Thomas O. Ryder
[address]
October 28, 2005
Board of Directors
The Reader's Digest Association, Inc.
Reader's Digest Road
Pleasantville, NY 10570-7000
Re: Retirement Transition
Members of the Board:
This letter constitutes my formal notice to the Board of Directors of The
Reader's Digest Association, Inc. ("Company") of my decision to retire pursuant
to Section 10(e) of my employment agreement dated April 28, 1998, as amended
("Employment Agreement"), effective as of December 31, 2006. At the Board's
request and to ensure a smooth and orderly transition, I expect to continue as
Chairman of the Board of Directors, having the responsibilities determined by
the Board, until my retirement on December 31, 2006. However, in accordance with
the succession planning that the Board and I have been discussing, I will be
resigning as Chief Executive Officer effective as of December 31, 2005. I look
forward to working with my successor during the coming months and following
year.
I understand that my Employment Agreement shall be deemed amended so as to
be consistent with my resignation as Chief Executive Officer as of December 31,
2005 and my retirement as Chairman and from all remaining positions with the
Company and its subsidiaries as of December 31, 2006 and that any changes in the
terms of my employment related to those changes in status (including the
transition compensation shown on Attachment 1) will not constitute "Good Reason"
or termination without Cause under my Employment Agreement.
Thank you for your cooperation and assistance in developing this succession
plan with me.
Respectfully submitted,
/s/ Thomas O. Ryder
Thomas O. Ryder
Acknowledged, accepted and agreed as of 10/31/05:
The Reader's Digest Association, Inc.
By: /s/ Lisa A. Cribari
Lisa A. Cribari
Vice President, Global Human Resources
Attachment 1
Transition Compensation
Annual Base Salary o Fiscal 2006: As determined by
the Compensation and Nominating
Committee on August 16, 2005
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
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.