Kodak 2006 Annual Report Download - page 196

41
Perquisites
The Company does not provide any signifi cant perquisites other than those that are related to personal security. The primary perquisites our Named
Executive Offi cers receive are executive physicals, fi nancial planning services, home security services, personal excess liability coverage and occa-
sional use of the Company’s driver service. Our Named Executive Offi cers, other than our CEO, also upon occasion, with CEO approval, use corporate
aircraft with their spouses for personal travel. Due to our executive security program, the Company requires our CEO to use Company aircraft for
all air travel, whether personal or business. The Company provides most of these perquisites primarily for security related reasons, to maximize an
executive’s time spent on Kodak business or to attract and retain our Named Executive Offi cers. The compensation attributed to our Named Executive
Offi cers for 2006 and required to be reported for these perquisites is included in the Summary Compensation Table on page 43 of this Proxy Statement.
SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
Severance Arrangements
Our Named Executive Offi cers are responsible for the continued success of the Company and the execution of the Company’s strategic plan to
transform the Company from a traditional products and services company to a digital company. The Committee believes that it is important to provide
our senior management some measure of fi nancial security in the event their employment is terminated without cause. Most of our Named Executive
Offi cers have an individual severance agreement that provides various severance benefi ts in the event their employment is terminated under various
circumstances. These individual severance arrangements were negotiated at the time each Named Executive Offi cer commenced employment with
the Company or later in connection with entering into retention agreement to provide for the executive’s continued employment and are consistent with
guidelines established by the Committee for our Named Executive Offi cers. Especially during the Company’s digital transformation process, our sever-
ance arrangements are designed to serve as a retention tool and to eliminate any reluctance of executives and employees to implement the Company’s
strategic plan. In certain instances, an executive’s successful completion of his or her responsibilities may result in the elimination of his/her job. Our
severance arrangements also provide an incentive for individuals to sign a release of claims against the Company, to refrain from competing with the
Company and to cooperate with the Company both before and after their employment is terminated.
For Mr. Perez, severance benefi ts are payable in the event his employment is terminated by the Company without “cause” or Mr. Perez for “good
reason.” Messrs. Faraci, Brust and Sklarsky and Ms. Hellyar are entitled to severance benefi ts for termination without “cause” under their individual
agreements with the Company. Ms. Hellyar and Mr. Sklarsky are entitled to severance upon their long-term disability. The defi nitions of “cause” vary
slightly among the executive’s employment agreements. When approving any employment agreement, the Committee focuses on the severance trig-
gers relative to each executive’s position and responsibilities.
Our severance arrangements with our Named Executive Offi cers also provide for the treatment of other compensation provided under the Company’s
annual bonus plan, equity plans and retirement plans. For additional information regarding the potential severance benefi ts payable to our Named Ex-
ecutive Offi cers under various circumstances, as well as the severance benefi ts paid in 2006, see the description under the Severance Benefi ts Tables
beginning on page 67 of this Proxy Statement.
Change-in-Control Arrangements
Consistent with our compensation philosophy, we believe that the interests of our shareholders are best served if the interests of our senior manage-
ment are aligned with theirs. To this end, our Executive Protection Plan, which the Company adopted in 1992, provides for enhanced change-in-control
severance benefi ts for our Named Executive Offi cers to reduce any reluctance of our Named Executive Offi cers to pursue potential change-in-control
transactions and to promote the continued employment and dedication of our Named Executive Offi cers without distraction. The Committee believes
that these change-in-control benefi ts also encourage smooth transition of management in the event of a change-in-control. The Committee reviews
the provisions of the Executive Protection Plan periodically to balance the costs of the plan against the benefi t provided to the Company. The Com-
mittee last reviewed the benefi ts offered to Named Executive Offi cers under the plan in 2005 and, in the context of the operating circumstances, the
Committee decided to maintain the current plan without change and re-evaluate it at a subsequent date.
Our Executive Protection Plan provides severance pay and continuation of certain welfare benefi ts for our Named Executive Offi cers if their employ-
ment is terminated without “cause” or for “good reason” during the two-year period following a change-in-control, and in some cases prior to a
change-in-control. Our CEO will also be entitled to benefi ts under the plan if he or she terminates employment for any reason during the 30-day period
commencing 23 months after a change-in-control.
Certain of our other compensation plans also provide enhanced benefi ts to our Named Executive Offi cers after a change-in-control without termination
of employment. These benefi ts are designed to provide our Named Executive Offi cers with the opportunity to realize the benefi ts under these plans
after a change-in-control. Additional plan terms and the treatment of any benefi ts after a change-in-control under the Company’s retirement plans,
deferred compensation plan, EXCEL plan and equity incentive plans are described below in the Change-In-Control Severance Payments Table on page
72 of this Proxy Statement. The potential change-in-control payments that would be payable to Named Executive Offi cers in the event of a hypotheti-
cal termination of employment as of December 31, 2006, in connection with a change-in-control are shown in the Change-In-Control Severance
Payments Table on page 72 of this Proxy Statement.