Summary of 2012 CEO Short-Term Incentive Program



 Exhibit 10.38 
 PHARMERICA CORPORATION 
 SUMMARY OF 

2012 SHORT-TERM INCENTIVE PROGRAM – CEO 
 AND 
 2012 SHORT-TERM INCENTIVE PROGRAM 

2012 Short-Term Incentive Program – CEO 
 On January 18, 2012, the Board of Directors of PharMerica Corporation (the “Corporation”), upon recommendation of the Compensation Committee, adopted the 2012 Short-Term Incentive Program
(the “CEO STIP”) under the PharMerica Corporation 2007 Omnibus Incentive Plan, as amended (the “Omnibus Plan”), for the Corporation’s Chief Executive Officer, Mr. Gregory Weishar. The CEO STIP provides for a
performance-based annual cash award to Mr. Weishar. 
 Performance Cycle. The CEO STIP performance cycle is for the
current year, beginning on January 1, 2012 and ending on December 31, 2012. 
 Maximum Award. If the
Corporation’s Adjusted EBITDA (as defined below) is equal to or greater than a target Adjusted EBITDA for the 2012 fiscal year, then Mr. Weishar is eligible to receive a payment under the CEO STIP equal to the lesser of (i) 2% of
Adjusted EBITDA for the 2012 fiscal year; or (ii) $2 million (the “Maximum Award”). The Compensation Committee, in its sole discretion, may decrease the Maximum Award based on its assessment of the Corporation’s performance, the
Chief Executive Officer’s individual performance, or any other factors it considers relevant, however in no event may the Compensation Committee reduce the Maximum Award below the annual bonus amount for the Chief Executive Officer (the
“Bonus Amount”). 
 Bonus Amount. The target Bonus Amount for Mr. Weishar is 125% of 2012 Base Salary. 70%
of the target Bonus Amount is based on the Corporation’s performance and 30% of the target Bonus Amount is based on individual performance goals. The Corporation must at least meet threshold Adjusted EBITDA of 80.0% of the target Adjusted
EBITDA amount in order for any payment to be made under the individual performance-based component. 
 The Corporation’s
performance will be measured by comparing the Corporation’s adjusted annual earnings before interest, taxes, integration, merger and acquisition related costs and other related charges, depreciation and amortization expense, impairment charges
of intangibles, and other accounting principle changes (“Adjusted EBITDA”), to a target Adjusted EBITDA for the entire 2012 fiscal year. Individual performance will be measured by comparing certain individual performance metrics to the
target individual performance metrics determined by the Compensation Committee. 
 The actual Bonus Amount is based on the
percentage of the performance target achieved. Generally, the percentage of the Bonus Amount earned at the end of the performance cycle will be determined according to the following schedule; however the actual Bonus Amount will be interpolated
between the percentages set forth in the chart based on actual results: 
  

			
	 Performance Achievement
	  	 Payout Level

	 < 80.0% of Performance Target
	  	0.0% of Award Target
		
	    80.0% of Performance Target
	  	40.0% of Award Target
		
	    90.0% of Performance Target
	  	70.0% of Award Target
		
	    96.0% of Performance Target
	  	88.0% of Award Target









			
	    100.0% of Performance Target
	  	100.0% of Award Target
		
	    105.0% of Performance Target
	  	118.8% of Award Target
		
	    110.0% of Performance Target
	  	137.5% of Award Target
		
	    115.0% of Performance Target
	  	156.3% of Award Target
		
	    120.0% of Performance Target
	  	175.0% of Award Target
		
	 > 120.0% of Performance Target
	  	175.0% of Award Target

 2012 Short-Term Incentive Program – Other Named Executive Officers 

On January 18, 2012, the Board of Directors of the Corporation, upon recommendation of the Compensation Committee, adopted the 2012
Short-Term Incentive Program (the “STIP”) under the Omnibus Plan. The STIP provides for performance-based annual cash awards to the Corporation’s executive officers, and certain other officers and employees of the Corporation. The
STIP advances the Corporation’s commitment to performance-based compensation practices by providing participants an opportunity to earn annual cash bonuses upon achievement of certain pre-established short-term performance objectives.

 Eligibility. Officers and employees of the Corporation may receive STIP cash awards as determined by the Board of
Directors or the Compensation Committee. 
 Performance Cycle. The STIP performance cycle is for the current year,
beginning on January 1, 2012 and ending on December 31, 2012. 
 Award Targets. The amount of the awards under
the STIP are based on individual participant bonus targets. Individual participant bonus targets are established for each participant by the Compensation Committee, in the case of the senior executive officers reporting to the Chief Executive
Officer, and by the Chief Executive Officer, for other participants, based upon a determination of the appropriate bonus target amounts which will enable the Corporation to remain competitive, to retain and recruit top employees, and to align such
employee’s interests with certain strategic initiatives of the Corporation. Individual non-executive participant bonus targets range from 5% to 100% of base salary on December 31, 2012, with targets for the Corporation’s executive
officers between 25% and 125% of base salary. 
 The Compensation Committee established the bonus targets under the STIP for the
Corporation’s fiscal 2011 Named Executive Officers, other than the principal executive officer, as follows: 
  

					
	 Executive
	  	 Title
	  	 Bonus Target

	Michael J. Culotta	  	Executive Vice President & Chief Financial Officer	  	80% of base salary
			
	William Monast	  	Executive Vice President of Sales and Client Management	  	75% of base salary
			
	Robert McKay	  	Senior Vice President of Purchasing and Trade Relations	  	65% of base salary
			
	Thomas Caneris	  	Senior Vice President, General Counsel, Chief Compliance Officer and Secretary	  	70% of base salary

 Performance Criteria. The performance criteria under the STIP is divided into a company
performance-based component and individual/group performance-based component for different employees. The breakdown for the Named Executive Officers, other than the Chief Executive Officer, is as set forth in the chart below. The Corporation must at
least meet threshold Adjusted EBITDA of 80.0% of target in order for any payment to be made under the individual/group performance-based components of the STIP; provided, however, that employees below Vice President may receive payment under
the individual/group performance-based component of the STIP if the threshold Adjusted EBITDA is not met. 








											
	 Executive
	  	 Title
	  	Company
Performance	 	 	Individual/Group
Performance	 
	 Michael J. Culotta
	  	Executive Vice President & Chief Financial Officer	  	 	70	% 	 	 	30	% 
				
	 William Monast
	  	Executive Vice President of Sales and Client Management	  	 	70	% 	 	 	30	% 
				
	 Robert McKay
	  	Senior Vice President of Purchasing and Trade Relations	  	 	50	% 	 	 	50	% 
				
	 Thomas Caneris
	  	Senior Vice President, General Counsel, Chief Compliance Officer and Secretary	  	 	50	% 	 	 	50	% 

 Under the STIP, company performance will be measured by comparing the Corporation’s Adjusted EBITDA,
to a target Adjusted EBITDA for the entire 2012 fiscal year. Individual/group performance will be measured by comparing certain individual/group performance metrics to target individual/group performance metrics established by the Corporation’s
Compensation Committee in consultation with the Chief Executive Officer for the Named Executive Officers other than the Chief Executive Officer. 
 Award Payouts. Award payout levels are based on the percentage of the performance target achieved. Generally, the percentage of the award earned at the end of the performance cycle will be
determined according to the following schedule; however the actual award payout will be interpolated between the percentages set forth in the chart based on actual results: 

 

			
	 Performance Achievement
	  	 Payout Level

	 < 80.0% of Performance Target
	  	0.0% of Award Target
		
	    80.0% of Performance Target
	  	40.0% of Award Target
		
	    90.0% of Performance Target
	  	70.0% of Award Target
		
	    96.0% of Performance Target
	  	88.0% of Award Target
		
	    100.0% of Performance Target
	  	100.0% of Award Target
		
	    105.0% of Performance Target
	  	118.8% of Award Target
		
	    110.0% of Performance Target
	  	137.5% of Award Target
		
	    115.0% of Performance Target
	  	156.3% of Award Target
		
	    120.0% of Performance Target
	  	175.0% of Award Target
		
	 > 120.0% of Performance Target
	  	175.0% of Award Target

 Payment of Awards. Payment of STIP awards will be made in cash. Awards will be paid on a specific
date by which the Compensation Committee reasonably expects that the Corporation’s Adjusted EBITDA for the year on which the award was based will have been reported. The Corporation will make the payment of the STIP awards to participants as
soon as administratively practicable following the date of the award determination, but no later than March 15, 2013. 

Vesting and Forfeiture. STIP participants must remain continuously employed full-time by the Corporation until the award payment
date in order to be entitled to receive a payout of an STIP award. 







 Other Terms & Provisions. STIP participants are not permitted to transfer
STIP awards, except by will or the laws of descent and distribution. The Corporation is entitled to withhold from any payments of awards under the STIP any and all amounts required to be withheld for federal, state and local withholding taxes. The
Compensation Committee has the discretion to change terms and conditions of STIP awards as it deems necessary to ensure that the STIP awards satisfy all requirements for “performance-based compensation” within the meaning of
Section 162(m)(4)(c) of the Internal Revenue Code.