[_]
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Preliminary Proxy
Statement
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[_]
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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[_]
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Definitive Proxy
Statement
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[X]
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Definitive Additional
Materials
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[_]
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Soliciting Material Pursuant to
§240.14a-12
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(Name of Registrant as Specified
in its Charter)
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[X]
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No fee
required.
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[_]
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
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Title of each class of securities
to which transaction applies:
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2)
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Aggregate number of securities to
which transaction applies:
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___________________________________________________
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3)
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it
was determined):
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____________________________________________________
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4)
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Proposed maximum aggregate value
of transaction:
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____________________________________________________
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5)
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Total fee
paid:
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____________________________________________________
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[_]
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Fee paid previously with
preliminary materials:
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[_]
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously
Paid:
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____________________________________________________
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2)
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Form, Schedule or Registration
Statement No.:
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____________________________________________________
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3)
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Filing
Party:
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____________________________________________________
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4)
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Date
Filed:
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____________________________________________________
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·
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Our
Board of Directors adopted and recommended for stockholder approval at the
Annual Meeting an amendment to the Restated Certificate of Incorporation
to declassify the Board of Directors and provide for annual election of
directors (2009 Proxy Statement (the “Proxy Statement”), filed with the
SEC on May 14, 2009, page 8).
|
|
·
|
The
Company adopted a majority vote standard for director elections with a
carve out for contested elections (Amended and Restated Bylaws, Article
III, Section 1, filed on Form 8-K on April 13,
2007).
|
|
·
|
Sixty-four
percent (9 of 14) of our directors and nominees are independent under the
NYSE listing standards (Proxy Statement, page
14).
|
|
·
|
The
Company adopted stock ownership guidelines for executives and
non-management directors (www.riteaid.com, under the Corporate Governance
section of the Our Company page).
|
|
·
|
The
Board unanimously approved Ms. Sammons’ recommendation to strengthen the
senior leadership team throughout the year, including hiring Messrs. John
T. Standley, Frank G. Vitrano and Kenneth Martindale who have a proven
track record of improving results in challenging situations (Letter to
Stockholders filed on May 14, 2009 as Additional Soliciting Materials (the
“Stockholder Letter”), page 2).
|
|
·
|
The
base salary for Mary Sammons (our Chairman and CEO) for fiscal year 2009
remained at $1,000,000, which is the same level it was for fiscal years
2004 through 2008 (Proxy Statement, page
30).
|
|
·
|
Equity
value provided to Ms. Sammons in Fiscal Year 2009 decreased from the prior
year (Proxy Statement, page 36).
|
|
·
|
Total
compensation for Ms. Sammons for fiscal year 2009 decreased by more than
50% from fiscal year 2008 (Proxy Statement, page
36).
|
|
·
|
For
fiscal year 2010 (commencing March 1, 2009), the base salary for the Named
Executive Officers and other executive officers of the Company will remain
unchanged from fiscal year 2009. Although the executives performed
well on an individual basis, the focus will continue on the potential
value that these executives might gain through the performance-based cash
incentive bonus and the long-term equity incentive program. The
Compensation Committee supports this salary freeze, which increases the
alignment of compensation with Company performance and the objectives of
our stockholders (Proxy Statement, page
35).
|
|
·
|
The
performance measures for the cash incentive bonus opportunity for the
Named Executive Officers and other executive officers of the Company for
fiscal year 2010 will be based solely on the attainment of Adjusted EBITDA
thresholds and will not contain a customer satisfaction component or
target. Although improvements in customer satisfaction continue
to be a focus of the Company, this change more closely aligns compensation
with Company’s financial performance goals (Proxy Statement, page
35).
|
|
·
|
An
independent compensation consultant is retained by the Compensation
Committee to conduct a pay for performance review, which is performed
annually using peer group companies that fall within a similar revenue
range and industry as Rite Aid’s (Proxy Statement, page
29).
|
|
·
|
The
nonqualified deferred compensation plan for senior management has a
“double trigger,” namely, (1) the account balance for each participant
vests upon a "change in control" of the Company, as defined in the plan,
only if such participant is involuntarily terminated without cause within
twelve months of the change in control, and (2) participants receive their
vested account balance upon the earlier of: (i) their retirement at age 60
or greater, with at least five years of participation in the plan; (ii)
termination of employment with the Company; and (iii) a hardship
withdrawal pursuant to the terms of the plan (Proxy Statement, page
34).
|
|
·
|
For
fiscal year 2009, there was a change in the mix of the equity incentive
program to provide for a closer pay for performance
alignment. Relative to the prior year, for fiscal year 2009
performance awards comprised 60% (increased from 25%), stock options
comprised 25% (reduced from 50%) and restricted stock comprised 15%
(reduced from 25%) of the total long-term equity incentive level (Proxy
Statement, pages 31-33).
|
|
·
|
For
fiscal year 2009, same store sales growth was 0.8% despite continued
weakness in the economy (Fourth Quarter and Full Year Results Announcement
issued April 2, 2009, available at www.riteaid.com).
|
|
·
|
Revenue
performance for fiscal year 2009 was $26.3 billion, an increase of 8.1%
from the prior year, primarily driven by an additional quarter of sales
for the Brooks Eckerd stores (Fourth Quarter and Full Year Results
Announcement issued April 2, 2009, available at www.riteaid.com).
|
|
·
|
For
fiscal year 2009, the Company increased year end liquidity to $723
million, the strongest liquidity position in more than a year largely due
to initiatives to reduce working capital (Fourth Quarter and Full Year
Results Announcement issued April 2, 2009, available at www.riteaid.com;
Stockholder Letter, page 1).
|
|
·
|
Rite
Aid completed the integration of the Brooks Eckerd acquisition in fiscal
year 2009 (Annual Report on Form 10-K filed April 17,
2009).
|
|
·
|
For
Fiscal 2010, the Company is focused on growing profitable sales by
tailoring marketing and merchandise programs to specific customer groups,
expanding our value offerings and building customer and associate
loyalty. We are also focused on continuing to aggressively
reduce costs and on improving cash flows so that we not only maintain
sufficient liquidity to operate our business but are also able to start
reducing debt (Stockholder Letter, page
3).
|
|
·
|
The
Company launched a new $400 million term loan due 2015 as part of a
comprehensive plan to refinance its September 2010 debt maturities and is
confident it will be able to complete its refinancing plan by the end of
2009 (Current Report on Form 8-K filed May 26, 2009; Stockholder Letter,
page 1).
|
|
·
|
Since
the beginning of our 2010 Fiscal Year on March 1, 2009 through the date of
this letter, our stock performance has increased
396%.
|
Sincerely,
|
|
/s/
Marc A. Strassler
|
|
Marc
A. Strassler
|
|
Executive
Vice President, General Counsel
|
|
and
Secretary
|
|
·
|
Our
Board of Directors adopted and recommended for stockholder approval at the
Annual Meeting an amendment to the Restated Certificate of Incorporation
to declassify the Board of Directors and provide for annual election of
directors (2009 Proxy Statement (the “Proxy Statement”), filed with the
SEC on May 14, 2009, page 8).
|
|
·
|
The
Company adopted a majority vote standard for director elections with a
carve out for contested elections (Amended and Restated Bylaws, Article
III, Section 1, filed on Form 8-K on April 13,
2007).
|
|
·
|
Sixty-four
percent (9 of 14) of our directors and nominees are independent under the
NYSE listing standards (Proxy Statement, page
14).
|
|
·
|
The
Company adopted stock ownership guidelines for executives and
non-management directors (www.riteaid.com, under the Corporate Governance
section of the Our Company page).
|
|
·
|
The
Board unanimously approved Ms. Sammons’ recommendation to strengthen the
senior leadership team throughout the year, including hiring Messrs. John
T. Standley, Frank G. Vitrano and Kenneth Martindale who have a proven
track record of improving results in challenging situations (Letter to
Stockholders filed on May 14, 2009 as Additional Soliciting Materials (the
“Stockholder Letter”), page 2).
|
|
·
|
The
base salary for Mary Sammons (our Chairman and CEO) for fiscal year 2009
remained at $1,000,000, which is the same level it was for fiscal years
2004 through 2008 (Proxy Statement, page
30).
|
|
·
|
Equity
value provided to Ms. Sammons in Fiscal Year 2009 decreased from the prior
year (Proxy Statement, page 36).
|
|
·
|
Total
compensation for Ms. Sammons for fiscal year 2009 decreased by more than
50% from fiscal year 2008 (Proxy Statement, page
36).
|
|
·
|
For
fiscal year 2010 (commencing March 1, 2009), the base salary for the Named
Executive Officers and other executive officers of the Company will remain
unchanged from fiscal year 2009. Although the executives performed
well on an individual basis, the focus will continue on the potential
value that these executives might gain through the performance-based cash
incentive bonus and the long-term equity incentive program. The
Compensation Committee supports this salary freeze, which increases the
alignment of compensation with Company performance and the objectives of
our stockholders (Proxy Statement, page
35).
|
|
·
|
The
performance measures for the cash incentive bonus opportunity for the
Named Executive Officers and other executive officers of the Company for
fiscal year 2010 will be based solely on the attainment of Adjusted EBITDA
thresholds and will not contain a customer satisfaction component or
target. Although improvements in customer satisfaction continue
to be a focus of the Company, this change more closely aligns compensation
with Company’s financial performance goals (Proxy Statement, page
35).
|
|
·
|
An
independent compensation consultant is retained by the Compensation
Committee to conduct a pay for performance review, which is performed
annually using peer group companies that fall within a similar revenue
range and industry as Rite Aid’s (Proxy Statement, page
29).
|
|
·
|
The
nonqualified deferred compensation plan for senior management has a
“double trigger,” namely, (1) the account balance for each participant
vests upon a "change in control" of the Company, as defined in the plan,
only if such participant is involuntarily terminated without cause within
twelve months of the change in control, and (2) participants receive their
vested account balance upon the earlier of: (i) their retirement at age 60
or greater, with at least five years of participation in the plan; (ii)
termination of employment with the Company; and (iii) a hardship
withdrawal pursuant to the terms of the plan (Proxy Statement, page
34).
|
|
·
|
For
fiscal year 2009, there was a change in the mix of the equity incentive
program to provide for a closer pay for performance
alignment. Relative to the prior year, for fiscal year 2009
performance awards comprised 60% (increased from 25%), stock options
comprised 25% (reduced from 50%) and restricted stock comprised 15%
(reduced from 25%) of the total long-term equity incentive level (Proxy
Statement, pages 31-33).
|
|
·
|
For
fiscal year 2009, same store sales growth was 0.8% despite continued
weakness in the economy (Fourth Quarter and Full Year Results Announcement
issued April 2, 2009, available at www.riteaid.com).
|
|
·
|
Revenue
performance for fiscal year 2009 was $26.3 billion, an increase of 8.1%
from the prior year, primarily driven by an additional quarter of sales
for the Brooks Eckerd stores (Fourth Quarter and Full Year Results
Announcement issued April 2, 2009, available at www.riteaid.com).
|
|
·
|
For
fiscal year 2009, the Company increased year end liquidity to $723
million, the strongest liquidity position in more than a year largely due
to initiatives to reduce working capital (Fourth Quarter and Full Year
Results Announcement issued April 2, 2009, available at www.riteaid.com;
Stockholder Letter, page 1).
|
|
·
|
Rite
Aid completed the integration of the Brooks Eckerd acquisition in fiscal
year 2009 (Annual Report on Form 10-K filed April 17,
2009).
|
|
·
|
For
Fiscal 2010, the Company is focused on growing profitable sales by
tailoring marketing and merchandise programs to specific customer groups,
expanding our value offerings and building customer and associate
loyalty. We are also focused on continuing to aggressively
reduce costs and on improving cash flows so that we not only maintain
sufficient liquidity to operate our business but are also able to start
reducing debt (Stockholder Letter, page
3).
|
|
·
|
The
Company launched a new $400 million term loan due 2015 as part of a
comprehensive plan to refinance its September 2010 debt maturities and is
confident it will be able to complete its refinancing plan by the end of
2009 (Current Report on Form 8-K filed May 26, 2009; Stockholder Letter,
page 1).
|
Sincerely,
|
|
/s/
Marc A. Strassler
|
|
Marc
A. Strassler
|
|
Executive
Vice President, General Counsel
|
|
and
Secretary
|