schl-def14a_20220921.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.           )

Filed by the Registrant

 

Filed by a Party other than the Registrant

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

SCHOLASTIC CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check all boxes that apply):

 

No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 


 

 

Scholastic 557 Broadway, New York, NY 10012-3999 (212) 343-6100
www.scholastic.com

 

SCHOLASTIC CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Holders of Class A Stock and Common Stock:

The Annual Meeting of Stockholders of Scholastic Corporation (the “Company”) will be held via the internet at www.virtualshareholdermeeting.com/SCHL2022 on Wednesday, September 21, 2022 at 9:00 a.m. E.D.T., for the following purposes:

Matters to be voted upon by holders of the Class A Stock

 

1.

Electing seven directors to the Board of Directors

Matters to be voted upon by holders of the Common Stock

 

1.

Electing two directors to the Board of Directors

and such other business as may properly come before the meeting and any adjournments thereof.

A proxy statement describing the matters to be considered at the Annual Meeting of Stockholders is attached to this notice. Only stockholders of record of the Class A Stock and the Common Stock at the close of business on July 25, 2022 are entitled to notice of, and to vote at, the meeting and any adjournments thereof.

We hope that you will be able to attend the meeting. Whether or not you plan to attend the meeting, we urge you to vote your shares promptly. You can vote your shares in three ways:

 

via the Internet at the website indicated on your proxy card;

 

via telephone by calling the toll free number on your proxy card; or

 

by returning the enclosed proxy card.

By order of the Board of Directors

 

 

 

 

 

 

Andrew S. Hedden

 

Secretary

 

August 12, 2022

 

 

 


 

 

TABLE OF CONTENTS

 

Solicitation of Proxies

 

1

 

 

 

 

 

 

 

 

General Information

 

1

 

 

 

 

 

 

 

 

Voting Securities of the Company

 

3

 

 

 

 

 

 

 

 

Principal Holders of Class A Stock and Common Stock

 

4

 

 

 

 

 

 

 

 

Change of Control Arrangement for Certain Class A Stockholders

 

7

 

 

 

 

 

 

 

 

Delinquent Section 16(a) Beneficial Ownership Reports

 

7

 

 

 

 

 

 

 

 

Share Ownership of Management

 

7

 

 

 

 

 

 

 

 

Compensation Committee Interlocks and Insider Participation

 

10

 

 

 

 

 

 

 

 

Human Resources and Compensation Committee Report

 

10

 

 

 

 

 

 

 

 

Compensation Discussion and Analysis

 

10

 

 

 

 

 

 

 

 

Summary Compensation Table

 

22

 

 

 

 

 

 

 

 

Grants of Plan-Based Awards

 

25

 

 

 

 

 

 

 

 

Outstanding Equity Awards at May 31, 2022

 

26

 

 

 

 

 

 

 

 

Option Exercises and Stock Vested

 

27

 

 

 

 

 

 

 

 

Pension Plan

 

27

 

 

 

 

 

 

 

 

Nonqualified Deferred Compensation Table

 

28

 

 

 

 

 

 

 

 

Potential Payments upon Termination or Change-in-Control

 

28

 

 

 

 

 

 

 

 

Pay Ratio

 

32

 

 

 

 

 

 

 

 

Related Party – Transaction with Executive Officer

 

33

 

 

 

 

 

 

 

 

Equity Compensation Plan Information

 

34

 

 

 

 

 

 

 

 

Stock Ownership Guidelines

 

34

 

 

 

 

 

 

 

 

Matters Submitted to Stockholders

 

35

 

 

 

 

 

 

 

 

Proposal 1 – Election of Directors

 

35

 

 

 

 

 

 

 

 

Nominees for Election by Holders of Class A Stock

 

36

 

 

 

 

 

 

 

 

Nominees for Election by Holders of Common Stock

 

36

 

 

 

 

 

 

 

 

Board Diversity Matrix

 

41

 

 

 

 

 

 

 

 

Board Leadership Structure and Risk Oversight

 

41

 

 

 

 

 

 

 

 

Meetings of the Board and its Committees

 

43

 

 

 

 

 

 

 

 

Corporate Governance

 

45

 

 

 

 

 

 

 

 

Director Compensation

 

50

 

 

 

 

 

 

 

 

Independent Registered Public Accountants

 

52

 

 

 

 

 

 

 

 

Audit Committee’s Report

 

53

 

 

 

 

 

 

 

 

Stockholder Proposals for 2023 Annual Meeting

 

53

 

 

 

 

 

 

 

 

Other Matters

 

54

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Important Notice Regarding Availability of Proxy Materials

for the 2022 Annual Meeting of Stockholders to be held on September 21, 2022

This Proxy Statement and the Annual Report to Stockholders are available at

www.proxyvote.com

SCHOLASTIC CORPORATION

557 Broadway

New York, New York 10012-3999

________________________

PROXY STATEMENT

________________________

ANNUAL MEETING OF STOCKHOLDERS

September 21, 2022

________________________

SOLICITATION OF PROXIES

General Information

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Scholastic Corporation, a Delaware corporation (the “Company”), to be voted at its Annual Meeting of Stockholders (the “Annual Meeting”), which will be held via the internet at www.virtualshareholdermeeting.com/SCHL2022 on Wednesday, September 21, 2022 at 9:00 a.m. E.D.T. and at any adjournments thereof.

The Company has made available to you over the Internet or delivered paper copies of this proxy statement, a proxy card and the Annual Report to Stockholders (of which the Company’s 2022 Annual Report on Form 10-K for the fiscal year ending May 31, 2022 is a part (the “Annual Report”), in connection with the Annual Meeting. The Company is using the rules of the Securities and Exchange Commission (“SEC”) that allow companies to furnish their proxy materials over the Internet. As a result, the Company is mailing to many of its stockholders a notice about the Internet availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the notice will have the ability to access the proxy materials over the Internet, as well as to request a paper copy by mail or via email, free of charge, by following the instructions in the notice.

This proxy statement and the accompanying form of proxy, together with the Company’s Annual Report, are being mailed to those stockholders who are not receiving the notice concerning Internet availability on or about August 12, 2022.

Shares represented by each proxy properly submitted, either by the Internet, telephone or mail as indicated on the enclosed form of proxy, will be voted in accordance with the instructions indicated on such proxy unless revoked. A stockholder may revoke a proxy at any time before it is exercised by:

 

delivering to the Secretary of the Company a written revocation thereof or a duly executed proxy bearing a later date; or

1


 

 

providing subsequent internet or telephone voting instructions; or

 

voting via electronic means at the Annual Meeting.

Any written notice revoking a proxy should be sent to the attention of Andrew S. Hedden, Corporate Secretary, Scholastic Corporation, 557 Broadway, New York, NY 10012-3999.

If you are a Common Stockholder of record submitting a proxy, and no instructions are specified, your shares will be voted FOR the election of the directors.

If you are a Common Stockholder and you hold your shares beneficially through a broker, bank or other holder of record submitting a proxy, and no instructions are specified, your shares will NOT be voted.

If you are a Class A Stockholder submitting a proxy, and no instructions are specified, your shares will be voted FOR the election of the directors.

By submitting a proxy, you authorize the persons named as proxies to use their discretion in voting upon any other matter brought before the Annual Meeting. The Company does not know of any other business to be considered at the Annual Meeting.

SEC rules permit the Company to deliver only one copy of the proxy statement or the notice of Internet availability of the proxy statement to multiple stockholders of record who share the same address and have the same last name, unless the Company has received contrary instructions from one or more of such stockholders. This delivery method, called “householding,” reduces the Company’s printing and mailing costs. Stockholders who participate in householding will continue to receive or have internet access to separate proxy cards.

If you are a stockholder of record and wish to receive a separate copy of the proxy statement, now or in the future, at the same address, or you are currently receiving multiple copies of the proxy statement at the same address and wish to receive a single copy, please write to or call the Corporate Secretary, Scholastic Corporation, 557 Broadway, New York, NY 10012-3999, telephone: (212) 343-6100.

Beneficial owners sharing an address who are currently receiving multiple copies of the proxy materials or notice of internet availability of the proxy materials and wish to receive a single copy in the future, or who currently receive a single copy and wish to receive separate copies in the future, should contact their bank, broker or other holder of record to request that only a single copy or separate copies, as the case may be, be delivered to all stockholders at the shared address in the future.

The cost of soliciting proxies will be borne by the Company. Solicitation other than by mail may be made personally or by telephone, facsimile or e-mail by regularly employed officers and employees who will not be additionally compensated for such solicitation. The Company may also reimburse brokers, custodians, nominees and other fiduciaries for their reasonable expenses in forwarding proxy materials to principals.

2


 

Voting Securities of the Company

Only holders of record of the Company’s Class A Stock, $0.01 par value (“Class A Stock”), and Common Stock, $0.01 par value (“Common Stock”), at the close of business on July 25, 2022 (the “Record Date”) are entitled to vote at the Annual Meeting. As of the Record Date, there were 1,656,200 shares of Class A Stock and 32,495,498 shares of Common Stock outstanding.

The Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) provides that, except as otherwise provided by law, the holders of shares of the Class A Stock (the “Class A Stockholders”), voting as a class, have the right to: (i) fix the size of the Board so long as it does not consist of less than three (3) nor more than fifteen (15) directors; (ii) elect all the directors, subject to the right of the holders of shares of Common Stock, voting as a class, to elect such minimum number of the members of the Board as shall equal at least one-fifth of the members of the Board; and (iii) exercise, exclusive of the holders of shares of Common Stock, all other voting rights of stockholders of the Company. The Certificate also provides that, except as otherwise provided by law, the voting rights of the holders of shares of Common Stock are limited to the right, voting as a class, to elect such minimum number of the members of the Board as shall equal at least one-fifth of the members of the Board.

Each share of Class A Stock and Common Stock is entitled to one vote. No holders of either class of stock have cumulative voting rights. At the Annual Meeting, the Class A Stockholders will vote on the election of seven members of the Board and the holders of Common Stock will vote on the election of two members of the Board. If any other matters were to properly come before the Annual Meeting, they would be voted on by the Class A Stockholders.

The vote required for the election of directors is specified in the description of such proposal. In the election of directors, withheld votes and abstentions have no effect on the vote.  For the purpose of determining whether a proposal has received the required vote, abstentions will not be considered as votes cast and will have no effect. Because none of the shares of Class A Stock are held by brokers, the effect of broker non-votes is not applicable in the case of the Class A Stock. Because the only proposal before Common Stockholders is the election of two directors, the effect of broker non-votes is not applicable in the case of the Common Stock.

The holders of a majority of the shares entitled to vote at the meeting constitute a quorum for the Annual Meeting, provided that, for purposes of matters to be voted upon by the holders of Class A Stock, a quorum is the holders of a majority of the Class A Stock and, for purposes of matters to be voted upon by the holders of Common Stock, a quorum is the holders of a majority of the Common Stock.

3


 

Principal Holders of Class A Stock and Common Stock

The following table sets forth information regarding persons who, to the best of the Company’s knowledge, beneficially owned five percent or more of the Class A Stock or the Common Stock outstanding on the Record Date. Under the applicable rules and regulations of the SEC, a person who directly or indirectly has, or shares, voting power or investment power with respect to a security is considered a beneficial owner of such security. Voting power is the power to vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of shares. In computing the number of shares and percentage beneficially owned by any stockholder, shares of Class A Stock or Common Stock subject to options or restricted stock units (“RSUs”) held by that person that are currently exercisable or vested or become exercisable or vested within 60 days of the Record Date are included. Such shares, however, are not deemed outstanding for purposes of computing the percentage owned by any other person.

 

 

Class A Stock

 

 

Common Stock

 

Name and Address

of Beneficial Owner

 

Amount and Nature

of Beneficial

Ownership(1)

 

 

Percent of

Class

 

 

Amount and Nature

of Beneficial

Ownership(2)

 

 

Percent of

Class

 

The Estate of Richard Robinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iole Lucchese, Special Executor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

890,904

 

 

 

 

53.8

%

 

 

 

1,424,699

(3)

 

 

 

4.3

%

 

Iole Lucchese

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

890,904

 

 

 

 

53.8

%

 

 

 

1,601,564

(4)

 

 

 

4.8

%

 

Barbara Robinson Buckland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

648,620

 

 

 

 

39.2

%

 

 

 

2,069,320

 

 

 

 

6.2

%

 

Mary Sue Robinson Morrill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

765,296

 

 

 

 

46.2

%

 

 

 

2,646,787

(5)

 

 

 

8.0

%

 

William W. Robinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

648,620

 

 

 

 

39.2

%

 

 

 

2,027,183

 

 

 

 

6.1

%

 

Florence Robinson Ford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

648,620

 

 

 

 

39.2

%

 

 

 

2,056,960

 

 

 

 

6.2

%

 

Andrew S. Hedden

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

648,620

 

 

 

 

39.2

%

 

 

 

2,008,299

(6)

 

 

 

6.0

%

 

Trust under the Will of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maurice R. Robinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

648,620

 

 

 

 

39.2

%

 

 

 

1,831,712

 

 

 

 

5.5

%

 

Trust under the Will of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florence L. Robinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

c/o Scholastic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

557 Broadway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10012

 

 

116,676

 

 

 

 

7.0

%

 

 

 

466,676

 

 

 

 

1.4

%

 

4


 

 

 

Class A Stock

 

 

Common Stock

 

Name and Address

of Beneficial Owner

 

Amount and Nature

of Beneficial

Ownership(1)

 

 

Percent of

Class

 

 

Amount and Nature

of Beneficial

Ownership(2)

 

 

Percent of

Class

 

T. Rowe Price Associates, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 E. Pratt Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baltimore, MD 21202

 

 

 

 

 

 

 

 

 

 

5,542,917

(7)

 

 

 

16.8

%

 

BlackRock, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55 East 52nd Street

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New York, NY 10055

 

 

 

 

 

 

 

 

 

 

4,731,230

(8)

 

 

 

14.4

%

 

The Vanguard Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Vanguard Boulevard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malvern, PA 19355

 

 

 

 

 

 

 

 

 

 

2,440,008

(9)

 

 

 

7.4

%

 

Dimensional Fund Advisor LP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6300 Bee Cave Road

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building One

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Austin, TX 78746

 

 

 

 

 

 

 

 

 

 

2,314,711

(10)

 

 

 

7.0

%

 

 

 

(1)

Each of the Estate of Richard Robinson and Iole Lucchese have filed Statements on Schedule 13D and Barbara Robinson Buckland, Mary Sue Robinson Morrill, William W. Robinson, Florence Robinson Ford, Andrew S. Hedden and the Trust under the Will of Maurice R. Robinson (the “Maurice R. Robinson Trust”) have filed Statements on Schedule 13G with the SEC (the “Ownership Filings”) regarding beneficial ownership of Common Stock. Barbara Robinson Buckland, Mary Sue Robinson Morrill, William W. Robinson and Florence Robinson Ford, all of whom are siblings of Richard Robinson, the former Chairman of the Board, President and Chief Executive Officer of the Company, and Andrew S. Hedden, a former Director and current Executive Officer of the Company, are trustees of the Maurice R. Robinson Trust, with shared voting and investment power with respect to the shares owned by the Maurice R. Robinson Trust. Under the terms of the Maurice R. Robinson Trust, the vote of a majority of the trustees is required to vote or direct the disposition of the shares held by the Maurice R. Robinson Trust. In addition, Mary Sue Robinson Morrill is the trustee of the Trust under the Will of Florence L. Robinson (the “Florence L. Robinson Trust”), with sole voting and investment power with respect to the shares owned by the Florence L. Robinson Trust. Each such trust directly owns the shares attributed to it in the table and each person listed herein as a trustee of such trust is deemed to be the beneficial owner of the shares directly owned by such trust. Based on their Ownership Filings and subsequent information made available to the Company, the aggregate beneficial ownership of the Class A Stock on the Record Date by the following persons was: the Estate of Richard Robinson, Iole Lucchese, Special Executor—890,904 shares (sole voting and investment power); Iole Lucchese, individually— 890,904 shares (sole voting and investment power); Barbara Robinson Buckland—648,620 shares (shared voting and investment power); Mary Sue Robinson Morrill—765,296 shares (shared voting and investment power); William W. Robinson—648,620 shares (shared voting and investment power); Florence Robinson Ford—648,620 shares (shared voting and investment power); Andrew S. Hedden—648,620 shares (shared voting and investment power); Maurice R. Robinson Trust—648,620 shares (sole voting and investment power); and Florence L. Robinson Trust—116,676 shares (sole voting and investment power).

(2)

The shares of Class A Stock are convertible at the option of the holder into shares of Common Stock at any time on a share-for-share basis. The number of shares of Common Stock and percentage of the outstanding shares of Common Stock for each beneficial owner of Class A Stock assumes the conversion of such holder’s shares of Class A Stock into shares of Common Stock. Based on their Ownership filings and subsequent information made available to the Company, the aggregate beneficial ownership of Common Stock on the Record Date by the following holders was: the Estate of Richard Robinson, Iole Lucchese, Special Executor—1,424,699 shares (sole voting and investment power) and Iole Lucchese, individually—176,865 shares (sole voting and investment power); Barbara Robinson Buckland—237,608 shares (sole voting and investment power) and 1,831,712 shares (shared voting and investment power); Mary Sue Robinson Morrill—2,646,787 shares (shared voting and investment power) and 466,676 sole voting and investment power; William W. Robinson—195,471 shares (sole voting and investment power) and 1,831,712 shares (shared voting and investment power); Florence Robinson Ford—225,248 shares (sole voting and investment power) and 1,831,712 shares (shared voting and investment power); Andrew S. Hedden—176,587 shares (sole voting and investment power) and 1,831,712 shares (shared voting and investment power); Maurice R. Robinson Trust—

5


 

1,831,712 shares (sole voting and investment power) and Florence L. Robinson Trust—466,676 shares (sole voting and investment power).

(3)

Includes 890,904 shares of Common Stock issuable on conversion of the Class A Stock described in Notes 1 and 2 above and 533,795 shares of Common Stock held directly by the Estate of Richard Robinson.

(4)

Ms. Lucchese was appointed as an executor of the Estate of Richard Robinson on July 1, 2021 and her holdings include all the shares described in Note 3 above; 35,768 shares of Common Stock held directly by Ms. Lucchese, 8,603 shares of Common Stock under options exercisable by Ms. Lucchese within 60 days of the Record Date under the Scholastic Corporation 2021 Stock Incentive Plan (the “2021 Plan”); 123,801 shares of Common Stock under options exercisable by Ms. Lucchese within 60 days of the Record Dated under the Scholastic Corporation 2011 Stock Incentive Plan (the “2011 Plan”); 2,973 RSUs scheduled to vest within 60 days of the Record Date under the 2021 Plan; and 5,720 RSUs scheduled to vest within 60 days of  the Record Date under the 2011 Plan. Does not include an additional unvested 5,947 RSUs under the 2021 Plan and 4,848 unvested RSUs under the 2011 Plan.

(5)

Does not include an aggregate of 179,635 shares of Common Stock held under Trusts for which Ms. Morrill’s spouse is the trustee for the benefit of their children, and an aggregate of 101,389 shares held by family members directly and in a trust for which neither Ms. Morrill nor her spouse are trustees, as to which Ms. Morrill disclaims beneficial ownership.

(6)

Includes 38,819 shares of Common Stock held directly by Mr. Hedden; 4,731 shares of Common Stock under options exercisable within 60 days of the Record Date under the 2021 Plan; 127,862 shares of Common Stock under options exercisable within 60 days of the Record Date under the 2011 Plan; 1,635 RSUs scheduled to vest within 60 days of the Record Date under the 2021 Plan; 3,540 RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan; 648,620 shares of Common Stock issuable on conversion of the Class A Stock owned by the Maurice Robinson Trust and 1,183,092 shares of Common Stock owned by the Maurice R. Robinson Trust. Does not include 3,271 unvested RSUs under the 2021 Plan and 2,666 unvested RSUs under the 2011 Plan.

(7)

The information for T. Rowe Price Associates, Inc. (“Price Associates”) is derived from a Schedule 13G Amendment dated February 14, 2022, filed with the SEC reporting beneficial ownership as of December 31, 2021. These shares are owned by various individual and institutional investors, including T. Rowe Price Mid-Cap Growth Fund, Inc. (which owns 2,254,277 of the shares, representing 6.8% of the shares outstanding) as to which Price Associates serves as investment adviser, and Price Associates holds 5,542,917 shares, with sole dispositive power over all such shares and sole voting power over 2,075,009 of such shares. For purposes of the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Price Associates is deemed to be a beneficial owner of these shares; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such shares.

(8)

The information for BlackRock, Inc. (“BlackRock”) is derived from a Schedule 13G Amendment, dated January 25, 2022, filed with the SEC reporting beneficial ownership as of December 31, 2021. BlackRock has the sole power to direct investments with regard to all 4,731,230 shares and the sole power to vote with regard to 4,657,466 of such shares. Accordingly, for purposes of the reporting requirements of the Exchange Act, BlackRock is deemed to be a beneficial owner of these shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds of the sale of, these shares.

(9)

The information for The Vanguard Group (“Vanguard”) is derived from a Schedule 13G Amendment, dated February 9, 2022, filed with the SEC reporting beneficial ownership as of December 31, 2021. Vanguard has the sole power to direct investments with regard to 2,390,133 shares, the shared power to vote with regard to 28,762 shares and the shared power to direct investments with regard to 49,875 shares. Accordingly, for purposes of the reporting requirements of the Exchange Act, Vanguard is deemed to be a beneficial owner of these shares.

(10)

The information for Dimensional Fund Advisors LP (“Dimensional Fund”) is derived from a Schedule 13G Amendment, dated February 14, 2022, filed with the SEC reporting beneficial ownership as of December 31, 2021. Dimensional Fund serves as investment adviser to certain investment companies and as investment manager or subadvisor to certain other commingled funds, group trusts and separate accounts (collectively, the “Funds”). In certain cases, subsidiaries of Dimensional Fund may act as an advisor or subadvisor to certain Funds. The Funds own these shares, and in its role as investment advisor, subadvisor and/or manager,

6


 

Dimensional Fund or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over shares owned by the Funds. Dimensional has the sole power to direct investments with regard to all 2,314,711 shares and the sole power to vote with regard to 2,271,471 of such shares. The Funds have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares held in their respective accounts. For purposes of the reporting requirements of the Exchange Act, Dimensional Fund is deemed to be a beneficial owner of these shares; however, Dimensional Fund expressly disclaims that it is, in fact, the beneficial owner of such shares.

Change of Control Arrangement for Certain Class A Stockholders

Pursuant to an agreement dated July 23, 1990 between the Maurice R. Robinson Trust and M. Richard Robinson, Jr. (the “Buy Sell Agreement”), the Maurice R. Robinson Trust has agreed that if it receives an offer from any person to purchase any or all of the shares of Class A Stock owned by the Maurice R. Robinson Trust and it desires to accept such offer, Richard Robinson, including his executors, heirs and personal representatives as the case may be (collectively, “Robinson”), will have the right of first refusal to purchase all, but not less than all, of the shares of Class A Stock that such person has offered to purchase for the same price and on the same terms and conditions offered by such person. In the event Robinson does not elect to exercise such option, the Maurice R. Robinson Trust shall be free to sell such shares of Class A Stock in accordance with the offer it has received. In addition, if Robinson receives an offer from any person to purchase any or all of his shares of Class A Stock and the result of that sale would be to transfer to any person other than Robinson or his heirs voting power sufficient to enable such other person to elect the majority of the Board, either alone or in concert with any person other than Robinson, his heirs or the Maurice R. Robinson Trust (a “Control Offer”), and Robinson desires to accept the Control Offer, the Maurice R. Robinson Trust will have the option to sell any or all of its shares of Class A Stock to the person making the Control Offer at the price and on the terms and conditions set forth in the Control Offer. If the Maurice R. Robinson Trust does not exercise its option, Robinson will be free to accept the Control Offer and to sell Robinson’s shares of Class A Stock in accordance with the terms of the Control Offer. If the Maurice R. Robinson Trust exercises its option, Robinson cannot accept the Control Offer unless the person making the Control Offer purchases the shares of Class A Stock that the Maurice R. Robinson Trust has elected to sell.

Delinquent Section 16(a) Beneficial Ownership Reports

During the fiscal year ended May 31, 2022, the Company had four Section 16(a) reports that were delinquent, the Form 3 for each of Mr. Dumont and Ms. Walker and the Form 4 reporting their initial equity grants due to unexpected delays in receipt of the requisite filing codes.

Share Ownership of Management

On the Record Date, July 25, 2022, each director and Named Executive Officer reported under the caption “Executive Compensation” and all directors and executive officers as a group beneficially owned shares of the Class A Stock and Common Stock as set forth in the table below. In computing the number of shares and percentage beneficially owned by any stockholder, shares of Class A or Common Stock subject to options or restricted stock units (“RSUs”) held by that person that are currently exercisable or vested or will become exercisable

7


 

or vested within 60 days of the Record Date are included. Such shares, however, are not deemed outstanding for purposes of computing the percentage owned by any other person.

 

 

 

Class A Stock

 

 

Common Stock

 

Name

 

Amount and

Nature

of Beneficial

Ownership(1)

 

 

Percent of

Class

 

 

Amount and

Nature

of Beneficial

Ownership(1)

 

 

Percent of

Class

 

Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iole Lucchese

 

 

809,904

(2)

 

 

 

53.8

%

 

 

 

1,601,564

(3)

 

 

 

4.8

%

 

Andrés Alonso

 

 

 

 

 

 

 

 

 

 

34,135

(4)

 

 

 

*

 

 

James W. Barge

 

 

 

 

 

 

 

 

 

 

57,340

(5)

 

 

 

*

 

 

John L. Davies

 

 

 

 

 

 

 

 

 

 

26,091

(6)

 

 

 

*

 

 

Robert Dumont

 

 

 

 

 

 

 

 

 

 

 

7,359

(7)

 

 

 

*

 

 

Linda Li

 

 

 

 

 

 

 

 

 

 

 

 

1,983

(8)

 

 

 

*

 

 

Verdell Walker

 

 

 

 

 

 

 

 

 

 

6,204

(9)

 

 

 

*

 

 

Peter Warwick

 

 

 

 

 

 

 

 

 

 

 

 

86,215

(10)

 

 

 

*

 

 

Margaret A. Williams

 

 

 

 

 

 

 

 

 

 

50,851

(11)

 

 

 

*

 

 

David J. Young

 

 

 

 

 

 

 

 

 

 

36,096

(12)

 

 

 

*

 

 

Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter Warwick

 

 

 

 

 

 

 

 

 

 

86,215

(10)

 

 

 

*

 

 

Iole Lucchese

 

 

890,904

(2)

 

 

 

53.8

%

 

 

 

1,601,564

(3)

 

 

 

4.8

%

 

Kenneth J. Cleary

 

 

 

 

 

 

 

 

 

 

97,201

(13)

 

 

 

*

 

 

Sasha Quinton

 

 

 

 

 

 

 

 

 

 

84,859

(14)

 

 

 

*

 

 

Rosamund Else-Mitchell

 

 

 

 

 

 

 

 

 

 

54,788

(15)

 

 

 

*

 

 

All directors and executive officers as a group (14 persons)

 

 

1,539,524

(2)

 

 

 

92.9

%

 

 

 

4,152,985

(16)

 

 

 

11.9

%

 

 

*

Less than 1.0%

(1)

Except as indicated in the notes below, each person named has sole voting and investment power with respect to the shares shown opposite his or her name.

(2)

See the information with respect to the Estate of Richard Robinson and Iole Lucchese under “Principal Holders of Class A Stock and Common Stock” above. The shares of Class A Stock are convertible at the option of the holder into shares of Common Stock at any time on a share-for-share basis.

(3)

See the information with respect to the Estate of Richard Robinson and Iole Lucchese under “Principal Holders of Class A Stock and Common Stock” above.

(4)

Includes 6,350 shares of Common Stock held directly by Dr. Alonso, 3,831 shares of Common Stock under options exercisable by Dr. Alonso within 60 days of the Record Date under the Amended and Restated Scholastic Corporation 2007 Outside Directors Stock Incentive Plan (the “2007 Plan”), 22,170 shares of Common Stock under options exercisable by Dr. Alonso within 60 days of the Record Date under the Scholastic Corporation 2017 Outside Directors Stock Incentive Plan (the “2017 Plan”) and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

(5)

Includes 21,484 shares of Common Stock held directly by Mr. Barge, 11,902 shares of Common Stock under options exercisable by Mr. Barge within 60 days of the Record Date under the 2007 Plan, 22,170 shares of Common Stock under options exercisable by Mr. Barge within 60 days of the Record Date under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan. 14,570 shares of Mr. Barge’s Common Stock held directly are presently used as collateral on a revolving credit line.

(6)

Includes 5,261 shares of Common Stock held directly by Mr. Davies, 19,046 shares of Common Stock under options exercisable by Mr. Davies within 60 days of the Record Date under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

8


 

(7)

Includes 323 shares held directly by Mr. Dumont, 5,252 shares of Common Stock under options exercisable by Mr. Dumont within 60 days of the Record Date under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

(8)

Ms. Li joined the Board in May 2022 and received a pro-rata portion of the fiscal 2022 equity grant. Her holdings include 1,342 shares of Common Stock under options exercisable by Ms. Li within 60 days of the Record Date under the 2017 Plan and 641 RSUs scheduled to vest within 60 days under the 2017 Plan.

(9)

Includes 4,420 shares of Common Stock under options exercisable by Ms. Walker within 60 days of the Record Date under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

(10)

Includes 36,867 shares of Common Stock held directly by Mr. Warwick, 6,139 shares of Common Stock under options exercisable by Mr. Warwick within 60 days of the Record Date under the 2007 Plan, 14,384 shares of Common Stock under options exercisable by Mr. Warwick within 60 days of the Record Date under the 2011 Plan, 11,075 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan and 17,750 shares of Common Stock under options exercisable by Mr. Warwick within 60 days of the Record Date under the 2017 Plan. Does not include an additional 22,150 unvested RSUs under the 2011 Plan.

(11)

Includes 14,995 shares of Common Stock held directly by Ms. Williams, 11,902 shares of Common Stock under options exercisable by Ms. Williams within 60 days of the Record Date under the 2007 Plan, 22,170 shares of Common Stock under options exercisable by Ms. Williams within 60 days of the Record Date under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

(12)

Includes 8,566 shares of Common Stock held directly by Mr. Young, 3,576 shares of Common Stock under options exercisable by Mr. Young within 60 days of the Record Date under the 2007 Plan, 22,170 shares of Common Stock under options exercisable under the 2017 Plan and 1,784 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan.

(13)

Includes 9,941 shares of Common Stock held directly by Mr. Cleary, 76,142 shares of Common Stock under options exercisable by Mr. Cleary within 60 days of the Record Date under the 2011 Plan, 4,731 shares of Common Stock under options exercisable by Mr. Cleary under the 2021 Plan, 4,752 RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan and 1,635 RSUs scheduled to vest within 60 days of the Record Date under the 2021 Plan. Does not include an additional 3,878 unvested RSUs under the 2011 Plan, 3,271 unvested RSUs under the 2021 Plan and 4,078 unvested RSUs under the MSPP.

(14)

Includes 7,179 shares of Common Stock held directly by Ms. Quinton, 61,257 shares of Common Stock under options exercisable by Ms. Quinton within 60 days of the Record Date under 2011 Plan, 8,603 shares of Common Stock under options exercisable by Ms. Quinton within 60 days of the Record Date under the 2021 Plan, 4,847 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan and 2,973 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2021 Plan. Does not include an additional 8,620 unvested RSUs under the 2011 Plan and 5,947 unvested RSUs under the 2021 Plan.

(15)

Includes 2,998 shares of Common Stock held directly by Ms. Else-Mitchell, 35,367 shares of Common Stock under options exercisable by Ms. Else-Mitchell within 60 days of the Record Date under the 2011 Plan, 8,603 shares of Common Stock under options exercisable by Ms. Else-Mitchell within 60 days of the Record Date under the 2021 Plan, 4,847 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan and 2,973 shares underlying RSUs scheduled to vest within 60 days of the Record Date under the 2021 Plan. Does not include an additional 4,848 unvested RSUs under the 2011 Plan and 5,947 unvested RSUs under the 2021 Plan.

(16)

Includes 890,904 shares of Common Stock issuable on conversion of the Class A Stock included in the 1,424,699 shares owned by the Estate of Richard Robinson as described in Notes 1, 2 and 3 under “Principal Holders of Class A Stock and Common Stock” above and 648,620 shares Class A Stock and 1,183,092 shares of Common Stock owned by the Maurice R. Robinson Trust of which Mr. Hedden is a trustee. Also includes an aggregate of 188,551 shares of Common Stock held directly by all directors and executive officers as a group; an aggregate of 438,813 shares of Common Stock under options exercisable by members of the group

9


 

within 60 days of the Record Date under the 2011 Plan; an aggregate of 35,271 shares of Common Stock under options exercisable by members of the group within 60 days of the Record Date under the 2021 Plan; an aggregate of 37,350 shares of Common Stock under options exercisable by members of the group within 60 days of the Record Date under the 2007 Plan; an aggregate of 136,490 shares of Common Stock under options exercisable by members of the group within 60 days of the Record Date under the 2017 Plan; an aggregate of 13,129 RSUs scheduled to vest within 60 days of the Record Date under the 2017 Plan; an aggregate of 34,781 RSUs scheduled to vest within 60 days of the Record Date under the 2011 Plan; and an aggregate of 12,189 shares of Common Stock under options exercisable by members of the group within 60 days of the Record Date under the 2021 Plan. Does not include an aggregate of 4,773 unvested RSUs under the Scholastic Corporation Management Stock Purchase Plan (the “MSPP”), an aggregate of 24,383 unvested RSUs under the 2021 Plan and an aggregate of 47,010 unvested RSUs under the 2011 Plan.

Compensation Committee Interlocks and Insider Participation

No member of the Human Resources and Compensation Committee (the “HRCC”) was at any time during fiscal 2022 an officer or employee of the Company or any of the Company’s subsidiaries nor was any such person a former officer of the Company or any of the Company’s subsidiaries. In addition, no HRCC member is an executive officer of another entity at which an executive officer of the Company serves on the board of directors.

Human Resources and Compensation Committee Report

The HRCC has reviewed and discussed with management the Compensation Discussion and Analysis (“CD&A”) section of this Proxy Statement. Based on this review and discussion, the HRCC recommended to the Board (and the Board has approved) that the CD&A be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

The members of the Human Resources and Compensation Committee of the Board of Directors of Scholastic Corporation have provided this report.

 

John L. Davies, Chairperson

Margaret A. Williams

David J. Young

 

COMPENSATION DISCUSSION AND ANALYSIS

The Company’s compensation programs for its executive officers and other senior management are administered by the Human Resources and Compensation Committee (“HRCC”), which is composed solely of independent directors as defined by NASDAQ rules. The Company’s overall objective is to maintain compensation programs that foster the short-term and long-term goals of the Company and its stockholders while attracting, motivating and retaining qualified individuals.

The HRCC generally consults with management regarding employee compensation matters. The Company’s Chief Executive Officer, working with the Company’s Human Resources Department, makes annual compensation recommendations to the HRCC for executive officers (other than himself) and senior management, including the Named Executive Officers. The Company’s compensation programs have been adopted in order to implement the HRCC’s compensation philosophy discussed below, while taking into account the Company’s financial position and performance. They have been developed with the assistance of the Human

10


 

Resources Department, as well as independent executive compensation consultants retained by the HRCC. A description of the composition and procedures of the HRCC is set forth under “Meetings of the Board and its Committees-Human Resources and Compensation Committee” and “Corporate Governance-HRCC Procedures” in “Matters Submitted to Stockholders - Proposal 1: Election of Directors,” below.

The HRCC regularly reviews the Company’s compensation programs and considers appropriate methods to tie the executive compensation program to performance and to further strengthen management’s alignment with stockholders.

Compensation Philosophy and Objectives

 

Pay Competitively

The Company’s goal is to provide a competitive compensation framework, taking into account the financial position and performance of the Company, individual contributions, business and staff unit contributions and the external market in which the Company competes for executive talent, as well as a focus on cross-Company collaboration.

 

The Company, through competitive compensation policies, strives to foster the continued development of the Company’s operating segments, which in turn builds stockholder value.

 

In determining the compensation of its Named Executive Officers, the Company seeks to achieve its compensation objectives through a combination of fixed and variable compensation.

 

The Company reviews the executive compensation of a broad group of companies in the publishing, media, technology and education industries for comparative purposes. In addition, the Company considers compensation practices of a compensation peer group for which companies are selected based upon several criteria, including size of company by revenues, relevant industry and other factors.

Pay for Performance

The Company’s compensation practices are designed to create a direct link between the aggregate compensation paid to each Named Executive Officer and the overall financial performance of the Company.

 

The performance of a specific business or staff unit for which an executive is responsible may be used to create a link between the achievement of business and staff unit financial goals and the overall financial performance of the Company.

Executives as Stockholders

The Company’s compensation practices have also been designed to link a portion of each Named Executive Officer’s compensation opportunity directly to the value of the Common Stock through the use of stock-based awards, including stock options and restricted stock units and, as deemed appropriate, performance-based stock units.

 

Peer Group Analysis

The Company reviews the compensation practices of selected peer companies to use as a general frame of reference, but it does not formally benchmark its compensation against that of such peer companies. The peer companies to which the Company has looked to gauge its competitiveness for these purposes have included, but were not limited to, the following: Career Education Corporation, Houghton Mifflin Harcourt Company, Meredith Corporation, Perdoceo Education Corporation, Pearson plc, E. W. Scripps Company, Graham Holdings Co., K-12, Inc., and John Wiley & Sons, Inc., which companies constituted the peer group for fiscal 2022. Additionally, in analyzing its executive compensation, from time to time the Company reviews general industry compensation surveys provided by consulting firms, as well as more focused surveys covering a broad base of media companies.

11


 

As a result of the recent acquisitions involving Houghton Mifflin Harcourt Company and Meredith Corporation, which will result in these companies being removed from the list of peer companies for fiscal 2023, the HRCC has determined to do a comprehensive review, with the assistance of its independent compensation advisor, Pay Governance LLC, of the current set of peer companies with a view to refreshing and revising the list to more fully align with the Company’s key activities and attributes.

Components of Executive Compensation

The following chart provides a brief overview of each of the elements of compensation. A more detailed description of each compensation element follows this chart.

 

Compensation

Element

Objective

Key Features

Fixed

 

 

 

 

Base Salary

To establish a fixed level of compensation principally tied to day-to-day responsibilities

Base salary is determined taking into account several factors, including current salary, individual job performance, internal equity, competitive external market conditions for recruiting and retaining executive talent, the scope of the executive’s position and level of experience, changes in responsibilities, responsibility for larger, more difficult to manage or more complex initiatives, such as new product development or technology initiatives, or positions that require considerable creative or technical talent, creative marketing capability or digital skills, or the management of those providing such creative content, technical skills or marketing and digital expertise.

Variable

 

 

 

 

Annual Performance-Based Cash Bonus Awards

To provide a reward based upon the achievement of the Company’s financial, operating and strategic goals established for the year

Through the use of annual bonus awards, the HRCC ties a significant portion of each Named Executive Officer’s total potential compensation to Company performance and, in the case where the executive officer is responsible for a business or staff unit of the Company, performance of the actual unit.

Long-Term Incentive Compensation

To align the long-term interests of the executives and the Company’s stockholders

Stock options, which typically vest ratably over three years, producing value for executives and employees only if the Common Stock price increases over the exercise price.

Restricted stock units, which convert automatically into shares of Common Stock on a 1-to-1 basis upon vesting, generally over a three year period, serving as a retention tool, as well as increasing an executive’s stock ownership.

 

 

 

Performance-based stock units, which have been issued on an exceptional basis to a limited number of executives as an incentive for the achievement of specifically-defined objectives.

12


 

Compensation

Element

Objective

Key Features

Other Equity-Based Incentives and Benefit Plans

 

To attract and retain highly qualified talent and maintain market competitiveness

The Company’s executives participate in the 401(k) Plan on the same terms as all other employees.

 

The ESPP provides a method for all employees, including executives, to purchase Common Stock at a 15% discount.

 

The MSPP permits senior management to defer receipt of all or a portion of their annual cash bonus payments in order to acquire restricted stock units at a 25% discount.

 

Base Salary

Base salaries are reviewed annually in the context of the HRCC’s consideration of the effect of base compensation on recruiting and retaining executive talent. In establishing each executive officer’s base salary, including those of the Named Executive Officers, the HRCC considers several factors, as described under “Base Salary” in the above chart. In considering annual base salary increases, Company financial performance is also taken into consideration.

Consistent with the Company’s policy for all employees, salaries for executive officers and senior management, including the Named Executive Officers, are reviewed annually, generally in September, and any increases, based on the compensation objectives discussed above, are generally effective on October 1 of each year. For fiscal 2022, the HRCC’s independent compensation consultant conducted an annual compensation review of market comparisons using both survey data and information from the most recent proxy statements for the peer group indicated above and, as a result of this review, the HRCC determined that no increases would be made to base salary for any of the Named Executive Officers in fiscal 2022, other than for Ms. Lucchese who received a 14.3% increase to her base salary in October 2021 due to her increased responsibilities at the corporate level.

Annual Performance-Based Cash Bonus Awards

Generally, the HRCC ties a meaningful portion of each Named Executive Officer’s total potential compensation to Company performance, which, in the case of a Named Executive Officer who is responsible for a business or staff unit of the Company, includes performance of such unit, generally through the use of annual cash bonus awards. In setting financial and operating performance targets, which are established early in the fiscal year, the HRCC considers Company-wide strategic and operating plans and, where applicable, those of the executive’s business or staff unit. In each case, whether considering the Company as a whole or an executive’s business or staff unit, the HRCC considers the budget for the next fiscal year and sets specific incentive targets that are directly linked to the Company’s financial performance and that of the business or staff unit. The continued focus of the annual bonus element of compensation has been to align the interests of senior management, including the Named Executive Officers, with the Company’s financial, operating and strategic goals for the relevant fiscal year and primarily to encourage the achievement of the Company’s key financial and operating goals for such fiscal year.

13


 

Short Term Incentive Plan

Potential cash bonus awards for senior management for fiscal 2022, including the Named Executive Officers, and other eligible employees were determined under the Company’s Short Term Incentive Plan (the “STIP”), which was adopted by the HRCC in September 2021 as a successor plan to the previous Management Incentive Plan (“MIP”). The STIP has been designed to reward both Company-wide and divisional performance. Under the STIP, bonus targets are stated as a percentage of salary. During fiscal 2022, the Company adjusted the bonus targets for all participants in order to make the targets consistent within each level of eligible employee based upon title and to address inequities across the Company’s divisions in order to make the bonus program achievable and meaningful to participants, as well as affordable to the Company. Therefore, during fiscal 2022, all of the Named Executive Officers had their bonus targets reduced to 50% of their salary, with the exception of Mr. Warwick, whose bonus target of 125% remained as set in his employment agreement, as further discussed on page 18.  

Fiscal 2022 STIP Bonuses

The fiscal 2022 STIP is being funded based on the achievement of both Corporate and Divisional or Departmental metrics. The Corporate metric used to determine payout of the bonus is Operating Income, defined for this purpose as the Company’s net revenues less total operating costs and expenses from continuing operations as reported in the Company’s audited financial statements, excluding one-time items as discussed in earnings releases or calls and press releases, legal or tax settlements, changes to accounting policies or impaired assets. Division Operating Income is defined for this purpose as the operating income of the specific business unit for which the Named Executive Officer is responsible measured against budget. The Departmental Budget Objective is defined for this purpose as the control of operational costs for each staff function measured against budget. The payment structure for the fiscal 2022 STIP is illustrated in the chart below:

 

Fiscal 2022 STIP Payment Structure

Participants

STIP at or above Target Performance

Corporate

Operating Income

Division Operating

Income or

Departmental

Budget Objective

Named Executive Officers – CEO & Board Chair

100%

0%

Named Executive Officers –Business Unit/Staff Heads

50%

50%

*  Business Unit Heads are measured on Division Operating Income.

*  Staff Heads are measured on Departmental Budget Objective.

14


 

The funding for the fiscal 2022 STIP is the sum of the calculated bonuses for each division based on achievement of the Company’s Corporate and Divisional/Departmental metrics as per the chart below:

Fiscal 2022 STIP Plan Funding(1)

Weighted Percentage

of Individual Metrics

Corporate

Operating Income

($ Millions)

Bonus

Payout %

  80.00%

$44.0

50%

100.00%

$55.0

100%

150.00%

$82.5

175%

(1)

For illustrative purposes this chart assumes that the Business and Staff Units achievement is equal to the Corporate Operating Income achievement.

For fiscal 2022, the Company achieved Corporate Operating Income of $97.4 million, which was 150% of the target amount and above the threshold for bonus payout under the STIP, which resulted in the payout of a bonus pool at 175% of the target pool. Based on the foregoing, the HRCC approved bonuses to be paid under the STIP to the Named Executive Officers as provided in the table below. 

Named Executive

Officer

Relevant Metric

Target Bonus payout
as a percentage
of base salary

Actual Bonus

Achievement

Fiscal 2022
Bonus Amount

Peter Warwick

100% Corporate Operating Income

125%

175%

$

1,815,925

Kenneth J. Cleary

50% Corporate Operating Income and 50% Departmental Budget Objective

50%

175%

$

503,125

Iole Lucchese

100% Corporate Operating Income

50%

175%

$

700,000

Rosamund Else-Mitchell

50% Corporate Operating Income and 50% Division Operating Income

50%

175%

$

542,500

Sasha Quinton

50% Corporate Operating Income and 50% Division Operating Income

50%

175%

$

525,000*

*

Does not include an additional supplemental bonus in the amount of $50,000 approved for Ms. Quinton by the HRCC relating to her work in developing a special Covid recovery plan for the Book Fair group, which supplemental bonus is included in the Summary Compensation Table on page 22.

15


 

Fiscal 2023 STIP

As discussed above, the annual bonus awards under the STIP are generally designed to reward for Company-wide performance, as well as the other indicators of performance referenced in the chart below. With respect to fiscal 2023, at its meeting on July 19, 2022, the HRCC set the performance measures based on Company-wide and individual Divisional/Departmental financial goals, focusing on the objective of meeting the Company’s fiscal 2023 operating plan based on a Corporate Operating Income target of $106.4 million for purposes of the fiscal 2023 STIP, and adding a 10% individual performance metric applicable to the Named Executive Officers based upon their annual performance reviews.

The payment structure to be applied for fiscal 2023 is illustrated in the chart below:

Fiscal 2023 STIP Payment Structure

Participants

STIP at or above Target Performance

Corporate

Operating Income

Division Operating

Income/

Departmental

Budget Objective

Individual

Performance

Review

Named Executive Officers – CEO/Board Chair

100%

0%

0%

Named Executive Officers –Business Unit/Staff Heads

50%

40%

10%

The funding for the fiscal 2023 STIP will be the sum of the calculated bonuses for each division based on achievement of the Company’s Corporate and Divisional/Departmental metrics as per the chart below:

Fiscal 2023 STIP Plan Funding(1)

Weighted Percentage

of Individual Metrics

Corporate

Operating Income

($ Millions)

Bonus

Payout %

80.00%

$85.1

50%

100.00%

$106.4

100%

150.00%

$159.6

175%

(1)

For illustrative purposes this chart assumes that the Business and Staff Units achievement is equal to the Corporate Operating Income achievement.

Long-Term Incentive Compensation

The HRCC determines the awards of long-term incentive compensation through equity incentives, which generally are awarded in the form of stock options, restricted stock units and/or performance-based stock units, granted to executive officers, including the Named Executive Officers, and senior management, as well as certain other eligible employees.

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The general practice of the HRCC is to consider:

 

Annual equity grants to key employees, including the Named Executive Officers and other members of senior management, at its regularly scheduled meeting in September. Such grants currently vest one-third each year over a three year period, with the stock option grants having a seven year exercise period.

 

Equity grants at other times depending upon circumstances such as promotions, new hires or special considerations.

The Company currently makes its grants of stock options, restricted stock units and other stock-based awards under the Scholastic Corporation 2021 Stock Incentive Plan (the “2021 Plan”), which was approved by the Board in July 2021 and by the Class A Stockholders in September 2021.

The practice of the HRCC is to generally make equity awards in the form of restricted stock units tied to vesting and stock options, including a combination of the foregoing in most cases. This determination reflects the desire to maintain a strong long-term equity component in executive compensation and to reduce, through the restricted stock unit component, the number of equity units required to provide such components. Accordingly, in years in which annual equity grants are made, the Company currently intends to utilize grants of stock options, restricted stock units and, on a limited basis involving special considerations, performance stock units, or a combination thereof, to qualified executives, including the Named Executive Officers.

Options to Purchase Common Stock and Restricted Stock Units

For fiscal 2022, the HRCC granted the annual equity-based awards to the Named Executive Officers and other members of senior management as well to certain other employees at its September 2021 meeting and otherwise granted such equity awards during fiscal 2022, principally to certain newly-hired or promoted employees to fulfill contractual obligations or commitments. These grants were made in the form of stock options, restricted stock units or a combination of both.

Stock options produce value for executives and employees only if the Common Stock price increases over the exercise price, which is set at the fair market value of the Common Stock on the date of grant, calculated for purposes of the 2021 Plan as the average of the high and low prices on the date of grant. The Company historically has calculated the exercise price of stock options by this method, which it believes gives a fair market value and eliminates price fluctuations during the day that the grant is made. Stock options currently granted by the HRCC vest in three annual installments beginning on the first anniversary of the date of grant and expire after seven years.  Restricted stock units granted under the 2021 Plan and 2011 Plan convert automatically into shares of Common Stock on a one-to-one basis upon vesting, currently generally also over a three year period. The 2021 Plan and the 2011 Plan and do not permit the deferral of restricted stock units. Through vesting and forfeiture provisions, both stock options and restricted stock units create incentives for executive officers and senior management to remain with the Company.

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The specific fiscal 2022 grants to the Named Executive Officers are set forth below in the “Grants of Plan-Based Awards” table, and information regarding the equity awards held by the Named Executive Officers as of the end of fiscal 2022 is set forth below in the “Outstanding Equity Awards at May 31, 2022” table.

Employment Agreement with Chief Executive Officer

On July 18, 2021, the Board elected one of its members, Peter Warwick, to succeed Richard Robinson, who passed away unexpectedly on June 5, 2021, as the Company’s Chief Executive Officer and President, effective August 1, 2021, for a three year term. Mr. Warwick continues to serve as a member of the Board.

In connection with his appointment as the Company’s Chief Executive Officer and President, Mr. Warwick entered into a three year employment agreement with the Company (the "CEO Employment Agreement"), which was unanimously recommended by the HRCC (without Mr. Warwick’s participation) and approved unanimously by the Board members, with Mr. Warwick recusing himself from the discussion and abstaining from the vote thereon.

The CEO Employment Agreement provides for: (i) an initial base annual salary of $1,000,000, which may be increased but not decreased during the term; (ii) an annual cash discretionary bonus based on a target bonus opportunity of 125% of base salary and the level of satisfaction of performance criteria determined on an annual basis by the HRCC (with a minimum guaranteed cash discretionary bonus of $625,000 in respect of fiscal 2022); (iii) an initial equity award of $1.5 million under the 2011 Plan, approved by the HRCC at its meeting held on July 20, 2021 with an effective grant date of August 2, 2021, 75% of such award in the form of restricted stock units and 25% in the form of stock options, with such grants vesting over a three year period, subject to acceleration in the case of certain termination events; and (iv) an annual equity grant under the 2011 Plan (or any successor plan) in the form of performance-based restricted stock units (PSUs) with a target fair market value of $1,000,000 per year during the three-year term of the CEO Employment Agreement. The number of PSUs to be granted is the number equal to the target fair market value of $1,000,000 divided by the fair market value of a share of Common Stock on the date of grant determined in accordance with the terms of the 2011 Plan (or any successor to the 2011 Plan), with each annual grant vesting in one year. In the case of the annual cash bonus referred to in clause (ii) above, it has been determined to base the performance criteria on the criteria adopted by the HRCC for the STIP for the relevant fiscal year.

In the event of a termination of Mr. Warwick by the Company without "cause" (as defined) or Mr. Warwick terminates his employment for "Good Reason" (as defined) following a Change of Control of the Company, Mr. Warwick will be entitled to twice the present value of his remaining base salary as severance. If Mr. Warwick's employment with the Company is terminated due to his death or disability, he (or his estate) will be entitled to receive his accrued base salary, expense reimbursement and vested equity awards (the "Accrued Obligations").  Also, in either case, any stock options, RSUs or PSUs (vesting at target level attainment in the case of PSUs), to the extent then outstanding and unvested, will become fully vested and, in the case of stock options, fully exercisable during the remaining term of the options. If Mr. Warwick is terminated without cause or leaves the employment for "Good Reason" (other than resulting from a Change of Control), he is entitled to receive the Accrued Obligations, a cash severance

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payment equal to the present value of his base salary through the expiration date of the CEO Employment Agreement, COBRA premium payments for health coverage for up to 18 months, accelerated vesting / exercisability of his RSUs or PSUs (vesting at target level attainment in the case of PSUs) and stock options and a partial year discretionary bonus provided that the applicable performance criteria for the period in question have been met.

During the term of the CEO Employment Agreement, Mr. Warwick is eligible for all employee benefits (including health insurance and 401(k) or other retirement plans, and participation in the STIP and MSPP) on terms not less favorable than those provided generally to other senior executives of the Company. The CEO Employment Agreement also contains other customary terms and conditions of senior executive employment agreements.

The performance measures for the PSUs for fiscal year 2022 were established prior to September 1, 2021 and will be established early in each of fiscal years 2023 and 2024. The performance measures are established annually by the HRCC (with input from the Human Resources Department of Scholastic) in consultation with Mr. Warwick. The performance measures established for fiscal 2022 for Mr. Warwick’s first annual equity grant covered the creation of a high-level strategic financial and business growth plan, strengthening senior management levels with executives geared to accelerating transformation and creating an enterprise-wide customer-centric change plan, as well as measures relating to investor engagement and CEO succession.  At its July 19, 2022 meeting, the HRCC reviewed Mr. Warwick’s fiscal 2022 performance and determined that Mr. Warwick had fully achieved the qualitative performance measures established for fiscal 2022 at the $1 million target level, which resulted in the issuance of 29,534 shares of Common Stock (using the date of grant to determine fair market value) to Mr. Warwick on that date upon vesting of the underlying PSUs.

Information on the compensation received by Mr. Warwick during fiscal 2022 is set forth below in the “Summary Compensation Table” and information regarding the equity awards received by Mr. Warwick is set forth in the “Outstanding Equity Awards at May 31, 2022” table.

Compensation Arrangements with Executive Officer

On September 14, 2020, the Company extended an offer of employment (the “Offer”) to Rosamund Else-Mitchell, the Company’s Executive Vice President and President, Education Solutions. Ms. Else-Mitchell was elected as an Executive Officer of the Company on June 1, 2021.

Under the principal terms of the Offer, Ms. Else-Mitchell is entitled to receive: (i) a base salary at the rate of $620,000 per year; (ii) two annual equity incentive grants, each with three year vesting, under the 2011 Plan (or successor plan) and valued at $500,000 each (60% of each grant to be made in the form of restricted stock units and 40% to be made in the form of non-qualified stock options), such grants to be made in fiscal 2021 and 2022, respectively, upon approval of the HRCC; (iii) a MIP target bonus percentage of 70% of her base salary; (iv) a one-time cash sign-on bonus of $100,000; (v) a one-time payment equal to 30% of her fiscal 2021 MIP target for the development of an approved Global Digital Strategy; and (v) relocation assistance. Information on the compensation received by Ms. Else-Mitchell during fiscal 2022 is set forth below in the “Summary Compensation Table” and information regarding the equity awards received by Ms. Else-Mitchell is set forth below in the “Outstanding Equity Awards at May 31, 2022” table.

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Also, as discussed above, in fiscal 2022 the Company reduced the annual bonus targets for the Named Executive Officers to 50% of their salary and, in order to incentivize Ms. Else-Mitchell, whose Offer provided for a higher bonus target based on achieving the financial goals of the Education Solutions group, the Company established, and the HRCC approved, a three-year incentive bonus plan (the “Special Incentive Plan”).

The metrics and goals for payout of the bonus under the Special Incentive Plan were set on the basis of the revised budget for fiscal 2022 and will be set on the basis of the final budget for fiscal 2023 and fiscal 2024.  The Special Incentive Plan, at target goal attainment, would pay out approximately 25% of her annual salary (currently $155,000) with a cap at approximately 37.5% of salary. The Special Incentive Plan will pay out annually after the results for each fiscal year are finalized, subject to being curtailed if the STIP is replaced with a plan that pays out 75% or more of her salary at target.

For fiscal 2022, the Special Incentive Plan had two metric and bonus payout measures: the first measure was the achievement of 50% growth in revenue for the Education Solutions Group and the second metric was based upon the achievement of certain Operational Execution Components or goals, with each goal having to be fully achieved in order receive payout for that goal. The specific Operational Execution Components were established by the HRCC and were based on the achievement of specific milestones for the Education Solutions Group.

For fiscal 2022, Ms. Else-Mitchell achieved the revenue target of $364 million and also fully achieved all of the Operational Execution Components, resulting in receiving a bonus of $235,000 under the Special Incentive Plan, which bonus is included in the Summary Compensation table on page 22.

Other Equity-Based Incentives

The Scholastic Corporation Employee Stock Purchase Plan (as amended, the “ESPP”) and the Scholastic Corporation Management Stock Purchase Plan (as amended, the “MSPP”) were designed to augment the Company’s stock-based incentive programs by providing participating employees with equity opportunities intended to further align their interests with the Company and its stockholders. The purpose of the ESPP is to encourage broad-based employee stock ownership. The ESPP is offered to United States-based employees, including the Named Executive Officers. The ESPP permits participating employees to purchase, through after-tax payroll deductions, Common Stock at a 15% discount from the closing price of the Common Stock on the last business day of each calendar quarter. Of the Named Executive Officers, currently only Mr. Cleary participates in the ESPP.

Under the MSPP, which was adopted in 1999 in order to provide an additional incentive for senior management, including the Named Executive Officers, to invest in Common Stock through the use of their cash bonuses paid under the MIP, eligible members of senior management may use such annual cash bonus payments on a tax-deferred basis to purchase restricted stock units (“RSUs”) in the Company at a 25% discount from the lowest closing price as reported on NASDAQ in the fiscal quarter in which the bonus is paid.

With respect to fiscal 2022, senior management participants in the MSPP were permitted to defer receipt of all or a portion of their annual cash bonus payments, which will be used to acquire RSUs at a 25% discount from the lowest closing price of the underlying Common Stock

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during the fiscal quarter ending on August 31, 2022. The deferral period chosen by the participants could not be less than the three-year vesting period for the RSUs, with the first three years of deferral running concurrently with the vesting period. Upon expiration of the applicable deferral period, the RSUs would be converted into shares of Common Stock on a one-to-one basis. During fiscal 2022, five members of senior management, including Mr. Cleary, who is a Named Executive Officer, are receiving bonuses from the STIP and making deferrals under the MSPP.

Results of Stockholder Advisory Vote on Compensation of Named Executive Officers

At the 2020 Annual Meeting of Stockholders, the Class A Stockholders approved the fiscal 2020 compensation for the Company’s Named Executive Officers, including the policies and practices related thereto. The Company believes this vote reflected the general satisfaction of the Class A Stockholders with the Company’s compensation philosophy for the Named Executive Officers. Accordingly, the HRCC continued to apply the same general principles in determining the amounts and types of executive compensation for fiscal 2022 as outlined in the Company’s compensation philosophy and framework described above. In addition, at the 2020 Annual Meeting of Stockholders, the Class A Stockholders approved a determination that the Company hold advisory votes on Named Executive Officer compensation once every three years. As a result, the next advisory vote on Named Executive Officer compensation will take place at the Annual Meeting in respect of the fiscal 2023 compensation for the Company’s Named Executive Officers, including the policies and practices related thereto.

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SUMMARY COMPENSATION TABLE

The following table summarizes the total compensation earned by or paid to the Named Executive Officers for the fiscal years ended May 31, 2022, 2021 and 2020, as indicated below.

 

Name and

Principal

Position

Fiscal

Year

 

Salary(1)

($)

 

 

 

Bonus

($)

 

 

 

Stock

Awards(2)

($)

 

 

 

Option

Awards(3)

($)

 

 

 

Non-Equity

Incentive Plan

Compensation(4)

($)

 

 

 

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)

 

 

 

All Other

Compen-

sation(5)

($)

 

 

 

Total

($)

 

 

Richard Robinson(6)

2022

 

$

 

37,308

 

 

 

$

 

0

 

 

 

$

 

0

 

 

 

$

 

0

 

 

 

$

 

0