Exhibit 10.4

PERFORMANCE GOALS
FOR PERFORMANCE BASED RESTRICTED STOCK UNIT AWARDS GRANTED IN 2017 UNDER
THE BAKER HUGHES INCORPORATED 2002 DIRECTOR & OFFICER
LONG-TERM INCENTIVE PLAN AND THE BAKER HUGHES INCORPORATED 2002 EMPLOYEE
LONG-TERM INCENTIVE PLAN

 

1.2017 Performance Based Restricted Stock Unit Program Overview

 

The Performance Based Restricted Stock Unit Program, a component compensation
program established under the Baker Hughes Incorporated 2002 Director & Officer
Long-Term Incentive Plan and the Baker Hughes Incorporated 2002 Employee
Long-Term Incentive Plan (the “2017 PRSUP”), provides for equity awards for
participants if certain performance goals are met during the term of the 2017
PRSUP.

 

The performance goals are related to the Company’s achievement as compared to a
peer group of companies. Achievement of the performance goals is measured over
multiple performance periods from the beginning of 2017 to the end of 2019. The
amount of a Participant’s Final Adjusted Units is determined by multiplying the
number of Performance Based Restricted Stock Units awarded to the Participant
under a Performance Based Restricted Stock Unit 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
2017, 2018, and 2019. The final twenty-five percent of the Total Unit Modifier
is calculated at the end of 2019 based upon the cumulative performance of the
Company over the three-year performance period 2017 through 2019.

 

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2.Performance Goals for the Performance Period

 

For purposes of determining the amount of a Participant’s Final Adjusted Units
under the 2017 PRSUP, 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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(a)                One Year Performance Periods

 

Revenue Growth. For the 2017 Performance Period, the 2018 Performance Period and
the 2019 Performance Period, the Company’s One Year Interval Percentage Increase
in Revenue for its 2017, 2018 and 2019 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 2017 Performance Period, the 2018
Performance Period and the 2019 Performance Period, the Company’s ROCE for its
2017, 2018 and 2019 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 2017
Performance Period, the 2018 Performance Period and the 2019 Performance Period,
the Company’s One Year Interval Percentage Increase in ROCE for its 2017, 2018
and 2019 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, 2019.

 

Return on Capital Employed. For the Three-Year Performance Period, the sum of
the ROCE of the Company for the 2017 Performance Period, the 2018 Performance
Period and the 2019 Performance Period shall be compared against the sum of the
ROCE

 

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for each member of the Peer Group for the 2017 Performance Period, the 2018
Performance Period and the 2019 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, 2019.

 

3.Payout Percentage Adjustments Based on Peer Group Ranking

 

For the Revenue Growth metric, the Payout Percentage for an applicable
performance period (the 2017 Performance Period, the 2018 Performance Period,
the 2019 Performance Period or the Three-Year Performance Period) for each of
the three performance goals is 25% times the payout percentage listed below.

 

2017, 2018, 2019, 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 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.

 

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

 

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

 

The Participant’s Performance Based Restricted Stock Units multiplied by the
Total Unit Modifier equals the Participant’s Final 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 Payout Percentage based upon the
performance in Year 1 is 16.88%. The sum of the Average Payout Percentages for
each of the performance periods equals the Total Unit Modifier.

 

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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.

 

For Example:

 

The total award earned is calculated by multiplying the number of Performance
Based Restricted Stock Units granted by the Total Unit Modifier. The resulting
product, 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 Performance Based Restricted Stock Units

 

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

 

The total award earned = 10,000 x 111.26% = 11,126 Performance Based Restricted
Stock Units

 

4.       Peer Group

 

The Peer Group is as follows for the performance periods ending in 2017, 2018,
and 2019, 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.

 

5.       General Performance Based Restricted Stock Unit Formula

 

Except as otherwise specified in the Terms and Conditions, the aggregate amount
payable to a Participant for a Performance Based Restricted Stock Unit Award
granted in 2017 under the Plan or the shall be equal to the number of
Performance Based Restricted Stock Units granted to the Participant multiplied
by the Total Unit Modifier.

 

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

 

Subject to the terms of the Plan, the Performance Based Restricted Stock 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 Based Restricted Stock 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

 

The Compensation Committee may not increase the Final Performance Based
Restricted Stock Unit Award Modifier for, or otherwise increase the aggregate
amount payable to a Participant for the performance period under, a Performance
Based Restricted Stock Unit Award Agreement issued by BHI in 2017 under the
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 Based Restricted Stock Unit Award Agreements issued by Baker
Hughes Incorporated (“BHI”) in 2017 under the Baker Hughes Incorporated 2002
Director & Officer Long-Term Incentive Plan and the Baker Hughes Incorporated
2002 Employee Long-Term Incentive Plan,, the terms set forth below shall have
the following meanings:

 

“Average 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.

 

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

 

“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.

 

“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 Based Restricted Stock Unit
Award is granted.

 

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

 

“Performance Based Restricted Stock Units” means the number of performance-based
restricted stock units listed in the Participant’s agreement evidencing his or
her Performance Based Restricted Stock Unit Award.

 

“Performance Based Restricted Stock Unit Award” means a Performance Based
Restricted Stock Unit Award granted under the Plan in 2017.

 

“Plan” means the Baker Hughes Incorporated 2002 Director & Officer Long-Term
Incentive Plan or the Baker Hughes Incorporated 2002 Employee Long-Term
Incentive Plan, as applicable.

 

“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.

 

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

 

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“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 13, 2020 or such earlier time as may be
applicable under the Terms and Conditions.

 

“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,
2017, and ending December 31, 2019.

 

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

 

“TOTAL Unit Modifier” means the sum of the Average Payout Percentages for the
2017 Performance Period, the 2018 Performance Period, the 2019 Performance
Period and the Three-Year Performance Period.

 

“2017 Performance Period” means the one-year period beginning January 1, 2017,
and ending December 31, 2017.

 

“2018 Performance Period” means the one-year period beginning January 1, 2018,
and ending December 31, 2018.

 

“2019 Performance Period” means the one-year period beginning January 1, 2019,
and ending December 31, 2019.

 

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