This excerpt taken from the CVS DEF 14A filed Apr 4, 2007.
Statement of The Board Recommending a Vote AGAINST the Barrie Shore Proposal
The Companys Board of Directors unanimously recommends that you vote against the Barrie Shore Proposal because it is unnecessary and it is not in the best interests of the Company or its stockholders.
The Management Planning and Development Committee (the Committee) of the Companys Board of Directors, comprised entirely of directors meeting the independence requirements of the New York Stock Exchange, oversees our executive compensation program and reviews and approves all compensation arrangements with our senior executive officers. With respect to the compensation of our CEO, the Committee also consults with the other independent directors.
Our executive compensation policies and programs are designed so that highly talented senior executives can be attracted, retained and motivated to consistently improve the Companys performance. The Committee has sought to create an integrated total compensation program structured to balance appropriately the Companys short- and long-term business and financial strategic goals. As discussed more fully in the Compensation Discussion and Analysis beginning on page 15 of this proxy statement, the Committee believes that a significant portion of our executive compensation program, including bonus, long-term incentive plan and stock option compensation, is performance-based and effectively aligns executive incentives with the long-term interests of the Companys stockholders.
The Committee takes steps to ensure that the Companys executive compensation program is not excessive. The Committee engages an independent compensation consulting firm to analyze market data and best practices for the key management group. The management groups salaries and other compensation awards are compared to a core peer group, as well as industry standards, in order to recommend compensation programs and policies that reflect and enhance the Companys high-growth strategy. The compensation program as a whole is competitive with other companies in our peer group, which is necessary in order for the Company to attract and retain executives.
The Barrie Shore Proposal requests that our Board of Directors limit the annual compensation of our chief executive officer to no more than $15,000,000 (including, but not limited to, salary, bonus, restricted stock awards, securities underlying options, LTIP payouts and all other compensation). The duration of the $15 million limit is not specified, and no provision is made for increases in the limit over time. We do not believe that establishing a cap at an arbitrary dollar amount for an indefinite time period serves the best interests of the Company or its stockholders. This proposal seeks to place a perpetual limit on compensation that would restrict the flexibility of the Committee in establishing compensation levels and programs and in responding to market and industry trends, developments and opportunities. In order to effectively attract and
retain executive officers of the highest caliber, the Committee must have the flexibility and ability to design appropriate compensation programs and respond to market trends, while adhering to sound practices, but without being fettered by arbitrary limits. Placing arbitrary and perpetual limits on executive compensation could impair the Companys ability to act promptly to fill key management positions, thereby placing us at a significant competitive disadvantage compared to other major companies.
The Board of Directors recommends a vote AGAINST the Barrie Shore Proposal.