Kodak admits mismanagement of CEO’s stock grants before announcing $ 765 million government loan
Reuters / Steve Marcus
- Kodak admitted to mismanaging a stock granting process for its chief executive before disclosing a $ 765 million government surprise loan.
- The camera company released a legal review that showed Kodak had not been fully briefed by legal counsel about the stock option process of its CEO and chairman, Jim Continenza, prior to the disclosure of the loan.
- Lawyers for Kodak have argued that the company did not violate securities regulations, but the allegations of wrongdoing are being investigated by the same agency that granted the loan.
- The company agreed to carry out the committee’s proposals and said “it is clear from the findings of the review that we need to take action to strengthen our practices, policies and procedures.”
- Kodak shares climbed 72% after the committee found no violations of the law.
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Kodak admitted to mismanaging a process for granting shares to its chief executive before disclosing its $ 765 million government loan.
An independent legal journal published by Kodak showed that the company had not been fully briefed by legal counsel about the granting of shares to CEO and chairman Jim Continenza before breaking the news of the loan.
Continenza received the grants a day before the camera company revealed it had received a ready to produce generic drug ingredients in response to the COVID-19 pandemic. The loan was granted by the US International Development Finance Corp, but is currently on hold.
“The manner in which the option grants were granted was suboptimal in several respects,” Kodak attorneys at Akin Gump Strauss Hauer & Feld said in a statement on Tuesday.
Lawyers have claimed that Kodak did not violate securities regulations, but allegations of wrongdoing are under investigation by the same agency that approved the agreement.
The report, which addressed a number of legal issues, proposed modifying the allocation of shares of Continenza and reassessing the composition of the board of directors.
He also said that the stock transactions carried out by Continenza and another board member, Philippe Katz, did not constitute insider trading as the loan application process was at a “very early stage. uncertain”.
Kodak has agreed to implement the proposals of the independent committee in a separate declaration, asserting that “it is clear from the findings of the review that we need to take action to strengthen our practices, policies and procedures.”
The loan announcement at the end of July sent Kodak shares up to 2,100% in two days. The company’s stock price has since wiped out most of the gains as regulators review the company’s loan and related information.
Kodak shares climbed 72% on Wednesday after the committee found no violations of the law.