Kodak 2007 Annual Report Download - page 190

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Executive Deferred Compensation Plan
The Company maintains the Eastman Kodak Company 1982 Executive Deferred Compensation Plan (EDCP) for its executives. Near the
end of each year, the Company’s executives may elect to defer any portion of their base salary in excess of $50,000 for the following year
and a portion of any EXCEL award earned for the following year. In 2007, the Compensation Committee froze the receipt of new monies
into the plan in 2008 due to its low utilization and its administrative cost. The plan has only two investment options: an interest-bearing
account that pays interest at the prime rate and a Kodak phantom stock account. Participants may only invest amounts in the Kodak
phantom stock account if they are, or were, subject to our stock ownership guidelines. Dividend equivalents on amounts invested in an
executive’s phantom stock account are credited to an executive’s account in the form of additional stock units at the same rate as
dividends are paid on shares of Company common stock. The plan’s benefits are neither funded nor secured.
Executives may elect to defer amounts under the plan for a fixed period of time during employment. After the period of fixed deferment,
any account balance may be paid in a cash lump-sum payment as soon as administratively possible coincident with a pay cycle in
September after the account is valued in August following the end of the deferment. Upon termination of employment, for amounts not
subject to Section 409A of the Code, the Compensation Committee has the sole discretion to pay such amounts in a lump sum or in
annual installments, not to exceed ten annual installments. For amounts subject to Section 409A of the Code, most Named Executive
Officers filed a distribution election to be paid in a lump sum or in installments, provided that payments begin no later than when the
executive reaches age 71. If an executive has not filed an election, then any amounts subject to Section 409A of the Code will be paid in a
lump sum. Any amounts subject to Section 409A of the Code are subject to a further six-month waiting period following termination of
employment in order to ensure compliance with Section 409A of the Code. Withdrawals prior to termination of employment are not
permitted under the Plan except in cases of severe financial hardship not within the executive’s control, although amounts not subject to
Section 409A of the Code may be withdrawn by an executive prior to termination of employment, provided that 10% of the amount
withdrawn will be forfeited by the executive.
Salary and Bonus Deferral Program
To preserve the full deductibility for federal income tax purposes of our Chief Executive Officer’s base salary, Mr. Perez is required to defer
that portion of his base salary that exceeds $1 million. The amount deferred each pay period bears interest at the same rate as described
above for our EDCP. The deferred amounts and interest earned on these amounts are tracked through a notational account maintained by
the Company. Amounts deferred are only payable upon Mr. Perez’s retirement from the Company in the form of a lump sum. The
notational account is neither funded nor secured.
Under the terms of Mr. Langley’s offer letter described on page 55 of this Proxy Statement, Mr. Langley participated in an individual bonus
plan established to incent achievement of certain pre-established goals in GCG for 2007. In February 2007, the Compensation Committee
determined that Mr. Langley earned $490,000 under the bonus plan as a result of achievement of the 2006 performance goals. This
amount, less applicable withholding, was contributed in February 2007 to an unfunded, deferred compensation account established on
behalf of Mr. Langley. Any bonus amounts contributed to this account by the Company continue to bear interest at the prime rate,
compounded annually, until they are distributed. Distributions from the account are subject to the same distribution rules as those in effect
under our EDCP described previously.
Deferral of Stock Awards
Under the Company’s prior equity award programs, Named Executive Officers were at times permitted to defer the receipt of various equity
awards to a date later than the date as of which they vest. Mr. Perez elected to defer awards earned under the Alternative Award of the
Executive Incentive Plan under the 2002 - 2004 performance cycle of the Company’s Performance Stock Program, his restricted stock
award granted on October 1, 2003 and performance stock units earned under the 2004-2005 performance cycle of the Leadership Stock
Program. Each of these awards have fully vested as of December 31, 2007, with the exception of a portion of Mr. Perez’s October 1, 2003
restricted stock award which will vest on October 1, 2008.
All of these deferred awards are tracked through notational accounts maintained by the Company. For each share or unit deferred, the
executive receives a phantom unit of our common stock in his account. Any stock dividends or amounts equivalent to dividends paid on
our common stock are added to the executive’s notational account in the form of additional phantom units as they are paid at the same
rate as dividends are paid on shares of our common stock. For these deferred awards, stock dividends were unrestricted, but are subject
to the original payment terms of the underlying deferred award. The notational accounts are neither funded nor secured.
The payout, withdrawal and distribution terms are generally similar for each deferred award, other than the performance stock units earned
under the 2004 - 2005 performance cycle of the Leadership Stock Program that were deferred by Mr. Perez. Pursuant to his deferral
election, Mr. Perez will be entitled to receive a distribution following his termination of employment of all amounts in his deferred account
attributable to these performance stock units (and any earnings thereon) in a lump-sum payment, in shares, as soon as administratively
practicable in March of the following year after his termination of employment with the Company. If applicable, a six-month waiting period
is required for compliance under Section 409A of the Code.