Kodak 2007 Annual Report Download - page 146

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Director Qualification Standards
When reviewing a potential candidate for the Board, the Governance Committee looks to whether the candidate possesses the necessary
qualifications to serve as a director. To assist it in these determinations, the Governance Committee has adopted “Director Qualification
Standards.” The Director Qualification Standards are attached as Exhibit ll to this Proxy Statement and can also be accessed at
www.kodak.com/go/governance. These standards specify the minimum qualifications that a nominee must possess in order to be
considered for election as a director. If a candidate possesses these minimum qualifications, the Governance Committee, in accordance
with the Director Selection Process described in the next section, will then consider the candidate’s qualifications in light of the needs of
the Board and the Company at that time, given the then-current mix of director attributes.
Director Selection Process
As provided in the Company’s Corporate Governance Guidelines, the Governance Committee seeks to create a diverse and inclusive
Board that, as a whole, is strong in both its knowledge and experience. When identifying, screening and recommending new candidates to
the Board for membership, the Governance Committee follows the procedures outlined in its “Director Selection Process.” The Director
Selection Process is attached as Exhibit lll to this Proxy Statement and can also be accessed at www.kodak.com/go/governance. The
Governance Committee generally uses the services of a third-party executive search firm when identifying and evaluating possible
nominees for director.
Board Business Plan
Our Board has a formal process for annually establishing and prioritizing its goals. The end product of this process is a “Board business
plan.” The Board believes that adopting such a plan annually enhances its ability to measure its performance, improves its focus on the
Company’s long-term strategic issues and ensures that its goals are linked to the Company’s operational and strategic imperatives.
Under the process approved by the Board, each year the Governance Committee submits to the Board a proposed list of Board goals for
the following year. At its first meeting of the year, the Board finalizes its goals for the year based on the Governance Committee’s
recommendations. Once the goals are established by the Board, the Governance Committee is responsible for tracking the Board’s
performance against its goals and routinely reporting these results to the Board. Performance against the goals is assessed as part of the
Board’s annual evaluation process.
Strategic Role of Board
The Board plays a key role in developing, reviewing and overseeing the Company’s business strategy. Twice each year, the Board
devotes an extended meeting to an update from management regarding the strategic issues and opportunities facing the Company and its
businesses. In addition, the Board throughout the year reviews the Company’s strategic plan and receives briefings and reports on critical
aspects of its implementation. These include business unit performance reviews, product category reviews and presentations regarding
research and development initiatives and the Company’s intellectual property portfolio.
DIRECTOR COMPENSATION
Introduction
Our directors are compensated through a combination of cash retainers and equity-based incentives. Consistent with the Board’s Director
Compensation Principles, a substantial portion of director compensation is linked to our stock performance. In addition, directors can elect
to receive their entire Board remuneration in stock based compensation. Our directors are required to keep all of the shares, net of any
shares used to pay the exercise price when exercising an option, they receive as compensation until they own shares equal in market
value to at least five times their annual retainer that is paid in cash.
Kodak does not pay management directors for Board service in addition to their regular employee compensation.
Director Compensation Principles
The Board has adopted the following director compensation principles, which are aligned with the Company’s executive compensation
principles:
• Pay should represent a moderately important element of Kodak’s director value proposition.
• Pay levels should generally target near the market median and pay mix should be consistent with market considerations.
• Pay levels should be differentiated based on the time demands on some members’ roles, and the Board will ensure regular rotation of
certain of these roles.
• The program design should ensure that rewards are tied to the successful performance of Kodak stock, and the mix of pay should
allow flexibility and Board diversity.