1899 Pioneering Worker Bonuses and Profit-sharing
George Eastman had no wife or children and believed in giving while living. One of the world’s richest men, he gave away more money ($2 billion in current dollars) than anyone of his era except John Rockefeller and Andrew Carnegie, yet his personal giving and even his face were little known in his day because of his predilection for anonymous gifts.
He could not hide, however, his extraordinary generosity to what he always called his “fellow employees” at Kodak. In 1899, the company Eastman had created dominated the photography market and had great success with a stock offering. Eastman decided to give $178,000 of his personal profit to his nearly 3,000 employees worldwide in one of corporate history’s first bonuses. Each person’s check was calculated using a formula based on salary, position, and time at Kodak, and it came with a note: “This is a personal matter with Mr. Eastman and he requests that you not consider it as a gift but as extra pay for good work.”
For decades to come, Eastman continued to reward employees generously. In 1911, he created a safety committee to study accident prevention. The same year, long prior to workmen’s compensations laws, he used $1 million to create a benefit, accident, and pension fund for employees, 50 years before most firms evolved sick pay, disability benefits, pension, and hospital benefit plans. The following year, Kodak employees received their first wage dividend, a profit-sharing program that continued for the life of the company. Every employee began receiving a 2 percent dividend on his wages of the past five years.
In 1919 Eastman provided his biggest gift to fellow employees. He donated back to the company 10,000 shares of common stock, a third of his personal holdings, so that employees could buy these at just 17 percent of market value. He also had the company set aside a matching amount of unissued, company-held stock so employee sales could continue in the future. In addition, the million-dollar proceeds to the company from selling this stock were channeled into the company’s Welfare Fund, which was administered by the newly established Kodak Employees Association. They used it, among other things, to help employees buy homes. Though long suspicious that pensions encouraged improvidence, by the late 1920s Eastman changed his mind and set up his final gift for employees—a retirement annuity, life insurance, and disability benefits.
- George Eastman profile in Philanthropy Hall of Fame, philanthropyroundtable.org/almanac/great_men_and_women/hall_of_fame/george_eastman
- Elizabeth Brayer, George Eastman: A Biography (University of Rochester Press, 2006)
- 1920 issue of The Kodak Magazine describing company benefits, play.google.com/books/reader?id=bs8WAAAAYAAJ&printsec=frontcover&output=reader&authuser=0&hl=en&pg=GBS.PA3