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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 27, 2007
Eastman Kodak Company
(Exact name of registrant as specified in its charter)
New Jersey 1-87 16-0417150
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
343 State Street,
Rochester, New York 14650
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (585) 724-4000
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Securities
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c)under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02 Departure of Directors or Principal Officers;
Election of Directors; Appointment of Principal
Officers
Item 5.02(e)
The Company is reporting five events under Item 5.02(e) on this
Form 8-K.
1. Named Executive Officers Discretionary Bonuses
The Executive Compensation and Development Committee of the Company's
Board of Directors ("the Committee") granted on Feb. 27, 2007,
discretionary bonuses to the following Named Executive Officers for
performance in 2006. The awards are as follows: Antonio M. Perez,
Chairman and Chief Executive Officer, $1,381,050; Philip J. Faraci,
President, Consumer Digital Imaging Group and Senior Vice President,
$261,144; James T. Langley, President, Graphic Communications Group and
Senior Vice President, $251,100; and Robert H. Brust, former Chief
Financial Officer and Executive Vice President, $382,378.
The Committee is responsible for reviewing and confirming the Company's
executive compensation goals. The Company's overall philosophy is to
provide an executive compensation package that attracts, retains and
motivates world-class executive talent critical to the success of the
Company's short- and long-term business goals, linked to the performance
of the Company and the individual.
As part of this compensation package, the Company provides an annual
cash bonus incentive opportunity to our executives, including our Named
Executive Officers, through our Executive Compensation for Excellence
and Leadership Plan (EXCEL). For 2006, the Committee has chosen to
award bonus payments to the Named Executive Officers identified above
based on the following process:
In the first 90 days of each year, the Committee reviews and finalizes
the performance metrics and targets to be achieved for the plan year. A
performance matrix is created that determines the percentage of the
plan's corporate funding pool that will be earned for the year based on
the Company's actual performance. In 2006, the two primary EXCEL
performance metrics selected by the Committee were digital revenue and
investable cash flow. The Committee selected these performance metrics
because of their direct correlation with the Company's digital
transformation.
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If the Company achieved the target goals for both investable cash flow
and digital revenue, then the award pool would have been funded at 100%.
At the end of the performance period, the Committee may use its
discretion to increase or decrease the amount of the corporate funding
pool. If either of the threshold goals was not achieved, then the award
pool would not have been funded and no bonus would be earned under the
EXCEL plan, unless the Committee exercised discretion. To guide its
exercise of discretion, the Committee considers baseline performance
metrics established at the same time the target goals are set that
reflect important elements of the Company's annual business strategy.
In 2006, these baseline metrics were: execution against the Company's
new business model; advancement of our restructuring plan; performance
against cost reduction goals regarding selling, general and
administrative costs; and performance against inventory and supply chain
goals. In exercising its discretion, the Committee is also guided by
the principle of ensuring that incentive payments do not result in
unearned windfalls or unfair penalties.
In 2006, the Company's investable cash flow performance exceeded the
target goal. Conversely, the Company's digital revenue growth did not
achieve the threshold for an EXCEL award, resulting in a zero payout
under the EXCEL plan. That result reflects the Company's clearly stated
objective in 2006 to emphasize digital margin growth over revenue growth
in the digital capture business, as announced to investors on January
30, 2006.
However, given the performance against the baseline metrics and the
Committee's concurrence that the decision to emphasize digital margin
growth was correct, the Committee agreed to exercise positive discretion
and to set the funding of the corporate EXCEL award pool at 81% of
target. In arriving at the 81% funding of the corporate pool, the
Committee took into consideration the revenue that could have been
generated had the Company chosen not to execute a margin growth strategy
on digital cameras.
To ensure that all plan awards are fully deductible for U.S. federal
income tax purposes, the Company's EXCEL plan states that any positive
discretion with respect to the size of the award pool exercised by the
Committee cannot affect the payment of awards to the Named Executive
Officers identified above. As a consequence, these executives did not
receive a bonus under the EXCEL plan for 2006. The Committee did,
however, establish a discretionary bonus pool from which the payments
itemized above were made.
These bonuses are consistent with the corporate award pool of 81%.
Fifty percent of the bonus award to the individuals named above will be
paid in cash and the remaining 50% will be paid in restricted stock that
vests over a three-year period subject to an executive's continued
employment. Because Mr. Brust retired from the Company on February 1,
all of his bonus will be paid in cash.
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2. Letter Agreement Amendment for Antonio M. Perez
The Chairman of the Executive Compensation and Development Committee of
Eastman Kodak Company's ("Company") Board of Directors ("Board") and
Antonio M. Perez, the Company's Chairman of the Board and Chief
Executive Officer, have executed an amendment, dated February 27, 2007
(attached as Exhibit (99.1)), to Mr. Perez's March 3, 2003 letter
agreement with the Company. The amendment reduces the age at which
Mr. Perez may retire with full retirement benefits from age 67 to age
65. Upon review of the Company's letter agreements with named executive
officers, it became evident that Mr. Perez's agreement needed to be
updated to reflect the stand-alone policy for age 65 retirement that was
adopted subsequent to his agreement. The amendment provides that Mr.
Perez will fully vest with respect to his supplemental pension benefit
upon attaining age 65. This is consistent with the Company's mandatory
retirement age for corporate officers, absent Board discretion. The
agreement currently requires Mr. Perez to work past age 65 to fully
vest. The supplemental pension benefits discussed above and below
provide a benefit determined at the time of retirement under the terms
of the Company's tax-qualified retirement plan, offset by benefits under
such plan and related plans.
3. Letter Agreement Amendments for Lump Sum Supplemental Pension
Arrangements
The Chairman of the Executive Compensation and Development Committee,
with respect to Mr. Perez, and the Company, with respect to the other
named executive officers listed below, have executed letter agreement
amendments requiring payment of any supplemental pension benefits
provided under such agreements in the form of a lump sum as soon as
practicable after any required waiting period under Internal Revenue
Code ("Code") Section 409A. This form of payment is consistent with
supplemental pension benefit distributions to the majority of named
executive officers over the past ten years who had such benefits,
including Robert H. Brust, the Company's former Chief Financial Officer,
who recently retired, and will have no economic impact on the Company,
as all forms of pension distributions are actuarially equivalent. These
changes are being made for administrative convenience so that all of the
benefits payable under the Company's supplemental pension arrangements
will now be paid uniformly in a lump sum. In addition, these changes
reflect the Company's current intention with respect to senior officers
regarding compliance with Code Section 409A, which requires letter
agreements to specify the time and form of payment of certain deferred
compensation arrangements, such as supplemental pension benefits.
The following named executive officers are affected by this change:
- Antonio M. Perez (amendment dated February 27, 2007 to March 3,
2003 letter agreement, attached as Exhibit (99.1))
- Philip J. Faraci, President, Consumer Digital Imaging Group and
Senior Vice President (amendment dated February 28, 2007 to November 3,
2004 letter agreement, attached as Exhibit (99.2))
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- James T. Langley, President, Graphic Communications Group and
Senior Vice President (amendment dated February 28, 2007 to August 12,
2003 letter agreement, attached as Exhibit (99.3))
4. Letter Agreement Amendment for James T. Langley
The Company and James T. Langley have executed an amendment, dated
February 28, 2007 (attached as Exhibit (99.3)), to Mr. Langley's August
12, 2003 letter agreement with the Company, which extends Mr. Langley's
individual bonus plan through 2007. Under his August 12, 2003
agreement, the bonus plan covered 2004 through 2006. The Company has
established various qualitative and quantitative performance goals for
the 2007 plan, including financial performance of the Graphic
Communications Group, and the maximum payout under the plan is $300,000.
5. 2007 EXCEL and Leadership Stock Administrative Guides
On February 27, 2007, the Executive Compensation and Development
Committee (the "Committee") of the Board of Directors of Eastman Kodak
Company (the "Company") approved an Administrative Guide for the 2007
Performance Period under the Executive Compensation for Excellence and
Leadership Plan (the "EXCEL Administrative Guide"). The EXCEL
Administrative Guide sets forth the specific performance goals and
business criteria for the 2007 performance period of the Company's
Executive Compensation for Excellence and Leadership Plan, which is the
Company's short-term variable pay plan. The measures set by the
Committee for the 2007 performance period are total earnings from
operations and net cash generation.
On February 27, 2007, the Committee approved an Administrative Guide for
the 2007 Performance Cycle of the Leadership Stock Program under Article
7 (Performance Awards) of the 2005 Omnibus Long-Term Compensation Plan
(the "Leadership Stock Administrative Guide"). The Leadership Stock
Administrative Guide sets forth the specific performance goals and
business criteria for the 2007 performance cycle of the Leadership Stock
Program, established under the 2005 Omnibus Long-Term Compensation Plan.
The measures set by the Committee for the 2007 performance cycle are
consumer inkjet printer revenue and digital revenue growth of the
Graphics Communications Group.
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibits
(99.1) Amendment, dated February 27, 2007, to Antonio M. Perez Letter
Agreement dated March 3, 2003.
(99.2) Amendment, dated February 28, 2007, to Philip J. Faraci Letter
Agreement dated November 3, 2004.
(99.3) Amendment, dated February 28, 2007, to James T. Langley Letter
Agreement dated August 12, 2003.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTMAN KODAK COMPANY
By: /s/ Robert L. Berman
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Robert L. Berman
Chief Human Resources Officer
and Senior Vice President
Date: March 1, 2007
EASTMAN KODAK COMPANY
INDEX TO EXHIBIT
Exhibit No.
(99.1) Amendment, dated February 27, 2007, to Antonio M. Perez Letter
Agreement dated March 3, 2003.
(99.2) Amendment, dated February 28, 2007, to Philip J. Faraci Letter
Agreement dated November 3, 2004.
(99.3) Amendment, dated February 28, 2007, to James T. Langley Letter
Agreement dated August 12, 2003.