MedcoHealth Solutions (MHS)

General

The Incentive Plan is designed to provide cash incentives to certain executive officers of the Company for contributing to the success and growth of the Company and to assist in attracting, motivating and retaining key employees by providing competitive compensation opportunities. Under the Incentive Plan, all executive officers (14 persons) will be eligible to receive cash awards for a year based on the achievement of established performance objectives determined by the Compensation Committee before or during the first three months of the performance cycle.

General

The Company’s Second Amended and Restated Certificate of Incorporation currently provides for a classified Board of Directors consisting of three classes of directors with staggered three-year terms, each class consisting, as nearly as possible, of one-third of the total number of directors. In 2007, the Board of Directors voted in favor of de-classifying the Company’s Board of Directors over a three-year period, and the Company’s shareholders ratified this action, which will result in annual elections of the Company’s directors beginning at the 2010 Annual Meeting of Shareholders. The terms of all directors, including those directors elected at the Annual Meeting and the 2009 Annual Meeting of Shareholders, will automatically expire upon the election of directors at the 2010 Annual Meeting of Shareholders. A director’s term continues until the election and qualification of such director’s successor, or the earlier death, resignation or removal of such director.

The Board of Directors currently consists of nine persons, as follows:

The term of office for the three Class II directors listed above, John L. Cassis, Michael Goldstein and Blenda J. Wilson expires at the Annual Meeting. The Board of Directors has selected Mr. Cassis, Mr. Goldstein and Dr. Wilson as the nominees for the Class II directors to be elected at the Annual Meeting. The Class II directors elected will each serve for a term of two years, based on the de-classification of the Board of Directors described above, expiring at the 2010 Annual Meeting of Shareholders upon the due election and qualification of each of their successors.

The three nominees for election have agreed to serve if elected, and management has no reason to believe that such nominees will be unavailable to serve. In the event that any of the nominees is unable or declines to serve as a director at the time of the Annual Meeting, then the persons named as proxies may vote for a substitute nominee chosen by the present Board of Directors to fill the vacancy. Alternatively, the Board of Directors may reduce the size of the Board of Directors. Unless otherwise instructed, the proxy holders will vote the shares represented by proxies received by them FOR each of the nominees named above.

General

The Company’s Second Amended and Restated Certificate of Incorporation currently provides for a classified Board of Directors consisting of three classes of directors with staggered three-year terms, each class consisting, as nearly as possible, of one-third of the total number of directors. At the annual meeting of shareholders in the year in which the term of a class of directors expires, director nominees in such class will stand for election for three-year terms. With respect to each class, a director’s term will continue until the election and qualification of such director’s successor, or the earlier death, resignation or removal of such director.

The number of directors that shall constitute the whole Board is nine, as determined by resolution of the Board in accordance with the Company’s Second Amended and Restated Certificate of Incorporation and the Company’s Amended and Restated Bylaws. The Board currently consists of nine persons, as follows:

The term of office for the two Class I directors listed above, Howard W. Barker, Jr., and David B. Snow, Jr., expires at the Annual Meeting. The Board has selected Mr. Barker and Mr. Snow as the nominees for the Class I directors to be elected at the Annual Meeting. Brian L. Strom, M.D., M.P.H., resigned from the Board of Directors on February 21, 2007. Dr. Strom was a member of Class I. The Class I directors elected will each serve for a term of three years, expiring at the 2010 Annual Meeting of Shareholders upon the due election and qualification of each of their successors.

The two nominees for election have agreed to serve if elected, and management has no reason to believe that such nominees will be unavailable to serve. In the event that either of the nominees is unable or declines to serve as a director at the time of the Annual Meeting, then the proxies will be voted for any nominee who may be designated by the present Board of Directors to fill the vacancy. Unless otherwise instructed, the proxy holders will vote the shares represented by proxies received by them FOR each of the nominees named above. The proxies solicited by this Proxy Statement cannot be voted for a greater number of persons than the number of nominees named.

General

The Company’s Second Amended and Restated Certificate of Incorporation provides for a classified Board of Directors consisting of three classes of directors with staggered three-year terms, each class consisting, as nearly as possible, of one-third of the total number of directors. At the annual meeting of shareholders in the year in which the term of a class of directors expires, director nominees in such class will stand for election to three-year terms. With respect to each class, a director’s term will continue until the election and qualification of such director’s successor, or the earlier death, resignation or removal of such director.

The number of directors that shall constitute the whole Board is ten, as determined by resolution of the Board in accordance with the Company’s Second Amended and Restated Certificate of Incorporation and the Company’s Amended and Restated Bylaws. The Board currently consists of nine persons, plus one vacancy in Class III, as follows:

The term of office for the three Class III directors listed above, Lawrence S. Lewin, Charles M. Lillis and Edward H. Shortliffe, expires at the Annual Meeting. The Board has selected Mr. Lewin, Mr. Lillis, Dr. Shortliffe and David D. Stevens as the nominees for the Class III directors to be elected at the Annual Meeting. Mr. Stevens is not currently a member of the Board of Directors and has been nominated by the Board of Directors, in accordance with the recommendation of the Corporate Governance and Nominating Committee, to fill a vacancy created by the Board of Directors in February 2006. The Class III directors elected will each serve for a term of three years, expiring at the 2009 Annual Meeting of Shareholders upon the due election and qualification of each of their successors.

The four nominees for election have agreed to serve if elected, and management has no reason to believe that such nominees will be unavailable to serve. In the event that any of the nominees is unable or declines to serve as a director at the time of the Annual Meeting, then the proxies will be voted for any nominee who may be designated by the present Board of Directors to fill the vacancy. Unless otherwise instructed, the proxy holders will vote the shares represented by proxies received by them FOR each of the nominees named above. The proxies solicited by this Proxy Statement cannot be voted for a greater number of persons than the number of nominees named.

General

The Incentive Plan is designed to provide annual incentives to certain executive officers of the Company for contributing to the success and growth of the Company and to assist in attracting, motivating and retaining key employees on a competitive basis. Under the Incentive Plan, all executive officers (14 persons) will be eligible to receive annual cash awards for a year based on the achievement of established performance objectives determined by the Compensation Committee before or during the first three months of that year.