• By
  • Jacqueline Palank
Associated Press/DAPD

Former Kodak employees who fear for their pensions and other benefits are urging a bankruptcy judge to think of them and not rubber-stamp $8.8 million in executive bonuses.



Kodak’s plan proposes to set aside $8.8 million in cash and deferred stock for 15 “key management employees,” including nine executives, deemed “essential” to Kodak’s ability to successfully restructure. What does Kodak consider a successful restructuring? The company must exit bankruptcy either under a standalone reorganization plan or the sale of its assets as a going concern, and it must pay unsecured creditors at least 30% of what they’re owed. (Creditor recoveries between 10% and 30% would still warrant bonuses, but they’d be less than $8.8 million.)

Pignataro, who says he is a Kodak retiree, wrote that he was “outraged” to learn that Kodak Chief Executive Antonio Perez would “even ask to be included” among the bonus recipients “after he led the company into bankruptcy.”

Perez’s expected bonus payment would be 200% of his base salary, according to Kodak. The CFO’s target bonus would be 178% of his salary, while the other managers’ bonuses would range from 16% to 206% of their salaries.

The bonuses, which Kodak announced earlier this month, carry the support of the official committee representing Kodak’s unsecured creditors. A Kodak spokesman said that the plan’s conditions are “more rigorous” than similar incentive plans and offer a chance for Kodak leaders to earn market-competitive compensation if and only if they can secure a meaningful payout for creditors.

Pignataro, of Naples, Fla., urged the judge to reject the plan outright. However, if the judge decides bonuses are warranted, he asked that a bonus plan exclude Perez and other top executives and that the bonuses be conditioned on Kodak paying unsecured creditors “at least 80%” of what they’re owed.

Quillen, who called himself a former Kodak employee in a letter dated July 16, questioned the need for bonuses to motivate Kodak’s leaders when they already have a duty to get as much money as possible out to creditors.

“Given the fiduciary obligations of the key management employees to maximize the value of Kodak’s bankrupt [sic] estate, the proposed financial incentives are unnecessary and redundant,” wrote Quillen, of Richmond, Va.

Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan is slated to consider the bonus plan Aug. 6.

Write to Jacqueline Palank at jacqueline.palank@dowjones.com.