Kodak 2005 Annual Report Download - page 190

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Daniel A. Carp
Mr. Carp retired from the Company on January 1, 2006. The Company employed Mr. Carp as President and CEO under a letter agreement dated
December 10, 1999. The letter agreement provided for a base salary of $1,000,000, and a target annual bonus of 105% of base salary. The
Compensation Committee approved an increase of Mr. Carp’s annual base salary to $1,100,000 effective May 5, 2003. Mr. Carp’s target award
under the Company’s variable pay plan was 155% of his base salary.
If the Company had terminated Mr. Carp’s employment without cause, Mr. Carp would have: 1) been permitted to retain his stock options and
restricted stock; 2) received severance pay equal to three times his base salary plus target annual bonus; 3) received prorated awards for the pending
periods under the Company’s bonus plans; and 4) been treated for pension purposes as if he were age 60. In the event of Mr. Carp’s disability while
employed with the Company, he would have received the same severance pay as he would have received upon termination without cause, except it
would have been reduced by the present value of any Company-provided disability benefi ts he received. The letter agreement also states that upon
Mr. Carp’s disability, he would have been permitted to retain all of his stock options.
On May 10, 2005, the Compensation Committee granted Mr. Carp “permitted and approved reason” status for all equity awards, including all stock
options, restricted stock and restricted stock units held by Mr. Carp upon his retirement, so that Mr. Carp would not forfeit any of his equity awards
as a result of his retirement on January 1, 2006. In addition, the Committee determined that any remaining restriction periods on restricted stock or
restricted stock units granted to Mr. Carp would lapse as of the date of his retirement.
Bernard V. Masson
Mr. Masson retired from the Company on January 2, 2006. The Company employed Mr. Masson under an offer letter dated November 7, 2002. The
Company entered into a subsequent letter agreement with Mr. Masson on August 13, 2003 as a result of his appointment as President, Digital & Film
Imaging Systems. Under this letter agreement, Mr. Masson was eligible to receive a severance allowance equal to one times his base salary plus
target annual bonus if he were terminated by the Company prior to August 13, 2008, for reasons other than cause or disability. The Company amended
Mr. Masson’s letter agreement effective May 5, 2005 to provide for certain enhanced retirement benefi ts through a phantom cash balance account
established on his behalf by the Company, as described on page 38. Under the terms of this amendment, if Mr. Masson’s employment were terminated
for other than cause, or voluntarily after June 1, 2008, he would be entitled to receive the then current balance in the phantom cash balance account.
Effective September 30, 2005, the Company entered into a letter agreement with Mr. Masson in connection with Mr. Masson’s termination of
employment with the Company effective January 2, 2006. Pursuant to the terms of the agreement, Mr. Masson will receive a severance allowance
equal to $1,646,040 payable in equal consecutive monthly payments over the 12-month period commencing on the six-month anniversary of the
date of his termination of employment. In addition, Mr. Masson’s termination of employment is being treated as an “approved reason” for purposes of
any stock options he holds and pursuant to the terms of the Company’s Leadership Stock Program described on page 31, so he did not forfeit these
awards as a result of his separation from service. Mr. Masson remained eligible for an award under the EXCEL plan described on page 28 for the 2005
performance period in accordance with the terms of EXCEL. In addition, he is receiving continuation of existing health, dental and basic life insurance
coverages, a retraining allowance and outplacement services, in accordance with the normal policies and practices of the Company. Also, Mr. Masson
will receive the current balance of $200,000 plus accrued interest in his phantom cash balance account pursuant to the terms of the May 5, 2005
letter agreement described above.
CHANGE IN CONTROL ARRANGEMENTS
Background
During 2005, the Compensation Committee reviewed the Company’s change in control program. Following its review, the Compensation Committee
presented its fi ndings to the Company’s Board of Directors. The Board determined that it was not appropriate at this time to take action regarding the
Company’s change in control program. The Board concluded that the Compensation Committee should re-address the topic at such later time as the
Board deems appropriate. Set forth below is a summary of the Company’s change in control program as it presently exists.
Program Description
The Company maintains a change in control program to provide severance pay and continuation of certain welfare benefi ts for virtually all U.S.
employees. A “change in control” is generally defi ned under the program as:
• the incumbent directors cease to constitute a majority of the Board, unless the election of the new directors was approved by at least
two-thirds of the incumbent directors then on the Board;
• the acquisition of 25% or more of the combined voting power of the Company’s then outstanding securities;
• a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that
requires the approval of the Company’s shareholders; or
• a vote by the shareholders to completely liquidate or dissolve the Company.