| Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On January 7, 2023, Rite Aid Corporation (the “Company”)
and Heyward Donigan, the Company’s President and Chief Executive Officer (“CEO”), mutually agreed to terms pursuant
to which Ms. Donigan ceased to serve as CEO and terminated employment with the Company, effective immediately. Elizabeth (Busy) Burr,
a member of the Company’s Board of Directors (the “Board”), was appointed as the Company’s interim CEO. It is
anticipated that Ms. Burr will serve as interim CEO until a permanent CEO is appointed.
Ms. Burr, age 61, has served as a
member of our Board since 2019. Ms. Burr served as President and Chief Commercial Officer at Carrot Inc., a digital health care
company with solutions that combine behavioral science, clinical expertise, and proprietary technology, from 2019 through 2021.
Ms. Burr served as the Chief Innovation Officer and Vice President of Healthcare Trend and Innovation at Humana from 2015 to
2018, where she led the design, build, and adoption of new product platforms in digital health, provider experience, and
telemedicine. Ms. Burr was the Founder of Humana Health Ventures, Humana’s strategic venture investing practice. She
served as Managing Director of Citi Ventures, Citigroup’s global venture group, from 2011 to 2015. Prior to Citigroup, she
spent seven years in investment banking at Morgan Stanley and Credit Suisse First Boston. Ms. Burr previously served as the
Vice President of Global Brand Management at Gap, Inc., where she was responsible for aligning the product, store, online,
advertising, and merchandising efforts for the four Gap brands around the world. Ms. Burr holds an M.B.A from Stanford
University and a B.A. in Economics from Smith College. Ms. Burr is a member of the boards of directors of Mr. Cooper Group
Inc., a company that provides mortgage servicing, origination, and transaction-based services, Satellite Healthcare, a nonprofit
provider of kidney dialysis services, and SVB Financial Group, a company that offers commercial, investment and private banking,
asset management, private wealth management, brokerage and investment services and funds management services to companies in the
technology, life sciences and health care, private equity and venture capital, and premium wine industries.
Donigan Separation Agreement and Release
The Company entered into a separation agreement and release with Ms. Donigan
(the “Donigan Separation Agreement”) in connection with her departure from the Company on January 7, 2023. The circumstances
of Ms. Donigan’s termination of employment qualify her for severance benefits under the terms of Ms. Donigan’s employment
agreement with the Company, entered into on August 8, 2019 in connection with her hire (the “Employment Agreement”).
The Employment Agreement was previously filed by the Company as Exhibit 10.1 to the Form 8-K on
August 12, 2019. In addition to the severance benefits provided under the Donigan Separation Agreement, which are governed
by Section 5.3 of the Employment Agreement, Ms. Donigan will be reimbursed for her legal
fees of up to $10,000 pursuant to the terms of the Donigan Separation Agreement. The Company’s provision of the severance
benefits under the Employment Agreement are subject to Ms. Donigan’s execution and nonrevocation
of a release of claims in favor of the Company and Ms. Donigan’s compliance with certain restrictive covenant provisions, each
as provided by the Donigan Separation Agreement.
The
above description of the Donigan Separation Agreement does not purport to be complete and is subject to, and qualified in its entirety
by, the full text of the Donigan Separation Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated into
this Item 5.02 by reference.
Burr Offer Letter
The Company entered into an offer letter with Ms. Burr (the “Burr
Offer Letter”), in connection with her appointment as interim CEO, effective as of January 7, 2023. The Board and Ms. Burr
have agreed that Ms. Burr’s base salary for the term she serves as interim CEO is at a rate of $300,000 per month, subject
to applicable withholdings. Ms. Burr will not receive any other compensation or benefits from the Company for serving as interim
CEO and while she is interim CEO, she will not receive the compensation payable to non-employee members of the Board. For example, Ms. Burr
will not participate in or receive benefits under the Company’s employee benefit plans and programs (including, but not limited
to, the Company’s bonus incentive plans, 401(k) plan, group medical, dental and vision insurance plans). If Ms. Burr serves
as interim CEO for more than six (6) full months, the Board will review the monthly salary and consider in good faith whether to
increase the monthly salary for interim CEO service in excess of six (6) months.
There are no other arrangements or understandings between Ms. Burr
and any other persons pursuant to which Ms. Burr was appointed as interim CEO of the Company. There are no family relationships between
Ms. Burr and any director or executive officer of the Company, and she has no direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The foregoing summary of the Burr Offer Letter does not purport to
be complete and is subject to, and qualified in its entirety by, the full text of the Burr Offer Letter, a copy of which is attached hereto
as Exhibit 10.2 and is incorporated into this Item 5.02 by reference.
Board and Committee Changes
In connection with her ceasing to serve as President and CEO, Ms. Donigan
has resigned from the Board, effective immediately.
As a result of Ms. Burr’s appointment as interim CEO, the
Board appointed Robert E. Knowling, Jr. to the Audit Committee of the Board to replace Ms. Burr. All such changes were effective
January 7, 2023.
A copy of the related press release announcing the CEO transition is
attached hereto as Exhibit 99.1