8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):  February 25, 2009

EXPRESS SCRIPTS, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	0-20199	43-1420563
(State or Other Jurisdiction of Incorporation or Organization	(Commission File Number)	(I.R.S. Employer Identification No.)

One Express Way, St. Louis, MO (Address of Principal Executive Offices) 63121 (Zip Code)

Registrant’s telephone number including area code: 314-996-0900

No change since last report

(Former Name or Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Annual Compensation Decisions

On February 25, 2009, the Compensation and Development Committee (the “Compensation Committee”) of the Board of Directors of Express Scripts, Inc. (the “Company”) met and approved several compensation related items for the Company’s Named Executive Officers.  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 14, 2008 (the “2008 Proxy Statement”). 

However, as previously disclosed by the Company, David A. Lowenberg retired from the Express Scripts organization on March 1, 2008, and Edward J. Stiften, retired from the Company on March 31, 2008.  As such, no compensation-related items were considered with respect to either Mr. Lowenberg or Mr. Stiften, and all references to Named Executive Officers herein and in Exhibit 10.1 hereto do not include Mr. Lowenberg or Mr. Stiften.   In addition, as previously disclosed by the Company, Thomas M. Boudreau announced his intention to retire from the Company effective April 1, 2009, and as a result, the Compensation Committee did not consider 2009 compensation adjustments for Mr. Boudreau.

A summary of the base salaries for the Named Executive Officers is attached as Exhibit 10.1 hereto and is incorporated by reference herein.

The Compensation Committee also approved target and potential annual bonus awards and equity awards for the Named Executive Officers (other than Mr. Boudreau).  A summary of the bonus and equity awards is also included in Exhibit 10.1 hereto and incorporated by reference herein.

ITEM 9.01       Financial Statements and Exhibits.

See exhibit index.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EXPRESS SCRIPTS, INC.
	(Registrant)
Date:  March 3, 2009	By:	/s/ Keith J. Ebling
		Keith J. Ebling
		Executive Vice President & General Counsel

Exhibit Index

Exhibit No.	Exhibit
10.11,2	Summary Of Named Executive Officer 2009 Salaries, 2008 Bonus Awards, 2009 Maximum Bonus Potential, and 2009 Equity and Performance Awards
10.2 1	Form of Performance Share Award Agreement used with respect to grants of performance shares by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2006
10.31	Form of Stock Option Agreement used with respect to grants of stock options by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed February 26, 2008.
10.4 1,2	Form of Restricted Stock Unit Agreement used with respect to grants of restricted stock units by the Company under the Express Scripts, Inc. 2000 Long-Term Incentive Plan.
10.5 1	Amended and Restated Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2001
10.6 1	Second Amendment to the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.27 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001
10.7 1	Third Amendment to the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit A to the Company's Proxy Statement filed April 18, 2006
10.8 1	Executive Employment Agreement, dated as of October 31, 2008, and effective as of November 1, 2008, between the Company and George Paz, incorporated by reference to Exhibit No. 10.1 to the Company’s Current Report on Form 8-K filed October 31, 2008
10.9 1	Form of Executive Employment Agreement entered into between the Company and certain key executives (including all of the Company’s named executive officers other than Mr. Paz), incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 31, 2008

1 Denotes management contract or compensatory plan arrangements. 

2 Filed herein.

EX-10.1

Exhibit 10.1

Summary of Named Executive Officer 2009 Salaries, 2008 Bonus

Awards, 2009 Maximum Bonus Potential, and 2009 Equity and Performance Awards

Base Salary Adjustments.  The Compensation Committee approved adjustments to the annual base salaries for certain of the Named Executive Officers after a review of performance and competitive market data.  The table below sets forth the annual base salary levels of the Company's Named Executive Officers for 2008 and 2009 (the salary for 2008 became effective on April 1, 2008, and the salary for 2009 will become effective as of April 1, 2009).  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 14, 2008 (the “2008 Proxy Statement”).

Annual Bonus Awards.  The Compensation Committee also authorized the payment of annual incentive (i.e., bonus) awards to each of the Company's executive officers in respect of the year ended December 31, 2008.  The annual bonus awards were made pursuant to the Company's annual bonus plan, with target percentages ranging from 70% to 130 % in 2008.  For each of the Named Executive Officers a minimum target percentage was established pursuant to such executive’s employment agreement with the Company, which are listed as exhibits to the Company’s Current Report on Form 8-K to which this Exhibit 10.1 is attached and which are hereby incorporated by reference herein.  The Employment Agreements for the Named Executive Officers and Mr. Paz are also described in the Company’s Current Report on Form 8-K filed October 31, 2008.

Pursuant to the bonus plan, in order for any bonus amount to be paid the Company must meet an annual financial goal which is based on budgeted EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share.  If the corporate financial target is not met, then the corporate bonus pool is reduced to the extent necessary to enable the Company to meet its target.  If the Company has met its annual financial goal, then actual bonus awards for executive officers are determined based on the executive officers’ respective bonus targets and an evaluation by the Committee (and in the case of senior executives also by the CEO) of the extent to which work plan goals were achieved.  In addition, if the Company meets certain “stretch” financial targets, bonus targets may be increased by as much as 100%.  The Committee reviews and approves the annual financial targets.  For 2008, the Company achieved its “stretch” financial goals, and, accordingly, bonuses awarded to the Named Executive Officers were enhanced by up to 100%.

The Compensation Committee also authorized the award of annual incentive (i.e., bonus) awards to each of the Company’s Named Executive Officers with respect to the year ending December 31, 2009.  These awards were granted as “Other Awards” under the Company’s 2000 Long-Term Incentive Plan, as amended (the “2000 LTIP”), and represent the maximum amount which may be earned by the executive based on the achievement of individual and corporate stretch financial and workplan goals.  The Compensation Committee may exercise discretion to reduce such bonuses based on Company performance, individual performance and other factors, but may in no event increase the amount of such bonuses beyond the maximum.  In addition, if certain threshold earnings per share targets are not met, then no such bonuses may be paid.

The following table sets forth the 2008 and 2009 base salary levels, along with the annual bonus awards for 2008 and the maximum annual bonus awards for 2009, for each of the Named Executive Officers:

		Annual Base Salary				Annual Bonus Award		Maximum Bonus Award
Name	Title	2008		2009		2008		2009
George Paz	President, CEO & Chairman	$	950,000	$	980,000	$	2,450,500	$	2,529,000
Jeffrey Hall	Executive Vice President & CFO	$	450,000	$	530,000	$	630,000	$	893,000
Thomas M. Boudreau	Executive Vice President, Law & Strategy	$	500,000	$	500,000	$	725,850		N/A	*
Edward Ignaczak	Executive Vice President, Sales & Account Management	$	450,000	$	464,000	$	680,000	$	921,000

* As previously disclosed, Mr. Boudreau is retiring from the Company on April 1, 2009.

 Annual Long Term Incentive Awards

On February 25, 2009, the Compensation Committee approved awards of certain long term incentive compensation to each of the Named Executive Officers (other than Mr. Boudreau).  The long term incentive compensation awards are comprised of a mix of performance shares, non-qualified stock options and restricted stock units, granted under the 2000 LTIP, with values as follows:

Name	Title	Non-Qualified Stock Options			Performance Shares			Restricted Stock Units
George Paz	President, CEO & Chairman	$	2,764,000		$	2,418,500		$	1,727,500
Jeffrey Hall	Executive Vice President & CFO	$	885,000		$	442,500		$	442,500
Thomas M. Boudreau	Executive Vice President, Law & Strategy		N/A	*		N/A	*		N/A	*
Edward Ignaczak	Executive Vice President, Sales & Account Management	$	720,000		$	360,000		$	360,000

* As previously disclosed, Mr. Boudreau is retiring from the Company on April 1, 2009.

Performance Shares.  The performance shares are settled in shares of the Company’s common stock (the “Stock”) on a share-for-share basis.  The number of shares of Stock to be delivered upon settlement of the performance shares is determined based upon the Company’s performance over a set period versus a peer group of companies selected by the Compensation Committee. 

Specifically, the number of shares issued in settlement of the performance share awards will depend on where the Company’s performance for the period from January 1, 2009 through January 1, 2012 ranks in relation to the designated peer group in three equally-rated metrics:

·   compound annual shareholder return (price appreciation plus reinvestment of monthly dividends and the compounding effect of dividends paid on reinvested dividends),

·   compound annual growth in earnings per share (basic earnings per share before extraordinary items and discontinued operations), and

·   average return on invested capital (income before extraordinary items (available for common stock) divided by total invested capital, which is the sum of total long-term debt, preferred stock, minority interest and total common equity).

In order for any shares to be issued under the performance share awards, the Company’s composite performance must rank in at least the 40th percentile in relation to its peer group.  Assuming the Company’s composite performance for the performance period is at the 40th percentile, the actual shares of Stock issued will equal 35% of the award targeted for the Named Executive Officer; at the 50th percentile, the actual shares of Stock issued will equal 100% of the award targeted for the Named Executive Officer; and at the 80th percentile, the actual shares of Stock issued will equal 250% of the award targeted for the Named Executive Officer, which is the maximum number of shares that can be awarded.  If the Company’s composite performance falls between these percentile rankings, the actual shares of Stock issued will be determined by interpolation.

Realization of the performance share awards and their actual value, if any, will depend on the applicable targets being met and the market value of the Stock on the date the performance share awards are settled.

The awards provide for certain rights in the event of termination of employment as a result of death, disability, retirement or termination by the Company without cause (as defined), but terminate in the event of termination of employment for any other reason prior to the last day of the performance period. Notwithstanding the foregoing, the awards provide that upon a change of control (as defined) prior to the last day of the performance period, participants who remain employed on the date of a change in control or who terminated earlier on account of death, disability or retirement will receive cash equal to the value of a portion of the Stock represented by the performance shares on the last trading day before the change in control, and that participants who were terminated earlier by the Company without cause will receive the cash value of the Stock represented by between 100% and 250% of the performance shares on the last trading day before the change in control.

The performance shares are subject to the terms of the 2000 LTIP and a Performance Share Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibits 10.5, 10.6 and 10.7, and the form of award agreement is listed as Exhibit 10.2, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and each is hereby incorporated herein by this reference.

Stock Options.  The non-qualified stock options (“options”) were granted with a specified exercise price of $45.74  per share, which was equal to the fair market value of the Stock on the date of grant.  As required under the Company’s Policy for Grant Approvals and for Establishing Grant Date for Equity Grants, the grant date for the options is March 2, 2009, the third trading date following the release of the Company’s 2008 financial results.  The options vest and become exercisable in equal amounts annually over a period of three years on the anniversary date of the grant, and expire on the seventh anniversary of their grant.  The actual value, if any, of the options will depend on the market value of the Stock on the date the options are exercised.

The options are subject to the terms and conditions of the 2000 LTIP as well as a Stock Option Award Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibits 10.5, 10.6 and 10.7, and the form of award agreement is listed as Exhibit 10.3, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and each is hereby incorporated herein by this reference.

Restricted Stock Units.  The restricted stock units awarded to the Named Executive Officers entitle the grantee to receive shares upon the satisfaction of the vesting conditions.  The restricted stock units are scheduled to vest as to one-third of each award annually on February 28, 2010, 2011, and 2012.  The restricted stock units are subject to the terms and conditions of the 2000 LTIP as well as a Restricted Stock Unit Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibits 10.5, 10.6 and 10.7, and the form of award agreement is listed as Exhibit 10.4, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and each is hereby incorporated herein by this reference.

EX-10.4

Exhibit 10.4

RESTRICTED STOCK UNIT AGREEMENT

THIS RESTRICTED STOCK UNIT AGREEMENT (“Agreement”) is made effective as of the Date of Grant (as set forth on Schedule A) by and between Express Scripts, Inc., a Delaware corporation (together with its Affiliates (as defined in the Plan), the “Company”), and ________________ (“Grantee”).  Capitalized terms used and not otherwise defined herein shall have the meaning given to them in the Plan (as defined herein).

WHEREAS, the Board of Directors of the Company (the “Board”) has adopted, and the stockholders of the Company have approved, the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the “Plan”), which governs the terms pursuant to which restricted stock units and certain other stock-based awards may be granted to key personnel of the Company; and

WHEREAS, the Board, acting through its Committee appointed to administer the Plan (the “Committee”), believes it is in the best interest of the Company to create an incentive for Grantee to remain in the employ of the Company and to work to achieve the Company’s strategic objectives; and

WHEREAS, subject to the terms described herein, the Company desires to grant to Grantee the right to receive in the future a certain number of shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”).

NOW, THEREFORE, in consideration of the premises, and of the mutual agreements hereinafter set forth, it is covenanted and agreed as follows:

l.            Grant of Restricted Stock Unit Award.  Pursuant to action of the Board and/or the Committee, the Company hereby grants to Grantee an award (the “Award”) of the number of Restricted Stock Units as set forth on Schedule A.  Each Restricted Stock Unit shall entitle Grantee to receive one share of Common Stock upon vesting in the future in accordance with, and subject to, the terms and conditions described herein.

2.           Vesting and Forfeiture.

(a)           Time Vesting.  The Restricted Stock Units shall vest in one or more installments in accordance with the Vesting Schedule as set forth on Schedule A, with the vesting of each installment subject to the Grantee’s continued employment with the Company through the applicable vesting date.

(b)           Accelerated Vesting.  Any Restricted Stock Units which have not yet vested under subparagraph (a) above shall, upon the occurrence of a Change in Control or the termination of the Grantee’s employment with the Company, vest or be forfeited in accordance with the provisions of the Plan and the terms of this Agreement (including any terms incorporated herein under Paragraph 10 below).  For the purposes of determining vesting and/or forfeiture under the Plan, Restricted Stock Units shall be treated in the same manner as Restricted Stock under the Plan.  In the event of any conflict between the terms of the Plan and the terms of this Agreement (including any terms incorporated herein under Paragraph 10 below) regarding the vesting of Restricted Stock Units the terms and provisions of this Agreement shall govern.

(c)           Forfeiture of Restricted Stock Units. If Grantee’s employment with the Company terminates for any reason, Grantee shall forfeit all rights with respect to any portion of the Award (and the underlying shares of Common Stock) that has not yet vested as of the effective date of the termination, except to the extent such Award vests upon such termination under subparagraph (b) above.

3.           Issuance of Common Stock upon Vesting.  In accordance with the Vesting Schedule and subject to all the terms and conditions set forth in this Agreement, the Plan and any Employment Agreement, the Company shall issue and deliver to Grantee the number of shares of Common Stock equal to the number of vested Restricted Stock Units (subject to any reductions for tax withholding or otherwise to the extent permitted under Plan, this Agreement or any Employment Agreement).  The Company may, in its sole discretion, deliver such shares of Common Stock (a) by issuing Grantee a certificate of Common Stock representing the appropriate number of shares, (b) through electronic delivery to a brokerage or similar securities-holding account in the name of Grantee, or (c) through such other commercially reasonable means available for the delivery of securities.

4.           Incorporation of the Plan by Reference.  The Award of Restricted Stock Units pursuant to this Agreement is granted under, and expressly subject to, the terms and provisions of the Plan, which terms and provisions are incorporated herein by reference.  Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

5.           Ownership Rights.  The Restricted Stock Units do not represent a current interest in any shares of Common Stock.  Grantee shall have no voting or other ownership rights in the Company arising from the Award of Restricted Stock Units under this Agreement.  Notwithstanding the foregoing, unless otherwise determined by the Committee or the Board, and to the extent permitted by the Plan, Grantee shall participate in any cash dividend declared by the Board applicable to shares of Common Stock, which shall entitle Grantee to receive a cash payment for each Restricted Stock Unit in an amount that would otherwise be payable as dividends with respect to an equal number of shares of Common Stock.

6.           Committee Discretion.  This Award has been made pursuant to a determination made by the Committee.  Notwithstanding anything to the contrary herein, the Committee shall have plenary authority to: (a) interpret any provision of this Agreement; (b) make any determinations necessary or advisable for the administration of this Agreement; (c) make adjustments as it deems appropriate to the aggregate number and type of securities available under this Agreement to appropriately adjust for, and give effect to, any Fundamental Change, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, stock combination, rights offering, spin-off or other relevant change in each case according to the power given to the Committee under the terms of the Plan; and (d) otherwise modify or amend any provision hereof in any manner that does not materially and adversely affect any right granted to Grantee by the express terms hereof, unless required as a matter of law.

7.           Tax Withholding.  The Company shall be entitled to withhold from Grantee’s compensation any required taxes, including social security and Medicare taxes, and federal, state and local income tax, with respect to the income arising from the vesting of any Restricted Stock Units under this Agreement.  The Company shall have the right to require the payment of any such taxes before delivering any shares of Common Stock upon the vesting of any Restricted Stock Unit.  Alternatively, in lieu of such withholding, Grantee shall be entitled to cover Grantee’s required minimum statutory withholding taxes arising from the vesting of any Restricted Stock Units under this Agreement through a reduction of the number of shares of Common Stock issued and delivered to Grantee.

8.           Electronic Delivery.  The Company may choose to deliver certain statutory materials relating to the Plan in electronic form.  Without limiting the foregoing, by accepting this Award, Grantee hereby agrees that the Company may deliver the Plan prospectus and the Company’s annual report to Grantee in an electronic format.  If at any time Grantee would prefer to receive paper copies of any document delivered in electronic form, the Company will provide such paper copies upon written request to the Investor Relations department of the Company.

9.           No Right to Continued Employment.  Nothing in this Agreement shall be deemed to create any limitation or restriction on such rights as the Company otherwise would have to terminate the employment of Grantee at any time for any reason.

10.         Entire Agreement.  This Agreement and the Plan contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations between the parties except to the extent that the vesting and/or forfeiture of this Award of Restricted Stock Units is addressed by any employment agreement between the Company and Grantee, in which instance the relevant terms of such employment agreement shall be incorporated herein and deemed to be a part of this Agreement.

11.         Governing Law.  To the extent federal law does not otherwise control, this Agreement shall be governed by the laws of Delaware, without giving effect to principles of conflicts of laws.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf and Grantee has signed this Agreement to evidence his or her acceptance of the terms hereof, all as of the Date of Grant.

Express Scripts, Inc.	Grantee
By:	Signature:
Name:	Print Name:
Title:

SCHEDULE A

·   Date of Grant:  ___________, 20___

·   Number of Restricted Stock Units:

·   Vesting Schedule:

Ø   One-third (1/3) of the Restricted Stock Units shall vest on February 28, 20___;

Ø   One-third (1/3) of the Restricted Stock Units shall vest on February 28, 20___;

Ø   One-third (1/3) of the Restricted Stock Units shall vest on February 28, 20___.