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DEFINITIVE COPY
Eastman Kodak Company
343 State Street
Rochester, NY 14650
Notice of 2000 Annual Meeting and Proxy Statement
(CORPORATE LOGO OMITTED)
Date of Notice March 27, 2000
<Page 4>
NOTICE OF THE 2000
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Eastman Kodak Company will
be held on Wednesday, May 10, 2000, at 10:00 AM, at the Theater
on the Ridge, 200 Ridge Road West, Rochester, New York. There are
six proposals to be voted on at the Meeting:
1. Re-election of four Class I directors for a term of
three years:
Martha Layne Collins
George M. C. Fisher
Paul E. Gray
John J. Phelan, Jr.;
and election of one Class III director for a term of
two years:
Debra L. Lee.
2. Ratification of election of PricewaterhouseCoopers LLP
as the independent accountants.
3. Shareholder proposal regarding executive compensation.
4. Shareholder proposal requesting annual election of all
directors.
5. Shareholder proposal requesting additional environmental
disclosure.
6. Shareholder proposal requesting a review of executive
compensation.
The Board of Directors recommends a vote FOR items 1-2 and a vote
AGAINST items 3-6.
If you were a shareholder of record at the close of business on
March 13, 2000, you are entitled to vote at the Annual Meeting.
If you have any questions about the Meeting, please contact:
Coordinator, Shareholder Services
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0205
(716) 724-5492
<Page 5>
Please do not write any comments on your proxy card. Consistent
with the Company's policy on confidential voting (see page 8),
we will not see your comments.
Photographs will be taken at the Annual Meeting. The Company may
use these photographs in publications. If you attend the Meeting,
we assume your permission to use your picture.
The Theater on the Ridge 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 27, 2000
March 27, 2000
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of
Shareholders on Wednesday, May 10, 2000, at 10:00 AM, at the
Theater on the Ridge, 200 Ridge Road West, Rochester, New York.
Six proposals will be voted on. We will also review Kodak's
performance and answer your questions.
You may vote by Internet, telephone, written proxy, or
written ballot at the Meeting. We encourage you to use the
Internet; it is the most cost-effective way to vote.
We look forward to seeing you on May 10, 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
Chairman of the Board
<Page 6>
TABLE OF CONTENTS
Notice of the Meeting 4
Letter to Shareholders 5
Questions and Answers 7
Proposals to be Voted on 11
Item 1-Election of Directors 11
Item 2-Ratification of Election of Independent Accountants 11
Item 3-Shareholder Proposal-Executive Compensation 12
Item 4-Shareholder Proposal-Annual Election of All Directors14
Item 5-Shareholder Proposal-Additional Environmental 15
Disclosure
Item 6-Shareholder Proposal-Review of Executive Compensation18
Board of Directors 20
Board Committees 25
Meeting Attendance 27
Director Compensation 28
Beneficial Security Ownership Table 29
Compensation of Named Executive Officers 31
Summary Compensation Table 31
Option/SAR Grants Table 33
Option/SAR Exercises and Year-End Values Table 35
Long-Term Incentive Plan 37
Employment Contracts and Arrangements 38
Retirement Plan 41
Report of the Executive Compensation and Development Committee 44
Performance Graph-Shareholder Return 48
<Page 7>
QUESTIONS AND ANSWERS
_________________________________________________________________
Q: What am I voting on?
A: You are voting upon six proposals:
1. Re-election of four Class I directors for a term on three
years: Martha Layne Collins, George M. C. Fisher, Paul E.
Gray and John J. Phelan, Jr.; and election of one Class III
director for a term of two years: Debra L. Lee.
2. Ratification of election of PricewaterhouseCoopers LLP
as independent accountants.
3. Shareholder proposal regarding executive compensation.
4. Shareholder proposal requesting annual election of all
directors.
5. Shareholder proposal requesting additional environmental
disclosure.
6. Shareholder proposal requesting a review of executive
compensation.
_______________________________________________________________
Q: What are the voting recommendations of the Board of Directors?
A: The Board recommends the following votes:
- FOR each of the directors.
- FOR ratification of election of PricewaterhouseCoopers LLP
as independent accountants.
- AGAINST the shareholder proposal regarding executive
compensation.
- AGAINST the shareholder proposal requesting annual election
of all directors.
- AGAINST the shareholder proposal requesting additional
environmental disclosure.
- AGAINST the shareholder proposal requesting a review of
executive compensation.
__________________________________________________________________
Q: Will any other matters be voted on?
A: 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 for you 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: How do I vote?
A: There are four ways to vote:
- By Internet at http://www.eproxyvote.com/ek. We encourage
you to vote this way.
- By toll-free telephone at (877) 779-8683.
- By completing and mailing your proxy card.
- By written ballot at the Meeting.
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If you vote by Internet or telephone, your vote must be received
before midnight of the day before the Meeting.
Your shares will be voted as you indicate. If you return your
proxy card but you do not indicate your voting preferences, George
M. C. Fisher and Joyce P. Haag will vote your shares FOR items 1-2
and AGAINST items 3-6.
__________________________________________________________________
Q: Who is entitled to vote?
A: Shareholders of record as of the close of business on March
13, 2000 (the Record Date) are entitled to vote at the Annual
Meeting. Each share of common stock is entitled to one vote
__________________________________________________________________
Q: Can I change my vote?
A: Yes. You can change your vote or revoke your proxy any time
before the Meeting by:
- entering a new vote by Internet or telephone;
- returning a later-dated proxy card;
- notifying Joyce P. Haag, Secretary; or
- completing a written ballot at the Meeting.
__________________________________________________________________
Q: What vote is required to approve each proposal?
A: The five director nominees receiving the greatest number of
votes will be elected.
The ratification of election of the independent accountants
requires 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. The adoption
of the shareholder proposal requesting annual election of all
directors would not by itself eliminate board classification.
An amendment to the Company's Restated Certificate of Incorporation
is necessary to eliminate board classification. This requires
action by both the Board of Directors and the affirmative vote of at
least 80% of the outstanding shares of the Company.
__________________________________________________________________
Q: Is my vote confidential?
A: Yes. Only the inspectors of election 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 N.A. will count the vote. Its representatives
will be the inspectors of election.
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__________________________________________________________________
Q: What shares are covered by your proxy card?
A: The shares covered by your card represent all your shares
including those in the Eastman Kodak Shares Program and the
Employee Stock Purchase Plan, and those 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.
__________________________________________________________________
Q: What does it mean if I get more than one proxy card?
A: It means your shares are in more than one account. You should
vote the shares on all your proxy cards. To provide better
shareholder service, we encourage you to have all your shares
registered in the same name and address. You may do this by
contacting our transfer agent, BankBoston N.A. at (800) 253-6057.
__________________________________________________________________
Q: Who can attend the Annual Meeting?
A: All shareholders of record as of March 13, 2000, 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 do I need to do to attend the Annual Meeting?
A: To attend the Meeting, please follow these instructions:
- If you vote by using the enclosed proxy card, check the
appropriate box on the card.
- If you vote by Internet or telephone, follow the
instructions provided for attendance.
- If a broker or other nominee holds your shares, bring
proof of your ownership with you to the Meeting.
- To enter the Meeting, bring the Admission Ticket attached
to your proxy card or printed from the Internet.
- If you do not have an Admission Ticket, go to the Special
Registration desk upon arrival at the Meeting.
Seating at the Meeting will be on a first-come, first-served
basis, upon arrival at the Meeting.
__________________________________________________________________
Q: Can I bring a guest?
A: Yes. If you bring a guest to the Meeting, check the
appropriate box on the enclosed proxy card or follow the
instructions on the Internet or telephone. When you go through
the registration area at the Meeting, be sure your guest is with
you.
__________________________________________________________________
Q: What is the quorum requirement of the Meeting?
A: A majority of the outstanding shares determined on March
13, 2000, constitutes a quorum for voting on proposals at the
Annual Meeting. If you vote, 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 1, 2000, there were 310,113,893 shares outstanding.
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__________________________________________________________________
Q: How do I recommend someone to be a director of Kodak?
A: You may recommend any person to be a director by writing to
Joyce P. Haag, Secretary, Eastman Kodak Company, 343 State Street,
Rochester, New York 14650-0218. You must include a description of
your 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 Shareholder Communications, 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, the Company 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 shareholders.
__________________________________________________________________
Q: When are the shareholder proposals due for the 2001 Annual
Meeting?
A: Shareholder proposals must be in writing, addressed to Joyce
P. Haag, Secretary, Eastman Kodak Company, 343 State Street,
Rochester, New York 14650-0218, and received by November 21, 2000.
__________________________________________________________________
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
- Diversity Report; Form EEO-1
- Health, Safety and Environment Annual Report
You may request copies by contacting:
Coordinator, Shareholder Services
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0205
(716) 724-5492
<Page 11>
PROPOSALS TO BE VOTED ON
ITEM 1-ELECTION OF DIRECTORS
The Company's By-Laws require the Company to have at least nine
directors but no more than 18. The number of directors is set by
the Board and is currently 12. The Board is divided into three
classes of directors with overlapping three-year terms.
There are four Class I directors whose terms expire at the 2000
Annual Meeting. Delano E. Lewis, a Class I director, resigned on
December 10, 1999 to become the Ambassador to the Republic
of South Africa.
Nominees for re-election as Class I directors are:
Martha Layne Collins
George M. C. Fisher
Paul E. Gray
John J. Phelan, Jr.
All four nominees agree to serve a three-year term. Information
about the nominees is provided on page 20.
The nominee for election as a Class III director is:
Debra L. Lee
The Board of Directors elected Ms. Lee a director on September
1, 1999. Ms. Lee, who is standing for election as a director by the
shareholders for the first time, agrees to serve a two-year term.
Information about Ms. Lee is provided on page 22.
If a nominee is unable to stand for election, 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 a 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 of Directors recommends a vote FOR the election of
directors.
ITEM 2-RATIFICATION OF ELECTION OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has been the Company's independent
accountants for many years. The Board of Directors, on the
recommendation of its Audit Committee, elected
<Page 12>
PricewaterhouseCoopers LLP, the Company's independent accountants,
to serve until the 2001 Annual Meeting of Shareholders.
Representatives of PricewaterhouseCoopers LLP will attend the
Meeting to respond to questions and, if they desire, to make a
statement.
The Board of Directors recommends a vote FOR the ratification of
election of PricewaterhouseCoopers LLP as independent accountants.
ITEM 3-SHAREHOLDER PROPOSAL-EXECUTIVE COMPENSATION
Robert D. Morse, 212 Highland Avenue, Moorestown, NJ 08057, owner
of 500 shares, submitted the following proposal:
"I propose that the Officers and Directors consider the
discontinuance of all bonuses immediately, and options, rights,
SAR's, etc., after termination of any existing programs for top
management. I must also include discontinuance request of
'Severance Contracts', which overpay a person no longer satisfactory
to the Company, just to leave!
This does not include any programs for employees.
REASONS:
Management and Directors are compensated enough to buy on open
market, just as You and I, if they are so motivated.
Management is already well paid with base pay, life insurance,
retirement plans, paid vacations, free use of vehicles and other
perks.
Options, rights, SAR's, are available elsewhere, and a higher offer
would induce transfers, not necessarily 'attain and hold' qualified
persons.
Who writes the objections to my proposal? Is it not the same
persons who nominate and pay the directors who in turn will provide
Management these exorbitant extras above a good base salary?
Shareowners should start reading and realizing that these persons
are not providing them entertainment on an individual choice basis,
as do athletes, movie stars, and similar able performers.
'Align management with shareowners' is a repeated ploy or 'line' to
lull us as to continually increasing their take of our assets. Do
we get any options to purchase at previous [presumed] lower rates,
expecting prices to increase?
<Page 13>
After taxes, present base salaries are way above the $200,000.00 our
President receives plus free lodging and Management only looks after
a Company, not the USA and some of the world problems. If they
filled out a daily work or production sheet, what would it show?
Please vote 'YES' for this proposal."
The Board of Directors recommends a vote AGAINST this proposal
for the following reasons:
The Company uses the same principles in setting the compensation for
all Company employees. These principles are:
1. Total compensation should be tied to performance that increases
shareholder value and is consistent with the Company's values.
2. Total compensation should be competitive with the total
compensation of similar companies to attract and retain talented
employees.
3. Total compensation should be linked to both short-term and
long-term Company performance.
In this context, "total compensation" is comprised of
base salary, annual incentive and long-term incentive. The
Company benchmarks these three elements with the practices
of other companies. All three elements of compensation are
considered independently in determining the appropriate amount of
total compensation for any given executive. This process is
described in the Report of the Executive Compensation and
Development Committee on pages 44-48.
Stock options are a type of long-term incentive which ties
compensation directly to increases in shareholder value. This
serves to align the interests of management with those of
the shareholders. Stock options, as a component of total
compensation, are designed with at least two purposes in mind: one
is to reward the recipient to the extent that good company
performance is reflected in an increase in the stock price, and the
second is to retain talented management. Stock options serve both
of these purposes, neither one to the detriment of the other.
The Board believes that both annual and long-term incentive
compensation are important components of an executive's total
compensation. The stock option component is an effective vehicle
to link the interests of management with the interests of the
Company's shareholders. The Company also believes that the use of
severance arrangements in appropriate circumstances can be favorable
to the Company.
For these reasons, the Board of Directors recommends a vote
AGAINST this proposal.
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ITEM 4-SHAREHOLDER PROPOSAL-ANNUAL ELECTION OF ALL DIRECTORS
The Service Employees International Union Master Trust, 1343 L
Street NW, Washington, DC 20005, owner of 24,300 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
In 1997, 1998 and 1999 a majority of shareholders who voted
supported this resolution. And now, in 2000, because of the
board's continued inaction, we again urge you to vote for this
proposal. Only by again clearly stating our support for this
important reform, can shareholders send management a necessary
wake-up call.
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."
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
<Page 15>
A classified Board of Directors provides director continuity and
Stability. This enhances the Board's ability to focus on long-
term strategy and long-term performance. For example, if the
Company were confronted with an unsolicited takeover offer, the
fact that the entire Board could not be removed in a single proxy
fight would allow directors to weigh remaining independent against
accepting the offer, or a competing offer, from a position of
strength. This is not merely a theoretical consideration;
anecdotal data suggest that companies with classified boards
secure a higher price-per-share premium in unsolicited takeover
situations than companies whose directors are elected annually.
In short, a classified board is beneficial to shareholders.
Proponent claims that a classified board protects the incumbency
of directors, which in turn limits accountability to shareholders.
While proponent's incumbency point is correct, the fact is that
shareholders have a variety of tools at their disposal to ensure
that directors, even directors who are elected on a classified
basis, are accountable to shareholders. These tools include
withholding votes from directors who are standing for election,
meeting with directors to express shareholder concerns, and
publicity campaigns. Shareholders have used these accountability
tools with a number of companies, with considerable success.
This proposal was first submitted by the proponent at the
Company's 1997 Annual Meeting. The Board opposed the proposal.
When the proposal was resubmitted at the 1998 Annual Meeting, the
Board took the extraordinary step of maintaining a neutral
position in order to receive the opinion of shareholders,
uninfluenced by a recommendation from the Board. The proposal was
submitted again in 1999, and the Board opposed it. Not only was
the vote in each of these years (expressed as a percentage of the
shares outstanding, 33.4% in 1997, 39.29% in 1998 and 35.66% in
1999) far short of the minimum vote (80% of the shares
outstanding) required to declassify, it represented less than 50%
of the shares outstanding.
The Board believes that a classified Board is a better governance
vehicle than annual election of Directors, and the holders of a
majority of the Company's shares outstanding apparently agree.
For these reasons, the Board of Directors recommends a vote
AGAINST this proposal.
ITEM 5-SHAREHOLDER PROPOSAL-ADDITIONAL ENVIRONMENTAL DISCLOSURE
Helen Glenn Burlingham, Wellspring Farm, 6320 Soper Road, Perry,
NY 14530, owner of 100 shares, submitted the following proposal:
<Page 16>
"Whereas, the US Securities and Exchange Commission (SEC) requires
publicly-held corporations to disclose potential environmental
liabilities to shareholders;
Whereas, various environmental codes of conduct, including the
CERES Principles (Coalition for Environmental Responsible
Economies) call for public disclosure and openness;
Whereas, Kodak's Vision of Environmental Responsibility affirms
the intent of environmental responsibility stating: 'Eastman
Kodak is recognized as a world-class company, and the leading
imaging company, in protecting the quality of the environment and
the health and safety of its employees, customers, and the
community in which it operates;'
Whereas, there is increased community concern about hazardous
waste incineration at Kodak Park and emissions of known
carcinogens, including dioxin and hexavalent chromium and Kodak
acknowledges that costly pollution controls may be necessary to
meet Clean Air Act requirements;
Whereas, Kodak has a history of environmental violations resulting
in substantial penalties including $2,000,000 in fines (1990) and
$5,000,000 in civil fines (1994) and a negotiated settlement with
the US Environmental Protection Agency (EPA) to spend $12,000,000
over eight years on environmental cleanup projects;
Whereas, Kodak's SEC reports, lists potential instances of
significant environmental liability that may accrue to the company
in pollution and toxic waste cleanup activities, including
potential cleanup at 'approximately 20 Superfund sites;'
Whereas, there may exist additional liability, cleanup
responsibility and remedial costs at Kodak facilities beyond what
is presently reported in SEC reports;
BE IT RESOLVED: The shareholders request Kodak's Board to
disclose in its environmental progress report, a complete listing
of all hazardous waste sites where Kodak is a potentially
responsible party, and other circumstances in which the company
and its shareholders can be expected to accrue environmentally-
based financial liabilities through retirement of operations,
court orders, consent decrees, litigation, or government
requirements, that environmental remediation, pollution clean-up,
pollution equipment upgrades, and/or damage compensation.
SUPPORTING STATEMENT
In recent years, Kodak has been the subject of federal and state
investigations for environmental violations. EPA's 1991
investigation uncovered 150 federal hazardous waste violations at
Kodak Park 'potentially worth tens of millions of dollars.'
<Page 17>
(Environmental Reporter, Washington DC). In addition to a
$100,000,000 underground storage tank improvement project at Kodak
Park, the company is liable for the investigation and remediation
of five hazardous waste sites on that property, and is listed as a
PRP at numerous other Superfund sites. Kodak continues to be New
York State's largest toxic chemical releaser (Federal Toxic
Release Inventory). In 1998, the NYS Department of Environmental
Conservation investigated Kodak and cited the company for numerous
environmental violations subject to financial penalties.
Kodak shareholders, in evaluating the company's continued economic
prospects, need to receive the best possible information on the
company's current assets and liabilities, including prospective
environmental liabilities, as can be reasonably ascertained.
For these reasons, we believe it is imperative that Kodak include
in its annual environmental progress report, a listing and
identification of known and expected environmental liabilities and
cleanup responsibilities that are likely to accrue.
If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors recommends a vote AGAINST this proposal for
the following reasons:
The Company accrues and discloses liabilities for environmental
matters in accordance with generally accepted accounting principles
(GAAP) and the rules and regulations of the Securities and Exchange
Commission (SEC). The disclosures are made in the Annual Report and
on Forms 10-K and 10-Q filed with the SEC.
In addition, for the past eight years the Company has produced and
made available to its shareholders a Health, Safety and Environment
Annual Report. This report provides a summary of the Company's
efforts and results in complying with environmental protection laws.
Any shareholder may obtain a copy of this annual environmental
report by contacting the Company.
This shareholder proposal requests the Company to provide more
extensive, detailed information than is required by GAAP and the
SEC. The rules of the SEC require the Company to disclose the
material effects that compliance with environmental laws may have
upon capital expenditures, earnings and the competitive position of
the Company. These rules also require the Company to disclose each
year all material estimated capital expenditures for environmental
control facilities. The Company complies with all the requirements
of GAAP and the SEC related to environmental matters.
We believe that the Company's environmental disclosures in its
Annual Report and on Forms 10-K and 10-Q, as well as the
availability of an easy-to-read description of the Company's efforts
to protect and restore the environment in its Health, Safety and
<Page 18>
Environment Annual Report, meet the information needs of
shareholders. All material information is disclosed concerning the
Company's environmental liabilities.
For these reasons, the Board of Directors recommends a vote
AGAINST this proposal.
ITEM 6-SHAREHOLDER PROPOSAL-REVIEW OF EXECUTIVE COMPENSATION
Robert McClellan III, 2877 Gains Basin Road, Albion, NY 14411,
owner of 50 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?
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.
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 1998, Kodak's CEO, George Fisher, earned approximately $3,127
an hour, including stocks, shares and salary, according to Kodak's
1998 Annual Meeting and Proxy Statement to shareholders. Yet, a
severe drop in earnings has resulted in Kodak's decision to cut
payroll by many thousands of workers, a restructuring plan that
Kodak states it will continue. Is it fair that comparatively low-
wage workers lose their income while top executives salaries do
not reflect financial performance?
<Page 19>
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 executive 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 comprehensive
Executive Compensation Review, with a summary report available
upon request to shareholders by October 15, 2000. 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 of the Company's executive compensation
programs. The Committee's report on pages 44 - 48 demonstrates
that the Committee already considers many of the issues raised by
the shareholder in his proposal.
<Page 20>
In determining appropriate compensation levels, the Committee
considers, among other things, 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 as well as the Company's performance in the
areas of customer satisfaction, employee satisfaction and public
responsibility. For example, if management fails to increase
diversity in the workforce, management receives less bonus.
The Company believes that only if shareholders, customers and
employees are satisfied will the Company be successful.
In 1999, Company compliance with equal employment opportunity laws
and regulations was criterion used to measure employee satisfaction
and public responsibility. In addition, the Committee reviewed
employee responses to opinion surveys which measured management's
leadership capabilities and employee satisfaction with the
workplace, management and the Company.
The Company recognizes that, in addition to delivering solid,
sustained financial performance, it must provide a work environment
that is inclusive of everyone and generally be a socially
responsible corporate citizen. Annual bonuses are determined based
upon performance in these areas.
The Executive Compensation and Development Committee's report
demonstrates that the Company already considers social, as well as
financial, criteria in determining executive compensation. The time,
effort and expense necessary to complete the review and produce the
summary report requested is not justified.
For these reasons, the Board of Directors recommends a vote
AGAINST this proposal.
BOARD OF DIRECTORS
MARTHA LAYNE COLLINS (PICTURE OMITTED)
GEORGE M. C. FISHER (PICTURE OMITTED)
PAUL E. GRAY (PICTURE OMITTED)
JOHN J. PHELAN, JR. (PICTURE OMITTED)
NOMINEES TO SERVE A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL
MEETING (Class I Directors)
MARTHA LAYNE COLLINS Director since May 1988
Governor Collins, 63, is Executive Scholar in Residence at
Georgetown College, a position she assumed in August 1998, after
having been Director, International Business and Management
Center, at the University of Kentucky since July 1996. From 1988
<Page 21>
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, 59, is Chairman of Eastman Kodak Company. Mr. Fisher
also held the positions of Chief Executive Officer from December
1993 through December 1999, President from December 1993 through
December 1996 and 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. 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 Delta Air Lines,
General Motors Corporation and AT&T.
PAUL E. GRAY Director since September 1990
Dr. Gray, 68, 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 Nvest, L.P. and The
Boeing Co.
JOHN J. PHELAN, JR. Director since December 1987
Mr. Phelan, 68, is the retired Chairman and Chief Executive
Officer of the New York Stock Exchange, Inc., 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.
and Metropolitan Life Insurance Company.
<Page 22>
BOARD OF DIRECTORS
DEBRA L. LEE (PICTURE OMITTED)
NOMINEE TO SERVE A TWO-YEAR TERM EXPIRING AT THE 2002 ANNUAL
MEETING (Class III Director)
DEBRA L. LEE Director since September 1999
Ms. Lee, 45, is President and Chief Operating Officer of BET
Holdings, Inc. (BET). She joined BET in 1986 as Vice President
and General Counsel. In 1992, she was elected Executive Vice
President of Legal Affairs and named publisher of BET's magazine
division, in addition to serving as general counsel. She was
placed in charge of strategic business development in 1995. Ms.
Lee holds a BA degrees from Brown University and MA and JD
degrees from Harvard University. She is affiliated with several
professional and civic organizations. Ms. Lee is a director of
BET Holdings, Inc.
ALICE F. EMERSON (PICTURE OMITTED)
PAUL H. O'NEILL (PICTURE OMITTED)
LAURA D'ANDREA TYSON (PICTURE OMITTED)
DIRECTORS CONTINUING TO SERVE A TERM EXPIRING AT THE 2001 ANNUAL
MEETING (Class II Directors)
ALICE F. EMERSON Director since May 1992
Dr. Emerson, 68, is Senior Advisor to The Andrew W. Mellon
Foundation, a position she assumed in 1998 after having served as
Senior Fellow since 1991. She was President of Wheaton College in
Massachusetts from 1975-1991 and served the University of
Pennsylvania, first as Dean of Women and subsequently as Dean of
Students from 1966 to 1975. Dr. Emerson received her bachelor's
degree from Vassar College and her Ph.D. degree from Bryn Mawr
College. She is a director of AES Corporation, Champion
International Corp. and FleetBoston Financial Corporation.
PAUL H. O'NEILL Director since December 1997
Mr. O'Neill, 64, is Chairman of Alcoa and has held this position
since April 1987. From April 1987 until May 1999, he also held
the position of Chief Executive Officer. 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
<Page 23>
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, 52, is Dean of the Walter A. Haas School of Business, a
position she assumed in July 1998. Previously, she was professor
of the Class of 1939 Chair in Economics and Business
Administration at the University of California, Berkeley, a
position she held from January 1997 to July 1998. Prior to 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 director of Fox Entertainment Company, Human
Genome Sciences, Inc., Morgan Stanley, Dean Witter, Discover & Co.
and SBC Communications, Inc.
BOARD OF DIRECTORS
RICHARD S. BRADDOCK (PICTURE OMITTED)
DANIEL A. CARP (PICTURE OMITTED)
DURK I. JAGER (PICTURE OMITTED)
RICHARD A. ZIMMERMAN (PICTURE OMITTED)
DIRECTORS CONTINUING TO SERVE A TERM EXPIRING AT THE 2002 ANNUAL
MEETING (Class III Directors)
RICHARD S. BRADDOCK Director since May 1987
Mr. Braddock, 58, is Chairman and CEO of priceline.com, a position
he has held since August 1998. He was Chairman of True North
Communications from July 1997 to January 1999. 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.
<Page 24>
Prior to that, he served for approximately five years as Sector
Executive in charge of Citicorp's Individual Bank, one of the
financial services company's three core businesses. Mr. Braddock
was graduated from Dartmouth College with a degree in history,
and received his MBA degree from the Harvard School of Business
Administration. He is a director of AmTec, Inc.,
Cadbury Schweppes, E*Trade and priceline.com.
DANIEL A. CARP Director since December 1997
Mr. Carp, 51, is President and Chief Executive Officer of Eastman
Kodak Company. He was elected CEO effective January 1, 2000 and
President and COO 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, 56, is Chairman of the Board, President and Chief
Executive Officer of The Procter & Gamble Company. He was elected
to the position of Chairman of the Board effective September 1999,
while continuing to serve as President and Chief Operating Officer
since 1995. He served as Executive Vice President from 1990-1995.
Mr. Jager joined The Procter & Gamble Company in 1970 and was
named Vice President in 1987. He was graduated from Erasmus
Universiteit, Rotterdam, The Netherlands. Mr. Jager is a director
of The Procter & Gamble Company.
RICHARD A. ZIMMERMAN Director since July 1989
Mr. Zimmerman, 68, is the retired Chairman and Chief Executive
Officer of Hershey Foods Corporation. Mr. Zimmerman joined Hershey
in 1958 and was named Vice President in 1971. Appointed a Group
Vice President later in 1971, he became President and Chief
Operating Officer in 1976. He was named Chief Executive Officer in
January 1984 and Chairman of the Board in March 1985. Mr.
Zimmerman was graduated from Pennsylvania State University. He is
a director of Stabler Companies, Inc. and Westvaco Corporation.
<Page 25>
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 6 meetings in 1999
- reviewed the Company's preparedness for transition to the
year 2000;
- discussed the independence of the independent accountants;
- discussed the quality of the accounting principles used
to prepare the Company's financial statements;
- recommended the firm that Kodak should retain as independent
accountants;
- reviewed the audit and non-audit activities of both the
independent accountants and the internal audit staff of the
Company; and
- met 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 3 meetings in 1999
- reviewed the qualifications of individuals for election as
members of the Board;
- recommended qualified individuals to be considered for Board
membership;
- reviewed directors' compensation and benefits and recommended
changes that were implemented in 1999; and
- discussed the shareholder proposal requesting
declassification of the Board of Directors.
Executive Compensation and Development Committee 4 meetings in 1999
- reviewed the Company's executive development process;
- set the compensation for the Chairman of the Board, Chief
Executive Officer, President, executive vice presidents and
senior vice presidents and recommended the compensation of
other Company officers;
- reviewed the Company's change in control program; and
- certified and granted awards under the Company's compensation
plans.
Finance Committee 4 meetings in 1999
- reviewed the Company's financing strategies including
dividend declaration, capital expenditures, debt issuances
and foreign exchange hedging;
- reviewed significant acquisitions, divestitures, and joint
ventures; and
- reviewed the investment performance and the administration of
the Company's defined benefit pension plan.
<Page 26>
Public Policy Committee 2 meetings in 1999
- reviewed proposals submitted by shareholders;
- reviewed the Company's philanthropic programs;
- reviewed the Company's environmental initiatives;
- reviewed employee survey results;
- reviewed employee relations issues; and
- reviewed various company diversity initiatives.
<Page 27>
<TABLE>
<CAPTION>
COMMITTEE MEMBERSHIP
Audit Committee Executive Finance Public
on Compensation Policy
Directors and
Name Development
<S> <C> <C> <C> <C> <C>
- -------------------- ----- --------- ----------- ------- -----
Richard S. Braddock X X*
Martha Layne Collins X X*
Alice F. Emerson X X
Paul E. Gray X* X
Durk I. Jager X X
Debra L. Lee X X
Paul H. O'Neill X X
John J. Phelan, Jr. X X*
Laura D'Andrea Tyson X X
Richard A. Zimmerman X* X
<FN>
*Chairman
</TABLE>
Meeting Attendance
The Board of Directors held a total of nine meetings in 1999. Each
director attended at least 75% of the meetings of the Board and
committees of the Board on which the director served. The average
attendance by all Directors was over 92%.
<Page 28>
Director Compensation
Annual Payments
Non-employee directors receive:
- $65,000 as a retainer, at least half of which must be
taken in stock or deferred into stock units;
- 2,000 stock options; and
- reimbursement of out-of-pocket expenses for the meetings
they attend.
Employee directors receive no additional compensation for serving
on the Board.
Deferred Compensation
Non-employee directors may defer some or all of their compensation
into a phantom Kodak stock account or into a phantom interest-
bearing account. Five directors deferred compensation in 1999. In
the event of a change in control of the Company, the amounts in
the phantom accounts will generally be paid in a single cash
payment.
Retirement Plan
The retirement plan for current non-employee directors was
terminated in 1999. The value of the director's benefit was
converted to common stock units and credited to each director's
account under the Deferred Compensation Plan for Directors.
Retired directors continue to receive benefits in accordance
with the plan. 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.
Life Insurance
The Company provides group term life insurance in the amount of
$100,000 to each non-employee directors. This amount decreases to
$50,000 at retirement or age 65, whichever occurs later.
Charitable Award Program
This program was closed to new participants effective January 1,
1997. The program provides for a contribution by the Company of
up to $1,000,000 following a director's death to a maximum of 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. Each of the following non-
employee directors continues to participate in the program: Messrs.
Braddock, Phelan, and Zimmerman, Drs. Emerson and Gray, and Gov.
Collins.
<Page 29>
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
Directors, Nominees
and Executive Number of Common Shares
Officers Owned on January 3, 2000
- ------------------- ------------------------
Richard S. Braddock 9,864 (a)
Daniel A. Carp 340,941 (b) (c)
Martha Layne Collins 8,915 (a)
Alice F. Emerson 10,647 (a)
George M. C. Fisher 3,027,249 (b) (c)
Paul E. Gray 8,901 (a)
Durk I. Jager 5,118 (a)
Robert J. Keegan 44,372 (b)
Carl F. Kohrt 190,350 (b) (c) (d)
Debra L. Lee 667
Paul H. O'Neill 4,212 (a)
John J. Phelan, Jr. 14,964 (a)
Eric L. Steenburgh 19,080 (b) (c)
Laura D'Andrea Tyson 2,068 (a)
Richard A. Zimmerman 11,932 (a)
All Directors, Nominees and 4,635,589 (a)(b)(c)(d)(e)
Executive Officers as a
Group (27), including the above
(a) Includes the following Kodak common stock equivalents,
which are held in the Deferred Compensation Plan for
Directors: R. S. Braddock - 5,221; M. L. Collins -
5,715; A. F. Emerson - 8,114; P. E. Gray - 5,901;
D. I. Jager - 3,118; P. H. O'Neill - 3,212; J. J. Phelan,
Jr. - 11,125; L. D. Tyson - 745; and R. A. Zimmerman -
7,388.
(b) Includes the following number of shares which may be
acquired by exercise of stock options: D. A. Carp - 290,054;
G. M. C. Fisher - 2,769,965; R. J. Keegan - 43,042; C. F.
Kohrt - 161,662; E. L. Steenburgh - 872; and all directors,
nominees and executive officers as a group - 4,075,123.
(c) Includes the following Kodak common stock equivalents,
receipt of which was deferred under the Performance
Stock Program: D. A. Carp - 25,027; G. M. C. Fisher -
89,244; C. F. Kohrt - 25,027; E. L. Steenburgh - 8,208;
and all directors, nominees and executive officers as a
group - 192,380.
(d) Includes the following Kodak common stock equivalents,
which are held in the Executive Deferred Compensation
Plan: C. F. Kohrt - 1,092; and all directors,
nominees and executive officers as a group - 4,841.
(e) The total number of shares beneficially owned by all
directors, nominees and executive officers as a group is
less than 2% of the Company's outstanding shares.
<Page 30>
The above table reports beneficial ownership in accordance with Rule
13d-3 under the Securities Exchange Act of 1934. This means 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 the above persons in the Kodak Stock
Fund of the Eastman Kodak Employees' Savings and Investment Plan,
stated in terms of Kodak shares.
<Page 31>
<TABLE>
<CAPTION>
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The individuals named in the following table were the Company's Chief Executive Officer and the four other highest-paid
executive officers during 1999. The figures shown include both amounts paid and amounts deferred.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation
---------------------------------- -------------------------------
Awards Payouts
------------------------ -----------
Securities
Other Under-
Annual Restricted lying All Other
Name and Compen- Stock Options/ LTIP Compensa-
Principal Position(a) Year Salary Bonus(b) sation(c) Awards(d) SARs(e) Payouts(f) tion(g)
- ------------------ ---- ---------- ---------- --------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 1999 $2,000,000 $2,520,000 $ - $ 0 155,998 $0 $ 32,390
Chairman & CEO 1998 2,000,000 1,710,000 - 0 159,087 0 1,768,222
1997 2,000,000 0 - 4,506,250 2,084,701 0 1,847,065
D. A. Carp 1999 817,308 1,020,000 - 0 102,223 0 0
President & COO 1998 741,250 545,063 30,334 1,476,800 401,402 0 0
1997 677,885 0 52,257 0 151,993 0 0
C. F. Kohrt 1999 563,539 494,208 414,036 0 37,650 0 0
Executive Vice President 1998 550,000 313,500 340,123 0 71,032 0 0
& Assistant COO 1997 540,385 0 98,384 0 36,674 0 0
E. L. Steenburgh* 1999 569,231 432,000 - 523,504 36,872 0 0
Executive Vice President 1998 420,000 189,000 - 643,130 0 0 0
& Assistant COO
R. J. Keegan 1999 473,077 434,340 - 0 32,564 0 0
Senior Vice President 1998 430,000 245,100 - 0 48,186 0 0
1997 375,000 112,500 - 0 28,000 0 42,500
*Employment commenced in April 1998.
<Page 32>
<FN>
(a) The following titles became effective January 1, 2000:
G. M. C. Fisher - Chairman; D. A. Carp - President & CEO;
C. F. Kohrt - Executive Vice President; E. L. Steenburgh -
Executive Vice President; R. J. Keegan - Executive Vice President.
(b) This column shows Management Variable Compensation Plan awards for
services in the year indicated.
(c) 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 tax reimbursement associated with
expatriate payments. For C. F. Kohrt for 1999, the amount
represents expatriate payments of $198,277 and tax reimbursement
of $215,759; for 1998, the amount represents expatriate payments
of $215,794 and tax reimbursement of $124,329; and for 1997, the
amount represents expatriate payments.
(d) The total number and value of restricted stock held as of December
31, 1999, for each named individual (valued at $66.25 per share)
are: G. M. C. Fisher - 136,975 shares - $9,074,594; D. A. Carp -
44,390 shares - $2,940,838; C. F. Kohrt - 24,390 shares -
$1,615,838; E. L. Steenburgh - 18,000 shares - $1,192,500; and
R. J. Keegan - 0 shares. The amount shown for D. A. Carp for 1998
represents 20,000 shares valued as of the date of grant (May 1,
1998) at $73.84 per share. The amounts shown for E. L. Steenburgh
represent 8,000 shares valued as of the date of grant (February
12, 1999) at $65.438 per share and 10,000 shares valued as of the
date of grant (April 13, 1998) at $64.313 per share. The amount
shown for G. M. C. Fisher for 1997 represents 50,000 shares
valued as of the date of grant (February 25, 1997) at $90.125 per
share which were granted in connection with the extension of his
employment contract. Dividends are paid on restricted shares as
and when dividends are paid on Kodak common stock.
(e) 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.
(f) No awards were paid for the periods 1997-1999, 1996-1998 and 1995-
1997 under the Performance Stock Program.
(g) For G. M. C. Fisher for 1999, this amount represents life
insurance premiums; for 1998, this amount includes $1,738,382 of
principal and interest forgiven by the Company with respect to two
loans which were fully forgiven in 1998 and $29,840 for life
insurance premiums; for 1997, this amount includes $1,819,805
of principal and interest forgiven and $27,180 for life insurance
premiums. For R. J. Keegan the amount represents a hiring bonus.
</TABLE>
<Page 33>
<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 (c)
- --------------- ---------- -------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
G. M. C. Fisher 5,998(a) .14% $66.750 3/11/09 $ 116,901
150,000(b) 3.52 63.875 3/31/09 2,808,000
D. A. Carp 2,223(a) .05 66.750 3/11/09 43,326
100,000(b) 2.35 63.875 3/31/09 1,872,000
C. F. Kohrt 1,650(a) .04 66.750 3/11/09 32,159
36,000(b) .85 63.875 3/31/09 673,920
E. L. Steenburgh 872(a) .02 66.750 3/11/09 16,995
36,000(b) .85 63.875 3/31/09 673,920
R. J. Keegan 1,564(a) .04 66.750 3/11/09 30,482
31,000(b) .73 63.875 3/31/09 580,320
<Page 34>
<FN>
(a) These options are immediately vested.
(b) 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.
(c) 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>
<Page 35>
<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 at
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 0 $0 2,269,965 1,278,360 $16,690,262 $391,814
D. A. Carp 0 0 256,654 516,750 1,658,648 260,445
C. F. Kohrt 0 0 161,662 94,345 1,409,145 101,561
E. L. Steenburgh 0 0 872 36,000 0 85,500
R. J. Keegan 0 0 36,382 72,368 89,081 91,740
<FN>
* Based on the closing price on the New York Stock Exchange - Composite Transactions of the Company's common
stock on December 31, 1999, of $66.25 per share.
</TABLE>
<Page 36>
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 of
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 at the
60th percentile within the Standard & Poor's 500 Composite Stock
Price Index.
In determining the actual award to be paid to a participant, the
Committee has the discretion to reduce or eliminate the award
earned, 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 1997-1999 performance cycle as
shown in the "LTIP Payouts" column of the Summary Compensation
Table shown on page 31.
<Page 37>
<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
Name Rights or Payout # of Shares # of Shares # of Shares
<S> <C> <C> <C> <C> <C>
- ---------------- ------------- ------------- ----------- ------------ -----------
G. M. C. Fisher N/A 1997-1999 6,750 13,500 20,250
1998-2000 6,750 13,500 20,250
1999-2001 10,000 20,000 30,000
D. A. Carp N/A 1997-1999 4,250 8,500 12,750
1998-2000 4,250 8,500 12,750
1999-2001 4,250 8,500 12,750
C. F. Kohrt N/A 1997-1999 3,288 6,575 9,863
1998-2000 3,288 6,575 9,863
1999-2001 3,400 6,800 10,200
E. L. Steenburgh N/A 1997-1999* 1,918 3,835 5,753
1998-2000* 3,014 6,027 9,041
1999-2001 3,400 6,800 10,200
R. J. Keegan N/A 1997-1999* 1,511 3,021 4,532
1998-2000 2,625 5,250 7,875
1999-2001 2,625 5,250 7,875
*Prorated award.
</TABLE>
<Page 38>
EMPLOYMENT CONTRACTS AND ARRANGEMENTS
George M. C. Fisher
The Company employs Mr. Fisher under an employment contract that
terminates on December 31, 2000. In addition to information found
elsewhere in this Proxy Statement, the contract, as amended, provides:
- 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
any pension paid by his prior employer;
- life insurance equal to 3.5 times his base salary; and
- a disability benefit equal to 60% 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.
Mr. Fisher's employment agreement also provides reimbursement by
the Company for any loss incurred as a result of the sale of his
personal residence in Rochester, NY.
Daniel A. Carp
Effective December 10, 1999, the Company entered into a letter
agreement with Mr. Carp providing for his employment as President
and Chief Executive Officer. The letter agreement provides for a
base salary of $1,000,000, subject to annual adjustment, and a
target annual bonus of 105% of his base salary. Mr. Carp's
compensation will be reviewed annually by the Executive
Compensation and Development Committee.
If the Company terminates Mr. Carp's employment without cause,
Mr. Carp will be permitted to retain his stock options and
restricted Stock. He will also receive severance pay equal to
three times his base salary plus target annual bonus and prorated
awards under the Company's bonus plans. The letter agreement also
provides that for pension purposes, Mr. Carp will be treated as if
he were age 55, if he is less than age 55 at the time of his
termination, or age 60, if he is age 55 or older but less than age
60, at the time of his termination of employment.
<Page 39>
In the event of Mr. Carp's disability, he will receive the same
severance pay as he would receive upon termination without cause;
except it will be reduced by the present value of any Company-
provided disability benefits he receives. The letter agreement
also states that upon Mr. Carp's disability, he will be permitted
to retain all of his stock options.
Eric L. Steenburgh
In April 1998, the Company hired Mr. Steenburgh under an offer
letter dated March 12, 1998. If, during the first five years of
Mr. Steenburgh's employment, the Company terminates his employment
without cause, or if Mr. Steenburgh voluntarily terminates
employment for good reason, he will receive severance pay equal to
one times his base salary plus target annual bonus. After he has
been employed for five years, Mr. Steenburgh will be credited with
20 extra years of service for pension purposes.
Robert J. Keegan
Effective June 23, 1997, the Company entered into an offer letter
with Mr. Keegan. The offer letter, as amended, credits Mr. Keegan
with 25 extra years of service for pension purposes. Any pension
benefit payable to Mr. Keegan will be offset by any pension paid to
him when he left the Company in 1995. The offer letter also
provides Mr. Keegan with an additional year and eight months of
service for all other retirement benefits.
If within the first three years of his employment, Mr. Keegan is
terminated for reasons other than cause or disability, he will be
paid a severance allowance equal to one and one half times his base
salary plus target annual bonus. In addition, Mr. Keegan will be
permitted to retain his stock options.
Change In Control Arrangements
The Company maintains a change in control program to provide
severance pay and continuation of certain welfare benefits for
virtually all U.S. employees. A "change in control" is generally
defined under the program as:
- the incumbent directors cease to constitute a majority of
the Board, unless the election was approved by at least
two-thirds of the incumbent directors then on the Board;
- the acquisition of 25% or more of the combined voting power
of the Company's then outstanding securities;
- a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company
or any of its subsidiaries that requires the approval of
the Company's shareholders; or
<Page 40>
- a vote by the shareholders to completely liquidate or
dissolve the Company.
The purpose of the program is to assure the continued employment
and dedication of all employees without distraction from the
possibility of a change in control of the Company. The program
provides for severance payments and continuation of certain welfare
benefits to eligible employees whose employment is terminated,
either voluntarily with "good cause" or involuntarily, during the
two year period following a change in control. The amount of the
severance pay and length of benefit continuation is based on the
employee's position in the Company. Each of the named
executive officers would be eligible for severance pay equal to
three times his base salary plus target annual bonus award. In
addition, each named executive officer would be eligible to
participate in the Company's medical, dental, disability and life
insurance plans until the first anniversary of the date of his
termination.
The Company's change in control program also requires, subject to
certain limitations, tax gross-up payments to all employees to
mitigate any excise tax imposed upon the employee under the
Internal Revenue Code.
Another component of the program provides enhanced benefits under
the Company's Retirement Plan. Any participant whose employment
is terminated, for a reason other than death, disability, cause
or voluntary resignation, within five years of a change in control
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 elapse between the date of a change
in control and the date of the participant's termination of
employment. 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.
In the event of a change in control of the Company which
causes the Company's stock to cease active trading on the New
York Stock Exchange, the Company's compensation plans will
generally be affected as follows:
- under the Executive Deferred Compensation Plan each
participant will be paid the amount in his or her account;
- under the Management Variable Compensation Plan, each
participant will be paid a pro rata target award for the
year in which the change in control occurs;
<Page 41>
- under the Performance Stock Program, each participant will
be awarded a pro rata target award for each pending
performance cycle and all awards will be cashed out based
on the change in control price;
- under the Company's stock option plans, all outstanding
options will vest in full and be cashed out based on the
difference between the change in control price and the
option's exercise price; and
- under the Company's restricted stock programs, all of the
restrictions on the stock will lapse and the stock will be
cashed out based on the change in control price.
RETIREMENT PLAN
The Company funds a tax-qualified defined benefit pension plan
for virtually all U.S. employees. Effective January 1, 2000, the
Company amended the Plan to include a cash balance feature. None
of the named executive officers elected to participate in the cash
balance feature. The following describes the benefits available
under the non-cash balance portion of the plan.
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 named executive
officers 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% of APC,
plus (b).3% 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 1% for each year in excess of 35 years.
The retirement income benefit is not subject to any deductions for
Social Security benefits or other offsets. The normal form of
benefit is an annuity, but a lump sum payment is available
in limited situations.
<Page 42>
<TABLE>
PENSION PLAN TABLE - Annual Retirement Income Benefit
Straight Life Annuity Beginning at Age 65
<CAPTION>
Years of Service
------------------------------------
Remuneration 25 30 35
- ------------- ---------- ---------- ------------
<S> <C> <C> <C>
$ 400,000 $ 160,000 $ 192,000 $ 224,000
500,000 200,000 240,000 280,000
1,000,000 400,000 480,000 560,000
1,500,000 600,000 720,000 840,000
2,000,000 800,000 960,000 1,120,000
2,500,000 1,000,000 1,200,000 1,400,000
3,000,000 1,200,000 1,440,000 1,680,000
3,500,000 1,400,000 1,680,000 1,960,000
4,000,000 1,600,000 1,920,000 2,240,000
4,500,000 1,800,000 2,160,000 2,520,000
5,000,000 2,000,000 2,400,000 2,800,000
<FN>
NOTE: For purposes of this table, Remuneration means APC. To the
extent that an 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, 1999, to each of the
named executive officers. This table also shows
the amount of each named executive officer's APC
at the end of 1999.
<TABLE>
<CAPTION>
<Page 43>
RETIREMENT PLAN
Average
Years of Participating
Name Service Compensation
- ----- -------- -------------
<S> <C> <C>
G. M. C. Fisher 28(a) $3,794,998
D. A. Carp 29 1,120,117
C. F. Kohrt 28 787,939
E. L. Steenburgh 1(b) 497,363
R. J. Keegan 28(c) 456,624
<FN>
(a) Mr. Fisher is credited with 22 extra years of service for
purposes of calculating his retirement benefit;
any pension benefit payable will be offset by any pension
paid by his prior employer.
(b) After Mr. Steenburgh has been employed for five years, he
will be credited with 20 extra years of service
for purposes of calculating his retirement benefit.
(c) Mr. Keegan is credited with 25 extra years of service for
purposes of calculating his retirement benefit;
any pension benefit payable will be offset by any pension
paid to him when he left the Company in 1995.
</TABLE>
<Page 44>
REPORT OF THE EXECUTIVE COMPENSATION
AND DEVELOPMENT COMMITTEE
Introduction
The Executive Compensation and Development Committee is comprised
of four non-employee, independent directors. The Committee sets the
target levels of annual and long-term compensation for the Chairman,
Chief Executive Officer, executive vice presidents and senior vice
presidents. In doing so, the principles that are used for setting
compensation for all Company employees are followed. These
principles are:
- Correlate total compensation to performance that
increases shareholder value and is consistent with the
Company's values.
- Attract and retain talented employees by providing total
compensation competitive with the total compensation of
similar companies.
- Link compensation to both short-term and long-term
Company performance.
Factors Considered in Determining Compensation
Survey Data: To determine whether the Company's compensation is
competitive with the compensation paid by similar
companies, the Company participates in surveys prepared by
outside consultants. The companies included in these surveys are
those that the Company competes 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 48. Based
on the compensation reported for these surveyed companies, the
Committee sets the target compensation of the Company's executives.
Management Appraisal Process: A primary factor used in
determining actual compensation is the management appraisal
process. This process consists of two parts: the Management
Performance Commitment Process (MPCP) and Touchstone Review.
The MPCP reinforces the Company's performance-based culture by
focusing participants on meeting and surpassing critical annual
performance measures. Annually, each member of management
develops specific and measurable goals in the following three
areas:
- shareholder satisfaction,
- customer satisfaction, and
- employee satisfaction/public responsibility.
Some of the metrics included in these areas are revenue growth,
economic value added (EVA), achievement of diversity goals,
employee satisfaction survey results and improvements in various
measures of quality and cycle time.
<Page 45>
Another element in the management appraisal process is the
Touchstone Review. This annual questionnaire uses direct input
from a manager's peers and subordinates to measure the manager's
practice of the six Company values:
- respect for the dignity of the individual,
- integrity,
- trust,
- credibility,
- continuous improvement and personal renewal, and
- recognition and celebration.
The results on both MPCP and the Touchstone Review, along with
such other factors as the Committee considers relevant, are used
to determine base salary, the amount of any stock option grant
and any incentive compensation award.
Annual Compensation
Base Salary: The Committee determines the base salary and annual
compensation changes, if any, for executives in the same manner
that is used for other Company employees. The target base salary
is based on survey data for comparable positions in similar
companies. Any change to base salary is based on individual
performance measured through the appraisal process described
above.
Incentive Compensation: Under the Company's annual incentive
compensation plan, the Management Variable Compensation Plan
(MVCP), a target incentive is set for each manager. The target,
which is a percentage of salary, varies depending on the
manager's position in the Company. For 1999, targets for
incentive compensation ranged from 25% of base salary to 105% of
base salary for the CEO.
The Company's three-year EVA performance, weighted 50% for the
current performance year and 25% for each of the two prior years,
is used to determine the funding available for incentive compensation.
The amount of all incentive compensation paid for a given year
generally cannot exceed the amount of the total funding calculated
for the year. At the start of the performance year, the Committee
approves a threshold EVA that must be achieved if awards are to be
paid for the year. After determining the amount of the funding
based on the final results for the performance year, the Committee
determines the actual amount of the incentive compensation awards
for the year using the results of the management appraisal process
and such other criteria it deems relevant.
The Summary Compensation Table on page 31 lists for services
rendered in 1999 the annual incentive compensation awards for the
CEO and the four other named executive officers.
Wage Dividend: In 1999, only non-management U.S. employees
participated in the Wage Dividend Plan, an annual profit-sharing
plan. The plan's performance measure in 1999 was EVA as described
for MVCP above. For 1999, the Committee approved a Wage Dividend
<Page 46>
percentage of 6.6%, providing for non-management employees
a payment equal to 6.6% of their eligible annual compensation.
Similar plans exist for most non-U.S., non-management employees.
Long-Term Compensation
The Company's long-term compensation program consists of two
components: stock options for all employees and a performance stock
program for certain senior executives.
Stock Options: Stock options directly align the interests of
employees and shareholders. The value of stock options depends
entirely on future increases in the price of the Company's common
stock.
In April 1998, the Committee approved an award of 100 stock options
to all non-management employees worldwide.
More recently, the Committee approved a stock option recognition
program (SORP) for 1999 that is used to grant awards to non-
management employees for exceptional performance.
The Company also maintains an annual management stock option
award program. To determine the size of individual target grants
for 1999, the Committee reviewed in late 1998 survey data
covering other companies' practices. The Committee used median
survey values as reference points to determine the size of target
option grants and confirm the annual granting of options to
managers and executives. The options granted in 1999 by the
Committee were granted at the market price with a term of ten
years. The stock option awards granted in 1999 to the CEO and the
four other named executive officers appear on page 33.
Performance Stock Program: The Performance Stock Program uses a
multi-year performance goal for the Company's senior executives.
The purpose of the program is to improve the results of the
Company and the return to shareholders over time. A description
of the program, as well as the threshold, target and maximum
awards for the CEO and the four other named executive
officers, appears on page 37.
The performance threshold for the 1997-1999 performance cycle was
total shareholder return equal to at least that earned over the
same period by a company at the 50th percentile of total
shareholder return within the Standard & Poor's 500 Composite
Stock Price Index. For the 1997-1999 performance cycle, the
Company's shareholder return was equal to the 17th 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 1997-1999 performance cycle. The
Committee is satisfied with the linkage between the shareholders'
interests and executive compensation that is demonstrated by this
program.
<Page 47>
Stock Ownership Requirements
The Company has stock ownership requirements for its senior
executives. Senior executives must own common stock of the
Company worth a certain multiple of base salary. The multiples range
from one times base salary to four times base 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.
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 extension, 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 the
Company's common stock on the New York Stock Exchange on February
25, 1997. Other details of his agreement appear on page 38.
During 1999, as in the past five 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 incentive compensation and
stock option award for the year. The Committee discussed Mr.
Fisher's performance in the context of the Company's 1999
performance, noting its satisfaction with the financial
results, the growth in revenue and the Company's progress toward
maintaining a diverse management and employee population. Also
noted was the need for improvement in employee satisfaction
survey results and the lack of expected total shareholder return.
Based on this assessment, Mr. Fisher received incentive
compensation of $2,520,000. The Committee granted Mr. Fisher
155,998 stock options in 1999 as shown in the Option/SAR Grants
in Last Fiscal Year Table on page 33.
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.
<Page 48>
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 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).
Richard S. Braddock (Chairman)
Alice F. Emerson
Durk I. Jager
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, 1994, plus
assumed reinvested dividends.
[graph omitted]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
Eastman Kodak $100.00 $144.00 $176.00 $136.00 $166.00 $157.00
S&P 500 Index 100.00 125.00 154.00 205.00 264.00 316.00
Dow Jones 100.00 129.00 167.00 208.00 246.00 305.00
The graph assumes that $100 was invested on December 31, 1994, 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 27, 2000
<Page 49>
Eastman Kodak Company
2000 Annual Meeting
Theater on the Ridge
200 Ridge Road West
Rochester, New York
[map omitted]
Parking for the Meeting is available in Lot 42 between Eastman
Avenue and Merrill Street. A shuttle service will run between the
parking lot and the Theater on the Ridge beginning at
approximately 8:30 AM, and ending approximately one hour after the
conclusion of the Meeting. The Visitor Parking Lot will not be
available for shareholder parking for this Meeting.
<Page 50>
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 10, 2000, or any adjournment thereof.
NOMINEES FOR DIRECTOR:
Class I: Martha Layne Collins, George M. C. Fisher, Paul E. Gray
and John J. Phelan, Jr.
Class III: Debra L. Lee
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR
DIRECTOR, FOR THE RATIFICATION OF ELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS, AND AGAINST
THE FOUR SHAREHOLDER PROPOSALS.
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;
AGAINST the shareholder proposal regarding executive
compensation;
AGAINST the shareholder proposal requesting annual
election of all directors;
AGAINST the shareholder proposal requesting additional
environmental disclosure; and
AGAINST the shareholder proposal requesting an
executive compensation review.
(CONTINUED, and To Be Signed and Dated on the REVERSE SIDE)
SEE REVERSE SIDE
<Page 51>
The Board of Directors recommends a vote FOR Items 1-2.
1. Election of FOR WITHHOLD
Directors AUTHORITY
0 0
(01) Martha Layne Collins
(02) George M. C. Fisher
(03) Paul E. Gray
(04) John J. Phelan, Jr.
(05) Debra L. Lee
______________________________________________________________
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
The Board of Directors recommends a vote AGAINST Items 3-6.
3. Shareholder FOR AGAINST ABSTAIN
proposal regarding
executive compensation 0 0 0
4. Shareholder FOR AGAINST ABSTAIN
proposal requesting
annual election of all
directors 0 0 0
5. Shareholder FOR AGAINST ABSTAIN
proposal requesting
additional
environmental
disclosure 0 0 0
6. Shareholder FOR AGAINST ABSTAIN
proposal requesting
review of executive
compensation 0 0 0
If you receive more than one Annual Report at the address shown 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 completed, promptly forward this card to: Proxy Services,
EquiServe, P. O. Box 9370, Boston, MA 02205-9940.
SIGNATURE(s) DATE
<Page 52>
NOTE: Please sign exactly as the name appears on this card. Joint
owners must each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title.
<Page 53>
March 13, 2000
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 10, 2000
Dear Sir:
Pursuant to Rule 14a-6 under the Securities Exchange Act, we hereby
transmit for filing the definitive proxy statement and form of
proxy for use in connection with the Annual Meeting of Shareholders
of Eastman Kodak Company to be held May 10, 2000. Mailing to
shareholders of the definitive proxy statement and form of proxy is
expected to commence on March 27, 2000.
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 and action
on four shareholder proposals.
The material changes from last year's proxy statement are as
follows:
1) the inclusion of four shareholder proposals (pages 12
through 20; which is one more than last year; and
2) the nomination for election of four Class I directors
and one Class III director.
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.
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, seven copies of the Annual Report for the
year 1999 will be forwarded to you on March 27, 2000. In addition,
two copies of the Annual Report and six copies of the Notice of
Meeting, Proxy Statement and Form of Proxy will be mailed to the
New York Stock Exchange on March 27, 2000.
Very truly yours,
Joyce P. Haag
JPH:nwc
Enc
[LD1]
16
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