Kodak 2009 Annual Report Download - page 208

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EMPLOYMENT AND RETENTION ARRANGEMENTS
The material terms of each Named Executive Officer’s employment or retention arrangements with the Company are described below. The
first paragraph of each section provides the structure of each Named Executive Officer’s letter agreement, the second paragraph
addresses the agreement’s compensation elements, the third paragraph sets forth any retirement provisions, and the fourth paragraph
references any severance provisions. The levels of salary, annual variable incentive compensation and long-term equity-based incentive
compensation, as well as the material considerations that the Committee takes into account in establishing those levels are described in
the Compensation Discussion and Analysis on pages 43 – 56 of this Proxy Statement.
Antonio M. Perez
The Company employed Mr. Perez as President and COO under a letter agreement dated March 3, 2003. This agreement was
subsequently amended on February 27, 2007, December 9, 2008, April 29, 2009 and September 28, 2009. In addition, by letter dated
May 10, 2005, the Board elected Mr. Perez as Chief Executive Officer, effective immediately and Chairman of the Board, effective
December 31, 2005. In connection with this election, the Committee modified the compensation-related terms of Mr. Perez’s employment.
As described earlier, in Mr. Perez’s September 28, 2009 amendment, he was eligible to receive 500,000 stock options on October 14,
2009. These options will vest in three substantially equal amounts on the anniversary date of the grant in 2011, 2012 and 2013. The
amendment also provides that Mr. Perez is eligible to participate in two performance stock unit programs for the 2010 and 2011
performance years, each with an intended dollar-denominated target value of $1,230,000. In addition to the compensation described
elsewhere in this Proxy Statement, Mr. Perez is eligible to receive a base salary of $1.1 million and a target award under the EXCEL plan
of 155% of his base salary. Mr. Perez is also eligible to participate in all incentive compensation and deferred compensation plans, policies
and arrangements that are provided to other senior executives of the Company. The April 29, 2009 amendment to Mr. Perez’s employment
agreement reflected the 15% base salary reduction for the remainder of 2009, as described on page 47 of this Proxy Statement.
Under his March 3, 2003 letter agreement, as modified by his September 28, 2009 letter agreement, Mr. Perez is also eligible to receive a
supplemental unfunded retirement benefit, which is described on page 74 of this Proxy Statement. Pursuant to Mr. Perez’s letter
agreement dated February 27, 2007, this supplemental retirement benefit will vest when he turns age 65, consistent with the Company’s
mandatory retirement policy for our corporate officers. The February 27, 2007 letter agreement also provides for the lump-sum payment of
his supplemental retirement benefit following the six-month anniversary of his termination. The terms of Mr. Perez’s supplemental
retirement benefit were further amended by a letter agreement dated December 9, 2008 to specify how his surviving spouse’s pre-
retirement survivor benefits related to his supplemental unfunded retirement benefit will be calculated, clarify what persons qualify as
survivors and provide for payment of pre-retirement survivor benefits in the form of a lump sum. With respect to the calculation of his
surviving spouse’s pre-retirement survivor benefits, Section 409A triggers immediate taxation on Mr. Perez’s deferred compensation if his
surviving spouse has control over which of two formulas would be used for this calculation. To avoid this tax implication, the December 9,
2008 letter agreement requires the surviving spouse’s pre-retirement survivor benefits to be the greater of the benefits calculated using
either formula. With regard to the definition of survivor, the December 9, 2008 letter agreement clarifies that the only persons who qualify
as survivors include Mr. Perez’s surviving spouse or domestic partner and, if none, his surviving child(ren) under age 19. This definition
was added because both his March 3, 2003 and February 27, 2007 letter agreements did not specify the intended meaning of the term
survivor. With regard to the lump sum payment of pre-retirement survivor benefits, the December 9, 2008 letter agreement provides for a
form of payment because one was not specified in Mr. Perez’s March 3, 2003 and February 27, 2007 letter agreements. A lump sum form
of payment was selected because it is consistent with the form of payment provided for Mr. Perez’s supplemental unfunded retirement
benefit under his February 27, 2007 letter agreement. The September 28, 2009 amendment provides for the accrual of one month of
pension service for each month of employment after December 1, 2010. In addition to these benefits, Mr. Perez is eligible to participate in
all retirement and supplemental retirement plans, policies and arrangements that are provided to other senior executives of the Company.
The term of Mr. Perez’s employment is indefinite but, according to his March 3, 2003 letter agreement, as amended by his December 9,
2008 and September 28, 2009 letter agreements, he will be eligible to receive certain severance benefits in connection with termination of
his employment under various circumstances. For information regarding his potential severance payments and benefits, please read the
narrative descriptions and tables beginning on page 77 of this Proxy Statement.