Kodak 2006 Annual Report Download - page 218

63
TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
Potential Payments upon Termination or Change-In-Control
Each of our Named Executive Offi cers is eligible to receive certain severance payments and benefi ts in connection with termination of employment
under various circumstances. The potential severance benefi ts payable to our Named Executive Offi cers, other than Mr. Meek, in the event of termina-
tion of employment on December 31, 2006 pursuant to any individual agreement with the Company are described below. Mr. Meek’s employment was
terminated by the Company without cause in 2006. The severance benefi ts payable to Mr. Meek as a result of his termination of employment pursuant
to his pre-existing agreements are described below.
Any actual amounts paid or distributed to our Named Executive Offi cers as a result of one of the separation events occurring in the future may be dif-
ferent than those described below due to the fact that many factors affect the amounts of any payments described under the various separation events
discussed below. For example, factors that could affect the amounts payable include the executive’s base salary, the Company’s stock price and the
executive’s age and service with the Company. In addition, although the Company has entered into individual severance arrangements with most of our
Named Executive Offi cers, in connection with a particular separation from the Company, the Company and the Named Executive Offi cer may mutually
agree on severance terms that vary from those provided in pre-existing arrangements.
In addition to benefi ts outlined in our Named Executive Offi cers’ individual agreements, Named Executive Offi cers will be eligible to receive any
benefi ts accrued under the Company’s broad-based benefi t plans, such as distributions under SIP, disability benefi ts and accrued vacation pay, in ac-
cordance with those plans and policies. Our Named Executive Offi cers will also be eligible to receive any account balances at the 2006 fi scal year end
under our non-qualifi ed deferred compensation plans and programs as set forth in the Non-Qualifi ed Deferred Compensation Table on page 61 of this
Proxy Statement and any present value of accrued benefi ts as set forth in the Pension Benefi ts Table on page 58 of this Proxy Statement.
For any unvested or restricted equity awards, related restriction periods may lapse and vesting may be accelerated automatically pursuant to the
terms of the awards depending on the circumstances surrounding a Named Executive Offi cer’s termination of employment. The Compensation Com-
mittee may waive any restrictions or accelerate vesting if an executive’s termination is determined to be for an “approved reason.” An approved reason
is defi ned as a termination of employment that is in the best interest of the Company, as determined by the Compensation Committee. Absent an
employment agreement specifying different treatment, equity awards held by Named Executive Offi cers will generally be affected as follows:
• Options: If the Compensation Committee determines that a Named Executive Offi cer’s termination is for an approved reason, then all
unvested options will continue to vest as if employment continued and will expire on the third anniversary date of termination of employment.
Upon termination of employment due to death or disability, all unvested options will immediately vest and remain exercisable until the third
anniversary of employment termination.
• Leadership Stock Awards: Upon termination of employment due to death, disability, retirement or an approved reason, an executive will be
eligible to receive a pro rata portion of any award earned under the performance cycle, provided the executive was employed for the fi rst year
of the performance cycle.
• 2006 EPSP Awards: With respect to awards earned under the 2006 EPSP, if the executive was employed through December 31, 2006, the
executive will be eligible to retain any earned awards if his employment is terminated due to death, disability, retirement or an approved reason
prior to the vesting date of such awards.
• Restricted Stock Awards: Restrictions will lapse and executives will retain shares upon termination for death, disability or an approved
reason.
Named Executive Offi cers will also be eligible to receive a pro rata amount of any EXCEL bonus award if their employment is terminated due to death,
disability, retirement or approved reason.
Following termination of employment, each of our Named Executive Officers is subject to comply with the post-termination restrictive covenants set
forth in their Eastman Kodak Company Employee’s Agreement, in addition to any covenants provided for in their individual letter agreements with the
Company. These covenants generally prohibit our Named Executive Officers from disclosing proprietary or confidential information of the Company
and from competing with the Company for a certain period after termination of their employment. All of our Named Executive Officers, other than
Messrs. Meek and Brust, whose probations are 18 and 24 months, respectively, are prohibited for one year after termination of their employment from
soliciting any of our employees to leave employment with the Company or any of our customers or suppliers to do business with any of our competi-
tors. All of our Named Executive Officers are prohibited from engaging in any work for a competitor of the Company in the field in which they were
employed by Kodak for a period of not more than 18 months after their employment is terminated. As described further below, Mr. Perez is also subject
to a two-year non-compete after termination of his employment under his offer letter dated March 3, 2003.