Exhibit 10.2

PERFORMANCE GOALS

FOR PERFORMANCE SHARE UNIT AWARDS GRANTED IN 2014 UNDER

THE BAKER HUGHES INCORPORATED 2002 DIRECTOR & OFFICER

LONG-TERM INCENTIVE PLAN

 

1. 2014 Performance Share Unit Program Overview

The Performance Share Unit Program, a component compensation program established
under the Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive
Plan (the “2014 PSUP”), provides for equity awards for participants if certain
performance goals are met during the term of the 2014 PSUP.

The amount that may be paid to a Participant under a Performance Share Unit
Award will be determined under a two-step calculation. Under the first step, the
number of Initial Performance Share Units awarded to a Participant under a
Performance Share Unit Award will be preliminarily adjusted as specified herein
based upon the achievement of Return on Capital Employed and Revenue growth
operational performance goals that are consistent with the goals established for
non-officer employees under the 2014 cash-based performance unit programs under
the Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive Plan
and the Baker Hughes Incorporated Employee Long-Term Incentive Plan. The
resulting preliminarily adjusted units are referred to as “Preliminarily
Adjusted Units.” Under the second step, the Preliminarily Adjusted Units will be
further adjusted as specified herein based upon relative Total Shareholder
Return performance. The final amount of the adjusted units is referred to as the
“Final Adjusted Units.” A Participant will be entitled to be awarded one share
of the Company’s Common Stock for each of the Participant’s Final Adjusted
Units.

Operational Performance for Purposes of Determining Preliminarily Adjusted Units

Certain adjustments to a Participant’s Initial Performance Share Units are made
based upon operational performance goals for purposes of determining the amount
of a Participant’s Preliminarily Adjusted Units. The operational performance
goals are related to the Company’s achievement as compared to a peer group of
companies. Achievement of the operational performance goals is measured over
multiple performance periods from the beginning of 2014 to the end of 2016. The
amount of a Participant’s Preliminarily Adjusted Units is determined by
multiplying the number of Initial Performance Share Units awarded to the
Participant under a Performance Share Award by an aggregate preliminary payout
percentage referred to as the “Total Unit Modifier.” Twenty-five percent of the
Total Unit Modifier is determined based upon one-year performance relative to
certain specified performance criteria during each of 2014, 2015, and 2016. The
final twenty-five percent of the Total Unit Modifier is calculated at the end of
2016 based upon the cumulative performance of the Company over the three-year
performance period 2014 through 2016.

 

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LOGO [g667203dsp010.jpg]

Relative Total Shareholder Return (TSR) Performance

Certain final adjustments to a Participant’s Preliminarily Adjusted Units are
made based on relative TSR performance goals. The relative TSR performance goals
are related to the Company’s TSR performance compared to the Philadelphia Stock
Exchange Oil Service Sector Index (or OSX), over the Three-Year Performance
Period.

 

  2. Performance Goals for the Performance Period

Operational Performance

For purposes of determining the amount of a Participant’s Preliminarily Adjusted
Units under the 2014 PSUP, the performance goals are based upon the Company’s
(1) change in Revenue as compared to the Peer Group, and (2) Return on Capital
Employed or ROCE as compared to the Peer Group measured in absolute terms as
well as the percentage growth in ROCE as compared to the Peer Group. For each
performance goal, if the Company’s performance as compared to the Peer Group is
the highest, the Company’s performance rank shall be first.

 

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LOGO [g667203dsp011.jpg]

 

(a) One Year Performance Periods

Revenue Growth. For the 2014 Performance Period, the 2015 Performance Period and
the 2016 Performance Period, the Company’s One Year Interval Percentage Increase
in Revenue for its 2014, 2015 and 2016 fiscal years, respectively, shall be
compared against the One Year Interval Percentage Increase in Revenue for all
members of the Peer Group.

Return on Capital Employed. For the 2014 Performance Period, the 2015
Performance Period and the 2016 Performance Period, the Company’s ROCE for its
2014, 2015 and 2016 fiscal years, respectively, shall be compared against the
ROCE for all members of the Peer Group during the applicable Current Period, as
an absolute measure. In addition, as a relative measure, for the 2014
Performance Period, the 2015 Performance Period and the 2016 Performance Period,
the Company’s One Year Interval Percentage Increase in ROCE for its 2014, 2015
and 2016 fiscal years, respectively, shall be compared against the One Year
Interval Percentage Increase in ROCE for all members of the Peer Group.

 

(b) Three-Year Performance Period

Revenue Growth. For the Three-Year Performance Period, the Three-Year Percentage
Increase in Revenue of the Company shall be compared against the Three-Year
Percentage Increase in Revenue for all members of the Peer Group as of
December 31, 2016.

 

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Return on Capital Employed. For the Three-Year Performance Period, the sum of
the ROCE of the Company for the 2014 Performance Period, the 2015 Performance
Period and the 2016 Performance Period shall be compared against the sum of the
ROCE for each member of the Peer Group for the 2014 Performance Period, the 2015
Performance Period and the 2016 Performance Period, as an absolute measure. For
the relative measure in the Three-Year Performance Period, the Three-Year
Percentage Increase in ROCE of the Company shall be compared against the
Three-Year Percentage Increase in ROCE for all members of the Peer Group as of
December 31, 2016.

Relative Total Shareholder Return (TSR) Performance

Three-Year Performance Period

For the Three-Year Performance Period, the Three-Year Total Shareholder Return
of the Company shall be compared against the Three-Year Total Shareholder Return
(TSR) for all members of the OSX Index as of December 31, 2016. TSR will be
determined using the average share price during the 20-business day period
ending on the first and last business day of Performance Period, assuming that
any dividends paid are reinvested as of the ex-dividend date.

 

  3. Payout Percentage Adjustments Based on Peer Group Ranking

Operational Performance

For the Revenue Growth metric, the Preliminary Payout Percentage for an
applicable performance period (the 2014 Performance Period, the 2015 Performance
Period, the 2016 Performance Period or the Three-Year Performance Period) for
each of the three performance goals is 25% times the payout percentage listed
below.

 

2014, 2015, 2016, and Three-Year Performance Period

 

Peer Group Rank in Revenue Growth

   5th     4th     3rd     2nd     1st  

Payout Percentage

     0 %      45 %      90 %      135 %      200 % 

 

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The Preliminary Payout Percentage for ROCE will be based on a combination of the
Company’s rank in absolute ROCE as well as the Company’s rank in percentage
growth in ROCE.

 

LOGO [g667203dsp013a.jpg]

The average of the Preliminary Payout Percentages for the Revenue Growth and
ROCE performance for a performance period is used to determine the Average
Preliminary Payout Percentage for the performance period.

The sum of the Average Preliminary Payout Percentages is the “Total Unit
Modifier.”

The Participant’s Initial Performance Share Units multiplied by the Total Unit
Modifier equals the Participant’s Preliminarily Adjusted Units.

In the example below, for illustrative purposes, Year 1 Revenue growth rank was
5th and 0% of 25% is 0%. ROCE absolute rank was 2nd and the ROCE rank in Growth
was 2nd, so the matrix above indicates a payout percentage of 135%, and 135%
percent of 25% is 33.75%. The Average Preliminary Payout Percentage based upon
the performance in Year 1 is 16.88%. The sum of the Average Preliminary Payout
Percentages for each of the performance periods equals the Total Unit Modifier.

 

LOGO [g667203dsp013b.jpg]

Note that levels of achievement contained in the foregoing example are not
forecasts by the Company of its expected levels of achievement. Rather, the
levels of achievement for purposes of the illustrative example were selected at
random.

 

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If the Peer Group is reduced by merger(s) or otherwise during the term of the
Three-Year Performance Period the Committee shall make such adjustments to the
above unit modifier chart as it deems appropriate in its sole discretion. Such
adjustments shall not increase the amounts that would have been payable under
the above unit modifier chart absent such adjustments.

Relative Total Shareholder Return (TSR) Performance

The final number of shares of the Company’s Common Stock to be paid under a
Performance Share Unit Award granted in 2014 earned will be calculated by
adjusting the Participant’s Preliminary Adjusted Units upwards or downwards
based on the Company’s relative TSR performance compared to the OSX Index. The
adjustment will be based on the table below.

 

TSR Percentile Rank

   TSR
Modifier

Less than 25th Percentile

   -30%

25th Percentile

   -15%

50th Percentile

   0%

75th Percentile or Greater

   30%

For Example:

The total award earned is calculated by first multiplying the number of Initial
Performance Share Units granted by the Total Unit Modifier. The resulting
product, the Preliminarily Adjusted Units, is then multiplied by the TSR
Modifier. The sum of (1) the Preliminarily Adjusted Units and (2) the product of
the Preliminarily Adjusted Units and the TSR Multiplier is the Final Adjusted
Units. Each Final Adjusted Unit represents a right to receive one share of the
Company’s Common Stock.

Assume the following:

 

  •   A participant was granted 10,000 Initial Performance Share Units

 

  •   The Company’s operational performance resulted in a Total Unit Modifier of
111.26%

 

  •   The Company’s relative TSR was at the 75th percentile of the OSX Index
resulting in 30% TSR Modifier

The total award earned = 10,000 x 111.26% x 1.30% = 14,464 Performance Share
Units

 

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4. Performance Comparison Groups

Operational Performance Peer Group

The Peer Group is as follows for the performance periods ending in 2014, 2015,
and 2016, and for the Three-Year Performance Period.

 

Peer Group

(5 Companies)

Baker Hughes Incorporated

Halliburton Company

National Oilwell Varco Incorporated

Schlumberger Limited

Weatherford International Ltd.

Relative TSR Performance Peer Group

Relative TSR Performance for the Three-Year Performance Period will consist of
the companies in the OSX Index at the end of Three-Year Performance Period. The
following is a list of the companies currently in the OSX Index:

Baker Hughes Incorporated

Cameron International Corporation

Diamond Offshore Drilling, Inc.

Halliburton Company

Helmerich & Payne, Inc.

Nabors Industries Ltd.

Noble Corp.

National Oilwell Varco.

Oceaneering International, Inc.

Oil States International Inc.

Rowan Companies, plc

Transocean Ltd

Schlumberger Limited

Tidewater Inc.

Weatherford International Ltd.

 

  5. General Performance Share Unit Formula

Except as otherwise specified in the Terms and Conditions, the aggregate amount
payable to a Participant for a Performance Share Unit Award granted in 2014
under the Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive
Plan shall be equal to the number of Initial Performance Share Units granted to
the Participant multiplied by the Total Unit Modifier, as further increased or
decreased by the TSR Modifier.

 

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The Compensation Committee shall determine in writing the extent to which the
Performance Goals applicable to the Performance Share Unit Awards have been
satisfied before the Company makes any payments under the Performance Share Unit
Awards.

Subject to the terms of the Plan, the Performance Share Unit Award and the Terms
and Conditions, unless prior to the Scheduled Payment Date a Change in Control
(as defined in the Terms and Conditions) occurs or the Participant forfeits his
Performance Share Unit Award, on the Scheduled Payment Date the Company shall
pay the Participant a number of shares of the Company’s Common Stock in an
amount equal to the Final Adjusted Units (prorated in accordance with the Terms
and Conditions in the event of the Retirement, death or permanent disability of
the Participant within the meaning of the Terms and Conditions).

The Compensation Committee may not increase the Final Performance Share Unit
Award Modifier for, or otherwise increase the aggregate amount payable to a
Participant for the performance period under, a Performance Share Unit Award
Agreement issued by BHI in 2014 under the Baker Hughes Incorporated 2002
Director & Officer Long-Term Incentive Plan.

Capitalized terms that are not defined herein shall have the meaning ascribed to
such terms in the Plan or the Terms and Conditions.

 

  6. Adjustments

Revenue Growth and Return on Capital Employed may be determined by including or
excluding, in the Compensation Committee’s discretion, items that are determined
to be extraordinary, unusual in nature, infrequent in occurrence, related to the
disposal or acquisition of a segment of a business, or related to a change in
accounting principal, in each case, based on Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) 225-20, Income Statement,
Extraordinary and Unusual Items, and FASB ASC 830-10, Foreign Currency Matters,
Overall, or other applicable accounting rules, or consistent with Company
accounting policies and practices in effect on the date these Performance Goal
are established.

 

  7. Definitions

For Performance Share Unit Award Agreements issued by Baker Hughes Incorporated
(“BHI”) in 2014 under the Baker Hughes Incorporated 2002 Director & Officer
Long-Term Incentive Plan, the terms set forth below shall have the following
meanings:

“Average Preliminary Payout Percentage” means, for a particular performance
period, the average of the 25% Preliminary Payout Percentages for the Revenue
Growth and ROCE performance for the performance period.

“Capital Employed” means an amount equal to the Relevant Company’s total
shareholders’ equity at the close of the Current Period plus the Relevant
Company’s long-term debt, short-term borrowing and the current portion of
long-term debt at the close of the Current Period.

“Company” means BHI and all of its Affiliates in which BHI directly or
indirectly has a capital investment.

 

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“Compensation Committee” means the Compensation Committee of the Board of
Directors of the Company.

“Current Period” means the fiscal year of the Relevant Company that coincides
with or ends within the fiscal year of the Company to which the applicable
Performance Goal applies.

“EBIT” means earnings before deduction of interest and taxes.

“Final Adjusted Units” means the final amount of a Participant’s adjusted units
determined after the adjustments provided herein.

“Initial Performance Share Units” means the number of Performance Share Units
awarded to a Participant under a Performance Share Unit Award, determined prior
to any adjustments hereunder.

“One Year Interval Percentage Increase in Revenue” means the result of (a) minus
(b), divided by (c), where (a) is the Revenue of the Relevant Company for the
Current Period, (b) is the Revenue of the Relevant Company for the Prior Period,
and (c) is the Revenue of the Relevant Company for the Prior Period.

“One Year Interval Percentage Increase in ROCE” means the result of (a) minus
(b), divided by (c), where (a) is the ROCE of the Relevant Company for the
Current Period, (b) is the ROCE of the Relevant Company for the Prior Period,
and (c) is the ROCE of the Relevant Company for the Prior Period.

“Participant” means the person to whom a Performance Share Unit Award is
granted.

“Peer Group” means the group identified in Section 4.

“Performance Share Units” means the number of performance units listed in the
Participant’s agreement evidencing his or her Performance Share Unit Award.

“Performance Share Unit Award” means a Performance Share Unit Award granted
under the Plan in 2014.

“Plan” means the Baker Hughes Incorporated 2002 Director & Officer Long-Term
Incentive Plan.

“Preliminarily Adjusted Units” means the product of the Participant’s Initial
Performance Share Units multiplied by the Total Unit Modifier.

“Preliminary Payout Percentage” means the preliminary payout percentages
identified herein for the increase in Revenue and ROCE metrics.

“Prior Period” means the fiscal year of the Relevant Company that coincides with
or ends within the fiscal year of the Company immediately preceding the fiscal
year of the Company to which the applicable Performance Goal applies.

 

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“Relevant Company” means the Company or a member of the Peer Group.

“Return on Capital Employed’’ or “ROCE’ means the Relevant Company’s EBIT for
the Current Period, divided by the Relevant Company’s Capital Employed.

“Revenue” means the revenue of the Company or the revenue of a particular member
of the Peer Group, as applicable.

“Scheduled Payment Date” means March 15, 2017.

“Three-Year Interval Percentage Increase in Revenue “ means the result of
(a) minus (b), divided by (c), where (a) is the Revenue for the Relevant Company
for the Current Period corresponding to the final fiscal year of the Company
ending during the Three-Year Performance Period, (b) is the Revenue of the
Relevant Company for the Prior Period corresponding to the fiscal year of the
Company immediately prior to the first fiscal year of the Company beginning
during the Three-Year Performance Period and (c) is the Revenue of the Relevant
Company for the Prior Period corresponding to the fiscal year of the Company
immediately prior to the first fiscal year of the Company beginning during the
Three-Year Performance Period.

“Three-Year Interval Percentage Increase in ROCE” means the result of (a) minus
(b), divided by (c), where (a) is the ROCE for the Relevant Company for the
Current Period corresponding to the final fiscal year of the Company ending
during the Three-Year Performance Period, (b) is the ROCE of the Relevant
Company for the Prior Period corresponding to the fiscal year of the Company
immediately prior to the first fiscal year of the Company beginning during the
Three-Year Performance Period and (c) is the ROCE of the Relevant Company for
the Prior Period corresponding to the fiscal year of the Company immediately
prior to the first fiscal year of the Company beginning during the Three-Year
Performance Period.

“Three-Year Performance Period” means the three-year period beginning January 1,
2014, and ending December 31, 2016.

“Three-Year Total Shareholder Return” means the TSR over the Three-Year
Performance Period.

“Terms and Conditions “ means the Terms and Conditions of Performance Unit Award
Agreements adopted by the Compensation Committee with respect to Performance
Unit Awards.

“Total Shareholder Return” or “TSR” means the total return to the shareholder.

“TSR Modifier” means the applicable percentage amount listed in the TSR modifier
chart.

“TOTAL Unit Modifier” means the sum of the Average Preliminary Payout
Percentages for the 2014 Performance Period, the 2015 Performance Period, the
2016 Performance Period and the Three-Year Performance Period.

“2014 Performance Period’’ means the one-year period beginning January 1, 2014,
and ending December 31, 2014.

 

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“2015 Performance Period” means the one-year period beginning January 1, 2015,
and ending December 31, 2015.

“2016 Performance Period” means the one-year period beginning January 1, 2016,
and ending December 31,2016.

 

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