Kodak 2005 Annual Report Download - page 175

19
Director Selection Process
As provided in the Company’s Corporate Governance Guidelines, the Governance Committee seeks to create a diverse and inclusive Board that, as a
whole, is strong in both its knowledge and experience. When identifying, screening and recommending new candidates to the Board for membership,
the Governance Committee follows the procedures outlined in its “Director Selection Process.” The Director Selection Process is attached as an
appendix to the Company’s Corporate Governance Guidelines, which are attached as Exhibit I. The Governance Committee generally uses the services
of a third-party executive search fi rm when identifying and evaluating possible nominees for director.
Board Business Plan
Last year the Board adopted a formal process for annually establishing and prioritizing its goals. The end product of this process is a “board business
plan.” The Board believes that annually adopting such a plan will enhance its ability to annually measure its performance, improve its focus on the
Company’s long-term strategic issues and ensure that its goals are linked to the Company’s strategic initiatives.
Under the process approved by the Board, each year the Governance Committee submits to the Board a proposed list of Board goals for the
following year along with a proposed list of performance measures to track the Board’s performance against these goals. At its fi rst meeting of the
year, the Board fi nalizes its goals for the year, prioritizes these goals and defi nes the performance measures for each goal. The Governance Committee
is responsible for tracking the Board’s performance against its goals and routinely reporting these results to the Board. Performance against the goals
is assessed as part of the Board’s annual evaluation process.
Chief Compliance Offi cer
With the support of the Board, Patrick M. Sheller was named to the new position of Chief Compliance Offi cer effective August 23, 2005. While the
Company has a strong tradition of maintaining the highest standards of business practice, this action was taken in part to heighten the awareness
and importance of an effective compliance program and strong compliance culture within the Company. Some key functions of the Chief Compliance
Offi cer are ensuring that the Company’s compliance programs and policies continue to meet the highest legal, regulatory and ethical standards;
monitoring adherence to these programs and policies; working with regulatory agencies on compliance matters; and implementing compliance
awareness programs and training. The position reports to both the Audit Committee and the Secretary.
Board Policy on Recoupment of Bonuses Upon Restatement Due to Fraud or Misconduct
In February 2006, the Board, on the recommendation of the Governance Committee, approved a policy on recoupment of performance-based bonuses
in the event of certain restatements of fi nancial results. Specifi cally, the policy provides that in the event of a restatement due to fraud or misconduct,
the Board will review performance-based bonuses to named executive offi cers whose fraud or misconduct caused the restatement, and the Company
will recoup such bonuses to the extent that the performance targets on which they were based would not have been met under the restated results.
This policy is published on our website at www.kodak.com/go/governance.
DIRECTOR COMPENSATION
Director Compensation Principles
The Board has adopted the following director compensation principles which are aligned with the Company’s executive compensation principles:
• Pay should represent a moderately important element of Kodak’s director value proposition.
• Pay levels should generally target near the market median, and pay mix should be consistent with market considerations.
• Pay levels should be differentiated based on the time demands on some members’ roles, and the Board will ensure regular rotation of certain
of these roles.
• The program design should ensure that rewards are tied to the successful performance of Kodak stock, and the mix of pay should allow
fl exibility and Board diversity.
• To the extent practicable, Kodak’s Director Compensation Principles should parallel those of the Company’s executive compensation program.
Annual Payments
Non-employee directors annually receive:
• $80,000 as a retainer, at least half of which must be taken in stock or deferred into stock units;
• 1,500 stock options that vest on the fi rst anniversary of the date granted; and
• 1,500 restricted shares of the Company’s common stock that vest on the fi rst anniversary of the date granted.
The Committee Chairs, with the exception of the Audit Chair, receive a chair retainer of $10,000 per year for their services, in addition to their annual
retainer as a director. The Audit Chair receives a chair retainer of $15,000 for his services, in addition to his annual retainer as a director.
The Presiding Director receives a retainer of $100,000 per year for his services, in addition to his annual retainer as a director.
Employee directors receive no additional compensation for serving on the Board.