UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SEC 1913 (3-99)
[LOGO] Kodak
Eastman Kodak Company
343 State Street
Rochester, NY 14650
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Notice of 2002
Annual Meeting
and Proxy Statement
Date of Notice March 20, 2002
March 20, 2002
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders on
Wednesday, May 8, 2002, at 10:00 AM, at the Theater on the Ridge, 200 Ridge
Road West, Rochester, New York. You will be asked to vote on three proposals.
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 8 and would like to take this
opportunity to remind you that your vote is very important.
Sincerely,
/s/ Daniel A. Carp
Daniel A. Carp
Chairman of the Board
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NOTICE OF THE 2002
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Eastman Kodak Company will be held on
Wednesday, May 8, 2002, at 10:00 AM, at the Theater on the Ridge, 200 Ridge
Road West, Rochester, New York. There are three proposals to be voted on at the
Meeting:
1. Election of four Class III directors for a term of three years:
Richard S. Braddock Durk I. Jager
Daniel A. Carp Debra L. Lee
and two Class I directors for a term of one year:
Timothy M. Donahue Delano E. Lewis
2. Ratification of election of PricewaterhouseCoopers LLP as independent
accountant.
3. Shareholder proposal requesting additional environmental disclosure.
The Board of Directors recommends a vote FOR items 1 and 2 and a vote AGAINST
item 3.
If you were a shareholder of record at the close of business on March 11, 2002,
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 14650-0211, (585) 724-5492.
The Theater on the Ridge is handicap accessible. If you require special
assistance, call the Coordinator, Shareholder Services.
By Order of the Board of Directors
/s/ Joyce P. Haag
Joyce P. Haag
Secretary and Assistant General Counsel
Eastman Kodak Company
March 20, 2002
1
TABLE OF CONTENTS
Letter to Shareholders............................................................. 1
Notice of the Meeting.............................................................. 1
Questions and Answers.............................................................. 3
Householding of Disclosure Documents............................................... 6
Audio Webcast of Annual Meeting Available on the Internet.......................... 6
Proposals to be Voted On........................................................... 7
Item 1 - Election of Directors............................................. 7
Item 2 - Ratification of Election of Independent Accountants............... 7
Item 3 - Shareholder Proposal - Additional Environmental Disclosure........ 8
Board of Directors................................................................. 10
Board Committees........................................................... 13
Meeting Attendance......................................................... 14
Director Compensation...................................................... 14
Beneficial Security Ownership Table................................................ 15
Transactions with Management....................................................... 16
Compensation of Named Executive Officers........................................... 17
Summary Compensation Table................................................. 17
Option/SAR Grants Table.................................................... 19
Option/SAR Exercises and Year-End Values Table............................. 19
Long-Term Incentive Plan................................................... 20
Employment Contracts and Arrangements...................................... 21
Change in Control Arrangements............................................. 22
Retirement Plan............................................................ 23
Report of the Executive Compensation and Development Committee..................... 25
Report of the Audit Committee...................................................... 29
Performance Graph - Shareholder Return............................................. 30
2
QUESTIONS AND ANSWERS
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Q: What am I voting on?
A: You are voting on three proposals:
1. Election of four Class III directors for a term of three years:
Richard S. Braddock
Daniel A. Carp
Durk I. Jager
Debra L. Lee
and two Class I directors for a term of one year:
Timothy M. Donahue
Delano E. Lewis
2. Ratification of election of PricewaterhouseCoopers LLP as independent
accountants.
3. Shareholder proposal requesting additional environmental disclosure.
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Q: What are the voting recommendations of the Board?
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 requesting additional environmental
disclosure.
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Q: Will any other matters be voted on?
A: We are not aware of any other matters that you will be asked to vote on at
the Meeting. If any other matter is properly brought before the Meeting, Daniel
A. Carp 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 on, other than procedural
matters such as adjournment of the Meeting.
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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.
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 do not indicate your voting preferences, Daniel A. Carp and
Joyce P. Haag will vote your shares FOR items 1 and 2 and AGAINST item 3.
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Q: Who can vote?
A: You can vote at the Meeting if you were a shareholder of record as of the
close of business on March 11, 2002 (the Record Date). Each share of common
stock is entitled to one vote.
3
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; or
. notifying Joyce P. Haag, Secretary and Assistant General Counsel.
You may also complete a written ballot at the Meeting.
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Q: What vote is required to approve each proposal?
A: The four Class III and the two Class I director nominees receiving the
greatest number of votes will be elected. The ratification of election of the
independent accountants and the shareholder proposal require the affirmative
vote of a majority of the votes cast at the Meeting.
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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. Therefore, please do not write any comments on your proxy
card.
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Q: Who will count the vote?
A: EquiServe Trust Company, N.A. will count the vote. Its representatives will
be the inspectors of election.
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Q: What shares are covered by my proxy card?
A: The shares covered by your card represent all the shares of Kodak stock you
own, including those in the Eastman Kodak Shares Program and the Employee Stock
Purchase Plan, and those credited to your account in the Eastman Kodak
Employees' 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.
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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, EquiServe Trust Company,
N.A., at (800) 253-6057.
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Q: Who can attend the Annual Meeting?
A: All shareholders of record as of the close of business on March 11, 2002,
can attend. Seating, however, is limited. Attendance at the Meeting will be on
a first-come, first-served basis, upon arrival at the Meeting. Photographs will
be taken at the Annual Meeting. We may use these photographs in publications.
If you attend the Meeting, we assume your permission to use your picture.
4
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.
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Q: Can I bring a guest?
A: Yes. If you plan to 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.
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Q: What is the quorum requirement of the Meeting?
A: A majority of the outstanding shares on March 11, 2002, constitutes a
quorum for voting 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, 2002, there
were 291,756,363 shares outstanding.
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Q: How do I recommend someone to be a director?
A: You may recommend any person to be a director by writing to Joyce P. Haag,
Secretary and Assistant General Counsel, 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.
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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 shareholders.
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Q: When are the shareholder proposals due for the 2003 Annual Meeting?
A: Shareholder proposals must be in writing, received by November 19, 2002,
and addressed to:
Joyce P. Haag, Secretary and Assistant General Counsel
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0218
5
Q: What other information about Kodak 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 on Kodak's website at
http://www.kodak.com/go/HSE
You may request copies by contacting:
Coordinator, Shareholder Services
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0211
(585) 724-5492
HOUSEHOLDING OF DISCLOSURE DOCUMENTS
The Securities and Exchange Commission has adopted a rule concerning the
delivery of disclosure documents. The rule allows us to send a single set of
any proxy, information statement, annual report and prospectus to any household
at which two or more shareholders reside if we believe the shareholders are
members of the same family. This rule benefits both you and Kodak. It reduces
the volume of duplicate information received at your household and helps Kodak
reduce expenses. The rule applies to Kodak's annual reports, proxy statements,
information statements and prospectuses. Each shareholder will continue to
receive a separate proxy card or voting instruction card.
If your household received a single set of disclosure documents for this year,
but you would prefer to receive your own copy, please contact our transfer
agent, EquiServe Trust Company, N.A., by calling their toll free number,
(800) 253-6057.
If you would like to receive your own set of Kodak's disclosure documents in
future years, follow the instructions described below. Similarly, if you share
an address with another Kodak shareholder and together both of you would like
to receive only a single set of Kodak's disclosure documents, follow these
instructions:
If your Kodak shares are registered in your own name, please contact our
transfer agent, EquiServe Trust Company, N.A., and inform them of your
request by calling them at (800) 253-6057 or writing them at P.O. Box
43016, Providence, RI 02940-3016.
If a broker or other nominee holds your Kodak shares, please contact ADP
and inform them of your request by writing them at Householding Department,
51 Mercedes Way, Edgewood, NY 11717. Be sure to include your name, the name
of your brokerage firm and your account number.
AUDIO WEBCAST OF ANNUAL MEETING
AVAILABLE ON THE INTERNET
Kodak's Annual Meeting will be webcast live. If you have internet access, you
can access the webcast by going to Kodak's Investor Center webpage at the
following address:
http://www.kodak.com/US/en/corp/investorCenter/investorsCenterHome.shtml
This webcast is listen only. You will not be able to ask questions.
The Annual Meeting audio webcast will be available on Kodak's website for a
short period of time after the Meeting.
6
PROPOSALS TO BE VOTED ON
ITEM 1
ELECTION OF DIRECTORS
Kodak's By-Laws require us to have at least nine directors but no more than 18.
The number of directors is set by the Board and is currently 13. Mr. Carp is
the only director who is also an employee of the Company. The Board is divided
into three classes of directors with overlapping three-year terms. There are
five Class III directors whose terms expire at the 2002 Annual Meeting. Mr.
Zimmerman, a Class III director, is retiring from the Board effective May 8,
2002, in accordance with the Company's retirement policy for directors. In
addition, Dr. Emerson (Class II) and Dr. Gray (Class I) are retiring from the
Board effective May 8, 2002, in accordance with the Company's retirement policy
for directors.
Nominees for election as Class III directors are:
Richard S. Braddock
Daniel A. Carp
Durk I. Jager
Debra L. Lee
These nominees agree to serve a three-year term. Information about them is
provided beginning on page 10. All four directors were previously elected by
shareholders.
Nominees for election as Class I directors are:
Timothy M. Donahue
Delano E. Lewis
These nominees agree to serve a one-year term. Mr. Donahue is standing for
election by you for the first time. Mr. Lewis was a director of the Company
from May 1998 to December 1999. Information about them is provided beginning on
page 11.
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.
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, on the recommendation of its Audit Committee, elected
PricewaterhouseCoopers LLP the Company's independent accountants to serve until
the 2003 Annual Meeting.
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.
7
ITEM 3
SHAREHOLDER PROPOSAL--ADDITIONAL ENVIRONMENTAL DISCLOSURE
Daniel E. Naulin, 8 Baymon Drive, Rochester, NY 14624, owner of 82 shares,
submitted the following proposal:
"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.' (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."
8
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 ten 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 Environment Annual Report, meet the information needs of
shareholders. All material information is disclosed concerning the Company's
environmental liabilities.
The Board of Directors recommends a vote AGAINST this proposal.
9
BOARD OF DIRECTORS
[PHOTO] [PHOTO] [PHOTO] [PHOTO]
RICHARD S. BRADDOCK DANIEL A. CARP DURK I. JAGER DEBRA L. LEE
NOMINEES TO SERVE A THREE-YEAR TERM EXPIRING AT THE 2005 ANNUAL MEETING (Class
III Directors)
RICHARD S. BRADDOCK Director since May 1987
Mr. Braddock, 60, is Chairman and Chief Executive Officer of priceline.com. He
has been Chairman since August 1998. He was CEO from July 1998 to June 2000 and
was re-elected CEO in May 2001. 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. 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 Cadbury Schweppes and priceline.com.
DANIEL A. CARP Director since December 1997
Mr. Carp, 53, is Chairman, Chief Executive Officer, President and Chief
Operating Officer of Eastman Kodak Company. He became Chairman on December 8,
2000. He was elected CEO effective January 1, 2000. He was President from
January 1, 1997 until April 2001 and was re-elected President in January 2002.
Mr. Carp served as Executive Vice President and Assistant Chief Operating
Officer from November 1995 to January 1997. 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 Inc.
DURK I. JAGER Director since January 1998
Mr. Jager, 58, is the former Chairman of the Board, President and Chief
Executive Officer of The Procter & Gamble Company. He left these positions in
July 2000. He was elected to the position of Chief Executive Officer in January
1999 and Chairman of the Board effective September 1999, while continuing to
serve as President 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.
DEBRA L. LEE Director since September 1999
Ms. Lee, 47, 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
degree 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 WGL Holdings, Inc. and Genuity, Inc.
10
[PHOTO] [PHOTO] [PHOTO]
TIMOTHY M. DONAHUE DELANO E. LEWIS MARTHA LAYNE COLLINS
NOMINEES TO SERVE A ONE-YEAR TERM EXPIRING AT THE 2003 ANNUAL
MEETING (Class I Directors)
TIMOTHY M. DONAHUE Director since October 2001
Mr. Donahue, 52, is President and Chief Executive Officer of Nextel
Communications, Inc. and a board member of NII Holdings, Inc. He has held these
positions since August 1999. He began his career with Nextel in January 1996 as
President and Chief Operating Officer. Before joining Nextel, Mr. Donahue
served as northeast regional president for AT&T Wireless Services operations
from 1991 to 1996. Mr. Donahue started his career with AT&T Wireless Services
(formerly McCaw Cellular Communications) in 1986 as president for McCaw
Cellular's paging division. In 1989, he was named McCaw Cellular's president
for the U.S. central region. Mr. Donahue is a graduate of John Carroll
University with a BA in English Literature.
DELANO E. LEWIS Director since July 2001
Mr. Lewis, 63, is the former Ambassador to South Africa, a position he held
from December 1999 to July 2001. Prior to his ambassadorship, Mr. Lewis was
President and Chief Executive Officer of National Public Radio Corporation, a
position he held from January 1994 until August 1998. He was President and
Chief Executive Officer of C&P Telephone Company, a subsidiary of Bell Atlantic
Corporation, from 1988 to 1993, after having served as Vice President since
1983. Mr. Lewis held several positions in the public sector prior to joining
C&P Telephone Company. Mr. Lewis received a BA from University of Kansas and a
JD from Washburn School of Law. Mr. Lewis previously served as a director of
Eastman Kodak Company from May 1998 to December 1999. He is a director of
Colgate-Palmolive Co.
DIRECTOR CONTINUING TO SERVE A TERM EXPIRING AT THE 2003 ANNUAL MEETING (Class
I Director)
MARTHA LAYNE COLLINS Director since May 1988
Governor Collins, 65, 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 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, Mid-America Bancorp and
PurchasePro.
11
[PHOTO] [PHOTO] [PHOTO]
WILLIAM W. BRADLEY HECTOR DE J. RUIZ LAURA D'ANDREA TYSON
DIRECTORS CONTINUING TO SERVE A THREE-YEAR TERM EXPIRING AT THE 2004 ANNUAL
MEETING (Class II Directors)
WILLIAM W. BRADLEY Director since May 2001
Senator Bradley, 58, is a Managing Director of Allen & Company, Incorporated
and Chair of the Advisory Board of McKinsey & Company's Institute for
Management of Nonprofits. From 1997 to 1999, he was a Senior Advisor and Vice
Chairman of the International Council of JP Morgan & Co., Inc. During that
time, he also served as an essayist for CBS evening news, a visiting professor
at Stanford University, University of Notre Dame and the University of
Maryland. Senator Bradley served in the U.S. Senate from 1978 to 1997
representing the State of New Jersey. Prior to serving in the Senate, he was an
Olympic gold medallist in 1964 and a professional basketball player with the
New York Knicks from 1967 to 1977, during which time they won two world
championships. Senator Bradley holds a BA degree in American History from
Princeton University and an MA degree from Oxford University, where he was a
Rhodes Scholar. He has authored five books on American politics, culture and
economy.
HECTOR DE J. RUIZ Director since January 2001
Dr. Ruiz, 56, is President and Chief Operating Officer of Advanced Micro
Devices, Inc. (AMD). He joined AMD in these capacities in January 2000. Before
joining AMD, Dr. Ruiz served as President of Motorola, Inc.'s Semiconductor
Products Sector since May 1997. From 1991 to 1994, Dr. Ruiz was Senior Vice
President and General Manager of Motorola's paging and messaging businesses,
and in 1996 became Executive Vice President and General Manager of those
businesses. Dr. Ruiz joined Motorola in 1977, and from 1977 to 1991, he held
the positions of Operations Manager, Vice President of MOS Wafer Processing,
Vice President of the Memory Products Division, Corporate Vice President and
General Manager of Integrated Circuit Wafer Manufacturing, Corporate Vice
President and Assistant General Manager, Microprocessor Products Group,
Corporate Vice President and Director of Technology and Senior Vice President.
Before joining Motorola, Dr. Ruiz worked at Texas Instruments Inc. from 1972 to
1977. Dr. Ruiz holds BS and MS degrees in electrical engineering from the
University of Texas at Austin and a Ph.D. from Rice University.
LAURA D'ANDREA TYSON Director since May 1997
Dr. Tyson, 54, is Dean of London Business School, a position she accepted in
January 2002. She was formerly the Dean of the Walter A. Haas School of
Business at the University of California, Berkeley, a position she held since
July 1998. Previously, she was professor of and holder 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.
12
Board Committees
The Board has the committees listed below. All committee members are
non-employee, independent directors as defined by the New York Stock Exchange
listing standards.
Audit Committee 8 meetings in 2001
. 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;
. 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; and
. reviewed the Committee's written charter and assessed
the Committee's effectiveness.
Committee on Directors 4 meetings in 2001
. sought qualified individuals with requisite skills for
Board membership; and
. recommended qualified individuals to be considered for
Board membership.
Executive Compensation and Development Committee 7 meetings in 2001
. reviewed the Company's executive development process;
. set the compensation for the executive officers and
recommended the compensation of other key management;
. granted and certified awards under the Company's
compensation plans;
. reviewed diversity representation within the Company;
. completed a review of Kodak's executive compensation
program;
. approved a new annual executive assessment and reward
program; and
. approved the Stock Option Exchange Program.
Finance Committee 5 meetings in 2001
. reviewed the Company's financing strategies including
dividend declaration, capital expenditures, debt
issuances and foreign exchange and commodity hedging;
. reviewed cash flow, balance sheet performance and
credit ratings;
. reviewed significant acquisitions, divestitures, and
joint ventures; and
. reviewed the investment performance and the
administration of the Company's defined benefit pension
plan.
Public Policy Committee 3 meetings in 2001
. reviewed philanthropic programs;
. reviewed environmental initiatives;
. reviewed employee survey results;
. reviewed employee relations issues; and
. reviewed diversity initiatives.
13
COMMITTEE MEMBERSHIP
--------------------------------------------------------------------
Committee Executive
on Compensation Public
Name Audit Directors and Development Finance Policy
-------------------------------------------------------------------
Richard S. Braddock X X*
-------------------------------------------------------------------
William M. Bradley X X
-------------------------------------------------------------------
Martha Layne Collins X X
-------------------------------------------------------------------
Timothy M. Donahue X X
-------------------------------------------------------------------
Alice F. Emerson X X
-------------------------------------------------------------------
Paul E. Gray X* X
-------------------------------------------------------------------
Durk I. Jager X X*
-------------------------------------------------------------------
Debra L. Lee X X*
-------------------------------------------------------------------
Delano E. Lewis X X
-------------------------------------------------------------------
Hector de J. Ruiz X X
-------------------------------------------------------------------
Laura D'Andrea Tyson X X
-------------------------------------------------------------------
Richard A. Zimmerman X X*
*Chairman
Meeting Attendance
The Board held a total of eight meetings in 2001. Each director attended at
least 88% of the meetings of the Board and committees of the Board on which the
director served. The average attendance by all directors was over 93%.
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.
The employee director receives 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. Six directors deferred compensation in 2001. In the
event of a change in control, the amounts in the phantom accounts will
generally be paid in a single cash payment.
Life Insurance The Company provides $100,000 of group term life insurance to
each non-employee director. This decreases to $50,000 at retirement or age 65,
whichever occurs later.
Charitable Award Program This program, which was closed to new participants
effective January 1, 1997, 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 self-insurance and joint
life insurance policies purchased by the Company. Each of the following
non-employee directors continues to participate in the program: Messrs.
Braddock and Zimmerman, Drs. Emerson and Gray and Gov. Collins.
14
-------------------------------------------------------------------
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
------------------------------------------------------------------
Directors, Nominees Number of Common Shares
and Executive Officers Owned on January 2, 2002
------------------------------------------------------------------
Richard S. Braddock 22,522 /(a) (b)/
------------------------------------------------------------------
William W. Bradley 1,094
------------------------------------------------------------------
Robert H. Brust 127,809 /(b)/
------------------------------------------------------------------
Daniel A. Carp 728,583 /(b)/
------------------------------------------------------------------
Martha Layne Collins 15,373 /(a)/ /(b)/
------------------------------------------------------------------
Martin M. Coyne 158,188 /(b)/
------------------------------------------------------------------
Timothy M. Donahue 3,055 /(a)/
------------------------------------------------------------------
Alice F. Emerson 17,302 /(a)/ /(b)/
------------------------------------------------------------------
Paul E. Gray 15,070 /(a) (b)/
------------------------------------------------------------------
Durk I. Jager 13,681 /(a) (b)/
------------------------------------------------------------------
Debra L. Lee 7,586 /(b)/
------------------------------------------------------------------
Delano E. Lewis 1,127 /(a)/
------------------------------------------------------------------
Hector de J. Ruiz 4,645 /(b)/
------------------------------------------------------------------
Patricia F. Russo 100,000 (c)
------------------------------------------------------------------
Eric L. Steenburgh 79,789 /(b)/
------------------------------------------------------------------
Laura D'Andrea Tyson 7,732 /(a)/ /(b)/
------------------------------------------------------------------
Richard A. Zimmerman 19,797 /(a)/ /(b)/
------------------------------------------------------------------
All Directors, Nominees and
Executive Officers as a
Group (29), including the above 2,641,777 /(a)/ /(b)/ /(d)/
------------------------------------------------------------------
(a) Includes the following Kodak common stock equivalents, which are held in
deferred compensation plans: R. S. Braddock - 5,687; R. H. Brust - 11,052;
D. A. Carp - 82,787 ; M. L. Collins - 8,173; M. M. Coyne - 14,211; T. M.
Donahue - 1,055; A. F. Emerson - 10,769; P. E. Gray - 8,070; D. I. Jager -
6,681; D. E. Lewis - 927; E. L. Steenburgh - 31,911; L. D. Tyson - 812; and
R. A. Zimmerman - 8,334; and all directors, nominees and executive officers
as a group - 327,379.
(b) Includes the following number of shares which may be acquired by exercise
of stock options: R. S. Braddock - 4,000; R. H. Brust - 102,657; D. A. Carp
- 595,494; M. L. Collins - 4,000; M. M. Coyne - 129,458; A. F. Emerson -
4,000; P. E. Gray - 4,000; D. I. Jager - 4,000; D. L. Lee - 4,000; H. de J.
Ruiz - 2,000; E. L. Steenburgh - 38,168; L. D. Tyson - 4,000; R. A.
Zimmerman - 4,000; and all directors, nominees and executive officers as a
group - 1,979,826.
(c) P. F. Russo forfeited these shares when she resigned from the Company on
January 4, 2002.
(d) The total number of shares beneficially owned by all directors, nominees
and executive officers as a group is less than 1% of the Company's
outstanding shares.
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 Employees' Stock
Ownership Plan, and the interests of the above persons in the Kodak Stock Fund
of the Eastman Kodak Employees' Savings and Investment Plan, stated in terms of
Kodak shares.
15
TRANSACTIONS WITH MANAGEMENT
Under Mr. Brust's offer letter, the Company loaned Mr. Brust, Chief Financial
Officer and Executive Vice President, the sum of $3,000,000 at an annual
interest rate of 6.21%, the applicable federal rate for mid-term loans,
compounded annually, in effect for January 2000. The unsecured loan is
evidenced by a promissory note dated January 6, 2000. Under Mr. Brust's amended
offer letter, a portion of the principal and all of the accrued interest on the
loan is to be forgiven on each of the first seven anniversaries of the loan.
Mr. Brust is not entitled to forgiveness on any anniversary date if he
voluntarily terminates his employment or is terminated for cause on or before
the anniversary date. The balance due under the loan on December 31, 2001, was
$2,400,000.
In March 2001, the Company loaned Mr. Carp, Chairman, President and Chief
Executive Officer, $1,000,000 for the purchase of a home. The loan is unsecured
and bears interest at 5.07% per year, the applicable federal rate for mid-term
loans, compounded annually, in effect for March 2001. The entire amount of the
loan and all accrued interest is due upon the earlier of March 1, 2006, or the
date of Mr. Carp's termination of employment from the Company. The loan is
evidenced by a promissory note dated March 2, 2001. The balance due under the
loan on December 31, 2001, was $1,042,227.
In August 1999, the Company loaned Mr. Gustin, Chief Marketing Officer and
Senior Vice President, $170,000 for the purchase of a home. The loan was
unsecured and bore interest at 5.96% per year, the applicable federal rate for
mid-term loans, compounded annually, in effect for August 1999. Under the
original terms of the loan, the entire amount of the loan and all accrued
interest was due upon the earlier of August 10, 2000, or the date of Mr.
Gustin's termination of employment. The loan was subsequently modified twice.
The balance due under the loan on December 31, 2001, was $195,325. Mr. Gustin
has repaid the loan in full.
16
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 2001. The
figures shown include both amounts paid and amounts deferred.
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------------------
Awards Payouts
-------------------------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP
Principal Position/(a)/ Year Salary Bonus/(b)/ Compensation/(c)/ Awards/(d)/ Options/SARs/(e)/ Payouts/(f)/
------------------------------------------------------------------------------------------------------------------
D. A. Carp 2001 $1,000,000 $ 507,500 $25,695 $2,968,751 410,000 0
Chairman & CEO 2000 1,000,000 598,500 -- -- 100,000 0
1999 817,308 1,020,000 -- -- 102,223 0
------------------------------------------------------------------------------------------------------------------
P. F. Russo 2001 628,989 675,000 -- 4,248,000 600,000 0
President & COO
------------------------------------------------------------------------------------------------------------------
R. H. Brust 2001 585,003 151,200 -- 430,414 78,000 0
Exec. V. P. & CFO 2000 492,764 225,720 -- 467,542 228,000 0
------------------------------------------------------------------------------------------------------------------
E. L. Steenburgh 2001 645,338 166,698 -- 553,447 0 0
Exec. V. P. 2000 588,457 258,552 -- 467,000 40,000 0
1999 569,231 432,000 -- 523,504 36,872 0
------------------------------------------------------------------------------------------------------------------
M. M. Coyne 2001 667,984 176,400 -- 553,447 95,000 0
Exec. V. P. 2000 449,449 400,075 -- 409,375 146,000 0
1999 384,996 325,004 -- 0 24,176 0
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------
Name and All Other
Principal Position/(a)/ Compensation/(g)/
-------------------------------------------
D. A. Carp $ 0
Chairman & CEO 0
0
-------------------------------------------
P. F. Russo 27,112
President & COO
-------------------------------------------
R. H. Brust 827,923
Exec. V. P. & CFO 1,269
-------------------------------------------
E. L. Steenburgh 0
Exec. V. P. 0
0
-------------------------------------------
M. M. Coyne 0
Exec. V. P. 0
0
17
(a) R. H. Brust was hired on January 3, 2000. P. F. Russo was hired in April
2001 and resigned from the Company on January 4, 2002. On that date, D. A.
Carp was re-elected President and COO.
(b) This column shows Management Variable Compensation Plan awards for services
in the year indicated. For P. F. Russo this amount was required to be paid
under her offer letter dated April 2001.
(c) Where no amount is shown, the value of personal benefits provided was less
than the minimum amount required to be reported. The amount shown in this
column represents tax payments made by the Company relating to the
officer's use of Company transportation. The Company requires D. A. Carp to
use Company transportation for security reasons.
(d) The awards shown represent grants of restricted stock valued as of the date
of grant. The grant to P. F. Russo was made pursuant to her offer letter.
P. F. Russo forfeited these shares when she resigned from the Company. The
amount shown for D. A. Carp includes 20,000 restricted shares granted in
recognition of his election as Chairman. The remaining amounts shown for
2001 represent grants made in substitution of, and not in addition to, the
stock option grants the named executives would otherwise have received in
January 2001 under the management stock option program.
D. A. Carp - 20,000 shares valued on January 12, 2001, at $40.875 per share
and 52,630 shares valued on January 16, 2001, at $40.875 per share. P. F.
Russo - 100,000 shares valued on April 16, 2001, at $42.48 per share. These
shares were forfeited when P. F. Russo resigned from the Company on January
4, 2002. R. H. Brust - 10,530 shares valued on January 16, 2001, at $40.875
per share and 11,625 shares valued on January 3, 2000, at $40.2187 per
share. E. L. Steenburgh - 13,540 shares valued on January 16, 2001, at
$40.875 per share, 8,000 valued on February 11, 2000, at $58.375 per share
and 8,000 valued on February 12, 1999, at $65.438 per share. M. M. Coyne -
13,540 shares valued on January 16, 2001, at $40.875 per share. Dividends
are paid on restricted shares as and when dividends are paid on Kodak
common stock.
The total number and value of restricted stock held as of December 31, 2001
for each named individual (valued at $29.43 per share) were: D. A. Carp -
98,309 shares - $2,893,234; P. F. Russo - 100,000 shares - $2,943,000
(these shares were forfeited when P. F. Russo resigned); R. H. Brust -
22,155 shares - $652,022; E. L. Steenburgh - 40,171 shares - $1,182,233; M.
M. Coyne - 26,180 shares - $770,477.
(e) In January 2001, D. A. Carp received a grant of stock options to purchase
160,000 shares in recognition of his election as Chairman. P. F. Russo was
awarded stock options to purchase 500,000 shares pursuant to her offer
letter. P. F. Russo forfeited all of her stock options when she resigned
from the Company on January 4, 2002. The remaining amounts for 2001
represent grants made in the fourth quarter of 2001 under the management
stock option program. Beginning with this grant, stock options will be
granted in the fourth quarter, rather than the first quarter, of a year to
coordinate the timing of the grant with the Company's annual management
appraisal process.
(f) No awards were paid for the periods 1999-2001, 1998-2000, and 1997-1999
under the Performance Stock Program.
(g) For P. F. Russo the amount represents the company contribution made to her
account under the cash balance feature of the Kodak Retirement Income Plan.
P. F. Russo forfeited this amount when she resigned from the Company on
January 4, 2002.
For R. H. Brust for 2001 the amount represents $786,300 of principal and
interest forgiven in connection with the loan from the Company as described
on page 16 and $41,623 as the Company contribution in the cash balance
feature of the Kodak Retirement Income Plan; for 2000 the amount represents
the Company contribution in the cash balance feature.
18
OPTION/SAR GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------
Number of Percentage
Securities of Total
Underlying Options/SARs
Options/ Granted to Exercise or Grant Date
SARs Employees Base Price Expiration Present
Name Granted/(a)/ in Fiscal Year Per Share Date Value/(e)/
---------------------------------------------------------------------------------
D. A. Carp 160,000/(b)/ 1.96% $40.97 01/11/11 $1,625,600
250,000/(c)/ 3.06 29.31 11/15/11 1,815,000
---------------------------------------------------------------------------------
P. F. Russo 500,000/(d)/ 6.12 39.77 04/05/11 4,880,000
100,000/(c)/ 1.22 29.31 11/15/11 726,000
---------------------------------------------------------------------------------
R. H. Brust 78,000/(c)/ 0.95 29.31 11/15/11 566,280
---------------------------------------------------------------------------------
E. L. Steenburgh 0 0 N/A N/A N/A
---------------------------------------------------------------------------------
M. M. Coyne 95,000/(c)/ 1.16 29.31 11/15/11 689,700
---------------------------------------------------------------------------------
(a) 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.
One third of the options vest on each of the first three anniversaries of
the date of grant.
(b) These options were granted in January 2001 in recognition of D. A. Carp's
election as Chairman.
(c) These awards were granted in November 2001 under the management stock
option program. Beginning with this grant, stock options are granted in the
fourth quarter of a year to coordinate with the timing of the Company's
annual management appraisal process. P. F. Russo forfeited her options when
she resigned from the Company on January 4, 2002.
(d) These options were granted to P. F. Russo in April 2001 pursuant to her
offer letter. P. F. Russo forfeited these options when she resigned from
the Company on January 4, 2002.
(e) 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."
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
----------------------------------------------------------------------------------------------
Number of
Securities Underlying Value of Unexercised
Unexercised Options/SARs In-the-Money Options/
Number of at Fiscal Year-End SARs at Fiscal Year-End*
Shares Acquired Value ----------------------------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------
D. A. Carp 13,148 $80,048 595,494 656,820 $0 $30,000
---------------------------------------------------------------------------------------------
P. F. Russo 0 0 0 60,000 0 12,000
---------------------------------------------------------------------------------------------
R. H. Brust 0 0 55,990 250,010 0 9,360
---------------------------------------------------------------------------------------------
E. L. Steenburgh 0 0 38,168 38,704 0 0
---------------------------------------------------------------------------------------------
M. M. Coyne 2,630 18,305 126,128 233,364 0 11,400
---------------------------------------------------------------------------------------------
* Based on the closing price on the New York Stock Exchange - Composite
Transactions of the Company's common stock on December 31, 2001, of $29.43
per share.
19
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. The program's performance goal
is total shareholder return equal to at least that earned 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 calculates the percentage earned of
each participant's target award. No awards are paid unless the performance goal
is achieved. Fifty percent of the target award is earned if the performance
goal is achieved. One hundred percent 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.
The Committee has the discretion to reduce or eliminate the award earned by any
participant based upon any criteria it deems appropriate. Awards 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 named executive officers for each cycle.
No awards were earned for the 1999-2001 performance cycle as shown in the "LTIP
Payouts" column of the Summary Compensation Table on page 17.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
------------------------------------------------------------------------------------------------
Estimated Future Payouts Under
Non-Stock Price-Based Plans
------------------------------------
Number of Performance or
Shares, Units Other Period Until Threshold Target Maximum
Name or Other Rights Maturation or Payout # of Shares # of Shares # of Shares
-----------------------------------------------------------------------------------------------
D. A. Carp N/A 1999-2001 4,250 8,500 12,750
2000-2002 10,000 20,000 30,000
2001-2003 10,000 20,000 30,000
-----------------------------------------------------------------------------------------------
P. F. Russo N/A 1999-2001/(a)(b)/ 1,875 3,750 5,625
2000-2002/(a)(b)/ 9,375 8,750 13,125
2001-2003/(a)(b)/ 6,875 13,750 20,625
-----------------------------------------------------------------------------------------------
R. H. Brust N/A 1999-2001/(a)/ 1,750 3,500 5,250
2000-2002 2,625 5,250 7,875
2001-2003 2,625 5,250 7,875
-----------------------------------------------------------------------------------------------
E. L. Steenburgh N/A 1999-2001 3,400 6,800 10,200
2000-2002 3,400 6,800 10,200
2001-2003 3,400 6,800 10,200
-----------------------------------------------------------------------------------------------
M. M. Coyne N/A 1999-2001 1,813 3,625 5,438
2000-2002 1,813 3,625 5,438
2001-2003 3,400 6,800 10,200
-----------------------------------------------------------------------------------------------
(a) Individuals who participate for less than the full performance cycle are
eligible for a prorated award based upon the length of their participation.
(b) P. F. Russo is not eligible to receive any awards under the program as a
result of her resignation from the Company on January 4, 2002.
20
Employment Contracts and Arrangements
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. In light of Mr. Carp's
promotion to Chairman in December 2000, the Executive Compensation and
Development Committee approved an increase to Mr. Carp's target annual bonus to
145% of his base salary.
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.
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, that was subsequently amended on December 1,
2001. Effective April 1, 2002, Mr. Steenburgh will retire from the Company. As
a result, Mr. Steenburgh will receive the following benefits under his amended
offer letter: pay equal to one times his total target annual compensation, a
retirement income benefit based on his actual service plus 20 years of deemed
service, and the ability to retain his Company-provided equity awards. Mr.
Steenburgh will also be covered under the Company's financial counseling
program for two years and be reimbursed for the cost to maintain life insurance
coverage until age 70 at one times his total target annual compensation.
Robert H. Brust - The Company employed Mr. Brust under an offer letter dated
December 20, 1999, that was amended on November 12, 2001. In addition to the
information provided elsewhere in this Proxy Statement, the amended offer
letter provides Mr. Brust a special severance benefit. If, during the first
seven years of Mr. Brust's employment, the Company terminates his employment
without cause, he will receive severance pay equal to two times his base salary
plus target annual bonus. After completing five years of service with the
Company, Mr. Brust will be allowed to keep his stock options upon his
termination of employment for other than cause.
Martin M. Coyne - Effective November 15, 2001, the Company entered into a
retention agreement with Mr. Coyne. In addition to the information provided
elsewhere in this Proxy Statement, the letter agreement provides Mr. Coyne a
special severance benefit equal to two times his total target annual
compensation if he is terminated without cause prior to February 7, 2004. The
letter agreement also provides Mr. Coyne a target award under the Company's
variable pay plan equal to 85% of Mr. Coyne's annual base salary.
Patricia F. Russo - The Company employed Ms. Russo as President and Chief
Operating officer under an offer letter dated April 2001. In addition to the
information described elsewhere in this Proxy Statement, the offer letter
provided Ms. Russo a base salary of $900,000 and a target award under the
Company's annual variable pay plan of 100% of her base salary. As a hiring
bonus, Ms. Russo received a grant of stock options for 500,000 shares and
100,000 shares of restricted stock. Ms. Russo forfeited both the stock options
and the restricted stock as a result of her resignation. The offer letter also
provided Ms. Russo a severance allowance equal to two times her total target
annual compensation if she terminated for good reason or was terminated without
cause. Given that Ms. Russo resigned from the Company, she did not receive any
severance upon her termination of employment.
21
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 of the new directors 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
. 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. 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. Each of the
named executive officers would be eligible for severance pay equal to three
times his or her total target annual compensation. 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 or her termination of employment. 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 participant will be
calculated as indicated above.
In the event of a change in control 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;
. 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.
22
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. All of the named executive officers, with the
exception of Mr. Brust and Ms. Russo, participate in the non-cash balance
portion of the plan. The cash balance feature covers all new employees hired
after March 31, 1999, including Mr. Brust and Ms. Russo. As a result of her
resignation from the Company, Ms. Russo forfeited her benefits under the 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 of employment. 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) 0.3% 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.
PENSION PLAN TABLE - Annual Retirement Income Benefit
Straight Life Annuity Beginning at Age 65
-------------------------------------------------------------
Years of Service
---------------------------------------------
Remuneration 3 20 25 30 35
------------------------------------------------------------
$ 500,000 $24,000 $160,000 $200,000 $240,000 $ 280,000
------------------------------------------------------------
750,000 36,000 240,000 300,000 360,000 420,000
------------------------------------------------------------
1,000,000 48,000 320,000 400,000 480,000 560,000
------------------------------------------------------------
1,250,000 60,000 400,000 500,000 600,000 700,000
------------------------------------------------------------
1,500,000 72,000 480,000 600,000 720,000 840,000
------------------------------------------------------------
1,750,000 84,000 560,000 700,000 840,000 980,000
------------------------------------------------------------
2,000,000 96,000 640,000 800,000 960,000 1,120,000
------------------------------------------------------------
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.
23
The following table shows the years of service credited as of December 31,
2001, to each of the named executive officers. This table also shows the amount
of each named executive officer's APC at the end of 2001, except for Mr. Brust
and Ms. Russo, who participated in the cash balance feature in 2001.
RETIREMENT PLAN
------------------------------------------------------------------------
Name Years of Service Average Participating Compensation
------------------------------------------------------------------------
D. A. Carp 31 $1,658,367
------------------------------------------------------------------------
E. L. Steenburgh 3/(a)/ 863,086
------------------------------------------------------------------------
M. M. Coyne 19/(b)/ 807,008
------------------------------------------------------------------------
(a) Upon Mr. Steenburgh's retirement on April 1, 2002, he will be credited with
20 extra years of service for purposes of calculating his retirement
benefit.
(b) If Mr. Coyne remains employed until February 7, 2004, he will be credited
with eight extra years of service for purposes of calculating his
retirement benefit.
Cash Balance Feature
Under the cash balance feature of the Company's pension plan, the Company
establishes an account for each participating employee. Every month the
employee works, the Company credits the employee's account with an amount equal
to four percent of the employee's monthly pay. In addition, the ongoing balance
of the employee's account earns interest at the 30-year Treasury bond rate. To
the extent federal laws place limitations on the amount of pay that may be
taken into account under the plan, four percent of the excess pay is credited
to an account established for the employee in an unfunded supplementary plan.
If a participating employee leaves the Company and is vested (five or more
years of service), the employee's account balance will be distributed to the
employee in the form of a lump sum or monthly annuity. If the participating
employee's account balance exceeds $5,000, the employee also has the choice of
leaving his or her account balance in the plan to continue to earn interest.
In addition to the benefits described above, Mr. Brust is covered under a
special supplemental pension arrangement established under his amended offer
letter. This arrangement provides Mr. Brust a single life annuity of $12,500
per month upon his retirement if he remains employed with the Company for at
least five years. If Mr. Brust remains employed until January 3, 2007, he will,
in lieu of receiving the $12,500 per month annuity, be treated as if eligible
for the non-cash balance portion of the plan. For this purpose, Mr. Brust will
be credited with 18 years of extra service in addition to his actual service.
In either case, Mr. Brust's supplemental benefit will be offset by his cash
balance benefit.
Ms. Russo's April 1, 2001 offer letter provided her a supplemental pension
benefit that treated her as if she were eligible for the non-cash balance
portion of the plan with 20 years of extra service. Since Ms. Russo did not
remain employed for five years, she forfeited this benefit upon her resignation
from the Company.
24
REPORT OF THE EXECUTIVE COMPENSATION
AND DEVELOPMENT COMMITTEE
Role of the Committee
The Executive Compensation and Development Committee is made up of four
independent members of the Board of Directors. The Committee members are
neither employees nor former employees of the Company. The functions of the
Committee include:
. reviewing the Company's executive compensation strategy,
. reviewing the design of the Company's executive compensation program,
. overseeing the administration of the executive compensation plans,
. monitoring and overseeing the career development of executives,
. annually establishing performance commitments for the CEO, executive
officers and key management,
. reviewing performance annually and determining the individual elements of
total compensation for the CEO and other designated executives, and
. reviewing at least annually diversity representation within the Company.
Principles of Executive Compensation
The Company's executive compensation program is designed to:
. tie compensation to performance that is consistent with the Company's
values and increases shareholder value,
. attract and retain employees needed to meet the Company's growth and
performance objectives,
. set the total compensation of the Company's executives at
market-competitive levels,
. link compensation to both short- and long-term Company performance,
. place a significant portion of each executive's compensation at risk; the
more senior an executive's position, the more compensation should be at
risk, and
. link the interests of the Company's executives with its owners through
stock ownership.
Executive Compensation Practices
Each year, the Company participates in surveys prepared by outside consultants.
The companies included in these surveys are those the Company competes with for
executive talent. Most, but not all, of these companies are included in the Dow
Jones Industrial Index, the performance of which is shown in the Performance
Graph on page 30. Based largely on the median compensation of these surveyed
companies, the Committee sets the target compensation of the Company's senior
executives.
At the Committee's request, the Company undertook a study during 2001 to
determine whether its executive compensation program was fulfilling its stated
principles and objectives. As a result of this study, the Committee approved a
new annual executive assessment and reward program for the Company beginning in
2002. This plan establishes a new way to set executive expectations and goals,
measure executive performance and differentiate rewards based on results. Its
chief features are greater focus on revenue growth, fewer key goals, a new
assessment of people leadership and greater discretion in assessing rewards. In
addition to revenue, economic profit will be the other performance measure used
in funding the plan's award pool. Both measures will be measured annually,
rather than on a three year weighed average basis, as was the case with the
plan's prior performance measure, Economic Value Added (EVA). These same two
measures will also be used to establish the annual performance goals under the
Wage Dividend Plan, the Company's annual bonus program for its U.S. employees,
other than its executives.
25
Components of Executive Compensation Program
The three components of the Company's executive compensation program are:
. base salary,
. short-term variable pay, and
. long-term incentives.
Base Salary: Base salary is the only fixed portion of an executive's
compensation. Each executive's base salary is reviewed annually based on (1) a
compensation range which corresponds to the executive's job responsibilities;
and (2) the executive's individual performance.
Individual performance is measured in large part through the Company's
management appraisal process. This process evaluates performance against a
combination of financial and non-financial goals. The management appraisal
process also measures an executive's performance relative to the Company values.
Short-Term Variable Pay: Under the short-term variable pay plan, a target
bonus is set annually for each executive. The target, which is a percentage of
base salary, varies depending on the executive's duties and responsibilities.
For 2001, target awards ranged from 25% of base salary to 145% of base salary
for the CEO.
Despite significant achievements during 2001, Kodak's financial performance for
the year was mixed. The continuing weakness in the global economy along with
the tragic events of September 11th and their continuing aftermath posed
challenges for Kodak and other global companies that were unparalleled in
recent decades. The Performance Graph on page 30 shows the overall impact on
both Kodak and others. These factors significantly contributed to the Company's
inability to achieve the plan's EVA-based 2001 performance goal established by
the Committee at the start of the year.
In contrast, the Company dramatically improved 2001 cash flow, prior to
dividends and other financing activities, over 2000 by more than $800 million
to a total of approximately $1 billion. The Company reduced inventories, net
receivables and capital spending by $581, $316 and $202 million, respectively,
as compared to 2000. The Company continues to be substantially on target with
its restructuring commitments, including $450 million of annual cost savings
and headcount reductions of approximately 7,200 employees. The Company
realigned its organizational structure along a new business model that matches
the way its customers buy.
Looking at these achievements along with the extraordinary environment of 2001,
the Committee adjusted the plan's performance goal through its discretion under
the plan. As a result, the plan's performance formula created an award pool
that funded payout at a 40% of target level.
The plan's award pool for the year will be the smallest in any of the previous
five years. When evaluating Company 2001 performance against that achieved in
each of these years, the Committee believes the payout is in line with the
plan's awards for the prior years.
The Committee believes that senior management should be held more accountable
for the Company's performance, whether that performance is above or below
expectations, than other executives of the Company. For this reason, the
Committee awarded the named executive officers the awards listed in the Summary
Compensation Table which, with the exception of Ms. Russo's award, are on
average 35% of target. Ms. Russo's award of $675,000 was required under the
terms of her agreement with the Company.
To ensure that all plan awards are fully deductible for U.S. federal income tax
purposes, the plan states that any discretion exercised by the Committee
regarding the plan's performance goal after the first 90 days of the year
cannot affect the payment of awards to the named executive officers. Given the
unforeseen events and conditions of this year, it was not possible for the
Committee to act within this timeframe. To ameliorate this result, the
Committee chose to grant the named executive officers their awards as a
discretionary bonus. To the extent these bonuses are not deductible by the
Company for U.S. federal income tax purposes, their payment will be delayed
until after termination of employment to preserve their deductibility.
26
Long-Term Incentives: Long-term compensation is delivered through stock
options, the Performance Stock Program and restricted stock.
The Company maintains a management stock option program. Stock options
encourage the Company's executives to act as owners, which helps to further
align their interests with the interests of the Company's shareholders. The
Committee generally grants stock options once a year under this program. The
options are priced at 100% of the fair market value of the Company's stock on
the day of grant. The Company bases target grant ranges on the median survey
values of the companies it surveys. Grants to individual executives are then
adjusted based in large part on the executive's performance potential.
To coordinate the timing of the management stock option grant with the annual
management appraisal process, awards will now be made in the fourth quarter,
rather than the first quarter, of the year. As a result of this change, two
grants under the program were made in 2001; one in January 2001 and the other
in November 2001. Assuming the Committee approves a grant for 2002, the awards
will be made in the fourth quarter of 2002.
The Performance Stock Program places a portion of our top executives' long-term
compensation at risk. The program measures performance over a three year period
based on the Company's total shareholder return relative to those companies
within the Standard & Poor's 500 Composite Price Index. A description of the
program, as well as the threshold, target and maximum awards for the named
executive officers appears on page 20. Based on the Company's performance over
the three-year performance cycle ending in 2001, no awards were paid for this
cycle.
From time to time, the Company grants restricted stock awards to selected
executives. These awards are generally made to either (1) induce the recipients
to remain with or to become employed by the Company; or (2) recognize
exceptional performance.
Share Ownership Program
The interests of the Company's executives should be inseparable from those of
its shareholders. The Company aims to link these interests by encouraging stock
ownership on the part of its executives.
One program designed to meet this objective is the Company's share ownership
program. Under this program, each senior executive is required to own stock of
the Company worth a multiple of his or her base salary. These multiples range
from one times base salary to four times base salary for the CEO.
To assist the program's participants in meeting their ownership requirements,
the Company permitted them to receive their January 2001 stock option grant in
the form of restricted units of the Company's common stock. For purposes of
determining the number of units to be granted in place of the stock option
award, the options were valued at 90% of their then Black-Scholes value. As
shown in the Summary Compensation Table on page 17, all of the named executive
officers elected to receive restricted stock units.
Today, the program applies to approximately 20 senior executives, all of whom
have either satisfied or are on track to satisfy the requirements.
Stock Option Exchange Program
Upon recommendation of the Committee, the Board of Directors approved the Stock
Option Exchange Program. The Company's shareholders subsequently approved the
plan amendments necessary to implement this program at their Special Meeting on
January 25, 2002. Under this program, all of the Company's
27
employees, excluding its five most senior executive officers, were given a
one-time opportunity to exchange their current options for a proportionately
fewer options at a new exercise price. The new exercise price will equal the
mean between the high and low trading price at which the Company's common stock
trades on the New York Stock Exchange on the date the new options are granted,
which is expected to be on or after August 26, 2002.
Chief Executive Officer Compensation
When Mr. Carp was named Chief Executive Officer, the Company entered into an
agreement with Mr. Carp concerning his compensation. The terms of this
agreement are described on page 21. Below is a description of Mr. Carp's
compensation for 2001.
Base Salary: Mr. Carp received a base salary of $1,000,000 as required under
his agreement with the Company.
Short-Term Variable Pay: Given the Company's mixed financial results and the
extraordinary environment of 2001, the Committee, for the reason previously
described, awarded Mr. Carp a discretionary bonus equal to 35% of his target
award under the plan. To preserve the Company's deductibility of this payment
for U.S. income tax purposes, the payment will be delayed until after Mr. Carp
retires from the Company. The amount of the bonus is listed in the Summary
Compensation Table on page 17.
Stock Options: In January 2001, the Committee awarded Mr. Carp an award of
140,000 shares under the Company's management stock option program. As
described earlier, Mr. Carp elected to receive this award in the form of
restricted stock units.
Due to the change in timing of the Company's awards under its management stock
option program from the first quarter to the last quarter of the year, Mr. Carp
also received a grant of stock options to purchase 250,000 shares in November
2002. This award was approved by the Committee based on its review of benchmark
data and assessment of the contributions Mr. Carp has made, and continues to
make, to the Company. In particular, the Committee noted the size of Mr. Carp's
award was well within the level of awards made to his peers.
Performance Stock Program: Based on the Company's financial performance over
the three-year period ending in 2001, Mr. Carp did not receive an award for the
1999-2001 performance cycle.
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 leadership and development strategies. These are
designed to provide leaders capable of creating effective organizations and
executing business strategies that will drive the success of the Company. In
addition, the Committee reviewed diversity activities and goals as part of the
Company's diversity program.
Company Policy on Qualifying Compensation
Under Section 162(m) of the Internal Revenue Code, the Company may not deduct
certain forms of compensation in excess of $1,000,000 paid to any of the named
executive officers that are employed by the Company at yearend. The Committee
believes that it is generally in the Company's best interests to comply with
Section 162(m). The Committee also feels, however, that there may be
circumstances in which the Company's interests are best served by maintaining
flexibility whether or not compensation is fully deductible under Section
162(m).
Richard S. Braddock, Chairman
Alice F. Emerson
Durk I. Jager
Hector de J. Ruiz
28
REPORT OF THE AUDIT COMMITTEE
The Audit Committee (the Committee) is composed of independent directors and
operates under a written charter adopted by the Committee and the Board. A copy
of the Committee's charter was filed with the 2001 Proxy Statement. The members
of the Committee are Paul E. Gray (Chairman), Martha Layne Collins, Timothy M.
Donahue, Hector de J. Ruiz and Richard A. Zimmerman.
Management has the primary responsibility for the Company's financial
statements and the reporting process, including the system of internal
controls. PricewaterhouseCoopers LLP, the independent accountants for the
Company, are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted
auditing standards and to issue a report thereon. The Committee's
responsibility is to monitor these processes.
In this context, the Committee has met and held discussions with management and
the independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States, and the
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The Committee discussed with the
independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 "Communication With Audit Committees".
The independent accountants provided to the Committee the written disclosures
required by the Independence Standards Board Standard No.1 "Independence
Discussion With Audit Committees". The Committee discussed with the accountants
the accountants' independence.
The Committee discussed with the Company's internal auditors and independent
accountants the plans for their respective audits. The Committee met with the
internal auditors and independent accountants, with and without management
present, and discussed the results of their examinations, their evaluations of
the Company's internal controls, and the quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended that the Board approve the audited financial statements for
inclusion in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, and the Board accepted the Committee's recommendation.
The following fees were paid to PricewaterhouseCoopers LLP for services
rendered in 2001:
Audit Fees: $4.8 million
Financial Systems Design and Implementation Fees: $1.0 million
All Other Fees: $7.9 million
All other fees presented above primarily comprise amounts paid in connection
with tax services and due diligence in connection with contemplated mergers and
acquisitions.
The Committee has reviewed the above fees for non-audit services and believes
such fees are compatible with the independent accountants' independence.
The Committee recommended to the Board, subject to shareholder ratification,
the election of PricewaterhouseCoopers LLP as the Company's independent
accountants.
Paul E. Gray, Chairman
Martha Layne Collins
Timothy M. Donahue
Hector de J. Ruiz
Richard A. Zimmerman
29
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, 1996, plus assumed reinvested dividends.
[CHART]
EK S&P 500 DJIA
12/31/1996 100.0 100.0 100.0
12/31/1997 77.7 133.1 124.8
12/31/1998 94.6 170.8 147.2
12/31/1999 89.3 206.5 187.0
12/31/2000 55.5 187.9 178.2
12/31/2001 44.0 165.6 168.5
The graph assumes that $100 was invested on December 31, 1996, 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 and Assistant General Counsel
Eastman Kodak Company
March 20, 2002
30
EASTMAN KODAK COMPANY
2002 ANNUAL MEETING
Theater on the Ridge
200 Ridge Road West
Rochester, NY
[MAP]
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.
Directions to Lot 42: From the West - Take Ridge Road (Rt. 104) to Woodside
Street. Turn left onto Woodside Street, then right on Eastman Avenue, and make a
quick left turn into Lot 42. From the East - take Route 104 and stay in the
right lane on the Veterans' Memorial Bridge onto Maplewood Drive. Stay on
Maplewood Drive crossing Lake Avenue onto Eastman Avenue and turn right at the
traffic light into Lot 42.
Note: At the time of the Annual Meeting, Eastman Avenue Eastbound from Dewey
Avenue will be closed due to a sewer project.
[LOGO] www.kodak.com
Eastman Kodak Company 343 State Street Rochester, New York 14650
Kodak
Share Moments. Share Life. /TM/
This proxy statement was printed on recyclable paper.
CC5-2 2002 Cat No. 8159766
NOTICE OF THE 2002 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Eastman Kodak Company will be held on
Wednesday, May 8, 2002, at 10:00 AM, at the Theater on the Ridge, 200 Ridge Road
West, Rochester, NY.
There are three proposals to be voted on at the Meeting:
1. Election of four Class III directors for a term of three years: Richard S.
Braddock, Daniel A. Carp, Durk I. Jager, and Debra L. Lee; and two Class I
directors for a term of one year: Timothy M. Donahue and Delano E. Lewis.
2. Ratification of election of PricewaterhouseCoopers LLP as independent
accountants.
3. Shareholder proposal requesting additional environmental disclosure.
The Board of Directors recommends a vote FOR items 1 and 2 and AGAINST item 3.
If you were a shareholder of record at the close of business on March 11, 2002,
you are entitled to vote at the Annual Meeting.
If you have any questions about the Meeting, please contact the Coordinator,
Shareholder Services, Eastman Kodak Company, 343 State St., Rochester, NY
14650-0211, (585) 724-5492.
The Theater on the Ridge is handicap accessible. If you require special
assistance, call the Coordinator, Shareholder Services.
By Order of the Board of Directors
/s/ Joyce P. Haag
Joyce P. Haag, Secretary and Assistant General Counsel
Eastman Kodak Company, March 20, 2002
--------------------------------------------------------------------------------
(Please detach Proxy Card at perforation.)
[LOGO]
EASTMAN KODAK COMPANY
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Daniel A. Carp and Joyce P. Haag, and each of
them, as Proxies with full power of substitution, to vote, as designated on the
reverse side, for director substitutes if any nominee becomes unavailable, and
in their discretion, on matters properly brought before the Meeting and on
matters incident to the conduct of the Meeting, all of the shares of common
stock of Eastman Kodak Company which the undersigned has power to vote at the
Annual Meeting of Shareholders to be held on May 8, 2002, or any adjournment
thereof.
NOMINEES FOR DIRECTOR: Class III: Richard S. Braddock, Daniel A. Carp, Durk I.
Jager, and Debra L. Lee
Class I: Timothy M. Donahue and Delano E. Lewis
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 SHAREHOLDER PROPOSAL.
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 requesting additional environmental
disclosure.
(CONTINUED, and To Be Signed and Dated on the REVERSE SIDE)
SEE REVERSE SIDE
[X] Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR Items 1 and 2 and AGAINST Item 3
1. Election of Directors - FOR WITHHOLD AUTHORITY
(01) Richard S. Braddock [ ] [ ]
(02) Daniel A. Carp
(03) Durk I. Jager
(04) Debra L. Lee
(05) Timothy M. Donahue
(06) Delano E. Lewis
--------------------------------------------------------------------------------
To withhold authority to vote for any particular nominee(s), write the name(s)
above.
2. Ratification of Election of Independent Accountants
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Shareholder proposal requesting additional environmental disclosure
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
I plan to attend the Annual Meeting. [ ]
I plan to bring a guest. [ ]
When completed, promptly forward this card to: Proxy Services
EquiServe
P.O. Box 43042
Providence, RI
02940-5070
Signature(s) Date
---------------------------------------- ------------------------
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.