CVS Caremark Corporation (CVS)

1. Base Salary

The Committee annually reviews the base salaries of designated senior executives, including the CEO, and considers increases based on corporate profitability, competitive salaries, position responsibility and individual qualifications and performance. A key component of this review is a comparison of current salaries against those reported for comparable positions in CVS Caremark’s peer group. The Committee also assesses internal salary levels within CVS Caremark, both with respect to the other executive officers and to other senior employees generally. Base salaries may be adjusted at the Committee’s discretion, which it generally chooses to exercise when competitive data indicate a significant market lag or in recognition of outstanding individual performance or an increase in the executive’s functional responsibilities.

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In 2008, salaries of select executive officers were increased to maintain or improve competitive position against target, as well as to provide merit increases. The Company is committed to a pay-for-performance philosophy, and after careful deliberation, the Committee approved the following salaries for the current executives specified in the Summary Compensation Table. Base salaries for Messrs. Ryan, Rickard, Bodine and Sgarro were not adjusted in 2008. Mr. McLure’s annual salary was raised to $800,000 from $730,000, approximating the 75th percentile of salaries for comparable positions within the peer group. Mr. Merlo’s annual salary was raised to $800,000 from $700,000, resulting in similar positioning. Both of these salary increases were determined and approved by the Committee at its March meeting and were effective on April 1, 2008.

The salaries that CVS Caremark paid to Messrs. Ryan, Rickard, Bodine, McLure, Merlo and Sgarro during fiscal 2008 are shown in the Summary Compensation Table on page 33.

1. Base Salary

The Committee annually reviews the base salaries of designated senior executives, including the CEO, and considers increases based on corporate profitability, competitive salaries, position responsibility levels and individual qualifications and performance. A key component of this review is a comparison of current salaries against those reported for comparable positions in CVS Caremark’s peer group. The Committee also assesses internal salary levels within CVS Caremark, both with respect to the other executive officers and to other senior employees generally. Base salaries may be adjusted at the Committee’s discretion, which it generally chooses to exercise when competitive data indicate a significant market lag or in recognition of outstanding individual performance or an increase in the executive’s functional responsibilities.

In 2007, salaries of executive officers were increased to maintain or improve competitive position against target, as well as to provide merit increases. The Company is committed to a pay-for-performance philosophy, and after careful deliberation and for specific reasons, the Committee approved the following salaries for the current executives specified in the Summary Compensation Table. Mr. Ryan’s base salary was adjusted to $1,400,000, which approximates the 75^th percentile of salaries reported for other CEOs in the CVS Caremark peer group for 2007. The Committee recognizes the long tenure of Mr. Ryan as an executive officer of CVS Caremark and his sustained contribution to the Company’s success. Mr. Rickard’s base salary was adjusted to $775,000 from $725,000. Mr. Sgarro’s salary was raised to $570,000 from $525,000. The base salaries of Messrs. Rickard and Sgarro each approximate the 75^th percentile in recognition of responsibilities that increased in scope and complexity as a result of the merger of CVS and Caremark. The annual salaries for Messrs. Bodine and Merlo each were increased to $700,000 from $650,000 upon their promotions in January 2007, to President, Health Care Services and President, CVS/pharmacy – Retail, respectively, approximating the median. Mr. McLure’s annual salary was raised to $730,000 from $728,000, which is between the median and the 75^th percentile. All of the salary increases for the current executive officers were determined and approved by the Committee at its March meetings and were effective in April 2007, except for Messrs. Bodine and Merlo, as noted above.

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The salaries that CVS Caremark paid to Messrs. Ryan, Rickard, Bodine, McLure, Merlo, Sgarro and Spalding during fiscal 2007 are shown in the Summary Compensation Table on page 34. For Messrs. McLure and Spalding, the salary figures are reflective of the base salaries paid to them by the Company since the closing of the merger on March 22, 2007 and, in the case of Mr. Spalding, until his resignation on October 12, 2007.

1. Base Salary

The Committee annually reviews the base salaries of designated senior executives, including the CEO, and considers increases based on corporate profitability, competitive salaries, position responsibility levels and individual qualifications and performance. A key component of this review is a comparison of current salaries against those reported for comparable positions in CVS’ peer group. The Committee also factors in internal salary levels within CVS, both with respect to the other executive officers and to other senior employees generally. Base salaries may be adjusted at the Committee’s discretion, which it generally chooses to exercise when competitive data indicate a significant market lag or in recognition of outstanding individual performance or an increase in the executive’s functional responsibilities.

In 2006, salaries of executive officers were increased to maintain or improve competitive position against target, as well as to provide merit increases. Because the Company is committed to a pay-for-performance philosophy, it generally sought through these increases to place such salaries at or about the median of base salaries in the peer group. Mr. Ryan’s base salary, which had remained at $1,000,000 since April 2001, had fallen well below the 25^th percentile of the peer group, and was adjusted to $1,200,000 effective April 1, 2006. This increase placed his salary between the 25^th percentile and the median of salaries reported for other CEOs in the CVS peer group for 2006. Mr. Rickard’s base salary was adjusted to $725,000 from $680,000, which placed him between the 25^th percentile and median of salaries for comparable proxy officers. The annual salaries for Messrs. Bodine and Merlo were each increased to $650,000 from $570,000, placing their rates just above the competitive median. Mr. Sgarro’s annual salary was raised to $525,000 from $495,000, placing his rate at the median of salaries paid to comparable proxy officers. All of the salary increases for executive officers were determined and approved by the Committee at its March meeting and were effective April 1, 2006.

The salaries that CVS paid to Messrs. Ryan, Rickard, Merlo, Bodine and Sgarro during fiscal 2006 are shown in the Summary Compensation Table on page 37.