Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Linda K. Zecher as President, Chief Executive Officer and Director.
On September 22, 2016, Houghton Mifflin Harcourt Company (the “
Company
”) announced that Linda K. Zecher has resigned from her current position as the Company’s President and Chief Executive Officer and as a member of the Company’s board of directors (the “
Board
”), effective immediately. L. Gordon Crovitz, one of the Company’s directors, will serve as the Company’s President and Chief Executive Officer on an interim basis, effective immediately.
In connection with Ms. Zecher’s resignation, the Company entered into a letter agreement (the “
Zecher Letter Agreement
”) with Ms. Zecher, effective as of September 22, 2016. Pursuant to the Zecher Letter Agreement, the Company and Ms. Zecher have agreed that, for all purposes under her employment agreement with the Company (the “
Zecher
Employment Agreement
”), Ms. Zecher’s resignation and departure from the Company shall be treated as a termination of employment by the Company without Cause and not as a resignation without Good Reason (each as defined in the Zecher Employment Agreement).
Appointment of L. Gordon Crovitz as President and Chief Executive Officer.
On September 22, 2016, the Company announced the appointment of L. Gordon Crovitz, a current member of the Company’s Board, to serve as President and Chief Executive Officer of the Company on an interim basis, effective immediately. Mr. Crovitz will perform the functions of President and Chief Executive Officer of the Company until the Company has chosen a permanent successor to serve in such roles.
As compensation for the services that Mr. Crovitz will provide as President and Chief Executive Officer of the Company, Mr. Crovitz will be entitled to receive: (i) a base salary at an annualized rate of $935,000; (ii) an award of restricted stock units (“
RSUs
”) under the Company’s
2015 Omnibus Incentive Plan,
which, upon vesting, shall be convertible into a number of shares of the Company’s common stock having an aggregate value of $935,000 (based on the closing price on the date of grant), which shall (a) have an effective date of grant on the business day that is three business days following the date on which the Company first releases quarterly earnings information following both the date of his appointment as President and Chief Executive Officer of the Company and the approval of the award by the Board and (b) vest on the earlier of: (1) the first anniversary of the date of his appointment as President and Chief Executive Officer of the Company; and (2) the date on which he ceases to be President and Chief Executive Officer of the Company in connection with the appointment of a successor President and Chief Executive Officer (such RSU award will otherwise generally be subject to the terms of the Company’s customary form of time-based vesting RSU award agreement for senior executives); (iii) a cash bonus in an amount equal to 125% of his annualized base salary, prorated based on his actual time serving as President and Chief Executive Officer of the Company; and (iv) reimbursement of his reasonable lodging and travel expenses, and reasonable attorneys’ fees incurred in connection with his appointment.
Mr. Crovitz, age 58,
has served as a member of the Board since August 2012. From 1980-2007, Mr. Crovitz held a number of positions with Dow Jones and The Wall Street Journal, culminating in his role as Executive Vice President for Dow Jones and Publisher of The Wall Street Journal. He co-founded e-commerce software company Press+ in 2009 and is currently a partner at NextNews Ventures, a partnership investing in early-stage news companies. Mr. Crovitz serves on the Board of Directors at Dun & Bradstreet, Inc., Marin Software Incorporated, Business Insider and Blurb. He is also on the board of the American Association of Rhodes Scholars. Mr. Crovitz’s management roles in the publishing industry and extensive experience as a director enable him to provide the Company with valuable guidance.
Executive Retention Arrangements.
On September 22, 2016, as part of a broader executive retention program, Joseph P. Abbott, Jr., Lee R. Ramsayer, Mary J. Cullinane and William F. Bayers were each awarded a special one-time cash retention bonus with a value of $500,000, $500,000, $500,000 and $250,000, respectively. Each retention bonus will be payable in two equal installments on each of September 22, 2017 and September 22, 2018, subject to the applicable executive’s continued employment on each such date. If the executive’s employment is terminated by the Company without Cause (as defined in the Houghton Mifflin Harcourt Publishing Company ELT Severance Plan), and other than due to death or disability, any then-unpaid portion of the retention bonus will become payable, subject to the executive’s execution of a separation agreement that will include a release of claims.
The foregoing is only a summary of the arrangements described herein, does not purport to be complete and is qualified in its entirety by reference to the full text of the underlying documents governing such arrangements.