Kodak 2007 Annual Report Download - page 161

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 Compensation Discussion and Analysis
SUMMARY/INTRODUCTION
The Executive Compensation and Development Committee, which we refer to in this discussion as the Committee, has oversight
responsibility for the Company’s executive compensation strategy. The Committee approves our compensation objectives, philosophy and
forms of compensation for all executives, including our Chief Executive Officer, President and Chief Operating Officer, Chief Financial
Officer and the two other executive officers who had the highest “total compensation” for 2007, as shown in the Summary Compensation
Table on page 51 of this Proxy Statement. These five executives are collectively referred to in this Proxy Statement as our Named
Executive Officers.
This Compensation Discussion and Analysis discusses and analyzes our executive compensation strategy and compensation of our
Named Executive Officers as shown in the executive compensation tables beginning on page 51 of this Proxy Statement. The overall
design and operation of our executive compensation program did not significantly change from 2006.
During 2007, our executive compensation strategy was focused on:
• Providing compensation for each Named Executive Officer that is competitive relative to the marketplace for executives with
comparable levels of responsibility;
• Continuing our multi-year strategy of de-emphasizing cash compensation and increasing the proportion of total direct compensation
delivered through performance-based equity awards;
• Designing our variable short-term and long-term incentive plans to achieve key financial and strategic objectives related to the last
phase of our transformation from a traditional film company to a digital technology company; and
• Providing realized compensation tied to changes in shareholder value over the long-term, thus aligning the economic interests of
Named Executive Officers with that of our shareholders.
The Committee implemented this strategy primarily through the creation of performance goals and associated awards for our Named
Executive Officers that were aligned to our strategic and operational imperatives. The majority of our Named Executive Officers’ total direct
compensation is delivered through performance-based variable programs, which are intended to enable executives to earn significant
rewards for achieving key operational and financial metrics that drive long-term shareholder value.
COMPENSATION PHILOSOPHY AND PROGRAM
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. Our executive compensation program consists of the
following material elements: base salary, annual variable pay and long-term variable equity incentives, retirement benefits and perquisites.
Our Named Executive Officers are also eligible to participate in broad-based welfare benefit plans and programs that are generally
available to our employees.
Our Committee annually reviews the Company’s executive compensation strategy and programs. In the course of the Committee’s review
in 2007, the Committee sought the advice and input of its independent compensation consultant, as well as Company management. For
additional information regarding the role of the Committee’s independent compensation consultants and management, see page 21 of this
Proxy Statement.
DETERMINING EXECUTIVE TOTAL DIRECT COMPENSATION
The Committee oversees the Company’s executive compensation strategy and reviews and approves the compensation of our Named
Executive Officers. In the first quarter of each year, the Committee establishes base salaries and target award opportunities under our
annual variable pay plan, the Executive Compensation for Excellence and Leadership Plan (EXCEL), for our Named Executive Officers.
During the first quarter the Committee also makes grants of performance-based equity awards earned under the Company’s Leadership
Stock program and establishes the performance targets for the new performance cycles under both EXCEL and Leadership Stock. In the
fourth quarter of each year, the Committee establishes the aggregate target economic value to be delivered to each Named Executive
Officer in the form of long-term variable equity incentive awards, which include stock options and Leadership Stock, the performance cycle
of which will start on January 1 of each year.