exhibit_10pt3.htm

EXHIBIT 10.3


    WALGREEN CO. MANAGEMENT
INCENTIVE PLAN

    (As
amended and restated effective September 1, 2008)

    


    
      	
              1.

            	
              Purpose:  The
      purpose of the Walgreen Co. Management Incentive Plan (the "Plan") is to
      provide special incentive and motivation to management-level employees
      through annual bonuses.

            


    

    


    
      	
              2.

            	
              Definitions:  Whenever
      used in the Plan, the following terms shall have the meanings set forth
      below, unless the context clearly provides
  otherwise:

            


    

    


    
      	
              a.  

            	
              The
      term "Base Salary" shall mean the base salary paid during the fiscal year
      to a Participant, and any such base salary earned but deferred or reduced
      pursuant to a Company Section 401(k) plan, or Section 125 plan, or another
      Company deferral plan.  The term Base Salary does not include
      any incentive or performance bonuses, Christmas bonus, stock purchase
      discounts, or other fringe benefits or supplementary
      remuneration.

            


    

    


    
      	
              b.  

            	
              The
      term "Committee" shall mean the Compensation Committee of the Board of
      Directors of the Company.

            


    

    


    
      	
              c.  

            	
              The
      term "Company" shall mean Walgreen Co., an Illinois corporation, and all
      wholly-owned subsidiaries of Walgreen
Co.

            


    

    


    
      	
              d.  

            	
              The
      term “Disability” shall mean total disability as determined by the
      Committee, consistent with how the Company determines whether termination
      of employment is upon disability for other benefit plan
      purposes.

            


    

    


    
      	
              e.  

            	
              The
      term "Employee" shall mean any employee of the Company, including, but not
      limited to, the officers of Walgreen Co.  Employee shall not
      include any person who is not classified as an employee in the common law
      sense in the records of the Company, even if those records are
      subsequently determined to have been in error or the person is
      subsequently reclassified as an employee.  For example, no
      person shall be considered to be an Employee for any period of time during
      which he or she:  (1) is a leased employee; (2) is an
      independent contractor; or (3) is otherwise not classified as an employee
      in the records of the Company.

            


    

    


    
      	
              f.  

            	
              The
      term "Extraordinary Items" shall mean significant transactions that are
      different from the typical or customary business transactions and are not
      expected to occur frequently as determined by the informed professional
      judgment of the Chief Financial Officer of the Company after taking into
      consideration all the facts involved in a particular situation and the
      objectives of the Plan.

            


    

    


    
      	
              g.  

            	
              The
      term "Individual Adjustment" shall mean the amount of any increase or
      reduction in the bonus share that would otherwise be allocated to a
      Participant.

            


    

    


    
      	
              h.  

            	
              The
      term "Participant" shall mean any Employee who participates in and is
      eligible to receive incentive compensation pursuant to paragraph 3 of the
      Plan.

            


    

    


    
      	
              i.  

            	
              The
      term "Plan Year" shall mean the fiscal year of Walgreen Co., which runs
      from September 1 to the following August
31.

            


    

    


    
      	
              j.  

            	
              The
      term “Retirement” shall
      mean termination of employment from the Company in good standing, as
      determined by the Committee or its delegates, and after having attained at
      least age 55 and at least 10 years of continuous
      service.

            


    

    


    
      	
              k.  

            	
              The
      term "Salary Grade" shall mean the salary grades to which job positions
      are assigned under the Walgreen Co. Salary Administration
      Program.  To the extent such Program is revised, references
      hereunder to Salary Grade and specific Salary Grade levels shall be
      appropriately adjusted by the Committee or its delegates to reflect such
      revised Program.

            


    

    


    
      	
              3.  

            	
              Eligibility and
      Participation:  The Committee shall have the authority
      and discretion to determine the class or classes of Employees eligible to
      participate in the Plan for any Plan Year.  As of the effective
      date of this amended and restated Plan, the following categories of
      Employees shall be eligible to participate in the
  Plan:

            


    

    


    
      	
              a.  

            	
              Any
      Employee whose job position is within Salary Grades 12 and above or their
      equivalent and is not covered by another Company management incentive
      plan; and

            


    

    


    
      	
              b.  

            	
              Any
      other Employee who is approved for participation by the Committee, based
      on the recommendation of Company management that he or she is in a
      position to make a substantial contribution to the success of the Company
      by exceptional service in a supervisory or staff
  position.

            


    

    


    The
Committee shall also have the authority to approve or deny Plan participation to
any individual Employee.  No Employee shall have a contractual right
to receive any incentive award or payment, as all awards and payments are
ultimately subject to the approval and authorization of the
Committee.

    


    
      	
              4.  

            	
              Determination of
      Bonuses:  Participant bonuses for each Plan Year shall be
      determined as follows:

            


    

    


    
      	
              a.  

            	
              Prior
      to the beginning of the Plan Year, or as early in the Plan Year as is
      practical considering the circumstances, management will recommend for
      Committee approval the bonus structure and accompanying details for that
      Plan Year.  Such recommendation shall cover the following areas
      and any other pertinent bonus
provisions:

            


    

    


    
      	
              (1)  

            	
              The
      class or class of employees eligible to participate in the Plan for such
      Plan Year.

            


    

    


    
      	
              (2)  

            	
              The
      performance measure or measures upon which bonuses shall be based, and the
      extent to which such measures shall be based on Company, division, or
      business unit performance, or some combination thereof.  The
      application of such performance measures may vary among different
      categories of employees.

            


    

    


    
      	
              (3)  

            	
              Threshold,
      target and maximum bonus levels (typically expressed as a percentage of
      Base Salary), and the corresponding Company performance measure or
      measures.  Such bonus levels may vary for different groups of
      Participants as determined by the
Committee.

            


    

    


    
      	
              (4)  

            	
              Any
      Individual Adjustments that may be applied, whether based on
      pre-established individual performance measures or determined on a
      discretionary basis.

            


    

    


    
      	
              b.  

            	
              After
      the end of each Plan Year when the computations and accounting
      determinations required to determine Plan bonuses have been completed, the
      highest-ranking accounting officer of the Company will report to the
      Committee that in his or her opinion those computations and accounting
      determinations were made in reasonable accordance with the terms of the
      Plan, and generally accepted accounting principles, subject to any
      adjustments provided for under the terms of paragraph 4c of the Plan and
      the certifications provided for under the terms of this paragraph
      4b.

            


    

    


    
      	
              c.  

            	
              In
      the event that the Company experiences any Extraordinary Items, the
      Finance Committee of the Board of Directors will recommend to the
      Committee, which will in turn make its recommendations to the full Board
      of Directors, whether such Extraordinary Items will be included in or
      excluded from the determination of the Company’s financial performance
      measure or measures used in determining the bonus for the Plan Year, and a
      report of the Board of Directors' decision will be delivered in writing to
      the Chief Accounting Officer of the
Company.

            


    

    


    
      	
              d.  

            	
              The
      bonuses earned by Participants under the terms of the Plan will be paid to
      Participants after the first meeting of the Board of Directors which
      follows the end of the applicable Plan Year, but in no event later than
      the date by which such bonuses must be paid in order to be allowed as a
      Federal income tax deduction for the fiscal year coinciding with such Plan
      Year.

            


    

    


    
      	
              e.  

            	
              Except
      as otherwise determined by the Committee or its delegates, bonuses for
      Participants in salary grades 12 and 13 (or their equivalent) shall be a
      portion of full bonuses for such Participants’ first and second years of
      Plan participation, as follows:

            


    

    


    
      	
               
      

            	
              (1)

            	
              One
      third for the first full or partial Plan Year of participation;
      and

            


    

    


    
      	
               
      

            	
              (2)

            	
              Two
      thirds for the second Plan Year of
  participation.

            


    

    


    For
purposes of the above, the following periods shall count for purposes of
determining years of Plan participation:

    


    
      	
               
      

            	
              (3)

            	
              Periods
      of Plan participation in Salary Grades 12 and
  13;

            


    

    


    
      	
               
      

            	
              (4)

            	
              Periods
      of participation in other Company incentive plans;
  and

            


    

    


    
      	
               
      

            	
              (5)

            	
              Such
      other periods of Company employment as determined by the Committee in its
      discretion.

            


    

    


    
      	
              5.  

            	
              Participation for
      Partial Plan Years:

            


    

    


    
      	
              a.  

            	
              Any
      Plan Participant whose employment with the Company terminates during a
      Plan Year for reasons other than Retirement, Disability or death shall not
      be eligible for a bonus for that Plan Year.  It is not intended
      that this paragraph of the Plan shall prohibit Company management from
      recommending to the Committee for its approval a discretionary bonus if in
      the sole judgment of management such a discretionary bonus is
      warranted.

            


    

    


    
      	
              b.  

            	
              A
      Participant who is eligible for a bonus hereunder for a portion of a Plan
      Year (due to hire, promotion or transfer during that Plan Year), shall
      generally be eligible for a bonus under this Plan based on Base Salary
      earned during the eligible portion of the Plan
      Year.  Notwithstanding the foregoing, the bonus amount payable
      to a Participant who is hired within the Plan Year, moves to a different
      bonusable grade level during the Plan Year, or receives payment under
      another Company incentive plan during the current or prior year, shall be
      subject to the discretion of the Committee and its
    delegates.

            


    

    


    
      	
              c.  

            	
              Subject
      to the end-of-year employment requirement set forth in paragraph 5a above,
      a Plan Participant who is on a Company-approved leave of absence for a
      portion of a Plan Year shall remain eligible for a bonus for up to the
      first six months of such leave of absence.  Any short-term
      disability pay during any such leave of absence shall be included in such
      Participant’s bonusable Base
Salary.

            


    

    


    
      	
              6.  

            	
              Administration.  Subject
      to the terms of the Plan and the powers granted to the full Board of
      Directors, the Committee has ultimate authority and responsibility for the
      administration of the Plan.  The Committee shall have all powers
      necessary to administer the Plan, including, without limitation, the power
      to interpret the provisions of the Plan, to decide all questions of
      eligibility, to establish rules and forms for the administration of the
      Plan, and to delegate specific duties and responsibilities to officers or
      other employees of the Company.  All determinations,
      interpretations, rules, and decisions of the Committee with respect to any
      question arising out of or in connection with the administration,
      interpretation and application of the Plan and the rules and regulations
      promulgated hereunder shall be final, conclusive and binding upon all
      persons having or claiming to have any interest or right under the
      Plan.

            


    

    


    
      	
              7.  

            	
              Indemnification.  The
      Company shall indemnify the members of the Committee, the other members of
      the Board of Directors and all Company officers and other employees
      responsible for administering the Plan against any and all liabilities
      arising by reason of any act or failure to act made in good faith in
      accordance with the provisions of the Plan.  For this purpose,
      liabilities include expenses reasonably incurred in the defense of any
      claim relating to the Plan.

            


    

    


    
      	
              8.  

            	
              Amendment and
      Termination.  The Plan may be amended from time to time
      or terminated at any time by the Board of Directors of Walgreen
      Co.

            


    

    


    
      	
              9.  

            	
              General Plan
      Provisions:

            


    

    


    
      	
              a.  

            	
              Nothing
      in this Plan is intended to limit the authority of the Committee to award
      additional discretionary bonuses to one or more senior executives of the
      Company as the Committee deems appropriate from time to
    time.

            


    

    


    
      	
              b.  

            	
              The
      impact of the payment of bonuses under the Plan on Participants’ other
      Company employee benefits shall be based on the governing terms of such
      other employee benefit plans and programs, or as determined by the
      Committee or its delegates, where
necessary.

            


    

    


    
      	
              c.  

            	
              Neither
      the existence of the Plan nor any substantive aspect of the Plan shall
      give any Participant the right to continued employment with the Company
      for any period of time or shall interfere with the right of the Company to
      discipline or discharge a Participant at any
  time.

            


    

    


    
      	
              d.  

            	
              The
      Company shall withhold from any bonus payment made pursuant to the Plan
      any taxes required to be withheld from such payment under local, state or
      federal law.

            


    

    


    
      	
              e.  

            	
              Bonuses
      otherwise payable hereunder may be paid on a deferred basis pursuant to
      the Walgreen Co. Section 162(m) Deferred Compensation Plan or pursuant to
      any other deferred compensation program that may be implemented with
      Committee approval in compliance with the requirements of Internal Revenue
      Code Section 409A and the regulations
  thereunder.

            


    

    


    
      	
              f.  

            	
              The
      Company shall not be required to fund or otherwise segregate any cash or
      other assets for purposes of meeting its obligations under the
      Plan.

            


    

    


    
      	
              g.  

            	
              The
      provisions of the Plan shall be construed and interpreted according to the
      laws of the State of Illinois, except as preempted by federal
      law.

            


    

    


    
      	
              h.  

            	
              A
      Participant shall not have any right to pledge, hypothecate, anticipate or
      in any way create a lien upon any amounts provided under this Plan and no
      benefits payable hereunder shall be assignable in anticipation of payment
      either by voluntary or involuntary acts, or by operation of
      law.

            


    

    


    
      	
              i.  

            	
              The
      Plan shall be binding upon the Company and any successor of the Company,
      including without limitation any corporation or other entity acquiring
      directly or indirectly all or substantially all of the assets of the
      Company whether by merger, consolidation, sale or
      otherwise.  Such successor shall thereafter be deemed the
      "Company" for the purposes of the
Plan.