CVS Caremark Corporation (CVS)

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 50^th and 75^th 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.