Kodak 2006 Annual Report Download - page 187

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SUMMARY/INTRODUCTION
Over the last several years, Kodak has been executing a strategy for transformation from a fi lm and analog-based business into a digital company.
Our executive compensation arrangements for 2006 refl ect this transition and the rapidly changing dynamics of Kodak’s business and the markets
in which it competes. As appropriate, the Executive Compensation and Development Committee has put in place compensation plans designed to
address targeted needs associated with the Company’s digital transformation.
The Company is in the midst of an extraordinary digital transformation. The Company now has a substantial presence in the graphic communications
market and has strengthened its market position in the consumer digital market with several innovative new product introductions. At the same time,
the Company is aggressively reducing its traditional manufacturing footprint and managing signifi cant changes in the Company’s workforce that are
required by the Company’s transformation. With the Executive Compensation and Development Committee’s guidance and oversight, in 2006, we
continued to assess the Company’s executive compensation philosophy to ensure that the principles, goals and strategies are aligned with the unique
nature of this complex and time-constrained digital transformation strategy.
Kodak’s executive compensation program is administered by the Executive Compensation and Development Committee, which we refer to in this
Compensation Discussion and Analysis as the Committee. The material elements of our executive compensation program include:
• Total Direct Compensation
– Base Salary
– Annual variable pay
– Long-term variable equity incentives
• Other Compensation and Benefi ts
– Retirement Plan Benefi ts
– Supplemental Individual Retirement Arrangements
– Deferred Compensation Plan
One of the roles of the Committee is to oversee the Company’s executive compensation strategy, including the compensation of the individuals who
served as our Chief Executive Offi cer and Chief Financial Offi cer during 2006, as well as the other individuals listed in the Summary Compensation
Table on page 43, who are referred to in this Proxy Statement as our Named Executive Offi cers.
During 2006, the Committee paid particular attention to bringing our Named Executive Offi cers’ “total direct compensation” to a level that the Com-
mittee considers to be market competitive. This level is targeted for each Named Executive Offi cer to be the median of compensation paid to execu-
tives in similar positions with similar responsibilities, as identifi ed by two national non-industry specifi c surveys recommended by the Committee’s
independent compensation consultant, using companies with gross revenues similar to Kodak. To achieve this objective, in 2006, the Committee
increased the long-term variable equity incentive opportunities of our Named Executive Offi cers, while holding base salaries constant, with the excep-
tion of any increase warranted by promotion.
COMPENSATION PHILOSOPHY
Our overall philosophy is to provide an executive compensation package that attracts, retains and motivates world-class executive talent critical to the
success of the Company’s short-term and long-term business goals. In 2006, the Committee reviewed and confi rmed the following executive compen-
sation goals, which are substantially similar to our prior long-established goals:
• Align management and shareholder interests
• Calibrate realized compensation to achievement of short-term and long-term objectives
• Inspire and develop world-class executive talent
• Attract, retain and motivate executives
• Maximize fi nancial effi ciency
• Ensure high standards and best practices
• Simplify plans and provide line of sight to performance goals
nCompensation Discussion and Analysis