Kodak Outsources Management of Overfunded US Pension Plan

Plan sponsor Eastman Kodak Co. has closed its defined benefit pension investment office and shifted the management of its assets to investment consultant NEPC LLC, the company confirmed in a press release Friday morning.

“The Kodak Retirement Income Plan Committee (KRIPCO) has engaged NEPC, LLC, one of the country’s largest independent, investment research-driven consulting firms with approximately $1.6 trillion of assets under advisement, to perform the Outsourced Chief Investment Officer and investment fiduciary functions with respect to Kodak’s U.S. pension plan,” the company stated in the release. NEPC, has acted as an outside financial adviser to the plan since 2004.

Kodak, also in the Friday statement, wrote that the company, in conjunction with KRIPCO, “has been exploring how it can best preserve and maximize the value of the pension over-funding” to benefit key stakeholders including current and former Kodak employees and Kodak shareholders.

Shares of Eastman Kodak surged 50% on Thursday after Bloomberg reported that NEPC would take over the Kodak Retirement Income Plan Committee. 

Kodak’s had $6.5 billion of global retirement assets, as of June 30, 2023, and had a funded status that stood at 145%, according to information provided to PLANSPONSOR sister publication, Chief Investment Officer last year. This overfunded status was the reason for the closure of the investment office, Bloomberg reported on Wednesday.

The investment office at Kodak has been led since 2013 by Chief Investment Officer Thomas Mucha, who won the 2023 Industry Innovation Award for corporate DB plans with less than $20 billion in assets from  CIO. When Mucha first joined the firm, the plan had a funded status of 91%. PLANSPONSOR, like CIO, is owned by is owned by ISS STOXX.

In general, excess pension assets returned to the employer would be subject to the 50% excise tax, in addition to applicable federal and state income taxes, according to information from Milliman.

The plan returned an annualized 3.0%, 9.0% and 9.2% for the past one, five and 10 years, respectively, as of June 30, 2023.

The 95-year-old plan was overfunded by $1.2 billion as of December 31, 2022, according to the release. This figure is roughly three times Kodak’s current market cap. As of December 31, 2022, plan assets were valued at $3.7 billion, while benefit obligations were $2.5 billion. 

Kodak did not respond to requests for additional comment.

A spokesperson for NEPC told CIO: the “Kodak Retirement Income Plan is a longstanding client of NEPC. NEPC will continue to support them per our fiduciary responsibility to the plan sponsor.”