Item 5.02(c)
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On September 28, 2017, Rite Aid Corporation (the Company) announced the appointment of Kermit Crawford as the President and Chief Operating Officer of the Company, effective as of October 2, 2017.
Mr. Crawford, age 58, has served as a retail and healthcare adviser and consultant for New York City-based Sycamore Partners, a private equity firm specializing in retail and consumer investments, since 2015.
Prior to joining Sycamore Partners, Mr. Crawford, a licensed pharmacist, spent more than 30 years with Walgreens, where he held a wide range of store operations and senior management positions, including responsibility for the companys pharmacy services, which included its pharmacy benefit management services. When he retired from Walgreens in 2014, Crawford was executive vice president and president of Walgreens pharmacy, health and wellness division, where he was responsible for all aspects of strategic, operational and financial management for the division.
Mr. Crawford also serves on the board of directors for Allstate and LifePoint Health. He is also on the Board of Councilors of the University of Southern California School of Pharmacy. Mr. Crawford earned a Bachelor of Science degree in pharmacy from Texas Southern University College of Pharmacy and Health Sciences in Houston.
The Company has entered into an employment agreement with Mr. Crawford, dated as of September 27, 2017 (the Employment Agreement). The Employment Agreement has an initial term of three (3) years, and thereafter will automatically renew for successive one (1) year terms unless either he or the Company gives prior notice of nonrenewal. Pursuant to the Employment Agreement, Mr. Crawford will be paid a base salary, on an annualized basis, of $1,000,000, he will be eligible for a target annual cash bonus opportunity equal to 175% of his base salary (prorated for fiscal year 2018), and he will be granted annual long-term equity incentive awards with a grant date fair value equal to 425% of his base salary. The Employment Agreement further provides that the Company will grant to Mr. Crawford inducement awards of restricted stock units with a grant date fair value equal to $2,000,000, which will vest in equal annual installments on each of the three successive anniversaries of the date of grant, 1,000,000 nonqualified stock options, which will vest and become exercisable in equal installments on each of the four successive anniversaries of the date of grant, and a cash bonus equal to $1,000,000, which will be paid to Mr. Crawford shortly following October 2, 2017 and which will be subject to a repayment obligation upon certain terminations of employment occurring on or prior to October 2, 2020.
The Employment Agreement provides that in the event the Company terminates Mr. Crawfords employment without cause or Mr. Crawford terminates his employment for good reason (each as defined in the agreement), and subject to his execution of a release of claims, Mr. Crawford will receive: (i) an amount equal to two (2) times the sum of (x) his base salary plus (y) target annual bonus, which will be payable in equal installments, generally over a period of two (2) years following the date the release of claims becomes irrevocable; (ii) an amount equal to his target annual bonus for the year in which the termination of employment occurs, prorated to reflect the portion of the year prior to his termination of employment; (iii) twenty-four (24) months benefits continuation; and (iv) accelerated vesting of any then-outstanding restricted stock awards and stock options that would have vested and become exercisable, as applicable, assuming he remained employed by the Company for a period of two (2) years following the date of termination of employment. The Employment Agreement further provides that any severance payable to Mr. Crawford will be reduced to the amount that is not subject to the excise tax on excess parachute payments if doing so would result in a greater after-tax payment to him. The Employment Agreement also subjects Mr. Crawford to certain confidentiality obligations and certain noncompetition, noninterference and nonsolicitation restrictions for a period of twelve (12) months post-employment.
The foregoing description of the Employment Agreement is a summary of certain of its terms only and is qualified in its entirety by the full text of the agreement filed as Exhibit 10.1 hereto and incorporated herein by reference.
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