DEF 14A 1 h66200ddef14a.htm DEF 14A def14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-12
 
Halliburton Company
 
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ   No fee required.
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:
 
     
     
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
     
     
 
 
  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
     
     
 
 
  (4)   Proposed maximum aggregate value of transaction:
 
     
     
 
 
  (5)   Total fee paid:
 
     
     
 
o   Fee paid previously with preliminary materials.
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
 
     
     
 
 
  (2)   Form, Schedule or Registration Statement No.:
 
     
     
 
 
  (3)   Filing Party:
 
     
     
 
 
  (4)   Date Filed:
 
     
     
 


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(HALLIBURTON LOGO)
 
April 6, 2009
 
To Our Stockholders:
 
You are cordially invited to attend the Annual Meeting of Stockholders of Halliburton Company. The meeting will be held on Wednesday, May 20, 2009, at 9:00 a.m., local time, at The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024.
 
At the meeting, stockholders are being asked to:
 
  •  elect the ten nominees named in the attached proxy statement to serve on the Board of Directors for the coming year;
 
  •  ratify the selection of KPMG LLP as principal independent public accountants to examine the financial statements and books and records of Halliburton for 2009;
 
  •  act on a proposal to amend and restate the Halliburton Company 1993 Stock and Incentive Plan;
 
  •  act on a proposal to amend and restate the Halliburton Company 2002 Employee Stock Purchase Plan; and
 
  •  consider five stockholder proposals.
 
Please refer to the proxy statement for detailed information on each of these proposals.
 
It is very important that your shares are represented and voted at the meeting. If you attend the meeting, you may vote in person even if you have previously voted.
 
We appreciate the continuing interest of our stockholders in the business of Halliburton and we hope you will be able to attend the Annual Meeting.
 
Sincerely,
 
-s- David J. Lesar
David J. Lesar
Chairman of the Board, President
and Chief Executive Officer


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(HALLIBURTON LOGO)
 
 
Notice of Annual Meeting of Stockholders
 
to be Held May 20, 2009
 
Halliburton Company, a Delaware corporation, will hold its Annual Meeting of Stockholders on Wednesday, May 20, 2009, at 9:00 a.m., local time, at The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024. At the meeting, the stockholders will be asked to consider and act upon the matters discussed in the attached proxy statement as follows:
 
  1.   To elect the ten nominees named in the attached proxy statement as Directors to serve for the ensuing year and until their successors shall be elected and shall qualify.
 
  2.   To consider and act upon a proposal to ratify the appointment of KPMG LLP as principal independent public accountants to examine the financial statements and books and records of Halliburton for the year 2009.
 
  3.   To consider and act upon management’s proposal to amend and restate the Halliburton Company 1993 Stock and Incentive Plan.
 
  4.   To consider and act upon management’s proposal to amend and restate the Halliburton Company 2002 Employee Stock Purchase Plan.
 
  5.   To consider and act upon five stockholder proposals, if properly presented at the meeting.
 
  6.   To transact any other business that properly comes before the meeting or any adjournment or adjournments of the meeting.
 
These items are fully described in the following pages, which are made a part of this Notice. The Board of Directors has set Monday, March 23, 2009, at the close of business, as the record date for the determination of stockholders entitled to notice of and to vote at the meeting and at any adjournment of the meeting.
 
This year we are furnishing proxy materials to our stockholders over the Internet. On April 6, 2009, we mailed our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our 2009 proxy statement and 2008 Annual Report on Form 10-K and vote online. The notice also provides instruction on how you can request a paper copy of these documents if you desire. If you received your annual materials via email, the email contains voting instructions and links to the proxy statement and Form 10-K on the Internet.
 
IF YOU PLAN TO ATTEND:
 
Attendance at the meeting is limited to stockholders and one guest each. Admission will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the meeting will begin at 9:00 a.m. Each stockholder holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Please note that you may be asked to present valid picture identification, such as a driver’s license or passport.
 
By order of the Board of Directors,
 
-s- Sherry D. Williams
Sherry D. Williams
Vice President and Corporate Secretary
 
April 6, 2009
 
 
 
 
You are urged to vote your shares as promptly as possible by following the voting instructions in the Notice of Internet Availability of Proxy Materials.


 

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PROXY STATEMENT
 
 
GENERAL INFORMATION
 
The proxy statement is solicited by the Board of Directors of Halliburton Company (“Halliburton”, the “Company”, “we” or “us”). By executing and returning the enclosed proxy or by following the enclosed voting instructions or by voting via the Internet or by telephone, you authorize the persons named in the proxy to represent you and vote your shares on the matters described in the Notice of Annual Meeting.
 
Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting and each may be accompanied by one guest. Admission to the Annual Meeting will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the Annual Meeting will begin at 9:00 a.m. Please note that you may be asked to present valid picture identification, such as a driver’s license or passport, when you check in at the registration desk.
 
If you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date.
 
No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting.
 
If you attend the Annual Meeting, you may vote in person. If you are not present, your shares can be voted only if you have voted via the Internet or by telephone or returned a properly executed proxy; and in these cases, your shares will be voted as you specify. If no specification is made, the shares will be voted in accordance with the recommendations of the Board of Directors. You may revoke the authorization given in your proxy at any time before the shares are voted at the Annual Meeting.
 
The record date for determination of the stockholders entitled to vote at the Annual Meeting is the close of business on March 23, 2009. Halliburton’s common stock, par value $2.50, is the only class of capital stock that is outstanding. As of March 23, 2009, there were 897,190,846 shares of common stock outstanding. Each of the outstanding shares of common stock is entitled to one vote on each matter submitted to the stockholders for a vote at the Annual Meeting. A complete list of stockholders entitled to vote will be kept at our offices at the address specified below for ten days prior to, and will be available at, the Annual Meeting.
 
Votes cast by proxy or in person at the Annual Meeting will be counted by the persons appointed by us to act as election inspectors for the Annual Meeting. Except as set forth below, the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter will be the act of the stockholders. Shares for which a stockholder has elected to abstain on a matter will count for purposes of determining the presence of a quorum and will have the effect of a vote against the matter.
 
Each Director shall be elected by the vote of the majority of the votes cast, provided that if the number of nominees exceeds the number of Directors to be elected and any stockholder-proposed nominee has not been withdrawn before the tenth (10th) day preceding the day we mail the Notice of Internet Availability of Proxy Materials to stockholders for the Annual Meeting, the Directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the election of Directors. A majority of the votes cast means that the number of shares voted “for” a Director must exceed the number of votes cast “against” that Director; abstentions will be ignored.
 
The election inspectors will treat shares held in street name that cannot be voted by a broker on specific matters in the absence of instructions from the beneficial owner of the shares, known as broker non-vote shares, as shares that are present and entitled to vote for purposes of determining the presence of a quorum. In determining the outcome of any matter for which the broker does not have discretionary authority to vote; however, those shares will not have any effect on that matter. Those shares may be entitled to vote on other matters.
 
In accordance with our confidential voting policy, the stockholders’ votes will not be disclosed to Halliburton’s officers, Directors or employees, except:
 
  •   as necessary to meet legal requirements and to assert claims for and defend claims against Halliburton;
  •   when disclosure is voluntarily made or requested by the stockholder;
  •   when the stockholder writes comments on the proxy card; or
  •   in the event of a proxy solicitation not approved and recommended by the Board.


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The proxy solicitor, the election inspectors and the tabulators of all proxies, ballots and voting tabulations are independent and are not employees of Halliburton.
 
The Notice of Internet Availability of Proxy Materials is being sent to stockholders on or about April 6, 2009. Our Annual Report on Form 10-K, including financial statements, for the fiscal year ended December 31, 2008 accompanies this proxy statement. The Annual Report on Form 10-K is not to be considered as a part of the proxy solicitation material or as having been incorporated by reference.
 
Our principal executive office is located at 5 Houston Center, 1401 McKinney Street, Suite 2400, Houston, Texas 77010.
 
ELECTION OF DIRECTORS
 
(Item 1)
 
Mr. Kenneth T. Derr, who has served as a Director since 2001 is retiring from the Board immediately prior to the Annual Meeting of Stockholders on May 20, 2009. He will not be a candidate for reelection for the ensuing year.
 
Nine of the nominees listed below are presently Directors of Halliburton. Mr. Malone is proposed for the first time for election to the Board. The common stock represented by the proxies will be voted to elect the ten nominees as Directors unless we receive contrary instructions. If any nominee is unwilling or unable to serve, favorable and uninstructed proxies will be voted for a substitute nominee designated by the Board. If a suitable substitute is not available, the Board will reduce the number of Directors to be elected. Each nominee has indicated approval of his or her nomination and his or her willingness to serve if elected. The Directors elected will serve for the ensuing year and until their successors are elected and qualify.
 
 
     
(PHOTO OF ALAN M. BENNETT)  
       ALAN M. BENNETT, 58, Retired Interim Chief Executive Officer, H&R Block, Inc. (a tax and financial services provider), 2007-2008; Retired Senior Vice President and Chief Financial Officer, Aetna, Inc. (a leading provider of health, dental, group life, disability and long-term care benefits), 2001-2007; Vice President and Corporate Controller, Aetna, Inc., 1998-2001; Vice President and Director of Internal Audit, Aetna, Inc., 1997-1998; Chief Financial Officer, Aetna Business Resources, 1995-1997; joined Halliburton Company Board in 2006; Chairman of the Audit Committee and member of the Nominating and Corporate Governance Committee; Director of H&R Block, Inc. and TJX Companies, Inc.
     
(PHOTO OF JAMES R. BOYD)  
       JAMES R. BOYD, 62, Retired Chairman of the Board, Arch Coal, Inc. (one of the largest U.S. coal producers); Chairman of the Board, Arch Coal, Inc., 1998-2006; Senior Vice President and Group Operating Officer, Ashland, Inc., 1989-2002; joined Halliburton Company Board in 2006; member of the Compensation and the Health, Safety and Environment Committees; Director of Arch Coal, Inc.
     
(PHOTO OF MILTON CARROLL)  
       MILTON CARROLL, 58, Chairman of the Board, CenterPoint Energy, Inc. (a public utility holding company) since 2002 and Chairman of Instrument Products, Inc. (a private oil-tool manufacturing company); joined Halliburton Company Board in 2006; member of the Compensation and the Health, Safety and Environment Committees; Chairman and Director of Health Care Service Corporation and Western Gas Partners, L.P.


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(PHOTO OF S. MALCOLM GILLIS)  
       S. MALCOLM GILLIS, 68, University Professor, Rice University since 2004; President, Rice University, 1993-2004; Ervin Kenneth Zingler Professor of Economics, Rice University, 1996-2004; Professor of Economics, Rice University, 1993-2004; joined Halliburton Company Board in 2005; member of the Audit and the Nominating and Corporate Governance Committees; Director of Service Corporation International, Introgen Therapeutics, Inc. and AECOM Technology.
     
(PHOTO OF JAMES T. HACKETT)  
       JAMES T. HACKETT, 55, Chairman of the Board, President and Chief Executive Officer of Anadarko Petroleum Corporation (an independent oil and gas exploration and production company) since 2006; President and Chief Executive Officer of Anadarko Petroleum Corporation, 2003-2006; President and Chief Operating Officer of Devon Energy Corporation, 2003; Chairman of the Board, President and Chief Executive Officer of Ocean Energy, Inc., 2000-2003; President and Chief Executive Officer of Ocean Energy, Inc., 1999-2000; Chairman, Chief Executive Officer and President of Seagull Energy Corporation, 1999; joined Halliburton Company Board in 2008; member of the Audit and the Compensation Committees; Director of Fluor Corporation and Chairman of the Federal Reserve Bank of Dallas.
     
(PHOTO OF DAVID J. LESAR)  
       DAVID J. LESAR, 55, Chairman of the Board, President and Chief Executive Officer of the Company since 2000; President of the Company, 1997-2000; Executive Vice President and Chief Financial Officer, 1995-1997; joined Halliburton Company Board in 2000.
     
(PHOTO OF ROBERT A. MALONE)  
       ROBERT A. MALONE, 58, Retired Chairman of the Board and President, BP America Inc. (the nation’s largest producer of oil and natural gas and the second largest gasoline retailer), 2006-2009; Chief Executive Officer, BP Shipping Limited, 2002-2006; Regional President Western United States, BP America Inc., 2000-2002; President, Chief Executive Officer and Chief Operating Officer, Alyeska Pipeline Service Company, 1996-2000; Director of First National Bank of Sonora.
     
(PHOTO OF J. LANDIS MARTIN)  
       J. LANDIS MARTIN, 63, Founder and Managing Director, Platte River Ventures, L.L.C. (a private equity investment company) since 2005; Chairman (1989-2005) and Chief Executive Officer (1995-2005), Titanium Metals Corporation; President and Chief Executive Officer, NL Industries, Inc., 1987-2003; Chairman of the Board and Chief Executive Officer, Baroid Corporation (and its predecessor), 1990-1994; joined Halliburton Company Board in 1998; Lead Director and member of the Health, Safety and Environment and the Nominating and Corporate Governance Committees; Director of Apartment Investment and Management Company, Crown Castle International Corporation and Intrepid Potash, Inc.
     
(PHOTO OF JAY A. PRECOURT)  
       JAY A. PRECOURT, 71, Chairman of the Board, Hermes Consolidated, Inc. (a gatherer, transporter and refiner of crude oil and refined products) since 1999; Chairman of the Board and Chief Executive Officer, Scissor Tail Energy, LLC, 2000-2005; Vice Chairman and Chief Executive Officer, Tejas Gas Corporation, 1986-1999; President, Tejas Gas Corporation, 1996-1998; joined Halliburton Company Board in 1998; Chairman of the Health, Safety and Environment Committee and member of the Audit Committee.


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(PHOTO OF DEBRA L. REED)  
       DEBRA L. REED, 52, President and Chief Executive Officer, Southern California Gas Company and San Diego Gas & Electric Company (regulated utility companies) since 2006; President and Chief Operating Officer, Southern California Gas Company and San Diego Gas & Electric Company, 2004-2006; President and Chief Financial Officer, Southern California Gas Company and San Diego Gas & Electric Company, 2002-2004; President of San Diego Gas & Electric Company, 2000-2001; President, Energy Distribution Services, Southern California Gas Company, 1998-2001; Senior Vice President, Southern California Gas Company, 1995-1998; joined Halliburton Company Board in 2001; Chairman of the Nominating and Corporate Governance Committee and member of the Compensation Committee; Director of Genentech, Inc.


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Stock Ownership of Certain Beneficial Owners and Management
 
The following table sets forth information about persons or groups, based on information contained in Schedules 13G filed with the Securities and Exchange Commission, or SEC, reflecting beneficial ownership, who own or have the right to acquire more than 5% of our common stock.
 
                 
    Amount and
    Percent
 
Name and Address
  Nature of
    of
 
of Beneficial Owner
  Beneficial Ownership     Class  
 
Wellington Management Company, LLP
    46,372,278 (1)     5.19 %
75 State Street, Boston, MA 02109
               
 
 
(1) Wellington Management Company, LLP is an investment adviser and is deemed to be the beneficial owner of 46,372,278 shares. Wellington Management Company, LLP has shared power to vote or direct the vote of 33,895,951 shares and has shared power to dispose or to direct the disposition of 46,372,278 shares.
 
The following table sets forth, as of February 23, 2009, the amount of our common stock owned beneficially by each Director, each Director Nominee, each of the executive officers named in the Summary Compensation Table on page 26 and all Directors, Director Nominees and executive officers as a group.
 
                         
    Amount and Nature of
 
    Beneficial Ownership  
    Sole
    Shared
       
    Voting and
    Voting or
       
Name of Beneficial Owner or
  Investment
    Investment
    Percent
 
Number of Persons in Group
  Power(1)     Power     of Class  
 
Alan M. Bennett
    14,393               *
James R. Boyd
    34,393               *
James S. Brown
    288,733               *
Milton Carroll
    10,428               *
Albert O. Cornelison, Jr. 
    222,679               *
Kenneth T. Derr
    40,719               *
C. Christopher Gaut
    634,810               *
S. Malcolm Gillis
    15,919               *
James T. Hackett
    4,624               *
David J. Lesar
    1,774,650       40,000 (2)     *
Robert A. Malone
    0               *
J. Landis Martin
    83,921               *
Mark A. McCollum
    157,797               *
Jay A. Precourt
    66,589               *
Debra L. Reed
    20,719       500 (2)     *
Shares owned by all current Directors, Director Nominees and executive officers as a group (21 persons)
    4,061,201               *
 
 
Less than 1% of shares outstanding.
 
(1) Included in the table are shares of common stock eligible for purchase pursuant to outstanding stock options within 60 days of February 23, 2009 for the following: Mr. Brown — 20,461; Mr. Cornelison — 57,800; Mr. Derr — 14,000; Mr. Gaut — 378,147; Mr. Lesar — 628,700; Mr. Martin — 20,000; Mr. McCollum — 46,100; Mr. Precourt — 20,000 and six unnamed executive officers — 226,234. Until the options are exercised, these individuals will neither have voting nor investment power over the underlying shares of common stock but only have the right to acquire beneficial ownership of the shares through exercise of their respective options.
 
(2) Mr. Lesar holds 40,000 shares in a family partnership. Ms. Reed has shared voting and investment power over 500 shares held in her husband’s Individual Retirement Account.


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CORPORATE GOVERNANCE
 
In 1997, our Board adopted a formal statement of its responsibilities and corporate governance guidelines to ensure effective governance in all areas of its responsibilities. Since 1997, our corporate governance guidelines have been reviewed periodically and revised as appropriate to reflect the dynamic and evolving processes relating to corporate governance, including the operation of the Board. Our Board’s Corporate Governance Guidelines, as revised in December 2008, can be found on the Corporate Governance page of our website www.halliburton.com and in Appendix A to this proxy statement.
 
Our Board also wants our stockholders to understand how the Board conducts its affairs in all areas of its responsibility. The full text of our Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees’ charters are available on our website.
 
We have posted on our website our Code of Business Conduct, which applies to all of our employees and Directors and serves as the code of ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, and other persons performing similar functions. If you do not have access to our website you can request a copy of the Code of Business Conduct, our corporate governance guidelines and the charters of the Board’s committees by contacting the Vice President and Corporate Secretary at the address set forth on page 2 of this proxy statement. Any waivers to our code of ethics for our executive officers can only be made by our Audit Committee. There were no waivers of the code of ethics in 2008.
 
Our Board is charged with approving related persons transactions involving our Directors, executive officers or any nominees for Director and any greater than 5% stockholders and their immediate family members. We have adopted a policy governing related persons transactions. The types of transactions covered by this policy are transactions, arrangements or relationships or any series of similar transactions, arrangements or relationships, including any indebtedness or guarantee of indebtedness, in which (1) we and our subsidiaries were or will be a participant, (2) the aggregate amount involved exceeds $120,000 in any calendar year, and (3) any related person had, has or will have a direct or indirect interest (other than solely as a result of being a director of, or holding less than a 10 percent beneficial ownership interest in, another entity). The Board will only approve related persons transactions when the Board determines such transactions are in our best interests or the best interests of our stockholders. In determining whether to approve or ratify a related person transaction, the Board will apply the following standards and such other standards it deems appropriate:
 
  •   whether the related person transaction is on terms comparable to terms generally available with an unaffiliated third-party under the same or similar circumstances;
  •   the benefits of the transaction to us;
  •   the extent of the related person’s interest in the transaction; and
  •   whether there are alternative sources for the subject matter of the transaction.
 
THE BOARD OF DIRECTORS AND
STANDING COMMITTEES OF DIRECTORS
 
The Board has standing Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees. Each of the standing committees are comprised of non-employee Directors, and in the business judgment of the Board, all of the non-employee Directors and Mr. Malone, who is proposed for the first time for election to the Board, are independent. The Board has made the determination that all of the non-employee Directors are independent because they meet the independence standards set forth in our corporate governance guidelines. Our independence standards, which meet the requirements of the New York Stock Exchange, or NYSE, provide that a Director will be considered independent if he or she:
 
  •   has not been employed by us or our affiliates in the preceding three years and no member of the Director’s immediate family has been employed as one of our or our affiliates’ executive officers in the preceding three years;
  •   has not received, and does not have an immediate family member that has received for service as one of our executive officers, within the preceding three years, during any twelve-month period, more than $120,000 in direct compensation from us, other than director’s fees, committee fees or pension or deferred compensation for prior service;


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  •   is not (A) a current partner or employee of our independent auditor and (B) was not during the past three calendar years a partner or employee of our independent auditor and personally worked on our audit;
  •   does not have an immediate family member who (A) is a current partner of our independent auditor, (B) is a current employee of our independent auditor who personally works on our audit and (C) was during the past three calendar years, a partner or employee of our independent auditor and personally worked on our audit;
  •   has not been an employee of one of our or our affiliates’ customers or suppliers and does not have an immediate family member who is an executive officer of one of our or our affiliates’ customers or suppliers that makes payments to, or receives payments from, us or our affiliates in an amount which exceeds the greater of $1 million or 2% of our customer’s or supplier’s consolidated gross revenues within any of the preceding three years; and
  •   has not been within the preceding three years part of an interlocking directorate in which our chief executive officer or another of our executive officers serves on the compensation committee of another corporation that employs the Director, or an immediate family member of the Director, as an executive officer.
 
There were no transactions, relationships or arrangements not disclosed in this proxy statement that were considered by the Board in making its determination as to the independence of the Directors. The definition of independence and compliance with this policy is periodically reviewed by the Nominating and Corporate Governance Committee.
 
During the last fiscal year, the Board met on 9 occasions, the Audit Committee met on 9 occasions, the Compensation Committee met on 4 occasions, the Health, Safety and Environment Committee met on 2 occasions, and the Nominating and Corporate Governance Committee met on 2 occasions. The non-employee Directors of the Board met in executive session, with no Company personnel present, on 6 occasions. Mr. Martin, as Lead Director, presides over the executive sessions of the independent Directors. All members of the Board attended at least 75% of the total number of meetings of the Board and the committees on which he or she served during the last fiscal year. Our corporate governance guidelines provide that all Directors should attend our Annual Meeting and all of our Directors attended the 2008 Annual Meeting.
 
To foster better communication with our stockholders, we established a process for stockholders to communicate with the Audit Committee and the Board. The process has been approved by both the Audit Committee and the Board, and meets the requirements of the NYSE and the SEC. The methods of communication with the Board, which follow, include mail, a dedicated telephone number and an e-mail address.
 
Contact the Board
 
You may choose one of the options listed below to report complaints about Halliburton’s accounting, internal accounting controls or auditing matters to the Audit Committee, or other concerns to the Board.
 
  •   Complaints relating to Halliburton’s accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee.
  •   Other concerns will be referred to the Lead Director.
  •   All complaints and concerns will be received and processed by the Halliburton Director of Business Conduct.
  •   Concerns may be reported anonymously or confidentially. Confidentiality shall be maintained unless disclosure is:
  o   required or advisable in connection with any governmental investigation or report;
  o   in the interests of Halliburton, consistent with the goals of Halliburton’s Code of Business Conduct; or
  o   required or advisable in Halliburton’s legal defense of the matter.
 
             
Call     Write     E-mail
 888.312.2692

or

770.613.6348
    Board of Directors
c/o Director of Business Conduct Halliburton Company
5 Houston Center
1401 McKinney Street, Suite 2400
Houston, TX 77010
    BoardofDirectors@halliburton.com
             
 
Halliburton’s Director of Business Conduct, a Halliburton employee, reviews all stockholder communications directed to the Audit Committee and the Board. The Chairman of the Audit Committee is promptly notified of any significant communication involving accounting, internal accounting controls, or auditing matters. The Lead Director is


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promptly notified of any other significant stockholder communications and significant communications addressed to a named Director are promptly sent to the Director. Copies of all communications are available for review by any Director.
 
Information regarding these methods of communication is also on our website, www.halliburton.com, under “Corporate Governance”.
 
Members of the Committees of the Board of Directors
 
             
        Health, Safety and
  Nominating and Corporate
Audit Committee
 
Compensation Committee
 
Environment Committee
 
Governance Committee
 
Alan M. Bennett*
  James R. Boyd   James R. Boyd   Alan M. Bennett
S. Malcolm Gillis
  Milton Carroll   Milton Carroll   Kenneth T. Derr
James T. Hackett
  Kenneth T. Derr*   J. Landis Martin   S. Malcolm Gillis
Jay A. Precourt
  James T. Hackett   Jay A. Precourt*   J. Landis Martin
    Debra L. Reed       Debra L. Reed*
 
 
* Chairperson
 
Audit Committee
 
The Audit Committee’s role is one of oversight, while Halliburton’s management is responsible for preparing financial statements. The independent public accounting firm appointed to audit our financial statements (the “principal independent public accountants”) is responsible for auditing those financial statements. The Audit Committee does not provide any expert or special assurance as to Halliburton’s financial statements or any professional certification as to the principal independent public accountants’ work. The following functions are the key responsibilities of the Audit Committee in carrying out its oversight:
 
  •   Recommending the appointment of the principal independent public accountants to the Board, and together with the Board, being responsible for the appointment, compensation, retention and oversight of the work of the principal independent public accountants;
  •   Reviewing the scope of the principal independent public accountants’ examination and the scope of activities of the internal audit department;
  •   Reviewing Halliburton’s financial policies and accounting systems and controls;
  •   Reviewing audited financial statements and interim financial statements;
  •   Preparing a report for inclusion in Halliburton’s proxy statement regarding the Audit Committee’s review of audited financial statements for the last fiscal year which includes a statement on whether it recommends that the Board include those financial statements in the Annual Report on Form 10-K;
  •   Approving the services to be performed by the principal independent public accountants; and
  •   Reviewing and assessing the adequacy of the Audit Committee’s Charter annually and recommending revisions to the Board.
 
The Audit Committee also reviews Halliburton’s compliance with its Code of Business Conduct. The Audit Committee meets separately with the principal independent public accountants, internal auditors and management to discuss matters of concern, and to receive recommendations or suggestions for change and to exchange relevant views and information.
 
Compensation Committee
 
The primary function of the Compensation Committee is to ensure that our compensation program is effective in attracting, retaining and motivating key employees, that it reinforces business strategies and objectives for enhanced stockholder value and that the program is administered in a fair and equitable manner consistent with established policies and guidelines.
 
The Compensation Committee’s responsibilities include, but are not limited to:
 
  •   Developing and approving an overall executive compensation philosophy, strategy and framework consistent with corporate objectives and stockholder interests;


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  •   Reviewing and discussing the annual Compensation Discussion and Analysis disclosure with executive management, and determining whether to recommend to the Board that the Compensation Discussion and Analysis be included in our annual proxy statement or Annual Report on Form 10-K;
  •   Reviewing the evaluation of the CEO’s performance by the non-employee members of the Board and then, based upon such evaluation, making a recommendation to the non-employee members of the Board regarding the CEO’s compensation for the next year;
  •   Specifically reviewing and approving all actions relating to compensation, promotion and employment-related arrangements (including severance arrangements) for specified officers of Halliburton, its subsidiaries and affiliates;
  •   Establishing annual performance criteria and reward schedules under our Annual Performance Pay Plan (or any other similar or successor plans) and certifying the performance level achieved and reward payments at the end of each plan year;
  •   Establishing performance criteria and award schedules under our Performance Unit Program (or any other similar or successor plans) and certifying the performance level achieved and award payments at the end of each performance cycle;
  •   Approving any other incentive or bonus plans applicable to specified officers of Halliburton, its subsidiaries and affiliates;
  •   Administering awards under our 1993 Stock and Incentive Plan and our Supplemental Executive Retirement Plan (or any other similar or successor plans);
  •   Selecting an appropriate peer group or peer groups against which to measure our total executive compensation program;
  •   Reviewing and approving or recommending to the Board, as appropriate, major changes to, and taking administrative actions associated with, any other forms of non-salary compensation under its purview;
  •   Reviewing and approving the stock allocation budget among all employee groups of Halliburton, its subsidiaries and affiliates;
  •   Periodically monitoring and reviewing overall compensation program design and practice to ensure continued competitiveness, appropriateness and alignment with established philosophies, strategies and guidelines;
  •   Reviewing and approving appointments to the Administrative Committee which oversees the day-to-day administration of some of our non-qualified executive compensation plans;
  •   Retaining persons having special competence (including consultants and other third-party service providers) as necessary to assist the Compensation Committee in fulfilling its responsibilities and maintaining the sole authority to retain and terminate these persons, including the authority to approve fees and other retention terms; and
  •   Performing such other duties and functions as the Board may from time to time delegate.
 
Health, Safety and Environment Committee
 
The Health, Safety and Environment Committee’s responsibilities include, but are not limited to:
 
  •   Reviewing and assessing Halliburton’s health, safety and environmental policies and practices and proposing modifications or additions as needed;
  •   Overseeing the communication and implementation of these policies throughout Halliburton;
  •   Reviewing annually the health, safety and environmental performance of Halliburton’s operating units and their compliance with applicable policies and legal requirements; and
  •   Identifying, analyzing and advising the Board on health, safety and environmental trends and related emerging issues.
 
Nominating and Corporate Governance Committee
 
The Nominating and Corporate Governance Committee’s responsibilities include, but are not limited to:
 
  •   Reviewing periodically the corporate governance guidelines adopted by the Board and recommending revisions to the guidelines as appropriate;
  •   Developing and recommending to the Board for its approval an annual self-evaluation process of the Board and its committees. The Committee shall oversee the annual self-evaluations;
  •   Reviewing and periodically updating the criteria for Board membership and evaluating the qualifications of each Director candidate against the criteria;
  •   Assessing the appropriate mix of skills and characteristics required of Board members;


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  •   Identifying and screening candidates for Board membership;
  •   Establishing procedures for stockholders to recommend individuals for consideration by the Committee as possible candidates for election to the Board;
  •   Reviewing annually each Director’s continuation on the Board and recommending to the Board a slate of Director nominees for election at the Annual Meeting of Stockholders;
  •   Recommending candidates to fill vacancies on the Board;
  •   Reviewing periodically the status of each Director to assure compliance with the Board’s policy that at least two-thirds of Directors meet the definition of independent Director;
  •   Reviewing the Board’s committee structure, and recommending to the Board for its approval Directors to serve as members and as Chairs of each committee;
  •   Reviewing annually any stockholder proposals submitted for inclusion in Halliburton’s proxy statement and recommending to the Board any Halliburton statements in response; and
  •   Reviewing periodically Halliburton’s Director compensation practices, conducting studies and recommending changes, if any, to the Board.
 
Stockholder Nominations of Directors. Stockholders may nominate Directors at an Annual Meeting of Stockholders in the manner provided in our By-laws. The By-laws provide that a stockholder entitled to vote for the election of Directors may make nominations of persons for election to the Board at a meeting of stockholders by complying with required notice procedures. Nominations shall be made pursuant to written notice to the Vice President and Corporate Secretary at the address set forth on page 2 of this proxy statement, and must be received at our principal executive offices not less than ninety (90) nor more than one hundred twenty (120) days prior to the anniversary date of last year’s annual meeting of stockholders, or no later than February 20, 2009 and no earlier than January 21, 2009. The notice shall set forth:
 
  •   as to each person the stockholder proposes to nominate for election or reelection as a Director:
  o   the name, age, business address and residence address of the person;
  o   the principal occupation or employment of the person;
  o   the class and number of shares of Halliburton common stock that are beneficially owned by the person, including derivatives, hedged positions and other economic or voting interests;
  o   a statement whether the nominee intends to tender the advance resignation described in Section 4 of our By-laws;
  o   any undisclosed voting commitments or other arrangements with respect to the proposed nominee’s actions as a director;
  o   other arrangements or matters that would prevent the proposed nominee from being considered an independent director under our Corporate Governance Guidelines and applicable stock exchange listing standards; and
  o   all other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and
  •   as to the stockholder giving the notice:
  o   the name and record address of the stockholder; and
  o   the class and number of shares of Halliburton common stock that are beneficially owned by the stockholder, including derivatives, hedged positions and other economic or voting interests; and
  •   information as to any material relationships, including financial transactions and compensation, between the stockholder and the proposed nominee.
 
The proposed nominee may be required to furnish other information as Halliburton may reasonably require to determine the eligibility of the proposed nominee to serve as a Director. At any meeting of stockholders, the presiding officer may disregard the purported nomination of any person not made in compliance with these procedures.
 
Qualifications of Directors. Candidates nominated for election or reelection to the Board should possess the following qualifications:
 
  •   Personal characteristics:
  o   highest personal and professional ethics, integrity and values;
  o   an inquiring and independent mind;
  o   practical wisdom and mature judgment;


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  •   Broad training and experience at the policy-making level in business, government, education or technology;
  •   Expertise that is useful to Halliburton and complementary to the background and experience of other Board members, so that an optimum balance of members on the Board can be achieved and maintained;
  •   Willingness to devote the required amount of time to carrying out the duties and responsibilities of Board membership;
  •   Commitment to serve on the Board for several years to develop knowledge about Halliburton’s principal operations;
  •   Willingness to represent the best interests of all stockholders and objectively appraise management performance; and
  •   Involvement only in activities or interests that do not create a conflict with the Director’s responsibilities to Halliburton and its stockholders.
 
The Nominating and Corporate Governance Committee is responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria. Diversity in personal background, race, gender, age and nationality for the Board as a whole may be taken into account in considering individual candidates.
 
Process for the Selection of New Directors. The Board is responsible for filling vacancies on the Board. The Board has delegated to the Nominating and Corporate Governance Committee the duty of selecting and recommending prospective nominees to the Board for approval. The Nominating and Corporate Governance Committee considers suggestions of candidates for Board membership made by current Committee and Board members, Halliburton management, and stockholders. The Committee may retain an independent executive search firm to identify candidates for consideration. The Committee retained the executive search firm, Korn/Ferry International, to assist its search in identifying and evaluating Director nominees, and this search firm identified Mr. Malone as a potential Director candidate. A stockholder who wishes to recommend a prospective candidate should notify Halliburton’s Vice President and Corporate Secretary.
 
When the Nominating and Corporate Governance Committee identifies a prospective candidate, the Committee determines whether it will carry out a full evaluation of the candidate. This determination is based on the information provided to the Committee by the person recommending the prospective candidate, and the Committee’s knowledge of the candidate. This information may be supplemented by inquiries to the person who made the recommendation or to others. The preliminary determination is based on the need for additional Board members to fill vacancies or to expand the size of the Board, and the likelihood that the candidate will meet the Board membership criteria listed above. The Committee will determine, after discussion with the Chairman of the Board and other Board members, whether a candidate should continue to be considered as a potential nominee. If a candidate warrants additional consideration, the Committee may request an independent executive search firm to gather additional information about the candidate’s background, experience and reputation, and to report its findings to the Committee. The Committee then evaluates the candidate and determines whether to interview the candidate. Such an interview would be carried out by one or more members of the Committee and others as appropriate. Once the evaluation and interview are completed, the Committee recommends to the Board which candidates should be nominated. The Board makes a determination of nominees after review of the recommendation and the Committee’s report.


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COMPENSATION DISCUSSION AND ANALYSIS
 
EXECUTIVE COMPENSATION OBJECTIVES
 
Our executive compensation program is designed to achieve the following objectives:
 
  •   Provide a clear and direct relationship between executive pay and Company performance on both a short and long-term basis;
  •   Emphasize operating performance drivers;
  •   Link executive pay to measures that drive stockholder value;
  •   Support our business strategies;
  •   Motivate our executives; and
  •   Maximize the return on our human resource investment.
 
These objectives serve to assure our long-term success and are built on the following compensation principles:
 
  •   Executive compensation is managed from a total compensation perspective.
  •   Consideration is given to each component of the total package in order to provide our Named Executive Officers, or NEOs, with competitive, market-driven compensation opportunities.
  •   All elements of compensation are compared to the total compensation packages of a comparator peer group that reflect the markets in which we compete for business and people.
 
Executive Compensation Procedures
 
Our compensation procedures guide the actions taken by the Compensation Committee. This ensures consistency from year to year and adherence to the responsibilities listed in the Compensation Committee’s Charter. The Compensation Committee reviews compensation annually, which includes:
 
  •   Selecting and engaging an external, independent consultant;
  •   Identifying the comparator peer group companies;
  •   Reviewing market data on benchmark positions; and
  •   Reviewing performance results against operating plans and our comparator peer group which includes our competitors.
 
These procedures set the platform for the final determination of compensation for the NEOs.
 
Our internal stock nomination process under the 1993 Stock and Incentive Plan ensures that all award grant dates are prospective and not retroactive. For NEOs, the grant date is the day the Committee determines annual compensation actions, generally in December of each year. However, awards may be approved by the Committee throughout the year. Exercise prices are set at the closing stock price on the date of the approved grant. Stock grants authorized for NEOs in 2008 are reflected in the Grants of Plan-Based Awards in Fiscal 2008 and Outstanding Equity Awards at Fiscal Year End 2008 tables.
 
Role of the CEO in Setting Compensation
 
In assisting the Committee in setting executive compensation for the other NEOs only, the CEO along with the independent, external consultant to the Committee, is guided by our compensation principles. They also consider current business conditions and make recommendations as follows:
 
  •   Recommend to the Committee base salary increases, taking into account comparator peer group data and the NEO’s individual performance.
  •   Recommend to the Committee the performance measures, target goals and award schedules for short-term incentive opportunities under our performance pay plan with performance targets being set relative to the projected business cycle and business plan.
  •   Recommend all long-term incentive awards made under our 1993 Stock and Incentive Plan and any retention of such shares upon early retirement, including:
  o   Developing and providing specific recommendations to the Committee on the aggregate number and types of shares to be awarded annually; and
  o   Reviewing the rationale and guidelines for annual stock awards and recommending changes to the grant types, when appropriate.


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The CEO does not provide recommendations concerning his own total compensation. Neither he nor other members of Halliburton management are present when the CEO’s total compensation is discussed by the Committee and other Board members.
 
Use of Independent Consultants and Advisors
 
The Committee engaged Hewitt Associates as its independent, external compensation consultant during 2008. The primary responsibilities of Hewitt Associates, assigned by the Committee, are to:
 
  •   Provide the Committee with independent and objective market data;
  •   Conduct compensation analysis;
  •   Recommend potential changes to the comparator peer group;
  •   Recommend plan design changes; and
  •   Review and advise on pay programs and pay levels.
 
These services are provided annually and as requested from time to time throughout the year by the Committee.
 
The contract for executive compensation services was entered into between Hewitt Associates and the Committee. Hewitt Associates also performs benefit administration services for Halliburton under a separate contract. The management of the Halliburton/Hewitt Associates relationship for benefits administration is the responsibility of Halliburton’s Global Benefits department, which has no contact with the Committee’s consultant.
 
Executive Compensation Benchmarking
 
The companies comprising the comparator peer group are chosen based on the following considerations:
 
  •   Market capitalization;
  •   Revenue and number of employees;
  •   Scope in terms of global impact and reach; and
  •   Industry affiliation.
 
Industry affiliation includes companies that are involved in the energy industry. The comparator peer group is reviewed annually by the Compensation Committee to ensure relevance.
 
Comparator Peer Group
 
The 2008 comparator peer group was composed of specific peer companies within the energy industry as well as selected companies representing general industry. This peer group was utilized to determine market levels of total compensation for the 2008 calendar year. The group includes the following companies:
 
     
•  3M Company
•  Alcoa Inc.
•  Anadarko Petroleum Corp.
•  Apache Corp.
•  Baker Hughes Inc.
•  Deere and Co.
•  Devon Energy Corp.
•  Eastman Kodak Co.
•  Emerson Electric Co.
•  Goodyear Tire and Rubber Co.
•  Hess Corp.
  •  Honeywell International Inc.
•  Johnson Controls, Inc.
•  Occidental Petroleum Corp.
•  Paccar Inc.
•  Raytheon Co.
•  Sunoco Inc.
•  Schlumberger Ltd.
•  Textron Inc.
•  TXU Corp.
•  Williams Companies Inc.
 
A slightly different comparator peer group is utilized for the 2008 cycle Performance Unit Program as discussed in the section Long-term Incentives: Performance Units.
 
Role of Market Data
 
We use regression analysis in considering total compensation benchmarking data because of variances in market capitalization and size among the companies comprising our comparator peer group. Thus, adjusted values are used as the basis of comparison of compensation between our executives and those of the comparator peer group.


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Total executive compensation for each NEO is structured to target market competitive pay levels at the 50th percentile in base pay, and short-term and long-term incentive opportunities. We also place an emphasis on variable pay at risk, which enables this compensation structure to position actual pay above or below the 50th percentile of our comparator peer group depending on performance.
 
A consistent pre-tax, present value methodology is used in assessing stock-based and other long-term incentive awards, including the Black-Scholes model used to value stock option grants.
 
Hewitt Associates gathers and performs an analysis of market data to determine how Halliburton’s total compensation for its NEOs compares to that of our comparator peer group. Hewitt Associates then advises the Committee on the market data and its results.
 
INTEGRATION OF COMPENSATION COMPONENTS, PLAN DESIGN AND DECISION-MAKING FACTORS
 
Each December, the Committee considers all elements of the executive compensation package for each NEO for the upcoming year. The Committee receives historical and prospective breakdowns of the total compensation components for each NEO as follows:
 
  •   Individual five-year total compensation history, which includes base salary, short and long-term incentives, and other benefits and perquisites;
  •   Income realized from prior restricted stock and option awards;
  •   Stock wealth accumulation based on total stock holdings;
  •   Total Company awarded stock position, including vested and unvested awards; and
  •   Detailed supplemental retirement award calculations.
 
Along with historical and prospective breakdowns, a competitive analysis is prepared by Hewitt Associates for each NEO, comparing each of their individual components of compensation as well as total compensation to that of the comparator peer group.
 
In making compensation decisions, each of the following compensation elements is reviewed separately and collectively:
 
  •   Base salary;
  •   Short-term (annual) incentives;
  •   Long-term incentives;
  •   Supplemental executive retirement benefits; and
  •   Other benefits, including perquisites.
 
Of these elements, all but base salary and certain health and welfare benefits are variable and at risk of forfeiture. Hewitt Associates provides market data detailing the elements and the median compensation of similar positions within our comparator peer group. The Committee uses this information as the primary reference point for determining the target value and actual value of each of the above elements of compensation, individually and in the aggregate, for each NEO. This assists the Committee in confirming that our compensation package for NEOs is appropriate and competitive to our comparator peer group.
 
The Committee considers the following when making compensation determinations:
 
  •   How compensation elements serve to appropriately motivate and reward each NEO;
  •   Competitively positioning their pay opportunity to retain their services;
  •   Individual NEO performance in reaching financial and operational objectives;
  •   Sustained levels of performance, future potential, time in position and years of service with us; and
  •   Other factors including operational or functional goals.
 
These factors are considered on an unweighted basis in making final pay decisions and to ensure internal equity among positions having similar scope and responsibility.
 
After considering these factors, the Committee then sets the final compensation opportunity for each NEO so that their actual total compensation is consistent with our philosophy of paying at the 50th percentile or higher for those years of superior performance and paying below the 50th percentile when performance does not meet competitive standards.


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The procedures used to set compensation for each of the NEOs are the same. Variations do exist in the amounts of compensation among the NEOs as a result of each NEO’s position and corresponding scope of responsibility, individual performance, length of time in the role and differences in the competitive market pay levels for positions in the comparator peer group.
 
Generally, in years when the Company achieves financial results substantially above or below expectations, actual compensation may fall outside the initial targets established by the Committee. These situations can occur, for example, as a result of industry-wide factors such as changes in demand for services.
 
Determination of CEO and NEO Target Total Compensation
 
When determining the base salary and stock awards for Mr. Lesar, the Committee takes into consideration competitive market pay levels for the CEOs within the comparator peer group. They also consider Mr. Lesar’s accomplishments in the areas of business development and expansion, management succession, development and retention of management, and the achievement of financial and operational objectives.
 
Each year, Mr. Lesar and the members of the Board agree upon a set of objectives based on the categories listed in our corporate governance guidelines which include:
 
  •   Leadership and vision;
  •   Integrity;
  •   Keeping the Board informed on matters affecting Halliburton and its operating units;
  •   Performance of the business;
  •   Development and implementation of initiatives to provide long-term economic benefit to Halliburton;
  •   Accomplishment of strategic objectives; and
  •   Development of management.
 
The Board determined that Mr. Lesar met these objectives in 2008 through the following achievements:
 
  •   Achieved revenue growth, margins and returns at or near the top of industry peers (performance of the business);
  •   Promoted Halliburton within the investing community as a pure oilfield services company (accomplishment of strategic objectives);
  •   Identified further areas of future growth in the eastern hemisphere and developed relationships with key customers (accomplishment of strategic objectives and development and implementation of initiatives to provide long-term economic benefit to Halliburton);
  •   Continued to develop an executive management succession planning process ensuring the development of individual executives as well as focusing senior management on talent management initiatives (development of management);
  •   Evaluated the strategic fit of possible acquisitions and the appropriateness of divestitures to enable continued growth and focus on our core business (leadership and vision and development and implementation of initiatives to provide long-term economic benefit to Halliburton); and
  •   Communicated regularly with the members of the Board providing status reports and notification of issues of immediate concern (integrity and keeping the Board informed on matters affecting Halliburton and its operating units).
 
The Committee considers Mr. Lesar’s performance evaluation when determining his total compensation, including base salary and short and long-term incentives, including stock awards.
 
Other NEO target total compensation is determined similarly to that of the CEO. Actual total compensation, including base salary, stock awards and short-term and long-term incentives, for Messrs. Lesar, Gaut, and Cornelison were at the 50th percentile pay levels of peer positions for 2008.
 
Mr. McCollum was initially targeted above the 50th percentile level of target total compensation because of the unique nature of his position at that time within our finance organization. Subsequently, Mr. McCollum was promoted to Executive Vice President and Chief Financial Officer. His target total compensation was again reviewed by the Compensation Committee in February 2008 and benchmarked to his new position. Because he was new to the Chief Financial Officer position, his total compensation was targeted below the 50th percentile.


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Mr. Brown’s target total compensation was not benchmarked because he was not under the purview of the Committee at the time those decisions were made.
 
Base Salary
 
The Committee sets base salary at the median of the comparator group in an effort to control fixed costs and to reward for performance in excess of the median through variable components of pay.
 
In evaluating market comparisons in setting base salary, the Committee also considers the following factors:
 
  •   Level of responsibility;
  •   Experience in current role and equitable compensation relationships among internal peers;
  •   Performance and leadership; and
  •   External factors involving competitive positioning, general economic conditions and marketplace compensation trends.
 
No specific formula is applied to determine the weight of each factor. Salary reviews are conducted annually to evaluate each executive; however, individual salaries are not necessarily adjusted each year.
 
Base pay amounts for the NEOs are listed in the Summary Compensation Table. For 2008, the Committee determined that:
 
  •   Mr. Lesar’s base pay was in line with market data and it was not increased.
  •   Mr. McCollum received a merit increase of 6.0% in December 2007 and then a 13.6% increase in February 2008 in recognition of his promotion to Executive Vice President and Chief Financial Officer, to bring his base salary closer to the 50th percentile of our comparator peer group.
  •   Mr. Cornelison did not receive a salary increase for 2008 due to his base salary already being aligned with the comparator peer group 50th percentile.
  •   Mr. Gaut received a 4.0% increase for 2008 to align his base salary with the comparator peer group.
  •   Mr. Brown received a merit increase of 2.6% in 2008, but was not benchmarked against the comparator peer group at the time as previously explained.
 
Short-term (Annual) Incentives
 
The Compensation Committee established the Annual Performance Pay Plan to:
 
  •   Reward executives and other key members of management for improving financial results that drive the creation of economic value for our stockholders; and
  •   Provide a means to connect individual cash compensation directly to our performance.
 
The Annual Performance Pay Plan provides an incentive to our NEOs to achieve the business objective of generating more earnings than normally expected by the investors who have provided us with capital to grow our business. We measure achievement of this objective using Cash Value Added, or CVA.
 
CVA is a financial measurement that demonstrates the amount of economic value added to our business. The formula for calculating CVA is as follows:
 
Operating Income
  − Corporate Costs
  + Interest Income
  + Foreign Currency Gains and Losses
  + Other Adjustments
= Net Operating Profit
  − Income Taxes
=
Cash Flow
 
Net Invested Capital
x Weighted Average Cost of Capital
=
Capital Charge
 
Cash Value Added (CVA) = Cash Flow — Capital Charge


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Cash Flow equals the sum of operating income minus corporate costs plus interest income plus foreign currency gains and losses plus other non-operating income reduced by our expected income tax expense.
 
Capital Charge equals total assets (excluding deferred income taxes) less total liabilities (excluding debt, deferred income tax-payable, and short-term notes payable) multiplied by a weighted average cost of capital percentage.
 
Cash Value Added is computed monthly and accumulated throughout the calendar year. Adjustments in the calculation of the CVA payout may, at times, be approved by the Compensation Committee and can include the treatment of unusual items that may have impacted our actual results.
 
At the beginning of each plan year, the Committee approves an incentive award schedule that equates given levels of CVA performance with varying reward opportunities paid in cash. The performance goals range from “Threshold” to “Target” to “Maximum.”
 
Threshold reflects the minimum CVA performance level which must be achieved in order for awards to be earned and Maximum reflects the maximum level that can be earned. For 2008, Threshold CVA was based on 75% of planned operating income excluding corporate costs, Target CVA on 100% of planned operating income excluding corporate costs and Maximum CVA on 125% of planned operating income excluding corporate costs.
 
These goals are based on our annual operating plan, as approved by our Board, and are set at levels that management believes would be sufficient to meet or exceed stockholder expectations of our performance, as well as management’s expectations of the relative performance of our competitors. Given the cyclical nature of our business, our performance goals vary from year to year, which can similarly impact the difficulty in achieving these goals.
 
In determining CVA awards, we have consistently applied a planned income tax rate and weighted average cost of capital percentage when determining actual CVA performance. As a result, the CVA performance goals are not made easier to achieve by improved income tax rates or lower actual cost of capital.
 
Over the past ten years the performance pay plans achieved Maximum performance levels six times, achieved Target performance level two times, and fell short of the Threshold performance level two times.
 
NEO Performance Pay Plan Opportunities
 
Individual incentive award opportunities are established at Threshold, Target and Maximum performance levels as a percentage of base salary at the beginning of the plan year. The maximum amount a NEO can receive is limited to two times the target opportunity level. The level of achievement of annual CVA performance determines the dollar amount of incentive compensation payable to participants following completion of the plan year.
 
The Committee set the 2008 performance goals for the NEOs based on company-wide consolidated CVA results. For Messrs. Gaut and Brown, part of their performance goals also included another metric due to their alignment with the business operations they oversee. Mr. Gaut was measured also on Drilling and Evaluation Division Net-Operating Value-Added (NOVA) and Mr. Brown was also measured on Western Hemisphere NOVA. NOVA utilizes balance sheet items under direct or indirect Division or Region control. It excludes interest income and foreign exchange gains and losses from operating income and uses only selected assets for the capital charge calculation that can be directly or indirectly impacted by personnel decisions. As such, NOVA functions similarly to CVA.
 
The Committee set their individual Threshold, Target and Maximum levels of opportunities under the plan as a percentage of January 1, 2008 annual base salary as follows:
 
                         
    Threshold
    Target
    Maximum
 
NEO
  Opportunity     Opportunity     Opportunity  
 
Mr. Lesar
    48 %     120 %     240 %
Mr. McCollum
    26 %     65 %     130 %
Mr. Cornelison
    26 %     65 %     130 %
Mr. Gaut
    30 %     75 %     150 %
Mr. Brown
    26 %     65 %     130 %
 
Actual Threshold, Target and Maximum dollar amounts can be found in the Grants of Plan-Based Awards in Fiscal 2008 table.


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The CVA targets for 2008 were $476 million at Threshold, $1,038 million at Target and $1,599 million at Maximum. Actual CVA for 2008 was $1,668 million. The earned awards for each NEO are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
 
The Committee approved one adjustment for 2008 regarding the $693 million charge to earnings incurred in the third quarter of 2008 for the premium paid in cash to settle our convertible debt, because the Committee determined this non-operating item should be excluded from the calculation of CVA. Accounting rule changes effective January 1, 2009, required us to reverse this $693 million charge at the beginning of 2009 and to restate prior periods.
 
Long-term Incentives
 
The Committee established the 1993 Stock and Incentive Plan to achieve the following objectives:
 
  •   Reward consistent achievement of value creation and operating performance goals;
  •   Align management with stockholder interests; and
  •   Encourage long-term perspectives and commitment.
 
Our 1993 Stock and Incentive Plan provides for a variety of cash and stock-based awards, including nonqualified and incentive stock options, restricted stock and units, performance shares and units, stock appreciation rights, and stock value equivalents, also known as phantom stock. Under the 1993 Stock and Incentive Plan, the Compensation Committee may, at its discretion, select from among these types of awards to establish individual long-term incentive awards.
 
Long-term incentives represent the largest component of total executive compensation opportunity. We believe this is appropriate given our principle that executive pay should be closely tied to stockholder interests and is at-risk based on performance.
 
In 2008, we used a combination of long-term incentive vehicles, including time-based restricted stock, performance units and nonqualified stock options. For NEOs, other than Mr. Lesar, operations-based incentives in the form of performance units targeted 40% of the long-term incentive value, another 40% was delivered through restricted stock and the remaining 20% was delivered in stock options.
 
Combination of Long-term Incentive Vehicles
 
(PIE CHART)
 
Messrs. McCollum, Cornelison, Gaut and Brown all approximated this combination of long-term incentive vehicles.
 
Mr. Lesar’s combination of long-term incentive vehicles was different from the other NEOs, because of the 1993 Stock and Incentive Plan $5,000,000 limit on performance units. Therefore, his long-term incentives were provided 27% in the form of performance units, with the balance of long-term incentives allocated 49% to restricted stock and 24% to stock options.
 
Granting a mix of incentives allows us to provide a diversified yet balanced long-term incentive program that effectively addresses volatility in our industry and in the stock market, in addition to maintaining an incentive to meet performance goals. Stock options and restricted stock are directly tied to our stock price performance and, therefore, directly to stockholder value. Additionally, restricted stock provides a significant retention incentive while performance units shift the focus to improving long-term returns on capital employed, as measured in relation to the comparator peer group for the Performance Unit Program.
 
In determining the size of long-term incentive awards, the Committee first considers market data references to the long-term incentive value for comparable positions and then may adjust the awards upwards or downwards based on


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the Committee’s view of internal equity. This can result in positions of similar magnitude and pay receiving awards of varying size. The 2008 long-term incentive awards for each NEO were based primarily on market data.
 
Restricted Stock and Stock Options
 
Our restricted stock and stock option awards are granted under the 1993 Stock and Incentive Plan and listed in the Grants of Plan-Based Awards in Fiscal 2008 table.
 
Except for the grants to Mr. Brown described below, the 2008 restricted stock grants are subject to a graded vesting schedule of 20% over 5 years. However, different vesting schedules may be utilized at the discretion of the Committee. Restricted shares are eligible for dividend payments under the terms of the restricted stock award agreements.
 
Stock option awards vest over a three-year graded vesting period with 331/3% of the grant vesting each year. All options are priced at the closing stock price on the date the grant is approved by the Committee.
 
The restricted stock and option awards shown in the Grants of Plan-Based Awards in Fiscal 2008 table represent the individual awards for each NEO made in 2008. All annual awards to NEOs were made in December 2008 and were approved by the Committee. Messrs. McCollum and Brown also received awards on February 13, 2008. Mr. McCollum’s award was related to his promotion to Executive Vice President and Chief Financial Officer. Mr. Brown’s award was related to his annual review for 2008.
 
Mr. Brown also received two additional restricted stock grants in 2008, in addition to his annual award. The October 7, 2008 award of 68,838 restricted shares has a 5 year cliff vesting schedule, with 100% of the award to vest in year five. An additional December 2, 2008 grant of 97,276 restricted shares has a graded vesting schedule, whereby 20% of the award will vest in years six through ten of the grant; nothing will vest in years one through five. Mr. Brown was granted these awards for retention purposes and to recognize the change in his scope of responsibilities.
 
The stock and option award columns in the Summary Compensation Table reflect the FAS 123R gross compensation expense recognized in 2008 for all outstanding restricted stock and option awards for each NEO.
 
Performance Units
 
The Performance Unit Program was designed to provide NEOs and other selected executives with incentive opportunities based on the level of achievement of pre-established performance objectives during three-year performance periods. The purpose of the program is to reinforce Halliburton’s objectives for sustained long-term performance and value creation. It is also intended to reinforce strategic planning processes, balance short- and long-term decision making and help provide competitive total compensation opportunities.
 
The program measures our consolidated Return on Capital Employed, or ROCE, compared to both absolute goals and relative goals, as measured by the results achieved by our comparator peer group companies.
 
Return on Capital Employed indicates the efficiency and profitability of our capital investments and is determined based on the ratio of earnings divided by average capital employed. The calculation is as follows:
 
     
ROCE =
  Net income + after-tax interest expense
   
(Return on Capital Employed)
  Shareholders’ equity + Debt (average of beginning and end of period)
 
The modifications that were made to the Performance Unit Program for the 2007 cycle were again utilized in the 2008 cycle. These included modifications to the comparator peer group used for measuring relative performance to focus on comparable oilfield equipment and service companies and domestic and international exploration and production companies. These changes were made in an effort to more accurately represent the timing, cyclicality and volatility related to the oil and natural gas industry. Finally, the performance metrics reflect increased absolute performance goals and more challenging relative performance goals.


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The comparator peer group for the 2008 cycle Performance Unit Program includes:
 
     
•  Anadarko Petroleum Corp. 
  •  Marathon Oil Corp.
•  Apache Corp. 
  •  Nabors Industries Ltd.
•  Baker Hughes, Inc. 
  •  National Oilwell Varco
•  BJ Services Co. 
  •  Schlumberger Ltd.
•  Cameron International Corp. 
  •  Smith International, Inc.
•  Chesapeake Energy Corp. 
  •  Transocean, Inc.
•  Devon Energy Corp. 
  •  Weatherford International Ltd.
•  Hess Corp.
   
 
The program allows for rewards to be paid in cash, stock or a combination of cash and stock. The first cycle began in 2001. Since that time the program has achieved slightly below target for the 2001 cycle, at target for the 2002 cycle, between target and maximum for the 2003 cycle and exceeded maximum for the 2004, 2005 and 2006 cycles. As a result of the changes made to the 2007 cycle and forward, achieving maximum payouts will be increasingly more difficult in the future.
 
2006 cycle Performance Unit Program Payout for NEOs
 
The 2006 cycle of the Performance Unit Program ended on December 31, 2008. Results for this cycle included the achievement of performance beyond the Maximum level on both absolute measures and measures relative to our comparator peer group. Halliburton’s three-year average ROCE for the 2006 cycle in absolute terms was 25.79% while the three-year average for the comparator group was 21.15% at the 75th percentile. Rewards for the 2006 cycle were paid in cash during 2009.
 
The amounts presented in the column, Non-Equity Incentive Plan Compensation in the Summary Compensation Table, represent the amounts earned by the NEOs in 2008 under both the 2006 cycle of the Performance Unit Program and the 2008 Annual Performance Pay Plan. For example, Mr. Lesar’s total amount of $8,120,000 represents the payment received for the 2006 cycle of the Performance Unit Program in the amount of $5,000,000, and his payment under the 2008 Annual Performance Pay Plan in the amount of $3,120,000. These amounts are discussed in the narrative following the Summary Compensation Table for all NEOs.
 
2008 cycle Performance Unit Program Opportunities for NEOs
 
Individual incentive opportunities are established based on market references and in accordance with our practice of granting a mix of long-term incentive vehicles. The Threshold, Target and Maximum columns under the heading Estimated Future Payouts Under Non-Equity Incentive Plan Awards in the Grants of Plan-Based Awards in Fiscal 2008 table indicate the potential payout for each NEO under the Performance Unit Program for the 2008 cycle. The potential payouts are performance driven and completely at risk.
 
Mr. Lesar has a Target payout potential of $2,500,000 and a Maximum payout potential of $5,000,000 if the maximum goals of the 2008 cycle Performance Unit Program are met or exceeded. $5,000,000 is the maximum cash award currently allowed under the 1993 Stock and Incentive Plan.
 
Messrs. McCollum and Cornelison were provided a Target opportunity level of 115% and Maximum opportunity level of 230%, utilizing their January 1, 2008 annual base pay. Mr. Gaut was provided a Target opportunity level of 125% and Maximum opportunity level of 250%, utilizing his January 1, 2008 annual base pay. Mr. Brown was provided a Target opportunity level of 75% and Maximum opportunity level of 150%, utilizing his January 1, 2008 annual base pay.
 
Opportunity levels were determined based upon market data of our comparator peer group and the NEO’s role within the organization. Actual payout amounts, if any, will not be known until after December 31, 2010.
 
Supplemental Executive Retirement Plan
 
The objective of the Supplemental Executive Retirement Plan, or SERP, is to provide a competitive level of pay replacement upon retirement. The current pay replacement target is 75% of final base salary at age 65 with 25 years of service.


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The material factors and guidelines considered in making an allocation include:
 
  •   Retirement benefits provided, both qualified and nonqualified;
  •   Current compensation;
  •   Length of service; and
  •   Years of service to normal retirement.
 
The calculation takes into account the following variables:
 
  •   Base salary;
  •   Years of service;
  •   Age;
  •   Employer portion of qualified plan savings;
  •   Age 65 value of any defined benefit plan; and
  •   Existing nonqualified plan balances and any other retirement plans.
 
Several assumptions are made annually, which include a base pay increase percentage, qualified and nonqualified plan contributions and investment earnings and an annuity rate. These factors are reviewed and approved annually by the Compensation Committee in advance of calculating any awards.
 
To determine the annual benefit, external actuaries calculate the total lump sum retirement benefit needed at age 65 from all Company retirement sources to produce an annual retirement benefit of 75% of final base pay. Company retirement sources include any qualified benefit plans and contributions to nonqualified benefit plans. If the combination of these two sources does not yield a total retirement balance that will meet the 75% objective, then contributions can be made annually through the SERP to bring the total benefit up to the targeted level.
 
To illustrate, assume $7.9 million is needed at age 65 to produce an annual retirement benefit equal to 75% of final base pay. The participant has $2.1 million in his qualified benefit plans at retirement and $3.0 million in his nonqualified retirement plans at retirement. Since the total of these two sources is $5.1 million, a shortfall of $2.8 million results. This is the amount needed to achieve the 75% pay replacement objective. Such shortfall may be accumulated through annual contributions to the SERP which will total $2.8 million at age 65.
 
In last year’s proxy statement we disclosed that the SERP was closed to new participants. However, in light of the challenges we are facing to attract and retain qualified executives, we re-opened the SERP to new participants in 2008. However, we limited participation to the direct reports of the CEO and other selected executives as recommended by the CEO and approved by the Compensation Committee at their discretion.
 
Allocations are made annually for each NEO who participates in the SERP, as approved by the Committee. However, participation one year does not guarantee future participation. The average annual amounts allocated over the history of participation are as follows: Mr. Lesar: $220,267; Mr. McCollum: $90,500; Mr. Cornelison: $130,857; Mr. Gaut: $132,167; and Mr. Brown: $211,000.
 
In 2008, the Committee authorized retirement allocations under the SERP to all NEOs as listed in the 2008 Nonqualified Deferred Compensation table and also included in the All Other Compensation column in the Summary Compensation Table.
 
Messrs. Lesar, McCollum, Cornelison and Gaut have participated in the SERP for at least five consecutive years (the number required for vesting purposes for allocations made in 2005 and thereafter) and are fully vested in their respective account balances. Mr. Brown is a new participant in the SERP. New participants in the SERP need to obtain 5 years of additional service with us from the date of their initial award in order to be vested in the SERP.
 
OTHER EXECUTIVE BENEFITS AND POLICIES
 
Retirement and Savings Plan
 
All NEOs participate in the Halliburton Retirement and Savings Plan, which is the defined contribution benefit plan available to all eligible U.S. employees. The matching contributions included in the Supplemental Table: All Other Compensation detail the amounts contributed by the Company on behalf of each NEO under the plan.


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Elective Deferral Plan
 
All NEOs may participate in the Halliburton Elective Deferral Plan, which was established to provide highly compensated employees with an opportunity to defer earned base salary and incentive compensation in order to help meet retirement and other future income needs.
 
The Elective Deferral Plan is a nonqualified deferred compensation plan and participation is completely voluntary. Pre-tax deferrals of up to 75% of base salary and/or eligible incentive compensation are allowed each calendar year. Gains or losses are credited based upon the participant’s election from among four benchmark investment choices with varying degrees of risk.
 
In 2008, Messrs. Gaut and Brown participated in this plan by deferring a percentage of their compensation. Mr. Lesar has an account balance from participation in prior years. Messrs. McCollum and Cornelison are not participants in the plan. Further details can be found in the 2008 Nonqualified Deferred Compensation table.
 
Benefit Restoration Plan
 
The Halliburton Company Benefit Restoration Plan provides a vehicle to restore qualified plan benefits which are reduced as a result of limitations imposed under the Internal Revenue Code or due to participation in other Company sponsored plans. It also serves to defer compensation that would otherwise be treated as excessive employee remuneration within the meaning of Section 162(m) of the Internal Revenue Code.
 
The Benefit Restoration Plan earns interest at the rate of 10% per annum. In 2008, all NEOs received awards under this plan in the amounts included in the Supplemental Table: All Other Compensation and the 2008 Nonqualified Deferred Compensation table.
 
Defined Benefit Pension Plans
 
With the exception of Mr. Cornelison, who participated in the Dresser Industries Consolidated Retirement Plan prior to the merger with Dresser Industries, Inc., no other NEO participated in any defined benefit pension plans as we no longer offer these types of plans to our U.S. employees. Also, the NEOs are not participants in any previously offered pension plans, which are now also frozen.
 
Mr. Cornelison’s benefit amounts are reflected in the Pension Benefits Table, with the change in value reflected in the Summary Compensation Table under the Change in Pension Value and NQDC Earnings column.
 
Perquisites
 
Health care and insurance coverage for our NEOs is the same as that provided to all active employees. In addition, we provide our NEOs and other highly compensated employees a physical examination benefit to be voluntarily utilized on an annual basis.
 
Country club memberships are limited and provided on an as-needed basis for business purposes only. Messrs. Cornelison, Gaut and Brown have club memberships.
 
We do not provide cars or car allowances. However, to allow for maximum efficiency and productive use of time, a company-leased car and part-time driver are provided for Mr. Lesar for the primary purpose of commuting to and from work while he is in Dubai and Houston.
 
A taxable benefit for executive financial planning is provided with the amount dependent on the NEO’s level within the company. This benefit does not include tax return preparation. It is paid, only if used, on a reimbursable basis.
 
We also provided for adequate security assessments and measures at the personal residences of Mr. Lesar during 2008.
 
Mr. Lesar uses company aircraft for all travel. Other than Mr. Lesar, no other NEO used company aircraft for personal use in 2008. Spouses are allowed to travel on select business trips.
 
In 2007, Mr. Lesar relocated to Dubai and became an expatriate under our business practice regarding long-term expatriate assignments. Mr. Lesar continues to waive his right to certain assignment allowances provided under the


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terms of our business practice with the exception of a goods and services differential and host country housing, utilities and transportation.
 
A differential is commonly paid to expatriates in assignment locations where the cost of goods and services is greater than the cost for the same goods and services in the expatriate’s home country. Differentials are determined by ORC Worldwide, a third-party consultant. Costs associated with Mr. Lesar’s car and driver and his housing and utilities while in Dubai are taxable as income to him. As part of his expatriate assignment, Mr. Lesar participates in our tax equalization program, which neutralizes the tax effect of the international assignment and approximates the tax obligation the expatriate would pay in his home country.
 
Specific amounts for the above mentioned perquisites are detailed for each NEO in the Supplemental Table: All Other Compensation immediately following the Summary Compensation Table.
 
Clawback Policy
 
Adopted by the Board in 2007, we have a clawback policy that will seek to recoup incentive compensation in all appropriate cases paid to, awarded or credited for the benefit of a NEO if:
 
  •   The amount of incentive compensation was calculated on the achievement of financial results that were subsequently reduced due to a restatement of our financial results;
  •   The NEO engaged in fraudulent conduct that caused the need for the restatement; and
  •   The amount of incentive compensation that would have been awarded or paid to the NEO, had our financial results been properly reported, would have been lower than the amount actually paid or awarded.
 
Any NEO who receives incentive compensation based on the achievement of financial results that are subsequently the subject of a restatement will not be subject to recoupment unless the NEO personally participates in the fraudulent conduct.
 
Stock Ownership Guidelines
 
In September 2008, the Committee adopted stock ownership guidelines for specified officers, which include all the NEOs, to further align their interests with our stockholders.
 
As a result, Mr. Lesar is encouraged to own Halliburton common stock of an amount equal to or in excess of five times his annual base salary. The other NEOs are encouraged to own an amount of Halliburton common stock equal to or in excess of three times their annual base salary. The Compensation Committee reviews their holdings, which include restricted shares, exercised options and all other Halliburton common stock personally held by the NEO, at each December meeting. Each NEO has 5 years from the date of the adoption of the guidelines to meet them.
 
As of December 31, 2008, all NEOs meet the guidelines.
 
ELEMENTS OF POST-TERMINATION COMPENSATION AND BENEFITS
 
Termination events that trigger payments and benefits include normal or early retirement, change-in-control, cause, death, disability, and voluntary termination. Post-termination payments may include severance, accelerated vesting of restricted stock and stock options, maximum payments under cash-based short and long-term incentive plans, nonqualified account balances and health benefits, among others. The Post-Termination Payment tables in this proxy statement indicate the impact of various termination events on each element of compensation for the NEOs.
 
IMPACT OF REGULATORY REQUIREMENTS ON COMPENSATION
 
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation paid to the CEO or any of the four other most highly compensated officers to the extent the compensation exceeds $1 million in any year. Qualifying performance-based compensation is not subject to this limit if certain requirements are met.


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Our policy is to utilize available tax deductions whenever appropriate and consistent with our compensation philosophy. When designing and implementing executive compensation programs, we consider all relevant factors, including tax deductibility of compensation. Accordingly, we have attempted to preserve the federal tax deductibility of compensation in excess of $1 million a year to the extent doing so is consistent with our executive compensation objectives; however, we may from time to time pay compensation to our executives that may not be fully deductible.
 
Our 1993 Stock and Incentive Plan enables qualification of stock options, stock appreciation rights and performance share awards as well as short-term and long-term cash performance plans under Section 162(m).
 
To the extent required by Section 304 of the Sarbanes-Oxley Act of 2002, we will make retroactive adjustments to any cash or equity-based incentive compensation paid to the CEO and CFO where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of restatement. When and where applicable, we will seek to recover any amount determined to have been inappropriately received by the CEO and CFO.


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COMPENSATION COMMITTEE REPORT
 
The Compensation Committee of the Board of Halliburton Company is responsible for establishing and maintaining competitive executive compensation programs that enable Halliburton to attract, retain and motivate high caliber executives who can considerably impact stockholder value. We also ensure that such programs are administered in a fair and equitable manner consistent with established policies and procedures.
 
Pursuant to our Charter, we are generally responsible for establishing the Company’s overall compensation philosophy and objectives and are specifically responsible for reviewing, approving and monitoring compensation strategies, plan design, guidelines, and practices as they relate to the named executive officers of the Company.
 
Our Committee consists entirely of independent, non-employee Directors appointed annually by the full Board. The composition of our Committee is reviewed annually to provide for adequate and reasonable rotation of members and to ensure that each member meets the criteria set forth in applicable Securities and Exchange Commission, New York Stock Exchange and Internal Revenue Code rules and regulations. Executive sessions, without members of Company management present, are regularly held. In addition, we invite all non-employee Board members to attend and participate in all our committee meetings; however, non-committee members are not entitled to vote.
 
We meet no less than four scheduled times per year and follow a pre-established calendar of actions. This calendar guides our Committee Chairperson, who coordinates with Halliburton’s Chief Executive Officer and executive compensation staff, in establishing the agenda for each meeting.
 
We have reviewed and discussed the Compensation Discussion and Analysis with Company management and, based on such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
 
THE COMPENSATION COMMITTEE
 
James R. Boyd
Milton Carroll
Kenneth T. Derr, Chairman
James T. Hackett
Debra L. Reed


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SUMMARY COMPENSATION TABLE
 
The following tables set forth information regarding the CEO, CFO and the three other most highly compensated executive officers of Halliburton as of the fiscal year ended December 31, 2008.
 
                                                                         
                                        Change In
             
                                        Pension
             
                                  Non-Equity
    Value and
             
                      Stock
    Option
    Incentive Plan
    NQDC
    All Other
       
          Salary
    Bonus
    Awards
    Awards
    Compensation
    Earnings
    Compensation
    Total
 
Name and Principal Position
  Year     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
David J. Lesar
    2008       1,300,000       0       4,217,791       3,023,622       8,120,000       86,074       1,128,752       17,876,239  
Chairman of the Board, President
    2007       1,300,000       0       3,684,235       3,555,245       7,433,860       67,294       982,904       17,023,538  
and Chief Executive Officer
    2006       1,300,000       0       3,736,474       2,618,324       6,640,000       53,249       947,740       15,295,787  
                                                                         
Mark A. McCollum
    2008       500,000       0       447,539       184,984       1,045,000       2,816       240,566       2,420,905  
Executive Vice President and
    2007       415,000       150,000       309,471       123,380       677,165       1,781       184,931       1,861,728  
Chief Financial Officer
    2006       395,000       0       263,178       116,493       675,000       1,018       146,780       1,597,469  
                                                                         
Albert O. Cornelison, Jr. 
    2008       550,000       0       775,106       366,663       1,870,000       21,706       406,113       3,989,588  
Executive Vice President and
    2007       550,000       0       650,858       365,757       1,458,465       14,975       460,456       3,500,511  
General Counsel
    2006       525,000       0       531,877       370,629       1,432,500       12,041       383,042       3,255,089  
                                                                         
C. Christopher Gaut
    2008       650,000       0       913,731       503,549       2,304,983       81,364       302,488       4,756,115  
President — Drilling and
    2007       625,000       0       758,894       508,540       1,901,438       92,090       319,230       4,205,192  
Evaluation Division
    2006       575,000       0       627,510       493,839       1,535,000       31,413       231,797       3,494,559  
                                                                         
James S. Brown     2008       390,000       0       554,080       131,033       809,500       7,897       333,404       2,225,914  
President — Western Hemisphere
                                                                       
 
Salary. The amounts represented in the Salary column are attributable to annual salary earned by each NEO. Information related to salary increases in 2008 is discussed in the Compensation Discussion and Analysis under Base Salary.
 
Bonus. No bonus amounts were made to any NEOs in 2008. The amount represented in the Bonus column is attributable to a one-time lump sum award to Mr. McCollum in 2007 for his involvement with the KBR, Inc. separation, which was completed in 2007. This award was discretionary with the payment amount based on his role and involvement with the event.
 
Stock Awards. The amounts in the Stock Awards column indicate the gross compensation expense recognized for restricted stock in 2008. FASB Statement 123R requires the fair value of equity awards to be recognized in the financial statements over the period the employee is required to provide service in exchange for the award, i.e. the vesting period. We calculate the fair value of restricted stock awards by multiplying the number of restricted shares granted by the closing stock price as of the award’s grant date.
 
Option Awards. The amounts in the Option Awards column indicate the gross compensation expense recognized for stock options in 2008. FASB Statement 123R requires the fair value of equity awards to be recognized in the financial statements over the period the employee is required to provide service in exchange for the award, i.e., the vesting period. The fair value of stock options is estimated using the Black-Scholes option pricing model. For a discussion of the assumptions made in these valuations, refer to Note 1 to the Consolidated Financial Statements, Description of Company and Significant Accounting Policies — Stock-based compensation, in the Halliburton Company Form 10-K for the fiscal year ended December 31, 2008.
 
Non-Equity Incentive Plan Compensation. The amounts represented in the Non-Equity Incentive Plan Compensation column are for amounts earned in 2008, to be paid in 2009. The total amount shown consists of payments made for the 2008 plan year under the Halliburton Annual Performance Pay Plan and the 2006 cycle Performance Unit Program. Information about these programs can be found in the Compensation Discussion and Analysis under Short-term (Annual) Incentives for the Halliburton Annual Performance Pay Plan and under Long-term Incentives for the Performance Unit Program.
 
The Threshold, Target and Maximum amounts for the 2008 Halliburton Annual Performance Pay Plan can be found in the Grants of Plan-Based Awards in Fiscal 2008 table under the Estimated Future Payouts Under Non-Equity Incentive Plan Awards.
 
The 2008 Halliburton Annual Performance Pay Plan amounts paid to each NEO are: $3,120,000 for Mr. Lesar; $650,000 for Mr. McCollum; $715,000 for Mr. Cornelison; $924,983 for Mr. Gaut; and $507,000 for Mr. Brown.


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The 2006 cycle Performance Unit Program amounts paid to each NEO are: $5,000,000 for Mr. Lesar; $395,000 for Mr. McCollum; $1,155,000 for Mr. Cornelison; $1,380,000 for Mr. Gaut; and $302,500 for Mr. Brown.
 
The amounts paid to the NEOs for the 2006 cycle Performance Unit Program differ from what is shown in the Grants of Plan-Based Awards in Fiscal Year 2008 table under Estimated Future Payments Under Non-Equity Incentive Plan Awards. The Grants of Plan-Based Awards in Fiscal Year 2008 table indicates the potential award amounts for Threshold, Target and Maximum under the 2008 cycle Performance Unit Program, while the Summary Compensation Table shows amounts paid for a prior program cycle, the 2006 cycle, which closed on December 31, 2008.
 
Change in Pension Value and NQDC Earnings. The amounts in the Change in Pension Value and NQDC Earnings column are attributable to the above-market earnings for various nonqualified plans. The methodology for determining what constitutes above-market earnings is the difference between the interest rate as stated in the applicable nonqualified plan document and the Internal Revenue Service Long-Term 120% AFR rate as of December 31, 2008. The 120% AFR rate used for determining above-market earnings in 2008 was 5.35%.
 
Change in Pension Value. Because the present value of Mr. Cornelison’s accumulated benefits as of December 31, 2008 was more than the present value of accumulated benefits as of December 31, 2007, a change in pension value of $2,765 is disclosed in the Pension Benefits Table.
 
Change in NQDC Earnings.
 
Halliburton Company Benefit Restoration Plan Above-Market Earnings. The current interest rate for the Halliburton Company Benefit Restoration Plan is 10% as defined by the plan document. The above-market earnings associated with this plan equals 4.65% (10% (plan interest) minus 5.35% (120% AFR rate)). The amounts shown in this column differ from the amounts shown for the Halliburton Company Benefit Restoration Plan in the 2008 Nonqualified Deferred Compensation table under the Aggregate Earnings in Last Fiscal Year column because the 2008 Nonqualified Deferred Compensation table includes all earnings and losses, and the Summary Compensation Table shows above-market earnings only.
 
NEOs earned above-market earnings for their balances associated with the Halliburton Company Benefit Restoration Plan as follows: $64,630 for Mr. Lesar; $2,816 for Mr. McCollum; $11,432 for Mr. Cornelison; $6,646 for Mr. Gaut; and $2,403 for Mr. Brown.
 
Halliburton Company Elective Deferral Plan Above-Market Earnings. The average earnings for the balances associated with the Halliburton Company Elective Deferral Plan were -26.77% for all funds and 8.2% for the one fund with positive returns. The above-market earnings associated with this fund equals 2.85% (8.2% minus 5.35% (120% AFR rate)). The amounts shown in this column differ from the amounts shown for the Halliburton Company Elective Deferral Plan in the 2008 Nonqualified Deferred Compensation table under the Aggregate Earnings in Last Fiscal Year column because the 2008 Nonqualified Deferred Compensation table includes all earnings and losses, and the Summary Compensation Table shows above-market earnings only.
 
Messrs. Lesar, Gaut and Brown earned above-market earnings for certain balances associated with the one fund in the Halliburton Company Elective Deferral Plan that had positive earnings as follows: $21,444 for Mr. Lesar; $74,718 for Mr. Gaut; and $5,494 for Mr. Brown. Messrs. McCollum and Cornelison are not participants in the Halliburton Company Elective Deferral Plan and do not have any prior balances in the plan.
 
ERISA Excess Benefit Plan for Dresser Industries, Inc. and ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. The current interest rate for both the ERISA Excess Benefit Plan for Dresser Industries, Inc. and ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. is 10%, as defined by the plan documents. The above-market earnings associated with these plans equals 4.65% (10% (interest for plans) minus 5.35% (120% AFR rate)).
 
Mr. Cornelison earned above-market earnings for his balances in the ERISA Excess Benefit Plan for Dresser Industries, Inc. and ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. The amounts for each plan are: $178 and $7,331, respectively.
 
The amounts shown in this column differ from the amounts shown for the ERISA Excess Benefit Plan for Dresser Industries, Inc. and ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. in the 2008 Nonqualified Deferred Compensation table under the Aggregate Earnings in Last Fiscal Year column because the 2008 Nonqualified


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Deferred Compensation table includes all earnings and losses, and the Summary Compensation Table shows above-market earnings only.
 
All Other Compensation. Detailed information for items listed in the All Other Compensation column can be found in the following supplemental table entitled Supplemental Table: All Other Compensation.
 
SUPPLEMENTAL TABLE: ALL OTHER COMPENSATION
 
The following table details the components of the All Other Compensation column of the Summary Compensation Table for 2008.
 
                                                                                                         
                                                                Supplemtl
             
                            Halliburton
          Restricted
    HRSP
    HRSP
    Benefit
    Executive
             
    Employee
          Financial
    Halliburton
    Giving
          Stock
    Employer
    Basic
    Restoration
    Retirement
    All
       
    Physical
    Parking
    Planning
    Foundation
    Choices
    HALPAC
    Dividends
    Match
    Contribution
    Plan
    Plan
    Other
    Total
 
Name
  ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
David J. Lesar
    761       3,270       20,538       200,000       1,000       5,000       297,979       9,000       9,200       85,600       168,000       328,404       1,128,752  
Mark A. McCollum
    2,200       3,270       1,000       40,000       780       0       24,349       9,167       9,200       21,600       129,000       0       240,566  
Albert O. Cornelison, Jr. 
    2,173       3,270       9,500       0       100       5,000       45,070       6,417       9,200       25,600       84,000       215,783       406,113  
C. Christopher Gaut
    1,960       0       2,500       35,000       700       5,000       54,246       9,000       9,200       33,600       142,000       9,282       302,488  
James S. Brown
    2,500       2,640       870       0       384       600       38,489       8,775       9,200       12,800       211,000       46,146       333,404  
 
Employee Physical. The Employee Physical Program provides NEOs the opportunity to have an annual physical examination to encourage an ongoing habit of health and wellness. Participation in the program is strictly voluntary. The amount shown is based on the value of services the NEO received less any medical insurance covered benefits.
 
Parking. This is the direct cost Halliburton pays for reserved parking spaces. Mr. Gaut offices at a location without reserved parking spaces or a cost associated with parking.
 
Financial Planning. This program allows NEOs to receive financial planning services by accredited financial planners. Tax planning is not covered under this program. The amount is based on the services the NEO received in 2008. If they do not utilize the program, the amount is forfeited.
 
Halliburton Foundation. The Halliburton Foundation allows NEOs and other employees to donate to approved universities, medical hospitals and primary schools of their choice. The Halliburton Foundation matches donations up to $20,000 on a two-for-one basis. Mr. Lesar participates in the Halliburton Foundation’s matching program for Directors, which allows his contributions up to $50,000 to qualified organizations to be matched on a two-for-one basis. Due to timing of when the NEO made the donation and when the Foundation matched the donation, a higher amount than the limit could result. Therefore, the amount shown indicates what the Foundation actually donated on behalf of the NEO during 2008.
 
Halliburton Giving Choices. The Halliburton Giving Choices Program allows NEOs and other employees to donate to approved not-for-profit charities of their choice. Halliburton matches donations by contributing ten cents for every dollar contributed by employees up to a maximum of $1,000. The amounts shown represent the match amounts the program donated to charities on behalf of the NEOs in 2008.
 
Halliburton Political Action Committee. The Halliburton Political Action Committee allows NEOs and other eligible employees to donate to political candidates and participate in the political process. Halliburton matches the donation dollar-for-dollar to a 501(c)(3) status nonprofit organization of the contributor’s choice. The amounts shown represent the match amounts the program donated to charities on behalf of the NEOs in 2008.
 
Restricted Stock Dividends. This is the amount of dividends paid on restricted stock held by NEOs in 2008.
 
Halliburton Retirement and Savings Plan Employer Match. The amount shown is the contribution Halliburton made on behalf of each NEO to the Halliburton Company Retirement and Savings Plan, our defined contribution plan. Halliburton matches up to 4% of each employee’s eligible base pay, up to the 401(a)(17) compensation limit of $230,000 in 2008.
 
Halliburton Retirement and Savings Plan Basic Contribution. This is the contribution Halliburton made on behalf of each NEO to the Halliburton Company Retirement and Savings Plan. If actively employed on December 31, 2008, each employee receives a contribution equal to 4% of their eligible base pay, up to the 401(a)(17) compensation limit of $230,000 in 2008.


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Halliburton Company Benefit Restoration Plan. This is the award earned under the Halliburton Company Benefit Restoration Plan in 2008. The plan provides a vehicle to restore qualified plan benefits which are reduced as a result of limitations on contributions imposed under the Internal Revenue Code or due to participation in other Company sponsored plans and to defer compensation that would otherwise be treated as excessive employee remuneration within the meaning of Section 162(m) of the Internal Revenue Code. Associated interest, awards and beginning and ending balances for the Halliburton Company Benefit Restoration Plan are included in the 2008 Nonqualified Deferred Compensation table. Above-market interest earned on these awards and associated balances is shown in the Summary Compensation Table under the Change in Pension Value and NQDC Earnings column.
 
Halliburton Company Supplemental Executive Retirement Plan. These are awards approved under the Halliburton Company Supplemental Executive Retirement Plan as discussed in the Supplemental Executive Retirement Plan section of the Compensation Discussion and Analysis. Awards are approved by the Halliburton Compensation Committee annually. The plan provides a competitive level of pay replacement for key executives upon retirement. Associated interest, awards and beginning and ending balances for the Halliburton Company Supplemental Executive Retirement Plan are included in the 2008 Nonqualified Deferred Compensation table.
 
All Other.
  •   Pension Equalizer Program and Associated Tax Equalization Payment. Mr. Cornelison is the only NEO who participates in the Dresser Industries, Inc. Pension Equalizer Plan. A subsequent tax equalization payment is also paid to ensure the NEO, along with other participants in the plan, receives the full benefit of the plan amount. Mr. Cornelison’s pension equalizer payment was $135,528 with a subsequent tax equalization payment of $75,083 for a total of $210,611.
  •   Country Club Membership Dues. The amount is based on the monthly membership fees. Club memberships are approved for business purposes only. Messrs. Cornelison, Gaut and Brown currently have club memberships paid by us. The amounts incurred were $5,172 for Mr. Cornelison, $9,282 for Mr. Gaut, and $34,654 for Mr. Brown.
  •   Aircraft Usage. Mr. Lesar uses Company aircraft for all travel. The incremental cost to Halliburton for his personal use of the Company plane in 2008 was $171,805. Other than Mr. Lesar, no other NEO used our aircraft for personal use in 2008. Spouses are allowed to travel on select business trips. For total compensation purposes in 2008, we valued the incremental cost of the personal use of aircraft using a method that takes into account: landing, parking, hanger fees, flight planning services and dead-head costs; crew travel expenses; supplies and catering; aircraft fuel and oil expenses per hour of flight; any customs, foreign permit and similar fees; and passenger ground transportation.
  •   Home Security. The Company provides security for residences based on a risk assessment which considers the NEO’s position. In 2008, a total of $9,214 for security maintenance fees was paid for the residences of Mr. Lesar.
  •   Car/Driver. A car and driver have been assigned to Mr. Lesar while in the U.S. so that he can work while in transit to allow him to meet customer and Company needs. The amount has been determined by his average commute time multiplied by his driver’s hourly rate. The cost to us was $9,290 in 2008. In addition, Mr. Lesar is provided with a car and driver in Dubai with an associated taxable income expense of $12,235.
  •   Other Compensation for Mr. Lesar. Mr. Lesar continues to be an expatriate because of his move to Dubai, UAE. In 2008, he received $22,981 for a Cost of Living Adjustment; $91,469 of imputed income for housing and utilities; $2,185 imputed income for employee taxes; $6,634 imputed income for vacation travel and $2,591 imputed income for excess benefits. All imputed income amounts are associated with his expatriate assignment and other expatriates on similar assignments receive similar adjustments as well.
  •   Other Compensation for Mr. Brown. Mr. Brown received a $6,765 payment associated with personal goods stolen while on a business trip and an associated tax gross-up amount of $4,726.


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GRANTS OF PLAN-BASED AWARDS IN FISCAL 2008
 
The following table represents amounts associated with the 2008 cycle Performance Unit Program, 2008 Annual Performance Pay Plan and restricted stock and stock option awards granted in 2008 for our NEOs.
 
                                                                 
                                  All Other
             
                            All Other
    Option Awards:
             
          Estimated Future Payouts
    Stock Awards:
    Number of
    Exercise or
    Grant Date
 
          Under Non-Equity
    Number of
    Securities
    Base Price
    Fair Value
 
          Incentive Plan Awards     Shares of
    Underlying
    of Option
    of Stock
 
    Grant
    Threshold
    Target
    Maximum
    Stock or Units
    Options
    Awards
    and Option
 
Name
  Date     ($)     ($)     ($)     (#)     (#)     ($/Share)     Awards ($)  
 
David J. Lesar
            1,250,000       2,500,000       5,000,000 (1)                                
              624,000       1,560,000       3,120,000 (2)                                
      12/02/2008                               253,028                       3,901,692  
      12/02/2008                                       262,075       15.42       998,270  
Mark A. McCollum
            287,500       575,000       1,150,000 (1)                                
              130,000       325,000       650,000 (2)                                
      02/13/2008                               10,300                       367,401  
      02/13/2008                                       11,500       35.67       124,154  
      12/02/2008                               48,700                       750,954  
      12/02/2008                                       50,400       15.42       191,979  
Albert O. Cornelison, Jr. 
            316,250       632,500       1,265,000 (1)                                
              143,000       357,500       715,000 (2)                                
      12/02/2008                               38,600                       595,212  
      12/02/2008                                       40,000       15.42       152,364  
C. Christopher Gaut
            406,250       812,500       1,625,000 (1)                                
              195,000       487,500       975,000 (2)                                
      12/02/2008                               41,800                       644,556  
      12/02/2008                                       43,300       15.42       164,934  
James S. Brown
            146,250       292,500       585,000 (1)                                
              101,400       253,500       507,000 (2)                                
      02/13/2008                               10,000                       356,700  
      02/13/2008                                       10,000       35.67       107,960  
      10/07/2008                               68,838 (3)                     1,499,980  
      12/02/2008                               97,276 (4)                     1,499,996  
      12/02/2008                               48,000                       740,160  
      12/02/2008                                       49,700       15.42       189,312  
 
 
(1) Indicates opportunity levels under the 2008 cycle of the Performance Unit Program.
 
(2) Indicates opportunity levels under the 2008 Halliburton Annual Performance Pay Plan.
 
(3) The October 7, 2008 restricted stock award in the amount of 68,838 restricted shares to Mr. Brown vests 100% on the fifth anniversary of the grant.
 
(4) The December 2, 2008 restricted stock award in the amount of 97,276 restricted shares to Mr. Brown will not begin vesting until the sixth anniversary of the award, at which time it will vest 20% annually through year ten.
 
As indicated by footnote (1), the opportunities for each NEO under the 2008 cycle Performance Unit Program if the Threshold, Target or Maximum levels are achieved are reflected under Estimated Future Payouts Under Non-Equity Incentive Plan Awards. This program measures our consolidated Return on Capital Employed as compared to our internal goals as well as relative to our comparator peer group utilized by the program during three-year cycles. The potential payouts are performance driven and completely at risk. For more information on the 2008 cycle Performance Unit Program, refer to Long-term Incentives in the Compensation Discussion and Analysis.
 
As indicated by footnote (2), the opportunities for each NEO under the 2008 Halliburton Annual Performance Pay Plan are also reflected under Estimated Future Payouts Under Non-Equity Incentive Plan Awards. This plan measures company Cash Value Added as compared to our pre-established goals during a one-year period. The potential payouts are performance driven and completely at risk. The amounts earned in 2008 and payable in 2009 for the 2008 Halliburton Annual Performance Pay Plan are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. For more information on the 2008 Halliburton Annual Performance Pay Program, refer to Short-term (Annual) Incentives in the Compensation Discussion and Analysis.
 
All restricted stock and nonqualified stock option awards are granted under the Halliburton Company 1993 Stock and Incentive Plan. The awards listed under All Other Stock Awards: Number of Shares of Stock or Units and All


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Other Option Awards: Number of Securities Underlying Options were awarded to each NEO, on the date indicated, by the Compensation Committee.
 
The annual restricted stock grants awarded to the NEOs in 2008 are subject to a graded vesting schedule of 20% over 5 years, except as indicated in footnotes 3 and 4. This vesting schedule serves to motivate our NEOs to remain with Halliburton. All restricted shares are priced at fair market value on the date of grant. Quarterly dividends are paid on the restricted shares at the same time and rate payable on our common stock, which is currently $0.09 per share. However, the shares may not be sold, transferred or used as collateral. The shares remain subject to forfeiture during the restricted period in the event of a NEO’s termination of employment or an unapproved early retirement.
 
Nonqualified stock options granted in 2008 vest over a three-year graded vesting period with 331/3% of the grants vesting each year. All options are priced at the fair market value on the date of grant using the Black-Scholes options pricing model. There are no voting or dividend rights unless the NEO exercises the options and acquires the shares.
 
The Estimated Future Payouts Under Equity Incentive Plan columns have been omitted because awards under the Performance Unit Program and Halliburton Annual Performance Pay Plan are expected to be paid in cash and are disclosed under Estimated Future Payouts Under Non-Equity Incentive Plan Awards.
 
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2008
 
The following table represents outstanding stock option and restricted stock awards for our NEOs as of December 31, 2008.
 
                                                         
          Option Awards     Stock Awards  
                                        Market
 
          Number of
    Number of
                Number of
    Value of
 
          Securities
    Securities
                Shares
    Shares or
 
          Underlying
    Underlying
                or Units
    Units of
 
          Unexercised
    Unexercised
    Option
          of Stock
    Stock
 
          Options
    Options
    Exercise
    Option
    Not
    Not
 
    Grant
    (#)
    (#)
    Price
    Expiration
    Vested
    Vested
 
Name
  Date     Exercisable     Unexercisable     ($)     Date     (#)     ($)  
 
David J. Lesar(1)
    12/06/2000                                       14,000       254,520  
      10/01/2001                                       92,644       1,684,268  
      01/02/2002                                       123,526       2,245,703  
      04/01/2002                                       123,523       2,245,648  
      01/02/2004                                       40,000       727,200  
      12/02/2004       46,000       0       19.31       12/02/2014       29,200       530,856  
      03/03/2005       133,334       0       22.04       03/03/2015                  
      12/07/2005       180,000       0       32.39       12/07/2015       64,000       1,163,520  
      12/06/2006       232,466       116,233       33.17       12/06/2016       67,500       1,227,150  
      12/05/2007       36,900       73,800       36.90       12/05/2017       80,480       1,463,126  
      12/02/2008       0       262,075       15.42       12/02/2018       253,028       4,600,049  
                                                         
Total
            628,700       452,108                       887,901       16,142,040  
                                                         
Mark A. McCollum(2)
    09/10/2003       13,332       0       12.17       09/10/2013                  
      12/02/2004       9,000       0       19.31       12/02/2014       2,000       36,360  
      12/07/2005       7,000       0       32.39       12/07/2015       8,000       145,440  
      12/07/2005                                       2,640       47,995  
      12/06/2006       8,934       4,466       33.17       12/06/2016       10,400       189,072  
      12/05/2007       4,000       8,000       36.90       12/05/2017       8,800       159,984  
      02/13/2008       0       11,500       35.67       02/13/2018       10,300       187,254  
      12/02/2008       0       50,400       15.42       12/02/2018       48,700       885,366  
                                                         
Total
            42,266       74,366                       90,840       1,651,471  
                                                         
Albert O. Cornelison, Jr.(3)
    10/01/2001                                       4,725       85,901  
      01/02/2002                                       6,300       114,534  
      04/01/2002                                       6,300       114,534  
      09/11/2002                                       12,000       218,160  
      01/02/2004                                       12,644       229,868  
      12/02/2004                                       5,000       90,900  
      12/07/2005       30,800       0       32.39       12/07/2015       11,280       205,070  
      12/06/2006       20,800       10,400       33.17       12/06/2016       24,160       439,229  
      12/05/2007       6,200       12,400       36.90       12/05/2017       13,520       245,794  
      12/02/2008       0       40,000       15.42       12/02/2018       38,600       701,748  
                                                         
Total
            57,800       62,800                       134,529       2,445,738  


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          Option Awards     Stock Awards  
                                        Market
 
          Number of
    Number of
                Number of
    Value of
 
          Securities
    Securities
                Shares
    Shares or
 
          Underlying
    Underlying
                or Units
    Units of
 
          Unexercised
    Unexercised
    Option
          of Stock
    Stock
 
          Options
    Options
    Exercise
    Option
    Not
    Not
 
    Grant
    (#)
    (#)
    Price
    Expiration
    Vested
    Vested
 
Name
  Date     Exercisable     Unexercisable     ($)     Date     (#)     ($)  
 
C. Christopher Gaut(4)
    03/03/2003       200,000       0       10.25       03/03/2013       30,000       545,400  
      01/02/2004       65,880       0       13.02       01/02/2014       12,644       229,868  
      12/02/2004       33,000       0       19.31       12/02/2014       6,840       124,351  
      12/07/2005       40,000       0       32.39       12/07/2015       14,640       266,155  
      12/06/2006       31,267       15,633       33.17       12/06/2016       36,320       660,298  
      12/05/2007       8,000       16,000       36.90       12/05/2017       17,040       309,787  
      12/02/2008       0       43,300       15.42       12/02/2018       41,800       759,924  
                                                         
Total
            378,147       74,933                       159,284       2,895,783  
                                                         
James S. Brown(5)
    07/29/1999                                       200       3,636  
      08/16/2000                                       2,000       36,360  
      08/21/2001                                       600       10,908  
      03/16/2004                                       1,268       23,052  
      01/13/2005                                       8,000       145,440  
      04/07/2005       2,193       0       22.56       04/07/2015       2,896       52,649  
      01/06/2006       3,000       3,000       33.03       01/06/2016       4,800       87,264  
      04/17/2006                                       6,000       109,080  
      01/03/2007       4,467       8,933       29.87       01/03/2017       11,700       212,706  
      02/13/2008       0       10,000       35.67       02/13/2018       10,000       181,800  
      10/07/2008                                       68,838       1,251,475  
      12/02/2008                                       97,276       1,768,478  
      12/02/2008       0       49,700       15.42       12/02/2018       48,000       872,640  
                                                         
Total
            9,660       71,633                       261,578       4,755,488  
 
 
(1) Mr. Lesar’s remaining stock option awards will continue to vest annually in equal amounts over three-year vesting schedules. His remaining restricted stock awards will continue to vest in equal amounts over each grant’s ten-year vesting schedule, except for the January 2, 2004, December 2, 2004, December 7, 2005, December 5, 2007 and December 2, 2008 awards, which will vest in equal amounts over five years.
 
(2) Mr. McCollum’s remaining stock option awards will continue to vest annually in equal amounts over three-year vesting schedules. His remaining restricted stock awards, including February 13, 2008 and December 2, 2008, will continue to vest in equal amounts over each grant’s five-year vesting schedule, except for the December 6, 2006 award, which will vest in equal amounts over ten years.
 
(3) Mr. Cornelison’s remaining stock option awards will continue to vest annually in equal amounts over three-year vesting schedules. His remaining restricted stock awards will continue to vest in equal amounts over each grant’s ten-year vesting schedule, except for the January 2, 2004, December 2, 2004, December 7, 2005, December 5, 2007 and December 2, 2008 awards, which will vest in equal amounts over five years.
 
(4) Mr. Gaut’s remaining stock option awards will continue to vest annually in equal amounts over three-year vesting schedules. His remaining restricted stock awards, including December 2, 2008, will continue to vest in equal amounts over each grant’s five-year vesting schedule, except for the March 3, 2003 and December 6, 2006 awards, which will vest in equal amounts over ten years.
 
(5) Mr. Brown’s remaining stock option awards will continue to vest annually in equal amounts over three-year vesting schedules. His remaining restricted stock awards will continue to vest in equal amounts over each grant’s ten-year vesting schedule, except for the March 16, 2004, January 13, 2005, April 7, 2005, January 6, 2006, April 17, 2006, February 13, 2008 and December 2, 2008 awards, which will vest in equal amounts over five years, the October 7, 2008 restricted stock award which will vest 100% on the fifth anniversary of the grant and the December 2, 2008 restricted stock award of 97,276 shares which will not begin vesting until the sixth anniversary of the award, at which time it will vest 20% annually through year ten.
 
The nonqualified stock option awards listed under Option Awards include outstanding awards, exercisable and unexercisable, as of December 31, 2008.
 
The restricted stock awards under Stock Awards are the number of shares not vested as of December 31, 2008. The market value shown was determined by multiplying the number of unvested restricted shares at year end by the closing price of our common stock on the New York Stock Exchange Composite Tape of $18.18 on December 31, 2008.
 
The Equity Incentive Plan Awards columns are intentionally omitted as this type of award is not utilized by us at this time.
 
The narratives under the Summary Compensation Table and Grants of Plan-Based Awards at Fiscal Year End 2008 table contain additional information on stock option and restricted stock awards.

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2008 OPTION EXERCISES AND STOCK VESTED
 
The following table represents stock options exercised and restricted shares that vested during fiscal year 2008 for our NEOs.
 
                                 
    Option Awards     Stock Awards  
    Number of
          Number of
       
    Shares Acquired
    Value Realized on
    Shares Acquired
    Value Realized on
 
Name
  on Exercise (#)     Exercise ($)     on Vesting (#)     Vesting ($)  
 
David J. Lesar
    108,666       2,789,943       239,401       6,615,961  
Mark A. McCollum
    0       0       14,820       299,374  
Albert O. Cornelison, Jr. 
    37,960       1,031,313       37,409       1,017,126  
C. Christopher Gaut
    0       0       41,604       1,056,706  
James S. Brown
    0       0       18,636       623,495  
 
The value realized for exercised stock option awards was determined by multiplying the spread (difference between the market price of the underlying stock on the date of exercise and the option price) by the number of options. The value listed represents the total value of all option exercises occurring in 2008.
 
The value realized for vested restricted stock awards was determined by multiplying the fair market value of the shares (closing market price of Halliburton common stock on the vesting date) by the number of shares that vested. Shares vested on various dates throughout the year; therefore, the value listed represents the aggregate value of all shares that vested in 2008.
 
2008 NONQUALIFIED DEFERRED COMPENSATION
 
The 2008 Nonqualified Deferred Compensation table reflects balances in Halliburton nonqualified plans as of January 1, 2008, contributions made by the NEO and us during 2008, any earnings (the net of the gains and losses on funds, as applicable) and the ending balance as of December 31, 2008. The plans are described in the Compensation Discussion and Analysis and brief summaries are provided below.
 
                                             
                                Aggregate
 
              Executive
    Registrant
    Aggregate
    Balance
 
              Contributions
    Contributions
    Earnings
    At Last
 
        01/01/08
    In Last
    In Last
    In Last
    Fiscal Year
 
        Balance
    Fiscal Year
    Fiscal Year
    Fiscal Year
    End
 
Name
  Plan   ($)     ($)     ($)     ($)     ($)  
 
David J. Lesar
  SERP     4,148,365       0       168,000       207,418       4,523,783  
    Benefit Restoration     1,389,885       0       85,600       138,988       1,614,473  
    Elective Deferral     724,503       0       0       61,694       786,197  
                                             
    Total     6,262,753       0       253,600       408,100       6,924,453  
                                             
Mark A. McCollum
  SERP     448,191       0       129,000       22,410       599,601  
    Benefit Restoration     60,560       0       21,600       6,056       88,216  
                                             
    Total     508,751       0       150,600       28,466       687,817  
                                             
Albert O. Cornelison, Jr. 
  SERP     936,348       0       84,000       46,817       1,067,165  
    Benefit Restoration     245,850       0       25,600       24,585       296,035  
    Dresser ERISA Excess     3,820       0       0       382       4,202  
    Dresser ERISA Comp Limit     157,650       0       0       15,765       173,415  
                                             
    Total     1,343,668       0       109,600       87,549       1,540,817  
                                             
C. Christopher Gaut
  SERP     715,496       0       142,000       35,775       893,271  
    Benefit Restoration     142,914       0       33,600       14,291       190,805  
    Elective Deferral     2,562,297       518,578       0       4,999       3,085,874  
                                             
    Total     3,420,707       518,578       175,600       55,065       4,169,950  
                                             
James S. Brown
  SERP     0       0       211,000       0       211,000  
    Benefit Restoration     51,675       0       12,800       5,167       69,642  
    Elective Deferral     206,461       97,500       0       (13,443 )     290,518  
                                             
    Total     258,136       97,500       223,800       (8,276 )     571,160  


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Halliburton Company Supplemental Executive Retirement Plan. The SERP provides a competitive level of pay replacement for key executives upon retirement. The current pay replacement target is 75% of final base salary at age 65 with 25 years of service. Several assumptions are made annually, which include pay increase percentage, qualified and nonqualified plan contributions, qualified and nonqualified plan investment earnings and an annuity rate.
 
Allocations under the SERP can be made once a year and are approved by the Compensation Committee at their discretion. The material factors and guidelines considered in making an allocation include:
 
  •   Retirement benefits provided from other Company programs, both qualified and nonqualified;
  •   Current compensation;
  •   Length of service; and
  •   Years of service to normal retirement.
 
These factors are reviewed and approved annually by the Compensation Committee in advance of calculating any awards. Messrs. Lesar, McCollum, Cornelison and Gaut have participated in the SERP for five or more consecutive years (the number required for vesting purposes for allocations made in 2005 and thereafter) and are fully vested in their respective account balances. Mr. Brown is not vested in his 2008 award. Balances earn interest at an annual rate of 5%.
 
The SERP amounts shown in the Registrant Contributions in Last Fiscal Year column are included in the Summary Compensation Table under All Other Compensation.
 
Halliburton Company Benefit Restoration Plan. The Halliburton Company Benefit Restoration Plan provides a vehicle to restore qualified plan benefits which are reduced as a result of limitations on contributions imposed under the Internal Revenue Code or due to participation in other Company sponsored plans and to defer compensation that would otherwise be treated as excessive remuneration within the meaning of Section 162(m) of the Internal Revenue Code. Awards are made annually to those who meet these criteria and earn interest at an annual rate of 10%. Awards and corresponding interest balances are 100% vested and distributed upon separation.
 
Benefit Restoration amounts shown in the Registrant Contributions in Last Fiscal Year column are included in the Summary Compensation Table under All Other Compensation.
 
Halliburton Company Elective Deferral Plan. The Halliburton Company Elective Deferral Plan allows participants to save for retirement utilizing eligible pre-tax base and/or eligible incentive compensation. Participants may elect to defer up to 75% of their annual base salary and up to 75% of their incentive compensation into the plan. Deferral elections must be made on an annual basis, including the type and timing of distribution. Plan earnings are based on the NEO’s choice of up to four investment options with varying degrees of risk, including the risk of loss. Investment options may be changed by the NEO monthly. The amounts shown in the Aggregate Earnings in Last Fiscal Year column reflects the aggregate of all gains and losses on outstanding balances in 2008. Only the above-market interest is shown in the Summary Compensation Table, under Change in Pension Value and NQDC Earnings.
 
ERISA Excess Benefit Plan for Dresser Industries, Inc. The ERISA Excess Benefit Plan for Dresser Industries, Inc. pays retirement benefits accrued as of December 31, 1998, which resulted from benefits that could not be paid from a Dresser defined benefit, defined contribution or other related plan because of the application of Internal Revenue Code Section 415. It is an unfunded excess benefit plan as defined in the Internal Revenue Code. Interest is accrued on an annual basis at the rate of 10%.
 
Mr. Cornelison received interest as shown in the Aggregate Earnings in Last Fiscal Year column. The above-market interest associated with earnings has been disclosed in the Summary Compensation Table under Change in Pension Value and NQDC Earnings.
 
ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. The ERISA Compensation Limit Benefit Plan for Dresser Industries, Inc. pays the accrued retirement benefit that cannot be paid from a Dresser defined benefit, defined contribution or other related plan because of the application of Internal Revenue Code Section 401(a)(17).
 
Interest is accrued on an annual basis at the rate of 10%. Mr. Cornelison received interest as shown in the Aggregate Earnings in Last Fiscal Year column. The above-market interest associated with earnings has been disclosed in the Summary Compensation Table under Change in Pension Value and NQDC Earnings.
 
The Aggregate Withdrawals/Distributions column has been omitted because there were no withdrawals or distributions in 2008.


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PENSION BENEFITS TABLE
 
The following table shows the present value of the accumulated benefit for Mr. Cornelison who is a participant in a defined benefit plan. None of the other NEOs are participants in a defined benefit plan.
 
                                 
          Years of
    Present Value of
    Payments During
 
          Credited Service
    Accumulated Benefit
    Last Fiscal Year
 
Name
  Plan Name     (#)     ($)     ($)  
 
Albert O. Cornelison, Jr. 
    Halliburton Retirement Plan       1.1667       28,783       0  
 
The non-contributory Dresser Consolidated Salaried Retirement Plan was established in 1986 for the purpose of providing participants with a monthly defined benefit upon retirement. The plan was frozen on May 31, 1995. Mr. Cornelison began employment with Dresser Industries on March 14, 1994, which qualified him to participate in the plan. His participation ended when the plan was frozen. However, since he has continued working for us after the plan freeze date, he continues to accrue both vesting service and years of service with us. Mr. Cornelison is the only NEO to participate in the Dresser Consolidated Salaried Retirement Plan.
 
Dresser Industries and Halliburton merged on September 29, 1998, and Halliburton subsequently merged the Dresser Consolidated Salaried Retirement Plan into the Halliburton Retirement Plan on December 31, 2001. None of the other NEOs were eligible to participate in the Halliburton Retirement Plan, because participation was limited to those salaried employees who were age 55 or older as of December 31, 1996.
 
The present value of accumulated benefits is based on formulas that utilize final average compensation and service while Mr. Cornelison was an employee of Dresser Industries, Inc. Service from the date of hire to the date the plan was frozen is used to calculate the benefit amount. Therefore, Mr. Cornelison’s defined benefit plan service equals 1.1667. Final average compensation is based on tax form W-2 pay (within the qualified pay limit) ending on the plan freeze date of May 31, 1995.
 
The assumptions used to calculate the Present Value of Accumulated Benefit with a calculation date of December 31, 2008, are as follows: 5.72% discount rate, no pre-retirement mortality assumption, Pension Protection Act 2009 post-retirement valuation mortality assumption, age 65 unreduced retirement date and no pre-retirement turnover.
 
Because Mr. Cornelison is eligible for early retirement under the plan (age 55 with 10 years of vesting service), the amount of his early retirement benefit is actuarially equivalent to the age 65 benefit based on a 5% interest rate and the 1971 Group Annuity Mortality Table weighted for 90% male and 10% female.
 
EMPLOYMENT CONTRACTS AND
CHANGE-IN-CONTROL ARRANGEMENTS
 
Employment Contracts
 
Messrs. Lesar, McCollum, Cornelison, Gaut, and Brown have employment agreements with Halliburton. Under the terms of Mr. Lesar’s agreement, a termination for cause is a termination for (i) gross negligence or willful misconduct in the performance of his duties and responsibilities or (ii) a conviction of a felony. In the event Mr. Lesar is involuntarily terminated by Halliburton for any reason other than termination for cause, Halliburton is obligated to pay Mr. Lesar a severance payment equal to (i) the value of any restricted shares that are forfeited because of termination, and (ii) five times his annual base salary.
 
Under the terms of the agreements with Messrs. McCollum, Cornelison, Gaut, and Brown, the reasons for termination of employment (other than death) are defined as follows:
 
(i) Retirement means either (a) retirement at or after normal retirement age (either voluntarily or under Halliburton’s retirement policy) or (b) voluntary termination of employment in accordance with Halliburton’s early retirement policy for other than a Good Reason. “Good Reason” means a termination of employment by employee because of (a) a material breach by Halliburton of any material provision of the employment agreement, or (b) a material reduction in employee’s rank or responsibility with Halliburton, provided that (i) employee provides written notice to Halliburton of the circumstances employee claims constitute “Good Reason” within ninety calendar days of the first to occur of such circumstances, (ii) such breach remains uncorrected for thirty calendar


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days following written notice, and (iii) employee’s termination occurs within one hundred eighty calendar days after the date that the circumstances employee claims constitute Good Reason first occurred.
 
(ii) Permanent disability means the employee’s physical or mental incapacity to perform his or her usual duties with such condition likely to remain continuously and permanently as reasonably determined by the Compensation Committee in good faith.
 
(iii) Voluntary termination means a termination of employment in the sole discretion and at the election of the employee for other than Good Reason.
 
(iv) Termination for cause means a termination of employee’s employment by Halliburton for Cause. “Cause” means any of the following: (a) employee’s gross negligence or willful misconduct in the performance of the duties and services required of the employee; (b) employee’s final conviction of a felony; (c) a material violation of Halliburton’s Code of Business Conduct; or (d) employee’s material breach of any material provision of his or her employment agreement which remains uncorrected for thirty days following written notice of such breach to employee by Halliburton.
 
If Messrs. McCollum, Cornelison, Gaut, and Brown terminate for any reason other than death, retirement (either at age 65 or voluntarily prior to age 65), permanent disability, voluntary termination or termination for cause, the executive is entitled to each of the following:
 
  •   At the Committee’s election, either the retention of all restricted shares following termination or a payment equal to the value of any restricted shares that are forfeited because of termination;
  •   A payment equal to two years’ base salary amounts;
  •   Any unpaid amounts earned under the Annual Performance Pay Plan in prior years; and
  •   Any amount payable for the year under the Annual Performance Pay Plan in which his employment is terminated determined as if he had remained employed for the full year.
 
Change-In-Control Arrangements
 
The Company does not maintain individual change-in-control agreements or provide for tax gross-ups on any payments associated with change-in-control. Some of our compensation plans, however, contain change-in-control provisions, which could result in payment of specific benefits.
 
Under the 1993 Stock and Incentive Plan, in the event of a change-in-control, the following will occur automatically:
 
  •   any outstanding options and stock appreciation rights shall become immediately vested and fully exercisable;
  •   any restrictions on restricted stock awards shall immediately lapse;
  •   all performance measures upon which an outstanding performance award is contingent are deemed achieved and the holder receives a payment equal to the maximum amount of the award he or she would have been entitled to receive, pro-rated to the effective date; and
  •   any outstanding cash awards including, but not limited to, stock value equivalent awards, immediately vest and are paid based on the vested value of the award.
 
Under the Annual Performance Pay Plan:
 
  •   in the event of a change-in-control during a plan year, a participant will be entitled to an immediate cash payment equal to the maximum dollar amount he or she would have been entitled to for the year, prorated through the date of the change-in-control; and
  •   in the event of a change-in-control after the end of a plan year but before the payment date, a participant will be entitled to an immediate cash payment equal to the incentive earned for the plan year.
 
Under the Performance Unit Program:
 
  •   in the event of a change-in-control during a performance cycle, a participant will be entitled to an immediate cash payment equal to the maximum amount he or she would have been entitled to receive for the performance cycle, pro-rated to the date of the change-in-control; and
  •   in the event of a change-in-control after the end of a performance cycle but before the payment date, a participant will be entitled to an immediate cash payment equal to the incentive earned for that performance cycle.


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Under the Employee Stock Purchase Plan, in the event of a change-in-control, unless the successor corporation assumes or substitutes new stock purchase rights:
 
  •   the purchase date for the outstanding stock purchase rights will be accelerated to a date fixed by the Compensation Committee prior to the effective date of the change-in-control; and
  •   upon such effective date, any unexercised stock purchase rights will expire and Halliburton will refund to each participant the amount of his or her payroll deductions made for purposes of the Employee Stock Purchase Plan, which has not yet been used to purchase stock.
 
POST-TERMINATION PAYMENTS
 
The following tables and narratives represent the impact of certain termination events on each element of compensation for NEOs as of December 31, 2008.
 
                                                             
        Termination Event  
              Early
                               
              Retirement
    Early Retirement
    Normal
    Term
    Term
    Change in
 
        Resignation
    w/o Appvl
    w/ Appvl
    Retirement
    for Cause
    w/o Cause
    Control
 
Name
 
Payments
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
David J. Lesar
  Severance     0       0       0       0       0       6,500,000       6,500,000  
    Annual Perf. Pay Plan     0       0       3,120,000       3,120,000       0       3,120,000       3,120,000  
    Restricted Stock     0       0       16,142,040       16,142,040       0       16,142,040       16,142,040  
    Stock Options     0       0       723,327       723,327       0       723,327       723,327  
    Performance Units     0       0       5,000,000       5,000,000       0       0       5,000,000  
    Nonqualified Plans     6,924,454       6,924,454       6,924,454       6,924,454       6,924,454       6,924,454       6,924,454  
    Health Benefits     0       12,000       12,000       0       0       0       0  
                                                             
    Total     6,924,454       6,936,454       31,921,821       31,909,821       6,924,454       33,409,821       38,409,821  
                                                             
                                                             
        Termination Event  
              Early
                               
              Retirement
    Early Retirement
    Normal
    Term
    Term
    Change in
 
        Resignation
    w/o Appvl
    w/ Appvl
    Retirement
    for Cause
    w/o Cause
    Control
 
Name
 
Payments
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
Mark A. McCollum
  Severance     0       0       0       0       0       1,000,000       1,000,000  
    Annual Perf. Pay Plan     0       0       650,000       650,000       0       650,000       650,000  
    Restricted Stock     0       0       1,651,471       1,651,471       0       1,651,471       1,651,471  
    Stock Options     80,192       80,192       219,296       219,296       80,192       219,296       219,296  
    Performance Units     0       0       770,666       770,666       0       0       770,666  
    Nonqualified Plans     687,817       687,817       687,817       687,817       687,817       687,817       687,817  
    Health Benefits     0       0       0       0       0       0       0  
                                                             
    Total     768,009       768,009       3,979,250       3,979,250       768,009       4,208,584       4,979,250  
                                                             
                                                             
        Termination Event  
              Early
                               
              Retirement
    Early Retirement
    Normal
    Term
    Term
    Change in
 
        Resignation
    w/o Appvl
    w/ Appvl
    Retirement
    for Cause
    w/o Cause
    Control
 
Name
 
Payments
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
Albert O. Cornelison, Jr. 
  Severance     0       0       0       0       0       1,100,000       1,100,000  
    Annual Perf. Pay Plan     0       0       715,000       715,000       0       715,000       715,000  
    Restricted Stock     0       0       2,445,737       2,445,737       0       2,445,737       2,445,737  
    Stock Options     0       0       110,400       110,400       0       110,400       110,400  
    Performance Units     0       0       1,228,334       1,228,334       0       0       1,228,334  
    Nonqualified Plans     1,540,816       1,540,816       1,540,816       1,540,816       1,540,816       1,540,816       1,540,816  
    Health Benefits     0       12,000       12,000       0       0       0       0  
                                                             
    Total     1,540,816       1,552,816       6,052,287       6,040,287       1,540,816       5,911,953       7,140,287  


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        Termination Event  
              Early
                               
              Retirement
    Early Retirement
    Normal
    Term
    Term
    Change in
 
        Resignation
    w/o Appvl
    w/ Appvl
    Retirement
    for Cause
    w/o Cause
    Control
 
Name
 
Payments
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
C. Christopher Gaut
  Severance     0       0       0       0       0       1,300,000       1,300,000  
    Annual Perf. Pay Plan     0       0       975,000       975,000       0       975,000       975,000  
    Restricted Stock     0       0       2,895,783       2,895,783       0       2,895,783       2,895,783  
    Stock Options     1,926,270       1,926,270       2,045,778       2,045,778       1,926,270       2,045,778       2,045,778  
    Performance Units     0       0       1,541,667       1,541,667       0       0       1,541,667  
    Nonqualified Plans     4,169,950       4,169,950       4,169,950       4,169,950       4,169,950       4,169,950       4,169,950  
    Health Benefits     0       0       0       0       0       0       0  
                                                             
    Total     6,096,220       6,096,220       11,628,178       11,628,178       6,096,220       11,386,511       12,928,178  
                                                             
                                                             
        Termination Event  
              Early
                               
              Retirement
    Early Retirement
    Normal
    Term
    Term
    Change in
 
        Resignation
    w/o Appvl
    w/ Appvl
    Retirement
    for Cause
    w/o Cause
    Control
 
Name
 
Payments
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
James S. Brown
  Severance     0       0       0       0       0       780,000       780,000  
    Annual Perf. Pay Plan     0       0       507,000       507,000       0       507,000       507,000  
    Restricted Stock     0       0       4,755,488       4,755,488       0       4,755,488       4,755,488  
    Stock Options     0       0       137,172       137,172       0       137,172       137,172  
    Performance Units     0       0       575,000       575,000       0       0       575,000  
    Nonqualified Plans     360,160       360,160       360,160       360,160       360,160       360,160       360,160  
    Health Benefits     0       12,000       12,000       0       0       0       0  
                                                             
    Total     360,160       372,160       6,346,820       6,334,820       360,160       6,539,820       7,114,820  
 
Resignation. Resignation is defined as leaving the Company to work elsewhere, not attaining early or normal retirement status (see these sections for information on what constitutes these statuses) or leaving the Company voluntarily. Upon resignation, the following actions will occur for a NEO’s various elements of compensation:
  •   Severance Pay. No severance would be paid to the NEO.
  •   Annual Performance Pay Plan. No payment, if any, would be paid to the NEO for the Performance Pay Plan.
  •   Restricted Stock. Any restricted stock holdings would be forfeited upon their date of resignation. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Stock Options. The NEO must exercise their outstanding, vested options within 30 days after their resignation or the options will be forfeited as per the terms of the stock option agreements. Any unvested stock options would be forfeited. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Performance Units. The NEO would not be eligible to receive payments, if any, from the Performance Unit Program.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Payments from the Halliburton Company Supplemental Executive Retirement Plan and Halliburton Company Benefit Restoration Plan are paid out of an irrevocable grantor trust held at State Street Bank and Trust Company. The principal and income of the trust are treated as assets and income of Halliburton for federal income tax purposes and are subject to the claims of general creditors of Halliburton to the extent provided in the plan. The Halliburton Elective Deferral Plan is unfunded and payments are made by us from general assets. Payments from these plans may be paid in a lump sum or in annual installments for a maximum ten year period. Plans related to Dresser Industries, Inc., as referenced in the 2008 Nonqualified Deferred Compensation table, are unfunded and paid by us in lump sum form from general assets.
  •   Health Benefits. The NEO would not be eligible for the $12,000 credit to assist in paying for retiree medical costs since they resigned from the Company.
 
Early Retirement. A NEO would become eligible for early retirement by either attaining age 50 or by attaining 70 points via a combination of age plus years of service. Eligibility for early retirement does not guarantee retention of stock awards (lapse of forfeiture restrictions on restricted stock and ability to exercise outstanding options for the

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remainder of the stated term). Early retirement eligibility is a condition that must be met before consideration will be given by the Compensation Committee to retention of stock awards upon separation from employment. For example, if a NEO is eligible for early retirement but is leaving us to go to work for a competitor, then their stock awards would not be considered for retention.
 
Early Retirement (Without Approval). The following actions will occur for their various elements of compensation:
  •   Severance Pay. No severance would be paid to the NEO.
  •   Annual Performance Pay Plan. No payment, if any, would be paid to the NEO for the Performance Pay Plan.
  •   Restricted Stock. Any restricted stock holdings would be forfeited upon their date of early retirement. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Stock Options. The NEO must exercise their outstanding, vested options within 30 days after their early retirement or the options will be forfeited as per the terms of the stock option agreements. Any unvested stock options would be forfeited. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Performance Units. The NEO would not be eligible to receive payments, if any, from the Performance Unit Program.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would be eligible for the $12,000 credit to assist with retiree medical costs. The NEO must have been age 40 or older as of December 31, 2004 and qualify for early retirement under our health and welfare plans which requires that they have attained age 55 with ten years of service or that their age and years of service equals 70 points with a minimum of ten years of service, to be eligible for this credit. The credit is only applicable if the NEO chooses Halliburton retiree medical coverage. This benefit is amortized into a monthly credit applied to the cost of retiree medical based on the number of months from the time of early retirement to age 65. For example, if a NEO is 10 years or 120 months away from age 65 at the time of their early retirement, they will receive a monthly credit in the amount of $100 ($12,000/120 months). Should the NEO choose not to elect coverage with Halliburton after their separation, they would not receive any cash in lieu of the credit. Note that this is not a cash payment, but a credit applied to the monthly retiree medical costs and only valid until the participant turns 65.
 
Early Retirement (With Approval). The following actions will occur for their various elements of compensation:
  •   Severance Pay. No severance would be paid to the NEO.
  •   Annual Performance Pay Plan. Participation is continued for the full year of separation and at the existing participation level at separation; however, any payments are made at the time all other participants receive payment and only if our performance yields a payment under the terms of the plan. These payments usually occur no later than the end of February in the year following the plan year.
  •   Restricted Stock. Any stock holdings restrictions would lapse upon the date of early retirement. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Stock Options. The NEO will be granted retention of their option awards. The unvested awards will continue to vest per the vesting schedule outlined in their stock option agreements and any vested options will not expire until 10 years from the grant award date.
  •   Performance Units. The NEO will participate on a pro-rated basis for any Performance Unit Program cycles that have not been completed at the time of the NEO’s early retirement. These payments, if earned, are paid out and the NEO would receive payments at the same time as other participants, which is usually no later than March of the year following the close of the cycle.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would be eligible for the $12,000 credit to assist with retiree medical costs. The NEO must have been age 40 or older as of December 31, 2004 and qualify for early retirement under our health and welfare plans to be eligible for this credit. Refer to the Early Retirement (Without Approval) section for more information on Health Benefits.


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Normal Retirement. A NEO would be eligible for normal retirement should they cease employment at age 65 or later. The following actions will occur for their various elements of compensation:
  •   Severance Pay. No severance would be paid to the NEO.
  •   Annual Performance Pay Plan. Participation is continued for the full year of separation and at the existing participation level at separation; however, any payments are made at the time all other participants receive payment and only if our performance yields a payment under the terms of the plan. These payments usually occur no later than the end of February in the year following the plan year.
  •   Restricted Stock. Any restricted stock holdings would vest upon the date of normal retirement. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Stock Options. The NEO will be granted retention of their outstanding option awards. The unvested awards will continue to vest per the vesting schedule outlined in their stock option agreements and any vested options will not expire until 10 years from the grant award date.
  •   Performance Units. The NEO will participate on a pro-rated basis for any Performance Unit Program cycles that have not been completed at the time of the NEO’s normal retirement. These payments, if earned, are paid out and the NEO would receive payments at the same time as other participants, which is usually no later than March following the close of the cycle.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would not be eligible for the $12,000 credit as they would be age 65 or older at the time of normal retirement.
 
Termination (For Cause). Should the NEO be terminated for cause from the Company, such as violating a Code of Business Conduct policy, the following actions will occur for their various elements of compensation:
  •   Severance Pay. No severance would be paid to the NEO.
  •   Annual Performance Pay Plan. No payment, if any, would be paid to the NEO for the Performance Pay Plan.
  •   Restricted Stock. Any restricted stock holdings would be forfeited upon their date of termination. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Stock Options. The NEO must exercise their outstanding, vested options within 30 days after their termination or the options will be forfeited as per the terms of the stock option agreements. Any unvested stock options would be forfeited. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2008 table.
  •   Performance Units. No payment, if any, would be paid to the NEO for the Performance Unit Program.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would not be eligible for the $12,000 credit to assist in paying for retiree medical costs.
 
Termination (Without Cause). Should a NEO with an employment agreement be terminated without cause by Halliburton, such as termination at the convenience of the Company, then the provisions of their applicable employment agreements related to severance payments, annual performance pay plan, and lapsing of stock restrictions would apply and are conditioned on a release agreement being executed by the NEO. Failure to do so will result in no payments for these items being made to the NEO. The following actions will occur for their various elements of compensation:
  •   Severance Pay. Severance is paid according to terms of an employment agreement. Mr. Lesar’s severance multiple is five times base salary at the time of termination. Messrs. McCollum, Cornelison, Gaut and Brown would receive severance in the amount of two times base salary at the time of termination. Severance paid under the terms of the employment agreement fully satisfies any and all other claims for severance under our plans or policies.
  •   Annual Performance Pay Plan. Participation is continued for the full year of separation and at the existing participation level at separation; however, any payments are made at the time all other participants receive payment and only if our performance yields a payment under the terms of the plan. These payments usually occur no later than the end of February in the year following the plan year.
  •   Restricted Stock. Restricted shares under the 1993 Stock and Incentive Plan are automatically vested or are forfeited and an equivalent value is paid to the NEO at the Compensation Committee’s discretion.


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  •   Stock Options. If the NEO is eligible for early retirement, then they will be granted retention of their option awards. The unvested awards will continue to vest per the vesting schedule outlined in their stock option agreements and any vested options will not expire until 10 years from the grant award date. If the NEO is not eligible for early retirement, then they must exercise their outstanding, vested options within 30 days after their termination or the options will be forfeited as per the terms of the stock option agreements. Any unvested stock options would be forfeited.
  •   Performance Units. No payment, if any, would be paid to the NEO for the Performance Unit Program.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would not be eligible for the $12,000 credit to assist in paying for retiree medical costs.
 
Change-in-Control. Should a NEO be affected by a change-in-control and subsequently terminated as a result, the following actions will occur for their various elements of compensation:
  •   Severance Pay. For all NEOs, except Mr. Lesar, the severance payment is calculated by multiplying their annual base salary as of the date of the NEO’s separation by two. Mr. Lesar’s severance multiple is five times base salary at the time of termination. A severance payment is only triggered in cases of termination without cause or upon the occurrence of a change-in-control. To receive severance pay, the NEO is required to sign a separation agreement releasing us from all future claims. Severance paid under the terms of the employment agreement fully satisfies any and all other claims for severance under our plans or policies.
  •   Annual Performance Pay Plan. In the event of a change-in-control during a plan year, the NEOs will be entitled to an immediate cash payment equal to the maximum dollar amount he or she would have been entitled to for the year, pro-rated through the date of the change-in-control. In the event of a change-in-control after the end of a plan year but before the payment date, the NEOs will be entitled to an immediate cash payment equal to the incentive earned for the plan year.
  •   Restricted Stock. Restricted shares under the 1993 Stock and Incentive Plan are automatically vested.
  •   Stock Options. Any outstanding options shall become immediately vested and fully exercisable by the NEO.
  •   Performance Units. In the event of a change-in-control during a performance cycle, NEOs will be entitled to an immediate cash payment equal to the maximum amount he or she would have been entitled to receive for the performance cycle, pro-rated to the date of the change-in-control. In the event of a change-in-control after the end of a performance cycle but before the payment date, NEOs will be entitled to an immediate cash payment equal to the incentive earned for that performance cycle.
  •   Nonqualified Plans. Under all circumstances, the NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2008 Nonqualified Deferred Compensation table. Refer to the Resignation section for more information on Nonqualified Plans.
  •   Health Benefits. The NEO would not be eligible for the $12,000 credit to assist in paying for retiree medical costs unless they were eligible for early retirement at the time of the change-in-control.
 
EQUITY COMPENSATION PLAN INFORMATION
 
                         
                Number of Securities
 
                Remaining Available for
 
    Number of Securities to be
    Weighted-Average
    Future Issuance Under Equity
 
    Issued Upon Exercise of
    Exercise Price of
    Compensation Plans (Excluding
 
    Outstanding Options, Warrants
    Outstanding Options,
    Securities Reflected in
 
Plan Category
  and Rights     Warrants and Rights     Column (a))  
    (a)     (b)     (c)  
 
Equity compensation plans approved by security holders
    12,748,156     $ 25.66       13,950,526  
Equity compensation plans not approved by security holders
                 
                         
Total
    12,748,156     $ 25.66       13,950,526  


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SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
 
Section 16(a) of the Securities Exchange Act of 1934 requires our Directors and executive officers to file reports of holdings and transactions in Halliburton shares with the SEC and the NYSE. Based on our records and other information, we believe that in 2008 our Directors and our officers who are subject to Section 16 met all applicable filing requirements, except: Mr. Peter Bernard, formerly Senior Vice President Business Development and Marketing, who filed a late Form 4 regarding shares withheld for taxes upon lapse of stock restrictions; Mr. James Brown, President — Western Hemisphere, who filed two late Forms 4 each relating to shares withheld for taxes upon lapse of stock restrictions, and a late Form 4 relating to a stock award; Mr. Albert Cornelison, Jr., Executive Vice President and General Counsel, who filed a late Form 4 relating to shares withheld for taxes upon lapse of stock restrictions; Mr. David King, President — Completion and Production Division, who filed a late Form 3, and a late Form 4 relating to shares withheld for taxes upon lapse of stock restrictions; and Mr. Timothy Probert, Executive Vice President Strategy and Corporate Development, who filed a late Form 3, and a late Form 4 relating to shares withheld for taxes upon lapse of stock restrictions.
 
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
 
There are no legal proceedings to which any Director, officer or principal stockholder, or any affiliate thereof, is a party that would be material and adverse to Halliburton.
 
DIRECTORS’ COMPENSATION
 
Directors’ Fees and Deferred Compensation Plan
 
From January 1, 2008 through June 30, 2008, all non-employee Directors received an annual retainer of $50,000 and an attendance fee of $2,000 for each meeting of the Board and for each committee meeting attended. The Lead Director received an additional annual retainer of $15,000. The chairman of each committee also received an additional retainer annually for serving as chair as follows: Audit — $20,000; Compensation — $15,000; Health, Safety and Environment — $10,000; and Nominating and Corporate Governance — $10,000. Beginning July 1, 2008, all non-employee Directors receive an annual retainer of $100,000, but there will no longer be an attendance fee for each meeting of the Board and for each committee meeting attended. The Lead Director and the chairman of each committee will continue to receive an additional annual retainer in the amounts listed above.
 
Under the Directors’ Deferred Compensation Plan, Directors are permitted to defer their fees or a portion of their fees. A participant may elect, on a prospective basis, to have his or her deferred compensation account either credited quarterly with interest at the prime rate of Citibank, N.A. or translated on a quarterly basis into Halliburton common stock equivalents. Distributions will be made after retirement to the Director in a lump sum or in annual installments over a 5-or 10-year period, as elected by them. Distributions of common stock equivalents are made in shares of common stock, while distributions of deferred compensation credited with interest are made in cash. Ms. Bader and Ms. Reed and Messrs. Bennett, Boyd, Carroll, Crandall, Derr, Gillis and Hackett have elected to participate in the plan.
 
Directors’ Restricted Stock Awards
 
When a non-employee Director is first elected to the Board, he or she receives an award of 2,000 restricted shares of common stock shortly thereafter.
 
Each non-employee Director receives an annual award of restricted shares of common stock with a value of $120,000 on the date of the award. These annual awards are normally made in August of each year.
 
Restricted shares may not be sold, assigned, pledged or otherwise transferred or encumbered until the restrictions are removed. Restrictions lapse following termination of Board service under specified circumstances, which include, among others, death or disability, retirement under the Director mandatory retirement policy or early retirement after at least four years of service. During the restriction period, Directors have the right to vote and to receive dividends on the restricted shares. Any shares that are restricted under the plan’s provisions following termination of service are forfeited.


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Directors’ Retirement Plan
 
The Directors’ Retirement Plan has been closed to new Directors elected after May 16, 2000. Under the Directors’ Retirement Plan, each participant receives an annual benefit upon the benefit commencement date. The benefit commencement date is the later of a participant’s termination date or attainment of age 65. The benefit equals the last annual retainer for the participant and is paid for a period of years equal to the participant’s years of service on his or her termination date. Upon the death of a participant, benefit payments are made to the surviving spouse, if any, in the form of a lump sum equal to the present value of the remaining unpaid annual installments. Years of service for each participant under the plan are: Mr. Crandall — 23, and Mr. Howell — 17. Assets are transferred to State Street Bank and Trust Company, as Trustee, to be held under an irrevocable grantor trust to aid Halliburton in meeting its obligations under the Directors’ Retirement Plan. The principal and income of the trust are treated as assets and income of Halliburton for federal income tax purposes and are subject to the claims of general creditors of Halliburton to the extent provided in the plan.
 
In 2007, Halliburton and the Board amended the plan to provide participants with a one-time election to receive a lump sum payment of the present value of any remaining payments, if the Director is retired and receiving annual payments or the present value of their plan benefit upon retirement, if the Director is still actively serving on the Board. Messrs. Crandall and Howell both elected the lump sum payment. Upon their retirement from the Board in May 2008, Mr. Crandall received a lump sum payment of $678,812, and Mr. Howell received a lump sum payment of $567,869.
 
Charitable Contributions
 
Matching Gift Programs. To further Halliburton’s support for charities, Directors may participate in the Halliburton Foundation’s matching gift programs for educational institutions, not-for-profit hospitals and medical foundations. For each eligible contribution, the Halliburton Foundation makes a contribution of two times the amount contributed, subject to approval by its Trustees and providing the contribution meets certain criteria. The maximum aggregate of all contributions each calendar year by a Director eligible for matching is $50,000, resulting in a maximum aggregate amount contributed annually by the Halliburton Foundation in the form of matching gifts of $100,000 for any Director who participates in the programs. Neither the Halliburton Foundation nor Halliburton has made a charitable contribution to any charitable organization in which a Director serves as an executive officer, within the preceding three years, that exceeds in any single year the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues.
 
Other Benefits
 
Accidental Death and Dismemberment. We offer an optional accidental death and dismemberment policy for Directors. Ms. Bader and Messrs. Carroll, Crandall, Derr, Gillis, Howell, Martin, and Precourt elected coverage for the standard principal amount of $250,000 each. We paid a total of $895 in premiums for these Directors. These premiums are included in the All Other Compensation column for those who participate.


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2008 DIRECTOR COMPENSATION
 
                                         
                Change in
             
                Pension
             
    Fees
          Value and
             
    Earned
          Nonqualified
             
    or Paid in
    Stock
    Deferred
    All Other
       
    Cash
    Awards
    Compensation
    Compensation
    Total
 
Name
  ($)     ($)     Earnings($)     ($)     ($)  
 
Kathleen M. Bader
    34,833       21,302       0       55,847       111,982  
Alan M. Bennett
    103,000       125,532       369       74,946       303,847  
James R. Boyd
    89,000       125,532       0       64,637       279,169  
Milton Carroll
    87,000       68,010       0       3,354       158,364  
Robert L. Crandall
    51,167       4,755       0       798,817       854,739  
Kenneth T. Derr
    102,000       118,653       1,565       150,325       372,543  
S. Malcolm Gillis
    87,000       197,276       577       73,297       358,150  
James T. Hackett
    60,333       29,479       0       1,122       90,934  
W.R. Howell
    41,083       4,755       0       569,781       615,619  
J. Landis Martin
    107,500       118,653       0       107,721       333,874  
Jay A. Precourt
    99,000       118,653       0       107,721       325,374  
Debra L. Reed
    90,000       118,653       2,878       27,120       238,651  
 
Fees Earned or Paid In Cash. The amounts in this column represent meeting fees and retainer fees earned in fiscal year 2008, but not necessarily paid in 2008. Refer to the section Directors’ Fees and Deferred Compensation Plan for information on meeting fees.
 
Stock Awards. FASB Statement 123R requires the fair value of equity awards to be recognized in the financial statements over the period the Director is required to provide service in exchange for the award, i.e. the vesting period. We calculate the fair value of restricted stock awards by multiplying the number of restricted shares granted by the closing stock price as of the award’s grant date. For a discussion of the assumptions made in these valuations, refer to Note 1 to the Consolidated Financial Statements, Description of Company and Significant Accounting Policies — Stock-based compensation, in the Halliburton Company Form 10-K for the fiscal year ended December 31, 2008.
 
The aggregate number of shares of restricted stock outstanding at fiscal year-end are: Mr. Bennett — 12,393; Mr. Boyd — 12,393; Mr. Carroll — 7,428; Mr. Derr — 20,719; Dr. Gillis — 15,919; Mr. Hackett — 4,624; Mr. Martin — 22,319; Mr. Precourt — 22,319; and Ms. Reed — 20,719. Ms. Bader did not stand for reelection to the Board in May 2008 and forfeited 3,603 shares of the 4,804 shares of restricted stock she had been awarded. Messrs. Crandall and Howell retired from the Board, and, therefore, had no remaining shares of restricted stock outstanding at fiscal year-end because their restricted shares vested upon retirement.
 
The total grant date fair value of each restricted stock award received in 2008 as computed in accordance with FASB Statement 123R is: Mr. Bennett — $119,996; Mr. Boyd — $119,996; Mr. Carroll — $119,996; Mr. Derr — $119,996; Dr. Gillis — $119,996; Mr. Hackett — $216,876; Mr. Martin — $119,996; Mr. Precourt — $119,996; and Ms. Reed — $119,996. Mr. Hackett’s restricted stock award is higher than the other Directors’ awards due to his receiving an initial award upon his election to the Board, which has a fair value of $96,880. Ms. Bader did not stand for reelection to the Board in May 2008 and Messrs. Crandall and Howell retired from the Board in May 2008 and as a result they did not receive a restricted stock award in 2008.
 
Change in Pension Value and Nonqualified Deferred Compensation Earnings. Only Mr. Crandall and Mr. Howell participated in the frozen Directors’ Retirement Plan. Mr. Crandall and Mr. Howell both retired in May 2008, prior to any increase in pension value.
 
Directors’ amounts also include above-market interest credited under the Directors’ Deferred Compensation Plan as follows: Mr. Bennett — $369; Mr. Derr — $1,565; Dr. Gillis — $577; and Ms. Reed — $2,878. The above-market earnings associated with this plan for the first quarter of 2008 was 1.9% (7.25% (plan interest) minus 5.35% (120% AFR rate)). There were no above-market earnings associated with this plan for the second, third, or fourth quarters of 2008.


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All Other Compensation. This column includes compensation related to the Halliburton Foundation, Accidental Death and Dismemberment program, restricted stock dividends associated with these awards, dividend equivalents associated with the Directors’ Deferred Compensation Plan and final lump sum payments under the Directors’ Retirement Plan.
 
Directors who participated in the matching gift program under the Halliburton Foundation and the corresponding match provided by the Halliburton Foundation include: Ms. Bader — $54,960; Mr. Bennett — $70,000; Mr. Boyd — $58,800; Mr. Crandall — $100,000; Mr. Derr — $136,668; Dr. Gillis — $67,880; Mr. Martin — $100,000; Mr. Precourt — $100,000; and Ms. Reed — $20,000. The amounts reflected indicate matching payments made by the Halliburton Foundation in 2008. Because of differences between the time when the Director makes the charitable contribution and the time when the Halliburton Foundation makes the matching payment, amounts paid by the Halliburton Foundation may apply to contributions made by the Directors in both 2007 and 2008 and the amounts shown may exceed $100,000 in those instances.
 
Directors who participated in the Accidental Death and Dismemberment program and incurred imputed income for the benefit amount include: Ms. Bader — $38; Mr. Carroll — $99; Mr. Crandall — $61; Mr. Derr — $159; Dr. Gillis — $159; Mr. Howell — $61; Mr. Martin — $159; and Mr. Precourt — $159.
 
Directors who received dividends on restricted stock held on Halliburton record dates include: Ms. Bader — $540; Mr. Bennett — $3,989; Mr. Boyd — $3,989; Mr. Carroll — $2,202; Mr. Crandall — $1,851; Mr. Derr — $6,987; Dr. Gillis — $5,259; Mr. Hackett — $1,012; Mr. Howell — $1,851; Mr. Martin — $7,563; Mr. Precourt — $7,563; and Ms. Reed — $6,987.
 
Directors who received dividend equivalents credited under the Directors’ Deferred Compensation Plan include: Ms. Bader — $309; Mr. Bennett — $957; Mr. Boyd — $1,848; Mr. Carroll — $1,053; Mr. Crandall — $18,092; Mr. Derr — $6,511; Mr. Hackett — $110; and Ms. Reed — $133.
 
The Option Awards and Non-Equity Incentive Plan Compensation columns have been omitted because stock option awards are no longer granted to non-employee Directors, and the Company does not utilize Non-Equity Incentive Plan Compensation for non-employee Directors. The aggregate number of stock options outstanding at fiscal year-end are: Mr. Derr — 14,000; Mr. Martin — 20,000; and Mr. Precourt — 20,000.


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AUDIT COMMITTEE REPORT
 
Halliburton’s Audit Committee consists of Directors who, in the business judgment of the Board, are independent under Securities and Exchange Commission regulations and the New York Stock Exchange listing standards. In addition, in the business judgment of the Board, all four members of the Audit Committee, Alan M. Bennett, S. Malcolm Gillis, James T. Hackett and Jay A. Precourt, have accounting or related financial management experience required under the listing standards and have been designated by the Board as “audit committee financial experts.” We operate under a written charter, a copy of which is available on Halliburton’s website, www.halliburton.com. As required by the charter, we review and reassess the charter annually and recommend any changes to the Board for approval.
 
Halliburton’s management is responsible for preparing Halliburton’s financial statements and the principal independent public accountants are responsible for auditing those financial statements. The Audit Committee’s role is to provide oversight of management in carrying out management’s responsibility and to appoint, compensate, retain and oversee the work of the principal independent public accountants. The Audit Committee is not providing any expert or special assurance as to Halliburton’s financial statements or any professional certification as to the principal independent public accountants’ work.
 
In fulfilling our oversight role for the year ended December 31, 2008, we:
  •   reviewed and discussed Halliburton’s audited financial statements with management;
  •   discussed with KPMG LLP, Halliburton’s principal independent public accountants, the matters required by Statement on Auditing Standards No. 61 relating to the conduct of the audit;
  •   received from KPMG LLP the written disclosures and letter required by the Public Company Accounting Oversight Board regarding KPMG LLP’s independence; and
  •   discussed with KPMG LLP its independence.
 
Based on our:
  •   review of the audited financial statements;
  •   discussions with management;
  •   discussions with KPMG LLP; and
  •   review of KPMG LLP’s written disclosures and letter,
 
we recommended to the Board that the audited financial statements be included in Halliburton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, for filing with the Securities and Exchange Commission. Our recommendation considers our review of that firm’s qualifications as independent public accountants for the Company. Our review also included matters required to be considered under Securities and Exchange Commission rules on auditor independence, including the nature and extent of non-audit services. In our business judgment the nature and extent of non-audit services performed by KPMG LLP during the year did not impair the firm’s independence.
 
Respectfully submitted,
THE AUDIT COMMITTEE OF DIRECTORS
 
Alan M. Bennett
S. Malcolm Gillis
James T. Hackett
Jay A. Precourt


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FEES PAID TO KPMG LLP
 
During 2008 and 2007, Halliburton incurred the following fees for services performed by KPMG LLP.
 
                 
    2008     2007  
    (In millions)     (In millions)  
 
Audit fees
  $ 10.1     $ 9.9  
Audit-related fees
    0.2       0.1  
Tax fees
    2.4       1.5  
All other fees
    0.2       0.1  
                 
Total
  $ 12.9     $ 11.6  
                 
 
Audit Fees
 
Audit fees represent the aggregate fees for professional services rendered by KPMG LLP for the integrated audit of our annual financial statements for the fiscal years ended December 31, 2008 and December 31, 2007. Audit fees also include the audits of many of our subsidiaries in regards to compliance with statutory requirements in foreign countries, reviews of our financial statements included in the Forms 10-Q we filed for fiscal years 2008 and 2007, and review of registration statements.
 
Audit-Related Fees
 
Audit-related fees primarily include professional services rendered by KPMG LLP for audits of some of our subsidiaries relating to transactions.
 
Tax Fees
 
The aggregate fees for tax services primarily consisted of international tax compliance and tax return services related to our expatriate employees.
 
All Other Fees
 
All other fees comprise professional services rendered by KPMG LLP related to immigration services and other nonrecurring miscellaneous services.
 
Pre-Approval Policies and Procedures
 
The Audit Committee has established written pre-approval policies that require the approval by the Audit Committee of all services provided by KPMG LLP as the principal independent public accountants that examine the financial statements and the books and records of Halliburton and all audit services provided by other independent public accountants. Prior to engaging KPMG LLP for the annual audit, the Audit Committee reviews a Principal Independent Public Accountants Auditor Services Plan. KPMG LLP then performs services throughout the year as approved by the Committee. KPMG LLP reviews with the Committee, at least quarterly, a projection of KPMG LLP’s fees for the year. Periodically, the Audit Committee approves revisions to the plan if the Committee determines changes are warranted. All of the fees described above provided by KPMG LLP to Halliburton were approved in accordance with the policy. Our Audit Committee considered whether KPMG LLP’s provisions of tax services and all other fees as reported above is compatible with maintaining KPMG LLP’s independence as our principal independent public accounting firm.
 
Work Performed by KPMG LLP’s Partners and Employees
 
KPMG LLP’s work on Halliburton’s audit was performed by KPMG LLP partners and employees.


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PROPOSAL FOR RATIFICATION OF THE SELECTION OF AUDITORS
 
(Item 2)
 
KPMG LLP has examined Halliburton’s financial statements beginning with the year ended December 31, 2002. A resolution will be presented at the Annual Meeting to ratify the appointment by the Board of that firm as independent public accountants to examine the financial statements and the books and records of Halliburton for the year ending December 31, 2009. The appointment was made upon the recommendation of the Audit Committee. KPMG LLP has advised that neither the firm nor any member of the firm has any direct financial interest or any material indirect interest in Halliburton. Also, during at least the past three years, neither the firm nor any member of the firm has had any connection with Halliburton in the capacity of promoter, underwriter, voting trustee, director, officer or employee.
 
Representatives of KPMG LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions from stockholders.
 
The affirmative vote of the holders of a majority of the shares of Halliburton’s common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal.
 
If the stockholders do not ratify the selection of KPMG LLP, the Board will reconsider the selection of independent public accountants.
 
The Board of Directors recommends a vote FOR ratification of the appointment of KPMG LLP as independent public accountants to examine the financial statements and books and records of Halliburton for the year 2009.
 
† † † † † † † † †


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PROPOSAL TO AMEND AND RESTATE
THE HALLIBURTON COMPANY 1993 STOCK AND INCENTIVE PLAN
 
(Item 3)
 
Introduction
 
The Halliburton Company 1993 Stock and Incentive Plan (the “1993 Stock and Incentive Plan”) was last approved by stockholders at the 2003 annual meeting and reserved 49 million shares (98 million shares post-stock split in July 2006) for issuance thereunder. The material terms of performance goals under the 1993 Stock and Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code were reapproved by the stockholders at the 2008 annual meeting.
 
This amendment and restatement names the 1993 Stock and Incentive Plan the Halliburton Company Stock and Incentive Plan (the “Stock and Incentive Plan”) and replenishes the pool of shares of Halliburton common stock available for issuance under the Stock and Incentive Plan by adding 34,959,680 shares.
 
Our Board is requesting that stockholders approve the amendment and restatement of the Stock and Incentive Plan, which amendment and restatement was approved by the Board of Directors on February 11, 2009 subject to stockholder approval.
 
General
 
In order to give Halliburton the flexibility to responsibly address its future equity compensation needs, Halliburton is requesting that stockholders approve the amendment and restatement of the Stock and Incentive Plan with the following material features:
  •   Add 34,959,680 shares to the Stock and Incentive Plan.
  •   Provide that for the purpose of computing shares remaining eligible for issuance under the Stock and Incentive Plan, each one share issued as a restricted stock grant (or pursuant to the vesting of a stock unit or performance share award) will count as the issuance of 1.60 shares reserved under the plan; and remove the limitation that no more than 32,000,000 shares in the aggregate may be awarded as restricted stock grants or stock units.
  •   Increase the cash value calendar year limit for individual performance awards not denominated in common stock from $5,000,000 to $10,000,000 for purposes of Section 162(m) of the Internal Revenue Code.
 
The 34,959,680 shares to be added to the Stock and Incentive Plan pursuant to the amendment and restatement of the plan, in combination with the remaining authorized shares and shares added back into the plan from forfeitures, is expected to satisfy Halliburton’s equity compensation needs through the 2013 annual meeting of stockholders. This being the case, if the amendment and restatement are approved, Halliburton anticipates seeking the authorization of additional shares under the Stock and Incentive Plan in 2013.
 
The Stock and Incentive Plan contains the following important features:
  •   Repricing of stock options and stock appreciation rights is prohibited unless stockholder approval is obtained.
  •   Stock options and stock appreciation rights must be granted with an exercise price that is not less than 100% of the fair market value on the date of grant.
  •   The ability to automatically receive replacement stock options when a stock option is exercised with previously acquired shares of Halliburton common stock or so-called “stock option reloading” is not permitted.
 
Share Reserve (adjusted for 1997 and 2006 stock splits where applicable)
 
         
Shares authorized under the Stock and Incentive Plan
    98,000,000  
Shares granted (less available cancellations) and shares expired from 1993 through January 31, 2009 from the Stock and Incentive Plan
    87,209,680  
Remaining shares available for grant as of January 31, 2009
    10,790,320  
Additional shares being requested under the amendment and restatement of the Stock and Incentive Plan
    34,959,680  
Total shares available for grant under the amended and restated Stock and Incentive Plan
    45,750,000  
 
Note: As of January 31, 2009, Halliburton had total outstanding awards of 13,190,374 options with a weighted average exercise price of $25.44 and a weighted average life of 6.25 years, and 9,154,055 full value awards.


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If the amendment and restatement of the Stock and Incentive Plan is approved by stockholders, the aggregate number of shares of Halliburton common stock that will be available for issuance under the Stock and Incentive Plan would increase to 45,750,000 shares, based on the estimates set forth above. If awards granted under the Stock and Incentive Plan are forfeited or terminate before being exercised, then the shares underlying those awards will again become available for awards under the Stock and Incentive Plan. The Stock and Incentive Plan does not provide for “liberal share counting.” Stock appreciation rights will be counted in full against the number of shares available for issuance under the Stock and Incentive Plan, regardless of the number of shares issued upon settlement of the stock appreciation rights.
 
The number of stock option shares or stock appreciation rights, singly or in combination, together with shares or share equivalents under performance awards granted to any individual in any one calendar year, shall not in the aggregate exceed 1,000,000. The cash value determined as of the date of grant of any performance award not denominated in common stock granted to any individual for any one calendar year shall not exceed $10,000,000.
 
In the event of any recapitalization, reorganization, merger, consolidation, combination, exchange, stock dividend, stock split, extraordinary dividend or divestiture (including a spin-off) or any other change in the corporate structure or shares of common stock occurring after the date of the grant of an award, the Compensation Committee shall make appropriate adjustments to the number and price of shares of common stock or other consideration subject to such awards and the award limits set forth in the preceding paragraph.
 
THE STOCK AND INCENTIVE PLAN
 
Types of Awards
 
The Stock and Incentive Plan provides for the grant of any or all of the following types of awards:
 
  •   stock options, including incentive stock options and non-qualified stock options;
  •   stock appreciation rights, either independent of, or in connection with, stock options;
  •   restricted stock;
  •   restricted stock units;
  •   performance awards; and
  •   stock value equivalent awards.
 
Any stock option granted in the form of an incentive stock option must satisfy the requirements of section 422 of the Internal Revenue Code. Awards may be made to the same person on more than one occasion and may be granted singly, in combination, or in tandem as determined by the Compensation Committee. To date, only awards of non-qualified stock options, restricted stock, restricted stock units and cash-based performance awards have been made under the Stock and Incentive Plan.
 
Term
 
The Stock and Incentive Plan is scheduled to expire on May 20, 2013.
 
Administration
 
The Board of Directors has appointed the Compensation Committee to administer the Stock and Incentive Plan. Subject to the terms of the Stock and Incentive Plan, and to any approvals and other authority as the Board of Directors may reserve to itself from time to time, the Compensation Committee, consistent with the terms of the Stock and Incentive Plan, will have authority to:
  •   select the individuals to receive awards and determine the timing, form, amount or value and term of grants and awards, and the conditions and restrictions, if any, subject to which grants and awards will be made and become payable under the Stock and Incentive Plan;
  •   construe the Stock and Incentive Plan and prescribe rules and regulations for the administration of the Stock and Incentive Plan; and
  •   make any other determinations authorized under the Stock and Incentive Plan as the Compensation Committee deems necessary or appropriate.


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Eligibility
 
A broad group of our employees and employees of our affiliates are eligible to participate in the Stock and Incentive Plan. The selection of participants from eligible employees is within the discretion of the Compensation Committee. Non-employee directors are eligible to participate in the Stock and Incentive Plan. As of January 1, 2009, approximately 13,350 employees (including employee directors and executive officers) and 9 non-employee directors are eligible for awards under the Stock and Incentive Plan as determined by the Compensation Committee.
 
Stock Options
 
Under the Stock and Incentive Plan, the Compensation Committee may grant awards in the form of stock options to purchase shares of common stock. The Compensation Committee will determine the number of shares subject to an option, the manner and time of the option’s exercise, and the exercise price per share of stock subject to the option. The term of an option may not exceed ten years. No consideration is received by us for granting stock options. The exercise price of a stock option will not be less than the fair market value of the common stock on the date the option is granted. Repricing of stock options is prohibited unless stockholder approval is obtained. The Compensation Committee will designate each option as a non-qualified or an incentive stock option.
 
The option exercise price may, at the discretion of the Compensation Committee, be paid by a participant in cash, shares of common stock or a combination of cash and common stock. Except as set forth below with regard to specific corporate changes, no option will be exercisable within six months of the date of grant.
 
Stock Appreciation Rights
 
The Stock and Incentive Plan also authorizes the Compensation Committee to grant stock appreciation rights either independent of, or in connection with, a stock option. The exercise price of a stock appreciation right will not be less than the fair market value of the common stock on the date the stock appreciation right is granted. If granted with a stock option, exercise of stock appreciation rights will result in the surrender of the right to purchase the shares under the option as to which the stock appreciation rights were exercised. Upon exercising a stock appreciation right, the holder receives for each share for which the stock appreciation right is exercised, an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Payment of that amount may be made in shares of common stock, cash, or a combination of cash and common stock, as determined by the Compensation Committee. The stock appreciation rights will not be exercisable within six months of the date of grant. The term of a stock appreciation right grant may not exceed ten years, and no consideration is received by us for granting stock appreciation rights.
 
Restricted Stock
 
The Stock and Incentive Plan provides that shares of common stock subject to specific restrictions may be awarded to eligible individuals as determined by the Compensation Committee. The Compensation Committee will determine the nature and extent of the restrictions on the shares, the duration of the restrictions, and any circumstance under which restricted shares will be forfeited. With a limited exception, the restriction period may not be less than three years from the date of grant. During the period of restriction, recipients will have the right to receive dividends and the right to vote the shares.
 
Restricted Stock Units
 
The Stock and Incentive Plan authorizes the Compensation Committee to grant restricted stock units. A restricted stock unit is a unit evidencing the right to receive one share of common stock or an equivalent cash value equal to the fair market value of a share of common stock. The Compensation Committee will determine the nature and extent of the restrictions on the restricted stock units, the duration of the restrictions, and any circumstance under which restricted stock units will be forfeited. With a limited exception, the restriction period may not be less than three years from the date of grant. The Compensation Committee may provide for the payment of dividend equivalents during the period of restriction, but recipients will not have the right to receive actual dividends or to vote the shares underlying the restricted stock units.


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Performance Awards
 
The Stock and Incentive Plan permits the Compensation Committee to grant performance awards to eligible individuals. Performance awards are awards that are contingent on the achievement of one or more performance measures. Such performance measures may be established and administered in accordance with the requirements of Section 162(m) of the Internal Revenue Code. Performance awards may be settled in cash or stock, as determined by the Compensation Committee. The number of shares or share equivalents under performance awards, singly or in combination, together with the number of stock option shares or stock appreciation rights, granted to any individual in any one calendar year, shall not in the aggregate exceed 1,000,000. The cash value (determined as of the date of grant) of any performance award that is not denominated in stock granted to any one participant in a calendar year may not exceed $10,000,000.
 
The performance criteria that may be used by the Compensation Committee in granting performance awards consist of objective tests based on the following:
 
     
•  earnings
  •  cash value added performance
•  cash flow
  •  stockholder return and/or value
•  customer satisfaction
  •  operating profits (including EBITDA)
•  revenues
  •  net profits
•  financial return ratios
  •  earnings per share
•  profit return and margins
  •  stock price
•  market share
  •  cost reduction goals
•  working capital
  •  debt to capital ratio
 
The Compensation Committee may select one criterion or multiple criteria for measuring performance. The measurement may be based on our overall corporate performance, based on subsidiary or business unit performance, or based on comparative performance with other companies or other external measures of selected performance criteria. The Compensation Committee will also determine the length of time over which performance will be measured and the effect of a recipient’s death, disability, retirement or other termination of service during the performance period.
 
Stock Value Equivalent Awards
 
The Stock and Incentive Plan permits the Compensation Committee to grant stock value equivalent awards to eligible individuals. Stock value equivalent awards are rights to receive the fair market value of a specified number of shares of common stock, or the appreciation in the fair market value of the shares, over a specified period of time, pursuant to a vesting schedule, all as determined by the Compensation Committee. Payment of the vested portion of a stock value equivalent award shall be made in cash, based on the fair market value of the common stock on the payment date. The Compensation Committee will also determine the effect of a recipient’s death, disability, retirement or other termination of service during the applicable period.
 
Amendment
 
The Stock and Incentive Plan, as proposed to be amended, provides that the Board of Directors may at any time terminate or amend the plan. However, the Board may not, without approval of the stockholders, amend the Stock and Incentive Plan to effect a “material revision” of the Plan, where a “material revision” includes, but is not limited to, a revision that:
 
  •   materially increases the benefits accruing to a Holder under the plan;
  •   materially increases the aggregate number of securities that may be issued under the plan;
  •   materially modifies the requirements as to eligibility for participation in the plan; or
  •   changes the types of awards available under the plan.
 
No amendment or termination of the Stock and Incentive Plan shall, without the consent of the optionee or participant, alter or impair rights under any options or other awards previously granted.
 
The summary of the Stock and Incentive Plan provided above is a summary of the principal features of the plan. This summary, however, does not purport to be a complete description of all of the provisions of the Stock and Incentive Plan. It is qualified in its entirety by references to the full text of the Stock and Incentive Plan. A copy of the


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Stock and Incentive Plan has been filed with the Securities and Exchange Commission with this proxy statement, and any stockholder who wishes to obtain a copy of the Stock and Incentive Plan may do so by written request to the Corporate Secretary at the address set forth on page 2 of this proxy statement.
 
Change-in-Control
 
In the event of a corporate change, unless an award document otherwise provides, as of the corporate change effective date, the following will occur automatically:
 
  •   any outstanding options and stock appreciation rights shall become immediately vested and fully exercisable;
  •   any restrictions on restricted stock awards or restricted stock unit awards shall immediately lapse;
  •   all performance measures upon which an outstanding performance award is contingent shall be deemed achieved and the holder shall receive a payment equal to the maximum amount of the award he or she would have been entitled to receive, prorated to the corporate change effective date; and
  •   any outstanding cash awards including, but not limited to, stock value equivalent awards, shall immediately vest and be paid based on the vested value of the award.
 
Plan Benefits
 
All awards to directors, executive officers and employees are made at the discretion of the Stock and Incentive Plan administrator. Therefore, the benefits and amounts that will be received or allocated under the Stock and Incentive Plan as amended and restated are not determinable at this time.
 
Federal Income Tax Treatment
 
The following summarizes the current U.S. federal income tax consequences generally arising for awards under the Stock and Incentive Plan.
 
A participant who is granted an incentive stock option does not realize any taxable income at the time of the grant or at the time of exercise, but in some circumstances may be subject to an alternative minimum tax as a result of the exercise. Similarly, we are not entitled to any deduction at the time of grant or at the time of exercise. If the participant makes no disposition of the shares acquired pursuant to an incentive stock option before the later of two years from the date of grant and one year from the date of exercise, any gain or loss realized on a subsequent disposition of the shares will be treated as a long-term capital gain or loss. Under these circumstances, we will not be entitled to any deduction for federal income tax purposes. If the participant fails to hold the shares for that period, the disposal is treated as a disqualifying disposition. The gain on the disposition is ordinary income to the participant to the extent of the difference between the option price and the fair market value on the exercise date. Any excess is long-term or short-term capital gain, depending on the holding period. Under these circumstances, we will be entitled to a tax deduction equal to the ordinary income amount the participant recognizes in a disqualifying disposition.
 
A participant who is granted a non-qualified stock option does not have taxable income at the time of grant, but does have taxable income at the time of exercise. The income equals the difference between the exercise price of the shares and the market value of the shares on the date of exercise. We are entitled to a corresponding tax deduction for the same amount.
 
The grant of a stock appreciation right will produce no U.S. federal tax consequences for the participant or us. The exercise of a stock appreciation right results in taxable income to the participant, equal to the difference between the exercise price of the shares and the market price of the shares on the date of exercise, and a corresponding tax deduction to us.
 
A participant who has been granted an award of restricted shares of common stock or an award of restricted stock units will not realize taxable income at the time of the grant. When the restrictions lapse, the participant will recognize taxable income in an amount equal to the excess of the fair market value of the shares or cash received at that time over the amount, if any, paid for the shares. We will be entitled to a corresponding tax deduction. Dividends on restricted stock paid to the participant during the restriction period will also be compensation income to the participant and will be deductible as compensation expense by us.
 
A participant who has been granted a performance award will not realize taxable income at the time of the grant, and we will not be entitled to a tax deduction at that time. A participant will realize ordinary income at the time the


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award is paid equal to the amount of cash paid or the value of shares delivered, and we will be entitled to a corresponding tax deduction.
 
The grant of a stock value equivalent award produces no U.S. federal income tax consequences for the participant or us. The payment of a stock value equivalent award results in taxable income to the participant equal to the amount of the payment received, valued with reference to the fair market value of the common stock on the payment date. We are entitled to a corresponding tax deduction for the same amount.
 
We may deduct any taxes required by law to be withheld in connection with any award.
 
Section 409A of the Internal Revenue Code generally provides that any deferred compensation arrangement which does not meet specific requirements regarding (i) timing of payouts, (ii) advance election of deferrals or (iii) restrictions on acceleration of payouts, will result in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. Failure to comply with section 409A may result in the early taxation (plus interest) to the holder of deferred compensation and the imposition of a 20% penalty on the holder on such deferred amounts included in the holder’s income. In general, to avoid a section 409A violation, amounts deferred may only be paid out on separation from service, disability, death, a change-in-control, an unforeseen emergency (other than death), each as defined under section 409A or at a specified time. Furthermore, the election to defer generally must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for the reasons specified above may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax. Based on current guidance, we expect that we will be able to structure future awards in a manner that complies with section 409A.
 
General/Vote Required
 
The closing price of Halliburton’s common stock on March 23, 2009, as traded on the New York Stock Exchange was $18.06 per share.
 
The affirmative vote of the holders of a majority of the shares of Halliburton’s common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal.
 
The Board of Directors recommends a vote FOR the approval of the proposed amendment and restatement of the Halliburton Company 1993 Stock and Incentive Plan.
 
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PROPOSAL TO AMEND AND RESTATE THE HALLIBURTON COMPANY
2002 EMPLOYEE STOCK PURCHASE PLAN
 
(Item 4)
 
Introduction
 
In 2002, the Board of Directors adopted and the stockholders approved the Halliburton Company 2002 Employee Stock Purchase Plan (the “2002 ESPP”), effective July 1, 2002, and reserved 24,000,000 shares (adjusted for 2-1 stock split in July 2006) for issuance under the ESPP. The 2002 Non-Qualified Stock Purchase Plan, a sub-plan of the 2002 ESPP (the “Sub-Plan”), was established to facilitate the offering of stock ownership interests to employees residing outside the United States.
 
This amendment and restatement names the 2002 ESPP the Halliburton Company Employee Stock Purchase Plan (the “ESPP”) and replenishes the pool of shares of Halliburton common stock available for purchase under the ESPP by adding 20,000,000 shares. This amended and restated ESPP is subject to stockholder approval.
 
Our Board is requesting that stockholders approve the amendment and restatement of the ESPP and the reservation of shares for issuance under the ESPP, which amendment and restatement was approved by the Board of Directors on February 11, 2009. Stockholder approval will qualify those shares for special tax treatment under Internal Revenue Code Section 423.
 
Summary of the ESPP
 
Purpose. The purpose of the ESPP is to provide employees of Halliburton and its designated subsidiaries with the opportunity to purchase Halliburton common stock and, therefore, to have an additional incentive to contribute to the prosperity of Halliburton.
 
Administration. The ESPP will be administered by the Compensation Committee of Directors (the “Committee”). None of the members of the Committee is an officer or employee, or former officer or employee, of Halliburton or its subsidiaries. Subject to the terms of the ESPP, the Committee has the power to make, amend and repeal rules and regulations for the interpretation and administration of the ESPP. The decisions of the Committee are final and binding upon all parties.
 
Shares Subject to the ESPP. There are 44,000,000 shares reserved for issuance under the ESPP, subject to adjustment as described below. The reserved shares will also be used to fund stock purchases under the Sub-Plan, and any shares issued under the Sub-Plan will reduce, on a share-for-share basis, the number of shares available for subsequent issuance under the ESPP. On March 23, 2009 the closing price per share of Halliburton common stock was $18.06.
 
Eligibility. In general, any employee of Halliburton or a designated subsidiary who, on an enrollment date, has a minimum of six months of service and is regularly employed for at least 20 hours per week or at least five months in a calendar year is eligible to participate in the ESPP during a purchase period. A “purchase period” is a period of approximately six months that begins on the first trading day of each July or January. An “enrollment date” is first day of each purchase period. Eligible employees become participants in the ESPP by filing with Halliburton a payroll deduction authorization form within the time prescribed by the Committee prior to an enrollment date.
 
As of December 31, 2008, 15,875,573 shares of common stock had been issued under the ESPP and the Sub-Plan, and 28,124,427 shares would be available for future issuance, assuming approval of the 20,000,000 share increase, which forms part of this proposal. As of December 31, 2008, approximately 43,829 employees, including 11 executive officers, would have been eligible to participate in the ESPP.
 
Plan Participation. Each participant is granted a right to purchase shares of Halliburton common stock on his or her enrollment date. A participant in the ESPP may make contributions through payroll deductions from one percent to ten percent of his or her eligible compensation each pay period, but not less than $10 for any pay period. Stock purchase rights may not accrue at a rate that exceeds $25,000 in fair market value of the common stock per calendar year. The participant’s contributions are used to purchase shares of Halliburton’s common stock at the end of each purchase period. The right to purchase Halliburton shares is exercised automatically on the last trading day of each purchase period (“purchase date”) to the extent of the payroll deductions accumulated during the purchase period,


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provided that the number of shares that may be purchased by a participant in any purchase period is limited to 10,000 shares. No participant shall be granted a stock purchase right under the ESPP to the extent that, immediately after the grant, such participant (or any other person whose stock would be attributed to such participant) would own capital stock of Halliburton and/or hold outstanding options to purchase such stock possessing 5% or more of the total combined voting power or value of all classes of the capital stock Halliburton or any of its subsidiaries.
 
Purchase Price; Shares Purchased. The purchase price per share is equal to 85% of the fair market value of the common stock on the enrollment date or the purchase date, whichever is less. The number of whole and fractional shares of Halliburton common stock a participant purchases in each purchase period is determined by dividing the total amount of payroll deductions during the purchase period by the purchase price.
 
Termination of Employment. Termination of a participant’s employment for any reason, including death, immediately cancels his or her participation in the ESPP. In that event, the payroll deductions credited to the participant’s account will be refunded to him or her, and in the case of death, to his or her estate or personal representative.
 
Changes in Common Stock; Adjustments. In the event that Halliburton’s common stock is changed by reason of any stock split, stock dividend, recapitalization, combination or other similar change in Halliburton’s capital structure, appropriate action will be taken by the Committee to adjust any or all of (i) the number and type of shares subject to the ESPP, (ii) the number and type of shares subject to outstanding stock purchase rights and (iii) the purchase price. In the event of a Corporate Change (as defined in the ESPP), unless the successor corporation assumes or substitutes new stock purchase rights:
 
  •   the purchase date for the outstanding stock purchase rights will be accelerated to a date fixed by the Committee prior to the effective date of the Corporate Change; and
 
  •   on the effective date, any unexercised stock purchase rights will expire and Halliburton will promptly refund the unused amount of each participant’s payroll deductions.
 
Amendment and Termination of the Plan. The Board may terminate the ESPP at any time with respect to common stock that is not subject to stock purchase rights. The Board may amend the ESPP at any time, provided that no change may be made in any outstanding stock purchase right that would materially impair that right without the consent of the participant. If not sooner terminated, the ESPP will automatically terminate when all of the shares of common stock reserved for issuance have been sold.
 
Withdrawal. Generally, a participant may withdraw from the ESPP during a purchase period at any time prior to the fifth business day before a purchase date.
 
The summary of the ESPP provided above is a summary of the principal features of the plan. This summary, however, does not purport to be a complete description of all of the provisions of the ESPP. It is qualified in its entirety by references to the full text of the ESPP. A copy of the ESPP has been filed with the Securities and Exchange Commission with this proxy statement, and any stockholder who wishes to obtain a copy of the ESPP may do so by written request to the Corporate Secretary at the address set forth on page 2 of this proxy statement.
 
U.S. Federal Income Tax Treatment
 
The following summarizes the effect of current U.S. federal income tax upon the participant and Halliburton with respect to shares purchased under the ESPP. It does not purport to be complete, and does not discuss the tax consequences arising in the context of a participant’s death or the income tax laws of any municipality, state or foreign country in which the participant’s income or gain may be taxable.
 
If the Halliburton stockholders approve this proposal, the ESPP, and the right of participants to make purchases thereunder, should qualify under the provisions of Sections 421 and 423 of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed of. Upon sale or other disposition of the shares, the participant will generally be subject to tax and the amount of the tax will depend on the holding period. If the shares are sold or disposed of more than two years from the first day of the applicable purchase period and more than one year from the date of transfer of the shares to the participant, then the participant generally will recognize ordinary income measured as the lesser of:
  •   the excess of the fair market value of the shares at the time of sale over the purchase price, or
  •   15% of the fair market value of the shares as of the enrollment date.


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Any additional gain should be treated as long-term capital gain. If the shares are disposed of within the two-year and one-year periods referred to above, the participant will recognize ordinary income generally measured as the difference between the fair market value of the shares on the purchase date over the purchase price. Any additional gain or loss on the sale will be long-term or short-term capital gain or loss, depending on the holding period. Halliburton is not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent ordinary income is recognized by participants upon a disposition of shares prior to the expiration of the holding period.
 
Non-U.S. Federal Income Tax Treatment
 
The income taxation consequences to participants and Halliburton (or its foreign subsidiaries) with respect to participation in the Sub-Plan vary by country. Generally, participants are subject to taxation at the time of purchase. The employing foreign subsidiary may be entitled to a deduction in the tax year in which a participant recognizes taxable income, provided the subsidiary reimburses Halliburton for the cost of the benefit conferred under the Sub-Plan.
 
Plan Benefits
 
The benefits to be received by Halliburton’s executive officers and employees as a result of the proposed amendment and restatement of the ESPP are not determinable, since the amounts of future purchases by participants are based on elective participant contributions. Non-employee Directors are not eligible to participate. No purchase rights have been granted, and no shares of common stock have been issued, with respect to the 20,000,000 share increase for which stockholder approval is sought under this proposal.
 
Vote Required
 
The affirmative vote of the holders of a majority of the shares of Halliburton’s common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal.
 
The Board of Directors recommends a vote FOR the approval of the proposed amendment and restatement of the Halliburton Company 2002 Employee Stock Purchase Plan.
 
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STOCKHOLDER PROPOSAL ON HUMAN RIGHTS POLICY
 
(Item 5)
 
The Sisters of Charity of the Blessed Virgin Mary (the “Sisters”), located at 205 W. Monroe, Suite 500, Chicago, IL 60606-5062, have notified Halliburton that they intend to present the resolution set forth below to the Annual Meeting for action by the stockholders. Their supporting statement for the resolution, along with the Board’s statement in opposition, is set forth below. As of October 14, 2008, the Sisters beneficially owned 100 shares of Halliburton’s common stock. Proxies solicited on behalf of the Board will be voted AGAINST this proposal unless stockholders specify a contrary choice in their proxies. A number of other organizations are co-sponsors of this proposal.
 
Develop and Adopt Human Rights Policy 2008 — Halliburton Company
 
WHEREAS: Halliburton is one of the world’s largest providers of products and services to the oil and gas industries and has operations globally. For example, the 2007 Halliburton Corporate Sustainability Report states: “. . . we are fully global, with over 50,000 employees from 121 different countries, working on six of the seven continents and on the oceans in between.”
 
Corporations operating in countries with civil conflict, weak rule of law, endemic corruption, poor labor and environmental standards face serious risks to reputation and shareholder value when they are seen as responsible for, or complicit in, human rights violations.
 
Worldwide, 99 companies have adopted explicit human rights policies addressing a company’s responsibility to the communities and societies where they operate. (www.business-humanrights.org, November, 2006)
 
Our company’s Code of Business Conduct does not address major corporate responsibility issues, such as, human rights. Without a human rights policy, our company faces reputation risks by operating in countries, such as China, where the rule of law is weak and human rights abuses are well documented. (U.S. State Department Country Human Rights Reports 2005; http://www.state.gov/g/drl/rls/hrrpt/2005)
 
Negative publicity hurts our company’s reputation and has the potential to impact shareholder value. Halliburton former subsidiary KBR has been linked to trafficking-related concerns, including substandard living conditions, extremely low wages and confiscating employee passports. (Chicago Tribune, 12-05; UPI, 4-25-06)
 
We recommend our company base its human rights policies on the Universal Declaration of Human Rights, the International Labor Organization’s Core Labor Standards, and the United Nations Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. (http://www1.umn.edu/humanrts/links/commentary.Aug2003.html)
 
RESOLVED:  Shareholders request management to review its policies related to human rights to assess areas where the company needs to adopt and implement additional policies and to report its findings, omitting proprietary information and prepared at reasonable expense, by December 2009.
 
Supporting Statement:
 
We recommend the review include:
 
1. A risk assessment to determine the potential for human rights abuses in locations, such as the Middle East and other war-torn areas, where the company operates.
 
2. A report on the current system in place to ensure that the company’s contractors and suppliers are implementing human rights policies in their operations, including monitoring, training, addressing issues of non-compliance and assurance that trafficking-related concerns have been addressed.
 
3. Halliburton’s strategy of engagement with internal and external stakeholders.
 
We urge you to vote FOR this proposal.


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The Board of Directors recommends a vote AGAINST this proposal. Halliburton’s statement in opposition is as follows:
 
We have adopted a policy statement on human rights which is set forth below and can also be found on our website at www.halliburton.com/AboutUs/default.aspx?navid=977&pageid=2336.
 
Halliburton Human Rights Policy Statement
 
Halliburton operates in approximately 70 countries around the world, with stockholders, customers, suppliers, and employees that represent virtually every race or national origin, and an associated multitude of religions, cultures, customs, political philosophies, and languages. This diversity reflects Halliburton’s belief in the dignity, human rights, and personal aspirations of all people as the foundation of our culture of business excellence.
 
We have long addressed our belief in human dignity, human rights, and fairness in our employment practices, non-discrimination policies, minimum age requirements, fair compensation policies, and our policies on health, safety, and security of our employees and our facilities. Halliburton clearly communicates its support for these issues, and other related topics in our Code of Business Conduct.
 
Halliburton’s Code of Business Conduct, its business values, and culture are influenced by, and reflect a fundamental respect for human rights and freedoms. Halliburton supports these beliefs and core values in our respect for, and compliance with local laws, regulations, and customs in all locations where we do business. Although we respect the sovereignty of governments throughout the world, and the responsibility of such governments to protect the rights, welfare, and health of its citizens, we also expect that our employees will always abide by the both the letter and spirit of our Code of Business Conduct and other Company policies and processes, in all of their dealings all over the world.
 
We believe that our policy statement is sufficient, and, because we maintain and enforce these policies, further assessment and reporting is not necessary.
 
The Board of Directors recommends a vote AGAINST the proposal. Proxies solicited by the Board of Directors will be voted against the proposal unless instructed otherwise.
 
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STOCKHOLDER PROPOSAL ON POLITICAL CONTRIBUTIONS
 
(Item 6)
 
The Office of the Comptroller of New York City, located at 1 Centre Street, New York, NY 10007-2341, has notified Halliburton that it intends to present the resolution set forth below to the Annual Meeting for action by the stockholders. The Office of the Comptroller of New York City is the custodian and trustee of the New York City Teachers’ Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund (the “Funds”). The Funds’ supporting statement for the resolution, along with the Board’s statement in opposition, is set forth below. As of November 18, 2008, the Funds beneficially owned 1,891,334 shares of Halliburton’s common stock. Proxies solicited on behalf of the Board will be voted AGAINST this proposal unless stockholders specify a contrary choice in their proxies.
 
Stockholder Proposal — Corporate political contributions and trade association payments
 
Resolved, that the shareholders of Halliburton Company (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
 
1. Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
 
2. Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
 
a. An accounting of the Company’s funds that are used for political contributions or expenditures as described above;
 
b. Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and
 
c. The internal guidelines or policies, if any, governing the Company’s political contributions and expenditures.
 
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the Company’s website to reduce costs to shareholders.
 
Stockholder Supporting Statement
 
As long-term shareholders of Halliburton, we support transparency and accountability in corporate spending on political activities. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.
 
Disclosure is consistent with public policy, in the best interest of the company and its shareholders and critical for compliance with recent federal ethics legislation. Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.
 
Relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political contributions, including payments to trade associations and other tax exempt organizations. This would bring our Company in line with a growing number of leading companies, including Pfizer, Aetna and American Electric Power that support political disclosure and accountability and present this information on their websites.


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The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support FOR this critical governance reform.
 
The Board of Directors recommends a vote AGAINST this proposal. Halliburton’s statement in opposition is as follows:
 
Halliburton is committed to complying with the letter and spirit of all laws and regulations governing federal and state political contributions and adhering to the highest standards of ethics and transparency in engaging in any political activities. The Board believes that it is in our best interests and those of our stockholders that we participate in the political process by engaging in a government relations program to educate and inform public officials about our position on issues significant to our business. Although we believe that political contributions can represent a valuable element of any governmental relations program, it is against federal law to contribute corporate funds to federal candidates and, consequently, Halliburton makes no such contributions. The Company does not currently have any policies and procedures for direct political contributions or expenditures made with corporate funds because the Company does not use corporate funds for that type of political activity.
 
Halliburton does maintain a political action committee (HALPAC), which makes political contributions, including contributions to federal officials; however, the funds for HALPAC are voluntarily contributed by employees, and are not from corporate funds. The activities of HALPAC are subject to regulation by the federal government, including detailed disclosure requirements. For example, as required by federal law, HALPAC files monthly reports with the Federal Election Commission (FEC) reporting all political contributions, and also files pre-election and post-election FEC reports. Moreover, all political contributions over $200.00 are required to be disclosed and the identity of the donor and the recipient are available to any member of the public from the FEC.
 
Political contributions by HALPAC and the Company are also subject to regulation at the state government level. And although some states permit corporate contributions to candidates of political parties, all states require that recipients of any political contributions from corporations, HALPAC, and other sources must generally disclose the identity of donors and the dollar amount of the contributions.
 
Like most American corporations, Halliburton participates in certain industry trade organizations with purposes that include, but are not limited to, enhancement of the public image of our industry, education about the industry, education about issues that affect the industry, industry best practices and standards, and leading industry products and technologies. Many of the trade organizations also engage in legislative activity related to matters that affect the industry as a whole, not any Halliburton specific matters.
 
Because the issues that trade organizations advocate for are not Halliburton specific, and Halliburton does not direct the legislative activities of any trade organization of which it is a member, the Board believes that additional reports requested in the proposal would result in an unnecessary and unproductive use of our time and resources.
 
The Board of Directors recommends a vote AGAINST the proposal. Proxies solicited by the Board of Directors will be voted against the proposal unless instructed otherwise.
 
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STOCKHOLDER PROPOSAL ON LOW CARBON ENERGY REPORT
 
(Item 7)
 
The General Board of Pension and Health Benefits of the United Methodist Church, located at 1201 Davis Street, Evanston, IL 60201, has notified Halliburton that it intends to present the resolution set forth below to the Annual Meeting for action by the stockholders. Whereas clauses preceding the resolution, along with the Board’s statement in opposition, are set forth below. As of December 1, 2008, the General Board of Pension and Health Benefits of the United Methodist Church beneficially owned at least $2,000 in market value of shares of Halliburton’s common stock. Proxies solicited on behalf of the Board will be voted AGAINST this proposal unless stockholders specify a contrary choice in their proxies.
 
WHEREAS: In 2007, the Intergovernmental Panel on Climate Change (IPCC) found “warming of the climate system is unequivocal,” and man-made greenhouse gas (GHG) emissions are now believed, with greater than 90 percent certainty, to be the cause.
 
The Stern Review, often cited as the most comprehensive overview of the economics of climate change, estimated that the cumulative economic impacts of climate change could be equivalent to a loss of up to 20% of average world-wide consumption if action is not taken quickly.
 
According to the Conference Board, “businesses that ignore the debate over climate change do so at their peril.” Data from the Energy Information Administration indicates that over half of domestic greenhouse gas emissions result from the combustion of oil and gas. Both major party presidential candidates in the United States support regulations designed to lower GHG emissions, increasing the likelihood that new regulations will be enacted that could significantly impact demand for oil and gas.
 
The IPCC also concludes that, “there is substantial economic potential for the mitigation of global greenhouse gas emissions over the coming decades that could offset the projected growth of global emissions or reduced emissions below current levels.”
 
Halliburton has great potential to help realize these GHG emission reductions by applying its core competencies in analyzing and mapping complex geological formations and managing wells in these formations. This expertise could be applied to the research and development of low-carbon energy technologies, such as geothermal energy and carbon sequestration.
 
A recent report by leading scientists from MIT, funded by the U.S. Department of Energy, concluded that new technologies could allow for a substantial portion of U.S. energy to come from geothermal sources. Halliburton’s competitor Baker Hughes offers geothermal services and “has provided wellbore construction services on over 1,000 geothermal wells throughout North, Central and South America, Europe and Asia.”
 
Another of our company’s main competitors, Schlumberger, states on its website, that, “we believe there is sufficient evidence of the potential seriousness of the issue [global warming] to start preparing future solutions.” To face this issue, Schlumberger has elected to invest in carbon sequestration technology, understanding that doing so is an important element in their role as a global citizen and business.
 
Halliburton’s 2007 sustainability report states that “We seek to develop services and technologies . . . for pursuing clean and renewable energy sources for the future.” Yet, the report provides no additional detail for investors to judge how the company is progressing in meeting this important goal. The report also does not address research or investment in any emerging low-carbon or renewable energy technology, including geothermal power or carbon sequestration.
 
RESOLVED: That Halliburton’s Board adopt a policy for low-carbon energy research, development and production and report to shareholders, within six months of the 2009 annual meeting, on activities related to the policy. The report shall be prepared at a reasonable cost and omit proprietary information.


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The Board of Directors recommends a vote AGAINST this proposal. Halliburton’s statement in opposition is as follows:
 
We acknowledge the growing global consensus that human activity, through the use of fossil fuels, contributes to the increasing concentration of greenhouse gases in the atmosphere. This is widely believed to be a contributory factor in global warming thus impacting climate change. Accordingly, climate change is increasingly seen as a major factor for business. Reducing carbon emissions is good for the environment and good for business. Finding ways to take advantage of climate change initiatives is seen as a key business opportunity.
 
Halliburton views health, safety, environment and service quality as critical to our success and long-term sustainability and we are committed to continuously improving our performance. Our corporate HSE Policy is overseen by the Health, Safety and Environment Committee of the Board of Directors, which provides direction for the management of HSE and input on current and emerging health, safety, and environmental issues. We demonstrate our commitment in seeking to prevent or mitigate the environmental impacts of our operations by continuing to develop industry-leading technologies that both reflect and advance our standard of sustainability.
 
Our goal is to provide products and services that, are safe in their intended use, consume energy and natural resources efficiently and can be recycled, reused or disposed of safely. We seek to develop services and technologies for maximizing the recovery of oil and gas in existing reservoirs, and for pursuing clean and efficient energy sources for the future.
 
Although we appreciate the concern of our stockholders that we engage in research and development of low carbon and renewable energy technology, we believe that our management, with their day to day involvement in our businesses operations, and their detailed understanding of our research and development, budgets, regulatory landscape and existing technology, continue to be in the best position to assess these matters, and to make the most informed judgments as to what research, development, technological innovation and investment are most likely to serve the interests of Halliburton, its employees and our stockholders. Moreover, to produce a report as requested by the proponent runs a substantial risk of diminishing any competitive advantage new research and development technology could provide to us.
 
The Board of Directors recommends a vote AGAINST the proposal. Proxies solicited by the Board of Directors will be voted against the proposal unless instructed otherwise.
 
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STOCKHOLDER PROPOSAL ON ADDITIONAL
COMPENSATION DISCUSSION AND ANALYSIS DISCLOSURE
 
(Item 8)
 
The American Federation of Labor and Congress of Industrial Organizations (the “AFL-CIO”), located at 815 Sixteenth Street N.W., Washington, D.C. 20006, has notified Halliburton that it intends to present the resolution set forth below to the Annual Meeting for action by the stockholders. Their supporting statement, along with the Board’s statement in opposition, are set forth below. As of December 10, 2008, the AFL-CIO beneficially owned 1,202 shares of Halliburton’s common stock. Proxies solicited on behalf of the Board will be voted AGAINST this proposal unless stockholders specify a contrary choice in their proxies. The Connecticut Retirement Plans & Trust Funds is a co-sponsor of the proposal.
 
RESOLVED: that the shareholders of Halliburton Company ( the “Company”) urge the board of directors to adopt a policy requiring the following information to be included in the Compensation Discussion and Analysis section of the Proxy Statement:
 
a. A description of any services, other than executive compensation consulting, (“Other Services”) performed by any firm (“Firm”) that provided any executive compensation services to the board’s Compensation Committee in the last fiscal year;
 
b. If a Firm has provided Other Services:
 
1. The breakdown of fees paid by Halliburton to the Firm in the last fiscal year for executive compensation consulting services and for Other Services;
 
2. Whether individual consultants who perform executive compensation consulting are permitted to own equity in the Firm; and
 
3. Whether the incentive pay of consultants who provide executive compensation services is linked in any way to the Firm’s provision of Other Services.
 
SUPPORTING STATEMENT
 
As long-term owners, we believe that a company’s pay practices reflect how well management’s interests are aligned with that of shareholders. The current financial crisis has made it clear that executive compensation at many companies is on an unsustainable trajectory and has become disconnected from company performance.
 
The independence of compensation consultants is important in determining how senior executives are compensated. We believe a potential conflict of interest exists at companies such as Halliburton where firms are hired to work for both the board’s compensation committee and the company or management. Halliburton’s 2008 Proxy Statement says that Hewitt Associates, which was hired in 2007 as the compensation consultant to advise the board’s Compensation Committee, “also performs benefit administration services” for the Company. But nowhere in the Proxy Statement does the Company disclose the fees paid to Hewitt Associates for the compensation consulting, and the Other Services.
 
The potential conflicts of interest arise because Firms earn far higher fees from Other Services than from compensation consulting, and cross-selling of Other Services is an important objective of the Firms. James Reda, who runs an eponymous independent compensation consultancy, estimates that Firms earn 2% or less of their total revenue from executive compensation consulting services. (Comment letter to SEC on Proposed Rules on Executive Compensation and Related Party Disclosure, April 6, 2006.) More recently, an investigation by the House Oversight and Governmental Reform Committee found that on average, full-service consulting firms were paid nearly 11 times more for the other consulting services than for the executive compensation advice.
 
Considering the key role of compensation consultants, we believe that shareholders should be given the information needed to assess the independence of the board’s compensation consultant. This proposal urges Halliburton to disclose information that is material to determining the independence of the compensation consultant and the objectivity of the advice rendered.
 
We urge shareholders to vote FOR this proposal.


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The Board of Directors recommends a vote AGAINST this proposal. Halliburton’s statement in opposition is as follows:
 
We are prohibited from disclosing fees under our contracts with Hewitt Associates. We have no knowledge of Hewitt Associates individual consultants’ equity ownership or incentive pay arrangements, and they are under no obligation to provide us with such information. We do not believe the disclosures requested under this proposal are practical or necessary.
 
The Board of Directors recommends a vote AGAINST the proposal. Proxies solicited by the Board of Directors will be voted against the proposal unless instructed otherwise.
 
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(Item 9)
 
William Steiner, located at 112 Abbottsford Gate, Piermont, NY 10968, has notified Halliburton that he intends to present the resolution set forth below to the Annual Meeting for action by the stockholders. His supporting statement for the resolution, along with the Board’s statement in opposition, are set forth below. As of November 13, 2008, Mr. Steiner beneficially owned 3,000 shares of Halliburton’s common stock. Proxies solicited on behalf of the Board will be voted AGAINST this proposal unless stockholders specify a contrary choice in their proxies.
 
RESOLVED, Shareowners ask our board to take the steps necessary to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common stock (or the lowest percentage allowed by law above 10%) the power to call special shareowner meetings. This includes that such bylaw and/or charter text will not have any exception or exclusion conditions (to the fullest extent permitted by state law) that apply only to shareowners but not to management and/or the board.
 
Statement of William Steiner
 
Special meetings allow shareowners to vote on important matters, such as electing new directors, that can arise between annual meetings. If shareowners cannot call special meetings, management may become insulated and investor returns may suffer. Shareowners should have the ability to call a special meeting when a matter is sufficiently important to merit prompt consideration.
 
This proposal topic won impressive support at the following companies (based on 2008 yes and no votes):
 
         
Occidental Petroleum (OXY)
  66%   Emil Rossi (Sponsor)
FirstEnergy Corp. (FE)
  67%   Chris Rossi
Marathon Oil (MRO)
  69%   Nick Rossi
 
The merits of this Special Shareowner Meetings proposal should also be considered in the context of the need for further improvements in our company’s corporate governance and in individual director performance. In 2008 the following governance and performance issues were identified:
 
  •  The Corporate Library (TCL) www.thecorporatelibrary.com, an independent investment research firm, rated our company:
“D” overall.
“High Governance Risk Assessment.”
“Very High Concern” in Executive Pay — $17 million for David Lesar
 
  •  Our directors served on boards rated “D” or lower by The Corporate Library:
         
Malcolm Gillis
  Service Corporation International (SCI)   F-rated
Malcolm Gillis
  AECOM Technology (ACM)    
James Hackett
  Fluor (FLR)    
James Hackett
  Anadarko Petroleum (APC)    
 
  •  We had no shareholder right to:
Cumulative voting.
Act by written consent.
Call a special meeting.
An Independent Chairman.
A Lead Director.
 
  •  Our board should take the initiative on the above topics rather than leave it to shareholders to take the initiative in introducing proposals.
  •  Three directors were designated as “Problem Directors” by The Corporate Library due to their involvement with the Halliburton board when it had units file for bankruptcy:
Landis Martin
Jay Precourt
Debra Reed
 
  •  Kenneth Derr was designated a “Problem Director” due to his involvement with the Calpine Corporation board which filed for bankruptcy.
  •  “Problem Directors” held 6 of the 11 seats on our key audit, nominaton and executive pay committees.


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  •  Litigation: In September 2008, Jack Stanley, who formerly served at a subsidiary of KBR, Inc., pled guilty to conspiring to violate the Foreign Corrupt Practices Act. By the plea, Stanley admitted that he participated in a scheme to bribe Nigerian government officials and will serve a maximum of 84 months’ imprisonment.
 
The above concerns shows there is need for improvement. Please encourage our board to respond positively to this proposal:
 
Special Shareowner Meetings —
Yes on 9
 
 
The Board of Directors recommends a vote AGAINST this proposal. Halliburton’s statement in opposition is as follows:
 
Our stockholders already have the right to call special meetings. The Delaware General Corporation Law, or DGCL, § 211(d) provides that special meetings of stockholders may be called by the board of directors or such other persons that may be authorized by the certificate of incorporation or bylaws. Section 11 of Halliburton’s By-laws authorizes stockholders owning a majority of our outstanding voting stock to call a special meeting of the stockholders. This right has been provided for in our By-laws for quite some time.
 
We would like to clarify several other misstatements in the proposal for our stockholders. The actual proposal considered in 2008 at the Occidental Petroleum Corporation, FirstEnergy Corp. and Marathon Oil Corporation meetings referred to by Mr. Steiner was:
 
“RESOLVED, Shareholders ask our board to amend our bylaws and any other appropriate governing documents to give holders of 10% to 25% of our outstanding common stock the power to call a special shareholder meeting, in compliance with applicable law. This proposal favors 10% from the above range.”
 
, not the proposal presented here by Mr. Steiner. Mr. Steiner’s proposal would allow stockholders holding just 10% of our common stock to call a special meeting. Our Board of Directors believes that threshold is too low.
 
Also, contrary to Mr. Steiner’s assertion, our stockholders already have the right to act by written consent. DGCL § 228 states that unless the certificate of incorporation provides otherwise, stockholders can act by written consent. Halliburton’s Restated Certificate of Incorporation does not limit the ability of stockholders to act by written consent. A majority of Halliburton stockholders, therefore, have the right to act by written consent in lieu of a meeting.
 
Further, in accordance with our Corporate Governance Guidelines, a Lead Director is elected by and from the independent outside Directors. As discussed on page 7 of this proxy statement, Mr. Martin is our Lead Director.
 
The Board does not believe it is appropriate for holders of only 10% of our common stock to have an unlimited ability to call special meetings for any purpose at any time. If holders of only 10% of our outstanding stock can call special meetings, this could enable stockholder activists or special interest groups to disrupt our operations with an agenda not in the best interests of Halliburton or its stockholders. Special meetings also impose substantial costs on us. Also, preparing for stockholder meetings requires significant time and attention of the Board of Directors, members of senior management and significant employees, diverting their attention from operating the company. Calling special meetings of stockholders is not a matter to be taken lightly, and special meetings should be used only to handle extraordinary events that cannot wait until the next annual meeting.
 
For these reasons, the Board of Directors believes that our current structure that allows a majority of Halliburton stockholders to call a special meeting or, alternatively, to act by written consent in lieu of a meeting, is sufficient.
 
The Board of Directors recommends a vote AGAINST the proposal. Proxies solicited by the Board of Directors will be voted against the proposal unless instructed otherwise.
 
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Advance Notice Procedures
 
Under our By-laws, no business, including nominations of a person for election as a director, may be brought before an Annual Meeting unless it is specified in the notice of the Annual Meeting or is otherwise brought before the Annual Meeting by or at the direction of the Board or by a stockholder entitled to vote who has delivered notice to Halliburton (containing the information specified in the By-laws). To be timely, a stockholder’s notice must be delivered to or mailed and received at our principal executive office specified on page 2 of this proxy statement not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of last year’s annual meeting of stockholders, or no later than February 20, 2009 and no earlier than January 21, 2009. These requirements are separate from and in addition to the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in Halliburton’s proxy statement. This advance notice requirement does not preclude discussion by any stockholder of any business properly brought before the Annual Meeting in accordance with these procedures.
 
Proxy Solicitation Costs
 
The proxies accompanying this proxy statement are being solicited by Halliburton. The cost of soliciting proxies will be borne by Halliburton. We have retained Georgeson Inc. to aid in the solicitation of proxies. For these services, we will pay Georgeson a fee of $12,500 and reimburse it for out-of-pocket disbursements and expenses. Officers and regular employees of Halliburton may solicit proxies personally, by telephone or other telecommunications with some stockholders if proxies are not received promptly. We will, upon request, reimburse banks, brokers and others for their reasonable expenses in forwarding proxies and proxy material to beneficial owners of Halliburton’s stock.
 
Stockholder Proposals for the 2010 Annual Meeting
 
Stockholders interested in submitting a proposal for inclusion in the proxy materials for the Annual Meeting of Stockholders in 2010 may do so by following the procedures prescribed in SEC Rule 14a-8. To be eligible for inclusion, stockholder proposals must be received by Halliburton’s Vice President and Corporate Secretary at 5 Houston Center, 1401 McKinney Street, Suite 2400, Houston, Texas 77010, no later than December 7, 2009. The 2010 Annual Meeting will be held on May 19, 2010.
 
 
As of the date of this proxy statement, we know of no other business that will be presented for consideration at the Annual Meeting other than the matters described in this proxy statement. If any other matters should properly come before the Annual Meeting for action by stockholders, it is intended that proxies will be voted on those matters in accordance with the judgment of the person or persons voting the proxies.
 
By Authority of the Board of Directors,
 
-s- Sherry D. Williams
Sherry D. Williams
Vice President and Corporate Secretary
 
April 6, 2009


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CORPORATE GOVERNANCE GUIDELINES
 
Revised as of December 3, 2008
 
The Board of Directors believes that the primary responsibility of the Directors is to provide effective governance over Halliburton’s affairs for the benefit of its stockholders. That responsibility includes:
 
  •   Evaluating the performance of the Chief Executive Officer and taking appropriate action, including removal, when warranted;
  •   Fixing the Chief Executive Officer’s compensation for the next year based upon a recommendation from the Compensation Committee;
  •   Selecting, evaluating and fixing the compensation of executive management of Halliburton and establishing policies regarding the compensation of other members of management;
  •   Reviewing succession plans and management development programs for members of executive management;
  •   Reviewing and approving periodically long-term strategic and business plans and monitoring corporate performance against such plans;
  •   Adopting policies of corporate conduct, including compliance with applicable laws and regulations and maintenance of accounting, financial, disclosure and other controls, and reviewing the adequacy of compliance systems and controls;
  •   Evaluating annually the overall effectiveness of the Board; and
  •   Reviewing matters of corporate governance.
 
The Board has adopted these Guidelines to assist it in the exercise of its responsibilities. These Guidelines are reviewed periodically and revised as appropriate to reflect the dynamic and evolving processes relating to the operation of the Board.
 
Operation of the Board — Meetings
 
1.  Chairman of the Board and Chief Executive Officer. The Board believes that, under normal circumstances, the Chief Executive Officer of Halliburton should also serve as the Chairman of the Board. The Chairman of the Board and Chief Executive Officer is responsible to the Board for the overall management and functioning of Halliburton.
 
2.  Lead Director. The Lead Director is elected by and from the independent outside Directors. The Lead Director of the Board shall preside at each executive session of the outside Directors and, in his or her absence, the outside Directors shall select one of their number to preside. The Lead Director is responsible for periodically scheduling and conducting separate meetings and coordinating the activities of the outside Directors, providing input into agendas for Board meetings and performing various other duties as may be appropriate, including advising the Chairman of the Board.
 
3.  Executive Sessions of Outside Directors. During each regular Board meeting, the outside Directors meet in scheduled executive sessions, presided over by the Lead Director.
 
Each December, in executive session, the Lead Director shall manage the discussion related to evaluating the performance of the Chief Executive Officer. In evaluating the Chief Executive Officer, the outside Directors take into consideration the executive’s performance in both qualitative and quantitative areas, including:
 
  •   leadership and vision;
  •   integrity;
  •   keeping the Board informed on matters affecting Halliburton and its operating units;
  •   performance of the business (including such measurements as total stockholder return and achievement of financial objectives and goals);
  •   development and implementation of initiatives to provide long-term economic benefit to Halliburton;
  •   accomplishment of strategic objectives; and
  •   development of management.
 
The evaluation will be communicated to the Chief Executive Officer by the Lead Director and reviewed by the Compensation Committee in the course of its deliberations before it provides a recommendation to the full Board of Directors for the Chief Executive Officer’s compensation for the next year.


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4.  Attendance of Non-Directors at Board Meetings. The Chief Financial Officer and the General Counsel will be present during Board meetings, except where there is a specific reason for one or both of them to be excluded. In addition, the Chairman of the Board may invite one or more members of management to be in regular attendance at Board meetings and may include other officers and employees from time to time as appropriate to the circumstances.
 
5.  Frequency of Board Meetings. The Board has five regularly scheduled meetings per year. Special meetings are called as necessary. It is the responsibility of the Directors to attend the meetings.
 
6.  Board Access to Management. Directors have open access to Halliburton’s management, subject to reasonable time constraints. In addition, members of Halliburton’s executive management routinely attend Board and Committee meetings and they and other managers frequently brief the Board and the Committees on particular topics. The Board encourages executive management to bring managers into Board or Committee meetings and other scheduled events who (a) can provide additional insight into matters being considered or (b) represent managers with future potential whom executive management believe should be given exposure to the members of the Board.
 
7.  Board Access to Independent Advisors. The Board has the authority to retain, set terms of engagement and dismiss such independent advisors, including legal counsel or other experts, as it deems appropriate, and to approve the fees and expenses of such advisors.
 
8.  Long-term Plans. Long-term strategic and business plans will be reviewed annually at one of the Board’s regularly scheduled meetings.
 
9.  Selection of Agenda Items for Board Meetings. The Chairman of the Board and Chief Executive Officer prepares a draft agenda for each Board meeting and the agenda and meeting schedule are submitted to the Lead Director for approval. The other Board members are free to suggest items for inclusion on the agenda and each Director is free to raise at any Board meeting subjects that are not on the agenda.
 
10.  Board/Committee Forward Agenda. A forward agenda of matters requiring recurring and focused attention by the Board and each Committee will be prepared and distributed prior to the beginning of each calendar year in order to ensure that all required actions are taken in a timely manner and are given adequate consideration.
 
11.  Information Flow; Advance Review of Meeting Materials. In advance of each Board or Committee meeting, a proposed agenda will be distributed to each Director. In addition, to the extent feasible or appropriate, information and data important to the Directors’ understanding of the matters to be considered, including background summaries and presentations to be made at the meeting, will be distributed in advance of the meeting. Information distributed to the Directors is approved by the Lead Director. Directors also routinely receive monthly financial statements, earnings reports, press releases, analyst reports and other information designed to keep them informed of the material aspects of Halliburton’s business, performance and prospects. It is each Director’s responsibility to review the meeting materials and other information provided by Halliburton.
 
Board Structure
 
1.  Two-thirds of the Members of the Board Must Be Independent Directors. The Board believes that as a matter of policy two-thirds of the members of the Board should be independent Directors. In order to be independent, a Director cannot have a material relationship with Halliburton. A Director will be considered independent if he or she:
 
  •     has not been employed by Halliburton or its affiliate in the preceding three years and no member of the Director’s immediate family has been employed as an executive officer of Halliburton or its affiliates in the preceding three years;
 
  •     has not received, and does not have an immediate family member that has received for service as an executive officer of Halliburton, within the preceding three years, during any twelve-month period, more than $120,000 in direct compensation from Halliburton, other than director’s fees, committee fees or pension or deferred compensation for prior service;
 
  •     (A) is not a current partner or employee of Halliburton’s independent auditor and (B) was not during the past three calendar years a partner or employee of Halliburton’s independent auditor and personally worked on Halliburton’s audit;
 
  •     does not have an immediate family member who (A) is a current partner of Halliburton’s independent auditor, (B) is a current employee of Halliburton’s independent auditor who personally works on Halliburton’s audit


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  and (C) was during the past three calendar years, a partner or employee of Halliburton’s independent auditor and personally worked on Halliburton’s audit;
 
  •     has not been an employee of a customer or supplier of Halliburton or its affiliates and does not have an immediate family member who is an executive officer of such customer or supplier that makes payments to, or receives payments from, Halliburton or its affiliates in an amount which exceeds the greater of $1 million or 2% of such customer’s or supplier’s consolidated gross revenues within any of the preceding three years;
 
  •     has not been within the preceding three years part of an interlocking directorate in which the Chief Executive Officer or another executive officer of Halliburton serves on the compensation committee of another corporation that employs the Director, or an immediate family member of the Director, as an executive officer.
 
The definition of independence and compliance with this policy will be reviewed periodically by the Nominating and Corporate Governance Committee. All Directors complete independence questionnaires at least annually and the Board makes determinations of the independence of its members.
 
The Board believes that employee Directors should number not more than 2. While this number is not an absolute limitation, other than the Chief Executive Officer, who should at all times be a member of the Board, employee Directors should be limited only to those officers whose positions or potential make it appropriate for them to sit on the Board.
 
2.  Size of the Board. The Board believes that, optimally, the Board should number between 10 and 14 members. The By-laws prescribe that the number of Directors will not be less than 8 nor more than 20.
 
3.  Service of Former Chief Executive Officers and Other Former Employees on the Board. Employee Directors shall retire from the Board at the time of their retirement as an employee unless continued service as a Director is requested and approved by the Board.
 
4.  Annual Election of All Directors. As provided in Halliburton’s By-laws, all Directors are elected annually by the majority of votes cast, unless the number of nominees exceeds the number of Directors to be elected, in which event the Directors shall be elected by a plurality vote. Should a Director’s principal title change during the year, he or she must submit a letter of Board resignation to the Chairman of the Nominating and Corporate Governance Committee who, with the full Committee, shall have the discretion to accept or reject the letter.
 
5.  Board Membership Criteria. Candidates nominated for election or reelection to the Board of Directors should possess the following qualifications:
 
  •     Personal characteristics:
 
  •     highest personal and professional ethics, integrity and values;
 
  •     an inquiring and independent mind; and
 
  •     practical wisdom and mature judgment.
 
  •     Broad training and experience at the policy-making level in business, government, education or technology.
 
  •     Expertise that is useful to Halliburton and complementary to the background and experience of other Board members, so that an optimum balance of members on the Board can be achieved and maintained.
 
  •     Willingness to devote the required amount of time to carrying out the duties and responsibilities of Board membership.
 
  •     Commitment to serve on the Board for several years to develop knowledge about Halliburton’s principal operations.
 
  •     Willingness to represent the best interests of all stockholders and objectively appraise management performance.
 
  •     Involvement only in activities or interests that do not create a conflict with the Director’s responsibilities to Halliburton and its stockholders.