Kodak 2006 Annual Report Download - page 185

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Corporate Governance Guidelines
In February 2007, upon the recommendation of the Governance Committee, the Board adopted amendments to our Corporate Governance Guidelines
to enhance our corporate governance practices. The fi rst governance enhancement strengthens the Board’s independence requirement. Now, a
substantial majority, rather than a simple majority as was previously the case, of the Board must be independent. In accordance with best practices,
the Board also amended our governance guidelines to require the Governance Committee to periodically assess the Board’s current and projected
strengths and needs by, among other things, reviewing the Board’s current profi le, its Director Qualifi cation Standards and the Company’s current and
future needs. The fi nal improvement made to the guidelines requires the Board to periodically review its own size and determine the size that is most
effective toward future operations.
Policy on Recoupment of Executive Bonuses in the Event of Certain Restatements
Last year, the Board, based on the Governance Committee’s recommendation, adopted a policy requiring the recoupment of bonuses paid to named
executive offi cers upon certain fi nancial restatements. Under the policy, which is posted on our website at www.kodak.com/go/governance, the
Company will require reimbursement of a certain portion of any bonus paid to a named executive offi cer where:
• The payment was predicated upon the achievement of certain fi nancial results that were subsequently the subject of a restatement;
• In the Board’s view, the offi cer engaged in fraud or misconduct that caused the need for the restatement; and
• A lower payment would have been made to the offi cer based upon the restated fi nancial results.
In each such instance, the Company will, to the extent practicable, seek to recover the amount by which the individual offi cer’s annual bonus for the
relevant period exceeded the lower payment that would have been made based on the restated fi nancial results, plus a reasonable rate of interest.
Director Search
This past year, the Governance Committee spent a considerable amount of its time searching for candidates to fi ll the Board’s existing vacancy and
upcoming vacancies. In accordance with the Board’s selection process, the Governance Committee engaged an external executive search fi rm who
is assisting in identifying and evaluating qualifi ed independent candidates who meet the Board’s target candidate profi les and fi t the Board’s Director
Qualifi cation Standards. The Governance Committee has identifi ed several preferred candidates and is in the process of interviewing these individuals.
Other Key Actions in 2006
Some of the other key actions taken by the Governance Committee last year are described below.
Director Independence
The Governance Committee assessed each non-management director’s independence based upon the Board’s Director Independence Standards and
those of the NYSE, and made recommendations to the full Board regarding each non-management director’s independence.
Board Training
Under the direction of the Governance Committee, the Board and its committees participated in a variety of training events during 2006. For example,
the Board toured the manufacturing facilities of two businesses within the Graphics Communications Group: Kodak Versamark, a leader in continu-
ous inkjet solutions and manufacturer of high volume inkjet printers; and NexPress Solutions, a producer of digital color and black and white printing
solutions. The Board also participated in training on corporate compliance. In addition, the Board received several briefi ngs from external advisors on
matters such as the Board’s responsibilities relating to executive compensation and on several corporate law issues.
Director Compensation
In late 2006, the Governance Committee decided to undertake a review of the market competitiveness of the Board’s Compensation Program. The last
time such a review was performed was in 2003. The Governance Committee has selected an external independent compensation consultant to assist
it in performing the review. The Governance Committee anticipates completing the review by the end of the third quarter of this year.
Disclosure Practices
Under the Governance Committee’s direction, the Company enhanced its proxy statement disclosure practices in areas such as director compensation,
corporate governance and executive compensation.
Board Business Plan
Based on the Governance Committee’s assistance, the Board last year continued its practice of establishing an annual Board business plan. The
business plan is the end product of a formal process developed by the Governance Committee to annually establish and prioritize the Board’s goals. A
more detailed description of this process appears on page 20 of this Proxy Statement. The Governance Committee tracked the Board’s performance
against its business plan and provided periodic reports to the Board on its progress.