Kodak 2009 Annual Report Download - page 154

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Importantly, you are not being asked to increase the aggregate number of shares available under the Plan or increase the individual award
maximums described below.
The amendment and re-approval requires the favorable vote of a majority of the votes cast.
Background
The Plan provides for the grant of various types of equity awards (stock options, Stock Appreciation Rights (SARs), Restricted Stock,
Restricted Stock Units (RSUs) and other stock-based awards), as well as performance awards that are earned by reference to
performance criteria chosen by the Compensation Committee or another committee designated by the Board of Directors (Committee) and
are payable in stock or cash. The Plan was approved by shareholders at the 2005 annual meeting.
Amendment
The Plan contains a list of criteria that are used (either individually or in combination) to measure the performance of the Company on a
consolidated basis and/or for any subsidiary, division, strategic product group, segment, business unit and/or one or more product lines,
that may be used to determine if and to what extent awards will be issued, vested and/or settled under the Plan. As and when certain
awards are granted under the Plan to certain executives, the Compensation Committee chooses, from the list of criteria, the specific
metrics that are used to measure performance in that year.
As a result of the amendment, the Plan will include the following performance metrics: return on assets; return on net assets; return on
equity; return on shareholder equity; return on invested capital; return on capital; total shareholder return; share price; improvement in
and/or attainment of expense levels; improvement in and/or attainment of cost levels; selling, general and administrative expense (SG&A);
SG&A as a percent of revenue; costs as a percent of revenue; productivity objectives; unit manufacturing costs; gross profit margin;
operating margin; cash margin; earnings per share; earnings from operations; segment earnings from operations; earnings; earnings
before taxes; earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); revenue
measures; number of units sold; number of units installed; revenue per employee; market share; market position; working capital
measures; inventory; accounts receivable; accounts payable; cash conversion cycle; cash flow; cash generation; net cash generation;
proceeds from asset sales; free cash flow; investable cash flow; capital expenditures; capital structure measures; cash balance; debt
levels; equity levels; economic value added models; technology milestones; commercialization milestones; customer metrics; customer
satisfaction; consumable burn rate; installed base; repeat customer orders; acquisitions; divestitures; employee metrics; employee
engagement; employee retention; employee attrition; workforce diversity; and, diversity initiatives, in each case, measured either annually
or cumulatively over a period of years, on an absolute basis and/or relative to a pre-established target and/or plan, to previous years’
results, as a percentage of revenue, and/or to a designated comparison group.
Prior to the amendment, the Plan provided for the following performance metrics: return on net assets; return on shareholders’ equity;
return on assets; return on capital; shareholder returns; total shareholder return; return on invested capital; profit margin; earnings per
share; net earnings; operation earnings; common stock price per share; sales or market share; unit manufacturing cost; working capital
productivity; days sales in inventory; days sales outstanding; revenue; revenue growth; cash flow and investable cash flow.
We are amending the list of criteria to include additional measures that the Company believes are relevant to driving profitable growth.
Further, the amended list will allow for more flexibility in selecting appropriate performance criteria in a given performance cycle.
Re-Approval of Material Terms
In addition to approving the revised performance criteria, we are asking for your re-approval of the Plan’s other material terms for purposes
of Section 162(m).
Section 162(m) limits to $1 million the Company’s annual federal income tax deduction for compensation in a taxable year to each
individual who, on the last day of the taxable year, was: 1) the Chief Executive Officer or 2) among the three other most highly
compensated executive officers (other than the Chief Financial Officer) whose compensation is reported in the Summary Compensation
Table (“covered employees”). “Qualified performance-based compensation,” which can include compensation from certain awards granted
under the Plan, is not subject to this deduction limit, and therefore is fully deductible, if certain conditions are met. One of the conditions is
shareholder approval of the material terms of the plan under which the compensation is paid. The material terms include (1) the class of
employees eligible to receive awards under the Plan, and (2) the maximum amount of compensation that can be paid to an employee
under the Plan in a specified time period. These material terms are described in the summary of the Plan that appears below.
Summary of the 2005 Omnibus Plan
The following summary of the Plan, as proposed to be amended, is qualified in its entirety by the terms of the 2005 Omnibus Plan, a copy
of which, as proposed to be amended, is attached to this Proxy Statement as Exhibit I.
Purpose
The purpose of the 2005 Omnibus Plan is to motivate selected employees and directors of the Company and its subsidiaries to put forth
maximum efforts toward the continued growth, profitability and success of the Company and its subsidiaries through equity-based and
cash-based incentives.