Performance Stock Unit Agreement between Scholastic Corporation and Peter Warwick, dated August 1, 2021
Contract Categories: Human Resources - Bonus & Incentive Agreements
EX-10.8 9 schl-ex108_20211130xq2.htm EX-10.8 Document
FY22 Annual RSU Award
SCHOLASTIC CORPORATION 2011 STOCK INCENTIVE PLAN
Restricted Stock Unit Agreement
Effective as of August 1, 2021 (the “Grant Date”), SCHOLASTIC CORPORATION, a Delaware corporation (the “Company”), hereby grants to Peter Warwick (the “Participant”) an Award consisting of a number of Restricted Stock Units determined as a percentage of the target award of 29,534 Restricted Stock Units (the “Target Award”) in respect of shares of common stock, par value $.01 per share, of the Company (the “Common Stock”) on the terms set forth herein, and in all respects subject to the terms and provisions of the Scholastic Corporation 2011 Stock Incentive Plan (the “Plan”), which terms and provisions are incorporated by reference herein. Unless the context herein otherwise requires, the terms defined in the Plan shall have the same meanings in this Agreement. The award of Restricted Stock Units hereunder is also subject to the terms and conditions of that certain employment agreement effective as of August 1, 2021, between the Company and the Participant (as the same may be amended, the "Employment Agreement") and constitutes the fiscal year 2022 Annual Performance-Based RSU Award (as defined in the Employment Agreement).
1.Vesting and Payment.
(a)Earned Units. Except as otherwise provided herein, the number of Restricted Stock Units as a percentage of the Target Award that are earned by the Participant (“Earned Units”) will be determined by the Committee based on its determination, in its sole discretion, of the level of attainment of the applicable Performance Goals set forth in Annex A hereto (which Annex A is incorporated by reference and is made part of this Agreement). The Committee's determination shall be made following the end of the Performance Period (defined as the twelve (12) months constituting the fiscal year ending May 31, 2022). The Committee may, in its sole discretion, adjust (upward or downward as the Committee may determine) the Target Award to determine the number of Earned Units to which the Participant may become entitled to hereunder based upon its assessment of the Participant’s individual performance in the context of the Performance Goals as determined by the Committee. No Restricted Stock Units will be earned until the Committee certifies that the Performance Goals have been met and certifies the extent to which they have been met. The maximum number of Earned Units which may be earned hereunder is equal to 150% of the Target Award. All determinations made by the Committee under this Agreement will be final and binding on the Participant.
(b) Vesting. Subject to the attainment of the applicable Performance Goals, as determined by the Committee pursuant to Section 1(a) above and subject to Participant having been continuously employed by the Company or any of its Affiliates (including any period during which the Participant is on leave of absence or any other break in employment in accordance with the Company's policies and procedures), any Earned Units awarded under Section 1(a) will become vested upon the Committee's certification as provided above ( the “Vesting Date”), except as otherwise provided in Section 2 of this Agreement.
(c) Payment. A share of Common Stock shall be distributed with respect to each Earned Unit on the applicable Vesting Date, except as provided in Section 2. Notwithstanding anything to contrary in this Agreement or otherwise, the provisions regarding accelerated vesting upon Retirement set forth in Section 9.2(b) of the Plan shall not apply to the Restricted Stock Units granted under this Agreement.
2.Termination of Employment.
(a)Death or Disability. Upon a Termination of Employment as a result of the Participant‘s death or Disability, all outstanding unvested Restricted Stock Units shall immediately vest at target level attainment and a share of Common Stock with respect to each such vested Restricted Stock Unit shall be distributed within fifty-five (55) days following such termination. For purposes of this Agreement, "Disability" shall have the meaning given such term under the Employment Agreement.
(b)Termination without Cause or Termination by the Participant for Good Reason. Subject to the requirements of Section 10(e) of the Employment Agreement, in the event the Participant’s Termination of Employment is by the Company without "Cause" or by the Participant voluntarily with "Good Reason," unvested Restricted Stock Units shall immediately vest at target level attainment and a share of Common Stock with respect to each such vested Restricted Stock Unit shall be distributed within fifty-five (55) days following such termination. For purposes of this Agreement, the terms "Cause" and "Good Reason" shall have the meaning given such terms under the Employment Agreement.
(c)Termination for Cause; Termination by the Participant other than for Good Reason. In the event the Participant’s Termination of Employment is for "Cause" or if the Participant terminates his employment voluntarily other than for "Good Reason," all unvested Restricted Stock Units shall be immediately forfeited for no consideration.
(d)Section 409A Award. Notwithstanding the foregoing, to the extent required by Section 409A of the Code upon a Termination of Employment (other than as a result of death) of the Participant as a result of the Participant being a Specified Employee, distributions determined, in whole or in part, to constitute a Section 409A Award shall be delayed until six months after such Termination of Employment if such termination constitutes a “separation from service” (within the meaning of Section 409A of the Code) and such distribution shall be made at the beginning of the seventh month following the date of the Participant’s Termination of Employment.
(e)Section 409A Compliance. No distribution in respect of a Section 409A Award shall be made upon the Participant’s Termination of Employment unless such termination constitutes a “separation from service” within the meaning of Section 409A of the Code. This Agreement is intended to comply with Section 409A of the Code and the Company shall construe, interpret and amend the provisions of this Agreement in such manner as the Company deems necessary, in its sole discretion, to comply with Section 409A of the Code with respect to a Section 409A Award but in no event shall the foregoing provisions or any other provision of this Agreement or the Plan be construed as a guarantee by the Company of any particular tax treatment.
3.Withholding Tax Liability. In connection with the vesting and payment of the Restricted Stock Units, the Company and the Participant will incur liability for income or withholding tax. The Company shall have the right to withhold from any payment in respect of Restricted Stock Units, transfer of Common Stock, or payment made to the Participant or to any person hereunder, whether such payment is to be made in cash or in Common Stock, all applicable minimum federal, state, city or other taxes as shall be required, in the determination of the Company, pursuant to any statute or governmental regulation or ruling. In its discretion, the Company may satisfy such withholding obligation by any one or combination of the following methods: (i) by requiring the Participant to pay such amount in cash or check; (ii) by deducting such amount from the Participant's current compensation; (iii) by allowing the Participant to surrender other shares of Common Stock of the Company which (a) in the case of shares initially acquired from the Company (upon exercise of a stock option or otherwise), have been owned by the Participant for such period (if any) as may be required to avoid a charge to the Company's
earnings, and (b) have a fair market value on the date of surrender equal to the amount required to be withheld; (iv) by delivery by the Participant of a properly executed notice together with irrevocable instructions to a broker approved by the Company to sell shares of Common Stock and deliver promptly to the Company the amount of sale or loan proceeds required to pay the amount required to be withheld, or (v) by withholding a number of shares of Common Stock to be issued upon delivery of Common Stock which have a fair market value equal to the minimum statutory amount required to be withheld. For these purposes, the fair market value of the shares to be withheld shall be determined by the Company on the date that the amount of tax to be withheld is to be determined. The Company shall also be authorized to sell any shares of Common Stock to the extent required to satisfy the Company’s withholding obligations.
4.Nontransferability of Restricted Stock Units. The Restricted Stock Units may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner, whether for value or no value and whether voluntary or involuntary (including by operation of law), other than by will or by the laws of descent and distribution. Subject to the foregoing and the terms of the Plan, the terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.
5.No Enlargement of Rights. This Agreement is not an agreement of employment. Neither the Plan nor this Agreement shall confer upon the Participant any right to continue as an officer, employee, or consultant of the Company or any Affiliate. Nothing contained in the Plan or this Agreement shall interfere in any way with the rights of the Company or any Affiliate to terminate the employment of the Participant at any time or to modify the Participant’s employment or compensation. The Participant shall have only such rights and interests with respect to the Restricted Stock Units as are expressly provided in this Agreement, the Employment Agreement and the Plan.
6.No Shareholder Rights before Exercise and Issuance.
(a)No Shareholder Rights. No rights as a stockholder shall exist with respect to the Common Stock subject to the Restricted Stock Units as a result of the grant of the Restricted Stock Units, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or in subparagraph 6(b) below. Shareholder rights shall exist only after issuance of stock following the settlement of Earned Units by delivery of Common Stock as provided in the Plan.
(b)Dividend Equivalents. Cash dividend equivalents shall be credited to a separate Restricted Stock Unit dividend book entry account on behalf of the Participant with respect to each Restricted Stock Unit and adjusted at such time as the number of Earned Units is determined in accordance with this Agreement to apply only to such number of Earned Units. Vested dividend equivalents shall be distributed in cash (or used for tax withholding) to the Participant at the same time a share of Common Stock is distributed with respect to the Earned Unit to which the dividend equivalent relates.
7.Effect of the Plan on Restricted Stock Unit. The Restricted Stock Units are subject to, and the Company and the Participant agree to be bound by, all of the terms and conditions of the Plan, as such may be amended from time to time in accordance with the terms thereof. The Participant acknowledges that he has received a copy of the Plan and has had an opportunity to review the Plan. Without the consent of the Participant, the Company may amend or modify this Agreement in any manner not inconsistent with the Plan or the Employment Agreement, including without limitation, to change the date or dates as of which a Restricted
Stock Unit becomes vested, or to cure any ambiguity, defect or inconsistency, provided such amendment, modification or change does not adversely affect the rights of the Participant.
8.Entire Agreement. The terms of this Agreement and the Plan constitute the entire agreement between the Company and the Participant with respect to the subject matter hereof and supersede any and all previous agreements between the Company and the Participant and all prior communications, representations and negotiations in respect thereto. No waiver by any party of any breach by the other of any provision of this Agreement or the Employment Agreement shall be deemed to be a waiver of any other breaches thereof or the waiver of any such or other provision of this Agreement or the Employment Agreement. Subject to the restrictions on assignment and transfer set forth above, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their estates, personal representatives, successors and assigns. This Agreement may be signed in counterparts.
9.Severability. If any provision of this Agreement, or the application of such provision to any person or circumstances, is held invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held valid or unenforceable, shall not be affected thereby.
10.Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
11.Notices. Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or by United States mail, to the appropriate party at the address set forth below (or such other address as the party shall from time to time specify): If to the Company, to: Scholastic Corporation, 557 Broadway, New York, New York 10012, Attention: Corporate Secretary. If to the Participant, to the most recent address on file with the Company. Notwithstanding the foregoing, the Company may require that any notice by the Participant be provided electronically or in writing to the Company or to the stock plan administrator pursuant to such procedures as the Company shall establish from time to time in its sole discretion.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set forth above.
SCHOLASTIC CORPORATION ("Company")
By: /s/ Lindsey Cotter
Name: Lindsey Cotter
Title: Senior Vice President, Human Resources
PETER WARWICK ("Participant")
/s/ Peter Warwick
Performance Measures for Annual Equity Awards
1. Create a three-year high-level strategic growth plan; a capital allocation program arising from it that will move capital to where the best growth opportunities lie with particular focus on direct to consumer and growth initiatives in Education; plan and begin to remove duplicate costs and expenses that are not yielding sufficiently strong returns in order to optimize the available funding for growth initiatives; communicate the growth plan clearly, robustly and frequently to Scholastic employees.
2. Strengthen the senior-most levels of the Scholastic organization with executives (promoted or recruited from outside) who have digital and change agency skills that can accelerate the transformation of the Company.
3. Build a “One Scholastic” customer-centric change plan, in collaboration with the members of the MEC and other key executives; begin an organizational and culture change program to implement it; focus from the outset on strong and regular internal communications.
4. Develop and begin to roll out a plan for engaging investors, enabling them to understand better the unique existing and unrealized assets and capabilities that Scholastic possesses, and providing the contours of the Company’s growth plan.
5. Identify 2-3 potential CEO candidates from within the Company, Board and outside; for inside candidates begin a process of mentoring; work with a professional executive search professional to identify potential new Board members and new executives for the Company who could be CEO succession candidates.