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A stake in Kodak

Most companies these days want their employees to feel a sense of ownership in the business. Eastman Kodak Co. wants more.
The photo giant this week unveiled a plan that could make each of its 90,000 non-management employees one of the company’s owners.
Kodak said it will give each employee a one-time grant of options to buy 100 shares of the company’s stock. The shares, priced at the average selling price on April 2, would vest in two years.
Skeptics might say Kodak merely is trying to soothe employees whose morale has hit bottom as the company carries through on plans to lay off nearly 20,000 of their colleagues. No doubt Chairman and CEO George Fisher and other top executives want to lift employees’ spirits.
But if the goal is a superficial boost to morale, there are cheaper ways to do it.
Skeptics also might argue that the individual stock grants are minuscule compared to the options Mr. Fisher has received. Indeed, when Mr. Fisher last year exercised 300,000 options, reaping some $9 million in pretax dollars, he cashed in less than 10 percent of the options available to him at the time.
Criticism of the shift to stock options as a major component of executive compensation has grown in recent years. The practice at some companies to cut the exercise price when the stock’s value has failed to rise significantly–or even dropped–has been lambasted, and rightly so.
Dilution of the value of existing shares also is a concern. And, as some experts have asked, shouldn’t options be indexed to the market or a group of industry peers?
It’s important to remember, however, why stock-option grants became popular: to link pay to performance. When a stock’s value soars, every shareholder–not just the CEO–does well.
Kodak’s idea–one shared by a growing number of firms that are granting options to rank-and-file workers–is to give employees reason to adopt the shareholders’ perspective.
With expectations low following a series of negative announcements, some analysts think Kodak shares have the potential to rebound sharply.
Legions of employee shareholders could help make that happen–and profit when it does.
–Rochester Business Journal


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