Kodak 2000 Annual Report Download - page 82

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10
ITEM 3
AMENDMENT TO 2000 MANAGEMENT VARIABLE COMPENSATION PLAN
What am I voting on?
You are voting on an amendment to 2000 Management Variable Compensation Plan to add performance
measures that the Executive Compensation and Development Committee may select in establishing
performance goals. The Board approved this amendment subject to your approval. The amendment appears as
Exhibit I on page 34.
What is the 2000 Management Variable Compensation Plan?
The 2000 Management Variable Compensation Plan is our short-term annual bonus plan for executives. The
purpose of the Plan is to provide a performanced-based, annual incentive award to attract, retain and motivate
our management-level employees and to appropriately recognize their performance. You previously approved
this Plan on May 12, 1999. The Plan currently has only one performance measure, Economic Profit/Economic
Value Added.
Why is the Plan being amended?
The Plan is being amended in anticipation of the results of a review of our executive compensation program.
Periodically we undertake a study of our executive compensation program to determine whether it is fulfilling
its stated principles and objectives. At the request of the Executive Compensation and Development
Committee, such a study is presently underway. We anticipate completing this study by yearend.
The amendment will provide the Committee the flexibility to select an appropriate performance measure at the
end of the study and introduce it in the 2002 performance period.
Why are we requesting your approval?
You are being asked to approve this amendment to allow all compensation paid under the amended plan to
continue to be deductible by the Company. Under Section 162(m) of the Internal Revenue Code, a company is
generally not permitted to deduct compensation paid in excess of $1 million to its Chief Executive Officer or
its four other most highly compensated executive officers, unless the compensation is paid under a
performanced-based compensation plan. To satisfy the requirements that apply to performanced-based
compensation plans, any performance measure used by the Plan must be approved by our shareholders.
Which additional performance measures are being added to the Plan?
If approved, the amendment would permit the following additional performance measures to be used: return on
net assets, return on shareholders’ equity, return on assets, return on capital, return on sales, shareholder
return, total shareholder return, profit margin, earnings per share, net earnings, operating earnings, earnings
before interest and taxes, common stock price per share, cash flow, cost reduction, revenue, revenue growth,
sales or market share.
Who is eligible to participate in the Plan?
Plan eligibility is generally limited to the Company’s management-level employees. The Committee
determines which management-level employees will be participants for a particular performance period.
The approximate number of management-level employees who are currently eligible to participate in the
Plan is 800.