Kodak 2008 Annual Report Download - page 164

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Named Executive Officers are discussed under “Elements of Total Direct Compensation,” beginning on page 38 of this Proxy Statement.
Use of Tally Sheets
The Committee annually reviews all components of our Named Executive Officers’ compensation as presented in a comprehensive set of
Tally Sheets that the Consultant prepares. The Tally Sheets provide a comprehensive view of each Named Executive Officer’s
compensation, broken down into three components:
1) An estimate of projected annual compensation, including target total cash compensation, the total estimated value of annual long-
term equity awards and the value of benefits and perquisites received by each Named Executive Officer;
2) A comprehensive summary of the vested and unvested values of all outstanding equity awards held by each Named Executive
Officer at current and assumed future stock prices; and
3) A summary of the severance benefits potentially payable to each Named Executive Officer as of year-end under various
termination scenarios.
The Tally Sheets provide the Committee with context for the decisions it makes in relation to total direct compensation. The Tally Sheets
allow the Committee to holistically assess total direct compensation and the relationship of various components of the total compensation
program to each other. The Tally Sheets also enable the Committee to determine how much wealth creation opportunity exists through
equity-based compensation and how strong the retention power is as a result of unvested value. The Tally Sheets may also influence the
Committee’s views on a variety of issues, such as changes to severance plans and employment agreements, special equity grants to
promote retention, or changes in long-term equity incentives.
From the 2008 Tally Sheets, the Committee found that the total outstanding equity held by our Named Executive Officers had little intrinsic
value and thereby did not provide sufficient retentive power, even in the event of significant stock price appreciation. The Committee
considered this factor in determining, at the end of 2008, the long-term equity mix for 2009 as described on page 42 of this Proxy
Statement. Mr. Berman is the only Named Executive Officer for whom Tally Sheets were not prepared or reviewed in 2008, because he
was not a Named Executive Officer in 2007.
Use of the CEO Evaluation Process
The Presiding Director and the Chair of the Compensation Committee, with support from the CHRO, lead the annual CEO evaluation
process to assess the performance of our CEO. Each February, our CEO completes a written self-assessment of his performance against
the business plan of record for the prior year. This written assessment is sent to the full Board for review. Later in the same month, the
CHRO interviews each member of the Board to collect feedback against an established set of criteria, including reaction to our CEO self-
assessment and the Company’s leadership imperatives, which are: 1) “Drives to Win,” 2) “Develops Leaders” and 3) “Leads With Values.”
The CHRO summarizes the input of each Board member and reviews all input with the Presiding Director and the Chair of the Committee.
The Presiding Director and the Chair of the Committee discuss the summary with the Board and subsequently review the feedback with
our CEO. Since the same director currently is both the Presiding Director and Chair of the Committee, the Chair of the Finance Committee
served as co-leader of this process for 2008.
For 2008, the Board noted a number of strengths in Mr. Perez’s performance. The Board recognized Mr. Perez’s strong leadership of the
Company’s digital transformation, which resulted in four consecutive quarters of double-digit growth in our digital businesses, from the
second half of 2007 through the first half of 2008. It acknowledged his strong strategic capability in guiding the identification and
development of key digital properties. It also recognized the strong operating capability demonstrated by his leadership of the changes
required to address the global economic challenges that impacted the business during the second half of 2008. While acknowledging the
impact of the global economic downturn on operational results that fell short of goals, the Board recognized the leadership he
demonstrated in enabling the Company to maintain a strong balance sheet, while maintaining and growing market share in key businesses
and achieving key milestones related to new product introductions throughout the year. The Board noted the important role Mr. Perez has
played in leading the Company’s continued progress in developing a robust, diverse pipeline of senior executive talent during a period of
dramatic change. The Board also recognized his leadership in modeling the Company values as he reinforces the cultural transformation
of Kodak. Typically, the Committee utilizes the CEO evaluation results when determining our CEO’s annual variable pay plan award.
Given, however, that no annual variable pay plan award was earned for 2008, the 2008 evaluation did not influence this year’s
determination as further described on page 41 of this Proxy Statement. The Committee considered the 2007 CEO evaluation when
determining our CEO’s long-term equity target allocation in December 2008 as described on page 43 of this Proxy Statement.
ELEMENTS OF TOTAL DIRECT COMPENSATION
Total direct compensation consists of the following elements: base salary, annual variable pay and long-term equity incentives.
Base Salaries
Base salaries provide a regular source of income to our Named Executive Officers. Consistent with our philosophy of tying pay to
performance, our Named Executive Officers receive a relatively small proportion of overall total direct compensation in the form of base
salary. The base salaries of our Named Executive Officers in 2008 ranged from approximately 13% - 27% of their target total direct