This excerpt taken from the CVS DEF 14A filed Apr 4, 2007.
1. Total Direct Compensation Competitive Positioning
The Company recommends, and the Board approves, financial performance targets that are deemed to be aggressive in their reach, and as such, if achieved, would deliver superior value to stockholders. In recent years, CVS performance, as measured by total shareholder return, revenue and profit growth, and other financial indicators, has consistently ranked in the upper quartiles when compared to the financial results of its peer group. Consistent with the setting of stretch performance targets and the relative value of their achievement as measured by return to stockholders, CVS positions its target total direct compensation, which comprises base salary plus annual and long-term incentives, for its executive officers between the 50th and 75th percentiles of that of the organizations in its peer group. The Committee believes that it is appropriate to reward the executive management team with compensation above the competitive median if the financial targets associated with the variable pay programs are delivered or exceeded. Conversely, if the financial targets are missed, rewards are reduced.