CVS Caremark Corporation (CVS)

ITEM  4:  STOCKHOLDER PROPOSAL REGARDING AN INDEPENDENT CHAIRMAN OF THE BOARD

On or about November 26, 2008, the Company received the following proposal from the Service Employees International Union, CLC (“SEIU”) Master Trust, 11 Dupont Circle, N.W., Ste. 900, Washington, DC 20036-1202, beneficial owner of 23,937 shares of the Company’s stock. In accordance with SEC rules, we are reprinting the proposal and supporting statement (the “SEIU Proposal”) in this proxy statement as they were submitted to us:

RESOLVED, that pursuant to Section 109 of the Delaware General Corporation Law, the stockholders of CVS Caremark Corporation (“CVS Caremark”) hereby amend the by-laws to delete the first sentence in Article IV Section 2 and insert in lieu thereof the following:

“The Board of Directors shall designate a Chairman of the Board (or one or more Co-Chairmen of the Board) who shall be a director who is independent from the Corporation. For purposes of this by-law, “independent” has the meaning set forth in the New York Stock Exchange (“NYSE”) listing standards, unless the Corporation’s common stock ceases to be listed on the NYSE and is listed on another exchange, in which case the latter exchange’s definition of independence shall apply. If the Board of Directors determines that a Chairman who was independent at the time he or she was selected is no longer independent, the Board of Directors shall select a new Chairman who satisfies the requirements of this by-law within 60 days of such determination. Compliance with this by-law shall be excused if no director who qualifies as independent is elected by the stockholders or if no director who is independent is willing to serve as Chairman of the Board. This by-law shall apply prospectively and in a manner that does not violate any contractual obligations of the Corporation in effect when this by-law is adopted.”

Supporting Statement

The primary purpose of our Board of Directors is to protect shareholders’ interests by providing independent oversight of management, including our Chief Executive Officer. In our view, this oversight may be compromised when the Chairman is also the CEO, as is currently the case. We believe that combining the two positions may not serve the best long-term interests of shareholders. Consider the following:

We believe that an independent Chairman is crucial to enhance Board leadership and protect long-term shareholder interests. Requiring that a fully independent director oversee the Board would promote greater management accountability, lead to a more objective evaluation of our CEO, and enhance investor confidence in our Company.

We urge shareholders to vote FOR this proposal.

Statement of The Board Recommending a Vote AGAINST the SEIU Proposal

The Company’s Board of Directors unanimously recommends that you vote against the SEIU Proposal because it is unnecessary and it is not in the best interests of the Company or its stockholders.

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The Board should not be constrained by a requirement that the positions of CEO and Chairman be separated. The Board of Directors believes that the Company and its stockholders are best served by having the flexibility to have the same individual serve as Chairman of the Board and Chief Executive Officer, and that adopting a policy to restrict the Board’s discretion in selecting the Chairman of the Board (as well as restricting the ability to combine the positions of Chairman and CEO) would deprive the Board of the ability to select the most qualified and appropriate individual to lead the Board as Chairman. The Board believes it is important to retain its flexibility to allocate the responsibilities of Chairman of the Board and Chief Executive Officer in any way that is in the best interests of the Company at any future point in time. The Board also believes that Board independence and oversight of management are effectively maintained through the Board’s current composition, committee system and the position of Lead Director.

In November 2007, the Board appointed Mr. Terrence Murray as its Lead Director. The Lead Director is appointed by and from the independent board members as a separate and independent position from the position of Chairman of the Board. The Lead Director presides at all the meetings of the Board at which the Chairman is not present. He has the authority to call, and lead, non-management director and independent director sessions and may retain independent legal, accounting or other advisors in connection with these sessions. The Lead Director facilitates communication between the Chairman and independent directors and advises the Chairman as to the Board’s informational needs. The Lead Director advises the Chairman regarding Board meeting agendas and as to the appropriate schedule of Board Meetings, and may request inclusion of additional agenda items.

Only one of the twelve members of the Company’s Board of Directors is currently an employee of the Company, and each of our Audit Committee, Management Planning and Development Committee, and Nominating and Corporate Governance Committee are comprised solely of directors meeting the independence requirements of the New York Stock Exchange. Therefore, there are ample outside directors to offer critical oversight of management. Furthermore, in accordance with the charters of the various committees, the Management and Development Committee is responsible for evaluating the performance of the CEO and other senior executives, and the Nominating and Governance Committee is responsible for evaluating the overall performance of the Board.

Our directors, including the Chairman of the Board, are also bound by fiduciary duties under law to act in a manner that they believe to be in the best interests of the Company and its stockholders. Requiring that the Chairman of the Board not be a member of management would not serve to augment or diminish the fiduciary duties of any director or officer of the Company and the Board does not believe that splitting the roles would enhance the Board’s independence or performance.

Rather, the Board believes that Mr. Ryan, in his capacities as Chairman, President and Chief Executive Officer, has served as a bridge between the Board and management and has provided critical leadership for carrying out the Company’s strategic initiatives and confronting its challenges. In short, the Board believes that a Chairman who is a member of CVS Caremark’s management team can be well situated to execute the Company’s strategy and business plans to maximize stockholder value.

We also note that the SEIU Proposal contains two errors; first, it asserts that two directors received high “withhold” votes at the 2007 annual meeting, when in fact the Company had adopted majority voting prior to the annual meeting such that stockholders were asked to vote “for” or “against” individual directors. Second, the Proposal incorrectly states that one director subsequently resigned following a “withhold” that exceeded the vote favoring his re-election, when in fact over 57% of the votes cast were in favor of the director’s re-election. His later retirement in July 2007 was unrelated to the election results.

For these reasons, the Board does not believe that amending the by-laws to require that the Chairman of the Board is not a member of management would enhance the Board’s independence or performance. The election of a non-management Chairman of the Board is unnecessary and inappropriate, especially in light of the creation of the position of Lead Director in 2007. CVS Caremark is committed to good corporate governance practices, and it is in the best interests of the stockholders for the Board to determine the selection of the Chairman of the Board without the constraints in the proposal.

Accordingly, the Board of Directors recommends a vote AGAINST the SEIU Proposal.

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