CVS Caremark Corporation (CVS)

Non-Qualified Deferred Compensation

Executive officers and selected other senior employees may participate in the CVS Deferred Compensation Plan and the CVS Deferred Stock Plan, which are available to all non-store U.S. employees who meet the Internal Revenue Service definition of a “highly compensated employee.” The Deferred Compensation Plan allows eligible participants to defer payment of a portion of their salary and all or a portion of their annual incentive (and in the case of executive officers, all or a portion of the LTIP cash award) as part of their personal retirement or financial planning. To qualify for participation in the Deferred Compensation Plan, an eligible employee must have deferred the maximum amount permitted into the CVS 401(K) Plan, the Future Fund. For 2006, that maximum amount was $15,000 per year. The Company provides a dollar-for-dollar match for base salary and annual cash incentive deferrals into the Future Fund and the Deferred Compensation Plan, up to a combined maximum of 5% of eligible compensation.

The investment crediting options for the Deferred Compensation Plan mirror those offered for the Future Fund. Each year, the amount of a participant’s deferred compensation account increases or decreases based on the appreciation and/or depreciation in the value of the investment crediting alternatives selected by the participant. There are no vesting requirements on deferred amounts or earnings on deferred amounts.

Executive officers and other highly-compensated Company employees are eligible to participate in the Deferred Stock Plan, in which they may elect to defer settlement of restricted stock units past the scheduled vesting date. Dividend equivalents are reinvested during the deferral period. Of the five named executive officers, Messrs. Ryan and Merlo have utilized the Deferred Stock Plan the most extensively, choosing to defer substantial portions of their equity-based compensation. In Mr. Ryan’s case, beginning in 1997 and continuing annually through 2006, he deferred settlement of 1,275,862 shares. Approximately 27,647 shares have been added through the dividend reinvestment program. The original value of his shares at the time of deferral was $25,907,625. The impact of the appreciation of the Company’s stock over the life of his deferrals plus the value of the dividend reinvestment program has grown that amount by $14,383,859, an increase of 56%, using the December 29, 2006 closing sales price of $30.91 per share of the Company’s common stock.

In Mr. Merlo’s case, beginning in 1998 and continuing annually through 2006, he originally deferred settlement of a total of 362,982. Approximately 7,977 shares have been added through the dividend reinvestment program. The original value of his shares at the time of deferral was $7,345,031. The impact of the appreciation of the Company’s stock over the life of his deferrals plus the value of the dividend reinvestment program has grown that amount by $4,121,323, an increase of 56%, using the December 29, 2006 closing sales price of $30.91 per share of the Company’s common stock.

Mr. Rickard has a deferred share balance of 48,123 shares with an original value of $1,335,656, which has increased by $151,812 due to the impact of Company stock appreciation and dividend reinvestment. Mr. Bodine has a deferred share balance of 210,580 shares with an original value of $4,244,852, which has increased by $2,264,169 due to the impact of the Company’s stock appreciation and dividend reinvestment. Mr. Sgarro has a deferred share balance of 195,444 shares with an original value of $3,877,731, which has increased by $2,163,450 through the impact of Company stock appreciation and dividend reinvestments.

Executive officers are not permitted to defer proceeds of stock option exercises.

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