108 Wilmot Road Deerfield, Illinois 60015 November 18, 2011 Dear Walgreens Shareholder: Please join us Wednesday, January 11, 2012, at 2:00 p.m., Central Time, for our Annual Shareholders’ Meeting. As in past years, the meeting will be held in the Grand Ballroom of Navy Pier, 600 East Grand Avenue, Chicago, Illinois. For your convenience, a trolley service will run from the Navy Pier parking garages to Entrance 2, Lobby 3. Even in a challenging U.S. economy, fiscal 2011 was a year of strong performance for Walgreens. We achieved our 37th consecutive year of record sales through a focus on delivering exceptional value, quality and service to our customers and patients, fueled by our culture of operational excellence and innovation. We returned a record $2.4 billion to shareholders in fiscal 2011 through dividends and share repurchases, including an increase in our dividend for the 36th consecutive year. The year also produced our strongest growth in net income in a decade and our largest growth in earnings per share in more than 15 years. At this year’s Annual Meeting, we’ll update you on how we are meeting the evolving needs of today’s customers and patients by becoming “My Walgreens” for everyone in America, the first choice for health and daily living. We will also review our financial performance and answer your questions. Please mark your calendar for January 11. Closed captioning will be offered during the entire meeting, including questions and answers. If you are unable to attend the meeting in person, please join us online at Walgreens.com at 2:00 p.m., Central Time, that day to hear a live broadcast. A video re-broadcast is expected to be available on our website by Monday, January 16. This year, we are pleased to be providing most of our shareholders with proxy materials over the Internet. By using this method of delivery, we are able to provide these important materials in an expedited manner while reducing our costs and the environmental impact of our Annual Meeting. Your vote is very important. Whether or not you plan to attend the meeting, please vote at your earliest convenience by following the instructions in the notice of internet availability of proxy materials or the proxy card you received in the mail. Our very best wishes for a healthy and happy holiday season, and thank you for your continued trust and confidence in Walgreens. Sincerely, ALAN G. MCNALLY GREGORY D. WASSON Chairman of the Board President and Chief Executive Officer 108 Wilmot Road Deerfield, Illinois 60015 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held Wednesday, January 11, 2012 TO THE SHAREHOLDERS OF WALGREEN CO.: The Annual Meeting of Shareholders of Walgreen Co., an Illinois corporation, will be held in the Grand Ballroom of Navy Pier, 600 East Grand Avenue, Chicago, Illinois, on Wednesday, January 11, 2012, at 2:00 p.m. Central Standard Time. The Annual Meeting is being held for the following purposes: (1) To elect 11 directors to hold office until the next Annual Meeting of Shareholders or until their successors are elected and qualified; (2) To ratify the appointment of Deloitte & Touche LLP as Walgreen Co.’s independent registered public accounting firm for the fiscal year ending August 31, 2012; (3) To approve the Walgreen Co. 2011 Cash-Based Incentive Plan; (4) To approve, on an advisory basis, the compensation of our named executive officers (a “Say-on-Pay” vote); (5) To conduct an advisory vote on the frequency of future shareholder Say-on-Pay votes (a “Say- When-on-Pay” vote); (6) To consider a shareholder proposal regarding an executive equity retention policy; and (7) To transact such other business as may properly come before the meeting or any adjournment. Only shareholders of record at the close of business on November 14, 2011, are entitled to vote at the Annual Meeting and any adjournment. Shareholders are cordially invited to attend the Annual Meeting. If attending, please bring the admission ticket mailed to you and at least one form of photo identification. This year, we are pleased to be using the Securities and Exchange Commission “e-proxy” rule that allows companies to furnish their proxy materials over the Internet instead of mailing printed copies of the proxy materials to each shareholder. As a result, we are mailing to most shareholders a notice instead of a printed copy of this proxy statement and our fiscal 2011 Annual Report. The notice contains instructions on how to access those documents over the Internet and how to submit voting instructions. The notice also contains instructions on how shareholders may, if desired, request a printed copy of our proxy materials. Shareholders who do not receive a notice will receive a printed copy of the proxy materials and our fiscal 2011 Annual Report by mail unless they have previously requested electronic delivery. To vote your shares, please follow the instructions in the notice of internet availability of proxy materials or the proxy card you received in the mail. If you vote by telephone or via the Internet, you need not return a proxy card. You may revoke your proxy at any time before your shares are voted at the meeting by notifying the Secretary of Walgreen Co. in writing or by validly submitting another proxy by telephone, Internet or mail. If you are present at the meeting, you may vote your shares in person, which will supersede your proxy. If you hold shares through a broker or other custodian, please check the voting instructions provided to you by that broker or custodian. Your vote is important. Whether or not you plan to attend the meeting in person, please vote at your earliest convenience. Your vote before the annual meeting will ensure representation of your shares at the annual meeting even if you are unable to attend. By order of the Board of Directors, THOMAS J. SABATINO, JR. Corporate Secretary November 18, 2011 TABLE OF CONTENTS Page PROXY STATEMENT ............................................................... 1 Questions and Answers about the Proxy Materials and the Annual Meeting ...................... 1 PROPOSAL 1 — Election of Directors ................................................... 5 The Board of Directors, Board Committees and Corporate Governance ......................... 11 Committees ....................................................................... 13 Director Selection Process ........................................................... 15 Consideration of Director Candidates for the 2013 Annual Meeting .......................... 16 Communications with the Board of Directors ............................................ 16 Board Leadership Structure .......................................................... 17 Board Oversight of Risk Management .................................................. 17 Director Compensation ............................................................... 18 Executive Compensation .............................................................. 20 Compensation Discussion and Analysis ................................................ 20 Executive Summary .............................................................. 21 Compensation Decision Process .................................................... 25 Elements of Compensation ........................................................ 26 Relationship Between Compensation Plans and Risk .................................... 37 Compensation Recovery Policy ..................................................... 38 Employment Agreements .......................................................... 38 Share Ownership Guidelines for Senior Executives ..................................... 39 Insider Trading Restrictions and Policy Against Hedging ................................. 39 Tax-Deductibility of Executive Officer Compensation ................................... 40 Compensation Committee Report on Executive Compensation .............................. 40 Executive Compensation Tables and Supporting Information ............................... 41 Summary Compensation Table ..................................................... 41 Grants of Plan-Based Awards in 2011 Fiscal Year ...................................... 43 Outstanding Equity Awards at 2011 Fiscal Year-End .................................... 44 Option Exercises and Stock Vested in 2011 Fiscal Year .................................. 45 Nonqualified Deferred Compensation for the 2011 Fiscal Year ............................ 46 Potential Payments Upon Termination or Change in Control .............................. 47 Securities Ownership of Certain Beneficial Owners and Management ........................... 54 Section 16(a) Beneficial Ownership Reporting Compliance ................................... 55 Equity Compensation Plans ............................................................ 55 Certain Relationships and Related Transactions ............................................ 56 Audit Committee Report .............................................................. 58 Independent Registered Public Accounting Firm Fees and Services ............................. 58 PROPOSAL 2 — Ratification of the Appointment of the Independent Registered Public Accounting Firm .................................................................. 59 PROPOSAL 3 — Approval of the Walgreen Co. 2011 Cash-Based Incentive Plan ................. 60 PROPOSAL 4 — Say-on-Pay – An Advisory Vote on the Compensation of our Named Executive Officers ................................................................. 62 PROPOSAL