CVS Caremark Corporation (CVS)

Statement of CVS’ Board Recommending a Vote AGAINST the Massachusetts Laborers’ Proposal

CVS’ Board of Directors unanimously recommends that you vote against the Massachusetts Laborers’ Proposal because it is unnecessary and it is not in the best interests of CVS or its stockholders.

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Our executive compensation program is designed to help CVS to recruit and maintain the outstanding management talent required to achieve our corporate objectives and increase shareholder value. The Management Planning and Development Committee (the “Committee”), 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 (including employment agreements and retirement benefits); with respect to the compensation of our Chief Executive Officer, the Committee consults with the other independent directors.

The Committee believes all of CVS’ compensation programs are consistent with general industry practice for companies of comparable size and are necessary to attract, motivate, reward and retain talented executives. The shareholder proposal requests that our Board of Directors seek shareholder approval of certain types of retirement benefits provided under employment agreements and non-qualified retirement programs. Retirement benefits are a critical component of the compensation program for all employees, including senior executives, and removing the flexibility of the Committee to oversee this important aspect of executive compensation would place CVS at a significant competitive disadvantage.

The Committee annually engages an executive compensation consulting firm to analyze market data and best practices for similar companies. This study demonstrated that the overall compensation of our senior executives is consistent with compensation levels at our peer group of companies. In order to attract high quality senior management, CVS must have the flexibility to continue to offer salary, bonus opportunities and retirement benefits competitive with those offered by other major companies. The Board of Directors believes that requiring shareholder approval for certain retirement benefits would impair CVS’ ability to act promptly to fill key management positions, thereby placing CVS at a significant competitive disadvantage compared to other major companies.

Although the supporting statement for this proposal focuses on retirement benefits in effect for Chairman of the Board, President and CEO Thomas M. Ryan and other senior executives in 2004, the proposal states that the new policy should be implemented “in a manner that does not violate any existing employment agreement or vested pension benefit.” We note that the specific retirement benefits objected to in the supporting statement for the Massachusetts Laborers’ Proposal are provided for under the vested Supplemental Executive Retirement Plan for Select Senior Management of the Company. As a result, the shareholder proposal, by its own terms, would not apply to the retirement benefits cited in the supporting statement.

The Board of Directors recommends a vote AGAINST the Massachusetts Laborers’ Proposal.

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