Express Scripts 2011 Annual Report Download - page 80

Express Scripts 2011 Annual Report
78
Through December 31, 2011, approximately 44.1 million shares of treasury stock have been reissued in
connection with employee compensation plans. As of December 31, 2011, approximately 36.8 million shares of our
common stock have been reserved for employee benefit plans (see Note 10 – Employee benefit plans and stock-
based compensation plans).
Preferred Share Purchase Rights. In July 2001 our Board of Directors adopted a stockholder rights plan
which declared a dividend of one right for each outstanding share of our common stock. The rights plan expired on
March 15, 2011 and no additional plans were adopted by the Board of Directors.
10. Employee benefit plans and stock-based compensation plans (reflecting the two-for-one stock split
effective June 8, 2010)
Retirement savings plan. We sponsor retirement savings plans under Section 401(k) of the Internal
Revenue Code for all of our full-time employees. Employees may elect to enter into a written salary deferral
agreement under which a maximum of 15% to 25% of their salary, subject to aggregate limits required under the
Internal Revenue Code, may be contributed to the plan. We match 200% of the first 1% and 100% of the next 3% of
the employees’ compensation contributed to the Plan for substantially all employees. For the years ended
December 31, 2011, 2010, and 2009, we had contribution expense of approximately $25.7 million, $26.8 million
and $22.0 million, respectively.
Employee stock purchase plan. We offer an employee stock purchase plan that qualifies under Section
423 of the Internal Revenue Code and permits all employees, excluding certain management level employees, to
purchase shares of our common stock. Participating employees may contribute up to 10% of their salary to purchase
common stock at the end of each monthly participation period at a purchase price equal to 95% of the fair market
value of our common stock on the last business day of the participation period. During 2011, 2010 and 2009,
approximately 200,000, 217,000 and 260,000 shares of our common stock were issued under the plan, respectively.
Our common stock reserved for future employee purchases under the plan is approximately 2.4 million shares at
December 31, 2011.
Deferred compensation plan. We maintain a non-qualified deferred compensation plan (the ―Executive
Deferred Compensation Plan‖) that provides benefits payable to eligible key employees at retirement, termination or
death. Benefit payments are funded by a combination of contributions from participants and us. Participants may
elect to defer up to 50% of their base earnings and 100% of specific bonus awards. Participants become fully vested
in our contributions on the third anniversary of the end of the plan year for which the contribution is credited to their
account. For 2011, our contribution was equal to 6% of each qualified participant’s total annual compensation, with
25% being allocated as a hypothetical investment in our common stock and the remaining being allocated to a
variety of investment options. We have chosen to fund our liability for this plan through investments in trading
securities, which primarily consist of mutual funds (see Note 1 – Summary of significant accounting policies). We
incurred net compensation expense (benefit) of approximately $0.6 million, $1.5 million and $(0.6) million in 2011,
2010, and 2009, respectively. At December 31, 2011, approximately 5.9 million shares of our common stock have
been reserved for future issuance under the plan. We have $0.3 million of unearned compensation related to
unvested shares that are part of our deferred compensation plan at both December 31, 2011 and 2010.
Stock-based compensation plans in general. In March 2011, the Board of Directors adopted the Express
Scripts, Inc. 2011 Long-Term Incentive Plan (the ―2011 LTIP‖), which provides for the grant of various equity
awards with various terms to our officers, Board of Directors and key employees selected by the Compensation
Committee of the Board of Directors. The 2011 LTIP was approved by our stockholders in May 2011 and became
effective June 1, 2011. Under the 2011 LTIP, we may issue stock options, stock-settled stock appreciation rights
(―SSRs‖), restricted stock units, restricted stock awards, performance share awards, and other types of awards. The
maximum number of shares available for awards under the 2011 LTIP is 30.0 million. The maximum term of stock
options, SSRs, restricted stock and performance shares granted under the 2011 LTIP is 10 years. As of December
31, 2011, approximately 28.5 million shares of our common stock are available for issuance under this plan.