Kodak 2001 Annual Report Download - page 115

employees, excluding its five most senior executive officers, were given a one-time opportunity to exchange
their current options for a proportionately fewer options at a new exercise price. The new exercise price will
equal the mean between the high and low trading price at which the Company’s common stock trades on the
New York Stock Exchange on the date the new options are granted, which is expected to be on or after August
26, 2002.
Chief Executive Officer Compensation
When Mr. Carp was named Chief Executive Officer, the Company entered into an agreement with Mr. Carp
concerning his compensation. The terms of this agreement are described on page 21. Below is a description of
Mr. Carp's compensation for 2001.
Base Salary: Mr. Carp received a base salary of $1,000,000 as required under his agreement with the
Company.
Short-Term Variable Pay: Given the Company’s mixed financial results and the extraordinary environment
of 2001, the Committee, for the reason previously described, awarded Mr. Carp a discretionary bonus equal to
35% of his target award under the plan. To preserve the Company’s deductibility of this payment for U.S.
income tax purposes, the payment will be delayed until after Mr. Carp retires from the Company. The amount
of the bonus is listed in the Summary Compensation Table on page 17.
Stock Options: In January 2001, the Committee awarded Mr. Carp an award of 140,000 shares under the
Company’s management stock option program. As described earlier, Mr. Carp elected to receive this award in
the form of restricted stock units.
Due to the change in timing of the Company’s awards under its management stock option program from the
first quarter to the last quarter of the year, Mr. Carp also received a grant of stock options to purchase 250,000
shares in November 2002. This award was approved by the Committee based on its review of benchmark data
and assessment of the contributions Mr. Carp has made, and continues to make, to the Company. In particular,
the Committee noted the size of Mr. Carp’s award was well within the level of awards made to his peers.
Performance Stock Program: Based on the Company’s financial performance over the three-year period
ending in 2001, Mr. Carp did not receive an award for the 1999-2001 performance cycle.
Leadership and Development
The Committee reviewed the Company’s leadership and organization development plans, as well as the
Company’s profiles for succession candidates. It also discussed the Company’s leadership and development
strategies. These are designed to provide leaders capable of creating effective organizations and executing
business strategies that will drive the success of the Company. In addition, the Committee reviewed diversity
activities and goals as part of the Company’s diversity program.
Company Policy on Qualifying Compensation
Under Section 162(m) of the Internal Revenue Code, the Company may not deduct certain forms of
compensation in excess of $1,000,000 paid to any of the named executive officers that are employed by the
Company at yearend. The Committee believes that it is generally in the Company’s best interests to comply
with Section 162(m). The Committee also feels, however, that there may be circumstances in which the
Company’s interests are best served by maintaining flexibility whether or not compensation is fully deductible
under Section 162(m).
Richard S. Braddock, Chairman
Alice F. Emerson
Durk I. Jager
Hector de J. Ruiz
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