CVS Caremark Corporation (CVS)

    C. Perquisites and Other Personal Benefits

Except for the few items discussed in this section, CVS Caremark generally does not provide perquisites or other personal benefits for its executive officers. The Committee believes that this policy is consistent with the Company’s philosophy to maximize the amount of “at-risk” pay of its executive officers. CVS Caremark also does not provide any additional cash compensation to any of the executive officers to reimburse them for any income tax liability (with the exception of certain circumstances following a change in control) that may arise and become due and payable as a result of their receipt of any cash or equity compensation, benefit or perquisite.

CVS Caremark provides an allowance to each of the executive officers to cover the cost of a Company-provided financial planner to assist with personal financial planning and estate planning. These amounts are reported in detail in the All Other Compensation Table on page 34; for 2008, they ranged from $5,801 to $15,000. The Company maintains corporate aircraft that may be used by Company employees to conduct Company business. Pursuant to an executive security program established by the Board upon the Committee’s recommendation, the CEO is required to use the Company’s aircraft for all travel needs, including personal travel, in order to minimize and more efficiently utilize his travel time, protect the confidentiality of his travel and the Company’s business, and enhance his personal security. Certain other executive officers specified in the tables were also permitted to use the Company’s corporate aircraft for personal travel on a very limited basis during fiscal 2008. The value of the personal use of Company aircraft by the CEO and any other executive officer is treated as income taxable to the executive. The Company provides no reimbursement for this cost nor does it pay the tax or any other expense associated with this cost on behalf of the executive.

CVS Caremark also requires that the CEO use a Company-provided car and driver for business-related travel and very limited personal travel. In addition, CVS Caremark provides an allowance to the executive officers to cover the costs of the installation and maintenance of security monitoring systems in their homes. While the Committee believes the security costs described in this and the preceding paragraph are business expenses, disclosure of these costs as personal benefits is required. The value of these items is treated as income taxable to the executives. The Company provides no reimbursement for these costs nor does it pay the taxes or any other expenses associated with these costs on behalf of the executives.

The aggregate incremental cost to the Company of providing these personal benefits to Messrs. Ryan, Rickard, Bodine, McLure, Merlo and Sgarro during fiscal 2008 is shown in the Summary Compensation Table on page 33.

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The Company’s 2008 performance ranks in the top third of our peer group for growth in revenue, operating income and diluted EPS, and in the upper half of our peer group for total stockholder return. The Company also outperformed key annual financial targets established by the Board. Our results for total stockholder return for one- , three- and five-year periods exceeded both the S&P 500 and the Dow Jones Industrial Indices. In addition to superior financial results, during 2008 we acquired Longs, increasing our fleet by over 500 stores and establishing a strong presence in the California and Hawaii markets. Our pharmacy services business won over $8 billion in new sales in 2008, resulting in net new business for the coming year of $2.5 billion. The retail business led the industry in comparable sales for both the front store and pharmacy. Based on these results, the Committee made the following compensation decisions for the CEO:

    B. Perquisites and Other Personal Benefits

Except for the few items discussed in this section, CVS Caremark generally does not provide perquisites or other personal benefits for its executive officers. The Committee believes that this policy is consistent with the Company’s philosophy to maximize the amount of “at-risk” pay of its executive officers. CVS Caremark also does not provide any additional cash compensation to any of the executive officers to reimburse them for any income tax liability (with the exception of certain circumstances following a change in control) that may arise and become due and payable as a result of their receipt of any cash or equity compensation, benefit or perquisite.

CVS Caremark provides an allowance to each of the executive officers to cover the cost of a Company-provided financial planner to assist with personal financial planning and estate planning. These amounts are reported in detail in the All Other Compensation Table on page 36; for 2007, they ranged from $5,000 to $13,736.

The Company maintains corporate aircraft that may be used by Company employees to conduct Company business. Pursuant to an executive security program established by the Board upon the Committee’s recommendation, the Committee requires the CEO to use the Company’s aircraft for all travel needs, including personal travel, in order to minimize and more efficiently utilize his travel time, protect the confidentiality of his travel and the Company’s business, and enhance his personal security. Certain other executive officers specified in the tables were also permitted to use the Company’s corporate aircraft for personal travel on a very limited basis during fiscal 2007. The value of the personal use of Company aircraft by the CEO and any other executive officer is treated as income taxable to the executive. The Company provides no reimbursement for this cost nor does it pay the tax or any other expense associated with this cost on behalf of the executive.

CVS Caremark also requires that the CEO use a Company-provided car and driver for business-related travel and very limited personal travel. In addition, CVS Caremark provides an allowance to the executive officers to cover the costs of the installation and maintenance of security monitoring systems in their homes. While the Committee believes the security costs described in the preceding two paragraphs are business expenses, disclosure of these costs as personal benefits is required. The value of these items is treated as income taxable to the executives. In addition, Caremark provided a flexible spending allowance to Mr. McLure, which is described under the Nonqualified Deferred Compensation section on page 44, and other benefits comparable to those provided to the executives specified in the tables. The Company provides no reimbursement for these costs nor does it pay the taxes or any other expenses associated with these costs on behalf of the executives.

The aggregate incremental cost to the Company of providing these personal benefits to Messrs. Ryan, Rickard, Bodine, McLure, Merlo and Sgarro during fiscal 2007 is shown in the Summary Compensation Table on page 34.

The Company’s 2007 performance ranks in the top third of our peer group for revenue growth, operating income growth, diluted EPS growth, and total shareholder return. The Company also outperformed key annual financial targets established by the Board. Our results for total shareholder return

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for one- , three- and five-year periods exceeded both the S&P 500 and the Dow Jones Industrial Indices. In addition to superior financial results, during 2007 we closed the transformative merger of equals with Caremark, creating the nation’s premier integrated pharmacy services provider, and completed the integration and re-launch of the former Osco and Sav-On stores that the Company acquired in 2006. Based on these results, the Committee made the following compensation decisions for the CEO:

Perquisites and Other Personal Benefits

Except for the few items discussed in this section, CVS does not provide perquisites or other personal benefits for its executive officers. The Committee believes that this policy is consistent with the Company’s philosophy to maximize the amount of “at risk” pay of its executive officers. CVS also does not provide any additional cash compensation to any of the executive officers to reimburse them for any income tax liability (with the exception of certain circumstances following a change in control) that may arise and become due and payable as a result of their receipt of any cash or equity compensation, benefit or perquisite.

CVS provides an allowance to each of the executive officers to cover the cost of a Company-provided financial planner to assist with personal financial planning and estate planning. These amounts are reported in detail in the All Other Compensation Table on page 38; for 2006, they ranged from $10,000 to $11,975.

The Company maintains corporate aircraft that may be used by Company employees to conduct Company business. Pursuant to an executive security program established by the Board upon the Committee’s recommendation, the Committee requires the CEO to use the Company’s aircraft for all travel needs, including personal travel, in order to minimize and more efficiently utilize his travel time, protect the confidentiality of his travel and the Company’s business, and enhance his personal security. Certain other named executive officers were also permitted to use the Company’s corporate aircraft for personal travel on a very limited basis during fiscal 2006. The value of the personal use of Company aircraft by the CEO and any other executive officer is treated as income taxable to the executive. The Company provides no reimbursement for this cost nor does it pay the tax or any other expense associated with this cost on behalf of the executive.

CVS also requires that the CEO use a Company-provided car and driver for business-related travel and very limited personal travel. In addition, CVS provides an allowance to the executive officers to cover the costs of the installation and maintenance of security monitoring systems in their homes. While the Committee believes the security costs described in the preceding two paragraphs are business expenses, disclosure of these costs as personal benefits is required. Costs for these programs are also reported as taxable income for the executive officers.

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The aggregate incremental cost to the Company of providing these personal benefits to Messrs. Ryan, Rickard, Merlo, Bodine and Sgarro during fiscal 2006 are shown in the Summary Compensation Table on page 37. Greater detail with costs broken out by the specific benefit is shown in the All Other Compensation Table on page 38.

The Company’s 2006 performance ranks in the top half of our peer group for revenue growth, operating income growth, and return on invested capital. The Company also over-achieved key annual financial targets established by the Board. Our results for total shareholder return for over one year, three year and five year periods consistently ranked in the highest quartile when compared to the S&P 500 Food and Staples Retail Group Index. In addition to superior financial results, during 2006 we completed the acquisition of the Osco/Sav-on stores, acquired the MinuteClinic business, and negotiated a transformational merger with Caremark. Based on these results, the Committee made the following compensation decisions for the CEO: