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DELAWARE
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0-20199
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43-1420563
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(State
or Other Jurisdiction of
Incorporation
or Organization
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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One
Express Way, St. Louis, MO
(Address
of Principal Executive Offices)
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63121
(Zip
Code)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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·
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Term of Employment
Agreements. Mr. Paz’s agreement runs from April 1, 2008
through March 31, 2011 without renewal other than through the mutual
agreement of the parties. The initial employment period under
Mr. Hall’s agreement runs from April 1, 2008 through March 31, 2009, and
the employment period is automatically extended for successive one-year
renewal periods unless either party gives timely notice of non-renewal at
least ninety days prior to the end of the then current
term.
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·
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Compensation and
Benefits. Each employment agreement generally provides
for: (i) the payment of an annual base salary (which may not be reduced
after any increase); (ii) a guaranteed minimum annual bonus target equal
to a fixed percentage of the executive’s base salary pursuant to the terms
of the Company’s bonus plan; (iii) participation in Company employee
benefit plans (other than bonus and incentive plans) on the same basis as
such plans are generally made available to similarly situated senior
executives of the Company; (iv) the executive’s right to receive
restricted stock, stock options and other equity awards and deferred
compensation, to the extent determined by the Company, the Board of
Directors or the Compensation and Development Committee of the Board (the
“Compensation Committee”) from time to time; (v) the reimbursement of
reasonable business expenses incurred by the executive in performing his
duties under the agreement; and (vi) such perquisites and fringe benefits
to which similarly situated executives of the Company are entitled and
which are suitable for the executive’s position. The amended
and restated agreements do not provide for any changes in the
executives’ current base salaries or bonus targets, however, the
agreements for Messrs. Boudreau and Ignaczak have been updated to reflect
their current, previously disclosed compensation
figures.
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Executive
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Initial
Annual Base Salary
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Guaranteed
Minimum
Annual
Bonus Target (1)
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|||||||
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George
Paz
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$
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950,000 | 130 | % | |||||
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Jeffrey
Hall
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$
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450,000 | 70 | % | |||||
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Thomas
Boudreau
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$
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500,000 | 70 | % | |||||
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Edward
Ignaczak
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$
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450,000 | 80 | % | |||||
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·
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Benefits Upon
Termination of Employment Prior to Expiration of Employment
Period. Each employment agreement provides for the
provision and forfeiture of certain benefits if the executive’s employment
is terminated prior to the expiration of the employment period (including
any renewal period in effect). In general, if the executive’s
employment is terminated prior to expiration of the employment period, the
executive is not entitled to receive any further payments or benefits
which have not already been paid or provided except as
follows:
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-
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The
executive will be entitled to (i) all previously earned and accrued, but
unpaid, annual base salary; (ii) reimbursement for any business expenses
properly incurred prior to termination; and (iii) such other employee
benefits (if any) to which the executive may be entitled under the
Company’s employee benefit plans.
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-
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If
the executive’s employment is terminated by the Company other than for
Cause or Disability, or by the executive for Good Reason (as those terms
are defined in the agreement), the executive is entitled to receive: (i)
any annual bonus earned for a previously completed fiscal year but unpaid
as of the termination date, payable to the extent the corporate bonus pool
is approved by the Compensation Committee; (ii) a severance benefit equal
to 18 months of his base salary plus 150% of a specified portion of the
executive’s bonus potential for the year based on the average percentage
of the potential earned for the three prior years (which amount may be
greater if the termination date occurs within one year after a change in
control of the Company); and (iii) reimbursement for the cost of
continuing medical insurance under COBRA for a period of time after
termination of employment (36 months under Mr. Paz’s agreement, and 18
months under the form agreement).
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If
the executive’s employment terminates on account of death, Disability or
Retirement (as those terms are defined in the agreement) prior to the end
of his initial employment period under the agreement, he generally is
entitled to receive (i) any annual bonus earned for a previously completed
fiscal year but unpaid as of the termination date, payable to the extent
the corporate bonus pool is approved by the Compensation Committee; and
(ii) reimbursement for the cost of continuing medical insurance under
COBRA for a period of time after termination of employment (36 months
under Mr. Paz’s agreement, and 18 months under the form
agreement). Also, with respect to any grants made to the
executive under the Company’s 2000 Long Term Incentive Plan during the
term of the agreement, a proper Retirement under the agreement shall be
deemed to be a retirement under such plan. In addition, if an
executive’s Retirement qualifies as a Tenured Retirement or an Early
Retirement, he would be eligible for certain additional items as described
below.
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·
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Benefits Upon “Tenured
Retirement.” If the executive’s employment terminates on
account of Tenured Retirement (defined as a Retirement by an executive who
has reached age 59 ½, has served at least 4 ½ years as a member of the
Company’s senior staff, and has provided at least six months advance
notice of retirement to the Company), in addition to the benefits upon
Retirement as described above, the executive would be entitled to the
following:
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For
all stock options or stock appreciation rights granted after January 1,
2008 (i) vested awards would remain vested and exercisable through the end
of their terms, and (ii) unvested awards would continue to vest in
accordance with their terms as if the executive were still employed by the
Company, and remain vested and exercisable through the end of their
terms.
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-
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For
all unvested restricted stock units granted after January 1, 2008, such
awards would continue to vest in accordance with their terms as if the
executive were still employed by the
Company.
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-
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For
all unvested performance shares granted after January 1, 2008, such shares
would be considered vested upon retirement, but only to the extent the
related performance criteria are ultimately met; provided, however, that
for any years in the performance period during which the executive works
less than three months, a pro-rated portion of the performance shares
would be subject to a cap of 100% of
target.
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·
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Benefits Upon “Early
Retirement.” If the executive’s employment terminates on
account of Early Retirement (defined as a Retirement by an executive who
has reached age 54 ½, has served at least 4 ½ years as a member of the
Company’s senior staff, has a combined age plus years of service on senior
staff of at least 64, and has provided at least six months advance notice
of retirement to the Company), in addition to the benefits upon Retirement
as described above, the executive would be entitled to the
following:
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-
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For
all stock options or stock appreciation rights granted after January 1,
2008 (i) vested awards would remain vested and exercisable for the
standard post-termination period set out in the Company’s Long Term
Incentive Plan, plus an additional month for each month the executive
worked past his or her 55th birthday through retirement, and (ii) a
pro-rated portion of the unvested awards (determined based on the number
of months worked past age 55 through retirement, divided by 60) would
continue to vest in accordance with its terms as if the executive were
still employed by the Company, and remain vested and exercisable for the
same extended period as the vested options in the preceding phrase
(i).
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For
all unvested restricted stock units granted after January 1, 2008, a
pro-rated portion of the unvested awards (determined based on the number
of months worked past age 55 through retirement, divided by 60) would
continue to vest in accordance with its terms as if the executive were
still employed by the Company.
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-
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For
all unvested performance shares granted after January 1, 2008, a pro-rated
portion of the unvested shares (determined based on the number of months
worked past age 55 through retirement, divided by 60) would be considered
vested upon retirement, but only to the extent the performance criteria
are ultimately met; provided, however, that for any years in the
performance period during which the executive works less than three
months, a further pro-rated portion of the performance shares would be
subject to a cap of 100% of target.
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·
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Restrictive
Covenants. Upon termination of each executive’s
employment with the Company, such executive is prohibited from (i)
soliciting any client or prospective client of the Company for a period of
two years after termination; (ii) soliciting or hiring any employee of the
Company for a period of two years after termination; (iii) competing with
the Company for a period of eighteen months after termination; or (iv)
disclosing certain confidential information with respect to the Company or
its business. If, following either a Tenured Retirement or an
Early Retirement, the executive violates these covenants, then the
executive would forfeit all unvested or unexercised equity awards, and
would be required to reimburse the Company for any realized benefits
resulting from his or her
retirement.
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Tax
Indemnification. In the event that any amount or benefit
paid or distributed to an executive pursuant to the employment agreement,
taken together with any amounts or benefits otherwise paid or distributed
to such executive by the Company pursuant to any other arrangement or plan
(collectively, the “Covered Payments”), would result in the executive’s
liability for the payment of an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended, the Company will make a
“gross-up” payment to the executive to fully offset the excise tax
provided the aggregate present value of the Covered Payments is equal to
or exceeds 125% of the maximum total payment which could be made to the
executive without triggering the excise tax. If the aggregate
present value of the Covered Payments, however, exceeds such maximum
amount, but is less than 125% of such maximum amount, then the Company
may, in its discretion, reduce the Covered Payments so that no portion of
the Covered Payments is subject to the excise tax, and no gross-up payment
would be made.
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| EXPRESS SCRIPTS, INC. | |||
| (Registrant) | |||
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Date:
October 31, 2008
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By:
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/s/ George Paz | |
| George Paz | |||
| Chairman, President and Chief Executive Officer | |||
| Exhibit No. | Exhibit |
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10.1*
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Executive
Employment Agreement between the Company and George Paz, dated October 31,
2008 and effective as of November 1, 2008.
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10.2*
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Form
of Executive Employment Agreement between the Company and other
executives, dated October 31, 2008 and effective as of November 1,
2008.
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