Kodak Wants to Use Bonuses to Retain Workers

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Date: Tuesday April 10, 2012 08:41:19 am
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    Kodak Wants to Use Bonuses to Retain Workers

    Kodak wants plan approved to keep specific employees
    Kodak is handing out big bonuses, but only to a select few *key* employees, some as high as 50 percent of a person’s base salary.

    Kodak calls this an employee continuity plan, essentially, giving an incentive to key employees in key positions, so they won’t jump ship to another company.

    And for top executives, most bonuses would be equal to 35% of their base salary, up to a maximum of 50%.

    The bonuses total $13.5 million for about 300 Kodak employees. Of that, the top 120 management level employees worldwide would get $8.5 million.

    George Conboy, President of Brighton Securities, says, “This is not that uncommon. They do need to keep people in important jobs. For Kodak to emerge from bankruptcy they need to become profitable. To become profitable, they need good employees. And to keep those good employees, they need to pay them well. But, one of the problems with Kodak in bankruptcy is, just when you thought employee morale couldn’t get any lower, the idea that they fired the guy to the right of you and their giving a bonus to the guy to the left of you, and you go back to work isn’t sitting too well with a lot of the line folks at Kodak.”

    The Kodak Retirees Association will not fight the bonuses. Kodak retirees just won a victory in the company’s bankruptcy proceedings when Kodak announced it won’t cut benefits as first announced.

    Bob Volpe, Kodak Retirees Association President, said,” You know, the company has to do what it needs to do to be competitive and to try to keep the people it thinks make a difference. So if that’s an appropriate thing for Kodak to be competitive and make the company successful, having a successful Kodak is good for retirees as well.”

    Profits from Kodak’s foreign subsidiaries are not a part of the U.S. bankruptcy proceedings. By some accounts, Kodak has $800-million in cash sitting in China – money they can’t bring here without tax penalties. Conboy says it’s an issue faced by most major U.S. companies.

    Conboy said, “So while it’s ironic that this pool of cash sits offshore when it’s needed here, rules, regulations and structure of operating a big multinational company compel Kodak to keep that money where it is.”

    According to the bankruptcy filing, Kodak used two criteria for the retention bonuses: critical need based on skills and/or personal leadership capabilities and the difficulty of replacing the person with somebody either inside or outside the company.

    As for other Kodak employees, the company says they deserve but “due to the limited funds available, the company is forced to select only a limited number of participants.”The bankruptcy court is scheduled to hear this request on April 18. Then it’s up to the judge.

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