Eastman Kodak Company’s (NYSE: KODK) shares jumped in pre-market session Wednesday as the special committee appointed by its board declared the outcome of its independent review on the company’s handling of stock options to the CEO.
What Happened: The committee remarked that although there were no violations of the law, the company did a sub-par job in matters of corporate governance, according to Bloomberg.
In July, the Rochester-based photography company received a $765 million loan under the Defence Production Act. The loan was granted with the intent to aid the manufacturing of generic drugs. However, in August the government decided to halt the loan when the reports about alleged insider trading broke out.
A special committee of Kodak’s board engaged a law firm to review share purchase transactions and option grants to company insiders – CEO Jim Continenza and board member Philippe Katz.
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One of the recommendations of the special committee is to revamp the company’s executive compensation packages and its policies on insider trading, the Financial Times reported.
Why Does It Matter: Continenza’s trade deals in company stocks were made before the news about the $765 million government grant was publicly announced. The lapse of judgment and lack of reporting stock transactions prior to the dissemination of material non-public information attracted insider trading investigations against the company.
According to FT, Continenza accepted the committee’s observations and agreed to implement its suggestions citing a “need to take action to strengthen our practices, policies and procedures.”
Price Movement: Kodak shares traded 24.4% higher at $7.75 in pre-market session Wednesday.