Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Eastman Kodak Company
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
Eastman Kodak Company
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2)
( ) $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11
1) Title of each class of securities to which
transaction applies:
-------------------------------------------
2) Aggregate number of securities to which
transaction applies:
-------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:1
-------------------------------------------
4) Proposed maximum aggregate value of
transaction:
-------------------------------------------
1Set forth the amount on which the filing fee is calculated and state
how it was determined.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
------------------------------------------
2) Form, Schedule or Registration Statement No.
------------------------------------------
3) Filing Party:
------------------------------------------
4) Date Filed:
------------------------------------------
DEFINITIVE COPY
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 14650
NOTICE OF 1995 ANNUAL MEETING AND PROXY STATEMENT
(CORPORATE LOGO OMITTED)
Date of Notice March 17, 1995
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....................9
Beneficial Security Ownership of Directors, Nominees ...
and Executive Officers...............................11
Compensation of Directors and Executive Officers.......12
Compensation of Directors........................12
Compensation of Executive Officers...............13
Report on Executive Compensation by the Executive
Compensation and Development Committee.........25
Performance Graph - Shareholder Return.................29
Ratification of Election of
Independent Accountants (Item 2).....................30
Management Proposals on Compensation (Items 3, 4 and 5)30
Shareholder Proposal (Item 6)..........................51
Other Matters..........................................54
Exhibit A - Eastman Kodak Company 1995 Omnibus
Long-Term Compensation Plan................56
Exhibit B - Management Variable Compensation Plan......85
Exhibit C - Wage Dividend Plan........................102
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 10, 1995, 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 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 10, 1995, 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 Shareholder 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 Shareholder Services at
716/724-5492.
The business of the meeting will be:
1. The election of four Class II directors;
2. The ratification of election of independent
accountants;
3. Action on Eastman Kodak Company 1995 Omnibus
Long-Term Compensation Plan;
4. Action on Management Variable
Compensation Plan;
5. Action on Wage Dividend Plan; and
6. Action on shareholder proposal requesting a
report on equal employment.
Shareholders of record at the close of business on March 13,
1995, will be entitled to vote at the meeting.
By Order of the Board of Directors
Joyce P. Haag, Secretary
Eastman Kodak Company
March 17, 1995
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, Shareholder 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 PLAN PARTICIPANTS
If you are a participant in the Employee Stock Purchase Plan
for Employees of Eastman Kodak Company or the Automatic Dividend
Reinvestment Plan 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 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. These 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 four
directors whose terms expire at the 1995 Annual Meeting and one
director, Mr. Duncan, who is retiring at the 1995 Annual Meeting.
The names and biographical summaries of the four persons who
have been nominated to stand for election at the 1995 Annual Meeting
appear in the sections below. The remaining directors whose terms
are continuing until the 1996 or 1997 Annual Meeting also appear in
the sections below. All the nominees were previously elected by the
shareholders.
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.
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
1998 ANNUAL MEETING
(Class II Directors)
ALICE F.
EMERSON (PICTURE OMITTED)
Dr. Emerson, 63, is Senior 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, 63, 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, 54, who joined the Kodak Board of Directors in May
1992, is an Executive Vice President of Eastman Kodak Company. 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. In August, 1994, he was elected an Executive
Vice President and was named chairman and president of the Greater
China Region. 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, 58, who joined the Kodak Board of Directors in May 1992,
is an Executive Vice President of Eastman Kodak Company. 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. In August,
1994, he was elected an Executive Vice President. 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 Frontier 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, 53, who was elected to the Kodak Board of Directors in
May 1987, is a principal of Clayton, Dubilier & Rice, a position he
has held since June 1994. From January 1993 until October 1993, he
was Chief Executive Officer of Medco Containment Services, Inc. From
January 1990 through October 1992, he served as President and Chief
Operating Officer of Citicorp and its principal subsidiary, Citibank,
N.A. 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 Lotus Development, True
North Communications Inc., DFS Group Limited, and Van Kampen American
Capital, Inc.
KARLHEINZ
KASKE (PICTURE OMITTED)
Dr. Kaske, 66, 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. Dr. Kaske is a professor at the Technical
University of Munich. 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, 63, 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
Lance, Inc. and Westvaco Corporation.
DIRECTORS SERVING A TERM EXPIRING AT THE 1997 ANNUAL MEETING
(Class I Directors)
MARTHA LAYNE
COLLINS (PICTURE
OMITTED)
Governor Collins, 58, 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.
GEORGE M. C.
FISHER (PICTURE OMITTED)
Mr. Fisher, 54, who joined the Kodak Board of Directors on
December 1, 1993, is Chairman, President and Chief Executive Officer
of Eastman Kodak Company. 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.
PAUL E.
GRAY (PICTURE OMITTED)
Dr. Gray, 63, 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, 63, 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 was President of the International Federation of Stock Exchanges
from 1991 through 1993. He is a member of the Council on Foreign
Relations and is 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.
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 and Drs. Emerson and Gray. The Committee had
six meetings during 1994 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, 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 six meetings in 1994. The
Committee's 1994 activities included a review of the Company's
executive development process, approval of remuneration to be paid to
the executive vice presidents and senior vice presidents of the
Company and recommendations concerning compensation of other Company
officers. In addition, the Committee amended the 1990 Omnibus Plan
and took action pursuant to the Management Annual Performance Plan
and the 1990 Omnibus Long-Term Compensation Plan. Also, the Committee
approved and recommended to the Board the Eastman Kodak Company 1995
Omnibus Long-Term Compensation Plan, the Management Variable
Compensation Plan and the Wage Dividend Plan.
The members of the Committee on Directors are Messrs. Goizueta
(Chairman), Braddock, and Zimmerman and Dr. Kaske. The Committee met
twice in 1994 and (i) reviewed the qualifications of individuals for
election as members of the Board; (ii) recommended qualified
individuals to be considered for Board membership; (iii) revised the
compensation of the Company's directors including the Directors'
Deferred Compensation Plan; (iv) revised the Directors' Charitable
Award Program; and (v) reviewed the charters of the committees of the
Board. 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 Gov. Collins
(Chairman), Mr. Phelan and Drs. Gray and Kaske. The Committee had
seven meetings during 1994 and reviewed (i) the investment
performance and the administration of the Company's pension plan; and
(ii) the Company's financing strategies, including the disposition of
the non-imaging health businesses and the reduction of debt.
The members of the Public Policy Committee are Messrs. Duncan
(Chairman), Goizueta, and Zimmerman and Gov. Collins. The Committee
met twice during 1994. Its activities included (i) a review of
proposals submitted by shareholders; (ii) a review of the Company's
philanthropic programs; and (iii) a review of the Company's
environmental initiatives.
MEETING ATTENDANCE The Board of Directors held a total of fourteen
meetings in 1994. No director attended less than 83 % 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, 1995
- ------------------- -----------------------
Richard T. Bourns 82,041*+
Richard S. Braddock 2,535
Martha Layne Collins 2,340
Charles T. Duncan 2,592
Alice F. Emerson 1,392
George M. C. Fisher 392,108**
Roberto C. Goizueta 4,499
Paul E. Gray 1,859
Karlheinz Kaske 1,353
Harry L. Kavetas 12,810&
John J. Phelan, Jr. 2,698
Wilbur J. Prezzano 176,445*
Leo J. Thomas 161,801*
Richard A. Zimmerman 2,919
All Directors, Nominees and 965,015*#
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 - 77,250;
G. M. C. Fisher - 264,708; W. J. Prezzano- 165,200;
L. J. Thomas- 150,568; and all directors, nominees and executive
officers as a group-770,606.
*Includes 20,000 shares of restricted stock.
&The transfer of these shares is restricted.
+The shares shown do not include the following Eastman Kodak
Company common stock equivalents which are held in the Eastman Kodak
Company 1982 Executive Deferred Compensation Plan: R. T. Bourns -
5,008 and all executive officers as a group - 9,541.
# 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 Plan 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 8,124,116 shares of
the Company's stock (less than 3 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 25,250 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 $20,000 in common
stock of the Company and $18,000 in cash. In addition, each such
director receives a fee of $1,000 for each Board meeting attended and
$900 for each Board committee and special meeting attended, and
$1,000 for each Board committee and special meeting which he or she
chairs. There is a deferred compensation plan available to all such
directors for the cash portion of their compensation, in which two
directors participated in 1994. Directors participating in this plan
may choose between an interest-bearing account and a phantom Kodak
stock fund. 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 pro
rata 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 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 Officer and
the four highest paid executive officers during 1994.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation
-------------------------------- -------------------------------
Awards Payouts
----------------------- -------
Securities
Other Under-
Annual Restricted lying All Other
Name and Compen- Stock Options/ LTIP Compensa-
Principal Position Year Salary(a) Bonus(b) sation Award(s) SARs Payouts tion
- ------------------ ---- --------- -------- ------ ---------- -------- ------- ---------
G. M. C. Fisher 1994 $2,000,000 $1,816,400 $84,901(c) 0 $0 $2,103,524(d)
Chairman, 1993 330,769 154,000 (e) $1,270,000(g) 1,323,539 0 5,000,000(h)
President, and
Chief Executive Officer
R. T. Bourns 1994 440,000 270,238 (e) 0 10,000 0 0
Senior Vice 1993 400,000 227,563 (e) 0 10,017 0 0
President 1992 343,462 127,873 (e) 0 17,530 0 0
H. L. Kavetas 1994 478,077 457,605 56,044(f) 550,830(i) 200,000 0 55,000(j)
Executive Vice
President (eff. 9/9/94),
Senior Vice
President (2/11/94-9/8/94)
W. J. Prezzano 1994 552,615 501,328 113,686(k) 0 65,000 0 1,351,200(l)
Executive Vice 1993 536,000 259,752 306,298(k) 0 15,026 0 0
President (eff. 9/9/94), 1992 536,000 291,146 391,865(k) 0 25,795 0 0
Group Vice President
(1/1/94-9/8/94)
L. J. Thomas 1994 618,462 488,547 (e) 0 119,200 0 0
Executive Vice 1993 592,308 301,008 (e) 0 19,158 0 0
President (eff. 9/9/94), 1992 580,000 267,306 (e) 0 33,182 0 0
Group Vice President
(1/1/94-9/8/94)
(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 1994: G. M. C. Fisher - $136,400 WD, $1,680,000 MAPP;
R. T. Bourns - $40,238 WD, $230,000 MAPP; H. L. Kavetas - $32,605 WD, $425,000 MAPP;
W. J. Prezzano - $51,328 WD, $450,000 MAPP; L. J. Thomas - $58,547 WD, $430,000 MAPP.
(c) This amount includes $43,973 for club memberships.
(d) This amount includes $2,064,394 of principal and interest forgiven by the Company with
respect to two loans described under the heading "Employment Contracts" on page 20
and $39,130 for term life insurance premiums.
(e) The value of personal benefits provided to the executive officer is less than the
minimum amount required to be reported.
(f) This amount includes $35,615 as a temporary living allowance.
(g) This amount represents 20,000 shares of restricted stock valued at $63.50 per share,
on the date of grant, November 11, 1993. The value of these shares as of
December 31, 1994 was $955,000. These shares are restricted until October 26, 1998
and receipt of these shares is conditioned upon continued employment with the
Company until such date. Dividends are paid on these shares as and when dividends are
paid on Kodak common stock.
(h) 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.
(i) This amount represents 12,810 shares of restricted stock valued at $43.00 per share,
on the date of grant, February 15, 1994. The value of these shares as of
December 31, 1994 was $611,678. These shares are restricted until February 14, 1999
and receipt of these shares is conditioned upon continued employment
with the Company until such date. Dividends are paid on these shares as and when
dividends are paid on Kodak common stock.
(j) This amount represents a hiring bonus.
(k) This amount represents expatriate payments and tax reimbursement for overseas
assignments in 1990 and 1991. The value of personal benefits provided to the
executive officer is less than the minimum amount required to be reported.
(l) This amount represents a special recognition Award paid in 1995 in connection with the
divestiture in 1994 of the non-imaging health businesses.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
- --------------------------------------------------------------------- Potential Realizable
Number of Percentage Value at Assumed
Securities of Total Annual Rate of
Underlying Options/SARs Stock Price Apprecia-
Options/ Granted to Exercise or tion for Option Term (a)
SARs Employees Base Price Expiration -----------------------------
Name Granted in Fiscal Year Per Share Date 0%(b) 5%(c) 10%(d)
- --------------- ---------- -------------- ----------- ---------- ------ --------- ----------
G. M. C. Fisher 0 0% N/A N/A $0 $ 0 $ 0
R. T. Bourns 10,000(e) .28 $42.94 2/14/04 0 270,000 684,400
H. L. Kavetas 200,000(f) 5.61 42.94 2/14/04 0 5,400,000 13,688,000
W. J. Prezzano 15,000(e) .42 42.94 2/14/04 0 405,000 1,026,600
50,000(g) 1.40 44.50 3/09/04 0 1,399,500 3,546,000
L. J. Thomas 19,200(e) .54 42.94 2/14/04 0 518,400 1,314,048
100,000(g) 2.81 44.50 3/09/04 0 2,799,000 7,092,000
All Shareholders
at $42.94 N/A N/A N/A N/A 0 9 Billion 23 Billion
at $44.50 0 9 Billion 24 Billion
Gain of named N/A N/A N/A N/A N/A .001 .001
officers as .001 .001
portion of all
shareholder gain
(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)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.
(c)A 5% per year appreciation in stock price from $42.94 per share and $44.50
per share yields $69.94 and $72.49 respectively.
(d)A 10% per year appreciation in stock price from $42.94 per share and $44.50
per share yields $111.38 and $115.42 respectively.
(e)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 of employment for an
Approved Reason.
(f)These options vest on February 15, 1999. Vesting accelerates upon death,
disability, or termination of employment without cause.
(g)These options vest on March 10, 1996, the second anniversary of the date of
grant. Vesting accelerates upon death, disability or termination of
employment for an Approved Reason.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Securities
Underlying Value of Unexercised
Unexercised in-the-money
Number Options/SARs at Options/SARs at
of Fiscal Year-End Fiscal Year-End(*)
Shares ----------------------------- --------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------- ------------ -------- ----------- ------------- ----------- ----------
G. M. C. Fisher 0 $ 0 264,708 1,058,831 $ 0 $ 0
R. T. Bourns 0 0 64,737 22,521 887,808 146,260
H. L. Kavetas 0 0 0 200,000 0 962,000
W. J. Prezzano 0 0 146,931 83,282 2,166,022 376,882
L. J. Thomas 0 0 126,944 142,803 1,767,947 601,636
(*)Based on the closing price on the New York Stock Exchange - Composite Transactions of the Company's
Common Stock on December 31, 1994 of $47.75 per share.
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. Participation in this Program commenced in 1993 for the CEO and the other named executive officers,
except H. L. Kavetas, whose participation commenced in 1994. Shown in the table below is the threshold and target
number of shares for H. L. Kavetas under this Program offset by the 12,810 shares of restricted stock Awarded to
H. L. Kavetas under his employment contract.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts Under Non-Stock
Price-Based Plans
Number of Performance ----------------------------------------------------
Shares, Units or Other Period Threshold Target Maximum
or Other Until Maturation Number Number Number
Name Rights or Payout of shares of shares of shares(a)
- --------------- --------- ---------------- -------------- -------------- -------------
H. L. Kavetas 10,826(b) 2/11/94-12/31/95 0(b) 10,826(b)
(a)Under the terms of the Restricted Stock Program, should performance exceed the targeted performance,
a greater under of shares than the target could be paid and there is no maximum stated in the program.
(b)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. The amounts shown are the prorated amounts.
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 participates in MAPP and has 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. Pursuant to the agreement, Mr. Fisher was granted 1,323,539
stock options in 1993. The agreement 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 the
date of the loan). $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 11 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. Forgiveness of the $4,000,000 loan is conditioned upon
Mr. Fisher's not having voluntarily terminated his employment with the
Company and forgiveness of the $4,284,400 loan is conditioned upon Mr.
Fisher's not entering into competition with the Company. The amount of
the forgiveness for 1994 is shown in the column of the Summary
Compensation Table entitled "All Other Compensation", on page 14.
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 the Company'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. 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. The Company provided Mr. Fisher with an apartment until
he purchased a permanent residence in the Rochester area. The Company
purchased Mr. Fisher's residence in Barrington Hills, Illinois. In
addition, the Company reimbursed 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 90 days, the payment of the annual incentive
for the year of his death and annual and long-term incentives earned but
not yet paid, and vesting of all stock options and awards and the
forgiveness of the loans. In the event of Mr. Fisher's disability prior
to termination of the agreement, the agreement provides for a disability
benefit payable to age 65, the payment of the annual incentive for the
year in which his disability occurs and annual and long-term incentives
earned but not yet paid, and vesting of all stock options and awards.
If Mr. Fisher's employment is terminated by the Company without cause,
including following 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 earned but not yet paid. 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.
On February 11, 1994, the Company entered into an agreement
covering a period of five years, for the employment of Harry L. Kavetas
as Chief Financial Officer of the Company. Mr. Kavetas' base salary is
$550,000, subject to review on an annual basis. Mr. Kavetas
participates in MAPP and has an annual target Award opportunity of at
least $330,000, with that amount guaranteed for services rendered in
1994. Mr. Kavetas was granted 12,810 shares of restricted stock with
the restrictions lapsing at the end of five years. Pursuant to the
agreement, Mr. Kavetas was granted 200,000 stock options that become
exercisable at the end of five years.
In addition, where necessary, Mr. Kavetas has been given credit
for a period of service sufficient to allow him to obtain the maximum
benefits available under Kodak's benefit plans. In particular. Mr.
Kavetas was credited with five years of service for purposes of the Wage
Dividend and will be credited with six years of service for each of the
first five years of employment for purposes of calculating a retirement
benefit. Any pension benefit payable to Mr. Kavetas by the Company will
be offset by any pension benefit paid to Mr. Kavetas by his prior
employer. The Company provided Mr. Kavetas with temporary housing until
he purchased a permanent residence in the Rochester area. In the event
of Mr. Kavetas's death prior to the termination of the agreement, the
agreement provides for salary continuation for 90 days, the pro rata
payment of all annual and long-term incentives and pro rata vesting of
stock options and restricted stock awards. In the event of Mr.
Kavetas's disability prior to termination of the agreement, the
agreement provides for the pro rata payment of all annual and long term
incentives, and pro rata vesting of stock options and restricted stock
awards. If Mr. Kavetas' employment is terminated by the Company without
cause, Mr. Kavetas is entitled to 18 months of salary continuation,
immediate pro rata vesting of stock options and restricted stock awards
and the payment of any incentive awards earned but not yet paid.
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.
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 or her account in a single lump sum cash
payment; (ii) each participant in the Management Annual Performance Plan
would be paid his or 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
Years of Service
----------------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35 40
- ------------- -------- -------- -------- -------- -------- -------- ---------- ----------
$ 400,000 $ 32,000 $ 64,000 $ 96,000 128,000 $160,000 $ 192,000 $ 224,000 $ 235,200
600,000 48,000 96,000 144,000 192,000 240,000 288,000 336,000 352,800
800,000 64,000 128,000 192,000 256,000 320,000 384,000 448,000 470,400
1,000,000 80,000 160,000 240,000 320,000 400,000 480,000 560,000 588,000
1,200,000 96,000 192,000 288,000 384,000 480,000 576,000 672,000 705,600
1,400,000 112,000 224,000 336,000 448,000 560,000 672,000 784,000 823,200
1,600,000 128,000 256,000 384,000 512,000 640,000 768,000 896,000 940,800
1,800,000 144,000 288,000 432,000 576,000 720,000 864,000 1,008,000 1,058,400
2,000,000 160,000 320,000 480,000 640,000 800,000 960,000 1,120,000 1,176,000
2,200,000 176,000 352,000 528,000 704,000 880,000 1,056,000 1,232,000 1,293,600
2,400,000 192,000 384,000 576,000 768,000 960,000 1,152,000 1,344,000 1,411,200
NOTE: For purposes of this table Remuneration means Average Participating Compensation. 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 five 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 1994.
"Average
Years of Participating
Service Compensation"
-------- -------------
G. M. C. Fisher 18* $1,999,998
R. T. Bourns 36 516,087
H. L. Kavetas 6** 550,004
W. J. Prezzano 29 714,017
L. J. Thomas 33 819,589
*Under the terms of his employment contract, Mr. Fisher has been
credited with seventeen years of service for purposes of
calculating his retirement benefit. 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.
**Under the terms of his employment contract, Mr. Kavetas is credited
with six years of service for purposes of calculating his
retirement benefit for each year of his first five years of
employment with the Company. Any pension benefit payable to Mr.
Kavetas by the Company will be offset by any pension benefit paid
to Mr. Kavetas 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 consistent with
Company values, including increasing shareholder 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 in 1994 was made up of two components:
base salary and the Management Annual Performance Plan (MAPP), an
annual incentive plan. The target annual incentive Award for
executives is dependent upon their position in the Company, with the
lowest level of executives having an incentive target of 18% of base
salary and the CEO having a target of 75% of base salary. MAPP
performance targets for the Company as a whole and for each Group
(Imaging and Health) were set for 1994 by the Committee in its
meeting in December, 1993. They were financial in nature and stated
in terms of earnings, cash flow and revenue, with weightings of 40%,
40% and 20%, respectively. After the divestiture during 1994 of all
of the businesses that made up the Health Group, except for the
Health Sciences Division, the target values for each measure were
restated based upon continuing operations.
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, Executive
Vice Presidents and Senior Vice Presidents. These levels were set
based on surveys of other companies conducted by external
consultants. A cross section of companies is surveyed, varying in
size and industry. The surveyed companies represent those with whom
the Company competes for executive talent and include most, but not
all, of the companies identified in the Performance Graph on page 29.
Through the mix of varied companies, a comprehensive picture is
obtained against which to set a frame of reference for executive
compensation. The mean compensation level of the surveyed companies
is a primary reference for determining targeted levels of
compensation.
During 1994, Company management sought to achieve improved
financial respectability through re-engineering its balance sheet,
significantly reducing debt and gaining greater operational
flexibility. Heavy emphasis was placed on generating cash flow,
along with growing revenues and increasing earnings. These
performance factors most heavily influenced compensation awards for
1994.
The Committee may exercise discretion in judging Company
performance against pre-established goals by including or excluding
extraordinary items. For 1994, the Committee did not include the
gain from the sale of the health businesses but did include the cost
of restructuring.
MAPP awards for 1994 were based upon the results achieved by
the continuing operations of the Company. Performance was strongly
above the revenue target and significantly beyond the cash flow
target for 1994. Earnings results were below target. Based upon
these results, MAPP Awards for the senior executives for 1994 were as
detailed in the Summary Compensation Table on page 14.
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.
Almost all of the companies included in these surveys are also
included in the surveys on annual cash compensation. They differ due
to the fact that different companies choose to participate in
different surveys of long-term compensation. 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 1994 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." Due to the divestiture of the non-
imaging health businesses and debt paydown program in 1994, the
formula used to calculate the wage dividend for 1994 was based on
returns from continuing operations. In addition, the effect of the
1994 restructuring costs was excluded. The resulting percentage,
which must be at least 5.0% and not higher than 15.0%, was 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 approach is
applied to virtually all employees. Employees with fewer than five
years of service receive a prorated amount.
Chief Executive Officer Compensation
Mr. Fisher joined the Company in October 1993, entering into an
employment agreement with the Company covering a period of five
years. The details of the agreement are set forth on page 20 of this
Proxy Statement. This agreement reflects the compensation package
necessary to obtain Mr. Fisher's services for the Company and the
amount required to compensate him for amounts forfeited by him as a
result of his departure from his previous employer.
During 1994, no change was made to the base salary of
$2,000,000 which was established in Mr. Fisher's agreement. Based
upon the Company's performance results described earlier in this
Report, Mr. Fisher received an annual incentive Award under MAPP of
$1,680,000. This represents an Award 12% above Mr. Fisher's target
Award of $1,500,000 (75% of his base salary) and was based on the
results achieved against the three goals of earnings, cash flow, and
revenue with the weightings described earlier. As is stated in the
agreement, he received no grant of stock options in 1994.
Mr. Fisher's agreement also provided for the forgiveness of 20
percent of the principal and all of the accrued interest on two loans
which were made to him by the Company, as described on page 20.
Leadership and Organization Development
In line with the expansion of the Committee's charter, it
reviewed leadership and organization development plans, as well as
profiles of succession candidates. It discussed executive
development strategies designed to provide for leaders capable of
creating effective organizations and executing business strategies
that will drive the success of the Company.
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, while there may be circumstances in which the
Company's interests are best served by maintaining flexibility
whether or not the compensation is fully deductible under Section
162(m), it is generally in the Company's best interest to comply with
Section 162(m).
Other Committee Action
The Company operates under the principle that compensation is to be
related to performance. To strengthen that linkage, two compensation
plans were redesigned and have been approved by the Committee: an
executive compensation plan, the Management Variable Compensation
Plan (MVCP), which is the new annual incentive plan replacing MAPP;
and a broad-based plan, the Wage Dividend Plan. Both plans use
Return On Net Assets ("RONA") to measure performance, increasing
alignment between the plans and better tying compensation to results
achieved. In addition, both plans, unlike their predecessors which
paid awards only in cash, allow for the possibility of payment using
common stock. The Committee also approved the 1995 Omnibus Long-Term
Compensation Plan, a five-year plan which is the successor to the
1990 Omnibus Long-Term Compensation Plan, which expired on January
31, 1995. The descriptions of these plans are found on pages 30
through 51 in this Proxy Statement. The plans are set forth in full
in Exhibits A, B and C, commencing on pages 56, 85 and 101,
respectively.
Commencing in 1995, the Company is implementing a new
management appraisal process, the Management Performance Commitment
Process. This process will measure the performance of each member of
management with respect to shareholder satisfaction, customer
satisfaction and employee satisfaction/public responsibility.
Various measurement criteria will be used, including financial
performance, improvements in health, safety and the environment,
achievement of diversity goals, employee development and product
leadership. In addition, managers will be appraised on how well they
evidence the five corporate values: respect for the dignity of the
individual, integrity, trust, credibility and continuous
improvement/personal renewal. The result of the appraisal process
will impact decisions on the compensation of executives covering base
salary, annual incentives and stock options.
Richard S. Braddock (Chairman) Robert 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"), the Dow Jones
Industrial Index and a peer group index, by measuring the changes in
common stock prices from December 31, 1989, plus assumed reinvested
dividends.
For the prior two years, the Company has chosen a self-
constructed peer group index consisting of large "blue chip"
companies traded in the U.S. 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.
As a result of the spin-off of Eastman Chemical Company in 1993
and the divestiture of other non-imaging businesses in 1994, the
Company has decided to change from the peer group identified above to
the Dow Jones Industrial Index.
The chart assumes that $100 was invested on December 31, 1989
in each of the Company's common stock, the S&P 500 Index, the Dow
Jones Industrial 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.
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- --------
Eastman Kodak $100 $106 $129 $113 $163 $182
S&P 500 Index 100 98 128 139 153 154
Dow Jones 100 99 123 133 155 162
Peer Group 100 103 139 139 143 158
ITEM 2 - RATIFICATION OF ELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit
Committee, has elected Price Waterhouse LLP, independent accountants
of the Company for many years, to serve until the Annual Meeting of
shareholders in 1996. The Board of Directors proposes that the
shareholders ratify the Board's election of Price Waterhouse LLP as
the independent accountants of the Company. Representatives of Price
Waterhouse LLP 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, 4 AND 5
MANAGEMENT PROPOSALS ON COMPENSATION
Three plans are being presented to the shareholders for approval.
Two of these, the Eastman Kodak Company 1995 Omnibus Long-Term
Compensation Plan and the Management Variable Compensation Plan, are
intended as primarily executive compensation plans. The Wage
Dividend Plan applies to virtually all employees.
Both the Management Variable Compensation Plan and the Wage Dividend
Plan were designed as cash compensation plans with the flexibility to
pay awards in the form of Company stock as well as cash. Awards paid
under the predecessors to these plans have traditionally been in
cash. The Company believes that increasing the stock ownership of
all employees will result in greater alignment of employee and
shareholder objectives.
ITEM 3 - Eastman Kodak Company 1995 Omnibus Long-Term Compensation
Plan
Background
The Board recommends approval of the Eastman Kodak Company 1995
Omnibus Long-Term Compensation Plan (the "Plan"). The Plan is
substantially the same as the Eastman Kodak Company 1990 Omnibus
Long-Term Compensation Plan ("1990 Omnibus Plan"), which was
approved by the shareholders at the 1990 Annual Meeting, and which
expired January 31, 1995. The major changes from the 1990 Omnibus
Plan were to accomplish the following:
1. Meet the strict requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") regarding
"Performance-Based Compensation so that compensation in excess
of $1 million will be tax deductible by the Company.
2. Prohibit the repricing of stock options.
3. Prohibit stock options and stock appreciation rights ("SARs")
from being granted with an exercise price less than 100% of
fair market value on the date of grant.
4. Allow employees other than management employees to be granted
Awards under the Plan.
5. Provide that Awards which terminate by expiration, forfeiture,
or cancellation without the issuance of shares, are settled in
cash in lieu of Common Stock, or are exchanged with the
Committee's approval for Awards not involving Common Stock
shall not be available again for grant under the Plan.
The full text of the Plan appears in Exhibit A to this Proxy
Statement and should be referred to for a complete description of its
provisions. A summary of the material features of the Plan appears
below. It is qualified in its entirety by reference to the text of
the Plan.
Purpose
The purpose of the Plan is to provide motivation to selected
employees of the Company and its subsidiaries to put forth maximum
efforts toward the continued growth, profitability and success of the
Company and its subsidiaries by providing incentives to such
employees through the ownership and performance of the Company's .
As its name implies, the Plan was designed to enable the Company to
adapt the long-term incentive compensation of its employees to
changing business conditions.
Administration
The Plan provides for administration by a committee (the
"Committee"), to be comprised of either the Executive Compensation
and Development Committee of the Board or another committee
designated by the Board; provided, however, each of the members of
the Committee must be both a "disinterested director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934
("Exchange Act") and an "outside director" within the meaning of the
Proposed Treasury Regulation Section 1.162-27(e)(3), or any
successors thereto. No member of the Committee is eligible to be
selected to participate in the Plan. Among the powers granted to the
Committee are the authority to interpret the Plan, establish rules
and regulations for its operation, select employees of the Company
and its subsidiaries to receive Awards and determine the form and
amount and other terms and conditions of such Awards. The Plan
authorizes the Committee to delegate its authority and duties under
the Plan, in certain circumstances; provided, however, only the
Committee may select and grant Awards to participants who are subject
to Section 16 of the Exchange Act or are a "Covered Employee," as
defined in Section 162(m) of the Code (i.e., the Company's Chief
Executive Officer and the four most highly paid executive officers).
Eligibility for Participation
All Employees of the Company or any of its 80-percent-or-more owned
subsidiaries are eligible to be selected to participate in the Plan;
provided, however, only those Employees who are senior level
executives are eligible to participate in the Plan's Performance
Stock Program. The selection of participants from among the
Employees is within the discretion of the Committee. The Committee
has not yet determined how many employees are likely to ultimately
participate in the Plan. However, the Committee intends to mainly
utilize the Plan to grant Awards to those Employees who hold a
position of responsibility in a managerial, administrative, or
professional capacity who the Committee believes can have a
significant effect on the growth, profitability and success of the
Company. There are currently approximately 900 Employees of the
Company and its subsidiaries in this category.
Types of Awards
The Plan provides for the grant of any or all of the following types
of Awards: (1) stock options, including incentive stock options;
(2) SARs in tandem with stock options or freestanding; (3) Common
Stock of the Company, including restricted Common Stock; (4) Common
Stock units; (5) performance units; (6) performance shares; (7)
shares of the Company's Common Stock under the Performance Stock
Program; and (8) any other Award established by the Committee which
is consistent with the Plan's purpose. Such Awards may be granted
singly, in combination, or in tandem as determined by the Committee.
Amendment of Plan
The Committee may suspend, amend or terminate the Plan at any time,
with or without prior notice; provided, however, it may not, without
shareholder approval, adopt any amendment which would require the
vote of the shareholders pursuant to Section 16 of the Exchange Act.
Further, the Committee may not, without shareholder approval, adopt
any amendment requiring shareholder approval pursuant to Section
162(m) of the Code, but only insofar as such amendment affects
Covered Employees.
Available Shares
The Plan authorizes the Committee to grant Awards during the period
from February 1, 1995 through December 31, 1999; except that the
Committee may grant Awards under the Performance Stock Program after
such date in recognition of performance for performance cycles
commencing prior to such date. Sixteen million shares of Common
Stock of the Company are available for grant under the Plan. Shares
of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of shares,
or are settled in cash in lieu of Common Stock, will not again be
available for grant under the Plan. The maximum number of shares
available for issuance under the Plan shall not be reduced to reflect
any dividends or dividend equivalents that are reinvested into
additional shares of Common Stock or credited as additional
performance shares.
Limitation on Awards
The maximum number of shares of Common Stock which shall be available
for Awards granted in the form of Stock Awards, performance units or
performance shares (including those issued in the form of performance
awards) under the Plan during its term shall be 5,000,000. The
maximum performance award payable to any one Participant under the
Plan for a Performance Period is 50,000 shares of Common Stock or, in
the event the Performance Award is paid in cash, the equivalent cash
value thereof. The maximum number of shares for which stock options
may be granted to any one Participant for a Performance Period is
200,000. The maximum number of shares for which SARs may be granted
under the Plan to any one Participant for a Performance Period is
also 200,000. The maximum award payable to any one Participant under
the Performance Stock Program for a Performance Cycle is 50,000
shares of Common Stock.
Stock Options
Under the Plan, the Committee may grant Awards in the form of options
to purchase shares of the Company's Common Stock. The Committee
will, with regard to each stock option, determine the number of
shares subject to the option, the manner and time of the option's
exercise and the exercise price per share of stock subject to the
option. In no event, however, may the exercise price of a stock
option be less than 100 percent of the fair market value of the
Company's Common Stock on the date of the stock option's grant. Upon
exercise, the option price may, at the discretion of the Committee,
be paid by a Participant in cash, shares of Common Stock, a
combination thereof, or such other consideration as the Committee may
deem appropriate. The Plan prohibits the repricing of stock options.
Any stock option granted in the form of an incentive stock option
will satisfy the applicable requirements of Section 422 of the Code.
Stock Appreciation Rights
The Plan authorizes the Committee to grant SARs either in tandem with
a stock option ("Tandem SARs") or independent of a stock option
("Freestanding SARs"). An SAR is a right to receive a payment equal
to the appreciation in market value of a stated number of shares of
Common Stock from the SAR's exercise price to the market value on the
date of its exercise.
A Tandem SAR may be granted either at the time of the grant of the
related stock option or at any time thereafter during the term of the
stock option. A Tandem SAR shall be exercisable to the extent its
related stock option is exercisable, and the exercise price of such
an SAR shall be the same as the option price under its related stock
option. Upon the exercise of a stock option as to some or all of the
shares covered by the Award, the related Tandem SAR shall be canceled
automatically to the extent of the number of shares covered by the
stock option exercise.
The Committee will, with regard to a Freestanding SAR, determine the
number of shares of the Company's Common Stock subject to the SAR,
the manner and time of the SAR's exercise, and the exercise price of
the SAR. However, the exercise price of a Freestanding SAR will in no
event be less than 100 percent of the fair-market value of the Common
Stock, on the date of the grant of the Freestanding SAR.
Stock Awards
The Plan authorizes the Committee to grant Awards in the form of
shares of Common Stock, restricted shares of Common Stock, and Common
Stock units ("Stock Awards"). Such Awards will be subject to such
terms, conditions, restrictions, and/or limitations, if any, as the
Committee deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment. The Plan
gives the Committee the discretion to accelerate the delivery of a
Stock Award.
Performance Shares
The Plan allows for the grant of "performance shares." For purposes
of the Plan, "performance shares" means either shares of Common Stock
of the Company or units which are expressed in terms of Common Stock
of the Company. Such Awards will be contingent upon the attainment
of certain performance objectives over a period to be determined by
the Committee. The performance objectives to be achieved during such
period and the measure of whether and to what degree such objectives
have been attained will also be determined by the Committee.
Performance Units
Awards may also be granted in the form of performance units which are
units valued by reference to criteria chosen by the Committee, other
than the Company's Common Stock. Performance units are similar to
performance shares in that they are contingently Awarded based on the
attainment of certain performance objectives over a fixed period. The
length of such period, the performance objectives to be achieved
during the period, and the measure of whether and to what degree such
objectives have been achieved will be determined by the Committee.
Performance Awards
This form of Award enables the Committee to treat those Awards
granted under the Plan in the form of Stock Awards, performance
shares and performance units as "Performance-Based Compensation"
under Section 162(m) of the Code and thus preserve the deductibility
of such Awards by the Company for Federal income tax purposes. Since
162(m) of the Code only applies to those Employees who are "Covered
Employees," as defined in Section 162(m) of the Code, only Covered
Employees are eligible for Performance Awards.
Those Covered Employees who are designated by the Committee as
Participants for a given Performance Period shall only be entitled to
receive a Performance Award for such period to the extent that the
pre-established objective Performance Goals set by the Committee for
such period are attained. With regards to a particular Performance
Period, the Committee shall have the discretion, subject to the
Plan's terms, to select the length of the Performance Period, the
type(s) of Performance Awards to be issued, the Performance Goal(s)
that will be used to measure performance for the period and the
Performance Formula that will be used to determine what portion, if
any, of the Performance Award has been earned for the period. Such
discretion shall be exercised by the Committee in writing within the
first 90 days of the Common Stock and performance for the period
shall be measured by the Committee upon the period's close. In
determining the actual size of an individual Performance Award for a
Performance Period, the Committee may through its use of negative
discretion reduce or eliminate such Award. Generally, a Participant
will have to be employed on the last day of a Performance Period in
order to be eligible for a Performance Award for such period.
Performance Stock Program
Through the Plan's Performance Stock Program (the "Program") the
Committee intends to continue the long-term stock based compensation
program, i.e., the 1993-1995 Restricted Stock Program, that it began
under the 1990 Omnibus Plan for selected senior executives. A
description of the 1993-1995 Restricted Stock Program appears in the
sections of this Proxy Statement entitled "Long-Term Incentive Plan"
and "Report On Executive Compensation By the Executive Compensation
and Development Committee." Among the purposes of the Program are to
motivate and reward selected senior executives to undertake actions
to increase the price of the Company's Common Stock by linking a
meaningful portion of their compensation to the achievement of
specific long-term financial objectives of the Company. Awards under
the Program are intended to qualify as "Performance-Based
Compensation" under Section 162(m) of the Code.
Participation in the Program will be limited to a small group of
senior level executives of the Company and its subsidiaries who are
expected to have the most influence and accountability for the
Company's future performance. Although the Committee has not yet
determined exactly how many senior level executives will participate
in the Program, it is generally believed that the Program will be
limited to approximately 35 to 40 Participants. The Committee
expects the Program to generally operate in the following fashion.
Awards granted under the Program will provide Participants with the
opportunity to earn shares of the Company's Common Stock, subject to
such terms and conditions as the Committee may determine. Each Award
granted under the Program for a Performance Cycle will consist of a
Target Award expressed as a fixed number of shares of Common Stock.
Each Performance Cycle will consist of three consecutive calendar
years. These cycles will operate concurrently. That is, a new
Performance Cycle will commence annually. However, a Performance
Cycle of 2 calendar years will commence in 1995 and, thus, coincide
with the three-year Performance Cycle which will commence in 1995.
The purpose of this is to establish the potential for consecutive
annual Award payments starting at the end of 1996.
Within the first 90 days of a Performance Cycle, the Committee shall
establish written objective performance goals for the cycle from the
listed performance criteria set forth in the Plan. In no event will
Awards be paid for the cycle unless these Performance Goals are
attained. At the same time, the Committee will establish in writing
the Performance Formula for the cycle which shall determine, assuming
the Performance Goals for the cycle are achieved, what percentage of
the Participant's Target Award for the cycle has been earned.
After the close of each Performance Cycle, the Committee shall
determine whether the Performance Goals for the cycle have been
achieved and, if so, calculate, based upon application of the
Performance Formula to the Performance Goals for the cycle, what
percentage of each Participant's Target Award has been earned for the
cycle. In determining the actual Award amount to be paid to a
Participant, the Committee shall have the authority to reduce or
eliminate the Target Award earned by the Participant, based upon any
objective or subjective criteria it deems appropriate.
Except in the case of a Change In Control, in the event that a
Participant's employment is terminated prior to completion of a
Performance Cycle for any reason other than death, Disability,
Retirement or termination due to an Approved Reason, all of the
Awards granted to the Participant for such cycle shall be forfeited.
If the event a Participant's employment is terminated by reason of
death, Disability, Retirement or for an Approved Reason prior to the
date payment of the Awards for such cycle is made, he or she shall
receive, assuming Awards are earned for such cycle, a pro rata Award
based upon his or her employment during the cycle prior to
termination of employment.
Other Terms of Awards
Awards may be paid in cash, Common Stock, a combination of cash and
Common Stock, or any other form of property, as the Committee shall
determine. If an Award is granted in the form of a Stock Award, stock
option, or performance share, or in the form of any other stock-based
grant, the Committee may include as part of such Award an entitlement
to receive dividends or dividend equivalents. At the discretion of
the Committee, payment of a Stock Award, performance share,
performance unit, dividend, or dividend equivalent may be deferred by
a Participant.
The Plan provides for the forfeiture of Awards in the event of
termination of employment for a reason other than death, disability,
retirement, or any Approved Reason. The Plan authorizes the Committee
to promulgate administrative guidelines for the purpose of
determining what treatment will be afforded to a Participant under
the Plan in the event of his death, disability, retirement, or
termination for an Approved Reason.
Upon the grant of any Award, the Committee may, by way of an Award
Notice or otherwise, establish such other terms, conditions,
restrictions and/or limitations governing the grant of such Award as
are not inconsistent with the Plan.
Change In Control/Change In Ownership
In the event of a Change In Control (as defined in the Plan), a
Participant whose employment is terminated, for a reason other than
death, Disability, Cause, voluntary resignation or Retirement, within
two years of the date of such event would be entitled to the
following treatment under the Plan: (i) all of the terms, conditions,
restrictions and limitations in effect on any of the Participant's
outstanding Awards would immediately lapse, (ii) all of the
Participant's outstanding Awards would automatically become one
hundred percent (100%) vested, (iii) all of the Participant's
outstanding stock options, SARs, Common Stock units, performance
shares, and other stock-based Awards would be immediately cashed out
on the basis of the Change In Control price (as defined in the Plan)
and (iv) all of the Participant's outstanding performance units would
be cashed out. Such payments would be made as soon as possible, but
no later than the 90th day following such event.
The Plan also provides that upon a Change in Ownership, all
Participants, regardless of whether their employment is terminated,
would automatically receive the same treatment afforded to a
terminated Participant under the Plan in the event of a Change In
Control. The Plan defines a Change In Ownership as a Change In
Control which results in the Company's Common Stock ceasing to be
actively traded on the New York Stock Exchange.
New Plan Benefits
The only Awards that have been made to date under the Plan are those
under the Plan's Performance Share Program. The table below shows
these Awards.
NEW PLAN BENEFITS
EASTMAN KODAK COMPANY 1995 OMNIBUS LONG-TERM COMPENSATION PLAN
Dollar Value of Performance Shares(1) Number of
Name and Performance
Position Threshold(2) Target(2) Maximum(2) Shares
- --------------- ------------- ------------ ------------- -------------
G. M. C. Fisher, Chairman, President & CEO
1995-1996 Cycle $ 323,156 $ 646,313 $ 969,469 13,500
1995-1997 Cycle $ 323,156 $ 646,313 $ 969,469 13,500
R. T. Bourns, Senior Vice President
1995-1996 Cycle $ 95,152 $ 190,303 $ 285,455 3,975
1995-1997 Cycle $ 95,152 $ 190,303 $ 285,455 3,975
H. L. Kavetas, Executive Vice President
1995-1996 Cycle $ 157,389 $ 314,778 $ 472,167 6,575
1995-1997 Cycle $ 157,389 $ 314,778 $ 472,167 6,575
W. J. Prezzano, Executive Vice President
1995-1996 Cycle $ 143,625 $ 287,250 $ 430,875 6,000
1995-1997 Cycle $ 143,625 $ 287,250 $ 430,875 6,000
L. J. Thomas, Executive Vice President
1995-1996 Cycle $ 168,759 $ 337,519 $ 506,278 7,050
1995-1997 Cycle $ 168,759 $ 337,519 $ 506,278 7,050
All executive
officers, including the above
1995-1996 Cycle $1,188,497 $2,376,994 $3,565,491 49,650
1995-1997 Cycle $1,188,497 $2,376,994 $3,565,491 49,650
All Directors
who are not
executive
officers N/A N/A N/A N/A
All employees,
excluding
executive
Officers
1995-1996 Cycle $1,011,958 $2,023,916 $3,035,874 42,275
1995-1997 Cycle $1,011,958 $2,023,916 $3,035,874 42,275
(1) The Dollar Value is based upon a per share price of $47.875
which was the closing price of the Company's Common Stock on the
New York Stock Exchange for February 1, 1995.
(2) These represent amounts that could be paid out at the end of the
applicable Performance Cycle, based on the Company's
performance in relation to the pertinent Performance Goals. If
performance does not meet the threshold, no Awards will be paid.
Actual Awards may be reduced by the Committee through the
exercise of negative discretion.
The Committee has made no determinations with respect to grants of
stock options under the Plan. Further, since the grant of stock
options under the Plan is entirely within the Committee's discretion,
it is not possible to determine the amount of stock options that
would have been granted for the last completed fiscal year if the
Plan had been in effect.
Federal Income Tax Consequences
The following is a brief summary of the principal United States
Federal income tax consequences under current Federal income tax laws
related to Awards under the Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state or local
tax consequences.
A Participant who is granted an incentive stock option does not
realize any taxable income at the time of the grant or at the time of
exercise. Similarly, the Company is not entitled to any deduction at
the time of grant or at the time of exercise. If the Participant
makes no disposition of the shares acquired pursuant to an incentive
stock option before the latter of two years from the date of grant of
such option and one year from the exercise of such option, any gain
or loss realized on a subsequent disposition of the shares will be
treated as a long-term capital gain or loss. Under such
circumstances, the Company will not be entitled to any deduction for
Federal income tax purposes.
The Participant who is granted a non-qualified stock option does not
have taxable income at the time of grant, but does have taxable
income at the time of exercise equal to the difference between the
exercise price of the shares and the market value of the shares on
the date of exercise. The Company is entitled to a corresponding
deduction for the same amount.
The grant of an SAR will produce no Federal tax consequences for the
Participant or the Company. The exercise of an SAR results in taxable
income to the Participant, equal to the difference between the
exercise price of the shares and the market price of the shares on
the date of exercise, and a corresponding deduction to the Company.
A Participant who has been granted either performance units or
performance shares expressed in the form of units of Common Stock
will not realize taxable income at the time of the grant, and the
Company will not be entitled to a deduction at such time. A
Participant will realize ordinary income at the time the Award is
paid, and the Company will have a corresponding deduction.
A Participant who has been granted an Award of restricted shares of
Common Stock will not realize taxable income at the time of the
grant, and the Company will not be entitled to a deduction at the
time of the grant, assuming that the restrictions constitute a
substantial risk of forfeiture for Federal income tax purposes. When
such restrictions lapse, the Participant will receive taxable income
in an amount equal to the excess of the fair-market value of the
shares at such time over the amount, if any, paid for such shares.
The Company will be entitled to a corresponding deduction.
The Award of an outright grant of Common Stock to a Participant will
produce immediate tax consequences for both the Participant and the
Company. The Participant will be treated as having received taxable
compensation in an amount equal to the then fair-market value of the
Common Stock distributed to him or her. The Company will receive a
corresponding deduction for the same amount.
Limitation on Income Tax Deduction
Under Section 162(m) of the Code the Company may be limited as to
Federal income tax deductions to the extent that total compensation
paid to any one Covered Employee exceeds $1,000,000 in any one year.
The Company can preserve the deductibility of certain compensation in
excess of $1,000,000, however, provided that it complies with the
conditions imposed by Section 162(m) of the Code, including the
payment of "Performance-Based Compensation" pursuant to a plan
approved by the shareholders. The Plan has been designed to enable
any Award granted by the Committee under the Plan to a Covered
Employee to qualify as "Performance-Based Compensation" under Section
162(m) of the Code.
Other Information
The closing price of the Company's Common Stock reported on the New
York Stock Exchange for February 1, 1995 was $47.875 per share.
The Board of Directors recommends a vote FOR approval of Eastman
Kodak Company 1995 Omnibus Long-Term Compensation Plan.
ITEM 4 - Management Variable Compensation Plan
Background
The Company is proposing for shareholder approval the Management
Variable Compensation Plan (hereinafter called "MVCP" or the "Plan").
In furtherance of its belief that the continued success of the
Company depends upon its ability to attract, retain and motivate
employees and its desire to more closely align the compensation of
its management level employees with the Company's performance goals,
and in view of recent tax legislation which imposes limits on the
Company's ability to deduct compensation payable to the Company's
Chief Executive Officer and four most highly paid executive officers,
the Executive Compensation and Development Committee of the Board of
Directors (the "Compensation Committee") undertook a review of the
annual incentive plan for the Company's management level employees.
This review determined that while the Company's Management Annual
Performance Plan ("MAPP") has served its intended purposes, it should
be replaced by a new performance-based, profit-focused, annual
compensation plan. In light of this determination, the Board of
Directors approved the adoption of the Plan, effective January 1,
1995, subject to approval by the Company's shareholders.
Unlike its predecessor, MVCP covers not only the Company's U.S. based
key employees, but also all of the Company's other Key Employees
located throughout the world. The Compensation Committee believes
that an annual incentive plan that is worldwide will provide
management with uniform Award opportunities.
This new plan provides for the issuance of Awards in the form of the
Company's Common Stock in addition to cash. By providing equity
ownership opportunities and performance-based incentives, the
Compensation Committee believes that the Plan will better align the
interests of the Company's Key Employees with those of its
shareholders.
Like the Company's Wage Dividend Plan, upon which shareholder
approval is also being sought by way of this Proxy Statement, MVCP
will use as its key performance measure the Company's Return on Net
Assets ("RONA").
Summary of the Management Variable Compensation Plan
The full text of the MVCP is set forth in Exhibit B to this Proxy
Statement and should be referred to for a complete description of its
provisions. This summary of the Plan is qualified in its entirety by
reference to the text of the Plan.
Purposes
The purposes of the Plan are to provide an annual performance-based,
profit-driven, annual incentive Award in order to attract, retain and
motivate the Company's Key Employees and to endeavor to maintain the
tax-deductible status of such incentive payments to the Company's
Chief Executive Officer and four most highly paid executive officers
(the "Covered Employees"). The Plan has been designed and will be
administered to grant "performance-based" Awards which are intended
to qualify for Federal tax deductibility under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
Administration
The Plan provides for administration by a committee (the
"Committee"), to be comprised of either the Compensation Committee or
another committee designated by the Board; provided, however, each of
the members of the Committee must be both a "disinterested director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 ("Exchange Act") and an "outside director" within the meaning of
the Proposed Treasury Regulation Section 1.162-27(e)(3), or any
successors thereto. No member of the Committee is eligible to be
selected to participate in the Plan. Among the powers granted to the
Committee are the authority to interpret the Plan, establish rules
and regulations for its operation, select Key Employees to
participate in the Plan and determine the form and amount and other
terms and conditions of an Award. The Plan authorizes the Committee
to delegate its authority and duties under the Plan in certain
circumstances; provided, however, that only the Committee may select
and grant Awards to Participants who are Covered Employees.
Eligibility for Participation
All Key Employees of the Company and its majority-owned subsidiaries
are eligible to be selected to participate in the Plan for any
Performance Period (which shall, generally, be the fiscal year of the
Company). The selection of Participants from among Key Employees is
within the discretion of the Committee. However, the fact that a Key
Employee is a Participant for a Performance Period shall not entitle
such Participant to receive an Award for such period. The payment of
Awards for a Performance Period is within the Committee's discretion
and contingent upon performance during such period.
The approximate number of Key Employees who are currently eligible to
participate in the Plan is approximately 900.
Form of Awards
Awards under the Plan may, in the discretion of the Committee, be
paid in cash, Common Stock of the Company or a combination of the
foregoing. The Committee may, in its sole judgment, subject an Award
to such terms, conditions and restrictions as it deems appropriate.
Performance Goals
The key performance criterion upon which Awards shall be based under
the Plan is the Company's Return on Net Assets ("RONA"). For
purposes of the Plan, RONA is calculated by dividing the Company's
Net Income for the Performance Period by its Average Net Assets for
the same period. The Committee has the authority to adjust the
calculation of the Company's Net Income and Net Assets for the
Performance Period in order to prevent the dilution or enlargement of
the rights of Participants in the event of extraordinary
transactions, events, gains, losses and similar circumstances;
provided, however, no such adjustment may be made with regard to the
Covered Employees to the extent such adjustment would cause their
Awards to fail to qualify as "Performance-Based Compensation" for
purposes of Section 162(m) of the Code.
RONA shall serve as the basis for establishing the Performance
Goal(s) for each Performance Period under the Plan. In no event may
any Awards be issued to a Covered Employee for a Performance Period
unless the Performance Goal for such period is achieved.
In addition to setting the Performance Goal(s) for the Performance
Period, the Committee shall, within the first 90 days of each
Performance Period, also establish in writing for such Performance
Period: those Key employees who will be Participants, the Performance
Formula, and the method of allocating a portion of the Maximum Award
Pool to each Covered Employee.
Procedure for Determining Awards
By way of background, the procedure for determining Awards for a
Performance Period entails the following five-step process which
shall be performed by the Committee upon the close of each
Performance Period: (1) determination of the Maximum Award; (2)
determination of the Maximum Award Pool; (3) allocation of Maximum
Award Pool to the Covered Employees; (4) determination of the Actual
Award Pool; and (5) allocation of Actual Award Pool among individual
Participants.
The Plan provides for an award pool to be established for each
Performance Period. The amount of this pool, referred to in the Plan
as the "Maximum Award Pool," serves as the basis for calculating the
maximum amount of Awards that may be granted to all Participants for
the Performance Period. The total pool need not be awarded and,
further, may be reduced in the judgment of the Committee. The pool
is calculated by adding together the Maximum Award for the
Performance Period plus a Carryforward Amount, if any exists from a
previous Performance Period.
The Maximum Amount is that part of the Maximum Award Pool which is
funded based on the Company's performance for the Performance Period.
It is the dollar amount earned under the objective qualitative
Performance Formula established by the Committee for the Performance
Period. The performance measure under this formula is the Company's
RONA performance for the Performance Period. To the extent RONA for
the Performance Period does not achieve the Committee's Performance
Goal(s), there will be no Maximum Award for the period.
The other component of the Maximum Award Pool is the Carryforward
Amount. This represents amounts previously earned for prior
Performance Periods, but not paid out in the form of Awards to
Participants.
Upon calculation of the Maximum Award Pool for a Performance Period,
the Committee shall, to the extent the Performance Goal(s) for the
period have been achieved, calculate what portion of the Maximum
Award Pool should be allocated to each Covered Employee. This shall
be done through the use of the objective allocation method adopted by
the Committee upon commencement of the Performance Period. Through
its authority to exercise negative discretion, the Committee may,
however, reduce or eliminate the portion of the Maximum Award Pool
allocated to any Covered Employee.
The Committee may also exercise negative discretion with regards to
the entire Maximum Award Pool. The Plan authorizes the Committee to
reduce or eliminate the Maximum Award Pool for a Performance Period
based upon such factors, indicia, standards, goals and/or measures it
determines in the exercise in its sole discretion. To the extent the
Committee exercises negative discretion in such fashion, the amount
resulting, if any, termed by the Plan as the "Actual Award Pool,"
becomes the maximum amount from which Awards may be issued for the
Performance Period.
The Plan authorizes the Committee to allocate the Actual Award Pool
among the Participants based on such factors, indicia, standards,
goals, and measures as it determines in the exercise of its sole
discretion. For example, in performing such allocation for a
Performance Period, the Committee may consider such factors as the
Participant's position, level of responsibility, Target Award and
contribution to the success of the Company, the performance of the
Company or the Participant's organizational unit, and business unit,
division and/or department achievements.
Awards for a Performance Period
In accordance with Section 162(m) of the Code, the Plan provides for
written certification by the Committee as to whether the Performance
Goals for the Performance Period have been achieved and, if so, the
amounts allocated to each Covered Employee from the Maximum Award
Pool. Such certifications will be made after the end of each
Performance Period and prior to payment of any Awards for the period.
Upon completion of these written certifications, Awards, to the
extent approved by the Committee, shall be paid as soon as
practicable. Such Award shall be paid in such form(s) as the
Committee determines from the permissible forms described in the
Plan. With Committee approval, payment of an Award may be deferred
in whole or in part by a Participant.
The maximum amount payable to any one Covered Employee under the Plan
for a Performance Period is $4,000,000. However, the maximum amount
need not be Awarded to any Covered Employee. The Committee retains
negative discretion to reduce or eliminate the amount of any Award
for a Covered Employee.
Additional Awards
As mentioned above, the difference, if any, between the Maximum Award
Pool and Actual Award Pool for a given Performance Period will be
added to the Carryforward Amount from which Awards may be made for
future Performance Periods. In addition, outside the context of a
Performance Period, the Plan grants the Committee the continuing
authority to issue Awards from the Carryforward Amount at such times,
in such amounts and subject to such terms and conditions as it
determines in the exercise of its sole discretion. Such Awards,
however, may only be granted to those Key Employees who are not
Covered Employees and must be issued in one or more of the forms
described earlier. Upon the issuance of any such Award, a
corresponding reduction shall be made to the Carryforward Amount to
reflect the amount of the Award.
Change In Control/Change In Ownership
In the event of a Change In Control (as defined in the Plan), a
Participant whose employment is terminated, for a reason other than
death, disability, cause, voluntary resignation or retirement, within
two years of the date of such event would be entitled to the
following treatment under the Plan: (i) all of the terms, conditions,
restrictions and limitations in effect on any of the Participant's
outstanding Awards would immediately lapse, (ii) except where
pro rata vesting is required, all of the Participant's outstanding
Awards would automatically become one hundred percent (100%) vested,
(iii) a pro rata Award for the Performance Period in which the
Participant terminates employment would be paid to the Participant
and (iv) all of the Participant's earned but unpaid and/or deferred
Awards would be paid to the Participant. Such payment would be made
as soon as possible, but no later than the 90th day following his or
her termination of employment.
The Plan also provides that upon a Change in Ownership all
Participants, regardless of whether their employment is terminated,
would automatically receive the same treatment afforded to a
terminated Participant under the Plan in the event of a Change In
Control. The Plan defines a Change In Ownership as a Change In
Control which results in the Company's Common Stock ceasing to be
actively traded on the New York Stock Exchange.
Amendment/Termination
The Committee may suspend, amend or terminate the Plan at any time,
with or without prior notice; provided, however, it may not, without
shareholder approval, adopt any amendment which would require the
vote of the shareholders pursuant to Section 16 of the Exchange Act.
Further, the Committee may not, without shareholder approval, adopt
any amendment requiring shareholder approval pursuant to Section
162(m) of the Code, but only insofar as such amendment affects
Covered Employees.
New Plan Benefits
The Plan became effective January 1, 1995, subject to approval of the
shareholders at the Annual Meeting. Amounts payable under the Plan
are based on future Company performance and contingent on the right
of the Committee to exercise negative discretion to reduce or
eliminate Award amounts. Accordingly, Awards for the 1995
Performance Period and future Performance Periods are not
determinable at this time. Further, given that the Performance Goals
for a Performance Period are established in advance based upon
anticipated Company performance for the period, it is also not
possible to determine amounts which would have been paid for the last
completed fiscal year if the Plan had been in effect.
Federal Income Tax Consequences
Under current Federal tax law, the following are the Federal income
tax consequences generally arising with respect to Awards under the
Plan.
Awards paid in the form of cash will be included in income at the
time of receipt and will be subject to tax at ordinary income tax
rates. The Award of an outright grant of Common Stock will produce
similar tax consequences to the Participant. The Participant will be
treated as having received compensation in an amount equal to the
then fair-market value of the Common Stock. A Participant who has
been granted an Award of restricted shares of Common Stock will not
realize taxable income at the time of grant, assuming the
restrictions constitute a substantial risk of forfeiture for Federal
income tax purposes. When such restrictions lapse, the Participant
will receive taxable income in an amount equal to the fair-market
value of such shares at such time.
Any Awards that are properly deferred under the terms of the Eastman
Kodak Employees' Savings and Investment Plan, the Eastman Kodak
Company 1982 Executive Deferred Compensation Plan or such other
applicable deferred compensation plan of the Company will be taxable
when actually or constructively received under the terms of such
plan.
At the time a Participant realizes income from an Award, the Company
will generally be entitled to a deduction for Federal income tax
purposes equal to the amount of such income realized by the
Participant. Deductions for amounts deferred shall be subject to and
limited by the provisions of Section 404 of the Code. Under Section
162(m) of the Code, the Company may be limited as to Federal income
tax deductions to the extent total compensation to any one Covered
Employee exceeds $1,000,000 in any one year. The Company can
preserve the deductibility of certain compensation in excess of
$1,000,000, however, provided that it complies with the conditions
imposed by Section 162(m) of the Code, including the payment of
"Performance-Based Compensation" pursuant to a plan approved by
shareholders. The Plan is intended to comply with Section 162(m) of
the Code by qualifying all payments to Covered Employees under the
Plan as "Performance-Based Compensation."
Other Information
The closing price of the Company's Common Stock reported on the New
York Stock Exchange for February 1, 1995 was $47.875 per share.
The Board of Directors recommends a vote FOR approval of Management
Variable Compensation Plan.
ITEM 5- Wage Dividend Plan
Background
The Company is proposing for shareholder approval the Wage Dividend
Plan.
In 1912, Company founder George Eastman introduced a program called
the "wage dividend" to provide employees with tangible recognition
for their contributions to the Company's success.
Today, the Board believes the wage dividend still assists the Company
in attracting, motivating, and retaining its employees. It also
feels that employees should have the potential to be rewarded for
their contributions to the Company's growth and success through such
an annual incentive program, tied directly to the Company's financial
performance goals.
In view of recent tax legislation that imposes limits on the
Company's ability to deduct compensation paid to its Chief Executive
Officer and four most highly paid executive officers (the "Covered
Employees"), the Executive Compensation and Development Committee of
the Board (the "Compensation Committee") has decided to formalize the
wage dividend as a performance-based plan. Under this new plan,
entitled the "Wage Dividend Plan" (the "Plan"), all Awards granted to
Covered Employees are intended to qualify for Federal tax
deductibility under Section 162(m) of the Internal Revenue Code of
1986, as amended, (the "Code").
The Plan is intended to tie future Awards to Company performance.
Most importantly, the size of any Wage Dividend paid under the Plan
will be based upon the effectiveness with which the Company generates
earnings and utilizes its assets as measured by its Return on Net
Assets ("RONA"). This is the same performance measure that will be
used to determine Awards under the Company's Management Variable
Compensation Plan, upon which shareholder approval is also being
sought by way of this Proxy Statement.
Subject to approval of the Company's shareholders, the Board of
Directors approved the adoption of the Plan, effective January 1,
1995.
Summary of the Wage Dividend Plan
The full text of the Plan is set forth in Exhibit C of this Proxy
Statement, and should be referred to for a complete description of
its provisions. The following summary of the Plan is qualified in its
entirety by reference to the text of the Plan.
Purposes
The purposes of the Plan are to assist the Company in attracting,
motivating and retaining its Employees by rewarding Employees for
their contributions to the Company's growth and success, provided
Company performance meets or exceeds established Performance Goals,
and to endeavor to qualify the Awards granted to Covered Employees
under the Plan as "Performance-Based Compensation" as defined in
Section 162(m) of the Code.
Term
The Plan shall be effective from January 1, 1995 through December 31,
1999.
Eligibility and Participation
All Employees of the Company are eligible to participate in the Plan.
However, in order to be eligible for an Award for a Performance
Period (fiscal year), an Employee must be designated as a Participant
by the Participation Rules adopted by the Committee within the first
90 days of the Performance Period. For 1995, participation is
generally limited to Employees of the Company working in the United
States. The fact that an Employee is a Participant shall not entitle
such Participant to receive an Award for the Performance Period.
Company performance relative to established Performance Goals shall
be the primary basis for calculating what Awards, if any, shall be
paid to Participants.
The approximate number of Employees who are currently eligible to
participate in the Plan is 48,500.
Administration
The Plan provides for administration by a committee (the
"Committee"), to be comprised of either the Compensation Committee or
another committee designated by the Board; provided, however, each of
the members of the Committee must be both a "disinterested director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 and an "outside director" within the meaning of the Proposed
Treasury Regulation Section 1.162-27(e)(3), or any successors
thereto. The authority of the Committee includes, but is not limited
to, the exclusive right to interpret the Plan, establish rules and
regulations for its operation, select Employees of the Company and
its subsidiaries to receive Awards and determine the form, amount and
other terms and conditions of such Awards. Except to the extent
prohibited by law, the Committee may delegate some or all of its
authority under the Plan.
Form of Awards
Awards may, at the Committee's discretion, be issued and paid in
cash, Common Stock, stock equivalents, or a combination of the
foregoing.
Procedure for Determining Awards
Within the first 90 days of a Performance Period, the Committee shall
establish in writing for such Performance Period: the Participation
Rules; Performance Goal(s); and the Performance Formula.
Performance Goals, Criterion, and Formula
The Performance Goals are the goals established by the Committee for
a Performance Period based upon RONA, the Plan's sole performance
criterion. RONA shall be calculated by dividing the Company's Net
Income for the Performance Period by its Average Net Assets for the
same period. The Performance Formula is the objective formula applied
against the Performance Goals to determine whether Awards have been
earned for the Performance Period, and, if so, the amount of such
Awards. For the 1995 Performance Period, a threshold RONA of 13.10%
has been established by the Committee. If this threshold is attained
the wage dividend multiplier to be applied to Participants'
qualifying compensation will be 0.05%.
Limitation of Awards
Participants in the Plan shall be eligible to receive Awards for a
Performance Period only if both the Performance Goals for such period
are achieved, and the Performance Formula applied against such goals
determines that Awards have been earned for the period. The maximum
Award payable to a Covered Employee under the Plan for a Performance
Period shall be $700,000.
Adjustments to Performance Criterion and Goals
The Committee is authorized at any time to adjust or modify the
calculation of Net Income, Net Assets and/or the Performance Goals in
order to prevent the dilution or enlargement of the rights of
Participants in recognition of, or in anticipation of, extraordinary,
unusual, or non-recurring items, transactions, events, or
developments, such as changes in accounting principles or economic
and business conditions. However, if and to the extent the exercise
of such authority after the first 90 days of a Performance Period
would cause the Awards granted to the Covered Employees for the
Performance Period to fail to qualify as "Performance-Based
Compensation" under Section 162(m) of the Code, then such authority
shall only be exercised with respect to those Participants who are
not Covered Employees.
Payment of Awards for a Performance Period
Following the completion of each Performance Period, the Committee
shall meet to certify whether, and to what extent, the Performance
Goals for the Performance Period have been achieved. If the goals
have been achieved, it shall calculate the amount of the Award earned
by each Covered Employee and the size of Awards earned by all other
Participants. In determining the actual size of the Awards to be
paid to a Covered Employee for a Performance Period, the Committee
may, through the use of negative discretion, reduce or eliminate the
amount of the Awards earned under the Performance Formula for the
Performance Period, if, in is sole judgment, such reduction or
elimination is appropriate. Prior to or coincident with its
performance of these certifications, the Committee shall, in its sole
discretion, determine the form(s) in which to grant Awards under the
Plan for such period. Unless deferred, Awards granted for a
Performance Period shall be paid to Participants as soon as
administratively practicable following the completion of the
certification procedure. At the Committee's discretion, Participants
may elect to defer payment of all or a portion of his/her Award,
subject to applicable terms, conditions, and limitations, of the
Eastman Kodak Employees' Savings and Investment Plan and/or the
Eastman Kodak Company 1982 Executive Deferred Compensation Plan.
Available Shares Under the Plan
The maximum number of shares of Common Stock of the Company which
shall be available for grant of Awards under the Plan during its term
shall not exceed 4 million.
New Plan Benefits
The Plan became effective January 1, 1995, subject to approval of the
shareholders at the Annual Meeting. Amounts payable under the Plan
are based on future Company performance and contingent on the right
of the Committee to exercise negative discretion to reduce or
eliminate Award amounts payable to Covered Employees. Accordingly,
Awards for the 1995 Performance Period and future Performance Periods
are not determinable at this time. Further, given that the
Performance Goals for a Performance Period are established in advance
based upon anticipated Company performance for the period, it is also
not possible to determine amounts which would have been paid for the
last completed fiscal year if the Plan had been in effect.
Federal Income Tax Consequences
Under current Federal tax law, the following are the Federal income
tax consequences generally arising with respect to Awards under the
Plan.
Awards paid in the form of cash will be included in income at the
time of receipt and will be subject to tax at ordinary income tax
rates. The Award of an outright grant of Common Stock will produce
similar tax consequences to the Participant. The Participant will be
treated as having received compensation in an amount equal to the
then fair market value of the Common Stock. A Participant who has
been granted an Award of restricted shares of Common Stock will not
realize taxable income at the time of grant, assuming the
restrictions constitute a substantial risk of forfeiture for Federal
income tax purposes. When such restrictions lapse, the Participant
will receive taxable income in an amount equal to the fair market
value of such shares at such time.
Any Awards that are properly deferred under the terms of the Eastman
Kodak Employees' Savings and Investment Plan, the Eastman Kodak
Company 1982 Executive Deferred Compensation Plan or such other
applicable deferred compensation plan of the Company will be taxable
when actually or constructively received under the terms of such
plan.
At the time a Participant realizes income from an Award, the Company
will generally be entitled to a deduction for Federal income tax
purposes equal to the amount of such income realized by the
Participant. Deductions for amounts deferred shall be subject to and
limited by the provisions of Section 404 of the Code. Under Section
162(m) of the Code, the Company may be limited as to Federal income
tax deductions to the extent total compensation to any one Covered
Employee exceeds $1,000,000 in any one year. The Company can
preserve the deductibility of certain compensation in excess of
$1,000,000, however, provided that it complies with the conditions
imposed by Section 162(m) of the Code, including the payment of
"Performance-Based Compensation" pursuant to a plan approved by
shareholders. The Plan is intended to comply with Section 162(m) of
the Code by qualifying all payment to Covered Employees under the
Plan as "Performance-Based Compensation."
The Board of Directors recommends a vote FOR approval of Wage
Dividend Plan.
ITEM 6
SHAREHOLDER PROPOSAL
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 proposal at the Annual Meeting.
"EQUAL EMPLOYMENT REPORT
We believe there is a strong need for corporate commitment to
equal employment opportunity. We also believe a clear policy
opposing all forms of discrimination is a sign of a socially
responsible corporation. Since a substandard equal employment
opportunity record leaves a company open to expensive legal
action, poor employee morale and even the loss of certain types
of business, we believe it is in the company's and
shareholder's interests to have information on our company's
equal employment record available.
One of the country's largest institutional investors the
California Public Employees' Retirement System includes
workplace performance guidelines as part of their corporate
performance criteria. The Department of Labor's Glass Ceiling
Commission has for the last four years conducted studies with
the help of a number of corporations and in 1994 held public
hearings to ascertain the status of equality and diversity in
Corporate America. In 1995 the Commission will report to the
President their recommendations.
As a major employer we are in a position to take the lead in
ensuring that employees receive fair employment opportunities
and promotions. We believe a report containing the basic
information requested in this resolution keeps the issue high
on top management's and the Board of Directors' agenda and
reaffirms our public commitment to equal employment opportunity
and programs responsive to the concerns of all employees.
Publicizing our standards is helpful to our investors and the
companies with whom we do business;
We are requesting that EEO information already gathered for the
purpose of complying with government regulations be made
available to company shareholders on request. The format of
the report requested is not the central question. Many
corporations openly release their EEO-1 information in annual
reports or public interest booklets.
Different companies use different styles in telling their story
to shareholders. Capital Cities/American Broadcasting Company,
Bristol-Myers-Squibb and Travellers produced a substantial
magazine style report. Campbell Soup produced a
straightforward four page document. We feel this request is
fair and reasonable.
RESOLVED: The shareholders request our company prepare a
report at reasonable cost available to shareholders and
employees reporting on the following issues. This report,
which may omit confidential information, shall be available by
September 1995.
1. A chart identifying employees according to their
sex and race in each of the nine major Equal Employment
Opportunity Commission defined job categories for 1992,
1993, 1994 listing either numbers or percentages in each
category.
2. A summary description of any Affirmative Action
policies and programs to improve performances, including
job categories where women and minorities are
underutilized.
3. A description of any policies and programs
oriented specifically toward increasing the number of
managers, who are qualified females and/or belong to
ethnic minorities.
4. A description of how our company publicizes our
company's affirmative action policies and programs to
merchandise suppliers and service providers.
5. A description of any policies and programs
directing the purchase of goods and services to minority-
and/or female-owned business enterprises."
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
The Company believes compiling and publicizing the report
requested by this proposal would not enhance equal employment
opportunity within the Company. It would be a cost without a
benefit.
The Company believes that building and managing diversity is
the responsibility of every member of management. Commencing
in 1995 the Company is implementing a new management appraisal
process, the Management Performance Commitment Process. This
process will measure the performance of each member of
management with respect to shareholder satisfaction, customer
satisfaction and employee satisfaction. One criteria against
which employee satisfaction will be measured is progress
against employee development and diversity goals.
Incorporating diversity goals into the Management Performance
Commitment Process will, the Company believes, be the most
effective way to achieve its diversity goals.
The Company has recently published its global expectation for
diversity. In ten years, the Company's workforce
representation in its management ranks will reflect the
demographics of the global markets it serves and will be at
parity in the United States with the availability of women and
minorities. This is an ambitious goal but one that the Company
is committed to.
The Company provides detailed statistical information on equal
employment opportunity to the federal government as required by
law. The Company has developed affirmative action plans to
provide employment opportunity for all qualified individuals
and monitors its progress against these plans. The Company
places significant importance on and directs strong effort
towards locating and developing minority and women-owned
suppliers and vendors. The Company has won numerous awards and
recognitions for its work-life initiatives and its minority
business development.
It is the Company's policy to provide equal employment
opportunity for all persons; this includes the prohibition of
unlawful discrimination in employment practices, compensation
practices, personnel procedures, and in the administration of
benefit plans and other programs, as well as provision of
reasonable accommodations for qualified persons with
disabilities. It is Company policy to promote the full
realization of equal employment opportunity through a positive,
continuing affirmative action program throughout Company
establishments directed toward women, minorities, Vietnam-era
veterans and individuals with disabilities.
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. However, solely for purposes of Section 16 of
the Securities Exchange Act of 1934, abstentions will be counted as
votes cast against the compensation plans (Items 3, 4 and 5).
VOTING A PROXY The proxy card enclosed is designed to permit
each shareholder of record at the close of business on March 13,
1995, to vote in the election of directors, the ratification of
independent accountants, the approval of the Eastman Kodak Company
1995 Omnibus Long-Term Compensation Plan, the Management Variable
Compensation Plan and the Wage Dividend Plan and on the shareholder
proposal. 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 February 1, 1995, the Company
had outstanding voting securities consisting of 339,860,687 common
shares, each entitled to one vote.
SHAREHOLDER PROPOSALS FOR 1996 The last day for the Company to
receive proposals from shareholders for the 1996 Annual Meeting of
shareholders is November 17, 1995. Proposals should be sent
certified mail - return receipt requested to Joyce P. Haag,
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/Joyce P. Haag
Joyce P. Haag, Secretary
March 17 1995
EXHIBIT A
EASTMAN KODAK COMPANY
1995 OMNIBUS LONG-TERM COMPENSATION PLAN
ARTICLE 1 -- PURPOSE AND TERM OF PLAN
1.1 Purpose
The purpose of the Plan is to provide motivation to selected
Employees of the Company to put forth maximum efforts toward the
continued growth, profitability, and success of the Company by
providing incentives to such Employees through the ownership and
performance of the Common Stock of Kodak. Toward this objective, the
Committee may grant stock options, stock appreciation rights, Stock
Awards, performance units, performance shares, Performance Awards,
Common Stock and/or other incentive Awards to Employees of the
Company on the terms and subject to the conditions set forth in the
Plan.
1.2 Term
The Plan shall become effective as of February 1, 1995, subject to
its approval by Kodak's shareholders at the 1995 Annual Meeting of
the Shareholders. No Awards shall be exercisable or payable before
approval of the Plan has been obtained from Kodak's shareholders.
Awards shall not be granted pursuant to the Plan after December 31,
1999; except that the Committee may grant Awards after such date in
recognition of performance for Performance Cycles commencing prior to
such date.
ARTICLE 2 -- DEFINITIONS
2.1. Approved Reason
"Approved Reason" means a reason for terminating employment with the
Company which, in the opinion of the Committee, is in the best
interests of the Company.
2.2. Award
"Award" means any form of stock option, stock appreciation right,
Stock Award, performance unit, performance share, Performance Award,
shares of Common Stock under the Performance Stock Program, or other
incentive Award granted under the Plan, whether singly, in
combination, or in tandem, to a Participant by the Committee pursuant
to such terms, conditions, restrictions and/or limitations, if any,
as the Committee may establish by the Award Notice or otherwise.
2.3. Award Notice
"Award Notice" means a written notice from the Company to a
Participant that establishes the terms, conditions, restrictions,
and/or limitations applicable to an Award in addition to those
established by this Plan and by the Committee's exercise of its
administrative powers.
2.4. Award Payment Date
"Award Payment Date" means, for a Performance Cycle, the date the
Awards for such Performance Cycle shall be paid to Participants. The
Award Payment Date for a Performance Cycle shall occur as soon as
administratively possible following the completion of the
certifications required pursuant to Subsection 13.5(c).
2.5. Board
"Board" means the Board of Directors of Kodak.
2.6. Cause
"Cause" means (a) the willful and continued failure by an Employee to
substantially perform his or her duties with his or her employer
after written warnings identifying the lack of substantial
performance are delivered to the Employee by his or her employer to
specifically identify the manner in which the employer believes that
the Employee has not substantially performed his or her duties, or
(b) the willful engaging by an Employee in illegal conduct which is
materially and demonstrably injurious to Kodak or a Subsidiary.
2.7. CEO
"CEO" means the Chief Executive Officer of Kodak.
2.8. Change In Control
"Change In Control" means a Change In Control of Kodak of a nature
that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on August 1, 1989, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 14(d) of
the Exchange Act, other than Kodak, a Subsidiary, or any employee
benefit plan(s) sponsored by Kodak or any Subsidiary, is or has
become the "beneficial owner," as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of 25% or more of the combined
voting power of the outstanding securities of Kodak ordinarily having
the right to vote at the election of directors, or (ii) individuals
who constitute the Board on January 1, 1995 (the "Incumbent Board")
have ceased for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to January 1,
1995 whose election, or nomination for election by Kodak's
shareholders, was approved by a vote of at least three-quarters (3/4)
of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of Kodak in which such
person is named as a nominee for director without objection to such
nomination) shall be, for purposes of this Plan, considered as though
such person were a member of the Incumbent Board.
2.9. Change In Control Price
"Change In Control Price" means the highest closing price per share
paid for the purchase of Common Stock on the New York Stock Exchange
during the ninety (90) day period ending on the date the Change In
Control occurs.
2.10. Change In Ownership
"Change In Ownership" means a Change In Control which results
directly or indirectly in Kodak's Common Stock ceasing to be actively
traded on the New York Stock Exchange.
2.11. Code
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions
and regulations thereto.
2.12. Committee
"Committee" means the Executive Compensation and Development
Committee of the Board, or such other Board committee as may be
designated by the Board to administer the Plan; provided that the
Committee shall consist of three or more directors, all of whom are
both a "disinterested person" within the meaning of Rule 16b-3 under
the Exchange Act and an "outside director" within the meaning of the
definition of such term as contained in Proposed Treasury Regulation
Section 1.162-27(e)(3), or any successor definition adopted.
2.13. Common Stock
"Common Stock" means Common Stock, $2.50 par value per share, of
Kodak which may be newly issued or treasury stock.
2.14. Company
"Company" means Kodak and its Subsidiaries.
2.15. Covered Employee
"Covered Employee" means an Employee who is a "Covered Employee"
within the meaning of Section 162(m) of the Code.
2.16. Disability
"Disability" means a disability under the terms of any long-term
disability plan maintained by the Company.
2.17. Effective Date
"Effective Date" means the date an Award is determined to be
effective by the Committee upon its grant of such Award.
2.18. Employee
" Employee" means either: (a) a salaried employee of Kodak; or (b) a
salaried employee of a Subsidiary.
2.19. Exchange Act
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor
provision and rules thereto.
2.20. Key Employee
"Key Employee" means a senior level Employee who holds a position of
responsibility in a managerial, administrative, or professional
capacity.
2.21. Kodak
"Kodak" means Eastman Kodak Company.
2.22. Negative Discretion
"Negative Discretion" means the discretion authorized by the Plan to
be applied by the Committee in determining the size of an Award for a
Performance Period or Performance Cycle if, in the Committee's sole
judgment, such application is appropriate. Negative Discretion may
only be used by the Committee to eliminate or reduce the size of an
Award. By way of example and not by way of limitation, in no event
shall any discretionary authority granted to the Committee by the
Plan, including, but not limited to Negative Discretion, be used to:
(a) grant Awards for a Performance Period or Performance Cycle if the
Performance Goals for such Performance Period or Performance Cycle
have not been attained; or (b) increase an Award above the maximum
amount payable under Sections 7.5, 8.6, 9.6 or 13.6 of the Plan.
2.23. Participant
"Participant" means either any Employee to whom an Award has been
granted by the Committee under the Plan or a Key Employee who, for a
Performance Cycle, has been selected to participate in the
Performance Stock Program.
2.24. Performance Awards
"Performance Awards" means the Stock Awards, Performance units and
Performance Shares granted to Covered Employees pursuant to Article
7. All Performance Awards are intended to qualify as "Performance-
Based Compensation" under Section 162(m) of the Code.
2.25. Performance Criteria
"Performance Criteria" means the one or more criteria that the
Committee shall select for purposes of establishing the Performance
Goal(s) for a Performance Period or Performance Cycle. The
Performance Criteria that will be used to establish such Performance
Goal(s) shall be limited to the following: return on net assets
("RONA"), return on shareholders' equity, return on assets, return on
capital, shareholder returns, profit margin, earnings per share, net
earnings, operating earnings, Common Stock price per share, and sales
or market share. To the extent required by Section 162(m) of the
Code, the Committee shall, within the first 90 days of a Performance
Period or Performance Cycle (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), define in an objective
fashion the manner of calculating the Performance Criteria it selects
to use for such Performance Period or Performance Cycle.
2.26. Performance Cycle
"Performance Cycle" means the one or more periods of time, which may
be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant's right to and
the payment of an Award under the Performance Stock Program.
2.27. Performance Formula
"Performance Formula" means, for a Performance Period or Performance
Cycle, the one or more objective formulas applied against the
relevant Performance Goals to determine, with regards to the Award of
a particular Participant, whether all, some portion but less than
all, or none of the Award has been earned for the Performance Period
or Performance Cycle. In the case of an Award under the Performance
Stock Program, in the event the Performance Goals for a Performance
Cycle are achieved, the Performance Formula shall determine what
percentage of the Participant's Target Award for the Performance
Cycle will be earned.
2.28. Performance Goals
"Performance Goals" means, for a Performance Period or Performance
Cycle, the one or more goals established by the Committee for the
Performance Period or Performance Cycle based upon the Performance
Criteria. The Committee is authorized at any time during the first
90 days of a Performance Period or Performance Cycle, or at any time
thereafter (but only to the extent the exercise of such authority
after the first 90 days of a Performance Period or Performance Cycle
would not cause the Awards granted to the Covered Employees for the
Performance Period or Performance Cycle to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the Code),
in its sole and absolute discretion, to adjust or modify the
calculation of a Performance Goal for such Performance Period or
Performance Cycle in order to prevent the dilution or enlargement of
the rights of Participants, (a) in the event of, or in anticipation
of, any unusual or extraordinary corporate item, transaction, event
or development; (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions; and (c) in view of the
Committee's assessment of the business strategy of the Company,
performance of comparable organizations, economic and business
conditions, and any other circumstances deemed relevant.
2.29. Performance Period
"Performance Period" means the one or more periods of time, which may
be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant's right to and
the payment of a Performance Award.
2.30. Performance Stock Program
"Performance Stock Program" means the program established under
Article 13 of the Plan pursuant to which selected Key Employee
receive Awards for a Performance Cycle in the form of shares of
Common Stock based upon attainment of Performance Goals for such
Performance Cycle. All Awards granted to Covered Employees under the
Performance Stock Program are intended to qualify as "Performance-
based Compensation" under Section 162(m) of the Code.
2.31. Plan
"Plan" means the Eastman Kodak Company 1995 Omnibus Long-Term
Compensation Plan.
2.32. Retirement
"Retirement" means, for all Plan purposes other than Article 18, a
termination of employment from the Company on or after attainment of
age 60 which constitutes a retirement under any defined benefit
pension plan maintained by the Company which is either a tax-
qualified plan under Section 401(a) of the Code or is identified in
writing by the Committee as a defined benefit pension plan. For
purposes of Article 18, "Retirement" means retirement under any
defined benefit pension plan maintained by the Company which is
either a tax-qualified plan under Section 401(a) of the Code or is
identified in writing by the Committee as a defined benefit pension
plan.
2.33. Stock Award
"Stock Award" means an Award granted pursuant to Article 10 in the
form of shares of Common Stock, restricted shares of Common Stock,
and/or Units of Common Stock.
2.34. Subsidiary
"Subsidiary" means a corporation or other business entity in which
Kodak directly or indirectly has an ownership interest of 80 percent
or more.
2.35. Target Award
"Target Award" means, for a Performance Cycle, the target Award
amount, expressed as a number of shares of Common Stock, established
for each wage grade by the Committee for the Performance Cycle. The
fact, however, that a Target Award is established for a Participant's
wage grade shall not in any manner entitle the Participant to receive
an Award for such Performance Cycle.
2.36. Unit
"Unit" means a bookkeeping entry used by the Company to record and
account for the grant of the following Awards until such time as the
Award is paid, canceled, forfeited or terminated, as the case may be:
Units of Common Stock, performance units, and performance shares
which are expressed in terms of Units of Common Stock.
ARTICLE 3 -- ELIGIBILITY
3.1 In General
Subject to Section 3.2, all Employees are eligible to participate in
the Plan. The Committee shall select, from time to time, Participants
from those Employees who, in the opinion of the Committee, can
further the Plan's purposes. Once a Participant is so selected, the
Committee shall determine the type or types of Awards to be made to
the Participant and shall establish in the related Award Notices the
terms, conditions, restrictions and/or limitations, if any,
applicable to the Awards in addition to those set forth in this Plan
and the administrative rules and regulations issued by the Committee.
3.2 Performance Stock Program
Only Key Employees shall be eligible to participate in the
Performance Stock Program.
ARTICLE 4 -- PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall have total and exclusive responsibility to
control, operate, manage and administer the Plan in accordance with
its terms.
4.2 Authority of the Committee
The Committee shall have all the authority that may be necessary or
helpful to enable it to discharge its responsibilities with respect
to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right to: (a)
interpret the Plan; (b) determine eligibility for participation in
the Plan; (c) decide all questions concerning eligibility for and the
amount of Awards payable under the Plan; (d) construe any ambiguous
provision of the Plan; (e) correct any default; (f) supply any
omission; (g) reconcile any inconsistency; (h) issue administrative
guidelines as an aid to administer the Plan and make changes in such
guidelines as it from time to time deems proper; (i) make regulations
for carrying out the Plan and make changes in such regulations as it
from time to time deems proper; (j) determine whether Awards should
be granted singly, in combination or in tandem; (k), to the extent
permitted under the Plan, grant waivers of Plan terms, conditions,
restrictions, and limitations; (l) accelerate the vesting, exercise,
or payment of an Award or the Common Stock of an Award when such
action or actions would be in the best interest of the Company; (m)
establish such other types of Awards, besides those specifically
enumerated in Article 5 hereof, which the Committee determines are
consistent with the Plan's purpose; (n) subject to Section 8.2, grant
Awards in replacement of Awards previously granted under this Plan or
any other executive compensation plan of the Company; and (o)
establish and administer the Performance Goals and certify whether,
and to what extent, they have been attained; and (p) take any and all
other action it deems necessary or advisable for the proper operation
or administration of the Plan.
4.3 Discretionary Authority
The Committee shall have full discretionary authority in all matters
related to the discharge of its responsibilities and the exercise of
its authority under the Plan including, without limitation, its
construction of the terms of the Plan and its determination of
eligibility for participation and Awards under the Plan. It is the
intent of Plan that the decisions of the Committee and its action
with respect to the Plan shall be final, binding and conclusive upon
all persons having or claiming to have any right or interest in or
under the Plan.
4.4 Section 162(m) of the Code
With regards to all Covered Employees, the Plan shall, for all
purposes, be interpreted and construed in accordance with Section
162(m) of the Code.
4.5 Action by the Committee
The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without a meeting, by a
writing or writings signed by all of the members of the Committee.
In addition, the Committee may authorize any one or more of its
number to execute and deliver documents on behalf of the Committee.
4.6 Delegation of Authority
The Committee may delegate some or all of its authority under the
Plan to any person or persons provided that any such delegation be in
writing; provided, however, that only the Committee may select and
grant Awards to Participants who are subject to Section 16 of the
Exchange Act or are Covered Employees.
ARTICLE 5 -- FORM OF AWARDS
5.1 In General
Awards may, at the Committee's sole discretion, be paid in the form
of Performance Awards pursuant to Article 7, stock options pursuant
to Article 8, stock appreciation rights pursuant to Article 9, Stock
Awards pursuant to Article 10, performance units pursuant to Article
11, performance shares pursuant to Article 12, shares of Common Stock
pursuant to Article 13, any form established by the Committee
pursuant to Subsection 4.2(m), or a combination thereof. All Awards
shall be subject to the terms, conditions, restrictions and
limitations of the Plan. The Committee may, in its sole judgment,
subject an Award to such other terms, conditions, restrictions and/or
limitations (including, but not limited to, the time and conditions
of exercise and restrictions on transferability and vesting),
provided they are not inconsistent with the terms of the Plan.
Awards under a particular Article of the Plan need not be uniform and
Awards under two or more Articles may be combined into a single Award
Notice. Any combination of Awards may be granted at one time and on
more than one occasion to the same Employee. For purposes of the
Plan, the value of any Award granted in the form of Common Stock
shall be the mean between the high and low at which the Common Stock
trades on the New York Stock Exchange as of the date of the grant's
Effective Date.
5.2 Foreign Jurisdictions
Awards may be granted, without amending the Plan, to Participants who
are foreign nationals or employed outside the United States or both,
on such terms and conditions different from those specified in the
Plan as may, in the judgment of the Committee, be necessary or
desirable to further the purposes of the Plan or to accommodate
differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to or alternative versions of
the Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, no such supplement or
alternative version shall: (a) increase the limitations contained in
Sections 7.5, 8.6, 9.6 and 13.6; (b) increase the number of available
shares under Section 6.1; or (c) cause the Plan to cease to satisfy
any conditions of Rule 16b-3 under the Exchange Act or, with respect
to Covered Employees, Section 162(m) of the Code.
ARTICLE 6 -- SHARES SUBJECT TO PLAN
6.1 Available Shares.
The maximum number of shares of Common Stock, $2.50 par value per
share, of Kodak which shall be available for grant of Awards under
the Plan (including incentive stock options) during its term shall
not exceed 16,000,000. (Such amount shall be subject to adjustment
as provided in Section 6.2.) Any shares of Common Stock related to
Awards which terminate by expiration, forfeiture, cancellation or
otherwise without the issuance of such shares, are settled in cash in
lieu of Common Stock, or are exchanged with the Committee's
permission for Awards not involving Common Stock, shall not be
available again for grant under the Plan. Moreover, shares of Common
Stock with respect to which an SAR has been exercised and paid in
cash shall not again be eligible for grant under the Plan. The
maximum number of shares available for issuance under the Plan shall
not be reduced to reflect any dividends or dividend equivalents that
are reinvested into additional shares of Common Stock or credited as
additional performance shares. The shares of Common Stock available
for issuance under the Plan may be authorized and unissued shares or
treasury shares.
6.2 Adjustment to Shares
(a) In General. The provisions of this Subsection 6.2(a) are
subject to the limitation contained in Subsection 6.2(b).
If there is any change in the number of outstanding
shares of Common Stock through the declaration of stock
dividends, stock splits or the like, the number of shares
available for Awards, the shares subject to any Award and
the option prices or exercise prices of Awards shall be
automatically adjusted. If there is any change in the
number of outstanding shares of Common Stock through any
change in the capital account of Kodak, or through a
merger, consolidation, separation (including a spin off
or other distribution of stock or property),
reorganization (whether or not such reorganization comes
within the meaning of such term in Section 368(a) of the
Code) or partial or complete liquidation, the Committee
shall make appropriate adjustments in the maximum number
of shares of Common Stock which may be issued under the
Plan and any adjustments and/or modifications to
outstanding Awards as it, in its sole discretion, deems
appropriate. In the event of any other change in the
capital structure or in the Common Stock of Kodak, the
Committee shall also be authorized to make such
appropriate adjustments in the maximum number of shares
of Common Stock available for issuance under the Plan and
any adjustments and/or modifications to outstanding
Awards as it, in its sole discretion, deems appropriate.
The maximum number of shares available for issuance under
the Plan shall be automatically adjusted to the extent
necessary to reflect any dividend equivalents paid in the
form of Common Stock.
(b) Covered Employees. In no event shall the Award of any
Participant who is a Covered Employee be adjusted
pursuant to Subsection 6.2(a) to the extent it would
cause such Award to fail to qualify as "Performance-Based
Compensation" under Section 162(m) of the Code.
6.3 Maximum Number of Shares for Stock Awards, Performance Units
and Performance Shares
From the maximum number of shares available for issuance under the
Plan under Section 6.1, the maximum number of shares of Common Stock,
$2.50 par value per share, which shall be available for Awards
granted in the form of Stock Awards, performance units or performance
shares (including those issued in the form of Performance Awards)
under the Plan during its term shall be 5,000,000.
ARTICLE 7 -- PERFORMANCE AWARDS
7.1 Purpose
For purposes of grants issued to Covered Employees, the provisions of
this Article 7 shall apply in addition to and, where necessary, in
lieu of the provisions of Articles 10, 11 and 12. The purpose of
this Article is to provide the Committee the ability to qualify the
Stock Awards authorized under Article 10, the performance units under
Article 11, and the performance shares under Article 12 as
"Performance-Based Compensation" under Section 162(m) of the Code.
The provisions of this Article 7 shall control over any contrary
provision contained in Articles 10, 11 or 12.
7.2 Eligibility
Only Covered Employees shall be eligible to receive Performance
Awards. The Committee will, in its sole discretion, designate within
the first 90 days of a Performance Period (or, if longer, within the
maximum period allowed under Section 162(m) of the Code) which
Covered Employees will be Participants for such period. However,
designation of a Covered Employee as a Participant for a Performance
Period shall not in any manner entitle the Participant to receive an
Award for the period. The determination as to whether or not such
Participant becomes entitled to an Award for such Performance Period
shall be decided solely in accordance with the provisions of this
Article 7. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not require
designation of such Covered Employee as a Participant in any
subsequent Performance Period and designation of one Covered Employee
as a Participant shall not require designation of any other Covered
Employee as a Participant in such period or in any other period.
7.3 Discretion of Committee with Respect to Performance Awards
With regards to a particular Performance Period, the Committee shall
have full discretion to select the length of such Performance Period,
the type(s) of Performance Awards to be issued, the Performance
Criteria that will be used to establish the Performance Goal(s), the
kind(s) and/or level(s) of the Performance Goal(s), whether the
Performance Goal(s) is(are) to apply to the Company, Kodak, a
Subsidiary, or any one or more subunits of the foregoing, and the
Performance Formula. Within the first 90 days of a Performance
Period (or, if longer, within the maximum period allowed under
Section 162(m) of the Code), the Committee shall, with regards to the
Performance Awards to be issued for such Performance Period, exercise
its discretion with respect to each of the matters enumerated in the
immediately preceding sentence of this Section 7.3 and record the
same in writing.
7.4 Payment of Performance Awards
(a) Condition to Receipt of Performance Award. Unless
otherwise provided in the relevant Award Notice, a
Participant must be employed by the Company on the last
day of a Performance Period to be eligible for a
Performance Award for such Performance Period.
(b) Limitation. A Participant shall be eligible to receive a
Performance Award for a Performance Period only to the
extent that: (1) the Performance Goals for such period
are achieved; and (2) and the Performance Formula as
applied against such Performance Goals determines that
all or some portion of such Participant's Performance
Award has been earned for the Performance Period.
(c) Certification. Following the completion of a Performance
Period, the Committee shall meet to review and certify in
writing whether, and to what extent, the Performance
Goals for the Performance Period have been achieved and,
if so, to also calculate and certify in writing the
amount of the Performance Awards earned for the period
based upon the Performance Formula. The Committee shall
then determine the actual size of each Participant's
Performance Award for the Performance Period and, in so
doing, shall apply Negative Discretion, if and when it
deems appropriate.
(d) Negative Discretion. In determining the actual size of
an individual Performance Award for a Performance Period,
the Committee may reduce or eliminate the amount of the
Performance Award earned under the Performance Formula
for the Performance Period through the use of Negative
Discretion, if in its sole judgment, such reduction or
elimination is appropriate.
(e) Timing of Award Payments. The Awards granted for a
Performance Period shall be paid to Participants as soon
as administratively possible following completion of the
certifications required by Subsection 7.4(c).
(f) Noncompetition. No Participant shall receive payment for
an Award if, subsequent to the commencement of a
Performance Period and prior to the date the Awards for
such period are paid, the Participant engages in any of
the conduct prohibited under Section 14.3.
7.5 Maximum Award Payable
Notwithstanding any provision contained in the Plan to the contrary,
the maximum Performance Award payable to any one Participant under
the Plan for a Performance Period is 50,000 shares of Common Stock
or, in the event the Performance Award is paid in cash, the
equivalent cash value thereof on the Performance Award's Effective
Date.
ARTICLE 8 -- STOCK OPTIONS
8.1 In General
Awards may be granted to Employees in the form of stock options.
These stock options may be incentive stock options within the meaning
of Section 422 of the Code or non-qualified stock options (i.e.,
stock options which are not incentive stock options), or a
combination of both. All Awards under the Plan issued to Covered
Employees in the form of stock options shall qualify as "Performance-
Based Compensation" under Section 162(m) of the Code.
8.2 Terms and Conditions of Stock Options
An option shall be exercisable in whole or in such installments and
at such times as may be determined by the Committee. The price at
which Common Stock may be purchased upon exercise of a stock option
shall be not less than 100% of the fair market value of the Common
Stock, as determined by the Committee, on the Effective Date of the
option's grant. Moreover, all options shall not expire later than 10
years from the Effective Date of the option's grant. Stock options
shall not be repriced, i.e., there shall be no grant of a stock
option(s) to a Participant in exchange for a Participant's agreement
to cancellation of a higher-priced stock option(s) that was
previously granted to such Participant.
8.3 Restrictions Relating to Incentive Stock Options
Stock options issued in the form of incentive stock options shall, in
addition to being subject to the terms and conditions of Section 8.2,
comply with Section 422 of the Code. Accordingly, the aggregate fair
market value (determined at the time the option was granted) of the
Common Stock with respect to which incentive stock options are
exercisable for the first time by a Participant during any calendar
year (under this Plan or any other plan of the Company) shall not
exceed $100,000 (or such other limit as may be required by the Code).
From the maximum number of shares available for issuance under the
Plan under Section 6.1, the number of shares of Common Stock that
shall be available for incentive stock options granted under the Plan
is 16,000,000.
8.4 Additional Terms and Conditions
The Committee may, by way of the Award Notice or otherwise, establish
such other terms, conditions, restrictions and/or limitations, if
any, of any stock option Award, provided they are not inconsistent
with the Plan.
8.5 Exercise
Upon exercise, the option price of a stock option may be paid in
cash, shares of Common Stock, a combination of the foregoing, or such
other consideration as the Committee may deem appropriate. The
Committee shall establish appropriate methods for accepting Common
Stock, whether restricted or unrestricted, and may impose such
conditions as it deems appropriate on the use of such Common Stock to
exercise a stock option. Subject to Section 19.9, stock options
Awarded under the Plan may be exercised by way of the Company's
broker-assisted stock option exercise program, provided such program
is available at the time of the option's exercise. The Committee may
permit a Participant to satisfy any amounts required to be withheld
under applicable Federal, state and local tax laws, in effect from
time to time, by electing to have the Company withhold a portion of
the shares of Common Stock to be delivered for the payment of such
taxes.
8.6 Maximum Award Payable
Notwithstanding any provision contained in the Plan to the contrary,
the maximum number of shares for which stock options may be granted
under the Plan to any one Participant for a Performance Period is
200,000 shares of Common Stock.
ARTICLE 9 -- STOCK APPRECIATION RIGHTS
9.1 In General
Awards may be granted to Employees in the form of stock appreciation
rights ("SARs"). An SAR may be granted in tandem with all or a
portion of a related stock option under the Plan ("Tandem SARs"), or
may be granted separately ("Freestanding SARs"). A Tandem SAR may be
granted either at the time of the grant of the related stock option
or at any time thereafter during the term of the stock option. SARs
shall entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common
Stock from the exercise price to the market value on the date of
exercise. All Awards under the Plan issued to Covered Employees in
the form of an SAR shall qualify as "Performance-Based Compensation"
under Section 162(m) of the Code.
9.2 Terms and Conditions of Tandem SARs
A Tandem SAR shall be exercisable to the extent, and only to the
extent, that the related stock option is exercisable, and the
"exercise price" of such an SAR (the base from which the value of the
SAR is measured at its exercise) shall be the option price under the
related stock option. However, at no time shall a Tandem SAR be
issued if the option price of its related stock option is less than
the fair market value of the Common Stock, as determined by the
Committee, on the Effective Date of the Tandem SAR's grant. If a
related stock option is exercised as to some or all of the shares
covered by the Award, the related Tandem SAR, if any, shall be
canceled automatically to the extent of the number of shares covered
by the stock option exercise. Upon exercise of a Tandem SAR as to
some or all of the shares covered by the Award, the related stock
option shall be canceled automatically to the extent of the number of
shares covered by such exercise, and such shares shall not again be
eligible for grant in accordance with Section 6.1. Moreover, all
Tandem SARs shall not expire later than 10 years from the Effective
Date of the SAR's grant.
9.3 Terms and Conditions of Freestanding SARs
Freestanding SARs shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee.
The exercise price of a Freestanding SAR shall be not less than 100%
of the fair market value of the Common Stock, as determined by the
Committee, on the Effective Date of the Freestanding SAR's grant.
Moreover, all Freestanding SARs shall not expire later than 10 years
from the Effective Date of the Freestanding SAR's grant.
9.4 Deemed Exercise
The Committee may provide that an SAR shall be deemed to be exercised
at the close of business on the scheduled expiration date of such SAR
if at such time the SAR by its terms remains exercisable and, if so
exercised, would result in a payment to the holder of such SAR.
9.5 Additional Terms and Conditions
The Committee may, by way of the Award Notice or otherwise, determine
such other terms, conditions, restrictions and/or limitations, if
any, of any SAR Award, provided they are not inconsistent with the
Plan.
9.6 Maximum Award Payable
Notwithstanding any provision contained in the Plan to the contrary,
the maximum number of shares for which SARs may be granted under the
Plan to any one Participant for a Performance Period is 200,000
shares of Common Stock.
ARTICLE 10 -- STOCK AWARDS
10.1 Grants
Awards may be granted in the form of Stock Awards. Stock Awards
shall be Awarded in such numbers and at such times during the term of
the Plan as the Committee shall determine.
10.2 Award Restrictions
Stock Awards shall be subject to such terms, conditions,
restrictions, and/or limitations, if any, as the Committee deems
appropriate including, but not by way of limitation, restrictions on
transferability and continued employment; provided, however, they are
not inconsistent with the Plan. The Committee may modify or
accelerate the delivery of a Stock Award under such circumstances as
it deems appropriate.
10.3 Rights as Shareholders
During the period in which any restricted shares of Common Stock are
subject to the restrictions imposed under Section 10.2, the Committee
may, in its sole discretion, grant to the Participant to whom such
restricted shares have been Awarded all or any of the rights of a
shareholder with respect to such shares, including, but not by way of
limitation, the right to vote such shares and, pursuant to Article
15, the right to receive dividends.
10.4 Evidence of Award
Any Stock Award granted under the Plan may be evidenced in such
manner as the Committee deems appropriate, including, without
limitation, book-entry registration or issuance of a stock
certificate or certificates.
ARTICLE 11 -- PERFORMANCE UNITS
11.1 Grants
Awards may be granted in the form of performance units. Performance
units, as that term is used in this Plan, shall refer to Units valued
by reference to designated criteria established by the Committee,
other than Common Stock.
11.2 Performance Criteria
Performance units shall be contingent on the attainment during a
Common Stock of certain performance objectives. The length of the
Common Stock, the performance objectives to be achieved during the
Common Stock, and the measure of whether and to what degree such
objectives have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Performance
objectives may be revised by the Committee, at such times as it deems
appropriate during the Common Stock, in order to take into
consideration any unforeseen events or changes in circumstances.
11.3 Additional Terms and Conditions
The Committee may, by way of the Award Notice or otherwise, determine
such other terms, conditions, restrictions, and/or limitations, if
any, of any Award of performance units, provided they are not
inconsistent with the Plan.
ARTICLE 12 -- PERFORMANCE SHARES
12.1 Grants
Awards may be granted in the form of performance shares. Performance
shares, as that term is used in this Plan, shall refer to shares of
Common Stock or Units which are expressed in terms of Common Stock.
12.2 Performance Criteria
Performance shares shall be contingent upon the attainment during a
Common Stock of certain performance objectives. The length of the
Common Stock, the performance objectives to be achieved during the
Common Stock, and the measure of whether and to what degree such
objectives have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Performance
objectives may be revised by the Committee, at such times as it deems
appropriate during the Common Stock, in order to take into
consideration any unforeseen events or changes in circumstances.
12.3 Additional Terms and Conditions
The Committee may, by way of the Award Notice or otherwise, determine
such other terms, conditions, restrictions and/or limitations, if
any, of any Award of performance shares, provided they are not
inconsistent with the Plan.
ARTICLE 13 -- PERFORMANCE STOCK PROGRAM
13.1 Purpose
The purposes of the Performance Stock Program are: (a) to promote the
interests of the Company and its shareholders by providing a means to
acquire a proprietary interest in the Company to selected Key
Employees who are in a position to make a substantial contribution to
the continued progress and success of the Company; (b) to attract and
retain qualified individuals to serve as Employees in those
positions; (c) to enhance long-term performance of the Company by
linking a meaningful portion of the compensation of selected Key
Employees to the achievement of specific long-term financial
objectives of the Company; and (d) to motivate and reward selected
Key Employees to undertake actions to increase the price of the
Common Stock.
13.2 Eligibility
Any Key Employee is eligible to participate in the Performance Stock
Program. Within the first 90 days of a Performance Cycle (or, if
longer, within the maximum period allowed under Section 162(m) of the
Code), the CEO will recommend to the Committee, and from such
recommendations the Committee will select, those Key Employees who
will be Participants for such Performance Cycle. However,
designation of a Key Employee as a Participant for a Performance
Cycle shall not in any manner entitle the Participant to receive
payment of an Award for the cycle. The determination as to whether
or not such Participant becomes entitled to payment of an Award for
such Performance Cycle shall be decided solely in accordance with the
provisions of this Article 13. Moreover, designation of a Key
Employee as a Participant for a particular Performance Cycle shall
not require designation of such Key Employee as a Participant in any
subsequent Performance Cycle and designation of one Key Employee as a
Participant shall not require designation of any other Key Employee
as a Participant in such Performance Cycle or in any other
Performance Cycle.
13.3 Description of Awards
Awards granted under the Performance Stock Program provide
Participants with the opportunity to earn shares of Common Stock,
subject to the terms and conditions of Section 13.8 below. Each
Award granted under the Plan for a Performance Cycle shall consist of
a Target Award expressed as fixed number of shares of Common Stock.
In the event the Performance Goals for the Performance Cycle are
achieved, the Performance Formula shall determine, with regards to a
particular Participant, what percentage of the Participant's Target
Award for the Performance Cycle will be earned. All of the Awards
issued under the Performance Stock Program to Covered Employees are
intended to qualify as "Performance-Based Compensation" under Section
162(m) of the Code.
13.4 Procedure for Determining Awards
Within the first 90 days of a Performance Cycle (or, if longer,
within the maximum period allowed under Section 162(m) of the Code),
the Committee shall establish in writing for such Performance Cycle
the following: the specific Performance Criteria that will be used to
establish the Performance Goal(s), the kind(s) and/or level(s) of the
Performance Goal(s), whether the Performance Goal(s) is(are) to apply
to the Company, Kodak, a Subsidiary, or any one or more subunits of
the foregoing, the amount of the Target Awards, and the Performance
Formula.
13.5 Payment of Awards
(a) Condition to Receipt of Awards. Except as provided in
Section 13.7, a Participant must be employed by the
Company on the Performance Cycle's Award Payment Date to
be eligible for an for such Performance Cycle.
(b) Limitation. A Participant shall be eligible to receive
an Award for a Performance Cycle only if: (1) the
Performance Goals for such cycle are achieved; and (2)
the Performance Formula as applied against such
Performance Goals determines that all or some portion of
the Participant's Target Award has been earned for the
Performance Period.
(c) Certification. Following the completion of a Performance
Cycle, the Committee shall meet to review and certify in
writing whether, and to what extent, the Performance
Goals for the Performance Cycle have been achieved. If
the Committee certifies that the Performance Goals have
been achieved, it shall, based upon application of the
Performance Formula to the Performance Goals for such
cycle, also calculate and certify in writing for each
Participant what percentage of the Participant's Target
Award has been earned for the cycle. The Committee shall
then determine the actual size of each Participant's
Award for the Performance Cycle and, in so doing, shall
apply Negative Discretion, if and when it deems
appropriate.
(d) Negative Discretion. In determining the actual size of
an individual Award to be paid for a Performance Cycle,
the Committee may, through the use of Negative
Discretion, reduce or eliminate the amount of the Award
earned under the Performance Formula for the Performance
Cycle, if in its sole judgment, such reduction or
elimination is appropriate.
(e) Timing of Award Payments. The Awards granted by the
Committee for a Performance Cycle shall be paid to
Participants on the Award Payment Date for such
Performance Cycle.
(f) New Participants. Participants who are employed by the
Company after the Committee's selection of Participants
for the Performance Cycle, as well as Key Employees who
are selected by the Committee to be Participants after
such date, shall, in the event Awards are paid for the
Performance Cycle, only be entitled to a pro rata Award.
The amount of the pro rata Award shall be determined by
multiplying the Award the Participant would have
otherwise been paid if he or she had been a Participant
for the entire Performance Cycle by a fraction the
numerator of which is the number of full months he or she
was eligible to participate in the Performance Stock
Program during the Performance Cycle over the total
number of full months in the Performance Cycle. For
purposes of this calculation, a partial month of
participation shall: (1) be treated as a full month of
participation to the extent a Participant participates in
the Performance Stock Program on 15 or more days of such
month; and (2) not be taken into consideration to the
extent the Participant participates in the Performance
Stock Program for less than 15 days of such month.
(g) Noncompetition. No Participant shall receive payment for
an Award if, subsequent to the commencement of the
Performance Cycle and prior to the Award Payment Date for
such cycle, the Participant engages in the conduct
prohibited under Section 14.3.
13.6 Maximum Award Payable
Notwithstanding any provision contained in the Plan to the contrary,
the maximum Award payable to any one Participant under the Plan for a
Performance Cycle is 50,000 shares of Common Stock.
13.7 Termination of Employment During Performance Cycle
In the event a Participant terminates employment due to death,
Disability, Retirement or termination of employment for an Approved
Reason prior to the Award Payment Date for a Performance Cycle, the
Participant shall receive, if Awards are paid for such Performance
Cycle and if he or she complies with the requirements of Subsection
13.5(g) through the Award Payment Date, a pro rata Award. The amount
of the pro rata Award shall be determined by multiplying the Award
the Participant would have otherwise been paid if he or she had been
a Participant through the Award Payment Date for the Performance
Cycle by a fraction, the numerator of which is the number of full
months he or she was a Participant during such Performance Cycle over
the total number of full months in the Performance Cycle. For
purposes of this calculation, a partial month of participation shall:
(1) be treated as a full month of participation to the extent a
Participant participates in the Performance Stock Program on 15 or
more days of such month; and (2) not be taken into consideration to
the extent the Participant participates in the Performance Stock
Program for less than 15 days of such month. Such pro rata Award
shall be paid in the form of shares of Common Stock, not subject to
any restrictions, limitations or escrow requirements. In the event
of Disability, Retirement or termination for an Approved Reason, the
pro rata Award shall be paid directly to the Participant and, in the
event of death, to the Participant's estate.
13.8 Awards
On the Award Payment Date for a Performance Cycle, the Committee
shall issue to each Participant the Award, in the form of shares of
Common Stock, he or she has earned for such Performance Cycle. Such
shares of Common Stock shall be subject to such terms, conditions,
limitations and restrictions as the Committee, in its sole judgment,
determines.
ARTICLE 14 -- PAYMENT OF AWARDS
14.1 In General
Absent a Plan provision to the contrary, payment of Awards may, at
the discretion of the Committee, be made in cash, Common Stock, a
combination of cash and Common Stock, or any other form of property
as the Committee shall determine. In addition, payment of Awards may
include such terms, conditions, restrictions and/or limitations, if
any, as the Committee deems appropriate, including, in the case of
Awards paid in the form of Common Stock, restrictions on transfer and
forfeiture provisions; provided, however, such terms, conditions,
restrictions and/or limitations are not inconsistent with the Plan.
Further, payment of Awards may be made in the form of a lump sum or
installments, as determined by the Committee.
14.2 Termination of Employment
If a Participant's employment with the Company terminates for a
reason other than death, Disability, Retirement, or any Approved
Reason, all unexercised, unearned, and/or unpaid Awards, including,
but not by way of limitation, Awards earned but not yet paid, all
unpaid dividends and dividend equivalents, and all interest accrued
on the foregoing shall be canceled or forfeited, as the case may be,
unless the Participant's Award Notice provides otherwise. The
Committee shall, notwithstanding Sections 4.4 and 19.11 to the
contrary, have the authority to promulgate rules and regulations to
determine the treatment of an Award under the Plan in the event of
the Participant's death, Disability, Retirement or termination for an
Approved Reason, provided, however, in the case of Awards issued
under the Restricted Stock Program, such rules and regulations are
consistent with Section 13.7.
14.3 Noncompetition
Unless the Award Notice specifies otherwise, a Participant shall
forfeit all unexercised, unearned, and/or unpaid Awards, including,
but not by way of limitation, Awards earned but not yet paid, all
unpaid dividends and dividend equivalents, and all interest, if any,
accrued on the foregoing if, (i) in the opinion of the Committee, the
Participant, without the prior written consent of Kodak, engages
directly or indirectly in any manner or capacity as principal, agent,
partner, officer, director, stockholder, employee, or otherwise, in
any business or activity competitive with the business conducted by
Kodak or any Subsidiary; (ii) at any time divulges to any person or
any entity other than the Company any trade secrets, methods,
processes or the proprietary or confidential information of the
Company; or (iii) the Participant performs any act or engages in any
activity which in the opinion of the CEO is inimical to the best
interests of the Company. For purposes of this Section 14.3, a
Participant shall not be deemed a stockholder if the Participant's
record and beneficial ownership amount to not more than 1% of the
outstanding capital stock of any company subject to the periodic and
other reporting requirements of the Exchange Act.
ARTICLE 15 -- DIVIDEND AND DIVIDEND EQUIVALENT
If an Award is granted in the form of a Stock Award, stock option, or
performance share, or in the form of any other stock-based grant, the
Committee may choose, at the time of the grant of the Award or any
time thereafter up to the time of the Award's payment, to include as
part of such Award an entitlement to receive dividends or dividend
equivalents, subject to such terms, conditions, restrictions and/or
limitations, if any, as the Committee may establish. Dividends and
dividend equivalents shall be paid in such form and manner (i.e.,
lump sum or installments), and at such time(s) as the Committee shall
determine. All dividends or dividend equivalents which are not paid
currently may, at the Committee's discretion, accrue interest, be
reinvested into additional shares of Common Stock or, in the case of
dividends or dividend equivalents credited in connection with
performance shares, be credited as additional performance shares and
paid to the Participant if and when, and to the extent that, payment
is made pursuant to such Award. The total number of shares available
for grant under Section 6.1 shall not be reduced to reflect any
dividends or dividend equivalents that are reinvested into additional
shares of Common Stock or credited as additional performance shares.
ARTICLE 16 -- DEFERRAL OF AWARDS
At the discretion of the Committee, payment of any Award, dividend,
or dividend equivalent, or any portion thereof, may be deferred by a
Participant until such time as the Committee may establish. All such
deferrals shall be accomplished by the delivery of a written,
irrevocable election by the Participant prior to the time established
by the Committee for such purpose, on a form provided by the Company.
Further, all deferrals shall be made in accordance with
administrative guidelines established by the Committee to ensure that
such deferrals comply with all applicable requirements of the Code.
Deferred payments shall be paid in a lump sum or installments, as
determined by the Committee. Deferred Awards may also be credited
with interest, at such rates to be determined by the Committee, and,
with respect to those deferred Awards denominated in the form of
Common Stock, with dividends or dividend equivalents.
ARTICLE 17 -- CHANGE IN OWNERSHIP
17.1 Background
Notwithstanding any provision contained in the Plan, including, but
not limited to, Sections 4.4 and 19.11, the provisions of this
Article 17 shall control over any contrary provision. Upon a Change
In Ownership: (i) the terms of this Article 17 shall immediately
become operative, without further action or consent by any person or
entity; (ii) all terms, conditions, restrictions, and limitations in
effect on any unexercised, unearned, unpaid, and/or deferred Award,
or any other outstanding Award, shall immediately lapse as of the
date of such event; (iii) no other terms, conditions, restrictions
and/or limitations shall be imposed upon any Awards on or after such
date, and in no circumstance shall an Award be forfeited on or after
such date; and (iv) except in those instances where a prorated Awards
is required to be paid under this Article 17, all unexercised,
unvested, unearned, and/or unpaid Awards or any other outstanding
Awards shall automatically become one hundred percent (100%) vested
immediately.
17.2 Dividends and Dividend Equivalents
Upon a Change In Ownership, all unpaid dividends and dividend
equivalents and all interest accrued thereon, if any, shall be
treated and paid under this Article 17 in the identical manner and
time as the Award under which such dividends or dividend equivalents
have been credited. For example, if upon a Change In Ownership, an
Award under this Article 17 is to be paid in a prorated fashion, all
unpaid dividends and dividend equivalents with respect to such Award
shall be paid according to the same formula used to determine the
amount of such prorated Award.
17.3 Treatment of Performance Units and Performance Shares
If a Change In Ownership occurs during the term of one or more Common
Stocks for which the Committee has granted performance units and/or
performance shares (including those issued as Performance Awards
under Article 7), the term of each such Common Stock (hereinafter a
"current Common Stock") shall immediately terminate upon the
occurrence of such event. Upon a Change In Ownership, for each
"current Common Stock" and each completed Common Stock for which the
Committee has not on or before such date made a determination as to
whether and to what degree the performance objectives for such period
have been attained (hereinafter a "completed Common Stock"), it shall
be assumed that the performance objectives have been attained at a
level of one hundred percent (100%) or the equivalent thereof.
A Participant in one or more "current Common Stocks" shall be
considered to have earned and, therefore, be entitled to receive, a
prorated portion of the Awards previously granted to him for each
such Common Stock. Such prorated portion shall be determined by
multiplying the number of performance shares or performance units, as
the case may be, granted to the Participant by a fraction, the
numerator of which is the total number of whole months that have
elapsed since the beginning of the Common Stock, and the denominator
of which is the total number of full months in such Common Stock.
For purposes of this calculation, a partial month shall be treated as
a full month to the extent 15 or more days in such month have
elapsed.
A Participant in one or more "completed Common Stocks" shall be
considered to have earned and, therefore, be entitled to receive all
the performance shares or performance units, as the case may be,
previously granted to him during each such Common Stock.
17.4 Treatment of Awards under Performance Stock Program
Upon a Change in Ownership, any Participant of the Performance Stock
Program, whether or not he or she is still employed by the Company,
shall be paid, as soon as practicable but in no event later than 90
days after the Change in Ownership, a pro rata Award for each
Performance Cycle in which the Participant was selected to
participate and during which the Change in Ownership occurs. The
amount of the pro rata Award shall be determined by multiplying the
Target Award for such Performance Cycle for Participants in the same
wage grade as the Participant by a fraction, the numerator of which
shall be the number of full months in the Performance Cycle prior to
the date of the Change in Ownership and the denominator of which
shall be the total number of full months in the Performance Cycle.
For purposes of this calculation, a partial month shall be treated as
a full month to the extent 15 or more days in such month have
elapsed. To the extent Target Awards have not yet been established
for the Performance Cycle, the Target Awards for the immediately
preceding Performance Cycle shall be used.
17.5 Valuation of Awards
Upon a Change In Ownership, all outstanding Units of Common Stock,
Freestanding SARs, stock options (including incentive stock options),
Stock Awards (including those issued as Performance Awards under
Article 7), performance shares (including those earned as a result of
the application of Section 17.3 above), and all other outstanding
stock-based Awards (including those earned as a result of the
application of Section 17.4 above and those granted by the Committee
pursuant to its authority under Subsection 4.2(m) hereof), shall be
valued and cashed out on the basis of the Change In Control Price.
17.6 Payment of Awards
Upon a Change In Ownership, any Participant, whether or not he or she
is still employed by the Company, shall be paid, in a single lump-sum
cash payment, as soon as practicable but in no event later than 90
days after the Change In Ownership, all of his or her Units of Common
Stock, Freestanding SARs, stock options (including incentive stock
options), Stock Awards (including those issued as Performance Awards
under Article 7), performance units and shares (including those
earned as a result of the application of Section 17.3 above), all
other outstanding stock-based Awards (including those earned as a
result of the application of Section 17.4 above and those granted by
the Committee pursuant to its authority under Subsection 4.2(m)
hereof), and all other outstanding Awards.
17.7 Deferred Awards
Upon a Change In Ownership, all Awards deferred by a Participant
under Article 16 hereof, but for which he or she has not received
payment as of such date, shall be paid in a single lump-sum cash
payment as soon as practicable, but in no event later than 90 days
after the Change In Ownership. For purposes of making such payment,
the value of all Awards which are stock based shall be determined by
the Change In Control Price.
17.8 Section 16 of Exchange Act
Notwithstanding anything contained in this Article 17 to the
contrary, any Participant who, on the date of the Change In
Ownership, holds any stock options or Freestanding SARs that have not
been outstanding for a period of at least six months from their date
of grant and who on such date is required to report under Section 16
of the Exchange Act shall not be paid such Award until the first day
next following the end of such six-month period.
17.9 Miscellaneous
Upon a Change In Ownership, (i) the provisions of Sections 14.2, 14.3
and 19.3 hereof shall become null and void and of no further force
and effect; and (ii) no action, including, but not by way of
limitation, the amendment, suspension, or termination of the Plan,
shall be taken which would affect the rights of any Participant or
the operation of the Plan with respect to any Award to which the
Participant may have become entitled hereunder on or prior to the
date of such action or as a result of such Change In Ownership.
ARTICLE 18 -- CHANGE IN CONTROL
18.1 Background
Notwithstanding any provision contained in the Plan, including, but
not limited to, Sections 4.4 and 19.11, the provisions of this
Article 18 shall control over any contrary provision. All
Participants shall be eligible for the treatment afforded by this
Article 18 if their employment terminates within two years following
a Change In Control, unless the termination is due to (i) death, (ii)
Disability, (iii) Cause, (iv) resignation other than (A) resignation
from a declined reassignment to a job that is not reasonably
equivalent in responsibility or compensation (as defined in Kodak's
Termination Allowance Plan), or that is not in the same geographic
area (as defined in Kodak's Termination Allowance Plan), or (B)
resignation within 30 days following a reduction in base pay, or (v)
Retirement.
18.2 Vesting and Lapse of Restrictions
If a Participant is eligible for treatment under this Article 18, (i)
all of the terms, conditions, restrictions, and limitations in effect
on any of his or her unexercised, unearned, unpaid and/or deferred
Awards shall immediately lapse as of the date of his or her
termination of employment; (ii) no other terms, conditions,
restrictions and/or limitations shall be imposed upon any of his or
her Awards on or after such date, and in no event shall any of his or
her Awards be forfeited on or after such date; and (iii) except in
those instances where a prorated Award is required to be paid under
this Article 18, all of his or her unexercised, unvested, unearned
and/or unpaid Awards shall automatically become one hundred percent
(100%) vested immediately upon his or her termination of employment.
18.3 Dividends and Dividend Equivalents
If a Participant is eligible for treatment under this Article 18, all
of his or her unpaid dividends and dividend equivalents and all
interest accrued thereon, if any, shall be treated and paid under
this Article 18 in the identical manner and time as the Award under
which such dividends or dividend equivalents have been credited.
18.4 Treatment of Performance Units and Performance Shares
If a Participant holding either performance units or performance
shares (including those issued as Performance Awards under Article 7)
is terminated under the conditions described in Section 18.1 above,
the provisions of this Section 18.4 shall determine the manner in
which such performance units and/or performance shares shall be paid
to the Participant. For purposes of making such payment, each
"current Common Stock," as that term is defined in Section 17.3,
shall be treated as terminating upon the date of the Participant's
termination of employment, and for each such "current Common Stock"
and each "completed Common Stock," as that term is defined in Section
17.3, it shall be assumed that the performance objectives have been
attained at a level of one hundred percent (100%) or the equivalent
thereof. If the Participant is participating in one or more "current
Common Stocks," he or she shall be considered to have earned and,
therefore, be entitled to receive that prorated portion of the Awards
previously granted to him for each such performance period, as
determined in accordance with the formula established in Section 17.3
hereof. A Participant in one or more "completed Common Stocks" shall
be considered to have earned and, therefore, be entitled to receive
all the performance shares and performance units previously granted
to him during each Common Stock.
18.5 Treatment of Awards under Performance Stock Program
If a Participant of the Performance Stock Program is eligible for
treatment under this Article 18, he or she shall be paid, as soon as
practicable but in no event later than 90 days after the date of his
or her termination of employment, a pro rata Award for each
Performance Cycle in which the Participant was selected to
participate and during which the Change in Ownership occurs. The
amount of the pro rata Award shall be determined by multiplying the
Target Award for such Performance Cycle for Participants in the same
wage grade as the Participant by a fraction, the numerator of which
shall be the number of full months in the Performance Cycle prior to
the date of his or her termination of employment and the denominator
of which shall be the total number of full months in the Performance
Cycle. For purposes of this calculation, a partial month shall be
treated as a full month to the extent 15 or more days in such month
have elapsed. To the extent Target Awards have not yet been
established for the Performance Cycle, the Target Awards for the
immediately preceding Performance Cycle shall be used.
18.6 Valuation of Awards
If a Participant is eligible for treatment under this Article 18, his
or her Awards shall be valued and cashed out in accordance with the
provisions of Section 17.5.
18.7 Payment of Awards
If a Participant is eligible for treatment under this Article 18, he
or she shall be paid, in a single lump-sum cash payment, as soon as
practicable but in no event later than 90 days after the date of his
or her termination of employment, all of his or her Units of Common
Stock, Freestanding SARs, stock options (including incentive stock
options), Stock Awards (including those issued as Performance Awards
under Article 7), performance units and shares (including those
earned as a result of the application of Section 18.4 above), all
other outstanding stock-based Awards (including those earned as a
result of the application of Section 18.5 above and those granted by
the Committee pursuant to its authority under Subsection 4.2(m)
hereof), and all other outstanding Awards.
18.8 Deferred Awards
If a Participant is eligible for treatment under this Article 18, all
of his or her deferred Awards for which payment has not been received
as of the date of his or her termination of employment shall be paid
to the Participant in a single lump-sum cash payment as soon as
practicable, but in no event later than 90 days after the date of the
Participant's termination. For purposes of making such payment, the
value of all Awards which are stock based shall be determined by the
Change In Control Price.
18.9 Section 16 of Exchange Act
Notwithstanding anything contained in this Article 18 to the
contrary, any Participant who, on the date of his or her termination
of employment under the conditions described in Section 18.1, holds
any stock options or Freestanding SARs that have not been outstanding
for a period of at least six months from their date of grant and who
on the date of such termination is required to report under Section
16 of the Exchange Act shall not be paid such Award until the first
business day next following the end of such six-month period.
18.10 Miscellaneous
Upon a Change In Control, (i) the provisions of Sections 14.2, 14.3
and 19.3 hereof shall become null and void and of no force and effect
insofar as they apply to a Participant who has been terminated under
the conditions described in Section 18.1 above; and (ii) no action,
including, but not by way of limitation, the amendment, suspension or
termination of the Plan, shall be taken which would affect the rights
of any Participant or the operation of the Plan with respect to any
Award to which the Participant may have become entitled hereunder on
or prior to the date of the Change In Control or to which he or she
may become entitled as a result of such Change In Control.
18.10 Legal Fees
Kodak shall pay all legal fees and related expenses incurred by a
Participant in seeking to obtain or enforce any payment, benefit or
right he or she may be entitled to under the Plan after a Change In
Control; provided, however, the Participant shall be required to
repay any such amounts to Kodak to the extent a court of competent
jurisdiction issues a final and non-appealable order setting forth
the determination that the position taken by the Participant was
frivolous or advanced in bad faith.
ARTICLE 19 -- MISCELLANEOUS
19.1 Nonassignability
No Awards or any other payment under the Plan shall be subject in any
manner to alienation, anticipation, sale, transfer (except by will or
the laws of descent and distribution), assignment, pledge, or
encumbrance, nor shall any Award be payable to or exercisable by
anyone other than the Participant to whom it was granted.
19.2 Withholding Taxes
The Company shall be entitled to deduct from any payment under the
Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld
with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such
payment. In accordance with any applicable administrative guidelines
it establishes, the Committee may allow a Participant to pay the
amount of taxes required by law to be withheld from an Award by
withholding from any payment of Common Stock due as a result of such
Award, or by permitting the Participant to deliver to the Company,
shares of Common Stock having a fair market value, as determined by
the Committee, equal to the amount of such required withholding
taxes.
19.3 Amendments to Awards
The Committee may at any time unilaterally amend any unexercised,
unearned, or unpaid Award, including, but not by way of limitation,
Awards earned but not yet paid, to the extent it deems appropriate;
provided, however, that any such amendment which, in the opinion of
the Committee, is adverse to the Participant shall require the
Participant's consent.
19.4. Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates of
Common Stock evidencing Stock Awards or any other Award resulting in
the payment of Common Stock prior to (i) the obtaining of any
approval from any governmental agency which the Company shall, in its
sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on the stock exchange on which
the Common Stock may be listed, and (iii) the completion of any
registration or other qualification of said shares under any state or
Federal law or ruling of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or
advisable.
19.5 No Right to Continued Employment or Grants
Participation in the Plan shall not give any Employee any right to
remain in the employ of Kodak or any Subsidiary. Kodak or, in the
case of employment with a Subsidiary, the Subsidiary, reserves the
right to terminate any Employee at any time. Further, the adoption
of this Plan shall not be deemed to give any Employee or any other
individual any right to be selected as a Participant or to be granted
an Award.
19.6. Amendment/Termination
The Committee may suspend or terminate the Plan at any time with or
without prior notice. In addition, the Committee may, from time to
time and with or without prior notice, amend the Plan in any manner,
but may not without shareholder approval adopt any amendment which
would require the vote of the shareholders of Kodak pursuant to
Section 16 of the Exchange Act or Section 162(m) of the Code, but
only insofar as such amendment affects Covered Employees.
19.7 Governing Law
The Plan shall be governed by and construed in accordance with the
laws of the State of New York, except as superseded by applicable
Federal Law.
19.8 No Right, Title, or Interest in Company Assets
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock
certificate in his or her name, and, in the case of restricted shares
of Common Stock, such rights are granted to the Participant under the
Plan. To the extent any person acquires a right to receive payments
from the Company under the Plan, such rights shall be no greater than
the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific
assets of the Company. All of the Awards granted under the Plan
shall be unfunded.
19.9 Section 16 of the Exchange Act
In order to avoid any Exchange Act violations, the Committee may,
from time to time, impose additional restrictions upon an Award,
including but not limited to, restrictions regarding tax withholdings
and restrictions regarding the Participant's ability to exercise
Awards under the Company's broker-assisted exercise program.
19.10 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity, including, but not
limited to, Kodak and its Subsidiaries and their directors, officers,
agents and employees makes any representation, commitment, or
guarantee that any tax treatment, including, but not limited to,
Federal, state and local income, estate and gift tax treatment, will
be applicable with respect to amounts deferred under the Plan, or
paid to or for the benefit of a Participant under the Plan, or that
such tax treatment will apply to or be available to a Participant on
account of participation in the Plan.
19.11 Compliance with Section 162(m)
If any provision of the Plan, other than the application of those
contained in Articles 17 or 18 hereof, would cause the Awards granted
to a Covered Person not to qualify as "Performance-Based
Compensation" under Section 162(m) of the Code, that provision,
insofar as it pertains to the Covered Person, shall be severed from,
and shall be deemed not to be a part of, this Plan, but the other
provisions hereof shall remain in full force and effect.
19.12 Other Benefits
No Award granted under the Plan shall be considered compensation for
purposes of computing benefits under any retirement plan of the
Company nor affect any benefits or compensation under any other
benefit or compensation plan of the Company now or subsequently in
effect.
EXHIBIT B
MANAGEMENT VARIABLE COMPENSATION PLAN
ARTICLE 1 -- PURPOSE, EFFECTIVE DATE AND TERM OF PLAN
1.1 Purpose
The purposes of the Plan are to provide an annual incentive to Key
Employees of the Company to put forth maximum efforts toward the
continued growth and success of the Company, to encourage such Key
Employees to remain in the employ of the Company, to assist the
Company in attracting and motivating new Key Employees on a
competitive basis, and to endeavor to qualify the Awards granted to
Covered Employees under the Plan as "Performance-Based Compensation
as defined in Section 162(m) of the Code. The Plan is intended to
apply to Key Employees of the Company in the United States and
throughout the world.
1.2 Effective Date
The Plan shall be effective as of January 1, 1995, subject to
approval by Kodak's shareholders at the 1995 Annual Meeting of the
Shareholders of Kodak.
1.3 Term
Awards shall not be granted pursuant to the Plan after December 31,
1999; provided, however, the Committee may grant Awards after such
date in recognition of performance for a Performance Period completed
on or prior to such date.
ARTICLE 2 -- DEFINITIONS
2.1 Actual Award Pool
"Actual Award Pool" means, for a Performance Period, the amount
determined in accordance with Section 6.4.
2.2 Average Net Assets
"Average Net Assets" means, for the Performance Period, the simple
average of the Company's Net Assets for each of the following five
fiscal quarters of the Company: the four fiscal quarters of the
Performance Period and the fiscal quarter immediately preceding the
Performance Period. For purposes of this calculation, Net Assets for
a fiscal quarter shall be determined as of the end of such quarter.
2.3 Award
"Award" means the compensation granted to a Participant by the
Committee for a Performance Period pursuant to Articles 6 and 7 or
the compensation granted to a Key Employee by the Committee pursuant
to Article 9. All Awards shall be issued in the form(s) specified by
Article 5.
2.4 Award Payment Date
"Award Payment Date" means, for each Performance Period, the date
that the amount of the Award for that Performance Period shall be
paid to the Participant under Article 7, without regard to any
election to defer receipt of the Award made by the Participant under
Article 8 of the Plan.
2.5 Board
"Board" means the Board of Directors of Kodak.
2.6 Carryforward Amount
"Carryforward Amount" means, for any Performance Period, the sum of
the Carryovers for all prior Performance Periods less the sum of all
Awards granted from the Carryforward Amount pursuant to Sections
6.4(d) and 9.5.
2.7 Carryover
"Carryover" means, for a Performance Period, that portion, if any, or
all of the difference, if any, between the Maximum Award for such
Performance Period and the sum of all Awards paid under the Plan for
such Performance Period, which the Committee elects to add to the
Carryforward Amount.
2.8 Cause
"Cause" means (a) the willful and continued failure by a Key Employee
to substantially perform his or her duties with his or her employer
after written warnings identifying the lack of substantial
performance are delivered to the Key Employee by his or her employer
to specifically identify the manner in which the employer believes
that the Key Employee has not substantially performed his or her
duties; or (b) the willful engaging by a Key Employee in illegal
conduct which is materially and demonstrably injurious to the
Company.
2.9 CEO
"CEO" means the Chief Executive Officer of Kodak.
2.10 Change In Control
"Change In Control" means a Change In Control of Kodak of a nature
that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on August 1, 1989, pursuant to
Section 12 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 13(d) of
the Exchange Act, other than Kodak, a Subsidiary, or any employee
benefit plan(s) sponsored by Kodak or any Subsidiary, is or has
become the "beneficial owner," as defined in Rule 12d-3 under the
Exchange Act, directly or indirectly, of 25% or more of the combined
voting power of the outstanding securities of Kodak ordinarily having
the right to vote at the election of directors, or (ii) individuals
who constitute the Board on January 1, 1995 (the "Incumbent Board")
have ceased for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to January 1,
1995 whose election, or nomination for election by Kodak's
shareholders, was approved by a vote of at least three-quarters (3/4)
of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of Kodak in which such
person is named as a nominee for director without objection to such
nomination) shall be, for purposes of this Plan, considered as though
such person were a member of the Incumbent Board.
2.11 Change In Ownership
"Change In Ownership" means a Change In Control which results
directly or indirectly in Kodak's Common Stock ceasing to be actively
traded on the New York Stock Exchange.
2.12 Code
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions
and regulations thereto.
2.13 Committee
"Committee" means the Executive Compensation and Development
Committee of the Board, or such other Board committee as may be
designated by the Board to administer the Plan; provided that the
Committee shall consist of three or more directors, all of whom are
both a "disinterested person" within the meaning of Rule 16b-3 under
the Exchange Act and an "outside director" within the meaning of the
definition of such term as contained in Proposed Treasury Regulation
Section 1.162-27(e)(3), or any successor definition adopted.
2.14 Common Stock
"Common Stock" means the Common Stock, $2.50 par value per share, of
Kodak which may be newly issued or treasury stock.
2.15 Company
"Company" means Kodak and its Subsidiaries.
2.16 Covered Employee
"Covered Employee" means a Key Employee who is a "Covered Employee"
within the meaning of Section 162(m) of the Code.
2.17 Disability
"Disability" means a disability under the terms of any long-term
disability plan maintained by the Company.
2.18 Effective Date
"Effective Date" means the date an Award is determined to be
effective by the Committee upon its grant of such Award.
2.19 Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor
provisions and rules thereto.
2.20 Key Employee
"Key Employee" means either: (1) a salaried employee of the Company
in wage grade 48 or above, or the equivalent thereof; or (2) a
salaried employee of the Company who holds a position of
responsibility in a managerial, administrative, or professional
capacity and is in wage grade 43 or above.
2.21 Kodak
"Kodak" means Eastman Kodak Company.
2.22 Maximum Award
"Maximum Award" means, for a Performance Period, the dollar amount
calculated in accordance with Section 6.2 by applying the Performance
Formula for such Performance Period against the Performance Goals for
the same Performance Period.
2.23 Maximum Award Pool
"Maximum Award Pool" means, for a Performance Period, the dollar
amount calculated in accordance with Section 6.3(b) by adding the
Maximum Award for the Performance Period with the Carryforward
Amount.
2.24 Negative Discretion
"Negative Discretion" means the discretion granted to the Committee
pursuant to Section 6.3(e) to reduce or eliminate the Maximum Award
Pool or a portion of the Maximum Award Pool allocated to a Covered
Employee.
2.25 Net Assets
"Net Assets" means the Company's consolidated Total Shareholders'
Equity and Borrowings (both short-term and long-term) as reported in
its audited consolidated financial statements. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of Net Assets for
such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting
the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; and (c)
in view of the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic and
business conditions, and any other circumstances deemed relevant.
However, if and to the extent the exercise of such authority after
the first 90 days of a Performance Period would cause the Awards
granted to the Covered Employees for the Performance Period to fail
to qualify as "Performance-Based Compensation" under Section 162(m)
of the Code, then such authority shall only be exercised with respect
to those Participants who are not Covered Employees.
2.26 Net Income
"Net Income" means, for a Performance Period, the Company's
consolidated Net Earnings (Loss) before Cumulative Effect of Changes
in Accounting Principle for the Performance Period as reported in its
audited consolidated financial statements. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of Net Income for
such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any dividend or other distribution (whether in the
form of cash, securities or other property), recapitalization,
restructuring, reorganization, merger, consolidation, spin off,
combination, repurchase, share exchange, liquidation, dissolution, or
other similar corporate transaction, event or development; (b) in
recognition of, or in anticipation of, any other unusual or
nonrecurring event affecting the Company, or the financial statements
of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions; (c) in recognition of, or in anticipation of, any other
extraordinary gains or losses; and (d) in view of the Committee's
assessment of the business strategy of the Company, performance of
comparable organizations, economic and business conditions, and any
other circumstances deemed relevant. However, if and to the extent
the exercise of such authority after the first 90 days of a
Performance Period would cause the Awards granted to the Covered
Employees for the Performance Period to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the Code,
then such authority shall only be exercised with respect to those
Participants who are not Covered Employees.
2.27 Participant
"Participant," means either (a) for a Performance Period, a Key
Employee who is designated to participate in the Plan for the
Performance Period pursuant to Article 3; or (b) for purposes of
Article 9, a Key Employee who is granted an Award pursuant to such
Article.
2.28 Performance Criterion
"Performance Criterion" means the stated business criterion upon
which the Performance Goals for a Performance Period are based as
required pursuant to Proposed Treasury Regulation Section 1.162-
27(e)(4)(iii). For purposes of the Plan, RONA shall be the
Performance Criterion.
2.29 Performance Formula
"Performance Formula" means, for a Performance Period, the one or
more objective formulas applied against the Performance Goals to
determine whether all, some portion but less than all, or none of the
Awards have been earned for the Performance Period. The dollar
amount obtained through application of the Performance Formula shall
be the Maximum Award. The Performance Formula for a Performance
Period shall be established in writing by the Committee within the
first 90 days of the Performance Period (or, if later, within the
maximum period allowed pursuant to Section 162(m) of the Code).
2.30 Performance Goals
"Performance Goals" means, for a Performance Period, the one or more
goals for the Performance Period established by the Committee in
writing within the first 90 days of the Performance Period (or, if
longer, within the maximum period allowed pursuant to Section 162(m)
of the Code) based upon the Performance Criterion. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of a Performance Goal
for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting
the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; and (c)
in view of the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic and
business conditions, and any other circumstances deemed relevant.
However, to the extent the exercise of such authority after the first
90 days of a Performance Period would cause the Awards granted to the
Covered Employees for the Performance Period to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the Code,
then such authority shall only be exercised with respect to those
Participants who are not Covered Employees.
2.31 Performance Period
"Performance Period" means Kodak's fiscal year or any other period
designated by the Committee with respect to which an Award may be
granted.
2.32 Plan
"Plan" means the Management Variable Compensation Plan.
2.33 Retirement
"Retirement" means retirement under any defined benefit pension plan
maintained by the Company which is either a tax-qualified plan under
Section 401(a) of the Code or is identified in writing by the
Committee as a defined benefit pension plan.
2.34 RONA
"RONA" means, for a Performance Period, Return on Net Assets for the
Performance Period. RONA shall be calculated by dividing Net Income
for the Performance Period by Average Net Assets for the same period.
2.35 Subsidiary
Subsidiary means a subsidiary which is majority owned by Kodak and
reported in Kodak's audited consolidated financial statements.
2.36 Target Award
"Target Award" means, for a Performance Period, the target Award
amounts established for each wage grade by the Committee for the
Performance Period. The Target Awards shall serve only as a
guideline in making Awards under the Plan. Depending upon the
Committee's exercise of its discretion pursuant to Section 6.4(c),
but subject to Section 6.5, a Participant may receive an Award for a
Performance Period which may be more or less than the Target Award
for his or her wage grade for that Performance Period. Moreover, the
fact that a Target Award is established for a Participant's wage
grade for a Performance Period shall not in any manner entitle the
Participant to receive an Award for such period.
ARTICLE 3 -- ELIGIBILITY
All Key Employees are eligible to participate in the Plan. The
Committee will, in its sole discretion, designate within the first 90
days of a Performance Period which Key Employees will be Participants
for such Performance Period. However, the fact that a Key Employee
is a Participant for a Performance Period shall not in any manner
entitle such Participant to receive an Award for the period. The
determination as to whether or not such Participant shall be paid an
Award for such Performance Period shall be decided solely in
accordance with the provisions of Articles 6 and 7 hereof.
ARTICLE 4 -- PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall have total and exclusive responsibility to
control, operate, manage and administer the Plan in accordance with
its terms.
4.2 Authority of the Committee
The Committee shall have all the authority that may be necessary or
helpful to enable it to discharge its responsibilities with respect
to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right: to interpret
the Plan, to determine eligibility for participation in the Plan, to
decide all questions concerning eligibility for and the amount of
Awards payable under the Plan, to establish and administer the
Performance Goals and certify whether, and to what extent, they are
attained, to construe any ambiguous provision of the Plan, to correct
any default, to supply any omission, to reconcile any inconsistency,
to issue administrative guidelines as an aid to administer the Plan,
to make regulations for carrying out the Plan and to make changes in
such regulations as they from time to time deem proper, and to decide
any and all questions arising in the administration, interpretation,
and application of the Plan. In addition, in order to enable Key
Employees who are foreign nationals or are employed outside the
United States or both to receive Awards under the Plan, the Committee
may adopt such amendments, procedures, regulations, subplans and the
like as are necessary or advisable, in the opinion of the Committee,
to effectuate the purposes of the Plan.
4.3 Discretionary Authority
The Committee shall have full discretionary authority in all matters
related to the discharge of its responsibilities and the exercise of
its authority under the Plan including, without limitation, its
construction of the terms of the Plan and its determination of
eligibility for participation and Awards under the Plan. It is the
intent of Plan that the decisions of the Committee and its action
with respect to the Plan shall be final, binding and conclusive upon
all persons having or claiming to have any right or interest in or
under the Plan.
4.4 Section 162(m) of the Code
With regard to all Covered Employees, the Plan shall for all purposes
be interpreted and construed in accordance with Section 162(m) of the
Code.
4.5 Delegation of Authority
Except to the extent prohibited by law, the Committee may delegate
some or all of its authority under the Plan to any person or persons
provided that any such delegation be in writing; provided, however,
only the Committee may select and grant Awards to Participants who
are Covered Employees.
ARTICLE 5 -- FORM OF AWARDS
Awards may at the Committee's sole discretion be paid in cash, Common
Stock or a combination thereof. The Committee may, in its sole
judgment, subject an Award to such terms, conditions, restrictions
and/or limitations (including, but not limited to, restrictions on
transferability and vesting), provided they are not inconsistent with
the terms of the Plan. For purposes of the Plan, the value of any
Award granted in the form of Common Stock shall be the mean between
the high and low at which the Common Stock trades on the New York
Stock Exchange as of the date of the grant's Effective Date.
ARTICLE 6 -- DETERMINATION OF AWARDS FOR A PERFORMANCE PERIOD
6.1 Procedure for Determining Awards
As detailed below in the succeeding Sections of this Article 6, the
procedure for determining Awards for a Performance Period entails the
following: (a) determination of Maximum Award; (b) determination of
Maximum Award Pool; (c) determination of Actual Award Pool; and (d)
allocation of Actual Award Pool among individual Participants. Upon
completion of this process, any Awards earned for the Performance
Period shall be paid in accordance with Article 7.
6.2 Determination of Maximum Award
(a) Purpose of Maximum Award. The Maximum Award for a Performance
Period is an addend in the calculation of the Maximum Award Pool for
such Performance Period.
(b). Calculation of Maximum Award. The Maximum Award for a
Performance Period is the dollar amount obtained by applying the
Performance Formula for such Performance Period against the
Performance Goals for the same Performance Period.
6.3 Determination of Maximum Award Pool
(a) Purpose of Maximum Award Pool. The Maximum Award Pool, for a
Performance Period, serves as the basis for calculating the maximum
amount of Awards that may be granted to all Participants for such
Performance Period .
(b) Calculation of Maximum Award Pool. The Maximum Award Pool for a
Performance Period shall be calculated by adding the Maximum Award
for such Performance Period with the Carryforward Amount.
(c) Limitation. The total of all Awards granted for a Performance
Period shall not exceed the amount of the Maximum Award Pool for such
Performance Period.
(d) Allocation of Maximum Award Pool to Covered Employees. Within
the first 90 days of a Performance Period (or, if longer, within the
maximum period allowed under Section 162(m) of the Code), the
Committee shall allocate in writing, or establish in writing an
objective means of allocating, on behalf of each Covered Person, a
portion of the Maximum Award Pool (not to exceed the amount set forth
in Section 6.5(a)) to be granted for such Performance Period in the
event the Performance Goals for such period are attained.
(e) Negative Discretion. The Committee is authorized at any time
during or after a Performance Period, in its sole and absolute
discretion, to reduce or eliminate the Maximum Award Pool for the
Performance Period, for any reason, based on such factors, indicia,
standards, goals, and/or measures it determines in the exercise of
its sole discretion. Similarly, the Committee is authorized at any
time during or after a Performance Period, in its sole and absolute
discretion, to reduce or eliminate the portion of the Maximum Award
Pool allocated to any Covered Employee for the Performance Period,
for any reason.
6.4 Determination of Actual Award Pool
(a) Purpose of Actual Award Pool. The Actual Award Pool for a
Performance Period determines the aggregate amount of all the Awards
that are to be issued under the Plan for such Performance Period.
(b) Establishment of Actual Award Pool. The Actual Award Pool for a
Performance Period shall be the Maximum Award Pool for such period
after adjustment, if any, by the Committee through Negative
Discretion. Thus, to the extent the Committee elects for a
Performance Period not to exercise Negative Discretion with respect
to the Maximum Award Pool, the Actual Award Pool for the Performance
Period shall be the Maximum Award Pool for such period.
(c) Allocation of Actual Award Pool to Individual Participants.
The portion of the Actual Award Pool that will be Awarded to any
individual Participant will be determined by the Committee, in its
sole and absolute discretion, based on such factors, indicia,
standards, goals, and measures which it determines in the exercise of
its sole discretion. By way of illustration, and not by way of
limitation, the Committee may, but shall not be required to,
consider: (1) the Participant's position and level of responsibility,
individual merit, contribution to the success of the Company and
Target Award; (2) the performance of the Company or the
organizational unit of the Participant based upon attainment of
financial and other performance criteria and goals; and (3) business
unit, division or department achievements.
(d) Adjustment to Carryforward Amount. To the extent the sum of
all Awards paid for a Performance Period exceeds the Maximum Award
for such period, the Carryforward Amount shall be reduced by an
amount equal to such difference.
6.5 Limitations on Awards to Covered Employees
The provisions of this Section 6.5 shall control over any Plan
provision to the contrary.
(a) Maximum Award Payable to Covered Employees. The maximum Award
payable to any Covered Employee under the Plan for a Performance
Period shall be $4,000,000.
(b) Attainment of Performance Goals. The Performance Goals for a
Performance Period must be achieved in order for a Covered Employee
to receive an Award for such Performance Period.
(c) Allocation of Actual Award Pool. The portion of the Actual
Award Pool allocated to a Covered Employee by the Committee pursuant
to Section 6.4(c) shall not exceed the portion of the Maximum Award
Pool allocated to such Covered Employee under Section 6.3(d).
ARTICLE 7 -- PAYMENT OF AWARDS FOR A PERFORMANCE PERIOD
7.1 Certification
(a) In General. Following the completion of each Performance
Period, the Committee shall meet to review and certify in writing
whether, and to what extent, the Performance Goals for the
Performance Period have been achieved.
(b) Performance Goals Achieved. If the Committee certifies that
the Performance Goals have been achieved, it shall, based upon
application of the Performance Formula to the Performance Goals for
such period, calculate and certify in writing the amount of: (i) the
Maximum Award; (ii) the Maximum Award Pool; and (iii) the Maximum
Award Pool to be allocated to each Covered Employee in accordance
with Section 6.3(d). Upon completion of these written
certifications, the Committee shall determine the amount of the
Actual Award Pool for the Performance Period.
(c) Performance Goals Not Achieved. In the event the Performance
Goals for a Performance Period are not achieved, the limitation
contained in Section 6.5(b) shall apply to the Covered Employees.
Further, any Awards granted for the Performance Period must be paid
from the Carryforward Amount which shall be reduced to reflect the
amount of such Awards.
7.2 Election of Form of Award
Prior to or coincident with its calculation of the amount of the
Actual Award Pool for a Performance Period, the Committee shall, in
its sole discretion, determine the form(s) in which to grant Awards
under the Plan for such period.
7.3 Timing of Award Payments
Unless deferred pursuant to Article 8 hereof, the Awards granted for
a Performance Period shall be paid to Participants on the Award
Payment Date for such Performance Period, which date shall occur as
soon as administratively practicable following the completion of the
procedure described in Section 7.1.
ARTICLE 8 -- DEFERRAL OF AWARDS
At the discretion of the Committee, a Participant may, subject to
such terms and conditions as the Committee may determine, elect to
defer payment of all or any part of any Award which the Participant
might earn with respect to a Performance Period by complying with
such procedures as the Committee may prescribe. Any Award, or
portion thereof, upon which such an election is made shall be
deferred into, and subject to the terms, conditions and requirements
of, the Eastman Kodak Employees' Savings and Investment Plan, 1982
Eastman Kodak Company Executive Deferred Compensation Plan or such
other applicable deferred compensation plan of the Company.
ARTICLE 9 -- ADDITIONAL AWARDS
9.1 In General
In addition to the Awards that are authorized to be granted under
Article 6 and paid under Article 7 for a Performance Period, the
Committee may, in its sole judgment, from time to time grant Awards
under the Plan from the Carryforward Amount.
9.2 Eligibility
All Key Employees, other than those who are Covered Employees, are
eligible to receive the Awards authorized to be granted under this
Article 9.
9.3 Form of Awards
Any Award granted by the Committee pursuant to the provisions of this
Article 9 shall be issued in one or more of the forms permitted under
Article 5 of the Plan.
9.4 Terms and Conditions
The Committee shall, by way of an Award notice or otherwise,
establish the terms, conditions, restrictions and/or limitations that
will apply to an Award issued pursuant to this Article 9; provided,
however, such terms, conditions, restrictions and limitations are not
inconsistent with the terms of the Plan.
9.5 Carryforward Amount
Upon the issuance of any Award under this Article 9, the Carryforward
Amount shall be immediately reduced by an amount equal to the value
of such Award.
ARTICLE 10 -- CHANGE IN OWNERSHIP
10.1 Background
Notwithstanding any provision contained in the Plan, including, but
not limited to, Sections 1.1, 4.4 and 13.10, the provisions of this
Article 10 shall control over any contrary provision. Upon a Change
in Ownership: (a) the terms of this Article 10 shall immediately
become operative, without further action or consent by any person or
entity; (b) all terms, conditions, restrictions and limitations in
effect on any unpaid and/or deferred Award shall immediately lapse as
of the date of such event; (c) no other terms, conditions,
restrictions, and/or limitations shall be imposed upon any Awards on
or after such date, and in no event shall an Award be forfeited on or
after such date; and (d) except where a prorated Award is required to
be paid under this Article 10, all unvested and/or unpaid Awards or
any other outstanding Awards shall automatically become one hundred
percent (100%) vested immediately.
10.2 Payment of Awards
Upon a Change in Ownership, any Key Employee, whether or not he or
she is still employed by the Company, shall be paid, as soon as
practicable but in no event later than 90 days after the Change in
Ownership, the Awards set forth in (a) and (b) below:
(a) All of the Key Employee's unpaid and/or deferred Awards; and
(b) A pro rata Award for the Performance Period in which the Change
in Ownership occurs. The amount of the pro rata Award shall be
determined by multiplying the Target Award for such Performance
Period for Participants in the same wage grade as the Key Employee by
a fraction, the numerator of which shall be the number of full months
in the Performance Period prior to the date of the Change in
Ownership and the denominator of which shall be the total number of
full months in the Performance Period. For purposes of this
calculation, a partial month shall be treated as a full month to the
extent of 15 or more days in such month have elapsed. To the extent
Target Awards have not yet been established for the Performance
Period, the Target Awards for the immediately preceding Performance
Period shall be used. The pro rata Awards shall be paid to the Key
Employee in the form of a lump-sum cash payment.
10.3 Miscellaneous
Upon a Change In Ownership, no action, including, but not by way of
limitation, the amendment, suspension, or termination of the Plan,
shall be taken which would affect the rights of any Key Employee or
the operation of the Plan with respect to any Award to which the Key
Employee may have become entitled hereunder on or prior to the date
of such action or as a result of such Change In Ownership.
ARTICLE 11 -- CHANGE IN CONTROL
11.1 Background
Notwithstanding any provision contained in the Plan, including, but
not limited to, Sections 1.1, 4.4 and 13.10, the provisions of this
Article 11 shall control over any contrary provision. All Key
Employees shall be eligible for the treatment afforded by this
Article 11 if their employment with the Company terminates within two
years following a Change In Control, unless the termination is due to
(a) death; (b) Disability; (c) Cause; (d) resignation other than (1)
resignation from a declined reassignment to a job that is not
reasonably equivalent in responsibility or compensation (as defined
in Kodak's Termination Allowance Plan), or that is not in the same
geographic area (as defined in Kodak's Termination Allowance Plan),
or (2) resignation within thirty days of a reduction in base pay; or
(e) Retirement.
11.2 Vesting and Lapse of Restrictions
If a Key Employee qualifies for treatment under Section 11.1, his or
her Awards shall be treated in the manner described in Subsections
10.1(b) and (c). Further, except where a prorated Award is required
to be paid under this Article 11, all of the Key Employee's unvested
and/or unpaid Awards shall automatically become one hundred percent
(100%) vested immediately.
11.3 Payment of Awards
If a Key Employee qualifies for treatment under Section 11.1, he or
she shall be paid, as soon as practicable but in no event later than
90 days after his or her termination of employment, the Awards set
forth in (a) and (b) below:
(a) All of the Key Employee's unpaid and/or deferred Awards; and
(b) A pro rata Award for the Performance Period in which his or her
termination of employment occurs. The amount of the pro rata Award
shall be determined by multiplying the Target Award for such
Performance Period for Participants in the same wage grade as the Key
Employee by a fraction, the numerator of which shall be the number of
full months in the Performance Period prior to the date of the Key
Employee's termination of employment and the denominator of which
shall be the total number of full months in the Performance Period.
For purposes of this calculation, a partial month shall be treated as
a full month to the extent 15 or more days in such month have
elapsed. To the extent Target Awards have not yet been established
for the Performance Period, the Target Awards for the immediately
preceding Performance Period shall be used. The pro rata Awards
shall be paid to the Key Employee in the form of a lump-sum cash
payment.
11.4 Miscellaneous
Upon a Change In Control, no action, including, but not by way of
limitation, the amendment, suspension, or termination of the Plan,
shall be taken which would affect the rights of any Key Employee or
the operation of the Plan with respect to any Award to which the Key
Employee may have become entitled hereunder prior to the date of the
Change In Control or to which he or she may become entitled as a
result of such Change In Control.
ARTICLE 12 -- SHARES SUBJECT TO THE PLAN
12.1 Available Shares
Subject to adjustment as provided in Subsection 12.2 below, the
maximum number of shares of Common Stock, $2.50 par value per share,
of the Company which shall be available for grant of Awards under the
Plan during its term shall not exceed 1,000,000. Any shares of
Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such
shares, are settled in cash in lieu of Common Stock, or are exchanged
with the Committee's permission for Awards not involving Common
Stock, shall not be available again for grant under the Plan. The
shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares.
12.2 Adjustment of Shares Available
(a) In General. The provisions of this Subsection 12.2(a) are
subject to the limitation contained in Subsection 12.2(b). If there
is any change in the number of outstanding shares of Common Stock
through the declaration of stock dividends, stock splits or the like,
the number of shares available for Awards and the shares subject to
any Award shall be automatically adjusted. If there is any change in
the number of outstanding shares of Common Stock through any change
in the capital account of Kodak, or through a merger, consolidation,
separation (including a spin off or other distribution of stock or
property) reorganization (whether or not such reorganization comes
within the definition of such term in Section 368(a) of the Code) or
partial or complete liquidation, the Committee shall make appropriate
adjustments in the maximum number of shares of Common Stock which may
be issued under the Plan and any adjustments and/or modifications to
outstanding Awards as it, in its sole discretion, deems appropriate.
In the event of any other change in the capital structure or in the
Common Stock of the Company, the Committee shall also be authorized
to make such appropriate adjustments in the maximum number of shares
of Common Stock available for issuance under the Plan and any
adjustments and/or modifications to outstanding Awards as it, in its
sole discretion, deems appropriate.
(b) Covered Employees. In no event shall the Award of any
Participant who is a Covered Employee be adjusted pursuant to
Subsection 12.2(a) to the extent it would cause such Award to fail to
qualify as "Performance-Based Compensation" under Section 162(m) of
the Code.
ARTICLE 13 -- MISCELLANEOUS
13.1 Nonassignability
No Awards under the Plan shall be subject in any manner to
alienation, anticipation, sale, transfer (except by will or the laws
of descent and distribution), assignment, pledge, or encumbrance, nor
shall any Award be payable to anyone other than the Participant to
whom it was granted.
13.2 Withholding Taxes
The Company shall be entitled to deduct from any payment under the
Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld
with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such
payment. In accordance with any applicable administrative guidelines
it establishes, the Committee may allow a Participant to pay the
amount of taxes required by law to be withheld from an Award by
withholding from any payment of Common Stock due as a result of such
Award, or by permitting the Participant to deliver to the Company,
shares of Common Stock having a fair market value, as determined by
the Committee, equal to the amount of such required withholding
taxes.
13.3 Amendments to Awards
The Committee may at any time unilaterally amend any unearned,
deferred or unpaid Award, including, but not by way of limitation,
Awards earned but not yet paid, to the extent it deems appropriate;
provided, however, that any such amendment which, in the opinion of
the Committee, is adverse to the Participant shall require the
Participant's consent.
13.4 Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates of
Common Stock evidencing Awards or any other Award resulting in the
payment of Common Stock prior to (a) the obtaining of any approval
from any governmental agency which the Company shall, in its sole
discretion, determine to be necessary or advisable, (b) the admission
of such shares to listing on the stock exchange on which the Common
Stock may be listed, and (c) the completion of any registration or
other qualification of said shares under any state or Federal law or
ruling of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
13.5 No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right
to remain in the employ of the Company. Kodak or, in the case of
employment with a Subsidiary, the Subsidiary, reserves the right to
terminate any Key Employee at any time. Further, the adoption of
this Plan shall not be deemed to give any Key Employee or any other
individual any right to be selected as a Participant or to be granted
an Award.
13.6 Amendment/Termination
The Committee may suspend or terminate the Plan at any time with or
without prior notice. In addition, the Committee may, from time to
time and with or without prior notice, amend the Plan in any manner,
but may not without shareholder approval adopt any amendment which
would require the vote of the shareholders of Kodak pursuant to
Section 16 of the Exchange Act or Section 162(m) of the Code, but
only insofar as such amendment affects Covered Employees.
13.7 Governing Law
The Plan shall be governed by and construed in accordance with the
laws of the State of New York, except as superseded by applicable
Federal Law.
13.8. No Right, Title, or Interest in Company Assets
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock
certificate in his or her name, and, in the case of restricted shares
of Common Stock, such rights are granted to the Participant under the
Plan. To the extent any person acquires a right to receive payments
from the Company under this Plan, such rights shall be no greater
than the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific
assets of the Company. All of the Awards granted under the Plan
shall be unfunded.
13.9 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity, including, but not
limited to, Kodak and its Subsidiaries and their directors, officers,
agents and employees makes any representation, commitment, or
guarantee that any tax treatment, including, but not limited to,
Federal, state and local income, estate and gift tax treatment, will
be applicable with respect to amounts deferred under the Plan, or
paid to or for the benefit of a Participant under the Plan, or that
such tax treatment will apply to or be available to a Participant on
account of participation in the Plan.
13.10 Compliance with Section 162(m)
If any provision of the Plan would cause the Awards granted to a
Covered Person not to constitute qualified "Performance-Based
Compensation" under Section 162(m) of the Code, that provision,
insofar as it pertains to the Covered Person, shall be severed from,
and shall be deemed not to be a part of, this Plan, but the other
provisions hereof shall remain in full force and effect.
EXHIBIT C
WAGE DIVIDEND PLAN
ARTICLE 1 -- PURPOSE, EFFECTIVE DATE AND TERM OF PLAN
1.1 Purpose
The purposes of the Plan are to assist the Company in attracting,
motivating and retaining its Employees by rewarding Employees for
their contributions to the Company's growth and success, provided
Company performance meets or exceeds established Performance Goals,
and to endeavor to qualify the Awards granted to Covered Employees
under the Plan as "Performance-Based Compensation as defined in
Section 162(m) of the Code.
1.2 Effective Date
The Plan shall be effective as of January 1, 1995, subject to
approval by Kodak's shareholders at the 1995 Annual Meeting of the
Shareholders of Kodak.
1.3 Term
Awards shall not be granted pursuant to the Plan after December 31,
1999; provided, however, the Committee may grant Awards after such
date in recognition of performance for a Performance Period completed
on or prior to such date.
ARTICLE 2 -- DEFINITIONS
2.1 Average Net Assets
"Average Net Assets" means, for the Performance Period, the simple
average of the Company's Net Assets for each of the following five
fiscal quarters of the Company: the four fiscal quarters of the
Performance Period and the fiscal quarter immediately preceding the
Performance Period. For purposes of this calculation, Net Assets for
a fiscal quarter shall be determined as of the end of such quarter.
2.2 Award
"Award" means the compensation payable to a Participant by the
Committee for a Performance Period pursuant to Article 7. All Awards
shall be issued in one or more of the forms specified by Article 5.
2.3 Award Payment Date
"Award Payment Date" means, for each Performance Period, the date
that the Awards, if any, for that Performance Period shall be paid to
Participants pursuant to Article 7, without regard to any election to
defer receipt of an Award made under Article 8 of the Plan.
2.4 Board
"Board" means the Board of Directors of Kodak.
2.5 Code
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions
and regulations thereto.
2.6 Committee
"Committee" means the Executive Compensation and Development
Committee of the Board, or such other Board committee as may be
designated by the Board to administer the Plan; provided, however,
that the Committee shall consist of three or more directors, all of
whom are both a "disinterested person" within the meaning of Rule
16b-3 under the Exchange Act and an "outside director" within the
meaning of the definition of such term as contained in Proposed
Treasury Regulation Section 1.162-27(e)(3), or any successor
definition subsequently adopted.
2.7 Common Stock
"Common Stock" means the Common Stock, $2.50 par value per share, of
Kodak which may be newly issued or treasury stock.
2.8 Company
"Company" means Kodak and its Subsidiaries.
2.9 Covered Employee
"Covered Employee" means an Employee who is a "Covered Employee"
within the meaning of Section 162(m) of the Code.
2.10 Effective Date
"Effective Date" means the date an Award is determined to be
effective by the Committee upon its grant of such Award.
2.11 Employee
"Employee" means, for a Performance Period, any person employed by
the Company during such Performance Period and compensated for
services in the form of an hourly wage or salary; provided, however,
that Limited Service Employees are not Employees.
By way of example, and not by way of limitation, the term "Employee"
does not include independent contractors or leased employees (within
the meaning of Section 414(n) of the Code.
2.12 Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor
provisions and rules thereto.
2.13 Kodak
"Kodak" means Eastman Kodak Company.
2.14 Limited Service Employee
"Limited Service Employee" means a person who is hired by the Company
for the specific purpose of meeting short-term needs of 900 hours or
less in any consecutive 12 month period and who is designated as a
Limited Service Employee when hired.
2.15 Negative Discretion
"Negative Discretion" means the discretion authorized by the Plan to
be applied by the Committee in determining the size of the Award to
be paid to a Covered Employee for a Performance Period if, in the
Committee's sole judgment, such application is appropriate. Negative
Discretion may only be used by the Committee to eliminate or reduce
the size of the Award earned by a Covered Employee pursuant to the
Performance Formula. By way of example, and not by way of
limitation, in no event shall any discretionary authority granted to
the Committee by the Plan, including, but not limited to Negative
Discretion, be used to: (a) grant an Award to a Covered Employee for
a Performance Period if the Performance Goals for such Performance
Period have not been attained; or (b) increase an Award to a Covered
Employee above the maximum amount payable under Section 6.2(b) of the
Plan.
2.16 Net Assets
"Net Assets" means the Company's consolidated Total Shareholders'
Equity and Borrowings (both short-term and long-term) as reported in
its audited consolidated financial statements. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of Net Assets for
such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting
the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; and (c)
in view of the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic and
business conditions, and any other circumstances deemed relevant.
However, if and to the extent the exercise of such authority after
the first 90 days of a Performance Period would cause the Awards
granted to the Covered Employees for the Performance Period to fail
to qualify as "Performance-Based Compensation" under Section 162(m)
of the Code, then such authority shall only be exercised with respect
to those Participants who are not Covered Employees.
2.17 Net Income
"Net Income" means, for a Performance Period, the Company's
consolidated Net Earnings (Loss) before Cumulative Effect of Changes
in Accounting Principle for the Performance Period as reported in its
audited consolidated financial statements. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of Net Income for
such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any dividend or other distribution (whether in the
form of cash, securities or other property), recapitalization,
restructuring, reorganization, merger, consolidation, spin off,
combination, repurchase, share exchange, liquidation, dissolution, or
other similar corporate transaction, event or development; (b) in
recognition of, or in anticipation of, any other unusual or
nonrecurring event affecting the Company, or the financial statements
of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions; (c) in recognition of, or in anticipation of, any other
extraordinary gains or losses; and (d) in view of the Committee's
assessment of the business strategy of the Company, performance of
comparable organizations, economic and business conditions, and any
other circumstances deemed relevant. However, if and to the extent
the exercise of such authority after the first 90 days of a
Performance Period would cause the Awards granted to the Covered
Employees for the Performance Period to fail to qualify as
"Performance-Based Compensation" under Section 162(m) of the Code,
then such authority shall only be exercised with respect to those
Participants who are not Covered Employees.
2.18 Participant
"Participant" means, for a Performance Period, an Employee who is
designated to participate in the Plan pursuant to Section 3.2.
2.19 Participation Rules
"Participation Rules" means, for a Performance Period, the rules
established by the Committee in accordance with Section 3.2 pursuant
to which the Committee shall determine which Employees will be
Participants for such Performance Period.
2.20 Performance Criterion
"Performance Criterion" means the stated business criterion upon
which the Performance Goals for a Performance Period are based as
required pursuant to Proposed Treasury Regulation Section 1.162-
27(e)(4)(iii). For purposes of the Plan, RONA shall be the
Performance Criterion.
2.21 Performance Formula
"Performance Formula" means, for a Performance Period, the one or
more objective formulas applied against the Performance Goals to
determine whether Awards have been earned for the Performance Period
and, if so, the amount of such Awards. The Performance Formula for a
Performance Period shall be established in writing by the Committee
within the first 90 days of the Performance Period (or, if later,
within the maximum period allowed pursuant to Section 162(m) of the
Code).
2.22 Performance Goals
"Performance Goals" means, for a Performance Period, the one or more
goals for the Performance Period established by the Committee in
writing within the first 90 days of the Performance Period (or, if
later, within the maximum period allowed pursuant to Section 162(m)
of the Code) based upon the Performance Criterion. The Committee is
authorized at any time during the first 90 days of a Performance
Period, or at any time thereafter in its sole and absolute
discretion, to adjust or modify the calculation of a Performance Goal
for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting
the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws,
regulations, accounting principles, or business conditions; and (c)
in view of the Committee's assessment of the business strategy of the
Company, performance of comparable organizations, economic and
business conditions, and any other circumstances deemed relevant.
However, if and to the extent the exercise of such authority after
the first 90 days of a Performance Period would cause the Awards
granted to the Covered Employees for the Performance Period to fail
to qualify as "Performance-Based Compensation" under Section 162(m)
of the Code, then such authority shall only be exercised with respect
to those Participants who are not Covered Employees.
2.23 Performance Period
"Performance Period" means Kodak's fiscal year.
2.24 Plan
"Plan" means the Wage Dividend Plan.
2.25 RONA
"RONA" means, for a Performance Period, Return on Net Assets for the
Performance Period. RONA shall be calculated by dividing Net Income
for the Performance Period by Average Net Assets for the same period.
2.26 Stock Equivalent
"Stock Equivalent" means an Award under Article 5 that is valued in
whole or in part by reference to, or is payable in or is otherwise
based on, Common Stock.
2.27 Subsidiary
Subsidiary means a subsidiary which is majority owned by Kodak and
reported in Kodak's audited consolidated financial statements.
ARTICLE 3 -- ELIGIBILITY AND PARTICIPATION
3.1 Eligibility
All Employees are eligible to participate in the Plan. However, the
fact that a person is an Employee for a Performance Period shall not
in any manner entitle such Employee to be eligible for an Award for
the Performance Period. In order to be eligible for an Award for a
Performance Period, the Employee must be designated as a Participant
for such Performance Period by the Committee in accordance with
Section 3.2 below.
3.2 Participation
Through the adoption of written Participation Rules within the first
90 days of a Performance Period, the Committee will, in its sole
discretion, designate those Employees who will be Participants for
such Performance Period. Pursuant to the Participation Rules for a
Performance Period, the Committee may condition the receipt of Awards
upon satisfaction of such preconditions and/or requirements as it, in
its sole discretion, determines. The fact that an Employee is a
Participant for a Performance Period shall not in any manner entitle
such Participant to receive an Award for the Performance Period. The
determination as to whether or not such Participant shall be paid an
Award for such Performance Period shall be decided solely in
accordance with the provisions of Article 7 hereof.
ARTICLE 4 -- PLAN ADMINISTRATION
4.1 Responsibility
The Committee shall have total and exclusive responsibility to
control, operate, manage and administer the Plan in accordance with
its terms.
4.2 Authority of the Committee
The Committee shall have all the authority that may be necessary or
helpful to enable it to discharge its responsibilities with respect
to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right: to interpret
the Plan, to determine eligibility for participation in the Plan, to
decide all questions concerning eligibility for and the amount of
Awards payable under the Plan, to establish and administer the
Performance Goals and certify whether, and to what extent, they are
attained, to construe any ambiguous provision of the Plan, to correct
any default, to supply any omission, to reconcile any inconsistency,
to issue administrative guidelines as an aid to administer the Plan,
to make regulations for carrying out the Plan and to make changes in
such regulations as they from time to time deem proper, and to decide
any and all questions arising in the administration, interpretation,
and application of the Plan. In addition, in order to enable
Employees who are foreign nationals or are employed outside the
United States or both to receive Awards under the Plan, the Committee
may adopt such amendments, procedures, regulations, subplans and the
like as are necessary or advisable, in the opinion of the Committee,
to effectuate the purposes of the Plan.
4.3 Discretionary Authority
The Committee shall have full discretionary authority in all matters
related to the discharge of its responsibilities and the exercise of
its authority under the Plan including, without limitation, its
construction of the terms of the Plan and its determination of
eligibility for participation and Awards under the Plan. It is the
intent of Kodak that the decisions of the Committee and its action
with respect to the Plan shall be final, binding and conclusive upon
all persons having or claiming to have any right or interest in or
under the Plan.
4.4 Section 162(m) of the Code
With regard to all Covered Employees, the Plan shall for all purposes
be interpreted and construed in accordance with Section 162(m) of the
Code.
4.5 Delegation of Authority
Except to the extent prohibited by law, the Committee may delegate
some or all of its authority under the Plan to any person or persons
provided that any such delegation be in writing.
ARTICLE 5 -- FORM OF AWARDS
Awards may at the Committee's sole discretion be issued and paid in
cash, Common Stock, Stock Equivalents or a combination thereof.
Awards paid in the form of Common Stock or Stock Equivalents shall be
issued for no consideration. The Committee may, in its sole
judgment, subject an Award to such terms, conditions, restrictions
and/or limitations (including, but not limited to, restrictions on
transferability and vesting), provided they are not inconsistent with
the terms of the Plan. For purposes of the Plan, the value of any
Award granted in the form of Common Stock shall be the mean between
the high and low at which the Common Stock trades on the New York
Stock Exchange as of the date of the grant's Effective Date. To the
extent Awards are granted in Common Stock or Stock Equivalents, such
payments shall count against the number of available shares reserved
under Section 9.1.
ARTICLE 6 -- DETERMINATION OF AWARDS FOR A PERFORMANCE PERIOD
6.1 Procedure for determining Awards
Within the first 90 days of a Performance Period (or, if later,
within the maximum period allowed under Section 162(m) of the Code),
the Committee shall establish in writing for such Performance Period:
(a) the Participation Rules; (b) the Performance Goal(s); and (c) and
the Performance Formula.
6.2 Limitations on Awards
The provisions of this Section 6.2 shall control over any Plan
provision to the contrary.
(a) General Limitation. Participants in the Plan for a Performance
Period shall be eligible to receive Awards for such Performance
Period only if: (1) the Performance Goals for such Performance Period
are achieved; and (2) the Performance Formula as applied against such
Performance Goals determines that Awards have been earned for the
Performance Period.
(b) Maximum Award Payable to Covered Employees. The maximum Award
payable to any Covered Employee under the Plan for a Performance
Period shall be $700,000.
ARTICLE 7 -- PAYMENT OF AWARDS FOR A PERFORMANCE PERIOD
7.1 Certification
Following the completion of each Performance Period, the Committee
shall meet to review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been
achieved. If the Committee certifies that such Performance Goals
have been achieved, it shall, based upon the Performance Formula, (i)
calculate and certify in writing the amount of the Award earned by
each Covered Employee; (ii) determine the actual size of the Award to
be paid to each Covered Employee for the Performance Period by
applying Negative Discretion, if and when it deems appropriate; and
(iii) calculate the size of the Awards to be paid for the Performance
Period to all other Participants.
7.2 Election of Form of Award
Prior to or coincident with its performance of the certifications
required by Section 7.1, the Committee shall, in its sole discretion,
determine the form(s) in which to grant Awards under the Plan for
such period.
7.3 Negative Discretion
In determining the actual size of the Award to be paid to a Covered
Employee for a Performance Period, the Committee may, through the use
of Negative Discretion, reduce or eliminate the amount of the Award
earned under the Performance Formula for the Performance Period, if,
in its sole judgment, such reduction or elimination is appropriate.
7.4 Timing of Award Payments
Unless deferred pursuant to Article 8 hereof, the Awards granted for
a Performance Period shall be paid to Participants on the Award
Payment Date for such Performance Period, which date shall occur as
soon as administratively practicable following the completion of the
procedure described in Section 7.1.
ARTICLE 8 -- DEFERRAL OF AWARDS
At the discretion of the Committee, a Participant may, subject to
such terms, conditions and limitations as the Committee may
determine, elect to defer payment of all or a portion of the Award
that would otherwise be paid to the Participant with respect to a
Performance Period by complying with such procedures as the Committee
may prescribe. Any Award, or portion thereof, upon which such an
election is made shall be deferred into, and subject to the terms,
conditions and requirements of the Eastman Kodak Employees' Savings
and Investment Plan, the 1982 Eastman Kodak Company Executive
Deferred Compensation Plan or successor plans thereto.
ARTICLE 9 -- SHARES SUBJECT TO THE PLAN
9.1 Available Shares
Subject to adjustment as provided in Section 9.2 below, the maximum
number of shares of Common Stock, $2.50 par value per share, of the
Company which shall be available for grant of Awards under the Plan
during its term shall not exceed 4,000,000. Any shares of Common
Stock related to Awards which are terminated by expiration,
forfeiture, cancellation or otherwise without the issuance of such
shares, or are settled in cash in lieu of Common Stock, or are
exchanged with the Committee's permission for Awards not involving
Common Stock, shall not be available again for grant under the Plan.
The shares of Common Stock available for issuance under the Plan may
be authorized and unissued shares or treasury shares.
9.2 Adjustment of Shares Available
(a) In General. The provisions of this Subsection 9.2(a) are
subject to the limitation contained in Subsection 9.2(b). If there
is any change in the number of outstanding shares of Common Stock
through the declaration of stock dividends, stock splits or the like,
the number of shares available for Awards and the shares subject to
any Award shall be automatically adjusted. If there is any change in
the number of outstanding shares of Common Stock through any change
in the capital account of Kodak, or through a merger, consolidation,
separation (including a spin off or other distribution of stock or
property) reorganization (whether or not such reorganization comes
within the definition of such term in Section 368(a) of the Code) or
partial or complete liquidation, the Committee shall make appropriate
adjustments in the maximum number of shares of Common Stock which may
be issued under the Plan and any adjustments and/or modifications to
outstanding Awards as it, in its sole discretion, deems appropriate.
In the event of any other change in the capital structure or in the
Common Stock of the Company, the Committee shall also be authorized
to make such appropriate adjustments in the maximum number of shares
of Common Stock available for issuance under the Plan and any
adjustments and/or modifications to outstanding Awards as it, in its
sole discretion, deems appropriate.
(b) Covered Employees. In no event shall the Award of any
Participant who is a Covered Employee be adjusted pursuant to
Subsection 9.2(a) to the extent it would cause such Award to fail to
qualify as "Performance-Based Compensation" under Section 162(m) of
the Code.
ARTICLE 10 -- MISCELLANEOUS
10.1 Nonassignability
No Awards under the Plan shall be subject in any manner to
alienation, anticipation, sale, transfer (except by will or the laws
of descent and distribution), assignment, pledge, or encumbrance.
Further, except in the case of an Award payable to a deceased
Participant, no Award shall be payable to anyone other than the
Participant to whom it was granted. In the case of an Award payable
to a deceased Participant, the Committee shall, in the exercise of
its sole and absolute discretion, determine the party to whom such
Award shall be paid.
10.2 Withholding Taxes
The Company shall be entitled to deduct from any payment under the
Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld
with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such
payment. In accordance with any applicable administrative guidelines
it establishes, the Committee may allow a Participant to pay the
amount of taxes required by law to be withheld from an Award by
withholding from any payment of Common Stock due as a result of such
Award, or by permitting the Participant to deliver to the Company,
shares of Common Stock having a fair market value, as determined by
the Committee, equal to the amount of such required withholding
taxes.
10.3 Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue, deliver, pay, credit or
otherwise acknowledge any Award resulting in the payment of Common
Stock prior to (a) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion,
determine to be necessary or advisable, (b) the admission of such
shares to listing on the stock exchange on which the Common Stock may
be listed, and (c) the completion of any registration or other
qualification of said shares under any state or Federal law or ruling
of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
10.4 No Right to Continued Employment or Grants
Participation in the Plan shall not give any Employee any right to
remain in the employ of the Company. Kodak or, in the case of
employment with a Subsidiary, the Subsidiary, reserves the right to
terminate any Employee at any time. Further, the adoption of this
Plan shall not be deemed to give any Employee any right to be
selected as a Participant or to be granted an Award.
10.5 Amendment/Termination
The Committee may suspend or terminate the Plan at any time with or
without prior notice. In addition, the Committee may, from time to
time and with or without prior notice, amend the Plan in any manner,
but may not without shareholder approval adopt any amendment which
would require the vote of the shareholders of Kodak pursuant to
Section 16 of the Exchange Act or Section 162(m) of the Code, but
only insofar as such amendment affects Covered Employees.
10.6 Governing Law
The Plan shall be governed by and construed in accordance with the
laws of the State of New York, except as superseded by applicable
Federal Law.
10.7. No Right, Title, or Interest in Company Assets
In the case of Awards payable in the form of Common Stock or Awards
resulting in the payment of Common Stock, no Participant shall have
any rights as a shareholder as a result of participation in the Plan
until the date of issuance of a stock certificate in his or her name
or, in the event such Common Stock is issued in book entry form,
until Kodak's transfer agent provides valid written notification
thereof to the Participant, and, in the case of restricted shares of
Common Stock, such rights are granted to the Participant under the
Plan. To the extent any person acquires a right to receive payments
from the Company under this Plan, such rights shall be no greater
than the rights of an unsecured creditor of the Company and the
Participant shall not have any rights in or against any specific
assets of the Company. All of the Awards granted under the Plan
shall be unfunded.
10.8 No Guarantee of Tax Consequences
No person connected with the Plan in any capacity, including, but not
limited to, Kodak and its Subsidiaries and their directors, officers,
agents and employees makes any representation, commitment, or
guarantee that any tax treatment, including, but not limited to,
Federal, state and local income, estate and gift tax treatment, will
be applicable with respect to amounts deferred under the Plan, or
paid to or for the benefit of a Participant under the Plan, or that
such tax treatment will apply to or be available to a Participant on
account of participation in the Plan.
10.9 Compliance with Section 162(m)
If any provision of the Plan would cause the Awards granted to a
Covered Person not to constitute qualified "Performance-Based
Compensation" under Section 162(m) of the Code, that provision,
insofar as it pertains to the Covered Person, shall be severed from,
and shall be deemed not to be a part of, this Plan, but the other
provisions hereof shall remain in full force and effect.
10.10 Compliance with Exchange Act
With respect to Participants who are subject to the Section 16 of the
Exchange Act, transactions under this Plan are intended to comply
with applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall, but only insofar as it
pertains to Participants who are subject to Section 16 of the
Exchange Act, be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
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
Joyce P. Haag, 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 10, 1995 or any adjournment thereof.
NOMINEES FOR CLASS II DIRECTORS:
Alice F. Emerson, Roberto C. Goizueta, Wilbur J. Prezzano
and Leo J. Thomas
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL CLASS II DIRECTORS,
FOR RATIFICATION OF ELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS, FOR APPROVAL OF EASTMAN KODAK COMPANY 1995 OMNIBUS LONG-
TERM COMPENSATION PLAN, FOR APPROVAL OF MANAGEMENT VARIABLE
COMPENSATION PLAN AND FOR APPROVAL OF WAGE DIVIDEND PLAN, AND AGAINST
THE SHAREHOLDER PROPOSAL.
This Proxy will be voted as directed; if no direction to the contrary
is indicated, it will be voted for the election of directors,
ratification of independent accountants, approval of the Eastman
Kodak Company 1995 Omnibus Long-Term Compensation Plan, approval of
the Management Variable Compensation Plan, and approval of the Wage
Dividend Plan, and against the shareholder proposal.
(CONTINUED, and To Be Signed and Dated on the REVERSE
SIDE)
The Board of Directors recommends a vote FOR Items 1, 2, 3, 4 and 5.
1. Election of FOR WITHHOLD
Class II Directors AUTHORITY
0 0
(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
3. Approval of
Eastman Kodak Company
1995 Omnibus
Long-Term
Compensation
Plan 0 0 0
4. Approval of
Management
Variable
Compensation
Plan 0 0 0
5. Approval of
Wage Dividend
Plan 0 0 0
The Board of Directors recommends a vote AGAINST Item 6.
6. Shareholder FOR AGAINST ABSTAIN
Proposal
Equal Employment
Report 0 0 0
I plan to attend the
Annual Meeting. 0
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 of New York, P. O. Box 8264, Edison, New Jersey 08818-9090.
March 10, 1995
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 10, 1995
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 10, 1995.
Mailing of the definitive proxy statement and form of proxy to
shareholders is expected to commence on March 17, 1995. The filing
fee of $125 was wire transferred to the Commission's account on
March 9, 1995.
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,
approval of three compensation plans and action on one shareholder
proposal.
The material changes from last year's proxy statement are as follows:
1) the inclusion of one shareholder proposal (pages 51
through 53);
2) the nomination for election of four Class II directors;
3) the inclusion of three management proposals on
compensation; and
4) a change in the performance graph from a self-constructed
peer group to the Dow Jones Industrial Index.
Securities and Exchange Commission--2
March 1995
In addition, please be advised that the pagination of the
electronically filed proxy statement differs from the printed version
thereof and the printed proxy statement contains the performance
graph while the electronic version contains a chart.
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.
Options issuable under the Eastman Kodak Company 1995 Omnibus Long-
Term Compensation Plan will be registered under the Securities Act of
1933 ("Securities Act") as soon as practicable following shareholder
approval of the Plan. The shares issuable under the Management
Variable Compensation Plan and Wage Dividend Plan will most likely
not be registered under the Securities Act in reliance upon Section
2(3) of the Securities Act and Release 33-6118 thereunder. Any
awards of shares under either of these plans will be bonus awards,
with no payment made by the recipient. If these circumstances
change, the Company will review its analysis and if required, will
register the shares.
Under separate cover, three copies of the compensation plans to be
acted upon and eight copies of the Annual Report for the year 1994
will be forwarded to you on or before March 17, 1995, the date
mailing to the shareholders is expected to commence. In addition,
five copies of the Annual Report will be mailed to the New York Stock
Exchange at that time.
Very truly yours,
Joyce P. Haag
JPH:las
Enc.
cc: Mr. M. Benard
Mr. D. L. Fiedler
Mr. G. M. C. Fisher
Mr. G. P. Van Graafeiland
1
17
16
1
