Kodak 2007 Annual Report Download - page 171

48
In 2007, the Committee revised its policy regarding the number of stock options granted to an individual upon election to a Company
officer. The Committee increased the size of the award to a level it determined to be appropriate in recognition of an individual’s promotion
and increase in responsibilities. In determining the new policy award levels, the Committee did not engage in a formal benchmarking
process, but did seek recommendations from management and its independent compensation consultant regarding award levels that
would be both reasonable and adequate to recognize and reward an individual’s promotion. Based on this advice, the Committee
increased the award levels as follows:
• Upon election to Assistant Officer, the number of stock options to be awarded increased from 2,500 to 5,000.
• Upon election to Vice President, Controller, Corporate Secretary or Treasurer, the number of stock options to be awarded increased
from 5,000 to 10,000.
• Upon election to Senior Vice President, the number of stock options to be awarded increased from 10,000 to 15,000.
• Upon election to Executive Vice President, the number of stock options to be awarded increased from 15,000 to 20,000.
Mary Jane Hellyar was the only Named Executive Officer to receive a non-annual equity award in 2007 in recognition of her election to
Executive Vice President. In accordance with the Company’s revised policy described above, Ms. Hellyar received a grant of 20,000 stock
options with an exercise price of $28.44, equal to the fair market value of our common stock on the date of grant of the award. This award
was made in accordance with the Board of Directors Policy on Equity Awards, discussed further on page 48 of this Proxy Statement.
EXECUTIVE COMPENSATION POLICIES RELATING TO INCENTIVE PLANS
Share Ownership Program
Under our Share Ownership Program, our Section 16 Executive Officers are expected, over time, to acquire a significant ownership stake
in the Company equal to at least one to five times their base salary amounts, depending on the executive’s position. Details regarding this
program are on page 33 of this Proxy Statement. The Committee believes this program furthers its objective of closely aligning the
interests of our executives with those of our shareholders.
Equity Grant Timing Practices
All stock options granted to Named Executive Officers in 2007 were granted in accordance with our Board of Directors Policy on Equity
Awards approved by the Board effective as of January 1, 2007. In accordance with this policy, our grant timing guidelines are as follows:
Regular Annual Grant Dates. Annual grants of stock options are approved at the Committee’s regularly scheduled December meeting. If
grants of stock options are to be awarded, the grant date for such options will be the date of the December meeting in which the grants
were approved.
Grant Dates for Ad Hoc and New Hire Equity Awards. For awards to Section 16 Executive Officers, the grant date for any ad hoc or
new hire equity award approved in a meeting of the Committee will be:
• The date of the Committee meeting in which the award is approved in the case of an ad hoc equity award; or
• The next regularly scheduled Committee meeting following the first date of employment in the case of an equity award to a new hire.
The grant date of any ad hoc or new hire equity award approved by unanimous written consent of the Committee will be the next regularly
scheduled Committee meeting following:
• The date of execution of the unanimous consent in the case of an ad hoc equity award; or
• The first date of employment in the case of an equity award to a new hire.
The exercise price of any stock options awarded will be the fair market value of the Company’s common stock on the grant date as defined
in the applicable equity compensation plan.
Policy on Qualifying Compensation
When designing all aspects of compensation, the Company considers the deductibility of executive compensation under Section 162(m) of
the Code, which provides that the Company may not deduct compensation of more than $1 million paid to certain executives, other than
“performance-based” compensation meeting certain requirements. Annual bonuses payable under our EXCEL plan are designed to satisfy
the requirements for “performance-based” compensation as defined in Section 162(m) of the Code. Stock options and Leadership Stock
are also intended to satisfy the requirements for “performance-based” compensation under Section 162(m) of the Code. While these plans
are designed to operate in a manner that are intended to qualify as “performance-based” under Section 162(m) of the Code, the
Committee may administer the plans in a manner that does not satisfy the requirements of Section 162(m) of the Code in order to achieve
a result that the Committee determines to be appropriate. While the Committee considers the impact of the tax treatment, the primary