Related Person Transaction Policy
Rite Aid Corporation (the “Company”) recognizes that Related Person Transactions (as defined below) may raise questions among its stakeholders (associates, vendors, creditors or stockholders) as to whether those transactions are consistent with the best interests of the Company and its stakeholders. The objective of this policy is to ensure that Related Person Transactions are in the best interests of the Company and its stakeholders.
It is the Company’s policy that the Nominating and Governance Committee (the “Committee”) of the Board of Directors review and approve or ratify all Related Person Transactions (as defined below), and that such Related Person Transactions be disclosed in accordance with applicable legal and regulatory requirements. The Company recognizes that there are situations where Related Person Transactions may be in, or may not be inconsistent with, the best interests of the Company and its stakeholders, including but not limited to situations where the Company may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when the Company provides products or services to Related Persons (as defined below) on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms comparable to those provided to associates generally.
Proposed charitable contributions, or pledges of charitable contributions, by The Rite Aid Foundation (the “Foundation”) or the Company to a charitable or non-profit organization identified on the roster of Related Persons shall be subject to prior review and approval by the Committee.
No immediate family member (as defined below) of a director or executive officer shall be hired as an associate of the Company unless the employment arrangement is approved by the Committee at the next Committee meeting. In the event a person becomes a director or executive officer of the Company and an immediate family member of such person is already an associate of the Company, no material change in the terms of employment, including compensation, may be made without the prior approval of the Committee (except, if the immediate family member is himself or herself an executive officer of the Company, any proposed change in the terms of employment shall be reviewed and approved in the same manner as other executive officer compensatory arrangements).
All Related Person Transactions that are required to be disclosed in the Company’s filings with the Securities and Exchange Commission, as required by the Securities Act of 1933 and the Securities Exchange Act of 1934 and related rules and regulations, shall be so disclosed in accordance with such laws, rules and regulations.
The material features of this policy shall be disclosed in the Company’s annual report on Form 10-K or in the Company’s proxy statement, as required by applicable laws, rules and regulations. In addition, the Company shall post this policy on its website and update it as appropriate.
Related Person Transactions must also comply with the Company’s existing policies and procedures as specified in our:
- Annual Questionnaire for Directors, Nominees and Officers (“D&O Questionnaire”);
- Code of Business Ethics and Conduct;
- CEO and Senior Financial Officer Code of Ethics;
- Ethics Committee Charter; and
- Fraud Policy.
This policy applies to all Related Persons.
Entering into a Related Person Transaction, without the approval from or ratification of the Committee is prohibited and a violation of this policy.
PROCEDURES FOR REVIEW AND APPROVAL OR RATIFICATION
Directors, executive officers and nominees shall complete an annual D&O Questionnaire and disclose all potential Related Person Transactions involving themselves and their immediate family members that are known to them. Throughout the year, directors and executive officers shall notify the Corporate Secretary and Chief Accounting Officer of any potential Related Person Transactions as soon as they become aware of any such transaction. The Corporate Secretary and Chief Accounting Officer shall inform the Committee of any Related Person Transaction of which they are aware. The Corporate Secretary and Chief Accounting Officer shall be responsible for conducting a preliminary analysis and review of potential Related Person Transactions and presentation to the Committee for review including provision of additional information to enable proper consideration by such Committee.
If the Corporate Secretary and Chief Accounting Officer determines that the proposed transaction is a Related Person Transaction, such proposed transaction shall be submitted to the Committee for consideration at the next Committee meeting or, in those instances in which the Corporate Secretary and Chief Accounting Officer, in consultation with the Chief Executive Officer or the Chief Financial Officer, determines that it is not practicable or desirable for the Company to wait until the next Committee meeting, to the Chair of the Committee (who will possess delegated authority to act between Committee meetings). The Committee or the Chair shall consider all of the available, relevant facts and circumstances, including (if applicable) but not limited to:
- The benefits to the Company;
- The impact on a director’s independence in the event the Related Person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer;
- The availability of other sources for comparable products or services;
- The terms of the transaction; and
- The terms available to unrelated third parties or to associates generally.
No member of the Committee shall participate in any review, consideration or approval of any Related Person Transaction with respect to which such member or any of his or her immediate family members is the Related Person. Only those Related Person Transactions that are in, or are not inconsistent with, the best interests of the Company and its stakeholders, shall be approved or ratified as the Committee or the Chair, as applicable, determines in good faith. The Chair shall report to the Committee at its next meeting, any Related Person Transactions approved or ratified by the Chair.
As necessary, the Committee shall review approved Related Person Transactions on a periodic basis throughout the duration of the transaction to ensure that the transactions remains in the best interests of the Company. The Committee may, in its discretion, engage outside counsel to review certain Related Person Transactions.
Each director and executive officer of the Company is personally responsible for compliance with this policy, including to the extent his or her immediate family members are involved in a Related Person Transaction. However, it shall not be considered a violation of this policy in the event a Related Person Transaction involving a director or executive officer is entered into without his or her knowledge if such director or executive officer notifies the Corporate Secretary or Chief Accounting Officer as soon as practicable after they become aware of the transaction so the Related Person Transaction can be presented to the Committee for the required review.
The Corporate Secretary and Chief Accounting Officer are responsible for the day-to-day application of this policy.
This policy has been approved by the Committee. The Committee will review and may amend this policy annually.
For the purposes of this policy, a “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) that occurred since the beginning of the Company’s most recent fiscal year in which the Company (including any of its subsidiaries and the Foundation) was, is or will be a participant and the amount involved exceeds $120,000 and in which any Related Person had, has or will have a direct or indirect material interest.
For purposes of this policy, a “Related Person” means:
- any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company;
- any person who is known to be the beneficial owner of more than 5% of any class of the Company’s voting securities (a “Five-Percent Stockholder”);
- any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or Five-Percent Stockholder, and any person (other than domestic employees or tenant) sharing the household of such director, executive officer, nominee or Five-Percent Stockholder; and
- any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.
Updated April 10, 2019