Kodak 2007 Annual Report Download - page 199

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The plan provides that, in the event of a termination of employment, either voluntarily with “good reason” or involuntarily without “cause,”
within two years following a change-in-control, each of the Named Executive Officers will receive a lump-sum severance payment equal to
(a) three times their base salary and target EXCEL bonus and (b) continued participation in the Company’s medical, dental, disability and
life insurance plans for 12 months at no cost to the executive. The plan also requires, subject to certain limitations, tax gross-up payments
to all employees to mitigate any excise tax imposed upon the employee under the Code. If it is determined that an executive would not be
subject to an excise tax if the payments received in connection with the change-in-control were reduced by 10%, then amounts payable to
the executive under the plan will be reduced to the maximum amount the executive could be paid without giving rise to an excise tax.
“Good reason” is defined under the plan for our Named Executive Officers to mean:
• The assignment of, or change in, the duties or responsibilities of the Named Executive Officer that are not comparable in any adverse
respect with his or her duties prior to the change-in-control, other than a change in the executive’s title or reporting relationship;
• A reduction of the Named Executive Officer’s pay, target bonus opportunities or benefits;
• A material reduction in the perquisites or fringe benefits provided;
• The failure of any successor to the Company to assume the plan; or
• Any amendment or termination of the plan not permitted by its terms.
“Cause” is defined under the program for our Named Executive Officers to mean:
• The willful and continued failure of the executive to substantially perform his or her duties (other than due to physical or mental illness)
after a written demand by the Board; or
• The willful engaging in illegal conduct or gross misconduct which is materially injurious to the Company or its affiliates.
In addition to the above, the plan provides that both Mr. Perez and Mr. Faraci would also be entitled to these severance benefits if they
voluntarily terminate their employment for any reason during the 30-day period commencing 23 months after the change-in-control. A
Named Executive Officer will also receive severance benefits under the plan if his or her employment is terminated prior to a change-in-
control if they are able to demonstrate that their employment was terminated in contemplation of a change-in-control and a change-in-
control occurs.
Other Benefit Plans
In 2007, the Company undertook a review of the change-in-control benefits under various Company plans. This review was initiated to
understand the positioning of Kodak plans in relation to best external practices from governance, competitive and potential cost
perspectives. Based on the review, the Compensation Committee determined to gradually phase out over a five-year period the change-in-
control pension enhancements under the Company’s defined benefit pension plan (KRIP) and unfunded supplemental retirement plan
(KURIP). As a result, effective January 1, 2008, the additional age and service resulting from the change-in-control pension enhancement
will be a maximum of four years and the maximum will thereafter decrease by one year for every additional year that transpires until the
enhancement is fully phased out effective January 1, 2012.
Previously under KRIP and KURIP, any participant in the traditional defined benefit component, including the affected Named Executive
Officers, whose employment is terminated for a reason other than death, disability, cause or voluntary resignation, within five years of a
change-in-control was provided up to five additional years of service to determine eligibility for a vested right, to calculate the amount of the
accrued benefit, and to determine any applicable early retirement factors. In addition, a participant was deemed to have up to five
additional years of age in determining any applicable early retirement factors. For participants age 50 or older as of the date of the change-
in-control, the enhanced age and service was used to determine eligibility for retirement.
The actual additional number of years of service and age that are given to a participant decreases proportionately depending upon the
number of years that elapsed between the date of a change-in-control and the date of the participant’s termination of employment. If the
plan is terminated within five years after a change-in-control, the benefit for each participant would be calculated as indicated previously.
Participants in the cash balance component of KRIP and KURIP, including the affected Named Executive Officers, are entitled to a benefit
equal to 7% of the participant’s annual compensation at the time of the termination times the number of additional years of service that the
executive is entitled to under the plan’s change-in-control pension enhancement.