Customer Service | Subscribe | Place an Ad

The Business Page

Welcome to the business page, a blog where I'll take you behind the scenes of greater Rochester's fast-changing economy. My name is Ben Rand, and I intend to introduce you to some of the personalities, concepts and events that make news in business here. I've been a business reporter for eight years in Rochester and a journalist for 18, working in four states. I grew up in Pittsford, but moved away after college for about a decade. My wife and I live in Irondequoit with our two children.

Friday, December 29, 2006

The Things You Miss...

...when you are off of work. Earlier this month Kodak awarded options on an additional 314,530 shares of company stock to Chairman and CEO Antonio M. Perez.

This should not be confused as money in his pocket. Options give an executive the right but not the obligation to buy the stock in the future, at a price set today.

In theory, if the company realizes its potential, the stock price will rise. If that happens, the executive makes money. If it doesn't, the options expire without the executive realizing a penny. (A common occurrence to more than a few Kodak executives in recent years.)

The stock doesn't have to move much from current levels for Perez to realize a decent gain. If, for example, Kodak shares move up just 5 percent from the option exercise price of $25.88 a share, Perez would net $405,743.

Of course, out of that amount you have to subtract taxes and consider inflation. The options are restricted -- Perez will gain control of one third of the options in each of the next three years.

There is a multiplier effect here as well. If the shares grow 25 percent, the net gain is $2.03 million; at 40 percent the gain is $3.3 million.

Options are something that Perez has a lot of. In his four year tenure at Kodak, the CEO has received options on 1,076,630 shares. The exercise prices range from a low of $24.49 a share to a high of $31.71.


Blogger Inigo said...

Good update on Perez benefits.
Can you investigate the board of directors' salaries and perks and publish? It seems the board has condoned the $2 billion in losses over the last 8 quarters with silence. Now they reward Perez? Isn't this the same board that let Carp loot the corporation even as the demise became apparent under his leadership. I believe the board, their perks and malfeasance should be brought to daylight. It doesn't take $10 million to find someone to captain a sinking ship.

9:55 AM, December 30, 2006  

Post a Comment

<< Home