Posts Tagged ‘Eastman Kodak Co.’

How CEOs earn their big bonuses

August 7, 2012

This just in from the Rochester Business Journal.

A federal judge in Manhattan on Monday cleared Eastman Kodak Co. to pay up to $4.5 million in bonuses to 12 top executives and senior managers, along with a onetime cash payment of up to $1.5 million to its co-president and chief operating officer, Dow Jones Newswires reported.

Kodak CEO Antonio Perez

U.S. Bankruptcy Judge Allan Gropper approved the continuation of the bonus programs, which Kodak put in place before its January bankruptcy filing, Dow Jones reported. Co-President and COO Laura Quatela can earn $600,000 to $1.5 million based on how much money Kodak raises in its auction of its digital patent portfolio and how quickly such a sale closes.

An auction of those digital patents is slated for this week and could raise upwards of $2 billion. The digital patent auction is viewed as critical to Kodak’s emergence from bankruptcy.

The $4.5 million in bonuses would go to Kodak insiders and executives, including Chairman and CEO Antonio Perez, Dow Jones reported.  THE BONUSES ARE TIED TO KODAK’S FINANCIAL PERFORMANCE(My emphasis added)

via Rochester Business Journal.

So Kodak’s top executives are getting bonuses based the company’s financial performance after the company has filed for bankruptcy.  I shudder to think what would have happened (he wrote sarcastically) if Kodak’s financial performance had been really bad.

I wonder what he advised

January 21, 2012

A year ago President Obama appointed Kodak CEO Antonio M. Perez to his Jobs and Competitiveness Council, whose mission is to advise how to promote job creation and economic growth.  According to Kodak’s web site, he still holds that position.

Kodak and the Rochester mentality

January 21, 2012

Rich Karlgaard of Forbes wote in the Wall Street Journal that Eastman Kodak Co. might not have failed if it hadn’t happened to be located here in Rochester, N.Y.

He said Kodak needed to be in a place where “success is the norm and innovation is built into the ecology.”  And he said Kodak CEOs did not make the bold and drastic decisions that were necessary because of excessive concern for the welfare of their employees and the community.

I heard stuff like this a lot when I was reporting on Kodak for the Democrat and Chronicle in the 1980s.  When Kodak started to falter, Wall Street analysts called for layoffs – the bigger, the better, in their view – and they complained about Kodak’s generous employee benefits and separation packages, which took money they thought rightfully belonged the stockholders.

It is true that Kodak’s operations were much more concentrated in a single city than almost every other major manufacturing employees.  I no longer have the figures on hand, but my recollection is that 40 percent of Kodak’s employees worked in the Rochester area.  Kodak accounted for one out of every eight jobs in the Rochester area, and one out of every three manufacturing jobs.  All of Kodak’s CEOs, from the death of George Eastman in 1932 to the hiring of George Fisher from Motorola in 1993, were promoted through the ranks and spent most of their careers in Rochester.  Kodak and Rochester were very much identified with each other.

During the 1980s, Kodak management was well aware, as Karlgaard noted, that the days of film photography were noted.  CEO Colby H. Chandler tried to incubate new enterprises within the corporate framework, but fostering start-ups within the framework of a larger corporation proved hard to do.  The new enterprises were neither self-reliant nor free of corporate independence.

Perhaps – who can say? – it would have been better for Kodak to launch its digital imaging business in a new location as a separate corporation, far from Rochester corporate headquarters.  Another Rochester-based company, Xerox Corp., did just that, and it didn’t work out.

In a deliberate effort to escape the Rochester mentality.  Xerox relocated its headquarters to Stamford, Conn., and its research laboratories to Palo Alto, Calif., so as not to be limited by the mentality of any one place.  Douglas K. Smith and Robert C. Alexander in their book, Fumbling the Future, wrote that scientists at Palo Alto Research Laboratories in effect invented the personal computer, but Xerox never capitalized on their invention.  Perhaps — who can say? —  if Xerox factories, research laboratories and headquarters had all been in the same place, the divisions of Xerox might have been able to work together to turn research innovations into marketable products.


Could Kodak have made it?

December 10, 2011

The financial markets are on a death watch for Eastman Kodak Co., whose dominant position in its markets once prompted an anti-trust suit by the U.S. government.  Was Kodak’s decline inevitable?  Michael Hiltzik, an economics columnist for the Los Angeles Times, wrote this week that the answer is probably “yes.”

Kodak executives didn’t always make the best decisions, he wrote, but Kodak’s basic problem was that its expertise in making photographic film didn’t transfer to digital photography, and even stand stand-alone digital cameras are giving way to i-phones and other electronic gadgets.

Kodak’s decline is of a different order from GM’s.  The latter still manufactures a product with a huge market demand; it just got sloppy and inefficient at turning out its cars and trucks.  That’s why the federal government, not to mention GM’s unions and other stakeholders, thought a dramatic restructuring might put it back on its feet.  (That it was a central player in an industry employing hundreds of thousands of Americans was part of the calculus too.)

Kodak, however, markets a process technology; and as the chemistry of film has yielded to digital electronics, consumer demand for Kodak’s traditional products has evaporated.  A similar transition afflicts newspapers, book publishers, movie studios, broadcasters and record labels today, but the issues for those industries are different yet.

Their business models are under pressure because they’re dependent on outdated distribution technologies; but their core products (information, entertainment) are still very much in demand.  So Kodak has faced a tougher challenge than automakers or content producers.


As I can confirm from my own experience in reporting on Kodak, it was not that Kodak management was unaware of the potential of electronic photography.  Hiltzik noted that Kodak scientists actually invented a digital camera back in 1976—a time when Kodak enjoyed a 90 percent share of the U.S. market for photographic film.  Under CEO Daniel Carp, Kodak achieved a No. 2 position in the digital photo market.  But Kodak didn’t make money in this market, because it didn’t have the experience and expertise of the electronics companies, and wasn’t able to acquire it fast enough.

A well-functioning free-market economy is an ecology in which many companies come into existence, some survive and flourish, a few seem to grow up to the sky, but all in time have to make way for new companies.  My home city of Rochester, N.Y., has been a center of flour milling, of horticulture, of textile manufacturing and of optics, photography and xerography.  The question for us, as for Americans elsewhere, is not how we can hold on to past glories, but what new things we can create that will equal the glories of the past.

Click on Kodak’s long fade to black for Michael Hiltzik’s complete article.

Click on The Rise and Fall of Eastman Kodak for a differing view by a Wall Street analyst.

The Kodak moment has come and gone

November 7, 2011

I reported on Eastman Kodak Co. for the Rochester (N.Y.) Democrat and Chronicle from 1980 to 1992. That was the start of its decline, although I didn’t realize it at the time.  I thought everything that went wrong was a temporary setback, from which the company would recover.

At the time, I thought the same thing about the United States as a whole.  But there’s no law of nature that says once-great companies or once-great nations will remain great forever.  That’s up to the people in them.

Click on The Rise and Fall of Eastman Kodak for a view of Kodak’s decline by a smart Wall Street analyst.

Click on Eastman Kodak and the idea of loyalty for an earlier post of mine.

Click on In memoriam: 75 years of Kodachrome for thoughts on Kodak’s legacy.


Eastman Kodak and the idea of loyalty

September 10, 2010

I don’t know if there was ever was a Fortune 500 company more paternalistic than Eastman Kodak Co., and I am certain there never was one that enjoyed greater loyalty from its employees.

When I first came to Rochester, N.Y., in the mid-1970s, Kodak seemed more like a cult than a company.  Kodak never asked its employees to sing a company anthem or do gymnastics in the morning, as Japanese companies of that era did, but if it had, I am sure they would have been glad to do so.Kodak was one of the last examples of the age of the “organization man,” in which security was given in return for conformity.

I wouldn’t really want that era to return, but I don’t regard the age of the disposable employee as an improvement.People in Rochester said that once you were hired by Kodak, you were set for life.  There were people who were the second or third generation in their family to have worked all their adult lives at Kodak.  There were people whose whole lives revolved around Kodak.  They spent their spare time at the Kodak recreation center, they attended plays at the theater in Kodak Building 27, they banked with Eastman Savings and Loan Association (not actually a part of the company) and saved up for retirement in the Kodak Savings and Investment Plan.

All this security was repaid by a devotion to the company that is hard to understand in the light of the way things are today.  In 1980, Kodak announced a new consumer product – a snapshot camera with film on a disc instead of a roll.  We reporters at the Democrat and Chronicle naturally wanted to find out in advance what the announcement was going to be.  All of us had friends and neighbors who worked for Kodak (one in eight employed persons in the Rochester area worked for Kodak), and thousands of them knew what the announcement was going to be.  But nobody said a word.  The Kremlin-like secrecy was complete.

I had just started to cover Kodak for the D&C.  The company gave me a Disc camera to try out, and, as luck would have it, the camera short-circuited and melted the internal parts.  I wrote a light-hearted article about it, treating it the subject fairly gently, I thought.  Kodak loyalists in the community didn’t think so.  I was inundated with angry phone calls accusing me of playing into the hands of the enemy, Fuji Photo.Kodak Disc 4000

The Disc didn’t turn out to be as successful as Kodak hoped and, for that and other reasons, the company began layoffs a couple of years later than continued for more than a decade.  Kodak employed 50,000 people in Rochester through the 1970s, and in 1982 employment here shot up to 60,000.  The following year Kodak began a series of layoffs that have continued ever since.  Employment locally is now below 7,500 and falling.

By the time I left the Kodak beat in 1992, the feeling of loyalty had been replaced with a sense of betrayal.  The angry phone calls came whenever I wrote anything that reflected favorably on the company.

A friend of mine, a Kodak patent attorney who lost his job in the downsizing, said he came to realize the profound ambiguity of the idea of loyalty to a corporation – or any other organization.  You can be loyal to people, and you can be loyal to ideas, he said.  But if the people change, and the ideas change, what are you being loyal to?

Business executives such as CEO Jack Welch of General Electric – called “Neutron Jack” because, like the neutron bomb, he made the people disappear and left the buildings standing –  said that companies such as Kodak did their employees no favor by holding out the false hope of lifetime employment.  The employees were set up for a worse fall than if Kodak had been tougher all along.

I think there is truth in that, but there is a middle ground between treating employees as children and treating them as commodities.  A business corporation can’t be like a Mommy and Daddy to its employees, but it doesn’t have to follow Welch in terminating the supposedly worst-performing 10 percent of employees every year.