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January 7, 2008
VIA Overnight Mail
Hanna T. Teshome, Esq.
Special Counsel, Division of Corporate Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-3720
Re: Eastman Kodak Company
Definitive schedule 14A
Filed March 30, 2007
File No. 001-00087
Dear Ms. Teshome:
This letter responds to your comment letter dated December 17, 2007
regarding the above referenced Proxy Statement filed on Form 14A on
March 30, 2007 (the "Proxy Statement") by Eastman Kodak Company (the
"Company").
As requested in the original comment letter dated September 26, 2007, we
hereby acknowledge that:
* The Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* Staff comments or changes to disclosure in response to comments
do not foreclose the Commission from taking any action with
respect to the filing; and
* The Company may not assert Staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
For convenience of reference, your comment is set forth in bold below
followed by our response.
1. While we note your response to prior comment 1, we re-issue
that comment. Please confirm that you will identify all benchmark
companies in your future filings. In addition, please confirm
that you will disclose where you target each element of
compensation against the peer companies and where actual payments
fall within targeted parameters. To the extent actual
compensation was outside a targeted percentile range, please
confirm that you will explain why. Alternatively, if you are not
using such surveys to benchmark competitive compensation but
rather are relying on such additional information to provide your
compensation committee with general information to assist in its
compensation level deliberations, please indicate such in your
response letter and clarify disclosure in future filings
accordingly.
2
We acknowledge your comment with respect to identification of the
companies used for purposes of benchmarking compensation levels. In
response, we respectfully share with you both the substantive basis for
not disclosing the identify of all benchmark companies contained in
surveys used by our Compensation Committee (the "Committee") in its
deliberations regarding compensation levels for our Named Executive
Officers and the practical problem such disclosure poses in terms of
its compliance.
As mentioned in our original response letter of November 21, 2007, the
Committee used two national non-industry specific surveys in setting our
Named Executive Officers' total direct compensation in 2006. By way of
background, we would like to explain more fully how this survey data was
used.
First, the Committee did not benchmark total direct compensation based
upon a specific group of peer companies, rather it utilized general
market data from surveys conducted by third-party organizations. As
discussed in our original response letter, the surveys used by the
Committee's consultant to provide market data were the 2006 Towers
Perrin Executive Compensation Survey and the 2006 Hewitt Executive
Compensation Survey. The surveys do not provide information by
reference to individual companies; rather, they present aggregated
compensation by revenue band for the group of companies falling within
each band. For example, one band may include companies with revenues
ranging from $6 to $10 billion and the next band may include companies
ranging from $10 to $20 billion. To ensure that the data is size-
adjusted to be similar to the gross revenue of our Company, the
Committee's consultant used the band with median revenues below that of
the Company (i.e., the low band) and the band with median revenues above
(i.e., the high band) the Company, which were then interpolated based on
the Company's revenue (or the business unit, for non-corporate
executives) to determine the median market rate. The interpolated value
represents the sum of the low band median compensation plus a percentage
of the difference between the low and high band values, with the
percentage calculated based on the positioning of the Company's actual
revenue relative to the range of median revenues for the low and high
bands in the surveys (e.g., the percentage factor would be 50% if
Company revenue was equidistant between the low and high bands). This
process was used for purposes of reporting market data for base salary,
annual variable pay, long-term variable equity incentive compensation
and total direct compensation for the Named Executive Officers. The
Committee sought to set the aggregate target total direct compensation
for each Named Executive Officer at the median of total direct
compensation paid to executives in similar positions with similar
responsibilities. It did not, however, set each component of a Named
Executive Officer's total direct compensation at the median for that
component of compensation paid to executives in similar positions with
similar responsibilities.
3
We respectfully contend that the disclosure of the companies within the
surveys is not material information to our investors and, if disclosed,
could possibly be misleading to them. In our November 21, 2007 letter,
we stated that the Committee did not review the specific companies
identified in the surveys. Furthermore, neither the Committee nor the
Company reviewed the specific companies within the particular survey's
revenue bands that were used for comparison purposes. Thus, given that
neither the Committee nor anyone else within the Company reviewed either
(a) the names of the companies used by the surveys or (b) the specific
companies within the particular survey's revenue bands that were used
for comparison purposes, we respectfully contend that this information
cannot be material to our investors and would not help our investors
better understand our compensation practices. Furthermore, we feel this
information could possibly be misleading to our investors since its
disclosure may imply that the identity of the survey companies was
actually reviewed by someone within the Company.
There is also a practical concern associated with the disclosure of the
requested information. We have contacted the owners of the surveys for
the purpose of seeking their approval to disclose this information. In
each case, the owners have raised concerns about the disclosure of
company names based on the belief that this is proprietary confidential
information. Thus, even if you determine that the requested information
is material to our investors, we may not be able to disclose this
information due to its proprietary nature.
With regards to the other issues raised by your comment, to the extent
applicable in future filings, we will clarify which elements of Named
Executive Officer compensation are targeted against benchmark companies,
the targeted ranges for any such element, and where actual payments fall
against such targeted ranges. Where actual compensation falls outside a
targeted range, we will explain the variance. If the Committee in
future years utilizes compensation surveys only as a general reference
to assist in its annual review of our Named Executive Officers'
compensation, we will clarify our disclosure accordingly.
* * *
4
We appreciate your additional comment as we seek to enhance our
compliance under the new executive compensation disclosure rules. If
you would like to discuss our response above, please contact me at 585-
724-3378.
Sincerely,
/s/ Laurence L. Hickey
Laurence L. Hickey
cc: Antonio M. Perez
Timothy M. Donahue
Frank S. Sklarsky
Joyce P. Haag
Robert L. Berman
Virginia M. Meredith
Ronald O. Mueller, Gibson, Dunn & Crutcher LLP