Eastman Kodak (KODK) shares jumped Wednesday after a law firm’s report concluded that the chemicals company mishandled an options grant to its chief executive, Jim Continenza, but didn’t break the law.
Kodak shares recently traded around $9, up 44%. They'd climbed 34% year to date through Tuesday.
The findings came from Akin Gump Strauss Hauer & Feld, which the company hired.
Akin Gump determined that Kodak’s general counsel didn’t properly inform the board about the potential pitfalls of announcing a $765 million government loan to Kodak.
That loan would have financed Kodak's production of ingredients for drugs to fight the coronavirus.
The pitfalls included the legal risks of allocating options to Continenza. He received his grants the day before Kodak announced the loan.
The company announced the loan in July and the government withdrew it in August amid reports of insider trading at Kodak. The stock had traded as high as $60 in late July, when the loan was announced.
“The manner in which the options grants were awarded was suboptimal in a number of respects,” the Akin Gump report said.
The report recommended that Kodak change its executive-compensation and insider-trading policies. It also recommended that the company adjust its board makeup.
Continenza said in a statement that “Kodak is committed to the highest levels of governance and transparency, and it is clear from the review’s findings that we need to take action to strengthen our practices, policies, and procedures.”
“Expeditiously implementing these recommended measures will be critical as we continue to execute on our long-term strategy and transform our business for the future.”