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): October 31, 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))
Page 1 of 19 pages.
ITEM 1.01. Entry into a Material Definitive Agreement
Effective October 31, 2005, The Reader's Digest Association, Inc. ("RDA") and
Thomas O. Ryder, Chairman and Chief Executive Officer of RDA, entered into a
letter agreement confirming his resignation as Chief Executive Officer of RDA,
effective December 31, 2005, and his retirement as Chairman of RDA, effective
December 31, 2006. The letter agreement amends the Employment Agreement dated
April 28, 1998 between RDA and Mr. Ryder so that any changes in the terms of his
employment related to those changes in status will not constitute "Good Reason"
or termination without Cause under that Employment Agreement. The letter
agreement also specifies the following compensation for Mr. Ryder:
Annual Base Salary o Fiscal 2006: As determined by the
Compensation and Nominating
Committee on August 16, 2005
($820,000)
o Fiscal 2007: Same as 2006 provided
employment continues full-time
Annual Incentive Compensation o Fiscal 2006 Target Opportunity: As
determined by the Committee on
August 16, 2005 ($1,000,000)
o Fiscal 2007 Target Opportunity:
Same as Fiscal 2006, pro-rated for
number of months employed prior to
12/31/06; further adjusted if
employment does not continue
full-time; amount of actual award
subject to discretion of the
Committee
Stock Options o Any future awards to be determined
by the Committee, consistent with
the Company's compensation
guidelines, pro-rated for the
number of months employed prior to
12/31/06
Performance Based Restricted
Stock Units o Any future awards to be determined
by the Committee
o Outstanding awards to vest as
follows:
o Fiscal 2005-2007. Subject to
attainment of performance
goals: pro-rated pay-out for
number of months employed
prior to 12/31/06; full
pay-out if employment
terminates on 12/31/06.
o Fiscal 2006-2008. Subject to
attainment of performance
goals: pro-rated pay-out for
number of months employed
prior to 12/31/06.
Effective October 31, 2005, RDA and Eric W. Schrier, Senior Vice President and
Global Editor-in-Chief of RDA and President, Reader's Digest North America,
entered into a Noncompetition, Nonsolicitation and Confidentiality Agreement
that, among other restrictions, prohibits Mr. Schrier from certain associations
with specified entities for a period of either one or two years after
termination of employment with RDA, depending on the circumstances of his
termination.
On October 31, 2005, the Board of Directors of RDA approved (1) a salary for
Eric W. Schrier of $700,000 and a pro-rated fiscal 2006 annual incentive award
target of $542,000 under The Reader's Digest Association, Inc. Senior Management
Incentive Plan (the "SMIP"), effective upon his promotion to President and Chief
Executive Officer of RDA on January 1, 2006 and (2) a salary for Thomas O.
Gardner of $550,000 and a pro-rated fiscal 2006 annual incentive award target of
$391,000 under the SMIP, effective upon his promotion to Executive Vice
President of RDA on January 1, 2006.
ITEM 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
Effective October 31, 2005, RDA and Thomas O. Ryder, Chairman and Chief
Executive Officer of RDA, entered into a letter agreement confirming his
resignation as Chief Executive Officer of RDA, effective December 31, 2005, and
his retirement as Chairman of RDA, effective December 31, 2006.
On October 31, 2005, the Board of Directors of RDA approved the appointment of
Eric W. Schrier as President and Chief Executive Officer of RDA, effective
January 1, 2006, and his nomination for election as a Director of RDA in January
2006. Mr. Schrier has been President, Reader's Digest North America since
February 2003. He has also been Senior Vice President and Global Editor-in-Chief
since joining RDA in January 2000, and served as President, U.S. Magazines from
February 2002 to February 2003.
On October 31, 2005, the Board of Directors of RDA approved the appointment of
Thomas D. Gardner as Executive Vice President of RDA, effective January 1, 2006.
Mr. Gardner has been President, Reader's Digest International since February
2003 and Senior Vice President of RDA since July 1998. He was also President,
North America Books and Home Entertainment, from January 2001 to February 2003
and was Senior Vice President, U.S. New Business Development of RDA prior to
January 2001. Mr. Gardner joined RDA in February 1992.
ITEM 7.01 Regulation FD Disclosure.
Furnished herewith is the following:
Exhibit Number
Description
99.1 The Reader's Digest Association, Inc.'s news release,
issued on October 31, 2005, relating to senior
management succession.
ITEM 9.01 Financial Statements and Exhibits.
(c) Exhibits
Filed herewith is the following:
Exhibit Number
Description
10.53 Letter agreement dated as of October 31, 2005 between
The Reader's Digest Association, Inc. and Thomas O. Ryder
10.54 Noncompetition, Nonsolicitation and Confidentiality Agreement
dated October 28, 2005 between The Reader's Digest
Association, Inc. and Eric W. Schrier
99.1 The Reader's Digest Association, Inc.'s news release, issued
on October 31, 2005, relating to senior management succession.
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: October 31, 2005
/s/ C.H.R. DuPree
------------------
C.H.R. DuPree
Vice President, Corporate Secretary and
Associate General Counsel
EXHIBIT INDEX
Exhibit Number
Description
10.53 Letter agreement dated as of October 31, 2005 between
The Reader's Digest Association, Inc. and Thomas O. Ryder
10.54 Noncompetition, Nonsolicitation and Confidentiality Agreement
dated October 28, 2005 between The Reader's Digest
Association, Inc. and Eric W. Schrier
99.1 The Reader's Digest Association, Inc.'s news release, issued
on October 31, 2005, relating to senior management succession.