Contrasting Images:
                   The New Finance Chief
                   At Kodak Has a Style
                   Quite Unlike His Boss's
                   ---
                   While Chairman Whitmore
                   Abhors Cutting Workers,
                   Steffen Doesn't Flinch
                   ---
                   Yellow Giant's Little Steps
                   By Joan E. Rigdon

                   04/28/1993
                   The Wall Street Journal
                   PAGE A1
                   (Copyright (c) 1993, Dow Jones & Co., Inc.)

                   ROCHESTER, N.Y. -- Kay R. Whitmore is the sort of boss most
                   people would want: Kind, generous, collegial. Sure, he's chairman of
                   Eastman Kodak Co., but Mr. Whitmore, 60 years old, often wears his
                   name tag on his shirt just like the regular Joes. The question is whether
                   Mr. Whitmore is a charming anachronism in an age that requires
                   Christopher J. Steffen.

                   Mr. Steffen, 51, favors limited-edition Trafalgar suspenders and matching
                   tie and kerchief sets. He relishes confrontation. Referring to his earlier
                   experience at Chrysler Corp., he says that when half the workers at a
                   troubled company must be laid off, "the other half buy in pretty quickly."

                   Since Mr. Whitmore hired Mr. Steffen as chief financial officer in January,
                   Kodak stock has gained $3.45 billion in value. The two men's disparate
                   values say a lot about the challenge of managing large corporations in the
                   difficult 1990s. And there is no question that Kodak has challenges:
                   Today, it is expected to report lower first-quarter operating earnings due
                   to declining film and copier sales.

                   Investors are hoping Mr. Steffen can turn the ship around. He promised
                   as much just two weeks into his new job while dining with Wall Street
                   analysts in a private room at New York's Helmsley Palace Hotel. Over
                   filet mignon, he accomplished in one evening what others at Kodak have
                   been unable to do in years: instill confidence in the company's future.

                   About two weeks earlier, Kodak had held a meeting for analysts in New
                   York that left many feeling decidedly negative. As Kodak executives
                   offered vague projections for the company's future and showed charts
                   without numbers, attendees fidgeted and some even walked out. Jack
                   Kelly of Goldman, Sachs & Co. flashed a thumbs down to a colleague.
                   The next day, the stock plunged 6% in New York Stock Exchange
                   trading before recovering somewhat by the session's end.

                   By contrast, Mr. Steffen held lively court at the Helmsley. He set specific
                   financial goals and promised a turnaround plan by Aug. 24. Since Kodak
                   has tried and failed to restructure before, analysts asked why they should
                   believe Kodak now. Mr. Steffen's reply: "This is the post-Stempel
                   world." The reference to the General Motors Corp. chairman who was
                   forced out by his board positively impressed the analysts. The next day
                   Kodak stock jumped 5.2%, or $2.62 a share, to $53. (Yesterday it
                   closed at $52.375.)

                   Although Mr. Steffen is just one outsider in a company that is proud of its
                   home-grown management tradition, investors are betting the newcomer
                   can cut fat at Kodak as he did earlier at Honeywell Inc., where he
                   assisted in a three-year turnaround of the engineering and industrial
                   systems concern.

                   But while investors applaud, Mr. Whitmore, Kodak's chairman and chief
                   executive officer since June 1990, expresses reservations. Although he
                   personally recruited Mr. Steffen -- after the board pushed him to hire an
                   outsider -- Mr. Whitmore thought he was simply getting a first-rate
                   numbers cruncher, not someone who would upstage him. "If Chris Steffen
                   comes in here assuming he's the Lone Ranger, he will not last very long,"
                   Mr. Whitmore says in an interview. "He can't do it all by himself."

                   The man clearly under pressure is Mr. Whitmore. Kodak earnings, which
                   hit $1.4 billion in 1988, haven't reached that level since, although last
                   year's did show a rise over 1991. The board is demanding earnings
                   improvement again this year. The company is projecting "solid" earnings
                   growth in 1993.

                   With a new sense of urgency, Mr. Whitmore has been scrambling to cut
                   costs. This year, before Mr. Steffen arrived, the CEO vowed to slash
                   research spending and let 2,000 workers go, although he softened the
                   blow by offering four months of medical benefits and a retraining
                   allowance of up to $5,000. The cutbacks, Kodak's first major layoffs in
                   more than a decade, were "extremely painful for Kay," says a former
                   manager. "It's people being fired unceremoniously with no regard for
                   length of service" that disturbed Mr. Whitmore, the former manager says.

                   But investors seem to be hoping for no less than a blood-letting:
                   thousands more layoffs, and the sale of entire businesses. And some
                   believe Mr. Whitmore, who seems to prize consensus over speed, isn't
                   the person for the job. "Kay may be the right guy to be the pilot of a
                   glacier," says Robert Monks, a shareholder activist who has targeted
                   Kodak as a company where he will try to force change. "The trouble is,
                   the water has gotten hot."

                   Enter Mr. Steffen. The image he cuts is in sharp contrast to that of his
                   new boss and the Kodak culture. Shunning the conservative look that
                   prevails in Kodak's army of executives, Mr. Steffen combs his hair in a
                   mini-pompadour and wears a large gold-chain bracelet. While Mr.
                   Steffen has hopped from one Fortune 500 company to another (Price
                   Waterhouse, Whitman Corp., Hyatt Corp. and Chrysler before
                   Honeywell, and now Kodak), Mr. Whitmore has spent his entire 35-year
                   career with the Yellow Giant, as Kodak is called in the trade.

                   Mr. Whitmore is so methodical that he plans his entire calendar for the
                   new year by September and sometimes spends years mulling decisions.
                   For instance, Kodak's new requirement for top officers to buy big chunks
                   of company stock had been under consideration since the mid-1980s,
                   one former manager says.

                   While it pains Mr. Whitmore to make any cuts in his company's payroll,
                   Mr. Steffen is proud -- even boastful -- of his role in some bloody
                   corporate restructurings. The one he took part in at Honeywell involved a
                   spinoff of its defense and marine businesses, the buyback of stock and
                   the elimination of 4,000 jobs, including 300 positions at headquarters. In
                   a speech to the Turnaround Management Association in New York in
                   February, he said inflicting pain is a given in any restructuring.

                   Mr. Steffen left Honeywell after losing out in a three-way race for the
                   chairman's seat.

                   So far, the new Kodak CFO has been extremely politic about his new
                   role, politely sidestepping any specific suggestions on changing the
                   company. "It's going to take time to tell where the businesses are," he
                   says.

                   Kodak's basic problems aren't unique in American industry. After a
                   century of dominating the U.S. market in its main business, photo film,
                   Kodak is getting stung by competition from private-label products and
                   archrival Fuji Photo Film Co. of Japan. Also, camcorders are hurting all
                   film sales, and the sluggish European and Japanese economies have cut
                   into sales overseas. The result: Kodak can no longer rely on its little
                   yellow boxes of film to offset slow growth in other businesses.

                   Kodak has tried to diversify into prescription drugs and electronic
                   imaging, but so far, both have gobbled up research dollars without
                   producing blockbuster products. The drug business, Sterling Winthrop,
                   has cancer drugs and other potential winners in the pipeline, but most are
                   at least two years away from market. In electronics, Kodak bet on
                   high-volume copiers, only to watch customers flock to low-volume
                   machines instead. To stay in that business, Kodak enlisted Canon to
                   make low-volume copiers that Kodak sells under its own name.

                   Kodak's most solid business is chemicals. Eastman Chemical is the
                   largest supplier of polyethylene terepthylate, or PET, resins for recyclable
                   soda bottles. Some analysts think Mr. Steffen may suggest spinning it off
                   as a separate company.

                   But Kodak's first priority, no doubt, is cutting costs. Its research and
                   development budget, $1.6 billion, or 7.9% of last year's sales, is among
                   the fattest in the Fortune 500; also high is spending on sales, advertising,
                   distributing and administrative costs, which were $5.9 billion last year, or
                   29% of sales.

                   In other areas, Kodak has appeared to be wasteful, even after Mr.
                   Whitmore became CEO and was given a mandate to cut costs. In May
                   1991 Kodak cut the ribbon on an extravagant $10 million Center for
                   Creative Imaging on Penobscot Bay in Camden, Maine. The center was
                   designed to promote Kodak's new Photo CD technology, a way of
                   storing photos on compact disks that can be viewed on television or
                   edited on computers. A big hit with professional photographers and
                   graphic artists, the center offered such courses as "Digital Music
                   Mastering" and "Browsable Movies and Surrogate Travel."

                   "It was like an idyllic retreat," says multimedia teacher Tom Nicholson.
                   "Money wasn't an object." But some of Kodak's top officers were
                   appalled. In February, Kodak agreed to sell the center to a private
                   investor group on undisclosed terms. "We thought it was a great idea to
                   showcase the latest imaging technology," Kodak says in a written
                   response to questions. "We simply have chosen to allow someone else"
                   to run the center.

                   Even when Mr. Whitmore tries to cut costs, he has sometimes been
                   generous to a fault. His first effort at cutting Kodak's payroll wound up
                   costing the company $1 billion.

                   In July 1991, with two weeks to go before reporting declining
                   second-quarter earnings, most of the senior management team decided
                   Kodak needed to shed 4,000 workers. Mr. Whitmore balked at the
                   number, says a former executive. According to this person, "Kay said,
                   `Let's do three. Four would create too much turmoil.'" Mr. Whitmore
                   declined to comment.

                   The severance plan Mr. Whitmore approved was, as he later said, "too
                   rich": lifetime health and dental benefits, bridge payments until age 62
                   roughly equal to the employee's future Social Security payment, and a
                   year's pay for those who retired by the end of the year. The plan was
                   quickly oversubscribed, attracting 8,321 employees at an average cost of
                   $120,000.

                   And while Kodak could have limited acceptance in the program, it
                   decided not to, fearing that any worker who missed out would become
                   bitter. Kodak lost some specialized managers as well as 2,000 factory
                   workers with decades of experience. Unable to rehire them because of
                   the plan's rules, the company was forced to recruit about 2,000
                   temporary workers, some of whom are still on the payroll.

                   Mr. Whitmore's generosity to employees is in many ways a reflection of
                   his upbringing and religious beliefs. A devout Mormon who prides himself
                   on his civic involvement, he is a family man both at home and at Kodak.
                   He once apologized to a manager about scheduling a 7 a.m. meeting that
                   disrupted her child-care arrangements -- and promised never to do it
                   again.

                   Mr. Whitmore acknowledges that his management style has contributed
                   to a lack of urgency at Kodak. "I regret we didn't move faster," he says in
                   an interview, adding that he has been taken by surprise by "the speed
                   with which change has taken place" in corporate America.

                   If he doesn't move more swiftly, he could face a boardroom mutiny.
                   Since the mid-1980s, Kodak's board has changed from one dominated
                   by insiders to one that is now two-thirds outsiders -- and playing a more
                   active role.

                   In addition, Mr. Steffen is expected to be elected to the board at the May
                   12 annual meeting. He says no one has hinted that he will get the top job
                   at Kodak upon Mr. Whitmore's expected retirement at age 65 in five
                   years. There are three group vice presidents who would also be
                   candidates. "No one has promised me that job," Mr. Steffen says. Still,
                   heading a Fortune 500 company "is certainly on the list of things I want to
                   do."

                    -30-
 

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