Exhibit 10.26

 

MARCH 6, 2007

 

Ms. Eva Dillon

58 West 15th Street, Apartment 2

New York, NY 10011

 

Dear Eva:

 

I am pleased to confirm the verbal offer of employment extended to you, and
which you have accepted, for the position of President and Publisher, reporting
to Mary Berner, Chief Executive Officer, Reader’s Digest Association, Inc., the
details of which are outlined below.

 

COMPENSATION AND BENEFITS

 

1.               As previously discussed, your annual base salary will be
$500,000 payable in biweekly installments.  Your base salary is subject to
periodic increases based upon performance.

 

2.               You will receive a sign-on bonus paid in the gross amount of
$100,000, less appropriate tax withholding, payable at the end of thirty days of
your employment with Reader’s Digest.  By accepting this offer, you agree that,
in the event that you voluntarily leave Reader’s Digest, or if you are
terminated by the company for cause within the twelve months following receipt
of payment, you will repay the full amount of the payment prior to the last day
of your employment. By accepting this offer, you further agree that Reader’s
Digest may deduct this amount from any other amounts Reader’s Digest owes you
should you be obligated to repay this amount.

 

3.               You will be eligible to participate in a customized annual
incentive plan with a bonus target for this position of $400,000 and a range of
opportunity of up to 200% of target (or up to $800,000).  For FY2007 (July 1,
2006 – June 30, 2007), the bonus target will be pro-rated based upon date of
hire.  The plan measures and goals will be determined by the Chief Executive
Officer, Reader’s Digest.  Receipt of a bonus requires that you be on the active
payroll at the time awards are paid, which is typically in August.

 

4.               You will receive an equity stake in the company, commensurate
with your level of responsibility and consistent with other senior executive
positions, the value of which will be based on the future performance and value
of the company.

 

5.               You will be eligible to participate in Reader’s Digest’s Senior
Executive Long-Term Incentive Program (LTIP).  This plan measures and rewards
performance over a multi-year period.  A new

 

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performance cycle begins each year.  The award earned can range up to 250% of
target depending on the extent to which the performance goals are achieved. 
Performance cycles and incentive targets are outlined below.

 

Cycle

 

Target

 

Anticipated
Payout Date

 

2008-2009

 

$

 300,000

 

December 2009

 

2008-2010

 

$

 300,000

 

December 2010

 

 

6.               You will be eligible to participate in the benefit programs
that are made generally available to Reader’s Digest employees in accordance
with their terms, as from time to time in effect, including The Reader’s Digest
Association, Inc. Retirement Plan (cash balance account), which currently
provides annual age-based contributions ranging from 3% to 12% of eligible
compensation, The 401(k) Partnership of The Reader’s Digest Association, Inc., a
savings plan which currently provides a 50% match on the first 6% of pre-tax
contributions, and medical, dental, life insurance, short- and long-term
disability plans.  Details of these benefit plans are included in the attached
information packet.

 

7.               You will be eligible for the following executive level
perquisites:  financial planning assistance provided by Ayco, the company’s
service provider and, an annual calendar year flexible perquisite account of
$12,500 under the Flexnet Program.  Further details about these programs will be
provided to you upon employment.

 

8.               You will be eligible for severance under The Reader’s Digest
Association, Inc. Severance Plan. Under the terms of that plan, you are eligible
for severance totaling 52 weeks of base pay if your employment is terminated
under certain circumstances, subject to and in accordance with the terms of that
plan.

 

9.               Your employment is contingent upon verification of the accuracy
of information obtained in the employment process through an independently
conducted background investigation, and authorization to work pursuant to the
Immigration Reform and Control Act of 1986 (“IRCA”).  Your employment cannot
commence until these conditions have been satisfied.

 

10.         By virtue of accepting these terms of employment with Reader’s
Digest, you also agree that, during employment and for a period of 12 months
following your termination of employment, you will not, without the written
consent of the Chief Executive Officer of Reader’s Digest (upon prior
consultation with the Chief Human Resources Officer of Reader’s Digest),
directly or indirectly, whether or not for compensation, work for, provide
services to or otherwise engage in any activity on behalf of the following
companies (and any of their affiliates or subsidiaries):  Conde Nast, Hearst
Corporation, Hachette Filipacchi Magazines, Meredith Corporation, Rodale Inc.,
Time Warner.

 

11.         You further agree that for the 12 month period following your
termination for any reason at any time, you will not, directly or indirectly,
solicit any employee of Reader’s Digest (or their affiliates or subsidiaries) to
cease employment with those entities or seek employment elsewhere.

 

Eva, while this letter provides you with information about compensation and
benefits, neither this letter nor any conversation is intended to create an
employment contract.  In all instances mentioned above,

 

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the specific terms of the applicable plans and awards govern, and Reader’s
Digest reserves the right to amend or terminate those plans or policies in
accordance with their terms.  Additionally, our policy is that “all employment
by the Company is at will and the Company reserves the right to terminate any
employee at any time with or without cause.”

 

We look forward to you joining the leadership team of Reader’s Digest and are
confident that you will make a significant difference for our Company.

 

 

Sincerely,

 

 

 

 

 

Lisa Cribari

 

Vice President,

 

Global Human Resources

 

 

cc:  Mary Berner

 

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