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DEFINITIVE COPY
(CORPORATE LOGO OMITTED)
NOTICE OF 1994 ANNUAL MEETING AND PROXY STATEMENT
Eastman Kodak Company
343 State Street
Rochester, New York 14650
Date of Notice March 17, 1994
TABLE OF CONTENTS
Notice of Annual Shareholders Meeting...................3
Information Requests....................................4
A Note for Kodak Employees and Retirees.................4
Election of Directors (Item 1)..........................5
Committees of the Board of Directors...................11
Beneficial Security Ownership of Directors, Nominees
and Executive Officers...............................14
Compensation of Directors and Executive Officers.......15
Compensation of Directors.........................15
Compensation of Executive Officers................16
Report on Executive Compensation by the Executive
Compensation and and Development Committee......27
Performance Graph - Shareholder Return.................32
Ratification of Election of
Independent Accountants (Item 2).....................33
Shareholder Proposals (Items 3 and 4)..................33
Other Matters..........................................38
TO KODAK SHAREHOLDERS
On behalf of the Board of Directors, it is my
pleasure to invite you to attend the Annual Meeting of
the shareholders of Eastman Kodak Company. The meeting
will be held in Rochester, New York, on May 11, 1994, at
10:00 a.m.
It is important that your shares be represented at
the meeting. We ask that you promptly sign, date and
return the enclosed proxy card regardless of the number
of shares you hold.
Time will be set aside during the meeting to discuss
each item of business described in the Proxy Statement
and for other questions relating to the Company.
Representative members of management will be on hand for
this purpose.
Please return your proxy card as promptly as
possible.
s/George M. C. Fisher
George M. C. Fisher
Chairman of the Board
NOTICE OF ANNUAL SHAREHOLDERS MEETING
The Annual Meeting of the shareholders of Eastman
Kodak Company will be held at the Theater on the Ridge,
200 Ridge Road West, Rochester, New York, on Wednesday,
May 11, 1994, at 10:00 a.m.
You may indicate your intention to attend the
meeting by checking the appropriate box on the enclosed
card, or by separate written request to Shareowner
Services, Eastman Kodak Company, Rochester, New York
14650-0520. Attendance at the meeting will be on a
first-come, first-served basis upon your arrival at the
meeting. You may bring up to two guests by checking the
appropriate box on the enclosed card. If the shares you
own are not registered in your name, please identify the
shareholder of record when you request admission.
Please note that photographs will be taken at the
Annual Meeting for use (including publication) by the
Company. Attendees are deemed to have waived any claim
regarding their appearance in such photographs.
The Theater on the Ridge is handicap accessible. If
you require special assistance, please call Shareowner
Services at 716/724-5492.
The business of the meeting will be:
1. The election of five directors;
2. The ratification of election of independent
accountants;
3. Action on shareholder proposal regarding
severance disclosure; and
4. Action on shareholder proposal regarding
executive compensation report.
Shareholders of record at the close of business on
March 14, 1994, will be entitled to vote at the meeting.
By Order of the Board of Directors
Gary P. Van Graafeiland, Senior Vice President and
Secretary
Eastman Kodak Company
March 17, 1994
INFORMATION REQUESTS
A copy of the Annual Report on Form 10-K, filed with
the Securities and Exchange Commission, may be obtained
by writing: Eastman Kodak Company, Shareowner Services,
Rochester, New York 14650-0520.
A transcript of the Annual Meeting may be obtained,
without charge, by writing to this same address. Also,
any shareholder of the Company may address a request to
the above address for plan descriptions, administrators'
annual reports and trust agreements and contracts for any
of the pension plans of the Company and its subsidiaries.
A NOTE FOR KODAK EMPLOYEES AND RETIREES,
AND ALL AUTOMATIC DIVIDEND REINVESTMENT SERVICE
PARTICIPANTS
If you are a participant in the Employee Stock
Purchase Plan for Employees of Eastman Kodak Company or
the Automatic Dividend Reinvestment Service for
Shareholders of Eastman Kodak Company, each offered by
First Chicago Trust Company of New York, or the Kodak
Employee Stock Ownership Plan, shares of Kodak stock
which are held for you may be voted through the proxy
card accompanying this mailing.
The trustees or custodians, as the shareholders of
record of the Kodak shares held in the above plans, are
entitled to vote those shares. However, they may not do
so under the applicable trust agreements or regulations
unless they have received directions to vote from the
plan participants. Arrangements have been made for each
of the trustees or custodians to vote the number of
shares equivalent to your interest in each plan in
accordance with the directions you give on the enclosed
proxy card, provided that you return the proxy card duly
signed and dated. Neither the shares you own directly
(if you own shares other than through one or more of the
above plans) nor your shares held in the plans will be
voted if you fail to return the proxy card. Therefore,
we urge you to return the card promptly, duly signed and
dated.
If you are a participant in the Kodak Stock Fund of
the Eastman Kodak Employees' Savings and Investment Plan,
your shares may also be voted under similar arrangements
through the proxy card accompanying this mailing. The
trustee of this plan has discretion to vote the shares
unless the plan administrator, Savings and Investment
Plan Committee, directs the voting of those shares. This
Committee has directed the trustee to vote the shares as
participants indicate on the cards, but where cards are
not returned, duly signed and dated, to vote those shares
as the Board of Directors recommends.
If you are a participant in the Kodak Stock Fund of
the Sterling Winthrop Inc. Hourly Employees' Savings
Plan, the Sterling Winthrop Inc. Salaried Employees'
Savings Plan, the L&F Products Employees' Savings Plan I
or the L&F Products Employees' Savings Plan II, your
shares may also be voted through the proxy card
accompanying this mailing. The Sterling Winthrop plans
provide that the trustees shall vote the shares as
participants indicate on the cards and where cards are
not returned, duly signed and dated, the shares will not
be voted. The L&F Products plans provide that the
trustees shall vote the shares as participants indicate
on the cards, but where cards are not returned, duly
signed and dated, the Plan Administrative Committees of
each of the plans shall direct the trustees how to vote
those shares.
ITEM 1 - ELECTION OF DIRECTORS
The By-laws of the Company currently provide that
the Board of Directors shall consist of not fewer than 9
nor more than 18 directors, which number is fixed from
time to time by the Board of Directors. The Company's
Restated Certificate of Incorporation provides that the
Board of Directors shall consist of three classes of
directors with overlapping three-year terms. One class
of directors is to be elected each year for a term
extending to the third succeeding Annual Meeting after
such election. There are five directors whose terms
expire at the 1994 Annual Meeting.
The names and biographical summaries of the five
persons who have been nominated to stand for election at
the 1994 Annual Meeting and the remaining directors whose
terms are continuing until the 1995 or 1996 Annual
Meeting appear in the sections below. All the nominees,
except Mr. Fisher, were previously elected by the
shareholders; Mr. Fisher is standing for election by the
shareholders for the first time.
Directors are elected to serve until the end of the
term for which they are elected and until their
respective successors are duly elected and qualified.
However, employee directors leave the Board when their
employment terminates, and directors who are not
employees leave the Board effective the date of the
annual meeting that occurs on or immediately following
their 70th birthday. It is anticipated that Mr. Duncan,
who turns 70 in October 1994, will retire on May 10,
1995.
If an unexpected occurrence makes it necessary, in
the judgment of the Board of Directors, that some other
person be substituted for any of the nominees, shares
represented by proxies will be voted for such other
person as the Board may select.
If any director retires, resigns, dies or is
otherwise unable to serve for the term for which elected,
or if the number of directors is increased by the Board
of Directors, any vacancy so arising will be filled by
the Board of Directors until the next Annual Meeting of
shareholders, or the Board may reduce the number of
Directors.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM
EXPIRING AT THE 1997 ANNUAL MEETING
(Class I Directors)
MARTHA LAYNE
COLLINS (PICTURE
OMITTED)
Governor Collins, 57, was elected to the Board of
Directors in May 1988. She is President of Martha Layne
Collins and Associates, a consulting firm, and is also
President of St. Catharine College in Springfield,
Kentucky, a position she assumed in July 1990. Following
her receipt of a B.S. from the University of Kentucky,
Governor Collins taught from 1959 to 1970. After acting
as Coordinator of Women's Activities in a number of
political campaigns, she served as Clerk of the Supreme
Court of the Commonwealth of Kentucky from 1975 to 1979.
She was elected to a four-year term as Governor of the
Commonwealth of Kentucky in 1983 after having served as
Lieutenant Governor from 1979 to 1983. Governor Collins,
who has served as a Fellow at the Institute of Politics,
Harvard University, is a director of R. R. Donnelley &
Sons Company and Bank of Louisville.
CHARLES T.
DUNCAN (PICTURE OMITTED)
Mr. Duncan, 69, who was elected to the Board of Directors
in August 1977, has had a career that includes private
practice with law firms in New York and Washington, D.C.,
as well as public service. Following service as
Principal Assistant United States Attorney for the
District of Columbia, General Counsel for the U.S. Equal
Employment Opportunity Commission, and Corporation
Counsel for the District of Columbia, Mr. Duncan joined
the faculty of Howard Law School, where he served as Dean
and Professor of Law from 1974 to 1978. Named a partner
in the law firm of Reid & Priest in 1984, he became
senior counsel in January 1990. Prior to joining Reid &
Priest, Mr. Duncan was a partner in Peabody, Lambert &
Meyers. Mr. Duncan, who was graduated from Dartmouth
College in 1947 and from Harvard Law School in 1950, is a
director of TRW, Inc.
GEORGE M. C.
FISHER (PICTURE OMITTED)
Mr. Fisher, 53, became Chairman, President and Chief
Executive Officer of Eastman Kodak Company effective
December 1, 1993. Mr. Fisher most recently served as
Chairman and Chief Executive Officer of Motorola, Inc.,
after having served as President and Chief Executive
Officer between 1988 and 1990 and Senior Executive Vice
President and Deputy to the Chief Executive Officer
between 1986 and 1988. Mr. Fisher holds a bachelor's
degree in engineering from the University of Illinois and
a masters in engineering and doctorate in applied
mathematics from Brown University. He is a member of the
board of directors of the American Express Company.
PAUL E.
GRAY (PICTURE OMITTED)
Dr. Gray, 62, was elected to the Board of Directors in
September 1990. Chairman of the Corporation of the
Massachusetts Institute of Technology (M.I.T.) since
October 1990, Dr. Gray served for the ten preceding years
as President of M.I.T. He has also served on the M.I.T.
faculty and in the academic administration, including
responsibilities as Associate Provost, Dean of
Engineering, and Chancellor. Dr. Gray earned his
bachelor's, master's, and doctorate degrees in electrical
engineering from M.I.T. He is a director of Arthur D.
Little, Inc., The Boeing Co., and The New England.
JOHN J.
PHELAN, JR. (PICTURE OMITTED)
Mr. Phelan, 62, who joined the Kodak Board of Directors
in December 1987, is the retired Chairman and Chief
Executive Officer of the New York Stock Exchange, a
position which he held from 1984 until 1990. He is
President of the International Federation of Stock
Exchanges, a member of the Council on Foreign Relations,
and a Senior Advisor to the Boston Consulting Group. Mr.
Phelan, a graduate of Adelphi University, is active in
educational and philanthropic organizations and is also a
director of Avon Products, Inc., Merrill Lynch & Co.,
Inc., Metropolitan Life Insurance Company and SONAT Inc.
DIRECTORS SERVING A TERM EXPIRING AT THE 1995 ANNUAL
MEETING
(Class II Directors)
ALICE F.
EMERSON (PICTURE OMITTED)
Dr. Emerson, 62, is a Fellow of The Andrew W. Mellon
Foundation, a position she assumed in 1991 after having
served as President of Wheaton College in Massachusetts
since 1975. Prior to 1975, Dr. Emerson served the
University of Pennsylvania, first as Dean of Women from
1966 to 1969 and subsequently as Dean of Students.
Elected to the Kodak Board of Directors in May 1992, Dr.
Emerson received her bachelor's degree from Vassar
College and her Ph.D. degree from Bryn Mawr College. She
is a member of the boards of directors of AES
Corporation, Bank of Boston Corporation and Champion
International Corp.
ROBERTO C.
GOIZUETA (PICTURE OMITTED)
Mr. Goizueta, 62, is Chairman and Chief Executive Officer
of The Coca-Cola Company. He was elected to this
position in March 1981, having served as President from
May 1980 to March 1981. Prior to becoming President, he
was a Vice Chairman and Executive Vice President. Mr.
Goizueta, who was elected to the Kodak Board of Directors
in May 1989, received a B.S. degree in chemical
engineering from Yale University. He is a member of the
boards of directors of Ford Motor Company, SONAT Inc. and
SunTrust Banks, Inc.
WILBUR J.
PREZZANO (PICTURE OMITTED)
Mr. Prezzano, 53, who joined the Kodak Board of Directors
in May 1992, is a Group Vice President of Eastman Kodak
Company and President of Kodak's Health Group. Mr.
Prezzano joined the Company in 1965 in the statistical
department and has held positions in Treasurer's,
Business Systems Markets, Customer Equipment Services
Division, Copy Products, Marketing Division,
International Photographic Operations and Photographic
Products. He served as Group Vice President and General
Manager, International, from January 1990 to September
1991, when he became President of Kodak's Health Group.
Mr. Prezzano received B.S. and M.B.A. degrees from the
University of Pennsylvania's Wharton School.
LEO J.
THOMAS (PICTURE OMITTED)
Dr. Thomas, 57, who joined the Kodak Board of Directors
in May 1992, is a Group Vice President of Eastman Kodak
Company and President of Kodak's Imaging Group. Dr.
Thomas began his Kodak career in 1961, and held various
positions in the Research Laboratories before being named
Director of Research and elected a Vice President in
1977. In December 1978, he was elected a Senior Vice
President and in 1984, he was appointed General Manager,
Life Sciences. Following the acquisition of Sterling
Drug Inc. in 1988, Dr. Thomas was named Sterling Vice
Chairman, and was elected the subsidiary's Chairman in
September 1988. He became General Manager of the Health
Group in 1989 and was elected a Group Vice President in
November 1989. In September 1991, Dr. Thomas became
President of the Imaging Group, which was formed to
consolidate Kodak's photographic and commercial imaging
businesses. Dr. Thomas holds a B.S. degree from the
University of Minnesota and M.S. and Ph.D. degrees from
the University of Illinois. He is a member of the boards
of directors of Rochester Telephone Corporation and John
Wiley & Sons, Inc.
DIRECTORS SERVING A TERM EXPIRING AT THE 1996 ANNUAL
MEETING
(Class III Directors)
RICHARD S.
BRADDOCK (PICTURE OMITTED)
Mr. Braddock, 52, was elected to the Kodak Board of
Directors in May 1987. He was Chief Executive Officer of
Medco Containment Services, Inc. from January 1993 until
October 1993, after having served as President and Chief
Operating Officer of Citicorp and its principal
subsidiary, Citibank, N.A. from January 1990 through
October 1992. Prior to that, he served for approximately
five years as Sector Executive in charge of Citicorp's
Individual Bank, one of the financial services company's
three core businesses. Mr. Braddock was graduated from
Dartmouth College in 1963 with a degree in history, and
received his M.B.A. from the Harvard School of Business
Administration in 1965. He is a director of Duty Free
Shops, Lotus Development and VISX Inc.
KARLHEINZ
KASKE (PICTURE OMITTED)
Dr. Kaske, 65, served as President and Chief Executive
Officer of Siemens AG from 1981 until his retirement in
September 1992. Dr. Kaske joined Siemens in 1960 and
held a variety of positions with Siemens AG, including
head of Process Engineering and head of the Power
Engineering Group. He holds a diploma in physics from
the Technical University of Aachen and a Doctorate of
Engineering from the Technical University of Brunswick.
Dr. Kaske is Chairman of the supervisory board of MAN
Aktiengesellschaft and a member of the supervisory boards
of Philipp Holzmann AG and Linde AG.
RICHARD A.
ZIMMERMAN (PICTURE OMITTED)
Mr. Zimmerman, 62, who joined the Kodak Board of
Directors in July 1989, is the retired Chairman and Chief
Executive Officer of Hershey Foods Corporation. Mr.
Zimmerman joined Hershey in 1958 and was named Vice
President in 1971. Appointed a Group Vice President
later in 1971, he became President and Chief Operating
Officer in 1976. He was named Chief Executive Officer in
January 1984 and Chairman of the Board in March 1985.
Mr. Zimmerman was graduated from Pennsylvania State
University. He is a member of the boards of directors of
Hershey Trust Company and Westvaco Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, an
Executive Compensation and Development Committee, a
Committee on Directors, a Finance Committee, and a Public
Policy Committee.
The members of the Audit Committee are Messrs.
Zimmerman (Chairman) and Duncan, Drs. Emerson and Gray.
The Committee had four meetings during 1993 and (i)
recommended to the Board that Price Waterhouse be elected
as independent accountants; (ii) reviewed the audit and
non-audit activities of both the independent accountants
and the internal audit staff of the Company; and (iii)
met separately and privately with the independent
accountants and with the Company's Director, Corporate
Auditing, and with the Company's chief financial and
accounting officers to ensure that the scope of their
activities had not been restricted and that adequate
responses to their recommendations had been received.
The members of the Executive Compensation and
Development Committee are Mr. Braddock (Chairman), Dr.
Emerson and Messrs. Goizueta and Phelan. The Committee
had nine meetings in 1993. The Committee's 1993
activities included a review and approval of remuneration
to be paid to the officers of the Company who were
members of the Board of Directors in 1993, including the
approval of Mr. Fisher's employment agreement. In
addition, the Committee took action pursuant to the
Management Annual Performance Plan and the 1990 Omnibus
Long-Term Compensation Plan, and made recommendations
concerning compensation of Company officers who were not
members of the Board. Also, the Committee took action
with respect to the adjustment of outstanding stock
options and awards to recognize the effect of the spin-
off of Eastman Chemical Company. In May 1993, the
Committee assumed oversight responsibility for the
executive development process.
The members of the Committee on Directors are
Messrs. Goizueta (Chairman), Braddock, and Zimmerman and
Dr. Kaske. The Committee met twice in 1993 and (i)
reviewed the qualifications of individuals for election
as members of the Board; (ii) recommended qualified
individuals to be considered for Board membership; and
(iii) reviewed the compensation of the Company's
directors. The Committee will consider persons whom
shareholders recommend as candidates for election as
Company directors. Any shareholder wishing to make such
a recommendation should submit it to the Secretary of the
Company.
The members of the Finance Committee are Governor
Collins (Chairman), Mr. Duncan and Drs. Gray and Kaske.
The Committee had three meetings during 1993 and reviewed
and made reports to the Board regarding (i) the
investment performance and the administration of the
Company's pension plan; and (ii) the Company's financing
strategies, including the effect of the spin-off of
Eastman Chemical Company.
The members of the Public Policy Committee are
Messrs. Duncan (Chairman), Goizueta, and Zimmerman and
Governor Collins. The Committee met twice during 1993.
Its activities included (i) a review of proposals
submitted by shareholders; (ii) a review of the Company's
philanthropic programs; (iii) a review of the Company's
policy with respect to South Africa; and (iv) a review of
the Company's environmental initiatives.
The Corporate Directions Committee, formed by the
Board in February 1993, was dissolved by the Board at the
February 1994 Board meeting. The Committee was formed to
work with senior management as they evaluated the
Company's business and product portfolio, assessed its
competitive position, reviewed its executive development
process, and developed plans to increase the Company's
value. The Committee felt that work in each of these
areas was well under way, with significant
accomplishments in 1993, including the development of
cash flow and debt reduction plans, the spin-off of
Eastman Chemical Company, implementation of major
benchmarking initiatives, and the active involvement of
the Executive Compensation and Development Committee in
the executive development process. Consequently, the
Board decided at its February 1994 meeting to dissolve
the Committee, and to have the full Board assume
oversight responsibility in the remaining areas.
The Company would be remiss in this final discussion of
the Corporate Directions Committee if it failed to
recognize the efforts of Mr. Phelan, Chairman of the
Committee, Drs. Emerson and Gray, and John F. Burlingame
(Mr. Burlingame served on the Committee until his
retirement in May 1993), who met in formal session eleven
times in 1993 and devoted countless additional hours to
Committee activities. The Company, its shareholders, and
its employees owe these directors a debt of gratitude for
their work.
MEETING ATTENDANCE The Board of Directors held a total
of fifteen meetings in 1993. Each director attended at
least 75 % of the meetings of the Board and committees of
the Board on which such director served.
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS
Directors, Nominees
and Executive Number of Common Shares
Officers Owned on Jan. 3, 1994
- ------------------- -----------------------
Richard T. Bourns 64,311*+
Richard S. Braddock 2,120
Martha Layne Collins 1,925
Earnest W. Deavenport, Jr. 4,929~
Charles T. Duncan 2,177
Alice F. Emerson 977
George M. C. Fisher 127,400*
Roberto C. Goizueta 4,084
Paul E. Gray 1,444
C. Michael Hamilton 21,127*
Karlheinz Kaske 938
John R. McCarthy 84,823*
John J. Phelan, Jr. 2,283
Wilbur J. Prezzano 150,648*
Leo J. Thomas 128,154*
Gary P. Van Graafeiland 20,992*
Kay R. Whitmore 436,059*
Richard A. Zimmerman 2,504
All Directors, Nominees and 1,056,895*#
Executive Officers as a
Group (18), including the above
NOTES: * Includes shares which may be acquired in the
following amounts by exercise of stock options:
R. T. Bourns - 59,729; C. M. Hamilton - 19,723;
J. R. McCarthy - 83,901; W. J. Prezzano- 139,418;
L. J. Thomas- 117,365; G. P. Van Graafeiland - 18,440;
K. R. Whitmore-409,607; and all directors, nominees and
executive officers as a group-848,183. The number of
stock options has been adjusted to reflect the spin-off
of Eastman Chemical Company.
*Includes 20,000 shares of restricted stock.
+The shares shown do not include 1,969 Eastman Kodak
Company common stock equivalents which are held in
Kodak's Executive Deferred Compensation Plan for R. T.
Bourns.
~Mr. Deavenport surrendered all of his 124,898 Kodak
stock options in connection with the spin-off of Eastman
Chemical Company.
# The total number of shares beneficially owned
by all directors, nominees and executive officers as a
group is less than one percent of the Company's
outstanding shares.
Beneficial security ownership as reported in the
above table has been determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934.
Accordingly, except as noted below, all Company
securities over which the directors, nominees and
executive officers directly or indirectly have or share
voting or investment power have been deemed beneficially
owned. The figures above include shares held for the
account of the above persons in the Automatic Dividend
Reinvestment Service for Shareholders of Eastman Kodak
Company, in the Kodak Employee Stock Ownership Plan, and
the interests, if any, of those of the above persons in
Fund A of the Eastman Kodak Employees' Savings and
Investment Plan, stated in terms of Kodak shares.
The table does not include approximately 5,712,994
shares of the Company's stock (less than 2 percent of the
outstanding shares) held in the Kodak Stock Fund of the
Eastman Kodak Employees' Savings and Investment Plan for
the benefit of some 25,195 employees and former
employees, over which a committee consisting of five
individuals, including four Company officers, has
discretionary voting power.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS Directors who are
compensated as employees of the Company receive no
additional compensation as directors. Each director who
is not an employee of the Company receives an annual
retainer of $38,000, payable $12,000 in common stock of
the Company and $26,000 in cash. In addition, each such
director receives a fee of $900 for each Board meeting
attended and $750 for each Board committee and special
meeting attended, except the Corporate Directions
Committee and the Special Search Committee (which was in
existence for a few months during 1993 to lead the search
for a new chief executive officer) whose members received
$1,500 for each meeting. There is a deferred
compensation plan available to all such directors for the
cash portion of their compensation, in which two
directors participated in 1993. Each director who is not
an employee of the Company is eligible to participate in
a retirement plan for directors which provides an annual
retirement benefit equal to the then-current annual
retainer, if the director has served at least five years.
Directors who have served fewer than five years are
entitled to a prorata retirement benefit. Each director
who is not an employee of the Company is covered by group
term life insurance in the amount of $100,000, which
decreases to $50,000 at the later of retirement from the
Board under the retirement plan described above or age
65. In the event of a change in control (as defined in
the applicable plans) each account under the deferred
compensation plan will be paid in a single lump sum cash
payment and all retirement benefit payments will be paid
in a single lump sum cash payment equal to the present
value of the remaining retirement benefits.
Each non-employee director is eligible to
participate in the Company's Directors' Charitable Award
Program, which provides for a contribution by the Company
of $1,000,000 following the director's death to up to
four charitable institutions recommended by the director.
The individual directors derive no financial benefits
from this Program, which is funded by joint life
insurance policies purchased by the Company and self
insurance. The purposes of the Program are to further
the Company's philanthropic endeavors, with particular
emphasis on education, acknowledge the service of the
Company's directors, recognize the interest of the
Company and the directors in supporting worthy charitable
and educational institutions and to enable the Company to
attract and retain directors of the highest caliber.
Directors who are participating in the Program are
Messrs. Braddock, Duncan, Phelan, and Zimmerman, Drs.
Emerson, Gray, and Kaske, and Gov. Collins.
COMPENSATION OF EXECUTIVE OFFICERS The individuals
named in the following table were the Company's Chief
Executive Officers and the four highest paid executive
officers during 1993.
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------
Annual Compensation Long-Term Compensation
------------------------------------------ -------------------------------------------
Awards Payouts
----------- -----
Other Securities
Annual Restricted Under- All other
Name and Compen- Stock lying LTIP Compensa-
Principal Position Year Salary(a) Bonus(b) sation Award(s) Options(c) Payouts tion
- ------------------------ -------- --------- ------------ ----------- ------------- ------ ------------ ---------------
G. M. C. Fisher 1993 $ 330,769 $154,000 $ 0 $1,270,000(d)1,323,529 $ 0 $5,000,000(e)
Chairman,
President, and
Chief Executive Officer
(eff. 12/1/93)
K. R. Whitmore 1993 930,769 374,255 96,154(f) 0 35,685 0 1,666,667(g)
Chairman, 1992 1,000,000 461,014 50(h) 0 62,230 0 0
President, and 1991 957,693 188,510 0 0 62,230 0 0
Chief Executive Officer
(until 12/1/93)
R. T. Bourns 1993 400,000 227,563 0 0 10,017 0 0
Senior Vice 1992 343,462 127,873 0 0 17,530 0 0
President 1991 279,038 150,489 0 0 16,278 0 0
E. W. 1993 500,000 276,028 0 0 15,026 50,118(i) 0
Deavenport, Jr. 1992 483,333 270,128 850(h) 0 24,542 0 0
Group Vice 1991 423,333 184,354 50(h) 0 22,664 0 0
President
W. J. Prezzano 1993 536,000 259,752 306,298(j) 0 15,026 0 0
Group Vice 1992 536,000 291,146 391,865(j) 0 25,795 0 0
President 1991 501,961 114,806 50(h) 0 25,795 0 0
L. J. Thomas 1993 592,308 301,008 0 0 19,158 0 0
Group Vice 1992 580,000 267,306 0 0 33,182 0 0
President 1991 495,769 264,296 50(h) 0 28,674 0 0
Footnotes to Summary Compensation Table
(a) Includes amounts paid and deferred.
(b) Includes both Wage Dividend (WD) and Management Annual Performance Plan (MAPP) paid in the year
following for services rendered in the year indicated, in the following amounts for 1993: G. M. C. Fisher - $154,000 WD,
$0 MAPP; K. R. Whitmore - $107,255 WD, $267,000 MAPP; R. T. Bourns - $37,563 WD, $190,000 MAPP;
E. W. Deavenport, Jr. - $55,209 WD, $220,819 MAPP; W. J. Prezzano - $59,752 WD, $200,000 MAPP;
L. J. Thomas - $61,008 WD, $240,000 MAPP.
(c) Pursuant to the operation of the 1990 Omnibus Long-Term Compensation Plan,
outstanding options were adjusted by a factor of 1.2521 as a result of the spin-off of Eastman Chemical Company effective
December 31, 1993.
(d) This amount represents 20,000 shares of restricted stock valued at $63.50 per share, which was
the closing price of Kodak stock on the date of grant, November 11, 1993, on the New York
Stock Exchange. These shares are restricted until October 26, 1998 and receipt of these shares
by Mr. Fisher is conditioned upon his continued employment with the Company until such date.
Dividends are paid on these shares as and when dividends are paid on Kodak common stock.
(e) This represents a hiring bonus, including amounts paid to reimburse Mr. Fisher for compensation
and benefits he forfeited upon termination of employment with his previous employer.
(f) The amount shown is a payment in lieu of vacation.
(g) This represents the total severance payment to be made to K. R. Whitmore in installments. See
Termination of Employment on page 24.
(h) The amounts shown for 1991 and 1992 include the cost of certain medical benefits which, when
aggregated with other perquisites, is less than the required disclosure threshold for 1993.
(i) Paid in 1993 in a combination of cash and common stock for the 1987-89 award cycle under the
1985 Long-Term Performance Award Plan, with the fair market value of the stock on the date of
payment of $40.8125 per share. This Plan is no longer in operation; this is a delayed distribution
from an earlier cycle.
(j) This amount represents tax reimbursement for overseas assignments in 1990 and 1991.
OPTION/SAR GRANTS IN 1993
Individual Grants
- -------------------------------------------------------------------------------------------------------------------
Number Potential Realizable
of Percentage Market Value at Assumed
Securities of Total Price Annual Rate of
Underlying Options/SARs Per Stock Price Apprecia-
Options/ Granted to Exercise Share tion for Option Term(a)
SARs Employees Base Price on Date Expiration ---------------------------------------
Name Granted(b) in 1993 Per Share(b) of Grant(c) Date 0%(d) 5%(e) 10%(f)
- ----------------------- ------------ --------------- ------------ ----------- ------------ -------- ---------- ----------
G. M. C. Fisher 1,323,539(g) 24.54 $50.467 $50.467 11/10/03 $0 $42,013,098 $106,456,212
K. R. Whitmore 35,685(h) 0.66 43.175 43.175 3/10/03 0 969,026 2,455,306
R. T. Bourns 10,017(h) 0.19 43.175 43.175 3/10/03 0 272,012 689,220
E. W. Deavenport, Jr. 15,026(h) 0.28 43.175 43.175 3/10/03 0 408,031 1,033,864
W. J. Prezzano 15,026(h) 0.28 43.175 43.175 3/10/03 0 408,031 1,033,864
L. J. Thomas 19,158(h) 0.36 43.175 43.175 3/10/03 0 520,235 1,318,166
All Shareholders
at $43.175 N/A N/A N/A N/A N/A 0 9 Billion 23 Billion
at $50.467 0 10 Billion 27 Billion
Gain of named N/A N/A N/A N/A N/A N/A .005 .005
officers as portion of .004 .004
all shareholder gain
Footnotes to the Option/SAR Grant Table
(a)The dollar amounts under these columns are the result of calculations at 0% and at the 5% and 10%
rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, of the Company's stock price.
(b)Pursuant to the operation of the 1990 Omnibus Long-Term Compensation Plan, outstanding options
were adjusted by a factor of 1.2521 as a result of the spin-off of Eastman Chemical Company effective
December 31, 1993.
(c)The market price per share on November 11, 1993 was $63.19 and the market price per share on March 11,
1993 was $54.06. These are equivalent to market prices per share of $50.467 and $43.175, respectively, after
giving effect to the spin-off of Eastman Chemical Company.
(d)No gain to the optionees is possible without an increase in stock price, which will benefit
all shareholders commensurately. A zero percent increase in stock price will result in zero
dollars for the optionee.
(e)A 5% per year appreciation in stock price from $50.467 per share and 43.175 per share yields $82.21
and $70.33 respectively.
(f)A 10% per year appreciation in stock price from $50.467 per share and $43.175 per share
yields $130.90 and $111.98 respectively.
(g)20% of these options vest on each anniversary of the grant date. Vesting accelerates upon retirement, death,
disability or termination for an approved reason. No options will be granted to Mr. Fisher in 1994.
(h)50% of these options vest on the first anniversary of the grant date and 50% vest on the second
anniversary of the grant date. Vesting accelerates upon retirement, death, disability or termination
for an approved reason.
AGGREGATED OPTION/SAR EXERCISES IN 1993
and 1993 YEAR-END OPTION/SAR VALUES
Number of
Securities
Underlying Value of Unexercised
Unexercised in-the-money
Number Options/SARs at Options/SARs at
of December 31, 1993(a) December 31, 1993(b)
Shares ------------------------------ ---------------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------------- ------------ ------------ --------------- --------------- -------------------
G. M. C. Fisher 0 $ 0 0 1,323,539 $ 0 $ 0
K. R. Whitmore 3,405 82,268 409,607 0 4,328,100 0
R. T. Bourns 450 27,563 48,459 28,799 548,918 175,825
E. W. 755 39,838 0(c) 0(c) 0(c) 0(c)
Deavenport, Jr.
W. J. Prezzano 3,970 218,721 121,136 44,077 1,477,245 272,526
L. J. Thomas 550 29,764 98,270 52,277 1,130,657 312,641
Footnotes to the Option Exercise Table
(a)Pursuant to the operation of the stock option plans, outstanding options were adjusted by a factor of
1.2521 to reflect the spin-off of Eastman Chemical Company effective December 31, 1993.
(b)Based on the closing price on the New York Stock Exchange - Composite Transactions of the Company's Common
Stock on a when-issued basis on that date of $44.37 per share.
(c)E. W. Deavenport, Jr. surrendered all of his 124,898 Kodak stock options in connection with the spin-off of
Eastman Chemical Company in exchange for options on shares of Eastman Chemical Company stock to be granted
by Eastman Chemical Company.
Long-Term Incentive Plan
In March 1993, the 1993-1995 Restricted Stock Program, a performance share unit arrangement under the
1990 Omnibus Long-Term Compensation Plan, was approved by the Executive Compensation and Development Committee.
Payouts of awards, if any, are tied to achieving specified levels of stock price, return on assets, and total
shareholder return relative to the Standard & Poor's 500 Index, over the period 1993-1995. The target amount
will be earned if the target level for each of these three criteria is achieved. The target stock price must be
achieved to trigger a payment of 100% of target. The threshold stock price must be achieved to trigger a
payment of 50% of target. If the threshold stock price is not achieved, no payment is made. The Committee will
determine the payout based upon its review of Company performance at the end of the performance period. Awards,
if any, will be paid in the form of restricted stock, which restrictions will lapse upon the participant's
attainment of age 60. Participants who terminate employment for reasons of death, disability, retirement or an
approved reason, prior to the completion of the performance cycle, will receive their award, if any, at the
conclusion of the performance period in the form of shares of Kodak common stock with no restrictions.
Estimated Future Payouts Under Non-Stock
Number of Performance Price-Based Plans
Share Units or Other Period ---------------------------------------
or Other Until Maturation Threshold Target Maximum
Name Rights (#) or Payout # of shares(a) # of shares(a) # of shares(b)
- --------------- --------- ------------- ----------- ----------- -----------
S>
G. M. C. Fisher 65,214(c) 1/1/93-12/31/95 32,607(c) 65,214(c)
K. R. Whitmore 31,303(c) 1/1/93-12/31/95 15,652(c) 31,303(c)
R. T. Bourns 25,042 1/1/93-12/31/95 12,521 25,042
E. W. Deavenport, Jr. 12,521(c) 1/1/93-12/31/95 6,261(c) 12,521(c)
W. J. Prezzano 37,563 1/1/93-12/31/95 18,782 37,563
L. J. Thomas 50,084 1/1/93-12/31/95 25,042 50,084
Footnotes to Long-Term Incentive Plan Table
(a) Pursuant to the operation of the the 1990 Omnibus Long-Term Compensation Plan,
the number of shares has been adjusted by a factor of 1.2521 to reflect the spin-off
of Eastman Chemical Company.
(b) Under the terms of the Restricted Stock Program, should performance exceed the targeted performance, a
greater number of shares than the target could be paid and there is no maximum stated in the program.
(c) Individuals who participate for less than the full performance period will receive a prorated amount
of the award, if any, determined at the end of the performance period based upon the duration
of their participation during the performance period.
EMPLOYMENT CONTRACTS
On October 27, 1993, the Company entered into an
Agreement covering a period of five years, for the
employment of George M. C. Fisher as Chairman, President and
Chief Executive Officer of the Company. Upon execution of
the Agreement, Mr. Fisher received $5,000,000 as an
inducement for entering into the Agreement and as
reimbursement for compensation and benefits that he would
forfeit upon termination of his employment with his previous
employer. Mr. Fisher's base salary is $2,000,000, subject
to review on an annual basis. Mr. Fisher will participate
in MAPP and will have an annual target award opportunity of
at least $1,000,000, with that amount guaranteed for
services rendered in each of 1994 and 1995. Mr. Fisher was
granted 20,000 shares of restricted stock with the
restrictions lapsing at the end of five years. The contract
provided for the grant to Mr. Fisher in 1993 of 1,057,055
stock options (1,323,539 after adjustment for the ECC spin-
off) and no stock options are to be granted to Mr. Fisher in
1994. The contract provided for the Company to make two
loans to Mr. Fisher in the total amount of $8,284,400 for
five years with interest at the rate of 4.86% (which is the
most recently announced rate under Section 1274(d) of the
Internal Revenue Code, prior to October 27, 1993).
$4,284,400 of this amount was loaned to Mr. Fisher due to
his forfeiture of 80,000 stock options from his prior
employer resulting from his accepting employment with the
Company. Mr. Fisher was required to use all of the loan
proceeds except $1,500,000 to purchase Kodak stock. The
shares he purchased are reflected in the security ownership
table on page 14 of this Proxy Statement. Twenty percent of
the principal and all of the accrued interest on each of
these loans are to be forgiven on each of the first five
anniversaries of such loans provided Mr. Fisher is still
employed by the Company.
In addition, where necessary, Mr. Fisher has been given
credit for a period of service sufficient to allow him to
obtain the maximum benefit available under Kodak's benefit
plans. In particular, Mr. Fisher was credited with five
years of service for purposes of the Wage Dividend and
seventeen years of service for purposes of calculating a
retirement benefit. The Company is providing Mr. Fisher
with an apartment until he purchases a permanent residence
in the Rochester area. The Company has agreed to purchase
Mr. Fisher's current residence in Barrington Hills,
Illinois. In addition, the Company has agreed to reimburse
Mr. Fisher for all closing costs associated with a previous
residence, which was sold after he accepted employment with
the Company. The Company is providing Mr. Fisher with term
life insurance equal to 3.5 times his base salary and a
disability benefit equal to 60% of base salary. In the
event of Mr. Fisher's death prior to the termination of this
Agreement, the Agreement provides for salary continuation
for ninety days, the payment of all annual and long-term
incentives, vesting of all stock options and awards and the
forgiveness of the loans. If Mr. Fisher's employment is
terminated by the Company without cause or in the event of a
change in control, Mr. Fisher is entitled to the greater of
the remaining term of his employment contract or 36 months
of salary continuation, immediate vesting of stock options,
the lapsing of any restrictions on any restricted stock
award and the payment of any incentive awards. Mr. Fisher
is entitled to reimbursement for taxes paid on certain of
the foregoing payments, including any amounts constituting
"parachute payments" under the Internal Revenue Code. If
Mr. Fisher dies prior to retirement, his spouse is entitled
to a 50% survivor annuity.
TERMINATION OF EMPLOYMENT
The Company has a general severance arrangement
available to substantially all employees. This Termination
Allowance Plan provides two weeks of compensation for every
year of service with a maximum of fifty-two weeks of salary.
Mr. Whitmore received fifty-two weeks of termination
allowance computed using the formula in the Termination
Allowance Plan.
The Company has entered into a retention arrangement
with Mr. Prezzano. The Agreement provides that if Mr.
Prezzano's employment is terminated prior to September 30,
1995 by the Company other than for cause, or by Mr. Prezzano
as a result of a diminution in duties or base salary, he
shall be entitled to an unreduced retirement annuity and a
termination allowance equal to two weeks of pay for each
year of service up to a maximum of 52 weeks of pay. The
Agreement also prohibits Mr. Prezzano from working for a
competitor for a period of three years following termination
of employment.
CHANGE IN CONTROL ARRANGEMENTS
In the event of a change in control, the following
would occur: (i) each participant in the Executive Deferred
Compensation Plan would receive the balance in his/her
account in a single lump sum cash payment; (ii) each
participant in the Management Annual Performance Plan would
be paid his/her target award for such year and any other
year for which payment of awards had not been made as of
such date; and (iii) all outstanding stock options and stock
appreciation rights would become fully vested and each
holder would be paid in a lump sum cash payment the
difference between the exercise price and market price of
Kodak common stock on the date of such event; each of the
foregoing payments would be made in a single lump sum cash
payment as soon as possible but no later than the 90th day
following such event.
RETIREMENT PLAN
The Company funds a tax-qualified, defined benefit
pension plan for virtually all U.S. employees. Retirement
income benefits are based upon the individual's "average
participating compensation," which is the average of three
years of those earnings described in the Plan as
"participating compensation." "Participating compensation,"
in the case of the executive officers included in the
Summary Compensation Table, is annual compensation (salary
and Management Annual Performance Plan payments), including
allowances in lieu of salary for authorized periods of
absence, such as illness, vacation or holidays.
For an employee with up to 35 years of accrued service,
the annual normal retirement income benefit is computed by
multiplying the number of years of accrued service by the
sum of (a) 1.3% of "average participating compensation"
("APC") for the employee's final three years, plus (b) .3%
of APC in excess of the average Social Security wage base
for the employee's final three years. For an employee with
more than 35 years of accrued service, the amount computed
above is increased by 1% for each year in excess of 35
years.
The retirement income benefit is not subject to any
deductions for Social Security benefits or other offsets.
Officers are entitled to benefits on the same basis as other
employees. The normal form of benefit is an annuity, but a
lump sum payment is available as an option.
Pension Plan Table
Annual Retirement Income Benefits
Straight Life Annuity Beginning at Age 65
"Average Years of Service
Participating -------------------------------------------------------------------------------
Compensation" 15 20 25 30 35 40
- ----------------- ---------- ---------- ---------- ------------ ------------ ----------
$ 400,000 $ 96,000 $128,000 $160,000 $ 192,000 $ 224,000 $ 235,200
600,000 144,000 192,000 240,000 288,000 336,000 352,800
800,000 192,000 256,000 320,000 384,000 448,000 470,400
1,000,000 240,000 320,000 400,000 480,000 560,000 588,000
1,200,000 288,000 384,000 480,000 576,000 672,000 705,600
1,400,000 336,000 448,000 560,000 672,000 784,000 823,200
1,600,000 384,000 512,000 640,000 768,000 896,000 940,800
1,800,000 432,000 576,000 720,000 864,000 1,008,000 1,058,400
2,000,000 480,000 640,000 800,000 960,000 1,120,000 1,176,000
2,200,000 528,000 704,000 880,000 1,056,000 1,232,000 1,293,600
2,400,000 576,000 768,000 960,000 1,152,000 1,344,000 1,411,200
NOTE: To the extent that any individual's annual retirement income benefit exceeds the amount payable
from the Company's funded Plan, it is paid from one or more unfunded supplementary plans.
The following table shows the years of accrued service
credited to each of the six individuals named in the Summary
Compensation Table. This table also shows for each named
individual the amount of his "average participating
compensation" at the end of 1993.
"Average
Years of Participating
Service Compensation"
-------- -------------
G. M. C. Fisher 17* $1,999,998
K. R. Whitmore 36 1,278,325
R. T. Bourns 35 446,429
E. W. Deavenport, Jr. 33 644,265
W. J. Prezzano 28 706,940
L. J. Thomas 32 770,558
*Under the terms of his employment contract, Mr. Fisher has
been credited with seventeen years of service for purposes
of calculating his retirement benefit. However, any pension
benefit payable to Mr. Fisher by the Company will be offset
by any pension benefit paid to Mr. Fisher by his prior
employer.
In the event of a change in control (as defined in the
Retirement Plan), a participant whose employment is
terminated, for a reason other than death, disability, cause
or voluntary resignation, within 5 years of the date of such
event would be credited with up to 5 additional years of
service and, where the participant is age 50 or over on the
date of such event, up to 5 additional years of age, for the
following plan purposes: (i) to determine eligibility for
early and normal retirement; (ii) to determine eligibility
for a vested right; and (iii) to calculate the amount of
retirement benefit. The actual number of years of service
and years of age that would be granted to such a participant
would decrease proportionately depending upon the number of
years that elapse between the date of a change in control
and the date of the participant's termination of employment.
Further, if the Plan is terminated within 5 years after a
change in control, the benefit for each plan participant
will be calculated as indicated above.
REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE
COMPENSATION AND DEVELOPMENT COMMITTEE
The Company's executive compensation plans are
formulated based on four fundamental principles:
1. Compensation should be related to performance,
including increasing shareowner value.
2. Compensation should be at a level consistent with that
provided by comparable companies in order to attract
and retain talented management.
3. Compensation should take into account both short- and
long-term corporate performance.
4. Senior management should have a meaningful equity stake
in the Company with share ownership preferred over
option ownership.
These four principles are implemented through
compensation consisting of a mix of base salary, annual
incentive plans and long-term incentive plans.
Annual Cash Compensation
Annual cash compensation is made up of two components,
base salary and the Management Annual Performance Plan
(MAPP). The extent to which annual incentive compensation
is at risk is based upon the executive's position in the
organization, with the lowest level of executives having 15%
of pay at risk and the CEO having 40% of pay at risk. MAPP
performance targets for the Company as a whole and for each
Group (Imaging, Health and Chemicals (which was spun off at
year-end)) are set for the following year by the Committee
at its meeting in December. Performance targets for 1993
were financial and related to earnings, revenue and cash
flow, such criteria being weighted 50%, 10% and 40%,
respectively.
The Committee, which is composed entirely of
independent outside directors, sets overall targeted levels
of compensation, both annual compensation and long-term
incentives, for the CEO, Group Vice Presidents and Senior
Vice Presidents, including the Chief Financial Officer, the
Chief Human Resources Officer and the Chief Legal Officer.
These levels were set based on surveys of other companies
conducted by external consultants. The surveyed companies
consist of companies in similar businesses, companies of
similar size and the peer companies identified in the
Performance Graph on page 32. The mean compensation level
of the surveyed companies is the primary reference for
determining targeted levels of compensation. The
Committee's consideration of increases in base salary for
these senior executives takes into account sustained
performance over time, and what is competitive compared to
the surveyed companies. MAPP awards are determined shortly
after year end based on the performance targets, as well as
external events which positively or negatively impacted the
executives' ability to meet planned financial targets.
Long-Term Incentive Compensation
The Company's long-term incentive compensation consists
of stock options and the 1993-1995 Restricted Stock Program,
with the latter program being limited to senior executives.
Stock options tie compensation directly to increased
shareholder value. Surveys of other companies' practices
are used to determine the size of grants. Taking into
account such factors as anticipated stock price growth and
volatility, future dividend yield, term of grant and an
estimated risk-free rate of return, anticipated compensation
levels are estimated. Mean survey values are used as
targets in determining the size of option grants.
Consideration is given to grant frequency in other companies
as well as to the frequency and size of past grants to Kodak
participants. Stock options were granted in 1993 at market
price for terms of ten years.
In the 1993-1995 Restricted Stock Program, a program
developed under the 1990 Omnibus Long-Term Compensation
Plan, performance goals for the three-year period were
established by the Committee pertaining to stock price,
return on assets and shareholder return relative to the
Standard and Poor's 500 Index. Shareholder return is
measured over the entire three year period, while the return
on assets is measured for the year 1995 and the stock price
is measured in the fourth quarter of 1995. Each of the
criteria is weighted equally but the target stock price must
be achieved to trigger a payment of 100% of the target award
and the threshold stock price must be achieved to trigger a
payment of 50% of the target award. If the threshold stock
price is not achieved, no award will be paid. Should awards
be earned in this program, based on performance through the
end of 1995, they would be paid in early 1996 in restricted
stock, with the restrictions lapsing at the time the
executive reaches the age of 60.
Wage Dividend
In addition, management participates in a Company-wide
annual bonus called the Wage Dividend. This bonus is based
on overall Company return on assets. The formula used to
calculate the Wage Dividend is 3% plus 80% of return on
assets (excluding unamortized goodwill), adjusted for
certain items. In 1993, the one-time effect of the change
in accounting for postemployment benefits was excluded. The
resulting percentage, which must be at least 5.0% and not
higher than 15.0%, is multiplied by the employee's
participating earnings (generally, the individual's last
year's salary or salary and annual incentive for MAPP
participants) to arrive at the bonus amount. This same
formula is applied to virtually all employees. Employees
with fewer than five years of service receive a prorated
amount.
Chief Executive Officer Compensation
Prior to determining the MAPP award for the CEO, the
Committee receives a report from the CEO on Company
financial performance and both internal and external factors
impacting performance. The Committee then meets privately
to discuss this report and makes a decision on the CEO's
performance and his corresponding MAPP award and base salary
increase.
In 1993, revenue was down slightly from 1992 and below
1993 target; earnings were lower than both 1992 results and
the target for 1993; and cash flow exceeded both 1992
results and the 1993 target, which target was increased
significantly in mid-year as part of the three year plan to
increase cash flow to be used to pay down debt.
Considering these results along with the general
business climate in 1993, the MAPP award for Mr. Whitmore
was made at 40% of his targeted MAPP payment level. This
compares with his MAPP award for 1992 which was 65% of the
targeted level. As part of the Company's 1993 grant of
stock options, Mr. Whitmore received options on 28,500
shares, all at market price and with a term of ten years.
He was also a participant in the 1993-1995 Restricted Stock
Program approved by the Committee and described elsewhere in
this Report, having a target award for the three year
program of 25,000 shares of restricted stock.
Mr. Whitmore terminated employment on December 1. He
received the severance benefits shown in the Summary
Compensation Table on page 17. These benefits, which are
comparable to those available to an employee with Mr.
Whitmore's 32 years of service, included an allowance of one
year's compensation, as well as a Wage Dividend and MAPP
award for his service in 1993. His earned retirement
benefit was calculated under the normal provisions of the
Company's retirement plan. His participation in the
Company's stock option plans and the 1993-1995 Restricted
Stock Program was determined according to the rules of those
plans.
In seeking a new CEO, the Board of Directors' Special
Search Committee sought a person with a proven record of
strong leadership and success, who could utilize the
Company's strengths to enhance its performance. They found
that person in George Fisher. A five year employment
agreement was negotiated between the Company and Mr. Fisher.
The details of that agreement are set forth on page 23 of
this Proxy Statement. This agreement reflects the
compensation package necessary to obtain Mr. Fisher's
services for the Company and the amounts required to
compensate him for amounts forfeited by him as a result of
his departure from his previous employer.
Company Policy on Qualifying Compensation
Internal Revenue Code Section 162(m), adopted in 1993,
provides that publicly held companies may not deduct in any
taxable year compensation in excess of one million dollars
paid to any of the individuals named in the Summary
Compensation Table which is not "performance-based" as
defined in Section 162(m). The Committee believes that
there are circumstances in which the Company's interests are
best served by providing compensation that is not fully
deductible under Section 162(m) of the Internal Revenue
Code. The Committee further believes that these
circumstances arose in the hiring of Mr. Fisher and may
arise in other circumstances where an exercise of discretion
is appropriate. The Company's paramount concern when hiring
Mr. Fisher was obtaining the best qualified CEO for the
Company. In addition, even though certain of the Company's
existing compensation plans do not qualify under Section
162(m), the Committee believes, at this time, that its
ability to exercise greater discretion under the terms of
such plans outweighs the need to qualify such plans under
Section 162(m). At present, Mr. Fisher is the only
individual who has any substantial portion of his
compensation paid in a form that is not fully deductible by
the Company and Mr. Fisher's compensation has been
established by the terms of his employment agreement.
Richard S. Braddock (Chairman) Roberto C. Goizueta
Alice F. Emerson John J. Phelan, Jr.
PERFORMANCE GRAPH -- SHAREHOLDER RETURN
The following graph compares the performance of the
Company's Common Stock with the performance of the Standard
& Poor's 500 Composite Stock Price Index ("S&P 500 Index")
and a peer group index by measuring the changes in common
stock prices from December 31, 1988, plus assumed reinvested
dividends.
The following group of peer companies was chosen
because each is a large "blue chip" company traded in the
U.S. The securities of these companies compete with Eastman
Kodak Company common stock for investor dollars.
The companies in the peer group are: American
Telephone & Telegraph Co., The Coca-Cola Company, Digital
Equipment Corp., The Dow Chemical Co., E. I. Du Pont de
Nemours & Co., General Electric Co., International Business
Machines Corp., Johnson & Johnson, Merck & Co., Inc.,
Minnesota Mining & Mfg. Co., Monsanto Company, Philip Morris
Companies Inc., Procter & Gamble Co., Westinghouse Electric
Corp., and Xerox Corp.
The chart assumes that $100 was invested on
December 31, 1988 in each of the Company's Common Stock, the
S&P 500 Index and the peer group index, and that all
dividends were reinvested. In addition, the graph weighs
the constituent companies on the basis of their respective
market capitalizations, measured at the beginning of each
relevant time period.
ITEM 2 - RATIFICATION OF ELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the
Audit Committee, has elected Price Waterhouse, independent
accountants of the Company for many years to serve until the
Annual Meeting of shareholders in 1995. The Board of
Directors proposes that the shareholders ratify the Board's
election of Price Waterhouse as the independent accountants
of the Company. Representatives of Price Waterhouse are
expected to be present at the meeting and to be available to
respond to appropriate questions. They will be given the
opportunity to make a statement if they desire to do so.
ITEMS 3 and 4
SHAREHOLDER PROPOSALS
Shareholders, whose names, addresses and shareholdings will
be furnished by the Company promptly upon receipt of any
request therefor, have given notice of their intention to
introduce the following proposals at the Annual Meeting.
ITEM 3 - SHAREHOLDER PROPOSAL - (SEVERANCE DISCLOSURE)
"RESOLVED that the shareholders recommend to the board
of directors that Eastman Kodak disclose severance
compensation made to executive officers.
BACKGROUND:
This resolution was presented at the 1993 Annual
Meeting and received 12 percent of the votes.
However, Kodak's proxy presented information to the
shareholders which misrepresented and distorted the
facts surrounding the issue. Kodak stated: 'The
Company is already obligated to provide essentially
everything the proponent requests.'
This proponent, the Wall Street Journal, and the SEC
all disagree with Kodak's assertion. The Journal
reported: 'Under new Securities and Exchange
Commission rules effective this year (1992), a company
needn't disclose compensation for an executive if he or
she wasn't on the payroll at the end of the fiscal
year.' The SEC wrote (to Kodak): 'The (SEC) staff
does not believe that disclosure under the commission's
new (1992) executive compensation provisions
substantially implements the proposal.'
Kodak also made the following statement in its proxy:
'The company is already providing the information
proponent wants to see.' This proponent assures all
shareholders that such a statement was and is untrue.
As a case in point: In 1992, Kodak's chief financial
officer and member of the board retired. In the 1993
proxy and annual report, no mention was made of his
1992 compensation. Proponent definitely wanted to know
the CFO's compensation for 1992, including severance
compensation.
If ex-CEO Mr. Whitmore retires prior to December 31,
Kodak has no legal obligation to disclose ANY
compensation he received in his year of retirement.
The present reporting rules allow for incomplete,
inaccurate, and deceptive reporting of executive
compensation.
I urge all shareholders to cast their proxies in favor
of this resolution. I also urge Kodak management to
support this resolution."
The Board of Directors recommends a vote AGAINST this
proposal for the following reasons:
This same proposal was presented to the shareholders at
the 1993 Annual Meeting and the 1992 Annual Meeting.
Over 81% of the shares voted were cast against this
proposal each time it was presented.
For many years, the Company's compensation program has
included reasonable termination payments for
substantially all U.S. employees, including executive
officers, in the event of layoff and most other
terminations, excluding terminations for cause. These
payments are provided under the Termination Allowance
Plan. From time to time, the Company has implemented
special employment reduction programs and on these
occasions has enhanced the termination payments
available under the Termination Allowance Plan. Such
enhancements were available to all eligible employees.
In virtually all instances where executive officers
have received severance payments, such payments have
been made on the same terms as payments made to all
other employees who left the Company under similar
circumstances.
In 1990, the Company adopted the Employee Protection
Plan to provide severance pay, health, dental and life
insurance continuation, and outplacement assistance for
substantially all U.S. employees terminated within 24
months after a change in control of the Company.
The disclosure requested in the resolution will provide
no meaningful information to shareholders because the
Company already is obligated to provide essentially
everything the proponent requests. The recently
revised rules of the Securities and Exchange Commission
require proxy statement disclosure of arrangements
providing severance payments to the Chief Executive
Officer and the four highest paid executive officers of
the Company, and three such arrangements are disclosed
in this Proxy Statement. In addition, these rules also
require the Company to file with the Securities and
Exchange Commission copies of any compensation
arrangement in which any executive officer
participates, unless it is immaterial in amount or
significance.
Proponent asserts that the Company has no legal
obligation to disclose any compensation received by Mr.
Whitmore, the Company's former CEO, in 1993. Proponent
then asserts that "the present reporting rules allow
for incomplete, inaccurate, and deceptive reporting of
executive compensation."
Mr. Whitmore's 1993 compensation, including his
severance payments, is disclosed on pages 17 and 24 of
this Proxy Statment.
If the proponent really believes that the "present
reporting rules" (rules promulgated by the Securities
and Exchange Commission in 1992) allow for "incomplete,
inaccurate, and deceptive reporting of executive
compensation," his argument is with the SEC, not the
Company. The Company disclosed the compensation of its
executives under the new rules for the first time in
1993. To date, not a single shareholder (with the
exception of the proponent) has notified the Company
that its 1993 disclosures were "incomplete, inaccurate,
and deceptive."
In view of the foregoing, it is recommended that
shareholders vote AGAINST this proposal.
ITEM 4 - SHAREHOLDER PROPOSAL - (EXECUTIVE COMPENSATION
REPORT)
"WHEREAS:
We believe financial, social and environmental criteria
should all be taken into account in fixing compensation
packages for top corporate officers. Public scrutiny
on Compensation is reaching a new intensity, concerns
expressed include the following:
Too often top executives receive considerable increases
in compensation packages, even when corporate financial
performance is poor and stockholders watch dividends
slip and stock prices drop.
Executive compensation, even when it decreases in a bad
year, is usually not proportional to a year's poor
returns and the financial burden borne by stockholders.
Professor Graef Crystal, a national authority on
executive compensation, argues that CEOs, get paid
'hugely in good years,' and 'if not hugely, then merely
wonderfully in bad years.'
The relationship between compensation and the social
and environmental impact of a company's decisions is an
important question. For instance, should top officers'
pay for a given year be reduced if the company is found
guilty of systematic sexual harassment or race
discrimination or poor environmental performance,
especially if it results in costly fines? Should
responsible officers compensation be on a business-as-
usual scale in a year of a major environmental
accident? Should compensation reflect a Company's
consistent EPA ranking as a U.S. company with high
toxic releases?
We believe this is an important principle for Kodak
management and Board to review in assessing the
compensation packages for our Company's leaders.
We believe that these questions deserve the careful
scrutiny of our Board and its Compensation Committee.
RESOLVED: Shareholders request that the Board institute
an Executive Compensation Review, and prepare
a report available to shareholders by October
1994 with the results of the Review and
recommended changes in practice. The review
shall cover pay, benefits, perks, stock
options and special arrangements in the
compensation packages for all the company's
top officers.
Supporting Statement
We recommend that the Board study and report on the
following in its review:
1. Ways to link executive compensation more closely
to financial performance with proposed criteria
and formulae.
2. Ways to link compensation to environmental and
social corporate performance (e.g. lower base pay
with incentives given for meeting or surpassing
certain environmental and social standards).
3. Ways to link financial viability of the company to
long-term environmental and social sustainability
(e.g. linkages that avoid short-range thinking,
and instead encourage long-range planning).
4. A description of social and environmental criteria
to take into account (e.g. environmental law
suits, settlements, penalties, violations, results
of internal or independent environment audits).
5. Comparison of compensation packages for officers
and the lowest and average wages for (a) the
company's U.S. employees, and (b) company
operations outside the U.S.
A number of companies including Bristol-Myers,
Westinghouse and Procter and Gamble have reported this
information to shareholders.
In light of Kodak's many changes and our belief that
the company needs to maintain a commitment to
environmental excellence and corporate responsibility
we request this review."
The Board of Directors recommends a vote AGAINST this
proposal for the following reasons:
This same proposal was presented to the shareholders at
the 1993 Annual Meeting. Over 92% of the shares voted
were cast against this proposal.
The essence of the report requested can be found in
this Proxy Statement. The Executive Compensation and
Development Committee states in its report on pages 27-
31 that Management Annual Performance Plan targets are
financial and relate to earnings, revenue and cash flow
weighted 50%, 10% and 40% respectively. The tables on
pages 17 through 22 demonstrate the extent to which
management compensation is tied to the Company's
financial performance.
The paramount concern of the Board and, the Board
believes, the Company's shareholders is the sustained
financial performance of the Company. It is for this
reason that the Board has chosen to make increasingly
large portions of management compensation contingent on
the Company's financial performance, including stock
price appreciation.
However, the Company recognizes that, in addition to
delivering solid, sustained financial performance, it
must abide by environmental laws and regulations,
provide a work environment free from sexual harassment
and race discrimination, and generally be a socially
responsible corporate citizen. Although the Company
believes that every employee is responsible for helping
the Company achieve these objectives, its new Chairman,
President and Chief Executive Officer, George M. C.
Fisher, has targeted one area, employment diversity, as
a priority, and intends to make the achievement of
diversity goals a factor in evaluating management's
performance.
In view of the foregoing, it is recommended that
shareholders vote AGAINST this proposal.
OTHER MATTERS
In accordance with New Jersey law, under which the
Company is incorporated, matters not properly noticed to
shareholders, other than procedural matters, may not be made
the subject of a vote by shareholders at the meeting.
VOTE REQUIRED TO ADOPT RESOLUTIONS The election of
directors requires a plurality of votes cast. Each other
matter to be submitted to shareholders requires the
affirmative vote of a majority of the votes cast at the
meeting. Although abstentions and broker non-votes will be
included in the calculation of the number of shares that are
considered present at the Annual Meeting, they will not be
counted as votes cast.
VOTING A PROXY The proxy card enclosed is designed to
permit each shareholder of record at the close of business
on March 14, 1994, to vote in the election of directors, the
ratification of independent accountants and on the
shareholder proposals. The proxy is solicited by the Board
of Directors of the Company. The proxy may be revoked in
writing at any time prior to its being voted at the meeting.
Each valid and timely proxy not revoked will be voted at the
meeting in accordance with the instructions on the card.
If, for any reason, any of the nominees for election to the
Board of Directors become unavailable, the holders of the
proxies may exercise discretion to vote for substitutes
proposed by the Board of Directors. The Board of Directors
of the Company has no reason to believe that the nominees
will be unable or will decline to serve if elected.
CONFIDENTIAL VOTING The Company has had for a number
of years a policy which protects the confidentiality of
shareholder votes. This policy provides that neither the
identity nor the vote of any shareholder will be disclosed
to the Company, its directors, officers or employees except
(i) to allow the election inspectors to certify the results
of the vote; (ii) as necessary to meet applicable legal
requirements and to assert or defend claims for or against
the Company; (iii) in the event of a proxy solicitation
based on an opposition proxy statement; or (iv) in the event
a shareholder has made a written comment on the proxy card.
OUTSTANDING VOTING SHARES As of March 1, 1994, the
Company had outstanding voting securities consisting of
330,632,755 common shares, each entitled to one vote.
SHAREHOLDER PROPOSALS FOR 1995 The last day for the
Company to receive proposals from shareholders for the 1995
Annual Meeting of shareholders is November 17, 1994.
Proposals should be sent certified mail - return receipt
requested to Gary P. Van Graafeiland, Senior Vice President
and Secretary, Eastman Kodak Company, Rochester, New York
14650-0208.
COSTS OF SOLICITATION The cost of this solicitation of
proxies will be borne by the Company. In addition to the
solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra
remuneration, may solicit proxies personally, or by
telephone, facsimile, telegraph or cable. The Company may
also request brokerage houses, nominees, custodians and
fiduciaries to forward soliciting material to the beneficial
owners of shares held of record. The Company will reimburse
such persons for their expenses in forwarding soliciting
material. In addition, the Company has retained Georgeson &
Co., Inc. to assist in the solicitation of proxies from all
shareholders for an estimated fee not to exceed $17,500,
plus reimbursement of reasonable out-of-pocket expenses.
By Order of the Board of Directors
s/Gary P. Van Graafeiland
Gary P. Van Graafeiland, Senior Vice President and Secretary
March 17, 1994
PAGE 1
DEFINITIVE COPY
(CORPORATE LOGO OMITTED)
EASTMAN KODAK COMPANY
This Proxy is Solicited on behalf of the Board of
Directors
The undersigned hereby appoints George M. C.
Fisher and Gary P. Van Graafeiland, and each of
them, as Proxies with full power of substitution,
to vote, as designated on the reverse side, for
director substitutes if any nominee becomes
unavailable, and on matters incident to the
conduct of the meeting, all of the shares of
common stock of Eastman Kodak Company which the
undersigned has power to vote at the Annual
Meeting of shareholders to be held on May 11, 1994
or any adjournment thereof.
NOMINEES FOR CLASS I DIRECTORS:
Martha Layne Collins, Charles T. Duncan,
George M. C. Fisher, Paul E. Gray and
John J. Phelan, Jr.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL CLASS I
DIRECTORS AND FOR RATIFICATION OF ELECTION OF PRICE
WATERHOUSE AS INDEPENDENT ACCOUNTANTS, AND AGAINST THE
SHAREHOLDER PROPOSALS.
This Proxy will be voted as directed; if no direction to the
contrary is indicated, it will be voted for the election of
directors and ratification of independent accountants, and
against the shareholder proposals.
(CONTINUED, and To Be Signed and Dated on the
REVERSE SIDE)
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Election of FOR WITHHOLD
Class I AUTHORITY
Directors 0 0
(see reverse)
(To withhold authority to vote for any particular nominee
write the name below.)
2. Ratification FOR AGAINST ABSTAIN
of Election
of Independent 0 0 0
Accountants
The Board of Directors recommends a vote AGAINST Items 3 and
4.
3. Shareholder FOR AGAINST ABSTAIN
Proposal
Severance Disclosure 0 0 0
4. Shareholder FOR AGAINST ABSTAIN
Proposal
Executive Compensation 0 0 0
Report
I plan to attend the
Annual Meeting - please
send admission 0
information
I plan to bring
a guest(s) 0
SIGNATURE(s) DATE
NOTE: Please sign exactly as the name appears hereon.
Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
When executed, promptly forward this card to: First Chicago
Trust Company, P. O. Box 8264, Edison, New Jersey 08818-
9090.
PAGE 1
March 16, 1994
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Attention: Document Control
Subject: Annual Meeting of Shareholders of Eastman Kodak
Company -- May 11, 1994
Dear Sir:
Pursuant to Rule 14a-6 under the Securities Exchange Act, we
hereby transmit for filing herewith the definitive proxy
statement and form of proxy for use in connection with the
Annual Meeting of shareholders of Eastman Kodak Company to
be held May 11, 1994. Mailing of the definitive proxy
statement and form of proxy to shareholders is expected to
commence on March 17, 1994. The filing fee of $125 was wire
transferred to the Commission's account on March 16, 1994.
Pursuant to Rule 14a-6(a) Eastman Kodak Company did not file
a preliminary proxy statement and form of proxy because the
only matters to be acted upon at the Annual Meeting are the
election of directors, ratification of the election of
independent accountants and action on two shareholder
proposals.
The material changes from last year's proxy statement are as
follows:
1) the inclusion of two shareholder proposals (pages
33 through 38); and
2) the nomination for election of five Class I
directors.
In addition, please note that the peer group used in the
performance graph is the same peer group as last year.
PAGE 2
Securities and Exchange Commission--2
March 16, 1994
However, the Proxy Statement for the 1993 Annual Meeting
erroneously omitted Monsanto Company from the list of
companies although its performance was included in the
performance graph.
The Performance Graph is being filed with the Commission
today under cover of Form SE.
In addition, please be advised that the pagination of the
electronically filed proxy statement differs from the
printed version thereof.
The ratification of election of independent accountants is a
matter upon which shareholders must vote, according to the
Company's by-laws. Item 18 of Schedule 14A is not,
therefore, applicable to the election of independent
accountants.
Under separate cover, eight copies of the Annual Report for
the year 1993 are being forwarded to you. In addition, four
copies of the Annual Report are being mailed to the New York
Stock Exchange.
Very truly yours,
Joyce P. Haag
JPH:las
Enc.
cc: Mr. D. L. Fiedler
Mr. M. Benard
Mr. G. P. Van Graafeiland
Mr. G. M. C. Fisher
16
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