Kodak 2005 Annual Report Download - page 204

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Leadership Stock for Messrs. Perez and Carp
Based on the Company’s operational earnings per share performance for the two-year period from January 1, 2004 through December 31, 2005, the
performance formula for the 2004-2005 performance cycle of the Leadership Stock Program derived a payout allocation equal to 51% of target for
all participants. This payout results in an award to Mr. Perez of 17,850 restricted units, subject to an additional one-year vesting period. With respect
to Mr. Carp, the payout for this performance cycle results in an award to him of 30,600 shares of common stock, which shares are not subject to the
one-year vesting period as a result of Mr. Carp’s retirement, under the terms of the plan.
In December 2004, prior to Mr. Perez’s election as CEO and Chairman, the Committee allocated to Mr. Perez a target award for the 2005-2006
performance cycle of the Leadership Stock Program of 32,500 performance stock units. The Committee determined Mr. Perez’s allocation based on
its assessment of his leadership and execution. At that time, the Committee allocated to Mr. Carp a target award for the 2005-2006 performance cycle
of the Leadership Stock Program of 41,000 performance stock units. The Committee determined Mr. Carp’s allocation based on its assessment of his
leadership and execution. Mr. Carp’s actual award for this cycle, if earned, will be prorated to refl ect his retirement after completion of one year of the
two-year cycle, in accordance with the terms of the plan.
The Committee allocated to Mr. Perez a target award for the 2006-2007 performance cycle of the Leadership Stock Program of 63,750 performance
stock units. The Committee determined Mr. Perez’s allocation based on its assessment of his leadership and execution. The allocation also refl ects the
revised long-term incentive compensation guidelines adopted by the Committee, as previously discussed in this Report.
Restricted Stock for Mr. Perez
As noted earlier, effective June 1, 2005, the Committee granted Mr. Perez 60,000 shares of restricted stock in connection with his promotion to CEO.
Performance Stock Program
Based on the Company’s fi nancial performance over the three-year period ending in 2005, neither Mr. Perez nor Mr. Carp received an award for the
2003-2005 performance cycle of the Performance Stock Program. This was the fi nal cycle of this program.
Committee Review of All Components of CEO Compensation
The Committee has reviewed all components of the CEO’s and each named executive offi cer’s compensation, including salary, bonus, equity and
long-term compensation, accumulated realized and unrealized stock option and restricted stock gains, the dollar value to the executive and cost to the
Company of all perquisites and other personal benefi ts, the earnings and accumulated payout obligations under the Company’s non-qualifi ed deferred
compensation program, the actual projected payout obligations under the Company’s retirement plans and any applicable supplemental enhancements
to retirement benefi ts, and under several potential severance and change-in-control scenarios. Tally sheets setting forth all the above components
were prepared by the Committee’s external consultant and reviewed in detail with the Committee.
Based on this review, the Committee fi nds the CEO’s and each of the named executive offi cer’s total compensation (and, in the case of the severance
and change-in-control scenarios, the potential payouts) in the aggregate to be reasonable.
It should be noted that when the Committee considers any component of the CEO’s and a named executive offi cer’s total compensation, the aggregate
amounts and mix of components are taken into consideration in the Committee’s decisions. In addition, it is the Committee’s policy to make most
compensation decisions in a two-step process to ensure suffi cient deliberation over these matters.
Company Policy on Qualifying Compensation
Under Section 162(m) of the Internal Revenue Code, the Company may not deduct certain forms of compensation in excess of $1,000,000 paid to
any of the named executive offi cers that are employed by the Company at year-end, unless certain specifi c and detailed criteria are satisfi ed. The
Committee believes that it is generally in the Company’s best interests to have compensation be deductible under Section 162(m). The Committee
also feels, however, that there may be circumstances in which the Company’s interests are best served by maintaining fl exibility regardless of whether
compensation is fully deductible under Section 162(m).
Timothy M. Donahue, Chair
Martha Layne Collins
Durk I. Jager
Debra L. Lee