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Reports
53
E A S T M A N฀ K OD A K ฀ C O M PA N Y
SHARE฀OWNERSHIP฀PROGRAM฀
The฀interests฀of฀the฀Company’s฀executives฀should฀be฀inseparable฀from฀those฀of฀its฀shareholders.฀The฀Company฀aims฀to฀link฀these฀interests฀by฀encouraging฀
stock฀ownership฀on฀the฀part฀of฀its฀executives.฀
One฀program฀designed฀to฀meet฀this฀objective฀is฀the฀Company’s฀share฀ownership฀program.฀All฀executive฀officers฀are฀required฀to฀retain฀a฀specified฀percent-
age฀of฀the฀shares฀attributable฀to฀stock฀option฀exercises฀or฀the฀vesting฀or฀earn-out฀of฀full฀value฀shares฀until฀they฀attain฀their฀ownership฀requirements,฀which฀
are฀expressed฀below฀as฀a฀multiple฀of฀base฀salary.
The฀share฀ownership฀requirements฀operate฀as฀follows:
฀ Level฀ Salary฀Multiple฀ Retention฀Ratio
฀ CEO฀ 5x฀ 100%
฀ COO/President฀ 4x฀ 100%
฀ Executive฀VPs฀ 3x฀ 75%
฀ Senior฀VPs฀ 2x฀ 75%
฀ Other฀Executive฀Officers฀ 1x฀ 50%
CHIEF฀EXECUTIVE฀OFFICER฀COMPENSATION฀
The฀Committee฀determined฀that฀Mr.฀Carp’s฀compensation฀for฀2004฀was฀in฀line฀with฀the฀executive฀compensation฀philosophy฀and฀practices฀described฀above฀
in฀this฀Report.฀Mr.฀Carp’s฀compensation฀for฀2004฀is฀described฀below.฀
Base฀Salary฀
In฀2004,฀the฀Committee฀chose฀to฀maintain฀Mr.฀Carp’s฀annual฀base฀salary฀at฀$1,100,000.฀Similarly,฀for฀2005,฀the฀Committee฀chose฀once฀again฀to฀maintain฀
Mr.฀Carp’s฀annual฀base฀salary฀at฀$1,100,000.฀To฀preserve฀the฀Company’s฀deductibility฀of฀all฀of฀Mr.฀Carp’s฀base฀salary฀for฀U.S.฀income฀tax฀purposes,฀pay-
ment฀of฀$100,000฀of฀his฀base฀salary฀will฀not฀be฀made฀until฀after฀his฀retirement฀from฀the฀Company.฀฀
Short-Term฀Variable฀Pay฀
Mr.฀Carp’s฀short-term฀variable฀pay,฀like฀that฀of฀all฀the฀Company’s฀other฀executives,฀is฀payable฀based฀upon฀the฀successful฀attainment฀of฀specific฀financial฀
goals฀established฀by฀the฀Committee฀in฀February฀of฀each฀year฀under฀the฀Company’s฀short-term฀variable฀pay฀plan,฀EXCEL.฀As฀described฀earlier,฀for฀2004,฀
these฀financial฀goals฀were฀based฀on฀revenue฀and฀investable฀cash฀flow.฀As฀previously฀reported฀under฀the฀2004฀EXCEL฀performance฀matrix,฀the฀Company฀
exceeded฀its฀target฀revenue฀and฀investable฀cash฀flow฀goals฀for฀the฀year.฀The฀Committee฀also฀considered฀Mr.฀Carp’s฀performance฀against฀his฀key฀EXCEL฀
performance฀goals.฀In฀particular,฀the฀Committee฀noted฀that฀the฀Company฀is฀well฀underway฀in฀the฀execution฀of฀its฀digital฀transformation฀strategy฀and฀with฀
regard฀to฀its฀leadership฀and฀diversity฀strategies.฀Based฀on฀these฀results฀and฀the฀results฀under฀the฀2004฀EXCEL฀baseline฀metrics฀and฀restructuring฀efforts฀
noted฀earlier฀in฀this฀Report,฀the฀Committee฀fixed฀Mr.฀Carp’s฀2004฀EXCEL฀award฀at฀127%,฀which฀is฀the฀same฀level฀it฀established฀for฀the฀corporate฀funding฀
pool.฀The฀amount฀of฀the฀award฀is฀listed฀in฀the฀Summary฀Compensation฀Table฀on฀page฀34.
Stock฀Options฀
Effective฀December฀10,฀2004,฀the฀Committee฀granted฀a฀stock฀option฀award฀to฀Mr.฀Carp฀of฀108,000฀shares.฀These฀options฀were฀granted฀under฀the฀same฀
terms฀and฀conditions฀as฀awards฀made฀to฀all฀officers฀generally฀under฀the฀Company’s฀stock฀option฀program.฀That฀is,฀the฀options฀were฀priced฀at฀100%฀of฀
the฀fair฀market฀value฀of฀the฀Company’s฀common฀stock฀on฀the฀day฀of฀grant,฀have฀a฀term฀of฀seven฀years฀and฀vest฀ratably฀over฀three฀years.฀The฀Committee฀
determined฀Mr.฀Carp’s฀award฀based฀on฀its฀review฀of฀benchmark฀data฀and฀assessment฀of฀Mr.฀Carp’s฀leadership.
Leadership฀Stock฀Program
The฀Committee฀allocated฀to฀Mr.฀Carp฀a฀target฀award฀for฀the฀2004-2005฀performance฀cycle฀of฀the฀Leadership฀Stock฀Program฀of฀60,000฀performance฀stock฀
units.฀The฀Committee฀determined฀Mr.฀Carp’s฀allocation฀based฀on฀its฀assessment฀of฀his฀leadership฀and฀execution.฀As฀part฀of฀its฀determination,฀the฀Commit-
tee฀also฀took฀into฀account฀the฀fact฀that฀there฀would฀be฀no฀increase฀to฀Mr.฀Carp’s฀annual฀base฀salary฀for฀2004.
Performance฀Stock฀Program฀
Based฀on฀the฀Company’s฀financial฀performance฀over฀the฀three-year฀period฀ending฀in฀2004,฀Mr.฀Carp฀did฀not฀receive฀an฀award฀for฀the฀2002-2004฀perfor-
mance฀cycle฀of฀the฀Performance฀Stock฀Program,฀other฀than฀the฀award฀earned฀under฀the฀cycle’s฀Executive฀Incentive฀Program,฀which฀was฀reported฀in฀last฀
year’s฀Proxy฀Statement฀and฀is฀referenced฀in฀footnote฀(f)฀to฀the฀Summary฀Compensation฀Table฀on฀page฀34.