Kodak 2005 Annual Report Download - page 199

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REPORT OF THE EXECUTIVE COMPENSATION AND
DEVELOPMENT COMMITTEE
Role of the Committee
The Executive Compensation and Development Committee, as of December 31, 2005, is comprised of four members of the Board of Directors, all of
whom are independent in accordance with the Board’s Director Independence Standards, which standards refl ect the NYSE’s director independence
standards. The principal functions of the Committee include:
• periodically reviewing and approving the Company’s executive compensation strategy and principles to ensure that they are aligned with the
Company’s business strategy and objectives, shareholder interests, desired behaviors and corporate culture;
• periodically reviewing the Company’s executive compensation plans to ensure that they are consistent with the Company’s executive
compensation strategy and principles;
• reviewing and approving the adoption of, and changes to, the Company’s executive compensation and equity-based compensation plans;
• overseeing the administration of the Company’s executive compensation plans;
• annually reviewing and approving the goals and objectives relevant to the compensation of the CEO, evaluating the CEO’s performance in light
of these goals and objectives and setting the CEO’s individual elements of total compensation based on this evaluation;
• overseeing the compensation of the Company’s named executive offi cers and other executive offi cers;
• reviewing the process and plans for the assessment and selection of candidates for the positions of CEO and, if applicable, President;
• annually overseeing a performance evaluation of the Committee, which includes a comparison of the performance of the Committee with the
requirements in its charter; and
• periodically reviewing the Company’s executive staffi ng plan and executive development strategies for meeting present and future
leadership needs.
To help perform its functions, the Committee makes use of Company resources and regularly retains the services of its external independent
compensation consultant.
Executive Compensation Philosophy
The Company’s overall philosophy is to provide an executive compensation package that attracts, retains and motivates world-class executive talent to
achieve the Company’s short- and long-term business goals.
In 2005, the Committee engaged in a review of the Company’s executive compensation strategy in light of the Company’s digital transformation
business strategy. In the course of this review, the Committee sought the advice and input of both its external independent compensation consultant,
as well as Company management. As a result of this review, the executive compensation goals of the Company were reaffi rmed, as described below.
Executive Compensation Goals
• inspire and develop world-class executive talent
• attract, retain and motivate executives
• calibrate realized compensation to achievement of short-term and long-term objectives
• align management and shareholder interests
• maximize the fi nancial effi ciency of the executive compensation program
• ensure high standards and best practices
In order to achieve these goals, the Company’s executive compensation strategy leverages all elements of market-competitive total compensation to
drive profi table growth and superior long-term shareholder value consistent with the Company’s values. Plan design and performance-based
differentiation are intended to drive extraordinary rewards for outstanding performance. Consistent with this compensation strategy, the following
principles provide a framework for the Company’s executive compensation program.
Executive Compensation Principles
• Total target compensation for executives should be market competitive. Market competitive is defi ned as the 50th percentile with differences
where warranted.
• The mix of total compensation elements will refl ect competitive market requirements and strategic business needs taking into account
differences in managing businesses for “cash” and businesses for “growth.”
• A signifi cant portion of each executive’s compensation should be at risk, with a positive correlation between the degree of risk and the level of the
executive’s responsibility.