Kodak (KODK) Executives Receive Stock Option Grants Prior to Explosion in Stock Price
On July 27, 2020, Kodak granted its CEO and Executive Chairman 1.75 million stock options, and 45,000 options each to its CFO, VP, and General Counsel. That same day, Kodak issued a statement to media outlets based in Rochester, NY, regarding “a new manufacturing initiative that could change the course of history for Rochester and the American People.” Media reports noted there would be a press conference the next day with Pentagon officials and that the initiative involved the U.S. International Development Finance Corporation (“DFC”) and the response to COVID-19. On this news, Kodak’s trading volume surged and the stock price increased. On July 28, before the stock market opened, RochesterFirst.com published an article revealing that Kodak and Washington D.C. leaders announced an agreement for a $765 million federal loan to support the launch of Kodak Pharmaceuticals. Kodak executives spent the next several days touting this agreement and watching Kodak’s stock price increase over 1,000%, from $2.65 on July 27, to $33.20 on July 29. Simultaneously, the insiders who received options saw their personal worth skyrocket. On August 1, 2020, questions started to arise regarding Kodak’s selection for the federal loan, the way Kodak handled the “inadvertent” disclosure on July 27, and Kodak’s failure to disclose the deal to investors. Revelations surrounding these questions caused Kodak’s stock to plummet over $29 per share over four trading days. Finally, on August 7, the DFC announced it will not proceed with the loan process until allegations against Kodak are cleared up, causing the stock to drop another 28% to close at $10.73 on August 10, 2020. Kodak is currently under investigation by several House Congressional committees and the SEC.
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