Home / Opinion / Kodak’s proposed bonus plan is a bad idea, most say

Kodak’s proposed bonus plan is a bad idea, most say

Nearly 90 percent of respondents to this week’s RBJ Daily Report Snap Poll say Eastman Kodak Co.’s proposal to pay performance-based incentives to 15 senior leaders is a bad idea.

Kodak filed a motion last week in U.S. Bankruptcy Court, seeking authority to pay the performance-based incentives outlined in its Emergence Performance Plan; together, they could total more than $17 million.

The top executives and managers—including CEO Antonio Perez—would be paid in cash and deferred stock if they succeed in restructuring the company and unsecured creditors recover 10 percent to 100 percent of what they are owed. If these creditors receive all they are owed, Perez, for example, would get more than $4 million in incentive compensation.

Many companies reorganizing under Chapter 11 have asked bankruptcy judges to approve such incentive plans as a way to keep key executives on board and tie them directly to the success of the restructuring. Kodak’s motion notes that the creditors’ committee backs the proposal.

Critics say, however, that top leaders at the helm when a company went into bankruptcy should not be singled out for bonuses tied largely to paying off debts.

Kodak’s motion comes as its critically important auction of two portfolios of digital patents approaches.

Some 72 percent of respondents said they think it is unlikely that Kodak will achieve its goal of emerging from bankruptcy as a profitable and sustainable business, including 18 percent who said it’s not at all likely. When the same question was posed soon after Kodak’s Chapter 11 filing in January, 53 percent of respondents answered “unlikely,” including 12 percent who said it’s not at all likely.

Just 2 percent now are very optimistic about Kodak’s restructuring, down from 13 percent in January.

Nearly 800 readers participated in this week’s poll, which was conducted July 16 and 17.

In your opinion, is Kodak’s proposal to pay performance-based incentives to 15 key senior leaders a good idea or a bad idea?
Good idea: 11%
Bad idea: 89%

In your opinion, how likely is it that Kodak will emerge from Chapter 11 a profitable and sustainable business?
Very likely: 2%
Somewhat likely: 26%
Not very likely: 54%
Not at all likely: 18%


As a small-business owner who worked with Kodak, I’m very dismayed about the bankruptcy. I may end up losing more than $50,000 due to purchases they made before filing for protection. I’m angry about any bonuses and hope they do not happen.
—Trish Ruffino

The Kodak executives led the company into bankruptcy and kept their jobs while at the same time thousands of employees lost their jobs. Then, in order to dig the company out of bankruptcy, the creditors’ committee backs the proposal of paying the executives obscene bonuses to dig their way out of their own mess? Would the 15 executives be able to do that without the help of the other employees who still remain there, or the ones who left their blood on the front steps on the way out the door? Absolutely not! So where is the bonus for all of those people who have also worked and sacrificed to try to save the company?
—Wendy Castiglione

I hate to say it, but this is what the Occupy movement was all about. The Kodak board and management team have been an abject failure in every quantifiable measure. For the board to now reward management with huge bonuses gives fodder to the critics of American corporate culture that takes care of its own regardless of performance.
—Bob Sarbane

Let’s see: Step 1: Wreck the company. Step 2: Hang around through bankruptcy. Step 3: Get lots of money. So if I do an awful job but hang around while the smoldering rubble burns out, I get money, lots of money? Sign me up!
—D. Ehrich, retired

The current executives at Kodak were not capable of keeping the company out of bankruptcy. Now they need to get the company out of bankruptcy or leave. They should not be rewarded for not doing their jobs.
—Doug Flood

Absolutely no way do you give anyone a bonus when you are in and trying to come out of Chapter 11. These are the same guys who got them there to begin with. They need to put every dollar away for reserve, because it isn’t going to be a slam dunk once they emerge from Chapter 11. Not until the company is up on its feet with a long-term, proven profit track record do you even consider paying any bonuses. They have laid off thousands of people, and those who are left there work day to day, worrying if they will have a job tomorrow. It seems like the workers in the plant and offices are the ones making all of the sacrifices, and the management is laughing all the way to the bank. What are they thinking?
—Grant Osman

Is it not the fault of the top executives the company went into Chapter 11? If anyone should get a bonus, it should be the non-exempt employees. They are the ones who suffer by staying.
—Ron Borden

Why award those who have already been rewarded for driving the company into bankruptcy, during which time they still collected large bonuses while their divisions were underperforming? My opinion is they already have received a bonus by still having a job while thousands lost theirs.
—G. Keenan, Xerox Corp.

It’s ludicrous to believe that the people who had a large part in driving the company into bankruptcy these past years should now be rewarded to try and save this dysfunctional company from its inevitable demise. But that seems to be the corporate game plan for many larger corporations. Look at the banks: They drove the country to the financial cliff, were bailed out with taxpayer funds and then gave themselves huge bonuses. Kodak needs fresh ideas and a fresh start with new faces, not retread ideas from old faces with outsize egos who are overcompensated, overrated and mostly incompetent.
—Michael Thornton, Rochester

About a year ago, I bought some digital inkjet paper at Staples manufactured by Kodak and overseen by these same people who believe they deserve the opportunity to cut up 17 million between themselves. They (i.e. Kodak) promised me a $13.00 per package rebate making the paper a $1 purchase. The paper had an inherent green tint and no amount of tweaking color balance provided the customer with an acceptable print, before I could go through one package, I received multiple complaints and I decided due to the poor quality of the product I would throw away the rest of the paper and change back to Espon papers. Now, more than 8 or more months later, I have not received my rebate, and regretfully I still receive complaints about that paper’s quality. I would ask before they divide up the 17 million if they could see to it and mail me my 26.00 that they promised me in a rebate. I’ll pay for the postage if they can’t afford it.
—Joe Wierzbowski Plymouth Photo Studio

Are you kidding me? This is exactly the kind of thinking that got Eastman Kodak into this problem. Bonuses, perks, golden parachutes, exorbitant pay for top and middle managers for not performing, and a board of directors without a backbone all led to the company’s demise. Do you think you would get a bonus if you screwed up anything the way they did? We would be fired! How anyone can think of rewarding poor performance is ridiculous. I know it will only be paid if they successfully emerge from bankruptcy. Guess what, you’re asking to reward the same people that created the problem. That’s nuts. I also think that giving a bonus to the middle management, those highly skilled people they wanted to retain was also nuts. Again you rewarded those people who created the problem. When is there going to be some sense of normalcy and good judgment in business affairs for all companies and with the bankruptcy court? This company’s management should not be rewarded in any way but rather put under further scrutiny and perhaps even managed by some sort of receiver who is not as lenient as the current court. All of the top managers and the board should have their salaries drastically reduced and paid in Kodak stock. Then if they fail, they get what they deserve as well as if they succeed. If they emerge from bankruptcy then the shareholders should demand the resignation of the top managers and the board members. I don’t think they will ever again be a viable company. They’re in the home printer market too late, they can’t sell their high speed printers, they are selling everything for cash, and are disillusioned to think their patent portfolio is worth what they think. The only viable Eastman Kodak organization left is Eastman Chemical.
—Bob Stein

Not only is the bonus a bad idea but these execs that drove Kodak into the ground should repay the company any past bonuses. The company’s stockholders and tens of thousands of laid-off employees, who’ve all suffered from the executives’ actions, deserve a refund. Antonio should be ashamed of himself for asking.
—Joanne Greene-Blose, The Project Solvers of America Inc.

They should also commit to an incentive plan for all other employees that is equal to two times the executives’ total. This plan should distribute an equal amount to every full time employee on the same day the executives get paid (if they get paid).
—D. Kennedy, Webster

It defies all sense of fairness to pay the people who bankrupted the company, laid off thousands of employees and then pay them performance bonus for sticking around. Talk about lack of integrity!
—J.A. DePaolis, Penfield

Sad, sad state of affairs—however Eastman Kodak management fostered the environment with high wages, bonuses, etc. while sacrificing innovation in product development and delivery.
—J. Becker

At a minimum, if the suppliers get 30 percent, the management should get only 30 percent of a bonus. But as they ran the ship aground, that fact that it is now (barely) afloat does not mean they should benefit.
—J. Nelson, Williamson

The key to me is that Antonio Perez was in charge when the company went in to bankruptcy. He made repeated statements that all was well and even sued suppliers to force them to continue supplying Kodak. He now wants a bonus for not paying Kodak’s obligations. That just isn’t right.
—Eric Snavely, Touchstone Technology

Bring in Bain Capital; let them chop the heads off the 15 "senior leaders" who were on watch while Kodak descended into bankruptcy. Nothing but rewards for failure.
—Al Kempf

Not only should the leaders at Kodak not get a bonus, they shouldn’t be in their jobs in the first place. How the leadership at Kodak has kept their jobs after mismanaging that company is beyond belief. What about the small businesses and employees that have lost money and/or their jobs over this bankruptcy? Just considering this is insulting to every person hurt by this debacle.
—David Wagner

In this job market, there are many qualified people out there who could do a better job for less. Why shortchange the vendors, who provided products in good faith, for the sake of overpaid executives who underperformed?
—Rich Mileo

These are the same executives who oversaw the selloff of some of the most profitable divisions like medical and chemical, and should have realized they could never be competitive in the digital space. In hindsight they should have sold off film and kept the rest. This bonus is a veiled attempt to split up what’s left. They should all be replaced with an outside management team who can hopefully find enough solid ground to save what’s left. Asking for a bonus is a farce.
—John Malvaso

CEO Antonio Perez and others were brought in to dismantle the profitable parts of the company and then they’re going to get a performance-based incentive on top of it all? Why don’t they tell us how much each exec have already made in incentives since they joined Kodak? If they do get it, I hope they all invest it with Bernie Madoff like the B&L execs did with their tens of millions incentives when they took the company private. There is some justice in the world!
—G. Palis

Until the ongoing bad decision making Kodak has been a victim of for the last few decades ends, the end of Kodak appears to be imminent. Paying the key senior executives a bonus is ludicrous! Aren’t these the same individuals who have been helping guide Kodak to the brink of destruction all along? Instead of laying off the people who actually perform the daily work on Kodak products; the company should have trimmed the fat at the top first. No more high paid CEOs with golden parachutes. Kodak needs to get back to the ideology and innovative thinking George Eastman had when he began the Eastman Kodak journey so long ago.
—L.S. Decker, MVP Health Care

Paying the people who ran a great company into the ground to stay seems crazy.
—Sig VanDamme

It is a slap in the face to the thousands of loyal Kodakers who have lost their jobs to reward these bunglers with a bonus for emerging from bankruptcy. They should be ashamed of themselves for even asking for a bonus. They certainly don’t deserve it.
—Frances Reese

So the company is sinking like a perforated ship due to extremely poor decisions during the tenure of the “key leaders,” they are actually IN bankruptcy due to the decisions of the “key leaders,” and now when they put some thatch in the holes of the ship, they can earn "performance bonuses"? Whiskey Tango Foxtrot?
—David Muench, Pittsford

The Kodak bonuses are a joke! These execs are the same execs that have put Kodak in the position it’s in right now. If you or I performed the way they did/do, we’d be unemployed!
—Rich Calabrese Jr.

Give executives of a bankrupt company huge cash bonuses if the vendors get paid? This is fiscal and moral insanity. Insuring adequate cash flow to pay employees and vendors is a basic part of their job for which they are paid a substantial salary. Another Kodak kick in the posterior to the employees, vendors, shareholders and Rochester.
—Michael Shacket

The audacity of this motion is mind-boggling. How out of touch are these guys? Perez was brought in 2003 to "save" Kodak from itself. Under his leadership the share price has fallen from $25 to $0.25, thousands of people have lost their livelihoods, retirees have lost benefits, and a great American success story has become an MBA case study in how to run a billion dollar company into bankruptcy. Really.
—Duane Piede, North Coast Energy Associates

Bonuses? Really? Was the pay for Perez and the other executives reduced when Kodak went into bankruptcy? I doubt it. Perhaps he and the rest of them should’ve been fired for going into bankruptcy in the first place. The executives obviously didn’t do their jobs well enough to deserve anything. However, I suspect this is all a ploy by them to later refuse or be denied the bonuses so that it deflects how much they’ve earned during this demise, not to mention the golden parachutes they certainly aspire to receive after they leave or the company ultimately folds. I’ve heard the argument that these bonuses are so that Kodak can keep and attract "qualified" executives. First of all, where would an executive whose company fell into bankruptcy go? And secondly, what would attract someone to come to a struggling if not doomed company? Oh yeah, undeserved salary, benefits and bonuses.
—Chuck Maloy, Rockingham Property Group

If the thoughts I’m having were translated into words … What I’m confused by is how management has been and is allowed to continue to stay on at Kodak. Any board of directors? Stockholders? Oversight? Regulations? Accountability? When will the charade end? The level of incompetence past, present and lack of vision for the future is stunning. Absofreakinlutely stunning. … I think in the future, when acknowledging these turbulent times, history will reflect on how tolerant we were to allow failure to be the acceptable norm during this era. How tolerance contributed to, if not was solely the cause of our troubles. Hopefully there will an emergence from accepting incompetence to an era of accountability. When management are done milking the Kodak cow dry, I wonder if they’ll pause for even a moment to reflect on the former greatness of the Eastman Kodak Co., the history, the legacy, the discoveries, the market share, the production capabilities, the technology, the property, the laboratories, the infrastructure, the workforce, the worldwide brand recognition and then realize the demise of this great industrial icon was on their watch, during their stewardship, under their direction. Two lifetimes to create, a couple of golden parachutes to destroy. It is obvious to even a novice to understand that they are not worthy of the reins handed over to them. The business plan is to demolish buildings, sell property, assets, intellectual property, and patents. Genius! It would be way too difficult to harness all of those complex assets and actually manage them into a successful venture. Why, people that could do that would be able to be compensated in the millions of dollars! The icing on the cake is the wanton display of greed. There should be shame and pink slips, not bonuses.
—Lou Romano

These people are those responsible for the downfall of Kodak. Why would you reward anyone for being a total failure? They all should have been fired years ago along with the board of directors.
—Harry Caruso, Caruso Asset Management 

Kodak’s executives are already being paid to do what is necessary to get out of Chapter 11. Why give them double-pay? They caused this predicament! Their pay is that they still have a job (how often has that been said to me and others at Kodak!). Future profitable and sustainable business is not at all likely. Kodak’s profitable and sustainable businesses were film products. Management has made absolutely no effort to keep this going. This business has no significant competitors, since digital is in its own niche. I presented the specific huge advantages of film imaging over digital since 1999. These are still valid. Around 2000 I got the financial information about Kodak and its digital competitors. Sony, HP and Microsoft together at that time together were $230 billion businesses, vs. Kodak’s $10 billion! I presented this in 2006 at the International Imaging Congress here in Rochester, and published the information at in the proceedings. Thus, it should have been known to Kodak’s management since the 1970s that they could not win in the digital imaging area. Considering otherwise is utter stupidity. CEO Carp publicly pronounced that he did not understand why Hollywood was still using film (there are excellent reasons) and that he would convert them to digital! No consideration to find out why Hollywood still wanted film! His heirs followed the same lines to kill their only chance to have a sustaining niche. Even now, Kodak management tries to “win” in areas where there are long-time highly effective competitors. If Kodak comes up with a profitable niche, these competitors will copy it, and compete Kodak kaput. With the Kodak leadership in the present and past 20 years, sadly, chances for a surviving Kodak are zero.
—Ingo H. Leubner

Why would you want to keep the key execs who drove the company into bankruptcy in the first place, much less pay them bonuses for selling off profitable items and patents. As usual the board of directors is not doing their job of due diligence.
—J.H. Peters, EK, retired

Antonio Perez and other top managers are already adequately compensated. Those executives who do not wish to stay on board have had since January to consider their options and make a decision. Paying of creditors is a moral obligation that goes with the territory of being a manager, not one to be rewarded or incentivized.
—Mary Lynn Vickers, owner, The Phantom Chef PCS

So the milking continues.
—Patrick Ho, Rochester Optical 

These "key executives" were instrumental in leading Kodak into bankruptcy, so they should not be paid to lead Kodak out of bankruptcy. As for fear they will leave if not paid a bonus, I believe there are many competent people who are available that could do as good or better job than these people. Giving them a bonus also insults all the Kodakers who have lost their jobs because of what these managers have done. There should be no room for bonuses in a bankruptcy proceeding. It is a crime what these and other senior executives before them have done to what at one time was a great company.
—Donald A. Dinero, TWI Learning Partnership

7/20/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.


  1. This is not Kindergarten. You don’t get a trophy for showing up.


    Hmmmmm! I wonder what the Bankrupt Judge was thinking?
    One might “follow the buck”? I wonder if KODAK’S upper execs read W. Isaacson’s book “STEVE JOBS”?

    Maybe the judge should hire Jesse Ventura? If a company can’t re-invent itself then “then the end is not the beginning” of this story!

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