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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">UNITED STATES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">SECURITIES AND EXCHANGE COMMISSION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">FORM 8-K</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Current Report</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Pursuant To Section 13 or
15(d) of the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Securities Exchange Act of 1934</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Date of Report (Date of earliest event reported)
<B>January 19, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: normal 12pt Times New Roman, Times, Serif; margin: 0; font-variant: normal; text-decoration: none; text-align: center"><B>PSYCHEMEDICS
CORPORATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(<FONT STYLE="font-size: 10pt">Exact Name of
Registrant As Specified In Its Charter</FONT>)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0; font-variant: normal; text-decoration: none; text-align: center"><B>Delaware</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(<FONT STYLE="font-size: 10pt">State or Other
Jurisdiction of Incorporation</FONT>)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font-family: Times New Roman, Times, Serif">
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    <TD STYLE="width: 50%; tab-stops: center 3.0in right 6.0in; font-size: 10pt; font-weight: bold; text-align: center">1-13738</TD>
    <TD STYLE="width: 50%; tab-stops: center 3.0in right 6.0in; font-size: 10pt; font-weight: bold; text-align: center">58-1701987</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: center">(Commission File Number)</TD>
    <TD STYLE="font-size: 10pt; text-align: center">(I.R.S. Employer Identification No.)</TD></TR>
</TABLE>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <TD STYLE="width: 63%; font-weight: bold; text-align: center">125 Nagog Park, Acton, Massachusetts</TD>
    <TD STYLE="width: 37%; font-weight: bold; text-align: center">01720</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-align: center">(Address of Principal Executive Offices)</TD>
    <TD STYLE="text-align: center">&nbsp; (Zip Code)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&#9;(978) 206-8220&#9;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Registrant&rsquo;s Telephone Number, Including
Area Code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>N/A </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Former name or former address, if changed since
last report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions
A.2. below):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 4%; font-family: Wingdings 2">&pound;</TD>
    <TD STYLE="width: 96%">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>ITEM 5.02(e)&#9;COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On January 19, 2012, the Compensation Committee
of the Board of Directors of Psychemedics Corporation (the &quot;Company&quot;) approved the terms of cash performance bonus arrangements
with certain executive officers, including the Company&rsquo;s Chief Executive Officer, its Vice President &ndash; Laboratory Operations,
its Vice President &ndash; Finance, and other employees for 2012 (the &ldquo;cash bonus arrangements&rdquo;). Bonus payments under
the cash bonus arrangements are calculated and paid as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Each participant has the opportunity to earn
as bonus compensation up to an aggregate of an additional 25% of his or her Base Salary in 2012 based on achievement of Company
and individual goals. Each participant's target percentages consist of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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    <TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 4%"><FONT STYLE="font-size: 10pt">a.</FONT></TD>
    <TD STYLE="width: 93%; padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-size: 10pt">Up to 10% of Base Salary based on the Company&rsquo;s achievement of
    pre-determined revenue and earnings per share goals for 2012; plus</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">b.</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Up to 10% of Base Salary based on the employee&rsquo;s&nbsp; achievement of pre-determined
    individual goals for 2012; plus</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">c.</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Up to 5% of Base Salary based on the Company&rsquo;s achievement of certain customer service
    objectives during 2012.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The foregoing targets (a), (b) and (c) are cumulative
and achievement of any such target is not dependent upon achievement of any other listed target.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Compensation Committee reserves the right
to withdraw, amend, add to and terminate the cash bonus arrangements, or any portion of them, in its discretion at any time, including,
but not limited to, changing or eliminating the threshold amounts giving rise to the payment of target percentages, determining
the calculation of such threshold amounts, and adjusting threshold amounts to take into account special non recurring items, in
determining financial and individual performance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At the end of fiscal year 2012, the Chief Executive
Officer will review and assess the performance of each of the other participants with respect to achievement of his or her individual
goals, and provide his recommendations thereon to the Compensation Committee. In addition, the Compensation Committee will review
and assess the Chief Executive Officer's performance with respect to achievement of his individual goals. The Compensation Committee
will then determine the level of payout of the portion of the Chief Executive Officer&rsquo;s bonus arrangement with respect to
individual and Company goals, and each of the other participants, based on the Committee's review and assessment of the performance
of each individual toward his or her individual goals and Company goals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">SIGNATURE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">PSYCHEMEDICS CORPORATION</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">Dated: January 25, 2012</TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 47%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;<U> </U></TD>
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Neil Lerner</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="tab-stops: center 3.0in right 6.0in">&nbsp;</TD>
    <TD STYLE="tab-stops: center 3.0in right 6.0in">&nbsp;</TD>
    <TD STYLE="tab-stops: center 3.0in right 6.0in">Neil Lerner, Vice President - Finance</TD></TR>
</TABLE>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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{"company-data": {"conformed-name": "PSYCHEMEDICS CORP", "cik": "0000806517", "assigned-sic": "8071", "irs-number": "581701987", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-13738", "film-number": "12543358"}, "business-address": {"street1": "125 NAGOG PARK", "city": "ACTON", "state": "MA", "zip": "01720", "phone": "978-206-8220"}, "mail-address": {"street1": "125 NAGOG PARK", "city": "ACTON", "state": "MA", "zip": "01720"}}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant To Section 13 or
15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 19, 2012
PSYCHEMEDICS
CORPORATION
(
Exact Name of
Registrant As Specified In Its Charter
)
Delaware
(
State or Other
Jurisdiction of Incorporation
)
1-13738
58-1701987
(Commission File Number)
(I.R.S. Employer Identification No.)
125 Nagog Park, Acton, Massachusetts
01720
(Address of Principal Executive Offices)
(Zip Code)
(978) 206-8220
(Registrant's Telephone Number, Including
Area Code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions
A.2. below):
£
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 5.02(e)	COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
On January 19, 2012, the Compensation Committee
of the Board of Directors of Psychemedics Corporation (the "Company") approved the terms of cash performance bonus arrangements
with certain executive officers, including the Company's Chief Executive Officer, its Vice President – Laboratory Operations,
its Vice President – Finance, and other employees for 2012 (the "cash bonus arrangements"). Bonus payments under
the cash bonus arrangements are calculated and paid as follows:
Each participant has the opportunity to earn
as bonus compensation up to an aggregate of an additional 25% of his or her Base Salary in 2012 based on achievement of Company
and individual goals. Each participant's target percentages consist of the following:
a.
Up to 10% of Base Salary based on the Company's achievement of
    pre-determined revenue and earnings per share goals for 2012; plus
b.
Up to 10% of Base Salary based on the employee's  achievement of pre-determined
    individual goals for 2012; plus
c.
Up to 5% of Base Salary based on the Company's achievement of certain customer service
    objectives during 2012.
The foregoing targets (a), (b) and (c) are cumulative
and achievement of any such target is not dependent upon achievement of any other listed target.
The Compensation Committee reserves the right
to withdraw, amend, add to and terminate the cash bonus arrangements, or any portion of them, in its discretion at any time, including,
but not limited to, changing or eliminating the threshold amounts giving rise to the payment of target percentages, determining
the calculation of such threshold amounts, and adjusting threshold amounts to take into account special non recurring items, in
determining financial and individual performance.
At the end of fiscal year 2012, the Chief Executive
Officer will review and assess the performance of each of the other participants with respect to achievement of his or her individual
goals, and provide his recommendations thereon to the Compensation Committee. In addition, the Compensation Committee will review
and assess the Chief Executive Officer's performance with respect to achievement of his individual goals. The Compensation Committee
will then determine the level of payout of the portion of the Chief Executive Officer's bonus arrangement with respect to
individual and Company goals, and each of the other participants, based on the Committee's review and assessment of the performance
of each individual toward his or her individual goals and Company goals.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
PSYCHEMEDICS CORPORATION
Dated: January 25, 2012
By:
/s/ Neil Lerner
Neil Lerner, Vice President - Finance