Kodak 2006 Annual Report Download - page 173

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EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
The Executive Compensation and Development Committee is comprised of four members of the Board, all of whom are independent in accordance
with the Board’s Director Independence Standards, which standards refl ect the NYSE’s director independence standards. The Executive Compensation
and Development Committee assists the Board in fulfi lling its responsibilities in connection with the compensation of its executives and employees,
including our Named Executive Offi cers. It performs this function by overseeing the Company’s executive compensation strategy, overseeing the
administration of its executive compensation and equity-based plans, assessing the effectiveness of the Company’s executive compensation plans,
reviewing and approving the compensation of the Company’s CEO, reviewing and approving the compensation of the Company’s Named Executive
Offi cers and executive offi cers, reviewing the Company’s succession plans for its CEO and other key positions and overseeing the Company’s activities
in the areas of leadership and executive development. The Compensation Committee operates under a written charter adopted by the Board, which
details the Compensation Committee’s duties and responsibilities. A current copy of the Compensation Committee’s charter can be accessed at www.
kodak.com/go/governance.
The full Board sets the compensation of the Company’s non-employee directors based on the recommendation of the Governance Committee.
The Compensation Committee has delegated limited authority to the Company’s Chief Human Resources Offi cer to assist the Compensation Com-
mittee with administration of the Company’s executive compensation and equity-based compensation plans. The Chief Human Resources Offi cer is
authorized to amend any executive compensation or equity-based compensation plan in which our Named Executive Offi cers participate other than
to materially increase the benefi ts accruing to a participant under the plan, increase the number of shares available for issuance under the plan or
substantially modify the requirements as to eligibility for participation. The Chief Human Resources Offi cer has also been delegated the authority to
amend award agreements under any executive compensation and equity-based compensation plan other than to increase the benefi ts accruing to the
participant and to determine the manner and timing of payments under the Eastman Kodak Company 1982 Executive Deferred Compensation Plan.
The Compensation Committee meets routinely throughout the year. It is the Compensation Committee’s policy to make most compensation decisions
in a two-step process to ensure suffi cient deliberation. The Compensation Committee approves all compensation and awards under the Company’s
executive compensation plans for each of the Company’s Named Executive Offi cers. The Compensation Committee also approves compensation levels
for each component of total direct compensation following discussions and after review of analyses and recommendations received from its consultant
and management, as it deems appropriate. The CEO, Chief Human Resources Offi cer and Director of Worldwide Total Compensation make recommen-
dations regarding each compensation element for the Named Executive Offi cers other than the CEO. The Compensation Committee’s consultant and
the Director of Worldwide Total Compensation present analyses and recommendations regarding CEO compensation to the Compensation Committee
in executive session.
With respect to the Company’s performance-based plans, management, including the CEO, CFO, Chief Human Resources Offi cer and Director of
Worldwide Total Compensation proposes performance goals. The CEO and Chief Human Resources Offi cer are involved in formulating recommenda-
tions to the Compensation Committee on award levels for each Named Executive Offi cer for the upcoming performance year, with the exception of
award levels for the CEO. Management develops these performance targets considering the Company’s strategic business plan and executive com-
pensation strategy and goals. Generally, the performance targets and individual award targets for the Company’s annual cash bonus plan are reviewed
and approved by the Compensation Committee within the fi rst 90 days of each calendar year. The performance targets and award levels under the
Company’s long-term incentive plans, including annual option grants and allocations for the Leadership Stock Program for the next performance cycle,
are generally established in December of each year. Throughout the year, the Compensation Committee reviews projections for achievement of each
plan’s performance targets.
Role of Compensation Consultants
To assist the Compensation Committee in evaluating the Company’s executive compensation plans, the Compensation Committee engaged an
independent outside consultant, Frederic W. Cook & Co., Inc. (FW Cook), to advise it directly. The Company has a contractual arrangement with FW
Cook which may be terminated by either party at the end of any month without penalty within 15 days written notice. The Compensation Committee’s
consultant attends Compensation Committee meetings on a regular basis and provides the Compensation Committee with market information and
analysis with respect to establishing executive compensation practices that are in line with the Company’s executive compensation strategy and goals.
Our consultant is also asked to confi rm that the Company’s executive compensation goals continue to be aligned with best practices.
The Company’s Chief Human Resources Offi cer and others directly involved with the Company’s executive compensation programs routinely consult
with FW Cook regarding the operation and administration of our executive compensation programs and practices. In 2006, neither the Compensation
Committee nor the Company engaged other consultants or advisors to advise in determining the amount or form of executive compensation.