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DEFINITIVE COPY
EASTMAN KODAK COMPANY
343 State Street
Rochester, New York 14650
NOTICE OF 1996 ANNUAL MEETING AND PROXY STATEMENT
(CORPORATE LOGO OMITTED)
Date of Notice March 14, 1996
TABLE OF CONTENTS
Notice of Annual Shareholders Meeting...................1
Information Requests....................................2
A Note for Kodak Employees and Retirees, and all
Automatic Dividend Reinvestment Plan Participants.....2
Election of Directors (Item 1)..........................2
Committees of the Board of Directors....................5
Beneficial Security Ownership of Directors, Nominees
and Executive Officers................................5
Compensation of Directors and Executive Officers........6
Compensation of Directors.........................6
Compensation of Executive Officers................6
Report on Executive Compensation by the Executive
Compensation and Development Committee.........12
Performance Graph - Shareholder Return.................14
Ratification of Election of
Independent Accountants (Item 2).....................14
Shareholder Proposals (Items 3, 4 and 5)...............14
Other Matters..........................................17
TO KODAK SHAREHOLDERS
On behalf of the Board of Directors, it is my pleasure to
invite you to attend the Annual Meeting of the shareholders of
Eastman Kodak Company. The meeting will be held in Rochester, New
York, on May 8, 1996, at 10:00 a.m.
It is important that your shares be represented at the meeting.
Please sign, date and return the enclosed proxy card as soon as
possible.
Time will be set aside during the meeting to discuss each item
of business described in the Proxy Statement and for other questions
relating to the Company.
s/George Fisher
George M. C. Fisher
Chairman of the Board
NOTICE OF ANNUAL SHAREHOLDERS MEETING
The Annual Meeting of the shareholders of Eastman Kodak Company
will be held at the Theater on the Ridge, 200 Ridge Road West,
Rochester, New York, on Wednesday, May 8, 1996, at 10:00 a.m.
You may indicate your intention to attend the Meeting by
checking the appropriate box on the enclosed proxy card. Attendance
at the Meeting will be on a first-come, first-served basis upon your
arrival at the Meeting. You may bring up to two guests by checking
the appropriate box on the proxy card. If the shares you own are not
registered in your name, please identify the shareholder of record
when you request admission.
Please refer all questions and comments (rather than adding
them to the proxy card) to: Coordinator, Shareholder Services,
Eastman Kodak Company, 343 State Street, Rochester, New York 14650-
0520, (716) 724-5492.
Photographs will be taken at the Annual Meeting for use
(including publication) by the Company. Attendees are deemed to have
waived any claim regarding their appearance in such photographs.
The Theater on the Ridge is handicap accessible. If you
require special assistance, please call Shareholder Services at
(716) 724-5492.
The business of the Meeting will be:
1. The election of three Class III directors;
2. The ratification of election of independent
accountants;
3. Action on a shareholder proposal concerning environmental
matters;
4. Action on a shareholder proposal concerning cumulative
voting; and
5. Action on a shareholder proposal concerning executive
compensation.
Shareholders of record at the close of business on March 11,
1996, will be entitled to vote at the Meeting.
By Order of the Board of Directors
Joyce P. Haag, Secretary
Eastman Kodak Company
March 14, 1996
INFORMATION REQUESTS
A copy of the Annual Report on Form 10-K, filed with the
Securities and Exchange Commission, may be obtained by writing to:
Coordinator, Shareholder Services, Eastman Kodak Company, 343 State
Street, Rochester, New York 14650-0520.
A transcript of the Annual Meeting may be obtained, without
charge, by writing to this same address. Also, any shareholder of
the Company may address a request to the above address for plan
descriptions, administrators' annual reports and trust agreements and
contracts for any of the pension plans of the Company and its
subsidiaries.
The Company makes available a report on diversity. Requests
for this report may be sent to the above address.
A NOTE FOR KODAK EMPLOYEES AND RETIREES,
AND ALL AUTOMATIC DIVIDEND REINVESTMENT PLAN PARTICIPANTS
If you are a participant in the Employee Stock Purchase Plan
for Employees of Eastman Kodak Company or the Automatic Dividend
Reinvestment Plan for Shareholders of Eastman Kodak Company, each
offered by First Chicago Trust Company of New York, the Kodak Stock
Fund of the Eastman Kodak Employees' Savings and Investment Plan, or
the Kodak Employee Stock Ownership Plan, shares of Kodak stock which
are held for you may be voted through the proxy card accompanying
this mailing.
The trustees or custodians, as the shareholders of record of
the Kodak shares held in the above plans, are entitled to vote those
shares. However, they may not do so under the applicable trust
agreements or regulations unless they have received directions to
vote from the plan participants. Arrangements have been made for
each of the trustees or custodians to vote the number of shares
equivalent to your interest in each plan in accordance with the
directions you give on the enclosed proxy card, provided that you
return the proxy card duly signed and dated. Neither the shares you
own directly (if you own shares other than through one or more of the
above plans) nor your shares held in the plans will be voted if you
fail to return the proxy card. Therefore, we urge you to return the
card promptly, duly signed and dated.
ITEM 1 - ELECTION OF DIRECTORS
The By-laws of the Company currently provide that the Board of
Directors shall consist of not fewer than 9 nor more than 18
directors, which number is fixed from time to time by the Board of
Directors. The Company's Restated Certificate of Incorporation
provides that the Board of Directors shall consist of three classes
of directors with overlapping three-year terms. One class of
directors is to be elected each year for a term extending to the
third succeeding Annual Meeting after such election. There are three
directors whose terms expire at the 1996 Annual Meeting.
The names and biographical summaries of the three persons who
have been nominated to stand for election at the 1996 Annual Meeting
appear in the sections below. The remaining directors whose terms
are continuing until the 1997 or 1998 Annual Meeting also appear in
the sections below except Leo J. Thomas, a Class II director who will
be retiring May 1, 1996. All the nominees were previously elected by
the shareholders.
Directors are elected to serve until the end of the term for
which they are elected and until their respective successors are duly
elected and qualified. However, employee directors leave the Board
when their employment terminates, and directors who are not employees
leave the Board effective the date of the annual meeting that occurs
on or immediately following their 70th birthday.
If an unexpected occurrence makes it necessary, in the judgment
of the Board of Directors, that some other person be substituted for
any of the nominees, shares represented by proxies will be voted for
such other person as the Board may select.
If any director retires, resigns, dies or is otherwise unable
to serve for the term for which elected, or if the number of
directors is increased by the Board of Directors, any vacancy so
arising will be filled by the Board of Directors until the next
Annual Meeting of shareholders, or the Board may reduce the number of
directors.
NOMINEES TO SERVE AS DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE
1999 ANNUAL MEETING
(Class III Directors)
RICHARD S.
BRADDOCK (PICTURE OMITTED)
Mr. Braddock, 54, who was elected to the Kodak Board of Directors in
May 1987, was a principal of Clayton, Dubilier & Rice, for the period
June 1994 to September 1995. From January 1993 until October 1993,
he was Chief Executive Officer of Medco Containment Services, Inc.
From January 1990 through October 1992, he served as President and
Chief Operating Officer of Citicorp and its principal subsidiary,
Citibank, N.A. Prior to that, he served for approximately five years
as Sector Executive in charge of Citicorp's Individual Bank, one of
the financial services company's three core businesses. Mr. Braddock
was graduated from Dartmouth College in 1963 with a degree in
history, and received his M.B.A. from the Harvard School of Business
Administration in 1965. He is a director of True North
Communications Inc. and DFS Group Limited.
KARLHEINZ
KASKE (PICTURE OMITTED)
Dr. Kaske, 67, who was elected to the Kodak Board of Directors in May
1993, served as President and Chief Executive Officer of Siemens AG
from 1981 until his retirement in September 1992. Dr. Kaske joined
Siemens in 1960 and held a variety of positions with Siemens AG,
including head of Process Engineering and head of the Power
Engineering Group. Dr. Kaske is a professor at the Technical
University of Munich. He holds a diploma in physics from the
Technical University of Aachen and a Doctorate of Engineering from
the Technical University of Brunswick. Dr. Kaske is Chairman of the
supervisory board of MAN Aktiengesellschaft and a member of the
supervisory board of Linde AG.
RICHARD A.
ZIMMERMAN (PICTURE OMITTED)
Mr. Zimmerman, 64, who joined the Kodak Board of Directors in July
1989, is the retired Chairman and Chief Executive Officer of Hershey
Foods Corporation. Mr. Zimmerman joined Hershey in 1958 and was
named Vice President in 1971. Appointed a Group Vice President later
in 1971, he became President and Chief Operating Officer in 1976. He
was named Chief Executive Officer in January 1984 and Chairman of the
Board in March 1985. Mr. Zimmerman was graduated from Pennsylvania
State University. He is a member of the boards of directors of
Lance, Inc. and Westvaco Corporation.
DIRECTORS SERVING A TERM EXPIRING AT THE 1997 ANNUAL MEETING
(Class I Directors)
MARTHA LAYNE
COLLINS (PICTURE
OMITTED)
Governor Collins, 59, was elected to the Kodak Board of Directors in
May 1988. She is President of Martha Layne Collins and Associates, a
consulting firm, and is also President of St. Catharine College in
Springfield, Kentucky, a position she assumed in July 1990.
Following her receipt of a B.S. from the University of Kentucky,
Governor Collins taught from 1959 to 1970. After acting as
Coordinator of Women's Activities in a number of political campaigns,
she served as Clerk of the Supreme Court of the Commonwealth of
Kentucky from 1975 to 1979. She was elected to a four-year term as
Governor of the Commonwealth of Kentucky in 1983 after having served
as Lieutenant Governor from 1979 to 1983. Governor Collins, who has
served as a Fellow at the Institute of Politics, Harvard University,
is a director of R. R. Donnelley & Sons Company and Bank of
Louisville.
GEORGE M. C.
FISHER (PICTURE OMITTED)
Mr. Fisher, 55, who joined the Kodak Board of Directors on
December 1, 1993, is Chairman, President and Chief Executive Officer
of Eastman Kodak Company. In addition, he was named Chief Operating
Officer of Eastman Kodak Company effective in October, 1995. Mr.
Fisher most recently served as Chairman and Chief Executive Officer
of Motorola, Inc., after having served as President and Chief
Executive Officer between 1988 and 1990 and Senior Executive Vice
President and Deputy to the Chief Executive Officer between 1986 and
1988. Mr. Fisher holds a bachelor's degree in engineering from the
University of Illinois and a masters in engineering and doctorate in
applied mathematics from Brown University.
PAUL E.
GRAY (PICTURE OMITTED)
Dr. Gray, 64, was elected to the Kodak Board of Directors in
September 1990. Chairman of the Corporation of the Massachusetts
Institute of Technology (M.I.T.) since October 1990, Dr. Gray served
for the ten preceding years as President of M.I.T. He has also
served on the M.I.T. faculty and in the academic administration,
including responsibilities as Associate Provost, Dean of Engineering,
and Chancellor. Dr. Gray earned his bachelor's, master's, and
doctorate degrees in electrical engineering from M.I.T. He is a
director of The Boeing Co. and The New England.
JOHN J.
PHELAN, JR. (PICTURE OMITTED)
Mr. Phelan, 64, who joined the Kodak Board of Directors in December
1987, is the retired Chairman and Chief Executive Officer of the New
York Stock Exchange, a position which he held from 1984 until 1990.
He was President of the International Federation of Stock Exchanges
from 1991 through 1993. He is a member of the Council on Foreign
Relations and is a senior advisor to the Boston Consulting Group.
Mr. Phelan, a graduate of Adelphi University, is active in
educational and philanthropic organizations and is also a director of
Merrill Lynch & Co., Inc., Metropolitan Life Insurance Company and
SONAT Inc.
DIRECTORS SERVING A TERM EXPIRING AT THE 1998 ANNUAL MEETING
(Class II Directors)
ALICE F.
EMERSON (PICTURE OMITTED)
Dr. Emerson, 64, is Senior Fellow of The Andrew W. Mellon Foundation,
a position she assumed in 1991 after having served as President of
Wheaton College in Massachusetts since 1975. Prior to 1975, Dr.
Emerson served the University of Pennsylvania, first as Dean of Women
from 1966 to 1969 and subsequently as Dean of Students. Elected to
the Kodak Board of Directors in May 1992, Dr. Emerson received her
bachelor's degree from Vassar College and her Ph.D. degree from Bryn
Mawr College. She is a member of the boards of directors of AES
Corporation, Bank of Boston Corporation and Champion International
Corp.
ROBERTO C.
GOIZUETA (PICTURE OMITTED)
Mr. Goizueta, 64, is Chairman and Chief Executive Officer of The
Coca-Cola Company. He was elected to this position in March 1981,
having served as President from May 1980 to March 1981. Prior to
becoming President, he was a Vice Chairman and Executive Vice
President. Mr. Goizueta, who was elected to the Kodak Board of
Directors in May 1989, received a B.S. degree in chemical engineering
from Yale University. He is a member of the boards of directors of
Ford Motor Company, SONAT Inc. and SunTrust Banks of Georgia, Inc.
WILBUR J.
PREZZANO (PICTURE OMITTED)
Mr. Prezzano, 55, who joined the Kodak Board of Directors in May
1992, is an Executive Vice President of Eastman Kodak Company. Mr.
Prezzano joined the Company in 1965 in the statistical department and
has held positions in Treasurer's, Business Systems Markets, Customer
Equipment Services Division, Copy Products, Marketing Division,
International Photographic Operations and Photographic Products. He
served as Group Vice President and General Manager, International,
from January 1990 to September 1991, when he became President of
Kodak's Health Group. In August, 1994, he was elected an Executive
Vice President and was named chairman and president of the Greater
China Region. Mr. Prezzano received B.S. and M.B.A. degrees from the
University of Pennsylvania's Wharton School.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, an Executive
Compensation and Development Committee, a Committee on Directors, a
Finance Committee, and a Public Policy Committee.
The members of the Audit Committee are Mr. Zimmerman (Chairman)
and Dr. Kaske and Gov. Collins. The Committee had four meetings
during 1995 and (i) recommended to the Board that Price Waterhouse
LLP be elected as independent accountants; (ii) reviewed the audit
and non-audit activities of both the independent accountants and the
internal audit staff of the Company; and (iii) met separately and
privately with the independent accountants and with the Company's
Director, Corporate Auditing, to ensure that the scope of their
activities had not been restricted and that adequate responses to
their recommendations had been received.
The members of the Executive Compensation and Development
Committee are Mr. Braddock (Chairman), Dr. Emerson and Messrs.
Goizueta and Phelan. The Committee had four meetings in 1995. The
Committee's 1995 activities included a review of the Company's
executive development process, approval of remuneration to be paid to
the executive vice presidents and senior vice presidents of the
Company and recommendations concerning compensation of other Company
officers. In addition, the Committee made determinations and granted
stock options under the Eastman Kodak Company 1995 Omnibus Long-Term
Compensation Plan and made determinations under the Management
Variable Compensation Plan and Wage Dividend Plan.
The members of the Committee on Directors are Messrs. Goizueta
(Chairman), Braddock and Zimmerman. The Committee, which acted by
written consent and met once in 1995, (i) reviewed the qualifications
of individuals for election as members of the Board; (ii) recommended
qualified individuals to be considered for Board membership; and
(iii) recommended revisions to the Eastman Kodak Company Retirement
Plan for Directors. The Committee will consider persons whom
shareholders recommend as candidates for election as Company
directors. Any shareholder wishing to make such a recommendation
should submit it to the Secretary of the Company.
The members of the Finance Committee are Mr. Phelan (Chairman)
and Drs. Gray and Kaske. The Committee had five meetings during 1995
and reviewed (i) the investment performance and the administration of
the Company's pension plan; and (ii) the Company's financing
strategies.
The members of the Public Policy Committee are Gov. Collins
(Chairman) and Drs. Emerson and Gray. The Committee met three times
during 1995. Its activities included (i) a review of proposals
submitted by shareholders; (ii) a review of the Company's
philanthropic programs; and (iii) a review of the Company's
environmental initiatives.
MEETING ATTENDANCE The Board of Directors held a total of six
meetings in 1995. All of the directors attended at least 90% of the
meetings of the Board and committees of the Board on which such
director served, except Dr. Kaske who, because of illness, attended
only 66% of the meetings.
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS
Directors, Nominees
and Executive Number of Common Shares
Officers Owned on Jan. 2, 1996
- ------------------- -----------------------
Richard T. Bourns 90,881 (a)(b)
Richard S. Braddock 2,826
Martha Layne Collins 2,631
Alice F. Emerson 1,683 (b)
George M. C. Fisher 656,816 (a)(c)
Roberto C. Goizueta 4,790
Paul E. Gray 2,150
Karlheinz Kaske 1,644
Harry L. Kavetas 12,810 (b)(d)
John J. Phelan, Jr. 2,989 (b)
Wilbur J. Prezzano 191,458 (a)
Leo J. Thomas 172,041 (a)
Richard A. Zimmerman 3,210
All Directors, Nominees and 1,442,445 (a)(b)(e)(f)
Executive Officers as a
Group (22), including the above
NOTES:
(a) Includes shares which may be acquired in the following amounts
by exercise of stock options: R. T. Bourns - 85,192; G. M. C.
Fisher - 529,416; W. J. Prezzano - 180,213; L. J. Thomas -
151,152; and all directors, nominees and executive officers as
a group - 1,250,862.
(b) The shares shown do not include the following Eastman Kodak
Company common stock equivalents which are held in the Eastman
Kodak Company Retirement Plan For Directors: A. F. Emerson -
1,582 and J. J. Phelan, Jr. - 4,500, nor do they include the
following Eastman Kodak Company common stock equivalents which
are held in the Eastman Kodak Company 1982 Executive Deferred
Compensation Plan: R. T. Bourns - 5,328, H. L. Kavetas -
8,097, and all executive officers as a group -25,920.
(c) Includes 20,000 shares of restricted stock.
(d) The transfer of these shares is restricted.
(e) The total number of shares beneficially owned by all directors,
nominees and executive officers as a group is less than one
percent of the Company's outstanding shares.
(f) The transfer of some of these shares is restricted.
Beneficial security ownership as reported in the above table
has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Accordingly, except as noted below,
all Company securities over which the directors, nominees and
executive officers directly or indirectly have or share voting or
investment power have been deemed beneficially owned. The figures
above include shares held for the account of the above persons in the
Automatic Dividend Reinvestment Plan for Shareholders of Eastman
Kodak Company, in the Kodak Employee Stock Ownership Plan, and the
interests, if any, of those of the above persons in the Kodak Stock
Fund of the Eastman Kodak Employees' Savings and Investment Plan,
stated in terms of Kodak shares.
The table does not include approximately 7,176,000 shares of
the Company's stock (less than 3 percent of the outstanding shares)
held in the Kodak Stock Fund of the Eastman Kodak Employees' Savings
and Investment Plan for the benefit of some 24,475 employees and
former employees, over which a committee consisting of six
individuals, including four Company officers, has discretionary
voting power.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS Directors who are compensated as
employees of the Company receive no additional compensation as
directors. Each director who is not an employee of the Company
receives an annual retainer of $38,000, payable $20,000 in common
stock of the Company and $18,000 in cash. In addition, each such
director receives a fee of $1,000 for each Board meeting attended and
$900 for each Board committee and special meeting attended, and
$1,000 for each Board committee and special meeting which he or she
chairs. There is a deferred compensation plan available to all such
directors for the cash portion of their compensation, in which two
directors participated in 1995. Directors participating in this plan
may choose between an interest-bearing account and a phantom Kodak
stock fund. Each director who is not an employee of the Company is
eligible to participate in a retirement plan for directors. For
those directors whose service as a director commenced prior to
January 1, 1996, the plan provides an annual retirement benefit for
life equal to the current annual retainer, if the director has served
at least five years. Directors who have served fewer than five years
are entitled to a pro rata retirement benefit. Effective for those
directors whose service as a director commences on or after January
1, 1996, the annual retirement benefit will be paid until the earlier
of the director's death or the end of a period of time equal to the
director's length of service as a director. In addition, the annual
retirement benefit will be based on the annual retainer in effect on
the date of the director's termination of service as a director.
Each director who is not an employee of the Company is covered by
group term life insurance in the amount of $100,000, which decreases
to $50,000 at the later of retirement from the Board under the
retirement plan described above or age 65. In the event of a Change
In Control (as defined in the applicable plans) each account under
the deferred compensation plan will be paid in a single lump sum cash
payment and all retirement benefit payments will be paid in a single
lump sum cash payment equal to the present value of the remaining
retirement benefits.
Each non-employee director is eligible to participate in the
Company's Directors' Charitable Award Program, which provides for a
contribution by the Company of up to $1,000,000 following the
director's death to up to four charitable institutions recommended by
the director. The individual directors derive no financial benefits
from this Program, which is funded by joint life insurance policies
purchased by the Company and self insurance. The purposes of the
Program are to further the Company's philanthropic endeavors, with
particular emphasis on education, acknowledge the service of the
Company's directors, recognize the interest of the Company and the
directors in supporting worthy charitable and educational
institutions and enable the Company to attract and retain directors
of the highest caliber. Directors who are participating in the
Program are Messrs. Braddock, Phelan, and Zimmerman,
Drs. Emerson, Gray, and Kaske, and Gov. Collins.
COMPENSATION OF EXECUTIVE OFFICERS The individuals named in
the following table were the Company's Chief Executive Officer and
the four highest paid executive officers during 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
--------------------------
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- -------------------------------
Awards Payouts
----------------------- -------
Securities
Other Under-
Annual Restricted lying All Other
Name and Compen- Stock Options/ LTIP Compensa-
Principal Position Year Salary(a) Bonus(b) sation Award(s) SARs Payouts tion
- ------------------ ---- ---------- ---------- --------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 1995 $2,000,000 $2,282,496 $ (c) $ 0 50,000 $5,010,098(d) $2,004,941(e)
Chairman, 1994 2,000,000 1,816,400 84,901(f) 0 0 0 2,103,524(e)
President, and 1993 330,769 154,000 (c) 1,270,000(g) 1,323,539 0 5,000,000(h)
Chief Executive Officer
R. T. Bourns 1995 440,000 273,000 (c) 0 15,000 1,925,104(d) 0
Senior Vice 1994 440,000 270,238 (c) 0 10,000 0 0
President 1993 400,000 227,563 (c) 0 10,017 0 0
H. L. Kavetas 1995 567,231 581,561 67,037(i) 0 28,000 857,541(d) 0
Executive Vice 1994 478,077 457,605 56,044(j) 550,830(k) 200,000 0 55,000(l)
President
W. J. Prezzano 1995 577,154 709,432 (c) 0 28,000 2,887,656(d) 0
Executive Vice 1994 552,615 501,328 113,686(m) 0 65,000 0 1,351,200(n)
President 1993 536,000 259,752 306,298(m) 0 15,026 0 0
L. J. Thomas 1995 646,615 613,498 (c) 0 28,000 3,850,208(d) 0
Executive Vice 1994 618,462 488,547 (c) 0 119,200 0 0
President 1993 592,308 301,008 (c) 0 19,158 0 0
<FN>
(a) Includes amounts paid and deferred.
(b) Includes both Wage Dividend Plan (WD) and Management Variable Compensation Plan (MVCP)
paid in the year following for services rendered in the year indicated, in the
following amounts for 1995: G. M. C. Fisher - $302,496 WD, $1,980,000 MVCP;
R. T. Bourns - $53,000 WD, $220,000 MVCP; H. L. Kavetas - $81,561 WD,
$500,000 MVCP; W. J. Prezzano - $84,432 WD, $625,000 MVCP; L. J. Thomas -
$88,498 WD, $525,000 MVCP. For years prior to 1995, Management Annual
Performance Plan (MAPP) was the predecessor plan to MVCP.
(c) The value of personal benefits provided to the executive officer is less than the
minimum amount required to be reported.
(d) This amount represents the value of the awards paid under the 1990 Omnibus Long-Term
Compensation Plan based on performance over the period 1993 - 1995, computed as of
the date of award, February 9, 1996, at $76.875 per share in the following amounts:
G. M. C. Fisher - 65,172 shares; R. T. Bourns - 25,042; H. L. Kavetas - 11,155
shares; W. J. Prezzano - 37,563 shares; and L. J. Thomas - 50,084 shares. The
awards were paid in shares of restricted stock, which restrictions lapse upon
attainment of age 60; except that because Mr. Bourns had attained age 60 by the date
of award, his award was paid in shares with no restrictions. Dividends are paid on
the restricted shares as and when dividends are paid on Kodak common stock.
(e) For 1995, this amount includes $1,982,891 of principal and interest forgiven by the
Company with respect to two loans described under the heading "Employment Contracts"
on page 10 and $22,050 for life insurance premiums; for 1994, the amount included
$2,064,394 of principal and interest forgiven by the Company and $39,130 for life
insurance premiums.
(f) This amount includes $43,973 for club membership.
(g) This amount represents 20,000 shares of restricted stock valued at $63.50 per share,
on the date of grant, November 11, 1993. The value of these shares as of
December 31, 1995 was $1,340,000. These shares are restricted until October 26, 1998
and receipt of these shares is conditioned upon continued employment with the
Company until such date. Dividends are paid on these shares as and when dividends are
paid on Kodak common stock.
(h) This represents a hiring bonus, including amounts paid to reimburse Mr. Fisher for
compensation and benefits he forfeited upon termination of employment with his
previous employer.
(i) This amount includes $55,934 for club membership including tax reimbursement.
(j) This amount includes $35,615 as a temporary living allowance.
(k) This amount represents 12,810 shares of restricted stock valued at $43.00 per share,
on the date of grant, February 15, 1994. The value of these shares as of
December 31, 1995 was $858,270. These shares are restricted until February 14, 1999
and receipt of these shares is conditioned upon continued employment
with the Company until such date. Dividends are paid on these shares as and when
dividends are paid on Kodak common stock.
(l) This amount represents a hiring bonus.
(m) This amount represents expatriate payments and tax reimbursement for overseas
assignments in 1990 and 1991. The value of personal benefits provided to the
executive officer is less than the minimum amount required to be reported.
(n) This amount represents a special recognition Award paid in 1995 in connection with the
divestiture in 1994 of the non-imaging health businesses.
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
- --------------------------------------------------------------------- Potential Realizable
Number of Percentage Value at Assumed
Securities of Total Annual Rate of
Underlying Options/SARs Stock Price Apprecia-
Options/ Granted to Exercise or tion for Option Term (a)
SARs Employees Base Price Expiration -----------------------------
Name Granted in Fiscal Year Per Share Date 0%(b) 5%(c) 10%(d)
- --------------- ---------- -------------- ----------- ---------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 50,000(e) 1.74% $56.313 4/19/05 $0 $1,770,747 $4,487,421
R. T. Bourns 15,000(e) .52 56.313 4/19/05 0 531,224 1,346,226
H. L. Kavetas 28,000(e) .97 56.313 4/19/05 0 991,618 2,512,956
W. J. Prezzano 28,000(e) .97 56.313 4/19/05 0 991,618 2,512,956
L. J. Thomas 28,000(e) .97 56.313 4/19/05 0 991,618 2,512,956
All Shareholders N/A N/A N/A N/A 12.1 Billion 30.5 Billion
Gain of named N/A N/A N/A N/A N/A .044% .044%
officers as
portion of all
shareholder gain
<FN>
(a)The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future appreciation, if
any, of the Company's stock price.
(b)No gain to the optionees is possible without an increase in stock price,
which will benefit all shareholders commensurately. A zero percent
increase in stock price will result in zero dollars for the optionee.
(c)A 5% per year appreciation in stock price from $56.313 per share yields
$91.728.
(d)A 10% per year appreciation in stock price from $56.313 per share yields
$146.061.
(e)One third of these options vests on the first anniversary of the grant
date, one third vests on the second anniversary of the grant date, and one
third vests on the third anniversary of the grant date. Termination of
employment prior to vesting results in forfeiture of the option unless
termination of employment is due to retirement, death, disability or an
approved reason. Vesting accelarates upon death.
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised in-the-money
Number Options/SARs at Options/SARs at
of Fiscal Year-End Fiscal Year-End(a)
Shares ----------------------------- --------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------- ------------ -------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 0 $ 0 529,416 844,123 $8,752,835 $13,664,082
R. T. Bourns 2,066 60,619 80,192 20,000 2,298,056 227,073
H. L. Kavetas 0 0 0 228,000 0 5,111,236
W. J. Prezzano 0 0 172,713 85,500 5,668,973 1,604,701
L. J. Thomas 18,595 650,285 141,552 137,600 4,434,482 2,780,231
<FN>
(a) Based on the closing price on the New York Stock Exchange - Composite Transactions of the Company's
Common Stock on December 29, 1995 of $67 per share.
</TABLE>
Long-Term Incentive Plan
In March 1993, the 1993-1995 Restricted Stock Program, a
performance share unit arrangement under the 1990 Omnibus Long-Term
Compensation Plan, was approved by the Executive Compensation and
Development Committee. Payouts of awards, if any, are tied to
achieving specified performance goals regarding stock price, return
on assets, and total shareholder return relative to the Standard &
Poor's 500 Index, over the period 1993-1995. These performance goals
are incorporated into the program's two performance formulas. Awards
may not be granted under the program unless one of the performance
formulas determines that awards are payable for the three year
performance period. One performance formula provides for payment at
100% of target, while the other provides for payment at 50% of
target. The sole difference being that under the former formula a
higher stock price must be achieved than under the latter. By
application of these performance formulas, the Committee will
determine the payout based upon its review of Company performance for
the performance period. If awards are payable under the terms of one
of the performance formulas, the Committee may in its discretion
reduce, but in no event may it increase, the percent of target
produced by such formula. In so doing, the Committee may consider,
in addition to the performance goals, such other internal and
external factors it deems relevant or appropriate. Awards, if any,
will be paid in the form of restricted stock, which restrictions will
lapse upon the participant's attainment of age 60. Participants who
terminate employment for reasons of death, disability, retirement or
an Approved Reason, prior to the completion of the performance cycle,
will receive their award, if any, at the conclusion of the
performance period in the form of shares of Kodak common stock with
no restrictions. Awards paid under this program are shown in the
column of the Summary Compensation Table entitled "LTIP Payouts."
In February 1995, the Committee approved the 1995-1996 and
1995-1997 Performance Cycles of the Performance Stock Program, the
successor to the Restricted Stock Program. Awards under each cycle
are contingent upon attaining a performance goal that was established
by the Committee upon the commencement of the cycles. This
performance goal is attainment by Kodak of a total shareholder return
equal to at least that earned over the same period by the company at
the 50th percentile in terms of total shareholder return within the
Standard & Poor's 500 Index. After the close of a cycle, the
Committee will determine whether the performance goal was achieved
and, if so, calculate, based upon application of the performance
formula to the performance goal, what percentage of each
participant's target award for the cycle has been earned. In no
event will awards be paid for a cycle unless the performance goal is
achieved. The performance formula for each cycle provides that 50%
of the target award will be earned if the performance goal is
achieved. In order for 100% of target to be earned, total
shareholder return for the cycle must equal that of the company used
to demarcate performance at the 60th percentile within the Standard &
Poor's 500 index. In determining the actual award amount to be paid
to a participant, the Committee has the discretion to reduce or
eliminate the target award earned by a participant, based upon any
objective or subjective criteria it deems appropriate. Awards, if
any, will be paid in the form of restricted stock which will carry
the same restrictions as the awards under the Restricted Stock
Program. All of the awards are intended to qualify as "Performance-
Based Compensation" under Section 162(m) of the Internal Revenue Code
of 1986. Participation in both cycles commenced in 1995 for the CEO
and the other named executive officers. Shown in the table below is
the threshold (i.e., attainment of the performance goal), target and
maximum number of shares for the CEO and the other named executive
officers for each cycle.
Individuals who participate for less than the full performance period
will receive a prorated amount of the Award, if any, determined at
the end of the performance period based upon the duration of their
participation during the performance period.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
Number
of Performance Estimated Future Payouts Under
Shares, or Other Non-Stock Price-Based Plans
Units or Period Until
Other Maturation Threshold Target Maximum
Rights or Payout # of Shares # of Shares # of Shares
Name
<S> <C> <C> <C> <C> <C>
- ---------------- ------------- ------------- ----------- ------------ ------------
G. M. C. Fisher N/A 1995-1996 6,750 13,500 20,250
1995-1997 6,750 13,500 20,250
R. T. Bourns N/A 1995-1996 1,988 3,975 5,963
1995-1997 1,988 3,975 5,963
H. L. Kavetas N/A 1995-1996 3,288 6,575 9,863
1995-1997 3,288 6,575 9,863
W. J. Prezzano N/A 1995-1996 3,000 6,000 9,000
1995-1997 3,000 6,000 9,000
L. J. Thomas N/A 1995-1996 3,525 7,050 10,575
1995-1997 3,525 7,050 10,575
</TABLE>
Employment Contracts
On October 27, 1993, the Company entered into an agreement
covering a period of five years, for the employment of George M. C.
Fisher as Chairman, President and Chief Executive Officer of the
Company. Upon execution of the agreement, Mr. Fisher received
$5,000,000 as an inducement for entering into the agreement and as
reimbursement for compensation and benefits that he would forfeit upon
termination of his employment with his previous employer. Mr. Fisher's
base salary is $2,000,000, subject to review on an annual basis. Mr.
Fisher participates in MVCP and has an annual target Award opportunity
of at least $1,000,000, with that amount guaranteed for services
rendered in each of 1994 and 1995. Mr. Fisher was granted 20,000 shares
of restricted stock with the restrictions lapsing at the end of five
years. Pursuant to the agreement, Mr. Fisher was granted 1,323,539
stock options in 1993. The agreement provided for the Company to make
two loans to Mr. Fisher in the total amount of $8,284,400 for five years
with interest at the rate of 4.86% (which was the most recently
announced rate under Section 1274(d) of the Internal Revenue Code, prior
to the date of the loan). Of this total amount, $4,284,400 was loaned
to Mr. Fisher due to his forfeiture of 80,000 stock options from his
prior employer resulting from his accepting employment with the Company.
Mr. Fisher was required to use all of the loan proceeds except
$1,500,000 to purchase Kodak stock. The shares he purchased are
reflected in the security ownership table on page 5 of this Proxy
Statement. Twenty percent of the principal and all of the accrued
interest on each of these loans are to be forgiven on each of the first
five anniversaries of such loans. Forgiveness of the $4,000,000 loan is
conditioned upon Mr. Fisher's not having voluntarily terminated his
employment with the Company and forgiveness of the $4,284,400 loan is
conditioned upon Mr. Fisher's not entering into competition with the
Company. The amount of the forgiveness for 1995 is shown in the column
of the Summary Compensation Table entitled "All Other Compensation," on
page 7.
In addition, where necessary, Mr. Fisher has been given credit for
a period of service sufficient to allow him to obtain the maximum
benefit available under the Company's benefit plans. In particular, Mr.
Fisher was credited with seventeen years of service for purposes of
calculating a retirement benefit. Any pension benefit payable to Mr.
Fisher by the Company will be offset by any pension benefit paid to Mr.
Fisher by his prior employer. The Company provided Mr. Fisher with an
apartment until he purchased a permanent residence in the Rochester
area. The Company purchased Mr. Fisher's residence in Barrington Hills,
Illinois. In addition, the Company reimbursed Mr. Fisher for all
closing costs associated with a previous residence, which was sold after
he accepted employment with the Company. The Company is providing Mr.
Fisher with life insurance equal to 3.5 times his base salary and a
disability benefit equal to 60% of base salary. In the event of Mr.
Fisher's death prior to the termination of this agreement, the agreement
provides for salary continuation for 90 days, the payment of the annual
incentive for the year of his death and annual and long-term incentives
earned but not yet paid and vesting of all stock options and awards and
the forgiveness of the loans. In the event of Mr. Fisher's disability
prior to termination of the agreement, the agreement provides for a
disability benefit payable to age 65, the payment of the annual
incentive for the year in which his disability occurs and annual and
long-term incentives earned but not yet paid and vesting of all stock
options and awards. If Mr. Fisher's employment is terminated by the
Company without cause, including following a Change In Control, Mr.
Fisher is entitled to the greater of the remaining term of his
employment contract or 36 months of salary continuation, immediate
vesting of stock options, the lapsing of any restrictions on any
restricted stock award and the payment of any incentive awards earned
but not yet paid. Mr. Fisher is entitled to reimbursement for taxes
paid on certain of the foregoing payments, including any amounts
constituting "parachute payments" under the Internal Revenue Code. If
Mr. Fisher dies prior to retirement, his spouse is entitled to a 50%
survivor annuity.
On February 11, 1994, the Company entered into an agreement
covering a period of five years, for the employment of Harry L. Kavetas
as Chief Financial Officer of the Company. Mr. Kavetas' base salary is
$550,000, subject to review on an annual basis. Mr. Kavetas
participates in MVCP and has an annual target award opportunity of at
least $330,000. Mr. Kavetas was granted 12,810 shares of restricted
stock with the restrictions lapsing at the end of five years. Pursuant
to the agreement, Mr. Kavetas was granted 200,000 stock options that
become exercisable at the end of five years.
In addition, where necessary, Mr. Kavetas has been given credit
for a period of service sufficient to allow him to obtain the maximum
benefits available under Kodak's benefit plans. In particular. Mr.
Kavetas will be credited with six years of service for each of the first
five years of employment for purposes of calculating a retirement
benefit. Any pension benefit payable to Mr. Kavetas by the Company will
be offset by any pension benefit paid to Mr. Kavetas by his prior
employer. The Company provided Mr. Kavetas with temporary housing until
he purchased a permanent residence in the Rochester area. In the event
of Mr. Kavetas' death prior to the termination of the agreement, the
agreement provides for salary continuation for 90 days, the pro rata
payment of all annual and long-term incentives and pro rata vesting of
stock options and restricted stock awards. In the event of Mr. Kavetas'
disability prior to termination of the agreement, the agreement provides
for the pro rata payment of all annual and long-term incentives, and pro
rata vesting of stock options and restricted stock awards. If Mr.
Kavetas' employment is terminated by the Company without cause, Mr.
Kavetas is entitled to 18 months of salary continuation, immediate pro
rata vesting of stock options and restricted stock awards and the
payment of any incentive awards earned but not yet paid.
Termination of Employment
The Company has a general severance arrangement available to
substantially all U.S. employees. This Termination Allowance Plan
provides two weeks of compensation for every year of service with a
maximum of fifty-two weeks of salary.
The Company has entered into a retention agreement with Wilbur J.
Prezzano. The arrangement provides that any Company retirement benefits
which Mr. Prezzano would have qualified for had he retired in 1994 will
be provided to him if and when he retires from Kodak. In addition,
assuming Mr. Prezzano retires, if the Company-provided retiree health
and dental coverage that he would have received had he retired in 1995
is not then available, he will be provided with comparable coverage.
For this purpose, comparable coverage means that coverage then being
offered which, in terms of its benefits and required participant
contribution, is most comparable to the coverage Mr. Prezzano would have
received had he retired in 1994.
Change In Control Arrangements
In the event of a Change In Control which results directly or
indirectly in the Company's stock ceasing to be actively traded on the
New York Stock Exchange, the following would occur: (i) each
participant in the Executive Deferred Compensation Plan would receive
the balance in his or her account in a single lump sum cash payment;
(ii) each participant in the Management Variable Compensation Plan would
be paid a pro-rata target award for such year and any other year for
which payment of awards had not been made as of such date; and (iii) all
outstanding stock options and stock appreciation rights would become
fully vested and each holder would be paid in a lump sum cash payment
the difference between the exercise price and the Change In Control
price; each of the foregoing payments would be made in a single lump sum
cash payment as soon as possible but no later than the 90th day
following such event.
Retirement Plan
The Company funds a tax-qualified, defined benefit pension plan
for virtually all U.S. employees. Retirement income benefits are based
upon the individual's "average participating compensation," which is the
average of three years of those earnings described in the Plan as
"participating compensation." "Participating compensation," in the case
of the executive officers included in the Summary Compensation Table, is
annual compensation (salary and Management Variable Compensation Plan
payments), including allowances in lieu of salary for authorized periods
of absence, such as illness, vacation or holidays.
For an employee with up to 35 years of accrued service, the annual
normal retirement income benefit is computed by multiplying the number
of years of accrued service by the sum of (a) 1.3% of "average
participating compensation" ("APC") for the employee's final three
years, plus (b) .3% of APC in excess of the average Social Security wage
base for the employee's final three years. For an employee with more
than 35 years of accrued service, the amount computed above is increased
by 1% for each year in excess of 35 years.
The retirement income benefit is not subject to any deductions for
Social Security benefits or other offsets. Officers are entitled to
benefits on the same basis as other employees. The normal form of
benefit is an annuity, but a lump sum payment is available as an option
for the benefit a participant accrued prior to January 1, 1996.
<TABLE>
PENSION PLAN TABLE - Annual Retirement Income Benefits
Straight Life Annuity Beginning at Age 65
<CAPTION>
Years of Service
----------------------------------------------------------------------------------------------
Remuneration 10 15 20 25 30 35 40
- ------------- -------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 500,000 $ 80,000 $120,000 $ 160,000 $ 200,000 $ 240,000 $280,000 $294,000
750,000 120,000 180,000 240,000 300,000 360,000 420,000 441,000
1,000,000 160,000 240,000 320,000 400,000 480,000 560,000 588,000
1,250,000 200,000 300,000 400,000 500,000 600,000 700,000 735,000
1,500,000 240,000 360,000 480,000 600,000 720,000 840,000 882,000
1,750,000 280,000 420,000 560,000 700,000 840,000 980,000 1,029,000
2,000,000 320,000 480,000 640,000 800,000 960,000 1,120,000 1,176,000
2,250,000 360,000 540,000 720,000 900,000 1,080,000 1,260,000 1,323,000
2,500,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,470,000
2,750,000 440,000 660,000 880,000 1,100,000 1,320,000 1,540,000 1,617,000
3,000,000 480,000 720,000 960,000 1,200,000 1,440,000 1,680,000 1,764,000
3,250,000 520,000 780,000 1,040,000 1,300,000 1,560,000 1,820,000 1,911,000
<FN>
NOTE: For purposes of this table Remuneration means Average Participating Compensation. To the extent that
any individual's annual retirement income benefit exceeds the amount payable from the Company's funded Plan, it
is paid from one or more unfunded supplementary plans.
</TABLE>
The following table shows the years of accrued service credited
to each of the five individuals named in the Summary Compensation
Table. This table also shows for each named individual the amount of
his "average participating compensation" at the end of 1995.
<TABLE>
<CAPTION>
"Average
Years of Participating
Service Compensation"
-------- -------------
<S> <C> <C>
G. M. C. Fisher 19(a) $2,513,998
R. T. Bourns 37 574,198
H. L. Kavetas 12(b) 697,415
W. J. Prezzano 30 852,541
L. J. Thomas 34 909,129
<FN>
(a) Mr. Fisher has been credited with seventeen years of service
for purposes of calculating his retirement benefit; any pension
benefit payable will be offset by any pension benefit paid by
his prior employer.
(b) Mr. Kavetas is credited with six years of service for purposes
of calculating his retirement benefit for each year of his
first five years of employment with the Company; any pension
benefit payable will be offset by any pension benefit paid by
his prior employer.
</TABLE>
In the event of a Change In Control (as defined in the
Retirement Plan), a participant whose employment is terminated, for a
reason other than death, disability, cause or voluntary resignation,
within 5 years of the date of such event would be credited with up to
5 additional years of service and, where the participant is age 50 or
over on the date of such event, up to 5 additional years of age, for
the following plan purposes: (i) to determine eligibility for early
and normal retirement; (ii) to determine eligibility for a vested
right; and (iii) to calculate the amount of retirement benefit. The
actual number of years of service and years of age that would be
granted to such a participant would decrease proportionately
depending upon the number of years that elapse between the date of a
Change In Control and the date of the participant's termination of
employment. Further, if the Plan is terminated within 5 years after
a Change In Control, the benefit for each plan participant will be
calculated as indicated above.
REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE COMPENSATION AND
DEVELOPMENT COMMITTEE
The Company's executive compensation plans are formulated based
on four fundamental principles:
1. Compensation should be related to performance consistent with
Company values, including increasing shareholder value.
2. Compensation should be at a level consistent with that provided
by comparable companies in order to attract and retain talented
management.
3. Compensation should take into account both short- and long-term
corporate performance.
4. Senior management should have a meaningful equity stake in the
Company.
These four principles are implemented through compensation
consisting of a mix of base salary, annual incentive plans and long-
term incentive plans.
The Executive Compensation and Development Committee, which is
composed entirely of independent outside directors, sets overall
targeted levels of compensation, both annual compensation and long-
term incentives, for the CEO, Executive Vice Presidents and Senior
Vice Presidents. These levels are set based on surveys of other
companies conducted by external consultants. A cross-section of
companies is surveyed, varying in size and industry. The surveyed
companies represent those with whom the Company competes for
executive talent and include most, but not all, of the companies
included in the Performance Graph on page 14. Through the mix of
varied companies, a comprehensive picture is obtained against which
to set a frame of reference for executive compensation. The mean
compensation level of the surveyed companies is a primary reference
for determining target levels of compensation.
Annual Cash Compensation
Annual cash compensation in 1995 was made up of two components:
base salary and the Management Variable Compensation Plan (MVCP), an
annual incentive plan. The target annual incentive award for
executives is dependent upon their position in the Company, with the
lowest level of executives having an incentive target of 18% of base
salary and the CEO having a target of 75% of base salary. The amount
of funds available for awards through MVCP is based upon Company
performance versus its Return On Net Assets (RONA) goal. Incentive
awards for individuals are then determined using the results of the
management appraisal process, the Management Performance Commitment
Process. This process measures performance of each member of
management with respect to shareholder satisfaction, customer
satisfaction and employee satisfaction/public responsibility.
Various measurement criteria are used, including financial
performance; improvements in health, safety and the environment;
achievement of diversity goals, employee development; and product
leadership. In addition, managers are appraised by their peers and
the employees they manage on how well they evidence the five
corporate values: respect for the dignity of the individual,
integrity, trust, credibility and continuous improvement/personal
renewal.
During 1995, Company management sought to build on the improved
financial respectability it achieved in 1994. At the same time, it
chose to place an emphasis on Return on Net Assets (RONA) within
compensation programs as an accurate measure of Company performance.
RONA is calculated by dividing net earnings for the period by average
net assets for the same period. Earnings are sales minus costs. Net
assets are total assets minus non-interest-bearing liabilities, such
as accounts payable. Heavy emphasis was placed on growing revenue,
managing costs and assets, increasing earnings and generating cash
flow. These performance factors most heavily influenced compensation
awards for 1995. Based primarily on overall Company results, but
also on unit and individual performance, MVCP awards for 1995 were
generally above target levels. Revenue growth was strongly above the
target level. RONA results exceeded target, while earnings and cash
flow were near target. Based upon these results, MVCP awards for the
Chief Executive Officer and the four highest paid executive officers
for 1995 were as detailed in the Summary Compensation Table on page
7.
Long-Term Incentive Compensation
The Company's long-term incentive compensation consists of
stock options and performance share programs, with the latter being
multi-year goal-based programs for senior executives in which awards
earned are paid in restricted stock.
Stock options tie compensation directly to increases in
shareholder value. Surveys of other companies' practices are used to
determine the size of grants. Almost all of the companies included
in these surveys are also included in the surveys on annual cash
compensation. They differ due to the fact that different companies
choose to participate in different surveys of long-term compensation.
Taking into account such factors as anticipated stock price growth
and volatility, future dividend yield, term of grant and an estimated
risk-free rate of return, anticipated compensation levels are
estimated. Mean survey values are used as targets in determining the
size of option grants. Consideration is given to grant frequency in
other companies as well as to the frequency and size of past grants
to Kodak participants. Stock options were granted in 1995 at market
price for terms of ten years.
The Company had two performance share programs active during
1995: the 1993-1995 Restricted Stock Program, a program developed
under the 1990 Omnibus Long-Term Compensation Plan, and the
Performance Stock Program, issued under the 1995 Omnibus Long-Term
Compensation Plan.
In the 1993-1995 Restricted Stock Program, performance goals
for the three-year period were established by the Committee
pertaining to stock price, return on assets and shareholder return
relative to the Standard & Poor's 500 Index. Shareholder return was
measured over the entire three-year period, while the return on
assets was measured for the year 1995 and the stock price was
measured in the fourth quarter of 1995. Each of the criteria was
weighted equally, but the target stock price had to be achieved to
trigger a payment of 100% of the target award and the threshold stock
price had to be achieved to trigger a payment of 50% of the target
award. Performance versus the three goals was strong. Kodak's total
shareholder return over the period 1993-1995 exceeded the median
shareholder return of the S&P 500 by 50% and results versus the other
goals well exceeded the targets. Based on these results, the
Committee approved awards at 100% of target levels. The awards were
distributed in the form of restricted shares of Kodak stock, with the
restrictions lapsing at the time the recipient reaches the age of 60.
The Committee approved in 1995 the establishment of the
Performance Stock Program, under the 1995 Omnibus Long-Term
Compensation Plan. It is anticipated that a new multi-year
performance cycle will be established each year. In 1995, a 1995-
1996 and a 1995-1997 cycle were approved. The threshold, target and
maximum award amounts for the Chief Executive Officer and the four
highest paid executive officers are shown in the chart on page 9. In
each cycle, the sole performance measure is Kodak's total return to
shareholders versus that of the S&P 500 for the performance period.
Should awards be earned, they would be paid early in the year
following the end of the performance cycle in Kodak restricted stock,
with the restrictions lapsing at the time the executive reaches the
age of 60.
Wage Dividend
Management employees also participate in the all-employee Wage
Dividend Plan, an annual profit sharing plan. For 1995, the award
payments under the Plan were based upon the Company's RONA. All
award recipients receive the same percentage award, which is
multiplied by the individual's participating earnings (generally, the
person's last year's salary or salary and annual incentive for MVCP
participants) to arrive at the bonus amount.
Chief Executive Officer Compensation
Mr. Fisher joined the Company in October 1993, entering into an
employment agreement with the Company covering a period of five
years. The details of the agreement are set forth on page 10 of this
Proxy Statement. This agreement reflects the compensation package
necessary to obtain Mr. Fisher's services for the Company and the
amount required to compensate him for amounts forfeited by him as a
result of his departure from his previous employer.
During 1995, no change was made to the base salary of
$2,000,000 which was established in Mr. Fisher's agreement. Based
upon the Company's performance described earlier in this Report, Mr.
Fisher received an annual incentive award under MVCP of $1,980,000.
This represents an award 32% above Mr. Fisher's target award of
$1,500,000 (75% of his base salary) and was based primarily on the
results achieved against financial goals. Results versus goals in
the areas of customer satisfaction and employee satisfaction/public
responsibility also influenced the size of his award. As shown in
the Option/SAR Grants in Last Fiscal Year Table on page 8, 50,000
non-qualified stock options were granted to Mr. Fisher in 1995. That
number was derived from the survey-based grant schedule used for all
stock option recipients in 1995.
Mr. Fisher's agreement also provided for the forgiveness of 20%
of the principal and all of the accrued interest on two loans which
were made to him by the Company, as described on page 10.
Leadership and Development
The Committee reviewed leadership and organization development
plans, as well as profiles of succession candidates. It discussed
executive development strategies designed to provide leaders capable
of creating effective organizations and executing business strategies
that will drive the success of the Company.
Company Policy on Qualifying Compensation
Internal Revenue Code Section 162(m), enacted in 1993, provides
that publicly held companies may not deduct in any taxable year
compensation in excess of one million dollars paid to any of the
individuals named in the Summary Compensation Table which is not
"performance-based" as defined in Section 162(m). The Committee
believes that, while there may be circumstances in which the
Company's interests are best served by maintaining flexibility
whether or not the compensation is fully deductible under Section
162(m), it is generally in the Company's best interest to comply with
Section 162(m).
Other Committee Action
The Committee supports the Company's encouragement of stock
ownership by all employees. To reinforce the achievement of that
objective, the Committee approved the Stock Option Recognition
Program (SORP) under the 1995 Omnibus Long-Term Compensation Plan.
SORP provides for the use of stock options as special recognition
awards for extraordinary contributions. Awards under SORP can
generally be made only to employees who are not participants in the
management-level stock option plan.
Richard S. Braddock (Chairman) Robert C. Goizueta
Alice F. Emerson John J. Phelan, Jr.
PERFORMANCE GRAPH -- SHAREHOLDER RETURN
The following graph compares the performance of the Company's
common stock with the performance of the Standard & Poor's 500
Composite Stock Price Index ("Standard & Poor's 500 Index") and the
Dow Jones Industrial Index, by measuring the changes in common stock
prices from December 31, 1990, plus assumed reinvested dividends.
The chart assumes that $100 was invested on December 31, 1990
in each of the Company's common stock, the Standard & Poor's 500
Index and the Dow Jones Industrial Index, and that all dividends were
reinvested. In addition, the graph weighs the constituent companies
on the basis of their respective market capitalizations, measured at
the beginning of each relevant time period.
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- --------
Eastman Kodak $100.00 $121.29 $106.67 $153.47 $170.67 $246.07
S&P 500 Index 100.00 130.34 140.25 154.32 156.42 214.99
Dow Jones 100.00 124.19 133.39 155.98 163.87 224.24
ITEM 2 - RATIFICATION OF ELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit
Committee, has elected Price Waterhouse LLP, independent accountants
of the Company for many years, to serve until the Annual Meeting of
shareholders in 1997. The Board of Directors proposes that the
shareholders ratify the Board's election of Price Waterhouse LLP as
the independent accountants of the Company. Representatives of Price
Waterhouse LLP are expected to be present at the Meeting and to be
available to respond to appropriate questions. They will be given
the opportunity to make a statement if they desire to do so.
ITEMS 3, 4 AND 5 SHAREHOLDER PROPOSALS
Shareholders, whose names, addresses and shareholdings will be
furnished by the Company promptly upon receipt of any request
therefor, have given notice of their intention to introduce the
following proposals at the Annual Meeting.
Reproduced below is each proposal as submitted by the
shareholder proponent.
ITEM 3-SHAREHOLDER PROPOSAL-ENVIRONMENTAL MATTERS
"DISCLOSING ENVIRONMENTAL LIABILITY TO SHAREHOLDERS
Whereas, the U.S. Securities and Exchange Commission
(SEC) requires publicly-held corporations to disclose potential
environmental liabilities to shareholders;
But a Price Waterhouse survey of securities issuers in
1992 found that as many as 62% of the responding companies had
known environmental liability exposures that were not yet
recorded in financial statements;
Eastman Kodak, in its SEC reports, lists some of the
major instances of potential environmental liability that may
accrue to the company in pollution and toxic waste cleanup
activities, fines, and environmental litigation;
However, it is unclear how much additional environmental
liability, cleanup responsibility, and remediation cost may
exist at Kodak's facilities beyond what is presently reported;
The company prepares an annual environmental progress
report for shareholders and the public; Therefore, be it
RESOLVED: That the shareholders of Kodak request the
Board to have the company disclose in its annual environmental
progress report, a listing of those sites and other
circumstances in which it can be reasonably expected through
retirement of operations, court order, consent decree,
litigation, or government requirement, that environmental
remediation, pollution clean-up, and/or damage compensation
will cause significant environmental liabilities to accrue to
the company.
REASONS: In recent years, certain forms of environmental
liability have accrued to Kodak. As of 1994, Kodak had accrued
$108 million for remediation of hazardous waste sites. Kodak
has a $200 million program to replace chemical storage tanks in
Kodak Park in Rochester Park.
Kodak shareholders, in evaluating the company's continued
economic prospects, need to receive the best possible
information on the company's current assets and liabilities,
including prospective environmental liabilities, as reasonably
as these can be assembled and forecast.
For these reasons and others, we believe it is imperative
that management include in its annual environmental progress
report, a listing and identification of those known and
expected environmental liabilities and clean-up
responsibilities that are likely to accrue to the Kodak
company.
If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
The Company accrues and discloses liabilities for environmental
matters in accordance with generally accepted accounting
principles (GAAP) and the rules and regulations of the Securities
and Exchange Commission (SEC). These disclosures are made in the
Annual Report and on Form 10-K filed with the SEC.
In addition, for the past five years the Company has produced and
made available to its shareholders an Annual Health, Safety and
Environment Report which provides a summary of the Company's
efforts and results in complying with environmental protection
laws. Any shareholder may obtain a copy of this annual
environmental report to shareholders by contacting the Company.
This shareholder proposal requests the Company to provide more
extensive, detailed information than is required by GAAP and the
SEC. The rules of the SEC require the Company to disclose the
material effects that compliance with environmental laws may have
upon capital expenditures, earnings and the competitive position
of the Company. These rules also require the Company to disclose
each year all material estimated capital expenditures for
environmental control facilities. The Company currently complies
with all the requirements of GAAP and the SEC related to
environmental matters.
We believe that the Company's current method of disclosing
environmental costs and other financial data in its
Annual Report, as well as the availability of an easy-to-read
description of the Company's efforts to protect and restore the
environment in its Annual Health, Safety and Environment Report,
meet the information needs of shareholders, as all material
information is disclosed concerning the Company's activity in this
area.
In view of the foregoing, it is recommended that shareholders vote
AGAINST this proposal.
ITEM 4-SHAREHOLDER PROPOSAL-CUMULATIVE VOTING
"RESOLUTION: That the stockholders of Eastman Kodak urge
that the Board of Directors take the necessary steps to adopt a
system of cumulative voting for the purposes of director
elections.
SUPPORTING STATEMENT:
Cumulative voting, which allows shareholders to `bundle'
their votes, serves a number of purposes. It allows a group of
shareholders to bundle votes and elect an envoy to the board.
And it helps encourage directors to earn shareholder votes,
rather than expect rubber-stamp elections. A responsive board
with a sharp focus on shareholder interests is greatly needed
at Kodak.
As Fortune magazine summarized, Kodak is `isolated.' The
company's share price has been disappointing, and it has failed
to find a productive answer to its problems.
The board has now run through three chief executives in
search of the answer. With George Fisher, the board hired a
mathematician presumably capable of bringing independent,
dispassionate analysis to bear. Instead, he's applied an
answer all too standard at many troubled companies: massive
layoffs. The formula hasn't worked. Thousands of layoffs have
only combined with continued troubles.
Yet the ingredients for success seems so clear:
Explained The Economist: `The world has 450 million camera
users, all eager to buy film; at the same time, half the
world's population has yet to take a photograph.' Add the fact
that Kodak film margins are 80%, it enjoys two thirds of the
American market and a third of the world market. So why is
such a company downsizing?
Instead, Kodak's problems may stem from wasteful
investment. Notes a Prudential Securities analyst, `In the
past ten years, Kodak has put over $10 billion into [research
and development] and earnings have gone from about $2.50 to
$2.50.'
Management's response to each new set of difficulties
seems to be to respond with more layoffs. More creative
leadership is required. Cumulative voting may help inspire a
more diligent board, one that may include representatives
specifically advanced by shareholders instead of nominated by
the incumbent board, and one where the success of individual
directors will attract a more direct and personalized
accounting.
Cumulative voting alone will certainly not solve all of
Kodak's problems, we believe such a step will help demonstrate
Kodak's commitment to meeting shareholder interests."
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
Director candidates are nominated by the Board's Committee on
Directors, consisting entirely of independent directors, and approved
by the Board, a majority of whose members are independent directors.
Today, directors at the Company (and at many large public companies)
are elected by a plurality of shares represented and voting at the
Annual Meeting. Shareholders, who are entitled to one vote per
share, may cast their votes in favor of, or withhold their votes
from, each director nominee. Cumulative voting, which is advocated
by proponent, permits shareholders to "cumulate" their votes (i.e.,
each shareholder receives a number of votes equal to the number of
shares owned by the shareholder multiplied by the number of director
nominees), and direct those votes to a single candidate.
Proponent argues that cumulative voting "allows a group of
shareholders to bundle votes and elect an envoy to the Board."
Stated differently, what proponent advocates is a mechanism by which
a group of shareholders can elect "special interest" directors to the
Board.
It is the Board's belief that the election of special interest
directors is not in the best interest of all shareholders, primarily
because a board whose members represent partisan interests will
function less effectively than a Board whose members consider
themselves to be representatives of all shareholders equally.
In view of the foregoing, it is recommended that shareholders vote
AGAINST this proposal.
ITEM 5-SHAREHOLDER PROPOSAL-EXECUTIVE COMPENSATION
"I propose that the board of directors consider the
discontinuance of all options, SAR's, rights to purchase, etc.
of stock for management and directors after termination of
existing agreements. This does not include other personel of
the company.
REASONS:
These increased benefits have failed to produce the claim
that it holds and retains qualified personel.
Notice the increasing number of management persons who
have left a company simply because of better corporate offers.
We as shareholders are constantly being undervalued with
each issuance or benefit. Call a halt by voting YES!
Many pages of a proxy are expended to promote self-
benefits; then there are unmentioned administrative costs of
distribution and record keeping.
Executives have other benefits, such as life insurance,
retirement plans, company perks, etc. They are well rewarded
for their input without these add-on-give-aways.
Compensation is enough for management to buy stock on the
open market just as you and I, if we are so inclined. Again,
vote YES!"
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
The Company's executive compensation plans are formulated based on
four fundamental principles:
1. Compensation should be related to performance consistent
with Company values, including increasing shareholder value.
2. Compensation should be at a level consistent with that
provided by comparable companies in order to attract and
retain talented management.
3. Compensation should take into account both short- and long-
term corporate performance.
4. Senior management should have a meaningful equity stake in
the Company.
As indicated above, the Company's philosophy with respect to
executive compensation is that it should be at a level consistent
with that provided by comparable companies. This level of total
compensation is comprised of base salary, annual incentive and
long-term incentive. Stock options are a type of long-term
incentive which ties compensation directly to increases in
shareholder value and thereby serves to align the interests of
management with those of the shareholders. The Company benchmarks
the number of options it grants with the practices of other
companies. All three elements of compensation are considered in
determining the appropriate amount of total compensation for any
given executive.
Stock options, as a component of total compensation, are designed
with at least two purposes in mind; one is to reward the recipient
to the extent that good company performance is reflected in an
increase in the stock price, and the second is to retain talented
management. Stock options serve both of these purposes, neither
one to the detriment of the other.
Currently, the directors of the Company do not receive stock
options from the Company. However, as indicated on page 6 of this
Proxy Statement, a majority of their annual retainer is paid in
the form of Company stock.
The Board believes that stock options are an important component
of executive compensation because they are an effective vehicle to
link the interests of management with the interests of the
Company's shareholders.
In view of the foregoing, it is recommended that shareholders vote
AGAINST this proposal.
OTHER MATTERS
In accordance with New Jersey law, under which the Company is
incorporated, matters not properly noticed to shareholders, other
than procedural matters, may not be made the subject of a vote by
shareholders at the Meeting.
VOTE REQUIRED TO ADOPT RESOLUTIONS The election of
directors requires a plurality of votes cast. Each other matter to
be submitted to shareholders requires the affirmative vote of a
majority of the votes cast at the Meeting. Although abstentions and
broker non-votes will be included in the calculation of the number of
shares that are considered present at the Annual Meeting, they will
not be counted as votes cast.
VOTING A PROXY The proxy card enclosed is designed to
permit each shareholder of record at the close of business on March
11, 1996, to vote in the election of directors, the ratification of
independent accountants, and on the three shareholder proposals. The
proxy is solicited by the Board of Directors of the Company. The
proxy may be revoked in writing at any time prior to its being voted
at the Meeting. Each valid and timely proxy not revoked will be
voted at the meeting in accordance with the instructions on the card.
If, for any reason, any of the nominees for election to the Board of
Directors becomes unavailable, the holders of the proxies may
exercise discretion to vote for substitutes proposed by the Board of
Directors. The Board of Directors of the Company has no reason to
believe that the nominees will be unable or will decline to serve if
elected.
CONFIDENTIAL VOTING The Company has had for a number of
years a policy which protects the confidentiality of shareholder
votes. This policy provides that neither the identity nor the vote
of any shareholder will be disclosed to the Company, its directors,
officers or employees except (i) to allow the election inspectors to
certify the results of the vote; (ii) as necessary to meet applicable
legal requirements and to assert or defend claims for or against the
Company; (iii) in the event of a proxy solicitation based on an
opposition proxy statement; or (iv) in the event a shareholder has
made a written comment on the proxy card.
OUTSTANDING VOTING SHARES As of February 1, 1996, the
Company had outstanding voting securities consisting of 346,420,124
common shares, each entitled to one vote.
SHAREHOLDER PROPOSALS FOR 1997 The last day for the Company
to receive proposals from shareholders for the 1997 Annual Meeting of
shareholders is November 15, 1996. Proposals should be sent
certified mail - return receipt requested to Joyce P. Haag,
Secretary, Eastman Kodak Company, Rochester, New York 14650-0208.
COSTS OF SOLICITATION The cost of this solicitation of
proxies will be borne by the Company. In addition to the
solicitation of the proxies by use of the mails, some of the officers
and regular employees of the Company, without extra remuneration, may
solicit proxies personally, or by telephone, facsimile, telegraph or
cable. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward soliciting material to the
beneficial owners of shares held of record. The Company will
reimburse such persons for their expenses in forwarding soliciting
material. In addition, the Company has retained Georgeson & Co.,
Inc. to assist in the solicitation of proxies from all shareholders
for an estimated fee not to exceed $17,500, plus reimbursement of
reasonable out-of-pocket expenses.
By Order of the Board of Directors
s/Joyce P. Haag
Joyce P. Haag, Secretary
March 14, 1996
DEFINITIVE COPY
(CORPORATE LOGO OMITTED)
EASTMAN KODAK COMPANY
This Proxy is solicited on behalf of the Board of
Directors
The undersigned hereby appoints George M. C. Fisher and
Joyce P. Haag, and each of them, as Proxies with full
power of substitution, to vote, as designated on the
reverse side, for director substitutes if any nominee
becomes unavailable, and in their discretion, on matters
properly brought before the Meeting and on matters
incident to the conduct of the Meeting, all of the shares
of common stock of Eastman Kodak Company which the
undersigned has power to vote at the Annual Meeting of
shareholders to be held on May 8, 1996 or any adjournment
thereof.
NOMINEES FOR CLASS III DIRECTORS:
Richard S. Braddock, Karlheinz Kaske, and
Richard A. Zimmerman
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL CLASS III DIRECTORS
AND RATIFICATION OF ELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS, AND AGAINST THE THREE SHAREHOLDER PROPOSALS.
This Proxy will be voted as directed; if no direction to the contrary
is indicated, it will be voted for the election of directors and
ratification of independent accountants, and against the three
shareholder proposals.
(CONTINUED, and To Be Signed and Dated on the REVERSE
SIDE)
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Election of FOR WITHHOLD
Class III Directors AUTHORITY
0 0
(To withhold authority to vote for any particular nominee write the
name below.)
2. Ratification FOR AGAINST ABSTAIN
of Election
of Independent
Accountants 0 0 0
The Board of Directors recommends a vote AGAINST Items 3, 4 and 5.
3. Shareholder FOR AGAINST ABSTAIN
Proposal-
Environmental
Matters 0 0 0
4. Shareholder FOR AGAINST ABSTAIN
Proposal-
Cumulative
Voting 0 0 0
5. Shareholder FOR AGAINST ABSTAIN
Proposal-
Executive
Compensation 0 0 0
If you receive more than one Annual Report at the address set
forth on this proxy card and have no need for the extra copy,
please check the box at the right. This will not effect the
distribution of dividends or proxy statements. 0
I plan to attend the
Annual Meeting. 0
I plan to bring
a guest(s). 0
SIGNATURE(s) DATE
NOTE: Please sign exactly as the name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
When executed, promptly forward this card to: First Chicago Trust
Company of New York, P. O. Box 8264, Edison, New Jersey 08818-9090.
<PAGE 1>
March 13, 1996
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Attention: Document Control
Subject: Annual Meeting of Shareholders of Eastman Kodak Company --
May 8, 1996
Dear Sir:
Pursuant to Rule 14a-6 under the Securities Exchange Act, we hereby
transmit for filing herewith the definitive proxy statement and form
of proxy for use in connection with the Annual Meeting of
shareholders of Eastman Kodak Company to be held May 8, 1996.
Mailing of the definitive proxy statement and form of proxy to
shareholders is expected to commence on March 14, 1996. The filing
fee of $125 was wire transferred to the Commission's account on
March 12, 1996.
Pursuant to Rule 14a-6(a) Eastman Kodak Company did not file a
preliminary proxy statement and form of proxy because the only
matters to be acted upon at the Annual Meeting are the election of
directors, ratification of the election of independent accountants,
and action on three shareholder proposals.
The material changes from last year's proxy statement are as follows:
1) the inclusion of three shareholder proposals (pages 32
through 37); and
2) the nomination for election of three Class III directors;
In addition, please be advised that the pagination of the
electronically filed proxy statement differs from the printed version
thereof and the printed proxy statement contains the performance
graph while the electronic version contains a chart.
<PAGE 2>
Securities and Exchange Commission--2
March 13 1995
The ratification of election of independent accountants is a matter
upon which shareholders must vote, according to the Company's by-
laws. Item 18 of Schedule 14A is not, therefore, applicable to the
election of independent accountants.
Under separate cover, eight copies of the Annual Report for the year
1995 will be forwarded to you on or before March 14, 1996, the date
mailing to the shareholders is expected to commence. In addition,
five copies of the Annual Report will be mailed to the New York Stock
Exchange at that time.
Very truly yours,
Joyce P. Haag
JPH:cbs
Enc.
cc: Mr. M. Benard
Mr. D. L. Fiedler
Mr. G. M. C. Fisher
Mr. G. P. Van Graafeiland
1
<PAGE> 16
16
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<PAGE 41>
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