UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 2005
THE READER'S DIGEST ASSOCIATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10434 13-1726769
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
Pleasantville, New York 10570-7000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code:
(914) 238-1000
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ] Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14a-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1. Registrant's Business and Operations
ITEM 1.01. Entry into a Material Definitive Agreement
On August 12, 2005, the Compensation and Nominating Committee of the Board of
Directors of The Reader's Digest Association, Inc. ("RDA") approved the
following:
1. Annual salaries of RDA Named Executive Officers (effective August 20, 2005):
Thomas O. Ryder, Chairman and Chief Executive Officer, $820,000
Eric W. Schrier, President, Reader's Digest North America and Senior
Vice President and Global Editor-in-Chief, $550,000
Thomas D. Gardner, President, Reader's Digest International and Senior
Vice President, $500,000
Michael S. Geltzeiler, Senior Vice President and Chief Financial
Officer, $410,000
Gary S. Rich, President, QSP, $400,000
2. Performance criteria for 2005-2007 restricted stock units awarded to RDA
executive officers:
Cumulative reported earnings per share of RDA for the three-year period
ending June 30, 2007, including special charges and extraordinary items
(unless otherwise determined by the Compensation and Nominating
Committee) and excluding non-cash impairment of goodwill or intangibles
not contemplated in the budget and acquisitions and divestitures not
completed at the time the budget is established.
3. Performance criteria for 2006-2008 restricted stock units awarded to RDA
executive officers:
Cumulative reported earnings per share of RDA for the three-year period
ending June 30, 2008, including special charges and extraordinary items
(unless otherwise determined by the Compensation and Nominating
Committee) and excluding non-cash impairment of goodwill or intangibles
not contemplated in the budget and acquisitions and divestitures not
completed at the time the budget is established.
4. Funding of bonus pools for fiscal 2006 under The Reader's Digest
Association, Inc. Senior Management Incentive Plan and Management
Incentive Compensation Plan:
Business Unit Bonus Pools
70% of each pool funded on individual Business Unit's fiscal 2006
performance
o 70% based on Business Unit's operating profit results (currency
neutral) as a percentage of budgeted Business Unit's operating
profit
o 30% based on achievement of Business Unit's strategic goals
30% of each pool funded on RDA's fiscal 2006 corporate performance
o 100% based on RDA's operating profit results (currency neutral)
as a percentage of budgeted RDA's operating profit
Staff Function Bonus Pools
70% of each pool funded on RDA's fiscal 2006 corporate performance
o 100% based on RDA's operating profit results (currency neutral)
as a percentage of budgeted RDA's operating profit
30% of each pool funded on individual Staff Function's fiscal 2006
performance
o 100% based on Staff Function's performance and achievement of
strategic goals
5. Form of award letter and terms and conditions of fiscal 2006 stock
option grants under The Reader's Digest Association, Inc. 2002 Key
Employee Long Term Incentive Plan (including amendments to previous
awards under The Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
6. Form of award letter and terms and conditions of fiscal 2006 restricted
stock grants under The Reader's Digest Association, Inc. 2002 Key
Employee Long Term Incentive Plan (including amendments to previous
awards under The Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
7. Form of award letter and terms and conditions of fiscal 2006 deferred
stock grants under The Reader's Digest Association, Inc. 2002 Key
Employee Long Term Incentive Plan (including amendments to previous
awards under The Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
8. Form of award letter and terms and conditions of fiscal 2005-2007
restricted stock unit grants under The Reader's Digest Association,
Inc. 2002 Key Employee Long Term Incentive Plan
9. Form of award letter and terms and conditions of fiscal 2006-2008
restricted stock unit grants under The Reader's Digest Association,
Inc. 2002 Key Employee Long Term Incentive Plan
10. The Reader's Digest Association, Inc. 2005 Key Employee Long Term
Incentive Plan
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE READER'S DIGEST ASSOCIATION, INC.
(Registrant)
Date: August 18, 2005
/s/ C.H.R. DuPree
------------------
C.H.R. DuPree
Vice President, Corporate Secretary and
Associate General Counsel
EXHIBIT INDEX
Exhibit Number
Description
10.1 Form of award letter and terms and conditions of fiscal
2006 stock option grants under The Reader's Digest
Association, Inc. 2002 Key Employee Long Term Incentive
Plan (including amendments to previous awards under The
Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
10.2 Form of award letter and terms and conditions of fiscal
2006 restricted stock grants under The Reader's Digest
Association, Inc. 2002 Key Employee Long Term Incentive
Plan (including amendments to previous awards under The
Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
10.3 Form of award letter and terms and conditions of fiscal
2006 deferred stock grants under The Reader's Digest
Association, Inc. 2002 Key Employee Long Term Incentive
Plan (including amendments to previous awards under The
Reader's Digest Association, Inc. 1989 and 1994 Key
Employee Long Term Incentive Plans)
10.4 Form of award letter and terms and conditions of fiscal
2005-2007 restricted stock unit grants under The
Reader's Digest Association, Inc. 2002 Key Employee
Long Term Incentive Plan
10.5 Form of award letter and terms and conditions of fiscal
2006-2008 restricted stock unit grants to under The
Reader's Digest Association, Inc. 2002 Key Employee
Long Term Incentive Plan
10.6 The Reader's Digest Association, Inc. 2005 Key Employee
Long Term Incentive Plan