Kodak 2008 Annual Report Download - page 161

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COMPENSATION PHILOSOPHY AND PROGRAM
Our overall compensation philosophy focuses on attracting, retaining and motivating world-class executive talent critical to the success of
the Company’s business goals. Our objective is to leverage all elements of market competitive total compensation to drive profitable
growth and shareholder value consistent with our Company values. We design our plans to be highly performance-based to drive
appropriate rewards for outstanding performance.
Our executive compensation program consists of the following material elements: 1) base salary; 2) annual variable pay; 3) long-term
equity incentives; and 4) benefits, which include retirement, termination and change-in-control arrangements. Our Named Executive
Officers are also eligible to participate in a limited set of perquisites and the benefit plans and programs that are generally available to our
employees.
The Committee regularly reviews the Company’s executive compensation principles, which provide a framework for the Company’s
executive compensation programs. In 2008, the Committee reviewed and approved the following principles:
• Aggregate total direct compensation, consisting of base salary, annual variable pay and long-term equity incentives, should be at
a competitive median level while maintaining flexibility to selectively target compensation for key positions at the 75th percentile.
• A significant portion of each executive’s compensation should be at risk, with a positive correlation between the degree of risk and the
level of the executive’s responsibility. In other words, the senior-most executives have the greatest amount of compensation at risk,
which ensures that executives most responsible to shareholders are held most accountable to changes in shareholder value and
achievement of critical performance goals.
• Interests of executives should be aligned with those of the Company’s shareholders by providing long-term equity incentives and
encouraging executives to acquire and maintain a requisite level of stock ownership.
• Compensation should be linked to key operational and strategic metrics of the Company’s business plan, along with qualitative
and behavioral expectations.
• Executive compensation should be differentiated on the following basis:
- Base salaries – internal and external relative responsibility and experience;
- Annual variable pay – Company performance, unit level performance (where applicable), individual performance as it
relates to results vs. commitments, and leadership and diversity; and
- Long-term equity incentives – Company performance and individual execution and leadership.
• Compensation program design should ensure high standards and consider best practices.
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. The Committee annually conducts a review of each Named Executive Officer’s total direct compensation including a
review of base salary, target total cash and total long-term equity incentive. In the course of the Committee’s review in 2008, the
Committee sought the advice and input of its independent compensation consultant, Frederic W. Cook & Co., Inc. (Consultant), as well as
Company management. In general, management gathers and analyzes data and provides a recommendation, with rationale, for dialog
with the Committee. Management provides a recommendation for each Named Executive Officer, with the exception of our CEO. In the
case of our CEO, the Consultant gathers and analyzes data and discusses a recommendation with the Committee Chair. The Committee
takes these recommendations into consideration and exercises its judgment to make decisions. For additional information regarding the
role of the Consultant, see page 19 of this Proxy Statement.