CVS Caremark Corporation (CVS)

Director Fees Payable in Stock; Stock Ownership Guidelines

Under the 1997 Incentive Compensation Plan, non-employee directors receive an annual award of 2,000 shares of common stock for their service during the preceding year (pro rated for partial year service). At least one half of the annual non-employee director retainer fee typically is paid in CVS common stock. Directors may choose to receive all retainer and attendance fees in common stock. A director may also choose to defer receipt of such shares. Deferred shares are credited with dividend equivalents.

Additionally, in November 2004 the Company adopted stock ownership guidelines for its directors and executive officers, as further described in the Management Planning and Development Committee Report on Executive Compensation beginning on page 12. Each of our directors is in compliance with these guidelines except Mr. Verrecchia, who joined the Board in September 2004 and, according to the guidelines, has 5 years from the date he joined the Board to achieve compliance.

As of January 1, 2005, our directors had deferred receipt of shares of common stock as follows: Mr. Cornwell, 15,084 shares; Mr. Goldstein, 9,157 shares; Ms. Heard, 12,165 shares; Dr. Joyce, 21,191 shares; Mr. Murray, 10,696 shares; Ms. Rosenberg, 5,038 shares; and Mr. Verrecchia, 728 shares.