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1.

We note that your company has disclosed information pertaining to the loss of two “major customers” over the course of the 2008 fiscal year which you estimate will result in decreased revenues of $162 million, or 13%, in 2009.  We further note that in your “Risk Factors” section you refer to your company’s dependence on certain customers and plan sponsors, but there is no disclosure of current customer dependence in your

“Business” section.  To the extent that you have relationships thatexceed 10% of revenue with any substantial customers, please disclose this information in your Business section pursuant to Item 101(c)(vii) of Regulation S-K; and if material, please file the related contracts.

2.

We note that you have not included as exhibits, nor incorporated by reference, all of the employment and severance agreements related to your named executive officers.  Pursuant to Item 601(b)(10)(ii)(A) of Regulation S-K, please file or incorporate by reference in your next 10-Q all employment and severance agreements of your named executive officers.

3.

In reviewing your Directors’ and Executives’ signatures on page 59 of your Form 10-K, we note that there is no designation for any signatory as your principal accounting officer.  For a Form 10-K, it must be clearly indicated which officer is signing as the principal accounting officer or controller.  If an individual exercises more than one function, such as principal financial officer and controller, then it must be indicated on the signature page that the officer is signing in both capacities.  As per the requirements of Form 10-K, please clearly indicate which officer is your principal accounting officer.

 

Response

 

4.

We note that the determination of annual cash incentives for your named executive officers is based on whether individual, corporate and departmental or business unit goals and objectives are achieved.  We also note that since threshold levels were not achieved, none of your named executive officers received cash incentive compensation for 2008.  However, you should still disclose the established threshold and target levels for all company, departmental or business unit and individual goals or performance criteria.  Please provide us draft disclosure for your 2009 proxy statement that provides the following:

·	All corporate, business unit or departmental and individual performance criteria,

·	The established threshold and target levels of achievement for each criteria, quantifying them to the extent they are quantifiable,

·	An explanation of how the level of achievement will affect actual bonuses paid, and

·	Confirmation that you will disclose the actual levels of achievement.

As requested in your letter, we have attached as Appendix A hereto draft disclosure of the “Elements of the Company’s Executive Compensation Program” subsection of the Compensation Disclosure Analysis section of our 2009 proxy statement that provides the following: (i) all corporate, business unit or departmental and individual performance criteria; (ii) the established threshold and target levels of achievement for each criteria, quantifying

 

5.

We note that your Summary Compensation Table includes information summarizing the elements of compensation for each of your Company’s named executive officers for the last two fiscal periods; even though most of the officers listed in the table have held their respective executive positions for more than the two years provided in the table.  Please confirm that your 2009 proxy statement will include a Summary Compensation Table that covers the last three fiscal years.

·	We are responsible for the adequacy and accuracy of the disclosures in our filings with the Commission;

 

·	Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

 

·	We may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

 

 

 

 

 

 

 

·	The annual cash bonus for the Chief Executive Officer was targeted at 100% of base salary.  Achievement of the full bonus amount was tied to the following factors: (i) achievement of budgeted net income of $_______ – 60% of the targeted bonus; (ii) achievement of budgeted sales of $________ – 10% of the targeted bonus; (iii) implementation of the Company’s new pharmacy and billing and collection system in all community retail stores and the Company’s mail service facility on or before September 30, 2009 – 10% of the targeted bonus; (iv) implementation of a new employee development and training program – 10% of the targeted bonus; and (v) improvement in employee satisfaction – 10% of the targeted bonus.  For 2009 the Company’s Chief Executive Officer earned __% of his targeted bonus amount.
·	The annual cash bonus incentive for the Chief Financial Officer was targeted at 55% of base salary.  Achievement of the full bonus amount was tied to the following factors: (i) achievement of budgeted net income of $_______ – 60% of the targeted bonus; (ii) achievement of budgeted sales of $_______ – 10% of the targeted bonus; (iii) implementation of the Company’s new pharmacy and billing and collection system in all community retail stores and the Company’s mail service facility on or before September 30, 2009 – 10% of the targeted bonus; (iv) achievement of cost reductions of $2.0 million above budget during 2009 – 10% of the targeted bonus; (v) implementation of a new employee development and training program – 5% of the targeted bonus; and (vi) improvement in employee satisfaction – 5% of the targeted bonus.  For 2009 the Company’s Chief Financial Officer earned __% of his targeted bonus amount.
·	The annual cash bonus for the Executive Vice President and General Counsel was targeted at 40% of base salary.  Achievement of the full bonus amount was tied to the following factors: (i) achievement of budgeted net income of $_______ – 60% of the targeted bonus; (ii) increase legal and compliance awareness through development of new education program – 15% of the targeted bonus; (iii) satisfactory results of internal survey of legal department – 15%; and (iv) meeting requirements of board and committee chairs related to secretarial and governance issues – 15% of the targeted bonus.  For 2009 the Company’s Executive Vice President and General Counsel earned __% of his targeted bonus amount.
·	The annual incentive for the Executive Vice President of Mail Operations was targeted at 50% of base salary.  Achievement of the full bonus amount was tied to the following factors: (i) achievement of budgeted net income of $_______ – 60% of the targeted bonus; (ii) achievement of budgeted sales of $_______ – 10% of the targeted bonus; (iii) implementation of the Company’s new pharmacy and billing and collection system in all community retail stores and the Company’s mail service facility on or before September 30, 2009 – 10% of the targeted bonus; (iv) achievement of cost reductions of $2.0 million above budget during 2009 – 10% of the targeted bonus; (v) implementation of a new employee development and training program – 5% of the targeted bonus; and (vi) improvement in employee satisfaction – 5% of the targeted bonus.  The Executive Vice President of Mail Operations had the opportunity to earn an additional bonus in an amount equal to 12.9% of the Company’s net income above $________.  For 2009 the Company’s Executive Vice President of Mail Operations earned __% of his targeted bonus amount and $_____ additional bonus.
·	The annual incentive for the Executive Vice President of Sales and Marketing was targeted at 50% of base salary.  Achievement of the full bonus amount was tied to the following factors: (i) achievement of budgeted net income of $_______ – 60% of the targeted bonus; (ii) achievement of budgeted sales of $_______ – 10% of the targeted bonus; (iii) implementation of the Company’s new pharmacy and billing and collection system in all community retail stores and the Company’s mail service facility on or before September 30, 2009 – 10% of the targeted bonus; (iv) achievement of cost reductions of $2.0 million above budget during 2009 – 10% of the targeted bonus; (v) implementation of a new employee development and training program – 5% of the targeted bonus; and (vi) improvement in employee satisfaction – 5% of the targeted bonus.  The Executive Vice President of Sales and Marketing had the opportunity to earn an additional bonus in an amount equal to 12.9% of the Company’s net income above $________.  For 2009 the Company’s Executive Vice President of Sales and Marketing earned __% of his targeted bonus amount and $_____ additional bonus.