Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Eastman Kodak Company
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
Eastman Kodak Company
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box): NO FEE REQUIRED
( ) $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11
1) Title of each class of securities to which
transaction applies:
-------------------------------------------
2) Aggregate number of securities to which
transaction applies:
-------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:1
-------------------------------------------
4) Proposed maximum aggregate value of
transaction:
-------------------------------------------
1Set forth the amount on which the filing fee is calculated and state
how it was determined.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
------------------------------------------
2) Form, Schedule or Registration Statement No.
------------------------------------------
3) Filing Party:
------------------------------------------
4) Date Filed:
------------------------------------------
DEFINITIVE COPY
Eastman Kodak Company
Notice of 1998 Annual Meeting and Proxy Statement
(CORPORATE LOGO AND PICTURE OMITTED)
Date of Notice March 20, 1998
NOTICE OF THE 1998
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of shareholders of Eastman Kodak Company will
be held on Wednesday, May 13, 1998, at 10:00 AM, at the Cobb
Galleria Centre, Two Galleria Parkway, Atlanta, Georgia, to
consider and take action on the following:
1. The election of four Class II directors: Alice F. Emerson,
Harry L. Kavetas, Paul H. O'Neill and Laura D'Andrea
Tyson, each for a term of three years; two Class III
directors: Durk I. Jager and Daniel A. Carp, each for a
term of one year; and one Class I director: Delano E.
Lewis, for a term of two years.
2. The ratification of election of Price Waterhouse LLP as the
independent accountants.
3. Amendment of Wage Dividend Plan.
4. Amendment of Management Variable Compensation Plan.
5. Action on a shareholder proposal requesting an executive
compensation review.
6. Action on a shareholder proposal requesting annual election
of all directors.
Your Board of Directors recommends a vote "FOR" items 1 - 4 and
a vote "AGAINST" item 5. The Board makes no recommendation with
respect to item 6.
Shareholders of record at the close of business on March 16, 1998,
are entitled to vote at the Annual Meeting.
If you plan to attend the Meeting, please check the appropriate
box on the enclosed proxy card. If you plan to bring a guest with
you to the Meeting, check the appropriate box on the enclosed
proxy card. If you vote by telephone or Internet, follow the
instructions provided for attendance. To enter the Meeting, bring
with you the "admission ticket" attached to your proxy card.
This ticket should be given to an admission attendant at the
registration area. If you bring a guest, be sure your guest is
with you when you go through the registration area. If your shares
are held by a broker or other nominee, bring proof of your
ownership. Attendance at the Meeting will be on a first-come,
first-served basis, upon arrival at the Meeting.
If you have any questions about the Meeting, please contact:
Coordinator, Shareholder Services
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0520
(716) 724-5492
Please do not write any comments on your proxy card. Consistent
with the Company's policy on confidential voting (see page 5),
proxy cards will not be seen by anyone at the Company.
Photographs will be taken at the Annual Meeting for use by the
Company. The Company may use these photographs in publications. If
you attend the Meeting, we assume you give us permission to use
your picture.
The Cobb Galleria Centre is handicap accessible. If you require
special assistance, call the Coordinator, Shareholder Services at
(716) 724-5492.
By Order of the Board of Directors
/s/ Joyce P. Haag
Joyce P. Haag, Secretary
Eastman Kodak Company
March 20, 1998
March 20, 1998
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of
shareholders on Wednesday, May 13, 1998, at 10:00 AM, at the Cobb
Galleria Centre, Two Galleria Parkway, Atlanta, Georgia. We will
review Kodak's performance and answer your questions. Enclosed
with this Proxy Statement is your proxy card.
This year you may vote by telephone or the Internet. We
encourage you to take advantage of these new voting options.
Also new this year will be the use of an "admission
ticket" for attending the Meeting. It is attached to your proxy
card. Please remove it from your proxy card and bring it with
you to gain entry to the Meeting.
We look forward to seeing you on May 13 and would like to
take this opportunity to remind you that your vote is very
important.
Sincerely,
/s/ George M. C. Fisher
George M.C. Fisher
TABLE OF CONTENTS
Notice of the Meeting 4
Letter to Shareholders 6
Questions and Answers 8
Proposals to be Voted Upon 11
Item 1-Election of Directors 11
Item 2-Ratification of Election of Independent Accountants 11
Item 3-Amendment of Wage Dividend Plan 12
Item 4-Amendment of Management Variable Compensation Plan 14
Item 5-Shareholder Proposal-Executive Compensation Review 16
Item 6-Shareholder Proposal-Annual Election of Directors 18
Board of Directors 20
Board Committees 24
Meeting Attendance 26
Director Compensation 27
Beneficial Security Ownership Table 28
Compensation of Named Executive Officers 29
Summary Compensation Table 30
Option /SAR Grants Table 32
Option /SAR Exercises and Year-End Values Table 34
Long-Term Incentive Plan 35
Employment Contracts 37
Retirement Plan 38
Report of the Executive Compensation and Development Committee 41
Performance Graph-Shareholder Return 46
Exhibit A-Wage Dividend Plan 47
Exhibit B-Management Variable Compensation Plan 49
QUESTIONS and ANSWERS
Q: What am I voting on?
A: You are voting on the following:
1. The election of four Class II directors: Alice F. Emerson,
Harry L. Kavetas, Paul H. O'Neill and Laura D'Andrea
Tyson, each for a term of three years; the election of two
Class III directors: Durk I. Jager and Daniel A. Carp,
each for a term of one year; and the election of one Class
I director: Delano E. Lewis, for a term of two years.
2. The ratification of election of Price Waterhouse LLP as
independent accountants.
3. Amendment to Wage Dividend Plan.
4. Amendment to Management Variable Compensation Plan.
5. A shareholder proposal requesting an executive compensation
review.
6. A shareholder proposal requesting the annual election of
all directors.
The Company is not aware of any other matters that will be brought
before the shareholders for a vote. If any other matter is
properly brought before the Meeting, George M. C. Fisher and Joyce
P. Haag, acting as your proxies, will vote on your behalf, in
their discretion. New Jersey law (under which the Company is
incorporated) requires that you be given notice of all matters to
be voted upon, other than procedural matters such as adjournment
of the Meeting.
Q: Who is entitled to vote?
A: Shareholders of record as of the close of business on March
16, 1998 (the Record Date) are entitled to vote at the Annual
Meeting. Each share of common stock is entitled to one vote.
Q: How do I vote?
A: You can vote in person or by mail, telephone or Internet. To
vote by mail, sign and date each proxy card you receive and return
it in the prepaid envelope. To vote by telephone or Internet,
follow the instructions on the proxy card. Your shares will be
voted as you indicate. If you do not indicate your voting
preferences, George M. C. Fisher and Joyce P. Haag will vote your
shares FOR items 1-4, AGAINST item 5 and ABSTAIN on item 6. You
have the right to revoke your proxy any time before the Meeting by
1) notifying Kodak's Corporate Secretary; 2) voting in person; 3)
returning a later-dated proxy card; or 4) entering a new vote by
telephone or Internet.
Q: Is my vote confidential?
A: Yes. Proxy cards, ballots and telephone and Internet votes
that identify individual shareholders are confidential. Only the
election inspectors and certain individuals who help with
processing and counting the vote have access to your vote.
Directors and employees of the Company may see your vote only if
the Company needs to defend itself against a claim or if there is
a proxy solicitation by someone other than the Company.
Q: Who will count the vote?
A: BankBoston will tabulate the votes and act as inspectors of
election.
Q: What shares are included in the proxy card?
A: The shares on your card represent all your shares including
those in the Eastman Kodak Shares Program and the Employee Stock
Purchase Plan, and the shares credited to your account in the
Savings and Investment Plan and the Kodak Employees Stock
Ownership Plan. The Trustees and custodians of these plans will
vote your shares in each plan as you direct. If you do not vote,
your shares, including those in these plans, will not be voted.
__________________________________________________________________
Q: What does it mean if I get more than one proxy card?
A: It means your shares are registered differently and are in
more than one account. You should vote the shares on all your
proxy cards. To provide better shareholder services, we encourage
you to have all your accounts registered in the same name and
address. You may do this by contacting our transfer agent at (800)
253-6057.
Q: Who can attend the Annual Meeting?
A: All shareholders as of the Record Date can attend and bring a
guest. Seating, however, is limited. Attendance at the Meeting
will be on a first-come, first-served basis, upon arrival at the
Meeting.
__________________________________________________________________
Q: What constitutes a quorum?
A: A majority of the outstanding shares as determined on the
Record Date, present or represented by proxy, constitutes a quorum
for voting on proposals at the Annual Meeting. If you submit a
properly completed proxy card or vote by telephone or Internet,
your shares will be part of the quorum. Abstentions and broker
non-votes will be counted in determining the quorum but neither
will be counted as votes cast. On March 2, 1998, there were
323,230,504 shares outstanding.
Q: What vote is required to approve the items to be voted upon?
A: Directors are elected by a plurality. This means the four
Class II nominees receiving the greatest number of votes will be
elected, the two Class III nominees receiving the greatest number
of votes will be elected and the one Class I nominee receiving the
greatest number of votes will be elected.
The ratification of election of the independent accountants
and the two compensation plan amendments require the affirmative
vote of a majority of the votes cast at the Meeting.
The shareholder proposals require the affirmative vote of a
majority of the votes cast at the Meeting. However, the adoption
of the shareholder proposal requesting annual election of all
directors would not by itself eliminate board classification.
Eliminating board classification requires an amendment to the
Company's Restated Certificate of Incorporation, which requires
action by the Board of Directors and the affirmative vote of at
least 80 percent of the outstanding shares of the Company.
Q: When are the shareholder proposals due for the 1999 Annual
Meeting?
A: In order to be considered for next year's Proxy Statement,
shareholder proposals must be in writing, addressed to Joyce P.
Haag, Corporate Secretary, Eastman Kodak Company, 343 State
Street, Rochester, New York 14650-0218, and received by November
19, 1998.
Q: How do I recommend someone to be a director of Kodak?
A: You may recommend any person as a director by writing to Joyce
P. Haag, Corporate Secretary, Eastman Kodak Company, 343 State
Street, Rochester, New York 14650-0218. You must include with your
recommendation a description of the nominee's principal
occupations or employment over the last five years and a statement
from your nominee indicating that he or she will serve if elected.
The Committee on Directors will consider persons recommended by
shareholders.
Q: How much did this proxy solicitation cost?
A: The Company hired Georgeson & Co. Inc. to assist in the
distribution of proxy materials and solicitation of votes. The
estimated fee is $18,500 plus reasonable out-of-pocket expenses.
In addition, Kodak will reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-
pocket expenses for forwarding proxy and solicitation material to
the owners of common stock.
Q: What other information about the Company is available?
A: The following information is available:
- Annual Report on Form 10-K;
- Transcript of the Annual Meeting;
- Plan descriptions, annual reports, and trust agreements and
contracts for the pension plans of the Company and its
subsidiaries;
- Report on diversity;
- Health, Safety and Environment Annual Report.
You may request copies by contacting:
Coordinator, Shareholder Services
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0520
(716) 724-5492
PROPOSALS TO BE VOTED UPON
ITEM 1-ELECTION OF DIRECTORS
The By-Laws of the Company require at least nine directors but no
more than eighteen. The number of directors is set by the Board.
The Board is divided into three classes of directors with
overlapping three-year terms. There are four Class II directors
whose terms expire at the 1998 Annual Meeting.
The remaining directors whose terms are continuing until the 1999
and 2000 Annual Meeting appear on pages 22-24. Dr. Kaske, who is a
Class III director, will retire on May 13, 1998. Mr. Goizueta, who
was a Class II director, died on October 18, 1997.
Nominees for re-election as Class II directors are Alice F.
Emerson, Harry L. Kavetas and Laura D'Andrea Tyson. In addition,
Paul H. O'Neill is standing for election by the shareholders for
the first time as a Class II director. All four of these
individuals agreed to serve a three-year term (see pages 20 and 21
for more information).
Daniel A. Carp and Durk I. Jager are nominated as Class III
directors to serve a one-year term ending at the 1999 Annual
Meeting of shareholders. These two nominees are standing for
election by you for the first time. Each agreed to serve as a
director.
Delano E. Lewis is nominated as a Class I director to serve a two-
year term ending at the 2000 Annual Meeting of shareholders. He
agreed to serve as a director and is standing for election by the
shareholders for the first time.
If one of the nominees is unable to serve, the Board may reduce
the number of directors or choose a substitute. If the Board
chooses a substitute, the shares represented by proxies will be
voted for the substitute.
If any director retires, resigns, dies or is unable to serve for
any reason, the Board may reduce the number of directors or elect
a new director to fill the vacancy. This new director will serve
until the next Annual Meeting of shareholders.
The Board recommends a vote FOR the election of directors.
ITEM 2-RATIFICATION OF ELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been the Company's independent
accountants for many years. The Board of Directors, on the
recommendation of its Audit Committee, elected Price Waterhouse
LLP the independent accountants, to serve until the 1999 Annual
Meeting of shareholders.
Representatives of Price Waterhouse LLP will attend the Meeting to
respond to questions and make a statement if they desire. The
affirmative vote of a majority of shares present in person or by
proxy and entitled to vote at the Meeting is required in order to
ratify Price Waterhouse LLP as independent accountants for May
1998 - May 1999.
The Board recommends a vote FOR the ratification of election of
Price Waterhouse LLP as independent accountants.
ITEM 3-AMENDMENT OF WAGE DIVIDEND PLAN
Description of Amendment
You are being asked to consider and vote upon an amendment to the
Wage Dividend Plan to add Economic Profit/Economic Value Added as
a permissible performance measure upon which awards may be based.
The Board of Directors approved this amendment.
Purpose of Shareholder Approval
The reason you are being asked to approve this performance measure
is to allow all compensation under the Plan to continue to qualify
as "performance-based" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended. Awards based on
Economic Profit/Economic Value Added will then be free from the
provisions of Section 162(m) that stop the Company from deducting
for federal income tax purposes compensation in excess of
$1,000,000 that is paid to the CEO or any of the four most highly
paid executive officers for any period.
Definition of Economic Profit and Economic Value Added
Economic Profit/Economic Value Added measures a company's economic
return to its shareholders based on the capital used in the
company's operating units. Economic Profit is defined as the
difference between a company's after-tax earnings and its cost of
capital multiplied by the total capital used by the company
("Investment"). The term can be expressed by the following
equation:
ECONOMIC PROFIT = AFTER-TAX EARNINGS - (COST OF CAPITAL X INVESTMENT)
Employees create Economic Profit when the operating profits from a
business exceed the cost of capital used in the business.
Economic Value Added means Economic Profit for the current year
minus Economic Profit for the immediately prior year.
Company's Use of Economic Profit/Economic Value Added
Prior to amendment by the Board of Directors, the Plan's sole
performance measure was return on net assets (RONA). The addition
of Economic Profit/Economic Value Added as a performance measure
under the Plan is consistent with the Company's shift towards
Economic Profit/Economic Value Added, rather than RONA, as its
chief financial measure. It is our view that Economic
Profit/Economic Value Added is a better indicator than RONA of
Company performance. Economic Profit/Economic Value Added does not
stop at accounting earnings, but instead takes into account the
investments made to generate those earnings and the return you
expect on those investments. Because Economic Profit calculations
use the Company's cost of capital, we feel that an increase in
Economic Profit/Economic Value Added, as compared to an increase
in RONA, is more closely linked to an increase in shareholder
wealth.
This amendment allows the Company to use the same performance
measure under both the Wage Dividend Plan and the Management
Variable Compensation Plan.
Description of Plan
Purpose and Administration. The purposes of the Plan are to assist
the Company in attracting, retaining and motivating selected
employees of Kodak and its subsidiaries by rewarding them for
their contributions to Kodak's growth and success, provided Kodak
performance meets or exceeds established performance goals. The
Plan is administered by the Executive Compensation and Development
Committee (the "Committee").
Eligibility. All employees of Kodak and its 80 percent or more
owned subsidiaries are eligible to participate in the Plan. To be
eligible for an award for a performance period, however, an
employee must be designated as a participant by the Committee
within the first 90 days of the performance period. To date,
participation in the Plan has generally been limited to employees
of the Company working in the United States. The approximate
number of employees who currently participate in the Plan is
39,600.
Form of Awards. Awards may, in the Committee's discretion, be paid
in cash, common stock, and/or stock equivalents, including stock
options. Awards paid in the form of common stock or stock
equivalents are issued for no consideration.
Stock Options. For the 1997 performance period, those participants
who were middle or senior managers on December 30, 1997 will
receive their wage dividend award in the form of non-qualified
stock options to purchase common stock. The exercise price of
these options will not be less than the fair market value of the
common stock on the date of grant. The stock options will vest
immediately upon grant and expire on the tenth anniversary of the
date of grant.
Procedure for Determining Awards. Within the first 90 days of a
performance period, the Committee establishes the participation
rules, performance goals and performance formula for the
performance period. As amended, the Plan's performance goals may
be based upon RONA or Economic Profit/EVA. Participants are
eligible to receive awards for a performance period only if both
the performance goal(s) for such period is (are) achieved, and the
performance formula applied against such goal(s) determines that
awards have been earned for the period.
Award Limit. The maximum award payable to any employee who is a
covered employee under Section 162(m) of the Internal Revenue Code
of 1986, as amended, is $700,000.
Payment. Before any award is paid for a performance period, the
Committee must certify in writing that the performance goal(s)
justifying the payment has (have) been met.
Plan Benefits. The benefits or amounts that will be received by or
allocated to the Chief Executive Officer, the named executive
officers, executive officers and all employees who are not
executive officers under the Plan, as amended, are not presently
determinable. Similarly, the benefits or amounts that would have
been received by or allocated to such persons for the 1997
performance period had the amended plan been in effect are not
determinable.
The Board of Directors recommends a vote FOR approval of the
amendment to the Wage Dividend Plan.
ITEM 4-AMENDMENT OF MANAGEMENT VARIABLE COMPENSATION PLAN
Description of Amendment
Your approval is requested of an amendment to the Management
Variable Compensation Plan (MVCP) to add Economic Profit/Economic
Value Added as a permissible performance measure to determine the
size of the Plan's annual award pool. The Board of Directors
approved this amendment. This amendment mirrors the amendment you
are being asked to approve to the Wage Dividend Plan.
Purpose of Shareholder Approval
You are being asked to approve the amendment to ensure that the
Plan's awards continue to be free from the terms of Section 162(m)
of the Internal Revenue Code of 1986, as amended.
Company's Use of Economic Profit
This amendment to MVCP supports the Company's decision to use
Economic Profit/Economic Value Added, rather than RONA, as its key
financial measure. It also allows the Company to use the same
performance measure under both MVCP and the Wage Dividend Plan.
Description of Plan
Purpose and Administration. The purposes of the Plan are to
provide an annual performance-based, profit-driven, incentive
award in order to attract, retain and motivate the Company's key
employees. The Plan is administered by the Executive Compensation
and Development Committee (the "Committee").
Eligibility. Plan eligibility is generally limited to key
employees, i.e., all employees of Kodak and its 80 percent or more
owned subsidiaries who are middle or senior managers. The
Committee determines which key employees will be participants for
a particular performance period. The approximate number of key
employees who currently participate in the Plan is 875.
Form of Awards. Awards may, in the Committee's discretion, be paid
in cash and/or common stock. To date, all awards under the Plan
have been paid in cash.
Procedure for Determining Awards. Within the first 90 days of a
performance period, the Committee establishes the performance
goals and performance formula for the performance period. As
amended, the Plan's performance goals may be based upon RONA or
Economic Profit/EVA. Participants are eligible to receive awards
for a performance period only if both the performance goal(s) for
such period is (are) achieved, and the performance formula applied
against such goal(s) determines that awards have been earned for
the period. The performance formula for a performance period
generally determines the size of the award pool for such period.
Award Limit. The maximum award payable to any employee who is a
covered employee under Section 162(m) of the Internal Revenue Code
of 1986, as amended, is $4,000,000.
Payment. Before any award is paid for a performance period, the
Committee must certify in writing that the performance goal(s)
justifying the payment has (have) been met. The Plan authorizes
the Committee to allocate the award pool among the Plan's
participants based on such factors, indicia, standards, goals and
measures as it determines in the exercise of its sole discretion.
To date, performance as measured by the Management Performance
Commitment Process and the Touchstone Review has influenced the
size of the award pool that is allocated to a given participant.
Plan Benefits. The benefits or amounts that will be received by or
allocated to the Chief Executive Officer, the named executive
officers, executive officers and all employees who are not
executive officers under the Plan, as amended, are not presently
determinable. Similarly, the benefits or amounts that would have
been received by or allocated to such persons for the 1997
performance period had the amended plan been in effect are not
determinable.
The Board of Directors recommends a vote FOR approval of the
amendment to the Management Variable Compensation Plan.
ITEM 5-SHAREHOLDER PROPOSAL-EXECUTIVE COMPENSATION REVIEW
Helen Glenn Burlingham, Wellspring Farm, 6320 Soper Road, Perry,
New York, owner of 100 shares, submitted the following proposal:
"WHEREAS:
We believe that financial, social and environmental criteria
should be taken into account in setting compensation packages for
top corporate officers. Public scrutiny of executive compensation
is intensifying worldwide with serious concerns being expressed
about the disparity between salaries of top corporate officers, US
employees, and workers in low wage countries.
Shareholders and our Board of Directors need to be vigilant in
safeguarding our company's best interest by challenging executive
pay packages that create rewards to executives regardless of
return to shareholders. For example, should executive pay be
reduced when stockholders' dividends are down?
Executives of companies like ours, with Mexican operations, often
make several thousand times the pay of their Mexican employees. In
1994, Ford's CEO, Alexander Trotman made 2,003 times the annual
pay of an average Ford employee in Mexico. According to Kodak
documents, some of our Mexican workers are making an average of
$ .95 per hour.
In 1995, Pearl Meyer and Partners reported that CEO compensation
packages at large corporations increased 23%, to an average of
$4.37 million, that is $2,100 an hour, or 183 times the average US
worker's 1995 hourly earnings according to the Council on
International and Public Affairs.
In 1996, Kodak's CEO and COO, George Fisher, had a reported
combined salary and bonus of $3,986,884 and held restricted stock
totaling $6,835,053 in addition to other compensation and
benefits. Yet, a severe drop in earnings in 1997 resulted in
Kodak's decision to cut payroll by 10,000 workers. Is it fair that
comparatively low-wage workers lose their income while top
executives salaries do not reflect financial performance?
Our company needs to adopt a policy of equitable compensation of
key officers based on success in serving shareholders, customers
and employees. We also need to address the implications of paying
high executives salaries and poverty wages to workers.
The relationship between compensation and the social and
environmental impact of company decisions also raises important
concerns. For example, should top officers pay be reduced for a
given year if the company is found guilty of poor environmental
performance, especially if it results in costly fines or expensive
protracted litigation?
BE IT RESOLVED:
That shareholders request the Board institute a compensation
Executive Compensation Review, with a summary report available
upon request to shareholders by October 15, 1998. Among questions
to be addressed are:
1. Whether the compensation of corporate executives should be
frozen or reduced during periods of significant corporate
downsizing and cost cutting.
2. Whether a cap should be placed on compensation packages for
officers to prevent our company from paying excessive
compensation.
3. How to develop appropriate performance measures for the
long-term incentive programs during periods of
restructuring.
4. How to develop an equitable and fair wage policy, because
paying widely divergent compensation levels can result in
decreased worker morale and/or productivity, poor labor-
management relations, and harm Kodak's public image.
5. How issues such as social and environmental responsibility
are reflected in executive compensation.
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 Executive Compensation and Development Committee of the Board
of Directors oversees all executive compensation programs. The
Committee's report on pages 41-46 demonstrates that the Committee
considers many of the same issues that are raised by the
shareholder in her proposal.
In determining appropriate compensation levels, the Committee
considers Company performance and the amount of compensation paid
by other companies for comparable jobs. In analyzing Company
performance, the Committee reviews the Company's financial
performance, including the performance of the Company's stock
compared to other companies in the Standard & Poor's 500 Composite
Stock Price Index, as well as customer satisfaction and employee
satisfaction/public responsibility. Annual bonuses are determined
based upon performance in all three of these areas, which are
weighted. For 1997, they were weighted 40 percent, 30 percent and
30 percent, respectively.
The criteria used to measure employee satisfaction/public
responsibility include Company compliance with environmental,
safety, and equal employment opportunity laws and regulations. In
addition, the Committee reviews employee responses to opinion
surveys which measure, among other areas, management's leadership
capabilities and employee satisfaction with the workplace, the
Company and management. If management fails to increase diversity
in the workforce, to decrease the Company's emissions, or to
improve safety in the workplace, management will receive less
bonus. The Company believes that only if shareholders, customers
and employees are satisfied will the Company be successful.
Based on the Company's 1997 performance, below-target payments
were made under the Management Variable Compensation Plan to the
senior executives of the Company, including no award to four of
the five named executives listed in the Summary Compensation Table
on page 30.
The Company recognizes that, in addition to delivering solid,
sustained financial performance, it must abide by environmental
laws and regulations, provide a work environment free from sexual
harassment and race discrimination, and generally be a socially
responsible corporate citizen.
Management believes that the time and effort necessary to produce
the report requested is not justified. The Executive Compensation
and Development Committee's report demonstrates that the Company
is already considering many of the issues identified in the
proposal.
The Board of Directors recommends a vote AGAINST this proposal.
ITEM 6-SHAREHOLDER PROPOSAL - ANNUAL ELECTION OF DIRECTORS
The Service Employees International Union Master Trust, 1343 L
Street NW, Washington, DC 20005, owner of 56,800 shares, submitted
the following proposal:
"BE IT RESOLVED: That the stockholders of Eastman Kodak Company
urge the Board of Directors take the necessary steps to declassify
the Board of Directors for the purpose of director elections. The
Board declassification shall be done in a manner that does not
affect the unexpired terms of directors previously elected.
SUPPORTING STATEMENT
The Board of Directors of Eastman Kodak is divided into three
classes serving staggered three-year terms. It is our belief that
the classification of the Board of Directors is not in the best
interests of Eastman Kodak and its shareholders. The elimination
of the staggered board would require each director to stand for
election annually. This procedure would allow shareholders an
opportunity to annually register their views on the performance of
the board collectively and each director individually. Concerns
that the annual election of directors would leave Eastman Kodak
without experienced board members in the event that all incumbents
are voted out are unfounded. If the owners should choose to
replace the entire board, it would be obvious that the incumbent
directors' contributions were not valued.
A classified board of directors protects the incumbency of the
board of directors and current management which in turn limits
accountability to stockholders.
It is our belief that Eastman Kodak's corporate governance
procedures and practices, and the level of management
accountability they impose, are related to the financial
performance of Eastman Kodak. While Eastman Kodak's current
performance is good, we believe sound corporate governance
practices, such as the annual election of directors, will impose
the level of management accountability necessary to help insure
that a good performance record continues over the long term.
We urge you to VOTE FOR this proposal."
The Board of Directors makes the following statement about the
proposal:
This same proposal was submitted to shareholders at last year's
Annual Meeting. Of those shares present in person or by proxy at
the Meeting, and who voted on this proposal, 50.3 percent voted in
favor of this proposal. Although this 50.3 percent represented
only 33 percent of all the shares outstanding, the Board decided
that, if the proposal were submitted again in 1998, it would take
a neutral position.
There are good arguments both for and against board
classification. The arguments in favor of a classified board are
that it:
1. provides continuity and stability of leadership;
2. allows the Company to implement long-term strategies and to
focus on long-term performance;
3. inhibits a substantial shareholder from changing abruptly
the entire Board of Directors without the approval, or at
least the cooperation, of the incumbent Board;
4. permits a more orderly process for directors to consider
any and all alternatives to maximize shareholder value, in
the exercise of their fiduciary responsibility; and
5. inhibits unfriendly take-over attempts.
The arguments against a classified board are that it:
1. protects the incumbency of current directors and,
therefore, management; and
2. is less accountable to shareholders because shareholders
are permitted to express their views on a particular
director only once every three years.
Note that elimination of Board classification requires an
amendment to the Company's Restated Certificate of Incorporation.
This requires action by the Board of Directors and the affirmative
vote of at least 80 percent of the outstanding shares of the
Company.
The creation of a classified Board and the 80 percent requirement
were approved by the shareholders at the Company's 1987 Annual
Meeting. The 80 percent requirement will be difficult to achieve.
The Board is not making a recommendation on how shareholders
should vote on this proposal. We want to receive a clear
indication of how you would like us to proceed on this issue. If
you do not vote "FOR" or "AGAINST" this item, your vote will
be counted as an abstention.
BOARD OF DIRECTORS
ALICE F. EMERSON (PICTURE OMITTED)
HARRY L. KAVETAS (PICTURE OMITTED)
PAUL H. O'NEILL (PICTURE OMITTED)
LAURA D'ANDREA TYSON (PICTURE OMITTED)
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING AT THE 2001
ANNUAL MEETING
(Class II Directors)
ALICE F. EMERSON Director since May 1992
Dr. Emerson, 66, 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. 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.
HARRY L. KAVETAS Director since May 1997
Mr. Kavetas, 60, is Chief Financial Officer and Executive Vice
President of Eastman Kodak Company. He was elected to this
position in September 1994 after serving as Senior Vice President
since February 1994. Before joining Kodak, Mr. Kavetas served as
President, Chief Executive Officer and Director of IBM Credit
Corporation, a position he held from 1986 until he retired from
IBM in December 1993. In his 32 years at IBM, Mr. Kavetas held a
number of management positions. Mr. Kavetas holds a BA degree in
finance and economics from the University of Illinois. He is a
director of Lincoln National Corporation.
PAUL H. O'NEILL Director since December 1997
Mr. O'Neill, 62, is Chairman and Chief Executive Officer of
Aluminum Company of America (Alcoa) and has held this position
since April 1987. Prior to joining Alcoa, Mr. O'Neill served as
President of International Paper Company from 1985-1987, after
having joined that company in 1977. Mr. O'Neill began his career
as an engineer for Morrison-Knudsen, Inc., worked as a computer
systems analyst with the U.S. Veterans Administration from 1961-
1966, and served on the staff of the U.S. Office of Management and
Budget from 1967-1977. He was deputy director of OMB from 1974-
1977. Mr. O'Neill received a BA degree in economics from Fresno
State College and a master's degree in public administration from
Indiana University. Mr. O'Neill is a director of Alcoa, Lucent
Technologies and National Association of Securities Dealers, Inc.
LAURA D'ANDREA TYSON Director since May 1997
Dr. Tyson, 50, is professor of the Class of 1939 Chair in
Economics and Business Administration at the University of
California, Berkeley, a position she accepted in January 1997.
Prior to accepting this position, Dr. Tyson served in the first
Clinton Administration as Chairman of the President's National
Economic Council and 16th Chairman of the White House Council of
Economic Advisers. Prior to joining the Administration, Dr. Tyson
was professor of Economics and Business Administration, Director
of the Institute of International Studies, and Research Director
of the Berkeley Roundtable on the International Economy at the
University of California, Berkeley. Dr. Tyson holds a BA degree
from Smith College and a Ph.D. degree in economics from the
Massachusetts Institute of Technology. Dr. Tyson is the author of
numerous articles on economics, economic policy and international
competition. She is a member of the boards of directors of
Ameritech Corporation and Morgan Stanley, Dean Witter, Discover &
Co.
BOARD OF DIRECTORS
DANIEL A. CARP (PICTURE OMITTED)
DURK I. JAGER (PICTURE OMITTED)
RICHARD S. BRADDOCK (PICTURE OMITTED)
RICHARD A. ZIMMERMAN (PICTURE OMITTED)
NOMINEES TO SERVE FOR A ONE-YEAR TERM EXPIRING AT THE 1999 ANNUAL
MEETING
(Class III Directors)
DANIEL A. CARP Director since December 1997
Mr. Carp, 49, is President and Chief Operating Officer of Eastman
Kodak Company. He was elected to this position effective January
1, 1997, after having served as Executive Vice President and
Assistant Chief Operating Officer since November 1995. Mr. Carp
began his career with Kodak in 1970 and has held a number of
increasingly responsible positions in market research, business
planning, marketing management and line of business management. In
1986 Mr. Carp was named Assistant General Manager of Latin
American Region and in September 1988 he was elected a Vice
President and named General Manager of that region. In 1991 he was
named General Manager of the European Marketing Companies and
later that same year, General Manager, European, African and
Middle Eastern Region. He holds a BBA degree in quantitative
methods from Ohio University, an MBA degree from Rochester
Institute of Technology and an MS degree in management from the
Sloan School of Management, Massachusetts Institute of Technology.
Mr. Carp is a director of Texas Instruments Incorporated.
DURK I. JAGER Director since January 1998
Mr. Jager, 54, is President and Chief Operating Officer of The
Procter & Gamble Company. He was elected to this position in July
1995 after having served as Executive Vice President since 1990.
Mr. Jager joined The Procter & Gamble Company in 1970 and was
named Vice President in 1987. From 1985-1990 Mr. Jager ran the
Japan and Asia Pacific Divisions of The Procter & Gamble Company.
He graduated from Erasmus Universiteit, Rotterdam, The
Netherlands. Mr. Jager is a director of The Procter & Gamble
Company.
DIRECTORS CONTINUING TO SERVE A TERM EXPIRING AT THE 1999 ANNUAL
MEETING
(Class III Directors)
RICHARD S. BRADDOCK Director since May 1987
Mr. Braddock, 56, is Chairman of True North Communications Inc.
and Ion Laser Technology, positions he has held since July 1997.
He was a principal of Clayton, Dubilier & Rice, from June 1994
until 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 graduated from Dartmouth College in 1963 with a degree in
history, and received his MBA degree from the Harvard School of
Business Administration in 1965. He is a director of AmTec, Inc.,
Cadbury Schweppes, True North Communications Inc., E-Trade and Ion
Laser Technology.
RICHARD A. ZIMMERMAN Director since July 1989
Mr. Zimmerman, 66, 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 graduated from Pennsylvania State University. He is a
member of the boards of directors of Stabler Companies, Inc. and
Westvaco Corporation
BOARD OF DIRECTORS
DELANO E. LEWIS (PICTURE OMITTED)
MARTHA LAYNE COLLINS (PICTURE OMITTED)
GEORGE M. C. FISHER (PICTURE OMITTED)
PAUL E. GRAY (PICTURE OMITTED)
JOHN J. PHELAN, JR. (PICTURE OMITTED)
NOMINEE TO SERVE FOR A TWO-YEAR TERM EXPIRING AT THE 2000 ANNUAL
MEETING
(Class I Director)
DELANO E. LEWIS
Mr. Lewis, 59, is President and Chief Executive Officer of
National Public Radio Corporation, a position he has held since
1994. He was President and Chief Executive Officer of C&P
Telephone Company, a subsidiary of Bell Atlantic Corporation, from
1988 to 1993, after having served as Vice President since 1973.
Mr. Lewis held several positions in the public sector prior to
joining C&P Telephone Company. Mr. Lewis received a BA from
University of Kansas and a JD from Washburn School of Law. He is a
director of BET Holding, Inc., Colgate-Palmolive Co., and
Halliburton, Inc.
DIRECTORS CONTINUING TO SERVE A TERM EXPIRING AT THE 2000 ANNUAL
MEETING
(Class I Directors)
MARTHA LAYNE COLLINS Director since May 1988
Governor Collins, 61, is Director, International Business and
Management Center, at the University of Kentucky, a position she
assumed in July 1996. From 1988 to 1997, she was President of
Martha Layne Collins and Associates, a consulting firm, and from
July 1990 to July 1996, she was President of St. Catharine College
in Springfield, Kentucky. Following her receipt of a BS degree
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, Bank of Louisville and Mid-America
Bancorp.
GEORGE M. C. FISHER Director since December 1993
Mr. Fisher, 57, is Chairman and Chief Executive Officer of Eastman
Kodak Company. Mr. Fisher also held the position of President from
December 1993 through December 1996 and the position of Chief
Operating Officer from October 1995 through December 1996. Before
joining Kodak, Mr. Fisher 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 master's degree
in engineering and a doctorate degree in applied
mathematics from Brown University. Mr. Fisher is a director of
General Motors Corporation and AT&T.
PAUL E. GRAY Director since September 1990
Dr. Gray, 66, is President Emeritus of the Massachusetts Institute
of Technology (M.I.T.) and Professor of Electrical Engineering and
Computer Science. Dr. Gray served as Chairman of the governing
board of M.I.T. from 1990 to June 1997 and as its President from
1980 to 1990. 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 Arthur D. Little,
Incorporated, New England Investment Company, L.P. and The Boeing
Co.
JOHN J. PHELAN, JR. Director since December 1987
Mr. Phelan, 66, is the retired Chairman and Chief Executive
Officer of the New York Stock Exchange, a position he held from
1984 until 1991. 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.
Board Committees
The Board of Directors has an Audit Committee, a Committee on
Directors, an Executive Compensation and Development Committee, a
Finance Committee, and a Public Policy Committee. All committee
members are non-employee, independent directors.
Audit Committee 5 meetings in 1997
- recommends the firm that Kodak should retain as independent
accountants;
- reviews the audit and non-audit activities of both the
independent accountants and the internal audit staff of the
Company; and
- meets separately and privately with the independent accountants
and with the Company's Director, Corporate Auditing, to ensure
that the scope of their activities has not been restricted and
that adequate responses to their recommendations have been
received.
Committee on Directors 4 meetings in 1997
- reviews the qualifications of individuals for election as
members of the Board;
- recommends qualified individuals to be considered for Board
membership; and
- recommends directors' compensation and benefits.
Executive Compensation and Development Committee 5 meetings in 1997
- reviews the Company's executive development process;
- sets the compensation for the Chief Executive Officer,
President, executive vice presidents and senior vice presidents
and recommends the compensation of other Company officers;
- certifies and grants awards under the Company's compensation
plans; and
- certifies awards under the Management Variable Compensation Plan
and Wage Dividend Plan.
Finance Committee 5 meetings in 1997
- reviews the investment performance and the administration of the
Company's pension plan;
- reviews the Company's financing strategies; and
- reviews significant acquisitions, divestitures, and joint
ventures.
Public Policy Committee 2 meetings in 1997
- reviews proposals submitted by shareholders;
- reviews the Company's philanthropic programs; and
- reviews the Company's environmental initiatives.
<TABLE>
<CAPTION>
COMMITTEE MEMBERSHIP
Audit Committee Executive Finance Public
On Compensation Policy
Directors and
Development
Name
<S> <C> <C> <C> <C> <C>
- -------------------- ----- --------- ----------- ------- ------
Richard S. Braddock X X*
Martha Layne Collins X X*
Alice F. Emerson X X X
Paul E. Gray X X
Durk I. Jager
Karlheinz Kaske X X
Paul H. O'Neill
John J. Phelan, Jr. X X*
Laura D'Andrea Tyson X X
Richard A. Zimmerman X* X**
<FN>
* Chairman
** Acting Chairman
Messrs. Jager and O'Neill have not been assigned to
committees as of the date of this Proxy Statement.
</TABLE>
Meeting Attendance
The Board of Directors held a total of eight meetings in 1997. All
of the directors attended at least 75 percent of the meetings of
the Board and committees of the Board on which such director
served, except Mr. Goizueta who was absent due to illness. The
average attendance by all directors was over 94 percent.
Director Compensation
Non-employee directors receive:
- $18,000 in cash and $20,000 in Kodak stock annually;
- $1,000 for each Board, committee and special meeting attended;
- an additional $1,000 for each committee meeting they chair;
and
- reimbursement for out-of-pocket expenses associated with
attending Board and committee meetings.
Employee directors receive no additional compensation for serving
on the Board.
Non-employee directors may defer some or all of their compensation
into a phantom Kodak stock account or into a phantom interest-
bearing account. Three directors deferred compensation in 1997. In
the event of a change in control of the Company, the amounts in
the phantom accounts will be paid in a single, cash payment.
The Company provides a retirement plan for non-employee directors.
For directors elected prior to January 1, 1996, the plan provides
an annual retainer benefit for life equal to the then-current
annual retainer. For directors elected after January 1, 1996, the
plan provides an annual retainer benefit equal to the annual
retainer when the director retired. The benefit is 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. Directors who serve
fewer than five years receive a pro rata benefit. In the event of
a change in control of the Company, all retirement benefits will
be paid in a single, cash payment equal to the present value of
the remaining retirement benefits.
The Company provides group term life insurance in the amount of
$100,000 to all non-employee directors. This amount decreases to
$50,000 at retirement or age 65, whichever occurs later.
Each non-employee director whose service commenced prior to
January 1, 1997, is eligible to participate in the Company's
Directors' Charitable Award Program. This program 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. It 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
services of the Company's directors, and recognize the interest of
the Company and the directors in supporting worthy charitable and
educational institutions. Directors who are participating in the
program are Messrs. Braddock, Phelan, and Zimmerman, Drs. Emerson,
Gray, and Kaske, and Gov. Collins.
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
Directors, Nominees
and Executive Number of Common Shares
Officers Owned on January 2, 1998
- ------------------- ------------------------
Richard S. Braddock 3,395
Richard T. Bourns 146,473(a)(b)(d)
Daniel A. Carp 149,040(a)(b)
Martha Layne Collins 3,200
Alice F. Emerson 3,909(c)
George M. C. Fisher 1,589,186(a)(b)
Paul E. Gray 2,719
Durk I. Jager 500
Karlheinz Kaske 2,213
Harry L. Kavetas 108,842(a)(b)(d)
Carl F. Kohrt 107,024(a)(b)(d)
Delano E. Lewis 75(f)
Paul H. O'Neill 1,456(c)
John J. Phelan, Jr. 8,285(c)
Laura D'Andrea Tyson 558
Richard A. Zimmerman 4,513(c)
All Directors, Nominees and 2,676,050(a)(b)(c)(d)(e)(f)
Executive Officers as a
Group (29), including the above
(a) Includes the following number of shares which may be
acquired by exercise of stock options: R. T. Bourns -
104,500; D. A. Carp - 123,360; G. M. C. Fisher - 1,326,933;
H. L. Kavetas - 32,708; C. F. Kohrt - 79,746; and all
directors, nominees and executive officers as a group -
2,064,249.
(b) Includes the following Eastman Kodak Company common stock
equivalents, receipt of which was deferred under the
Performance Stock Program: R. T. Bourns - 30,661; D. A. Carp
- - 23,795; G. M. C. Fisher - 84,853; H. L. Kavetas - 19,771;
C. F. Kohrt - 23,795; and all directors, nominees and
executive officers as a group - 269,047.
(c) Includes the following Eastman Kodak Company common stock
equivalents, which are held in the Deferred Compensation
Plan For Directors: A. F. Emerson - 1,657; P. H. O'Neill -
456; J. J. Phelan, Jr. - 4,727; and R. A. Zimmerman - 734.
(d) Includes the following Eastman Kodak Company common stock
equivalents, which are held in the Executive Deferred
Compensation Plan: R. T. Bourns - 5,579; H. L. Kavetas -
33,553; C. F. Kohrt - 1,038; and all directors, nominees and
executive officers as a group - 53,231.
(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) Includes shares purchased in February 1998.
The above table reports beneficial ownership in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. This means,
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 are listed as
beneficially owned. The figures above include shares held for the
account of the above persons in the Eastman Kodak Shares Program
and 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 7,072,373 shares of the
Company's stock (less than three percent of the outstanding
shares) held in the Kodak Stock Fund of the Eastman Kodak
Employees' Savings and Investment Plan for the benefit of
approximately 23,661 employees and former employees. A committee
consisting of five individuals, including four Company officers,
has discretionary voting power over this fund.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The employees named in the following table were the Company's
Chief Executive Officer and the four highest-paid executive
officers during 1997. The amounts shown include both amounts paid
and amounts deferred.
<TABLE>
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The individuals named in the following table were the Company's Chief Executive Officer and the four highest-paid
executive officers during 1997. The amounts shown include both amounts paid and amounts deferred.
SUMMARY COMPENSATION TABLE
--------------------------
<CAPTION>
Annual Compensation Long-Term Compensation
(Paid or Deferred)
---------------------------------- -------------------------------
Awards Payouts
------------------------ -----------
Securities
Other Under-
Annual Restricted lying All Other
Name and Compen- Stock Options/ LTIP Compensa-
Principal Position Year Salary Bonus(a) sation(b) Award(s)(c) SARs(d) Payouts(e) tion(f)
- ------------------ ---- ---------- ---------- --------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 1997 $2,000,000 $ 0 $ - $4,506,250 2,084,701 $ 0 $1,847,065
Chairman and CEO 1996 2,000,000 1,725,000 - 0 75,000 1,495,463 1,925,188
1995 2,000,000 2,282,496 - 0 50,000 5,010,098 2,004,941
D. A. Carp 1997 677,885 0 52,257 0 151,993 0 0
President & COO 1996 517,309 600,000 - 0 34,000 365,558 0
1995 334,616 342,645 206,339 0 29,820 1,443,866 0
H. L. Kavetas 1997 625,385 0 - 885,000 237,676 0 0
Executive 1996 597,692 450,000 - 0 34,000 728,346 0
Vice President and CFO 1995 567,231 581,561 67,037 0 28,000 857,541 0
C. F. Kohrt 1997 540,385 0 98,384 0 36,674 0 0
Executive Vice President 1996 486,538 400,000 - 0 34,000 365,558 75,000
& Assistant COO 1995 296,000 236,769 - 0 29,820 1,443,866 0
R. T. Bourns 1997 445,000 119,568 - 0 27,621 0 0
Senior Vice President 1996 445,000 253,446 - 0 23,000 440,331 0
1995 439,770 273,000 - 0 15,000 1,925,104 0
<FN>
(a) This column includes Management Variable Compensation Plan awards
for services in the year indicated. For 1995 this column also
includes Wage Dividend. Beginning in 1996, Wage Dividend was paid
in the form of stock options.
(b) Where no amount is shown, the value of personal benefits provided
was less than the minimum amount required to be reported. For D.
A. Carp the amounts represent expatriate payments: 1997 - tax
reimbursement; 1995 - $111,433 for housing and $61,542 for tax
reimbursement. For H. L. Kavetas this amount includes $35,615 as a
temporary living allowance. For C. F. Kohrt the amount represents
expatriate payments.
(c) The total number and value of restricted stock held as of December
31, 1997 for each named individual (valued at $60.81 per share)
are: G. M. C. Fisher -151,372 shares - $9,204,931; R. T. Bourns -
0 shares; D. A. Carp - 22,742 shares - $1,382,941; H. L. Kavetas
- - 22,810 shares - $1,387,076; and C. F. Kohrt - 22,740 shares -
$1,382,819. Amounts shown for 1997 represent grants made in
connection with the extension of Mr. Fisher's and Mr. Kavetas'
employment contracts with the shares valued as of the date of
grant, i.e., G. M. C. Fisher 50,000 shares - $4,506,250 at $90.125
per share on February 25, 1997 and H. L. Kavetas 10,000 shares -
$885,000 at $88.50 per share on March 4, 1997. Dividends are paid
on restricted shares as and when dividends are paid on Kodak
common stock.
(d) For G. M. C. Fisher for 1997, this amount includes 2,000,000 stock
options granted in connection with the extension of his employment
contract. For H. L. Kavetas for 1997, this amount includes 200,000
stock options granted in connection with the extension of his
employment contract.
(e) No awards were paid for the period 1995-1997 under the Performance
Stock Program. Amounts for 1996 were paid based on performance
over the period 1995-1996 and computed as of the date of award,
February 13, 1997 at $92.3125 per share. Amounts for 1995 were
paid based on performance over the period 1993-1995, and computed
as of the date of award, February 9, 1996, at $76.875 per share.
The value of these shares as of December 31, 1997 is included in
footnote (c). All these awards were paid in shares of restricted
stock, which restrictions lapse upon attainment of age 60.
Dividends are paid on the restricted shares as and when dividends
are paid on Kodak common stock.
(f) For G. M. C. Fisher for 1997, this amount includes $1,819,805 of
principal and interest forgiven by the Company with respect to two
loans described under the heading "Employment Contracts" on page
37 and $27,180 for life insurance premiums; for 1996 this amount
includes $1,901,388 of principal and interest forgiven and $23,800
for life insurance premiums; and for 1995 this amount includes
$1,982,891 of principal and interest forgiven and $22,050 for life
insurance premiums. For C. F. Kohrt for 1996, the amount is a
special recognition award paid in connection with repositioning of
the Office Imaging Business.
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
-------------------------------------------------------------------------
Number of Percentage
Securities of Total
Underlying Options/SARs
Options/ Granted to Exercise or
SARs Employees Base Price Expiration Grant Date
Name Granted in Fiscal Year Per Share Date Present Value (e)
- --------------- ---------- -------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
G. M. C. Fisher 2,000,000(a) 31.74% $90.125 2/24/07 $57,460,000
9,701(b) .15 90.438 3/12/07 286,956
75,000(c) 1.19 74.313 4/03/07 1,822,500
D. A. Carp 100,000(d) 1.58 79.563 1/02/07 2,508,000
1,993(b) .03 90.438 3/12/07 58,953
50,000(c) .79 74.313 4/03/07 1,215,000
H. L. Kavetas 200,000(a) 3.15 88.500 3/03/07 5,642,000
2,676(b) .04 90.438 3/12/07 79,156
35,000(c) .55 74.313 4/03/07 850,500
C. F. Kohrt 1,674(b) .03 90.438 3/12/07 49,517
35,000(c) .55 74.313 4/03/07 850,500
R. T. Bourns 1,621(b) .03 90.438 3/12/07 47,949
26,000(c) .41 74.313 4/03/07 631,800
<FN>
(a) These options were granted in connection with the
extension of Mr. Fisher's and Mr. Kavetas' employment
contracts. One quarter of these options vest on each
of the first four anniversaries of the grant date. If
Mr. Fisher's employment terminates before the options
vest, he will forfeit the options unless his
termination is due to death, disability, retirement
after December 31, 2000 or an approved reason. If Mr.
Kavetas' employment terminates before the options
vest, he will forfeit the options unless his
termination is due to death, disability, illness,
retirement after February 11, 2001, or an approved
reason.
(b) These options were awarded under the Wage Dividend
Plan. These options are immediately vested.
(c) These options were awarded under the Spring 1997 stock
option grant. One third of the options vest on each of
the first three anniversaries of the grant date.
Termination of employment, for other than death or a
permitted reason, prior to the first anniversary of
the grant date, results in forfeiture of the options.
Thereafter, termination of employment prior to vesting
results in forfeiture of the options unless the
termination is due to retirement, death, disability or
an approved reason. Vesting accelerates upon death.
(d) These options were awarded in connection with his
election as President and Chief Operating Officer. One
third of the options vest on each of the first three
anniversaries of the grant date. Termination of
employment, for other than death or a permitted
reason, prior to the first anniversary of the grant
date, results in forfeiture of the options.
Thereafter, termination of employment prior to vesting
results in forfeiture of the options unless the
termination is due to retirement, death, disability or
an approved reason. Vesting accelerates upon death.
(e) As of the date of printing this Proxy Statement, the
exercise price of all of these options is higher than
the market price of Kodak stock. The present value of
these options was determined using the Black-Scholes
model of option valuation in a manner consistent with
the requirements of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based
Compensation."
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of
Securities Value of Unexercised
Unexercised in-the-money
Number Options/SARs at Options/SARs
of Fiscal Year-End Fiscal Year-End*
Shares ----------------------------- -----------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------- ------------ ---------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 300,000 $8,719,114 826,933 2,406,307 $7,998,573 $2,846,040
D. A. Carp 1,691 38,730 92,960 182,579 1,542,727 22,193
H. L. Kavetas 0 0 32,708 466,968 86,986 3,615,930
C. F. Kohrt 740 16,949 79,746 67,579 1,209,832 22,208
R. T. Bourns 0 0 104,500 46,413 2,174,693 22,463
<FN>
* Based on the closing price on the New York Stock Exchange - Composite Transactions of the Company's
common stock on December 31, 1997 of $60.81 per share.
</TABLE>
Long-Term Incentive Plan
Each February the Executive Compensation and Development
Committee approves a three-year performance cycle under the
Performance Stock Program. Participation in the Program is
limited to senior executives. Awards under each cycle are
contingent upon achieving a performance goal established by the
Committee. The performance goal is total shareholder return by
the Company equal to at least that earned over the same period by
a company at the 50th percentile in terms of total shareholder
return within the Standard & Poor's 500 Composite Stock Price
Index. After the close of a cycle, the Committee determines
whether the performance goal was achieved and, if so, calculates
the percentage of each participant's target award earned. No
award is paid unless the performance goal is achieved. Fifty
percent of the target award is earned if the performance goal is
achieved. One hundred percent of the target award is earned if
total shareholder return for the cycle equals that of a company
used to measure performance at the 60th percentile within the
Standard & Poor's 500 Composite Stock Price 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 criteria it deems
appropriate. Awards, if any, are paid in the form of restricted
stock, which restrictions lapse at age 60. The table below shows
the threshold (i.e., attainment of the performance goal), target
and maximum number of shares for the Chief Executive Officer and
the other named executive officers for each cycle.
Individuals who participate for less than the full performance
cycle are eligible for only a prorated award based upon the
length of their participation.
No awards were earned for the 1995-1997 performance cycle as
shown in the Long-Term Incentive Payout column of the Summary
Compensation Table shown on page 30.
<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 1995-1997 6,750 13,500 20,250
1996-1998 6,750 13,500 20,250
1997-1999 6,750 13,500 20,250
D. A. Carp N/A 1995-1997 1,650 3,300 4,950
1996-1998 3,288 6,575 9,863
1997-1999 4,250 8,500 12,750
H. L. Kavetas N/A 1995-1997 3,288 6,575 9,863
1996-1998 3,288 6,575 9,863
1997-1999 3,288 6,575 9,863
C. F. Kohrt N/A 1995-1997 1,650 3,300 4,950
1996-1998 3,288 6,575 9,863
1997-1999 3,288 6,575 9,863
R. T. Bourns N/A 1995-1997 1,988 3,975 5,963
1996-1998 1,988 3,975 5,963
1997-1999 1,988 3,975 5,963
</TABLE>
EMPLOYMENT CONTRACTS
The Company employs Mr. Fisher under a contract which terminates
on December 31, 2000. In addition to information found elsewhere
in this Proxy Statement, this contract provides:
- two loans to Mr. Fisher in the total amount of $8,284,400
with an interest rate of 4.86 percent;
- 20 percent of the principal and all accrued interest on the
two loans are forgiven each year. As of December 31, 1997,
$1,656,880 principal remained;
- credit for years of service under the Company's benefit
plans, including 22 years of deemed service and five
additional years of age for the retirement plan. Any
pension benefit payable to Mr. Fisher will be reduced by
pension paid from his prior employer;
- life insurance equal to 3.5 times his base salary; and
- a disability benefit equal to 60 percent of his base salary.
If Mr. Fisher's employment is terminated without cause, including
following a change in control, Mr. Fisher is entitled to three
years of salary continuation, immediate vesting of stock options,
lapsing of restrictions on restricted stock and payment of unpaid
bonuses. Mr. Fisher is entitled to reimbursement for taxes on
certain payments, including any amounts constituting "parachute
payments" under the Internal Revenue Code.
The Company employs Mr. Kavetas under a contract which terminates
on February 10, 2001. The contract provides credit for years of
service under the Company's benefit plans. For calculating
pension benefit, he receives credit for five years of service for
each of the first five years of employment and 3.5 years of
service for the sixth and seventh years of employment. Any
pension benefit payable to Mr. Kavetas will be reduced by pension
payments from Mr. Kavetas' prior employer. If employment
terminates due to death, Mr. Kavetas' estate is entitled to three
months' salary. If he is terminated without cause he is entitled
to 18 months' salary, vesting of stock options and lapsing of
restrictions on restricted stock.
Termination of Employment
The Company has a general severance arrangement available to
substantially all U.S. employees which provides two weeks of pay
for every year of service with a maximum of 52 weeks.
Change in Control Arrangements
In the event of a change in control of the Company which causes
the Company's stock to cease trading on the New York Stock
Exchange, the Company will make the following payments within 90
days after the change in control:
- to each participant in the Executive Deferred Compensation
Plan, the amount in his or her account;
- to each participant in the Management Variable Compensation
Plan, a pro rata target award for the year in which the
event occurs and pays any other awards not yet paid; and
- to each holder of a stock option or stock appreciation right,
the difference between the exercise price and the change in
control price.
RETIREMENT PLAN
The Company funds a tax-qualified, defined benefit pension plan
for virtually all U.S. employees. Retirement income benefits are
based upon an employee's "average participating compensation"
(APC). The Plan defines APC as one-third of the sum of the
employee's "participating compensation" for the highest
consecutive 39 periods of earnings over the 10-year period ending
immediately prior to retirement or termination. "Participating
compensation," in the case of the executive officers included in
the Summary Compensation Table, is base salary and Management
Variable Compensation Plan awards, 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 calculated by
multiplying the employee's years of accrued service by the sum of
(a) 1.3 percent of APC, plus (b) .3 percent of APC in excess of
the average Social Security wage base. For an employee with more
than 35 years of accrued service, the amount is increased by one
percent 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 in some limited situations.
<TABLE>
PENSION PLAN TABLE - Annual Retirement Income Benefit
Straight Life Annuity Beginning at Age 65
<CAPTION>
Years of Service
------------------------------------------------------------
Remuneration 20 25 30 35 40
- ------------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 500,000 $ 160,000 $ 200,000 $ 240,000 $ 280,000 $ 320,000
1,000,000 320,000 400,000 480,000 560,000 640,000
1,500,000 480,000 600,000 720,000 840,000 960,000
2,000,000 640,000 800,000 960,000 1,120,000 1,280,000
2,500,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000
3,000,000 960,000 1,200,000 1,440,000 1,680,000 1,920,000
3,500,000 1,120,000 1,400,000 1,680,000 1,960,000 2,240,000
4,000,000 1,280,000 1,600,000 1,920,000 2,240,000 2,560,000
4,500,000 1,440,000 1,800,000 2,160,000 2,520,000 2,880,000
<FN>
NOTE: For purposes of this table Remuneration means APC. To the extent that any employee'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 service credited as of
December 31, 1997 to each of the five employees named in the
Summary Compensation Table. This table also shows the amount of
each named employee's APC at the end of 1997.
<TABLE>
<CAPTION>
RETIREMENT PLAN
Years of
Service APC
-------- -------------
<S> <C> <C>
G. M. C. Fisher 26(a) $3,794,998
D. A. Carp 27 871,328
H. L. Kavetas 23(b) 1,055,105
C. F. Kohrt 26 691,145
R. T. Bourns 39 669,400
<FN>
(a) Mr. Fisher is credited with 22 extra years of service for
purposes of calculating his retirement benefit.
(b) Mr. Kavetas is credited with 19 extra years of service for
purposes of calculating his retirement benefit.
</TABLE>
In the event of a change in control, a participant whose
employment is terminated, for a reason other than death,
disability, cause or voluntary resignation, within five years of
such event is given up to five additional years of service. In
addition, where the participant is age 50 or over on the date of
the change in control, up to five additional years of age is given
for the following plan purposes:
- to determine eligibility for early and normal retirement;
- to determine eligibility for a vested right; and
- to calculate the amount of retirement benefit.
The actual number of years of service and years of age that is
given to such a participant decreases proportionately depending
upon the number of years that occurs 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 five years
after a change in control, the benefit for each plan participant
will be calculated as indicated above.
REPORT OF THE EXECUTIVE COMPENSATION
AND DEVELOPMENT COMMITTEE
Purposes
The Company's executive compensation plans aim to:
- Tie compensation to performance consistent with Company
values, as well as increasing shareholder value.
- Attract and retain talented management by paying compensation
comparable to the compensation paid by similar companies.
- Link compensation to both short-term and long-term Company
performance.
- Increase senior management's stock ownership.
Types of Compensation
There are two main types of compensation:
- Annual Compensation. This includes both salary and bonus.
- Long-Term Compensation. This includes stock options and a
performance share program that pays awards in restricted
stock and restricted stock units.
Factors to be Considered in Determining Compensation
Survey Data: The Executive Compensation and Development Committee
is composed entirely of independent outside directors. The
Committee sets overall targeted levels of compensation, both
annual compensation and long-term incentives, for the Chief
Executive Officer, President, Executive Vice Presidents and Senior
Vice Presidents. The Committee wants management compensation to be
comparable to the compensation paid by similar companies. Each
year, the Company participates in surveys prepared by outside
consultants. The companies included in these surveys are those
that we compete with for executive talent. Most, but not all, of
these companies are included in the Dow Jones Industrial Index
shown in the Performance Graph on page 46. Based largely on the
median compensation of these surveyed companies, the Committee
sets the target compensation of the Company's executives.
Management Appraisal Process: Management compensation is also
determined through our management appraisal process. This process
consists of two parts: the Management Performance Commitment
Process (MPCP) and Touchstone Review.
We use the Management Performance Commitment Process to reinforce
a performance-based culture, to focus and coordinate our efforts
and, most importantly, to improve performance. In the first step
of this process, each member of management at the start of the
year develops specific and measurable goals in the following three
areas:
- shareholder satisfaction;
- customer satisfaction; and
- employee satisfaction/public responsibility.
To achieve a common, Company-wide focus, managers align their
goals and efforts both across the entire Company and throughout
all levels of the Company. The criteria used to measure
achievement of these goals are: financial performance; improvement
in health, safety and the environment; achievement of diversity
goals; employee development; product leadership; cycle time; and
customer satisfaction.
Periodically and at year-end, each manager's performance is
measured against his or her goals.
The final step of the process links compensation to results. The
manager's MPCP score plays a significant role in determining his
or her base salary, stock option grant and annual bonus.
The other part of our management appraisal process is the
Touchstone Review. This is an annual questionnaire which measures
a manager's practice of the five Company values:
- respect for the dignity of the individual;
- integrity;
- trust;
- credibility; and
- continuous improvement/personal renewal.
A manager's peers and subordinates complete the questionnaire. The
results are included in the appraisal process and have an impact
on the manager's base salary, stock option grant and bonus.
Stock Ownership Requirements: The Company has stock ownership
requirements for its senior executives. Senior executives must own
common stock of the Company worth a multiple of salary. The
multiples range from one times salary to four times salary for the
CEO.
Today, these requirements apply to approximately 25 executives,
all of whom have either satisfied or are on track to satisfy the
requirements.
Annual Compensation
Annual compensation for our executives includes salary and bonus
under our annual incentive plan.
Base Salary: The Company determines a manager's salary based on
individual performance and comparisons to executive compensation
in similar companies. Individual performance is measured through
our Management Performance Commitment Process and Touchstone
Review.
Bonuses: Under the Company's annual bonus plan, the Management
Variable Compensation Plan (MVCP), a target bonus is set for each
manager. The target, which is a percentage of salary, varies
depending on the manager's position in the Company. Target bonus
ranges from 18 percent of salary to 90 percent of salary for the
CEO.
Through 1997, the Plan's sole performance measure to determine the
award pool for the year was return on net assets (RONA). Using
RONA, the Committee establishes at the beginning of each year a
performance threshold for the year. The Plan provides that no
bonuses will be paid if the performance threshold is not met.
Company performance equal to or greater than the year's
performance threshold determines the size of the award pool for
such year. The total amount of all bonuses for a given year cannot
exceed the amount of the award pool for the year. The Committee
awards bonuses from the award pool using the results of the
management appraisal process.
1997 Bonuses: During 1997, the Company aimed to increase revenue,
while managing assets and reducing costs, and improve earnings.
The Company continued to use return on net assets (RONA) as its
performance measure for its bonus pool. At the same time, however,
the Company introduced the use of Economic Profit/Economic Value
Added in the financial planning and management of the Company.
During 1997, management goals also focused on:
- customer satisfaction;
- product leadership;
- employee training and development; and
- diversity.
In 1997, the Company met its RONA threshold. Even so, due to poor
overall Company results, bonuses for 1997 were well below target.
Company performance was below target in all three key result
areas:
- shareholder satisfaction;
- customer satisfaction; and
- employee satisfaction/public responsibility.
The Summary Compensation Table on page 30 lists for 1997 the
awards for the CEO and the four highest paid executive officers.
Long-Term Compensation
The Company's long-term compensation program consists of stock
options and a performance share program. The purpose of both types
of awards is to increase shareholder value.
Stock Options: Stock options tie compensation directly to the
future value of the Company's common stock. Our managers gain only
when you gain-when the price of our common stock rises.
In determining the size of individual grants for 1997, the
Committee reviewed survey data covering other companies'
practices. Most of the companies included in these surveys are the
same companies used in the surveys of annual cash compensation.
The Committee used median survey values as reference points in
determining the size of option grants. The Committee also
considered the frequency with which other companies grant stock
options, as well as the number of options granted by the Company
to its managers in prior years. The Committee granted stock
options in 1997 to all Company managers at market price for a term
of ten years. The 1997 stock option awards for the CEO and the
four highest-paid executive officers appear on page 32.
Performance Stock Program: The Performance Stock Program is a
multi-year program for the Company's senior executives. The
purpose of the program is to focus the attention of senior
management on the long-term results of the Company. A description
of the program, as well as the threshold, target and maximum
awards for the CEO and the four highest-paid executive officers,
appears on page 36.
The performance threshold for the 1995-1997 performance cycle was
shareholder return equal at least to that earned over the same
period by a company at the 50th percentile in terms of shareholder
return within the Standard & Poor's 500 Composite Stock Price
Index. For the 1995-1997 performance cycle, the Company's
shareholder return was equal to the 19th percentile company in the
Standard & Poor's 500 Composite Stock Price Index. Due to the
Company's failure to achieve threshold performance, no awards were
paid for the 1995-1997 performance cycle.
Wage Dividend
Management employees also participate in the Wage Dividend Plan,
an annual profit sharing plan for all U.S. employees. In 1997, the
Plan's sole performance measure was return on net assets (RONA).
If the Plan's RONA threshold is met in a given year, all employees
receive awards based on the same percentage of their earnings for
the year. The level of RONA determines this percentage. For 1997,
the percentage was 2.06 percent. Awards for all management
employees are paid in the form of stock options.
Chief Executive Officer Compensation
Mr. Fisher joined the Company in October 1993. His employment
agreement with the Company covers a period of five years. An
amendment to this agreement in February 1997 extended Mr. Fisher's
employment until December 31, 2000. Under the terms of Mr.
Fisher's agreement, he was granted 50,000 shares of restricted
stock and 2,000,000 stock options. The restrictions on the
restricted stock lapse on January 1, 2001. The exercise price of
the stock options is $90.125, the closing price of Kodak common
stock on the New York Stock Exchange on February 25, 1997. Other
details of his agreement appear on page 37.
During 1997, as in the past three years, no change was made to Mr.
Fisher's salary of $2,000,000. This amount is set under the terms
of Mr. Fisher's employment agreement.
The Committee used the CEO's results under the management
appraisal process to determine his bonus and stock option award
for the year. Based upon the Company's performance described
earlier in this Report, Mr. Fisher did not receive a bonus for
1997. The Committee granted Mr. Fisher 75,000 stock options in
1997 as shown in the Options/SAR Grants in Last Fiscal Year Table
on page 32.
Leadership and Development
The Committee reviewed the Company's leadership and organization
development plans, as well as the Company's profiles for
succession candidates. It also discussed the Company's executive
compensation strategies. These are designed to provide leaders
capable of creating effective organizations and executing business
strategies that will drive the success of the Company. In
addition, the Committee reviewed diversity activities and goals as
part of the Company's diversity program.
Company Policy on Qualifying Compensation
Under Section 162(m) of the Internal Revenue Code, the Company may
not deduct certain forms of compensation in excess of $1,000,000
paid to any of the senior executives named in the Summary
Compensation Table. 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 interests to comply with Section 162(m).
Other Committee Action
During 1997, Company management conducted a review to determine
how well the existing executive compensation programs were
supporting Company business strategies. The study concluded that
no major changes are needed to the programs. As part of that study
and other program development efforts, the Committee agreed that
beginning in 1998, Economic Profit/Economic Value Added will be
the key performance measure in the Management Variable
Compensation Plan and introduced as a performance measure in the
Wage Dividend Plan.
The Committee supports the Company's encouragement of stock
ownership by all employees. To reinforce this objective, the
Committee agreed to continue the Stock Option Recognition Program
(SORP) through 1998. This program provides for the use of stock
options as special recognition awards for extraordinary
contributions and achievements. Awards under SORP can generally be
made only to employees who are not participants in the management-
level stock option plan. Options under this program are granted
from the 1995 Omnibus Long-Term Compensation Plan.
Richard S. Braddock (Chairman)
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 and the Dow Jones Industrial Index, by
measuring the changes in common stock prices from December 31,
1992 plus assumed reinvested dividends.
[graph omitted]
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
Eastman Kodak $100.00 $143.87 $159.99 $230.68 $282.26 $218.21
S&P 500 Index 100.00 110.06 111.52 153.39 188.59 251.49
Dow Jones 100.00 116.97 122.85 168.22 216.86 270.88
The graph assumes that $100 was invested on December 31, 1992 in
each of the Company's common stock, the Standard & Poor's 500
Composite Stock Price 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.
By Order of the Board of Directors
/s/ Joyce P. Haag
Joyce P. Haag, Secretary
Eastman Kodak Company
March 20, 199
EXHIBIT A
WAGE DIVIDEND PLAN
Section 2.20 of the Wage Dividend Plan is amended in its entirety
to read as follows:
2.20 Performance Criteria
"Performance Criteria" means the stated business criterion
or criteria upon which the Performance Goals for a
Performance Period are based as required pursuant to Proposed
Treasury Regulation Section 1.162-27(e)(4)(iii). For purposes
of the Plan, RONA and Economic Profit/EVA shall be the
Performance Criteria. Either or both of these criterion shall
be used to establish the Performance Goals.
Section 2.22 of the Wage Dividend Plan is amended to delete the
term "Performance Criterion" and insert in its place the term
"Performance Criteria."
Article 2, entitled "Definitions," of the Wage Dividend Plan is
amended to add the following definitions and the existing sections
of Article 2 are renumbered to accommodate these changes:
"Economic Profit" means, for a Performance Period, the Net
Operating Profit After Tax that remains after subtracting the
Capital Charge for such Performance Period. Economic Profit
may be expressed as follows: Economic Profit = Net Operating
Profit After Tax - Capital Charge. Economic Profit may be
either positive or negative.
"Economic Value Added or EVA" means Economic Profit for the
current year minus Economic Profit for the immediately prior
year.
"Capital Charge" means, for a Performance Period, the amount
obtained by multiplying the Cost of Capital for the
Performance Period by the Operating Net Assets for the
Performance Period.
"Cost of Capital" means, for a Performance Period, the
estimated weighted average of the Company's cost of equity
and cost of debt for the Performance Period as determined by
the Committee in its sole and absolute discretion. The
Committee will determine the Cost of Capital for a
Performance Period within the first 90 days of the
Performance Period.
"Operating Net Assets" means, for a Performance Period, the
net investment used in the operations of the Company.
Operating Net Assets is calculated from the Company's audited
consolidated financial statements as being total assets minus
non-interest-bearing liabilities adjusted for LIFO
inventories, postemployment benefits other than pensions
(OPEB) and Wang in-process R&D.
"Net Operating Profit After Tax" means, for a Performance
Period, the after-tax operating earnings of the Company for the
Performance Period adjusted for interest expense and Wang in-
process R&D
EXHIBIT B
MANAGEMENT VARIABLE COMPENSATION PLAN
Section 2.28 of the Management Variable Compensation Plan is
amended in its entirety to read as follows:
2.28 Performance Criteria
"Performance Criteria" means the stated business criterion
or criteria upon which the Performance Goals for a
Performance Period are based as required pursuant to Proposed
Treasury Regulation Section 1.162-27(e)(4)(iii). For purposes
of the Plan, RONA and Economic Profit/EVA shall be the
Performance Criteria. Either or both of these criterion shall
be used to establish the Performance Goals.
Section 2.30 of the Management Variable Compensation Plan is
amended to delete the term "Performance Criterion" and insert in
its place the term "Performance Criteria."
Article 2, entitled "Definitions," of the Management Variable
Compensation Plan is amended to add the following definitions and
the existing sections of Article 2 are renumbered to accommodate
these changes:
"Economic Profit" means, for a Performance Period, the Net
Operating Profit After Tax that remains after subtracting the
Capital Charge for such Performance Period. Economic Profit
may be expressed as follows: Economic Profit = Net Operating
Profit After Tax - Capital Charge. Economic Profit may be
either positive or negative.
"Economic Value Added or EVA" means Economic Profit for the
current year minus Economic Profit for the immediately prior
year.
"Capital Charge" means, for a Performance Period, the amount
obtained by multiplying the Cost of Capital for the
Performance Period by the Operating Net Assets for the
Performance Period.
"Cost of Capital" means, for a Performance Period, the
estimated weighted average of the Company's cost of equity
and cost of debt for the Performance Period as determined by
the Committee in its sole and absolute discretion. The
Committee will determine the Cost of Capital for a
Performance Period within the first 90 days of the
Performance Period.
"Operating Net Assets" means, for a Performance Period, the
net investment used in the operations of the Company.
Operating Net Assets is calculated from the Company's audited
consolidated financial statements as being total assets minus
non-interest-bearing liabilities adjusted for LIFO
inventories, postemployment benefits other than pensions
(OPEB) and Wang in-process R&D.
"Net Operating Profit After Tax" means, for a Performance
Period, the after-tax operating earnings of the Company for
the Performance Period adjusted for interest expense and Wang
in-process R&D.
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 13, 1998, or any adjournment
thereof.
NOMINEES FOR DIRECTOR:
Class I: Delano E. Lewis
Class II: Alice F. Emerson, Harry L. Kavetas,
Paul H. O'Neill and Laura D'Andrea Tyson
Class III: Daniel A. Carp and Durk I. Jager
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR
DIRECTOR, FOR THE RATIFICATION OF ELECTION OF PRICE WATERHOUSE LLP
AS INDEPENDENT ACCOUNTANTS, FOR THE AMENDMENT TO WAGE DIVIDEND
PLAN, FOR THE AMENDMENT TO MANAGEMENT VARIABLE COMPENSATION PLAN
AND AGAINST THE SHAREHOLDER PROPOSAL REQUESTING AN EXECUTIVE
COMPENSATION REVIEW. THE BOARD OF DIRECTORS MAKES NO
RECOMMENDATION WITH RESPECT TO THE SHAREHOLDER PROPOSAL REQUESTING
ANNUAL ELECTION OF DIRECTORS.
This Proxy will be voted as directed; if no direction to the
contrary is indicated, it will be voted as follows:
FOR the election of all nominees for director;
FOR the ratification of election of independent accountants;
FOR the amendment to Wage Dividend Plan;
FOR the amendment to Management Variable Compensation Plan;
AGAINST the shareholder proposal requesting an executive
compensation review; and
ABSTAIN with respect to the shareholder proposal requesting
annual election of directors.
(CONTINUED, and To Be Signed and Dated on the REVERSE SIDE)
SEE REVERSE SIDE
[BOX OMITTED]
The Board of Directors recommends a vote FOR Items 1 through 4.
1. Election of FOR WITHHOLD
Directors AUTHORITY
0 0
______________________________________________________________
To withhold authority to vote for any particular nominee(s), write
the name(s) above.
2. Ratification FOR AGAINST ABSTAIN
of Election
of Independent
Accountants 0 0 0
3. Amendment to FOR AGAINST ABSTAIN
Wage Dividend Plan 0 0 0
4. Amendment to FOR AGAINST ABSTAIN
Management Variable
Compensation Plan 0 0 0
The Board of Directors recommends a vote AGAINST Item 5.
5. Shareholder FOR AGAINST ABSTAIN
Proposal-
Executive Compensation
Review 0 0 0
The Board of Directors makes no recommendation with respect to
Item 6.
6. Shareholder FOR AGAINST ABSTAIN
Proposal-
Annual Election of
Directors 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 affect the
distribution of dividends or proxy statements. 0
I plan to attend the
Annual Meeting. 0
I plan to bring
a guest. 0
When executed, promptly forward this card to: Proxy Services,
Boston EquiServe, P. O. Box 9372, Boston, MA 02205-9942.
SIGNATURE(s) DATE
NOTE: Please sign exactly as the name appears hereon. Joint
owners must each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
Boston EquiServe
Proxy Services
[CORPORATE LOGO OMITTED]
Kodak uses Boston EquiServe's web-based proxy system to allow you to
securely vote over the web using Boston EquiServe's advanced web
technology.
To vote your Kodak proxy using Boston EquiServe's secure Internet
services, have your proxy card ready and click on the button below.
[BOX OMITTED]
Vote Proxy
Copyright 1998 by Boston EquiServe, Limited Partnership and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Boston EquiServe
Web Proxy Voting
Please enter the 13 Digit Control Number located in the lower left
corner of your proxy card and click on "Submit."
Control Number:
[BOX OMITTED]
Submit
[BOX OMITTED]
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Boston EquiServe
Web Proxy Voting
Eastman Kodak Company
You may now cast your vote by proxy for the Eastman Kodak Company Annual
Meeting to be held on May 13, 1998 for shareholders of record as of
March 16, 1998.
CUSIP: 277461-109
Proxy Voting Instructions
I hereby appoint George M. C. Fisher and Joyce P. Haag, and each of
them, as Proxies, with full power of substitution, to vote, as
designated, for director substitutes if any nominees become 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 I have power to vote at
the Annual Meeting of shareholders to be held on May 13, 1998 or any
adjournment thereof.
Please click on the button below to begin voting.
Begin Voting
[BOX OMITTED]
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Boston EquiServe
Web Proxy Voting
Eastman Kodak Company
Vote Each Proposal Selectively
Please vote on proposals 1 through 6 below by clicking on the box that
indicates how you would like your shares voted on each proposal. When
you have finished, click on the Submit button at the bottom of the page.
The Board of Directors recommends a vote FOR item 1.
1. Election of Directors
Nominees:
Delano E. Lewis (Class I)
Alice F. Emerson (Class II)
Harry L. Kavetas (Class II)
Paul H. O'Neill (Class II)
Laura D'Andrea Tyson (Class II)
Daniel A. Carp (Class III)
Durk I. Jager (Class III)
[CIRCLE OMITTED] Vote For All Nominees
[CIRCLE OMITTED] Vote Withheld From All Nominees
[CIRCLE OMITTED] Withhold Selectively
Place a check mark next to each nominee from whom you would like to
WITHHOLD your vote.
[BOX OMITTED] Delano E. Lewis (Class I)
[BOX OMITTED] Alice F. Emerson (Class II)
[BOX OMITTED] Harry L. Kavetas (Class II)
[BOX OMITTED] Paul H. O'Neill (Class II)
[BOX OMITTED] Laura D'Andrea Tyson (Class II)
[BOX OMITTED] Daniel A. Carp (Class III)
[BOX OMITTED] Durk I. Jager (Class III)
The Board of Directors recommends a vote FOR item 2.
2. Ratification of Election of Independent Accountants
[CIRCLE OMITTED] For
[CIRCLE OMITTED] Against
[CIRCLE OMITTED] Abstain
The Board of Directors recommends a vote FOR item 3.
3. Amendment to Wage Dividend Plan
[CIRCLE OMITTED] For
[CIRCLE OMITTED] Against
[CIRCLE OMITTED] Abstain
The Board of Directors recommends a vote FOR item 4.
4. Amendment to Management Variable Compensation Plan
[CIRCLE OMITTED] For
[CIRCLE OMITTED] Against
[CIRCLE OMITTED] Abstain
The Board of Directors recommends a vote AGAINST Item 5.
5. Shareholder Proposal - Executive Compensation Review
[CIRCLE OMITTED] For
[CIRCLE OMITTED] Against
[CIRCLE OMITTED] Abstain
The Board of Directors makes no recommendation with respect to Item 6.
6. Shareholder Proposal - Annual Election of Directors
[CIRCLE OMITTED] For
[CIRCLE OMITTED] Against
[CIRCLE OMITTED] Abstain
[BOXES OMITTED]
Submit Revise Ballot
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Boston EquiServe
Web Proxy Voting
Eastman Kodak Company
Proxy Confirmation
Please review your voting instructions indicated below.
You may then either submit your voting instructions or revise what you
have entered.
Proposal 1. Election of Directors
Proposal 2. Ratification of Election of Independent Accountants
Proposal 3. Amendment to Wage Dividend Plan
Proposal 4. Amendment to Management Variable Compensation Plan
Proposal 5. Shareholder Proposal - Executive Compensation Review
Proposal 6. Shareholder Proposal - Annual Election of Directors
[BOXES OMITTED]
Submit Revise
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Thank you for voting your proxy.
Please check any of the following that apply:
1. If you receive more than one Annual Report at the address set forth
on your proxy card and have no need for the extra copy, please check the
box that follows. This will not affect the distribution of dividends or
proxy statements.
[BOX OMITTED]
2. I plan to attend the Annual Meeting.
[BOX OMITTED]
3. I plan to bring a guest.
[BOX OMITTED]
4. Please change my address.
My new address is:
[BOX OMITTED]
5. If you would like to receive an email confirmation of your vote,
please check the box that follows and enter your email address below:
[BOX OMITTED]
6. We are considering sending communications to shareholders via email
which will be much more convenient, timely and efficient than postal
mail. If you would like to receive future communications via email, if
we decide to do so, please check the box that follows, enter the last
four digits of your Social Security Number and your email address below:
[BOX OMITTED]
The last four digits of my Social Security Number are:
[BOX OMITTED]
If you checked "Yes" to either question 5 or 6, please enter your email
address.
My email address is:
[BOX OMITTED]
Submit
[BOX OMITTED]
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Boston EquiServe
Web Proxy Voting
Eastman Kodak Company
[EXCLAMATION SYMBOL OMITTED]
Thank you for your participation.
If you wish to vote another proxy or change your voting instructions,
please vote again. For each proxy submitted, our system will
automatically count only your last vote.
Vote Again
[BOX OMITTED]
Copyright 1998 by Boston EquiServe, L.P. and
Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
Eastman Kodak Company Proxy Telephone Script
Topic Code: 1030
Description: Control Number Entry
Voice Artist: Male
Message: Welcome to Shareholder Direct Telephone Proxy. Please be
assured that your telephone-based vote is strictly
confidential. (Pause) Please use your telephone key pad
to enter your thirteen-digit control number found in the
lower left portion of your proxy card.
Topic Code: 1020
Description: You Have Selected...
Voice Artist: Male
Message: You Have selected...
Topic Code: 9999
Description: Eastman Kodak Company
Voice Artist: Female
Message: Eastman Kodak Company
Topic Code: 9997
Description: Company Intro Message...
Voice Artist: Female
Message: This telephone system allows you to securely vote your
proxy. This telephone proxy is solicited by Kodak's
Board of Directors for the Annual Meeting of shareholders
on May 13, 1998. As owner of the shares represented by
this proxy, you appoint George M. C. Fisher and Joyce P.
Haag as proxies. They will vote your shares as you direct
on this call. Also, they, or either of them, may vote at
the Annual Meeting, or any adjournment thereof, in their
discretion, for director substitutes if any nominee
becomes unavailable, on matters promptly brought before
the Meeting, and on all matters incident to the conduct
of the Meeting. (Pause) There are 6 items to be voted
upon. You must vote on each item separately. (Pause)
The first item is Election of Directors. The Board of
Directors recommends a vote FOR each of the nominees.
Topic Code: 2000
Description: Vote All
Voice Artist: Male
Message: [Not Used]
Topic Code: 2010
Description: Confirm Vote - All In Favor of Management
Voice Artist: Female
Message: [Not Used]
Topic Code: 2020
Description: Confirm Vote - Vote Ballot Selectively
Voice Artist: Female
Message: [Not Used]
Topic Code: 3001
Description: Director Election (Withhold Selectively)
Voice Artist: Male
Message: You will now vote for the Directors. To accept all of
the Nominees, press 1. To withhold your vote from all of
these Nominees, press 2. To withhold your vote from only
some of the nominees, press 3.
Topic Code: 3010
Description: Confirm Vote - Accept All
Voice Artist: Female
Message: You have chosen to elect all of the Nominees.
Topic Code: 3020
Description: Confirm Vote - Withhold All
Voice Artist: Female
Message: You have chosen to withhold your vote from all of the
Nominees.
Topic Code: 3030
Description: Confirm Vote - Withhold Selectively
Voice Artist: Female
Message: You have chosen to vote on a per Nominee basis.
Topic Code: 3100
Description: Individual Director Election - Instructions
Voice Artist: Male
Message: The Board of Directors recommends a vote FOR each of
these nominees.
Topic Code: 3160
Description: Please Consider...
Voice Artist: Female
Message: Please consider Nominee...
Topic Code: 3101
Description: Board of Directors Nominee Number 1
Voice Artist: Female
Message: Delano E. Lewis, Class I Director
Topic Code: 3102
Description: Board of Directors Nominee Number 2
Voice Artist: Female
Message: Alice F. Emerson, Class II Director
Topic Code: 3103
Description: Board of Directors Nominee Number 3
Voice Artist: Female
Message: Harry L. Kavetas, Class II Director
Topic Code: 3104
Description: Board of Directors Nominee Number 4
Voice Artist: Female
Message: Paul H. O'Neill, Class II Director
Topic Code: 3105
Description; Board of Directors Nominee Number 5
Voice Artist: Female
Message: Laura D'Andrea Tyson, Class II Director
Topic Code: 3106
Description: Board of Directors Nominee Number 6
Voice Artist: Female
Message: Daniel A. Carp, Class III Director
Topic Code: 3107
Description: Board of Directors Nominee Number 7
Voice Artist: Female
Message: Durk I. Jager, Class III Director
Topic Code: 3170
Description: Accept or Withhold Menu
Voice Artist: Male
Message: To vote for this Nominee as a director, press 1. To
withhold your vote from this Nominee, press 2.
Topic Code: 3171
Description: Confirm Vote - Accept
Voice Artist: Female
Message: You have chosen to vote for...
Topic Code: 3172
Description: Confirm Vote - Withhold
Voice Artist: Female
Message: You have chosen to withhold your vote from...
Topic Code: 4003
Description: Voting Issues
Voice Artist Male
Message: Item 2. Ratification of Election of Independent
Accountants. The Board of Directors Recommends a vote FOR
item 2.
Topic Code: 4004
Description: Voting Issues
Voice Artist Male
Message: Item 3. Amendment to Wage Dividend Plan. The Board of
Directors Recommends a vote FOR item 3.
Topic Code: 4005
Description: Voting Issues
Voice Artist: Male
Message: Item 4. Amendment to Management Variable Compensation
Plan. The Board of Directors Recommends a vote FOR item
4.
Topic Code: 4006
Description: Voting Issues
Voice Artist: Male
Message: Item 5. Shareholder Proposal: Executive Compensation
Review. The Board of Directors Recommends a vote AGAINST
item 5.
Topic Code: 4007
Description: Voting Issues
Voice Artist: Male
Message: Item 6. Shareholder Proposal: Annual Election of
Directors. The Board of Directors makes NO
recommendation with respect to item 6.
Topic Code: 4043
Description: Voting Issues Menu (Without the Terminate Option)
Voice Artist: Male
Message: To vote for, press 1. To vote against, press 2. To
abstain, press 3.
Topic Code: 4051
Description: Confirm Vote - For
Voice Artist: Female
Message: You have chosen to vote for this proposal.
Topic Code: 4052
Description: Confirm Vote -
Voice Artist: Female
Message: You have chosen to vote against this proposal.
Topic Code: 4053
Description: Confirm Vote -
Voice Artist: Female
Message: You have chosen to abstain from voting on this proposal.
Topic Code: 1590
Description: If This Is Correct...
Voice Artist: Male
Message: If this is correct, press 1. If this is not correct,
press 2.
Topic Code: 9998
Description: If you plan to attend...or other "ending" message...
Voice Artist: Female
Message: If you would like to attend the Annual Meeting, change
your mailing address or discontinue duplicate mailings,
please call 1-800-253-6057. (pause) Thank you for your
interest in Kodak and for voting your shares. Remember,
since you voted by phone, there is no need for you to
return your proxy card. If you would like to change your
vote, please call back and follow the instructions
provided. Our system will count only your last vote for
each proxy submitted.
Topic Code: 1600
Description: Thank you. And Good-bye.
Voice Artist: Female
Message: Thank-you for participating. Good Bye.
March 19, 1998
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 13, 1998
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 (including related materials through which
shareholders may vote telephonically or through the Internet) for
use in connection with the Annual Meeting of shareholders of
Eastman Kodak Company to be held May 13, 1998. Mailing of the
definitive proxy statement and form of proxy to shareholders is
expected to commence on March 20, 1998.
Pursuant to Rule 14a-6(a) the 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, amendment
of two compensation plans and action on two shareholder proposals.
The material changes from last year's proxy statement are as
follows:
1) the inclusion of one additional shareholder proposal
(pages 16 through 18);
2) the nomination for election of one Class I director,
four Class II directors and two Class III directors;
and
3) the amendment of two compensation plans.
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.
Securities and Exchange Commission--2
March 19, 1998
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 1997 are being forwarded to you. In addition, five copies of
the Annual Report are being mailed to the New York Stock Exchange.
Very truly yours,
Joyce P. Haag
JPH:cbs
Enc
<PAGE 7>
16
<PAGE 34>
<PAGE 67>
