Eastman Kodak is seeking to redefine the word ‘success’ by paying its top executives bonuses for achieving a 30-cents-in-the-dollar payment to unsecured creditors.
Kodak has asked a US Bankruptcy Court for permission to pay bonuses to 15 of its top executives – at the same time taking the hatchet to those in middle management positions.
If Kodak achieves a full payout to unsecured creditors, the bonus to CEO Antonio Perez, who has managed the downward direction of Kodak for the past six years, doubles! Under Perez, Eastman Kodak lost 88 percent of its market value last year, before seeking bankrupcty protection.
Kodak entered Chapter 11 bankruptcy protection in January this year. The company has now filed a motion with the bankruptcy court to implement the ‘Excel Incentive Program’ – a term which, in the context, would fit well into George Orwell’s dystopian novel, 1984.
Under this scheme, top executives including Mr Perez, would be paid a total of up to US$17.6 million in cash and deferred stock. Perez would be eligible for a maximum bonus payout – in addition to his multi-million dollar salary – of US$4.4 million. The scheme allows participants to earn up to 200 percent of their ‘target award’ depending on the level of payout to unsecured creditors.
Among those in the ‘unsecured creditors’ category are Eastman Kodak employees, as well as trade creditors. Kodak Australasia is not part of the bankruptcy move.
In order to earn their target award, the payout to creditors must be in excess of 30 cents in the dollar; the bonus rises to a maximum of 200 percent of the target award if Kodak pays all its bills to all creditors.
‘This really makes me sick – from 900 stores in 2005 to 62 in 2012 [in Austrralia], how many people have perished from the bad decisions of this executive?’ asked Garrett Rooney, T3C (Tamworth Colour Copy), a long-time and loyal Australian Kodak customer.
‘It used to be that there was a symbiotic relationship between Kodak Express stores and Kodak. We seem to have gone from that, to parasitic. No wonder more and more people are looking at Kodak as just another supplier with no preference.
‘Reality for these people is a show on TV with Ozzie or someone in it!’
Kodak Australia declined to comment when approached by Australian printing trade website, Proprint.
The filing follows the leaking of a memo from Perez published in the Rochester Business Journal, signalling more carnage among middle managers.
The memo outlines yet another new re-arrangement of the deck chairs, with Kodak split into three divisions: Consumer; Digital Printing and Enterprise; and Graphics, Entertainment and Commercial Films.