Kodak 2003 Annual Report Download - page 89

Proxy Statement
89
Performance Stock Program for a performance cycle is 75,000 shares of
common stock.
Grants To Non-U.S. Employees
To facilitate the granting of awards to participants who are employed out-
side of the United States, the Plan authorizes the Committee to modify and
amend the terms and conditions of an award to accommodate differences
in local law, policy or custom.
Stock Options
The Committee may grant awards in the form of stock options to purchase
shares of the Company’s common stock. For each stock option grant, the
Committee will determine the number of shares subject to the option, the
manner and time of the option’s exercise and the exercise price. Stock
options must be granted for a term of 10 years or less. The exercise price
of a stock option may not be less than 100% of the fair market value of
the Company’s common stock on the date the stock option is granted.
Upon exercise, a participant may pay the exercise price in cash, shares of
common stock, a combination thereof, or such other consideration as the
Committee determines. The Plan prohibits the repricing of stock options.
Any stock option granted in the form of an incentive stock option will sat-
isfy the requirements of Section 422A of the Internal Revenue Code.
Stock Appreciation Rights
The Committee may grant SARs either in tandem with a stock option
(“Tandem SARs”) or independent of a stock option (“Freestanding SARs”).
A Tandem SAR may be granted either at the time of the grant of the relat-
ed stock option or at any time thereafter during the term of the stock
option. A Tandem SAR will be exercisable to the extent its related stock
option is exercisable, and the exercise price of such an SAR will be the
same as the option price of 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 will automatically be canceled to the extent of the
number of shares covered by the stock option exercise. The Committee
will determine the number of shares subject to a Freestanding SAR, the
manner and time of the SAR’s exercise, and the exercise price of the SAR.
Freestanding SARs must be granted for a term of ten years or less. The
exercise price of a Freestanding SAR may not be less than 100% of the
fair market value of the Company’s common stock on the date of grant.
Performance Stock Program
A description of the Performance Stock Program as it operated prior to
January 1, 2004 appears on page 108 under the heading “Long-Term
Incentive Plan.” Effective January 1, 2004, the Company created under the
Plan a new performance-based, long-term incentive compensation pro-
gram, entitled the “Leadership Stock Program”. A description of the new
program appears on page 118 of the Report of the Executive
Compensation and Development Committee. The Plan provisions that for-
merly pertained to the Performance Stock Program were used in part to
establish the new Leadership Stock Program. That is, currently 83 execu-
tives who participate in the Leadership Stock Program will do so by way of
the Plan’s former Performance Stock Program.
Performance Shares
The Plan authorizes the grant of awards in the form of performance
shares. The Plan defines performance shares as shares or units of com-
mon stock that are granted contingent upon the attainment during a per-
formance period of certain performance objectives.
That article of the Plan that authorizes the issuances of performance
shares was used in part to establish the Company’s new Leadership Stock
Program. That is, those participants of the new program who will not par-
ticipate under the terms of the Plan’s former Performance Stock Program
will do so by way of the provisions of the Plan that authorizes the granting
of performance shares.
Other Terms
Awards may be paid in cash, common stock, a combination of cash and
common stock or any other form of property, as the Committee deter-
mines. 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 the award an entitlement to receive div-
idends or dividend equivalents. At the discretion of the Committee, a par-
ticipant may defer payment of a stock award, performance share, per-
formance unit, dividend or dividend equivalent.
Change In Control and Change In Ownership
In the event of a Change In Control (as defined in the Plan), a participant
whose employment is terminated within two years for a reason other than
death, disability, cause, voluntary resignation or retirement will receive the
following treatment:
• all of the terms, conditions, restrictions and limitations in effect on any
of the participant’s awards will lapse;
• all of the participant’s outstanding awards will be 100% vested;
• all of the participant’s outstanding stock options, SARs, common stock
units, performance shares and other stock-based awards will be cashed
out based on the Change In Control Price (as defined in the Plan); and
• all of the participant’s outstanding performance units will be cashed out.
All payments will be made as soon as possible, but no later than the 90th
day following the date of the participant’s termination of employment.
In the event of a Change In Ownership (as defined below) where Kodak
common stock is exchanged solely for common stock of the surviving
company and the surviving company assumes all of the awards under the
Plan, the participant’s awards will be treated as follows, regardless of
whether the participant’s employment is terminated: (i) all of the terms,
conditions, restrictions and limitations in effect on any of the participant’s
outstanding awards will immediately lapse, (ii) all of the participant’s
outstanding awards will automatically become one hundred percent
(100%) vested, and (iii) all awards deferred by the participant under the
Performance Stock Program, but for which he or she has not received
payment, will be paid in the form of unrestricted shares of common stock
as soon as practicable, but in no event later than 90 days after the Change
In Ownership.
In the event of a Change In Ownership where Kodak common stock is not
exchanged solely for common stock of the surviving company or the sur-
viving company does not assume all of the awards under the Plan, all par-