Kodak, Under Bankruptcy Protection, Wants To Hand Out $13.5M In Bonuses

BUFFALO, N.Y. — Eastman Kodak Co. is seeking permission to pay about 300 executives and other employees a total of $13.5 million in bonuses to persuade them to stay with the company as it reorganizes under bankruptcy protection.

The Rochester-based photography company said the targeted employees have knowledge and skills critical to help the business emerge from Chapter 11 and would be difficult to replace if they left to pursue other offers. They include 119 middle managers who would share $8.5 million of the sum.

Also this week, Kodak told retirees it has withdrawn for now its motion to end supplemental health care benefits for about 16,000 Medicare-eligible retirees. The company will instead create a retirees committee to examine the issues of medical and survivor benefits.

"Once the ... committee is formed, we will take another look at what is the best approach to address our legacy retiree costs," Kodak said in a letter dated Wednesday.

The request for bonuses was included in an employee continuity plan outlined by Kodak in a U.S. Bankruptcy Court filing in New York this week.

The 119 managers identified as "Group 1," whose names the filing said are "sensitive and highly confidential," would receive bonuses equivalent to 35 to 50 percent of their base salaries. The roughly 200 members of "Group 2" would share about $5 million, each receiving 25 percent or less of the base salary.

"Absent employee continuity, the debtors' business operations would be compromised, jeopardizing their restructuring efforts and significantly reducing the likelihood that the debtors will emerge successfully from Chapter 11," Kodak said in the filing.

Although many more of the company's 7,600 employees have valuable skills, a lack of funds prevents additional bonuses, the filing said.

Kodak, founded in 1880, began bankruptcy proceedings in January after being hurt first by Japanese competition and then by its inability to keep pace with the shift from film to digital technology over the past decade. It is required under its bankruptcy financing terms to produce a reorganization plan by Feb. 15, 2013.

Many in line to receive bonuses have seen their workloads increase while taking what amount to significant pay cuts, the court filing said. That's because some of their compensation was tied to Kodak's performance, and no new long-term incentives are being granted during bankruptcy proceedings.

"As a result, offers from (Kodak's) competitors or from companies in other industries seeking talented employees may seem particularly attractive," the motion said.

Retirees, meantime, praised Kodak's motion to form a retirees committee after seeking formation of such a panel in a motion filed in March. The Eastman Kodak Retirees Association, known as EKRA, said it would submit the names of about 50 retirees to be considered for appointment by the U.S. trustee.

"These decisions by Kodak give retirees a chance to directly interact with Kodak to try to find win/win solutions for the resolution of all of our health and survivor benefits," said EKRA Vice President Art Roberts.

Comments

[TheDarkSideOfTheForce]

07:50 PM on 04/19/2012

in the court shoes, I would ask to fire everybody who is on this list, and every manager
above. Only this will cure the company. They can get the 13.5 Mil, the ROI will not take long.

[y-abebe]

01:39 PM on 04/09/2012

i call it lootin' in time of chaos and the people who do that thieves and the law makers who devise the mechanism protect them collaborators.

[IsmaelPerez4]

11:41 PM on 04/08/2012

Some of these "executives" have probably caused Kodak's failure. Nice move; definitively a well deserved award by their standard.

[SoylentGreenIsPeople]

10:39 AM on 04/08/2012

The U.S. economy simply is not "free market" in any way or fashion. It suffers the unfortunate misnomer "crony capitalism" which is more properly called "corporate socialism". Profits are privatized by the elites, losses are socialized by the taxpayers. As long as the government can be bought, we will have the 0.01% in charge.

[y-abebe]

01:40 PM on 04/09/2012

what about corporate democracy.

[Flight]

09:24 PM on 04/07/2012

That's obscene to pay that kind of money to 'keep talent' on a ship that's been sinking for years -- thanks to inept management who stood by and saw other companies lead the digital photo revolution. I'm sure Mr. Eastman has turned a few flips in his grave over the years.

[builderman55]

11:38 AM on 04/07/2012

As I've said before, there IS a culture of entitlement and it's not just among the lower classes. In corporate America, all the normal laws of capitalism are suspended at will...

[rkt9]

07:16 AM on 04/07/2012

I find it ironic that a startup solar company leasing one of Kodak's labs in Rochester, needs just 15 million to develop roll to roll tandem solar PV film. They already have the patented technology, and kodak has the equipment to produce it, sitting idle. This could bring Kodak back to profitability. Instead they are going to give bonuses. If the middle managers really wanted to save their jobs, and the jobs of countless more, they would all donate their bonsuses towards funding the solar roll to roll technology.

[estimatorone]

12:01 AM on 04/07/2012

Why should this be a surprise? If you look at most companies in
bankruptcy, the officers of the company are the least affected by
it. In fact, many times, their salaries/bonuses/bennies are protected.
Look at the financial meltdown. One of the biggest issues the banks
had was that their officers, and "top performers" did not sacrifice any
part of their bonuses. Even after a public outcry, they were given
very substantial bonuses which were paid for by the bail outs we
gave. What makes Kodak any different?

[eulerckt]

11:54 PM on 04/06/2012

Ahhhhhhhhh America. The land were failure is an option.

[MeinNH]

09:09 AM on 04/07/2012

and there is lots of profit for the CEO's...

[werndone]

11:53 PM on 04/06/2012

U got 2 b kidding? This is 2 f--ked up........... This is a real Kodak moment! DUUUH

[victorzeller]

11:43 PM on 04/06/2012

Kodak no bailout for you. You turned yourself into a dinosaur. Now live with it.

[Edwin Keever Jr]

11:12 PM on 04/06/2012

Kodak was a good company until the digital camers came about. The digital camera was one of the mane problems with Kodak, film labs around the country and other companies such as Greytag.

[Thomas VonBerge]

10:43 PM on 04/06/2012

Now that is a Kodak moment.

[bonypix]

10:26 PM on 04/06/2012

Now we know why they have temporarily backed off on the retirees healthcare benefits. But bonuses for Management? Isn't that what got Kodak in big trouble in the first place? They'll pay them up to 50% of their pay to stay while getting ready to lay off another 91 workers. George Eastman is rolling over in his grave at the turn this company has taken in the last decades.

[mebecarl]

10:04 PM on 04/06/2012

Don't be upset, people. It's the American way, and nobody's going to stop them from passing out bonuses.