Kodak 2010 Annual Report Download - page 167

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The Committee reviews base salaries annually, but it does not automatically increase salaries. Rather, base salaries are adjusted only if
deemed appropriate by the Committee, utilizing market data as a reference and in consideration of: 1) experience; 2) responsibilities; 3)
the importance of the position relative to other senior management positions within the Company; 4) external relative scope or changes in
the competitive marketplace; and 5) years since last base salary change. Any change in base salary will affect an executive’s target
opportunity under our annual variable pay plan, which is based on a percentage of base salary.
The market median base salary reference is used because it:
• Enables us to attract and retain high quality talent;
• Ensures that our executives receive competitive levels of fixed compensation, which protects against excessive risk taking that
might be encouraged if salaries were set substantially below market rates;
• Ensures that fixed costs are reasonable and sustainable; and
• Enables us to deliver the majority of compensation opportunity through variable, results-based incentives to ensure that realized
pay is highly correlated with achievement of important performance goals and changes in shareholder value.
Committee Discussion and Analysis
Following a review of our then current Named Executive Officer performance for 2009, the Committee, based on the CEO’s
recommendation, determined that base salaries should remain unchanged for 2010. This decision was primarily influenced by the
Company’s need to conserve costs in the continued uncertain economic environment and a review of current base salary as compared to
market reference data. In the case of the then current Named Executive Officers (Messrs. Perez, Sklarsky and Faraci and Ms. Haag), base
salary approximated market median. The Committee also determined that Mr. Perez’s base salary should remain unchanged for the same
reasons.
The Committee set Mr. Jotwani’s base salary at the time of offer in consideration of his significant experience and skill, his prior
compensation, and what was required to attract him to join the Company. The resulting base salary for Mr. Jotwani approximated the
market median reference. The Committee established Ms. McCorvey’s base salary to recognize her increased responsibilities as the CFO
and in recognition of her skills and experience. The resulting base salary for Ms. McCorvey placed her between the 25th percentile and
median of the market reference data.
Annual Variable Pay: EXCEL
EXCEL provides an annual variable cash incentive opportunity to drive annual performance aligned to success in our business strategy.
EXCEL is structured to comply with the “performance-based” compensation requirements of Section 162(m) so that the Company may
deduct cash incentives payable under the plan.
Executives participating in the plan are assigned a target opportunity expressed as a percentage of base salary. Payouts under EXCEL are
based on a formula that represents results achieved against primary performance metrics. The Committee also establishes a set of
baseline metrics for each performance year. These baseline metrics reflect key strategic and operational imperatives for the year, intended
to ensure that the primary performance metrics are not achieved at the expense of strategic deliverables that are in the long-term interest
of our shareholders. There is no weighting assigned to the baseline metrics. The Committee may consider achievement relative to the
baseline metrics in applying positive or negative discretion to the final EXCEL award. The Committee may not exercise positive discretion
to increase the size of a Named Executive Officer’s award above the maximum award level established under the plan. The maximum
award for any Named Executive Officer is the lesser of 10% of the EXCEL award pool (without discretion), or 500% of his or her prior year-
end base salary, not to exceed $5 million.
EXCEL Target Opportunity
Our Named Executive Officers are assigned target opportunities based on a percentage of base salary as shown on page 39 of this Proxy
Statement.
Committee Discussion and Analysis
For 2010, the Committee determined that the EXCEL target opportunity for Messrs. Perez, Sklarsky and Faraci and Ms. Haag would
remain at the same level as 2009, as it provided a competitive variable pay opportunity based on market median reference data and
created an appropriate mix of fixed versus variable compensation for their levels of responsibility. The resulting target total cash
compensation (base salary plus EXCEL target award) for Messrs. Sklarsky and Faraci and Ms. Haag approximated the market median
reference and positioned Mr. Perez between the median and 75th percentile. The Committee set Mr. Jotwani’s target opportunity based on
internal and external relative responsibility, to create an appropriate balance of fixed versus variable compensation for his responsibilities
and to attract him to join the Company. The resulting target total cash compensation for Mr. Jotwani approximated the market median
reference. The Committee established Ms. McCorvey’s target opportunity based on internal and external relative responsibility and to
create an appropriate balance of fixed versus variable compensation. The resulting target total cash compensation positioned Ms.
McCorvey between the 25th and market median reference.