BAKER HUGHES INCORPORATED
POLICY STATEMENT ON SHAREHOLDER RIGHTS PLANS
(Adopted March 3, 2004)

Baker Hughes Incorporated (“Company”) does not have a “poison pill” or “shareholder rights plan” and the Company’s Board of Directors (“Board”) considers it unlikely that such a plan would be considered in the future.

If the Company ever were to adopt a shareholder rights plan, the Board would seek prior stockholder approval of the plan unless, due to timing constraints or other reasons, a committee consisting solely of independent directors determines that it would be in the best interests of stockholders to adopt a plan before obtaining stockholder approval.

If a shareholder rights plan is adopted without prior stockholder approval, the shareholder rights plan must either be ratified by the stockholders or must expire, without being renewed or replaced, within one year.

The Governance Committee shall review this policy statement at least annually and report to the Board of Directors with any recommendations arising from its review.