Eastman Kodak Co. is seeking permission to pay about 300 executives and other employees a total of $13.5 million in bonuses to persuade them to stay with the company as it reorganizes under bankruptcy protection.
The Rochester-based photography company said the targeted employees have knowledge and skills critical to help the business emerge from Chapter 11 and would be difficult to replace if they left to pursue other offers. They include 119 middle managers who would share $8.5 million of the sum, an average of about $71,400 for each.
Also this week, Kodak told retirees it has withdrawn for now its motion to end supplemental health care benefits for about 16,000 Medicare-eligible retirees. The company will instead create a retirees committee to examine the issues of medical and survivor benefits.
"Once the committee is formed, we will take another look at what is the best approach to address our legacy retiree costs," Kodak said in a letter dated Wednesday.
The request for bonuses was included in an employee continuity plan outlined by Kodak in a U.S. Bankruptcy Court filing in New York this week.
The 119 managers identified as "Group 1," whose names the filing said are "sensitive and highly confidential," would receive bonuses equivalent to 35 to 50 percent of their base salaries. The roughly 200 members of "Group 2" would share about $5 million, each receiving 25 percent or less of the base salary.
"Absent employee continuity, the debtors' business operations would be compromised, jeopardizing their restructuring efforts and significantly reducing the likelihood that the debtors will emerge successfully from Chapter 11," Kodak said in the filing.
Although many more of the company's 7,600 employees have valuable skills, a lack of funds prevents additional bonuses, the filing said.
Kodak, founded in 1880, began bankruptcy proceedings in January after being hurt first by Japanese competition and then by its inability to keep pace with the shift from film to digital technology over the past decade. It is required under its bankruptcy financing terms to produce a reorganization plan by Feb. 15, 2013.
Many in line to receive bonuses have seen their workloads increase while taking what amounts to significant pay cuts, the court filing said. That's because some of their compensation was tied to Kodak's performance, and no new long-term incentives are being granted during bankruptcy proceedings.
"As a result, offers from (Kodak's) competitors or from companies in other industries seeking talented employees may seem particularly attractive," the motion said.