Kodak 2010 Annual Report Download - page 174

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48
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
Severance Arrangements
The Committee believes that it is important to provide our senior management some measure of financial security in the event their
employment is terminated without cause, because of their responsibility for the success of the Company and the execution of the
Company’s strategic plan.
Messrs. Perez and Jotwani have an individual letter agreement that provides various severance benefits in the event their employment is
terminated under various circumstances. These individual letter agreements were established at the time Messrs. Perez and Jotwani
commenced employment with the Company. Additionally, when determining the appropriate severance arrangement for a Named
Executive Officer, the Committee generally applies pre-established guidelines. Under these guidelines, our Named Executive Officers may
be eligible to receive a severance allowance equal to one to two times their target total cash compensation depending on their position,
length of service and the circumstances surrounding their departure. The individual letter agreements for Named Executive Officers are
approved by the Committee and are consistent with guidelines for executive severance that the Committee has established.
Our individual severance arrangements are designed to serve as a retention tool and to eliminate any reluctance of executives to
implement any transformational components of the Company’s strategic plan. In certain instances, an executive’s successful completion of
his or her responsibilities may result in the elimination of his or her job. These arrangements also provide an incentive for individuals to
sign a release of claims against the Company, to refrain from competing with the Company and to cooperate with the Company both
before and after their employment is terminated.
Mr. Perez’s individual severance arrangement provides severance benefits that are payable in the event his employment is terminated by
the Company without “cause” or if he terminates for “good reason.” Mr. Jotwani’s arrangement provides him with severance benefits for
termination by the Company without “cause” or in the event of his long-term disability. The definitions of “cause” and “good reason” as
applicable to Mr. Perez’s and Mr. Jotwani’s letter agreements are set forth on pages 64 – 65 of this Proxy Statement.
When approving any letter agreement for employment or retention, the Committee focuses on the reasons for which severance may be
triggered relative to the Named Executive Officer’s position and responsibilities.
Our severance arrangements with Messrs. Sklarsky and Faraci and Mmes. McCorvey and Haag are provided in accordance with the
Company plans applicable to employees generally. For additional information regarding the potential severance benefits payable to our
Named Executive Officers under various circumstances, see the description under the Severance Payments Table on pages 68 – 69 of
this Proxy Statement.
Change in Control Arrangements
Consistent with our compensation philosophy, we believe that the interests of our shareholders are best served if the interests of our senior
management are aligned with theirs. To this end, our Executive Protection Plan, which the Company adopted in 1992, provides for
enhanced change in control severance benefits for our Named Executive Officers to reduce any reluctance of our Named Executive
Officers to support potential change in control transactions that may be in the best interest of shareholders and to promote the continued
employment and dedication of our Named Executive Officers without distraction. The Committee believes that these change in control
benefits also encourage smooth transition of management in the event of a change in control. The terms of the Executive Protection Plan
are more fully described on page 66 of this Proxy Statement.
When determining the appropriate level of change in control severance benefits for a Named Executive Officer under the Executive
Protection Plan, the Committee considers how to ensure that the plan continues to fulfill the objectives described above and, in doing so, it
takes market practice and cost of the benefits into consideration. The Committee’s decisions concerning these benefits do not affect
decisions on other compensation elements. Certain of our other employee benefit and compensation plans also provide enhanced benefits
to our Named Executive Officers, as well as other US employees, after a change in control. These benefits are designed to protect our
Named Executive Officers against possible loss of benefits after a change in control. The terms of the Executive Protection Plan and the
treatment of any benefits after a change in control under the Company’s retirement and welfare plans, deferred compensation plan,
EXCEL, and equity incentive plans are more fully described on pages 66 – 67 of this Proxy Statement.
Beginning in 2010, new Section 16 Officers waived their right to an excise tax gross-up payment under our Executive Protection Plan. The
Plan was amended later in the year to eliminate all excise tax-gross ups. In addition, the plan was amended to eliminate the ability of the
CEO and the President to receive termination benefits if either should leave the Company under certain circumstances following a change
in control. While Mr. Perez had already forfeited his “walk away” right and excise tax gross-up as described above, these amendments
eliminated the right associated with anyone serving as CEO or President in the future.