March 20th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
WOONSOCKET, R.I. (WPRI) – CVS Caremark CEO Larry Merlo’s pay package jumped by a third to total more than $18 million in 2012, up from $12 million the previous year, according to an SEC filing.
• The Saturday Morning Post: CVS Caremark is on a hot streak (Feb. 23)
January 17th, 2013 at 4:30 pm by Ted Nesi under Nesi's Notes, On the Main Site
CVS Caremark is holding its fire on Governor Chafee’s budget – for now.
The governor on Wednesday proposed reducing Rhode Island’s corporate tax rate from 9% to 7% over three years, and paying for it partly by cutting in half the value of Jobs Development Act tax credits – the vast majority of which benefit Woonsocket-based CVS, to the tune of more than $15 million in fiscal 2011-12 alone.
“We will be reviewing all of the elements of the governor’s budget proposal and look forward to continue making significant contributions to Rhode Island’s economy,” CVS spokesman Mike DeAngelis told WPRI.com on Thursday.
“CVS Caremark shares Governor Chafee’s commitment to improving and growing Rhode Island’s economy and we applaud his focus on job creation and a competitive corporate tax rate,” he said.
January 16th, 2013 at 7:01 pm by Ted Nesi under Nesi's Notes, On the Main Site
• Overview: No tax hikes in Chafee budget
In March 2011, a newly inaugurated Gov. Lincoln Chafee proposed an ambitious restructuring of Rhode Island’s sales tax to boost revenue. House Speaker Gordon Fox killed the idea just a month later amid a huge outcry.
Last year Chafee tried a different tack, proposing an increase in the meals tax and trying to win support by earmarking the money for education. But the dining industry protested, putting signs on restaurant tables from Woonsocket to Westerly, and lawmakers ignored the governor’s big idea on revenue once again.
Chafee may be stubborn, but he’s not insane: his first two budgets taught him that proposing high-profile tax hikes is political suicide. So the message in Chafee’s proposed 2013-14 budget is unequivocal: read my lips, no new taxes.
“Governor Chafee’s revenue plan was very simple – taxpayers have already shouldered enough of the cost of government, and the delicate recovery we are in today should not be derailed by any tax increases,” the budget document declares. “Therefore, Governor Chafee’s FY 2014 Proposed Budget does not include any increases in taxes, fees or charges.” (They underlined it in the original.)
May 7th, 2012 at 9:56 am by Ted Nesi under Nesi's Notes, On the Main Site
There are only 17 publicly traded American companies bigger than Rhode Island’s own CVS Caremark.
That’s according to the 2012 edition of the Fortune 500, which the finance magazine published this morning. CVS came in No. 18, up three spots from No. 21 last year, after revenue rose 12% to $107.75 billion in 2011.
Rhode Island’s other Fortune 500 company – aerospace conglomerate Textron – went in the other direction, falling three spots to No. 236. Textron’s revenue rose 7% to $11.28 billion last year.
No other Rhode Island companies are large enough to crack the Fortune 500, though Hasbro is close. The Pawtucket toymaker was No. 511 on the longer Fortune 1,000 list in 2010, but fell to No. 538 last year.
Exxon Mobil topped the list this year, bumping two-time champ Wal-Mart Stores. Massachusetts placed 11 companies on the list, led by Liberal Mutual Insurance Group (No. 84) and Staples (No. 114).
As an astute commenter accurately noted, the revenue numbers are all “billions,” not millions. Mea culpa.
May 2nd, 2012 at 3:02 pm by Ted Nesi under Nesi's Notes, On the Main Site
The city of Woonsocket sent forth some good news for a change this morning, with local drugstore giant CVS Caremark trumpeting a 9% spike in its first-quarter profit that has its stock price near a 52-week high at this writing. Here are some highlights from the coverage.
• John Kell, Dow Jones: “The drugstore-chain raised its full-year adjusted-earnings guidance for the second time this year on a greater-than-expected benefit from business being driven away from rival Walgreen Co., which left pharmacy-benefits manager Express Scripts Holding Co.’s network at the beginning of the year due to a contract rate dispute. … Same-store sales increased 8.4% over the prior-year period, with pharmacy same-store sales rising 9.8% as CVS outperformed all main competitors even more so than in prior quarters, according to Merlo. The overall 8.4% jump was the largest increase CVS has reported since late 2006, before it acquired Caremark. The increase contrasts with Walgreen, which has reported slumping same-store sales since the beginning of the year.”
• Tom Murphy, AP: “CVS Caremark Corp. gained millions of new prescriptions in the first quarter due to a contract impasse between two rivals, and now the drugstore chain wants to keep the growth going by ensuring that those customers stick around and use the rest of its store. … [T]he new customers CVS snared will likely stick around, analyst Dave Shove said in a research note. … ‘We suspect that sales will continue to benefit throughout the year, with or without a resolution by the companies,’ Shove wrote.”
• Bruce Japsen, Forbes: “While Walgreen Co. and Express Scripts remain at odds, rival CVS Caremark Corp. is taking their lunch money. … So far this year, the imbroglio in the market has been an unprecedented windfall to CVS. … But [CEO Larry] Merlo cautioned Wall Street analysts and investors this morning to take the financial benefit to CVS one quarter at a time.”
• Chris Burritt, Bloomberg: ”‘We didn’t know it was going to be this good,’ Judson Clark, an analyst with Edward Jones & Co. in Des Peres, Missouri, said today in a telephone interview. ‘The customers bringing over prescriptions from Walgreen are probably going to stay with CVS regardless of what happens between Express Scripts and Walgreen,’ said Clark, who recommends buying CVS shares.”
• Phil Wahba, Reuters: “CVS Chief Executive Larry Merlo told Reuters that the boost from his rivals’ fallout could be long lasting. ‘The longer the impasse lasts, the stickier that customer is going to be,’ Merlo said. ‘They’re going to have an opportunity to visit a CVS multiple times and begin to establish a relationship with the CVS pharmacists.’ … The only things that slowed down the company’s pharmacy sales were a weak flu season and new generic drugs, which carry lower prices than brand name drugs.”
(photo: CVS Caremark Corp.)
April 17th, 2012 at 3:26 pm by Ted Nesi under General Talk
The health care system will still be in need of major changes even if the nation’s highest court throws out President Obama’s 2010 law, CVS Caremark CEO Larry Merlo told Barron’s magazine in a recent interview.
“No matter how Obamacare plays out, no matter how the Supreme Court rules, we have a health-care system that is weighed down by escalating costs, and that has to be addressed,” Merlo said. “Health-care represents about 18% of GDP. We are going to see some type of health-care reform that deals with three things: access, quality, and cost.”
Merlo’s comments were included in a glowing profile of the CVS CEO, who took the helm at Rhode Island’s largest company in March 2011. Barron’s reporter Lawrence C. Strauss, who’s written nice things about CVS and Hasbro before, describes CVS as “a $107 billion colossus” that’s now on an upswing and poised to keep growing.
March 16th, 2012 at 2:17 pm by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
WOONSOCKET, R.I. (WPRI) – CVS Caremark CEO Larry Merlo’s pay package totaled $12 million in 2011, up a third from the $9 million he got in 2010 before formally taking the top job, the company said Thursday in an SEC filing.
Merlo, who lives in East Greenwich, succeeded Tom Ryan as the Woonsocket-based drugstore giant’s chief executive last March. His 2011 pay package included a $1.2 million salary; a $3.8 million bonus (formally known as “non-equity incentive plan compensation”); $6.8 million in stock and stock option awards; and $211,144 in “other compensation.”
Merlo’s other compensation was made up of $51,319 for personal use of CVS’s corporate jet; $13,225 for financial planning services; $883 for home security; $8,800 for the CVS Caremark Charity Classic; and $74,227 in additional retirement contributions.
February 20th, 2012 at 12:13 pm by Ted Nesi under Nesi's Notes, On the Main Site
Walgreen Co. and CVS Caremark are far and away the largest drugstore chains in the United States, with Rite Aid a distant third. Woonsocket-based CVS fills more prescriptions annually, while Walgreens has more stores (7,800 to CVS’s 7,300).
Most discussions of their rivalry focus on whether one should buy Pennsylvania-based Rite Aid to get a leg up on the other. But Morningstar analyst Matthew Coffina thinks the smartest move would be for the two leaders themselves to pair up – with CVS buying Walgreens to create “a retail powerhouse.”
“CVS Caremark and Walgreen would be better off together than apart,” Coffina wrote in a report issued Friday. They face the same “long-term threats” from pharmacy-benefit manager (PBM) consolidation, and by combining they’d gain bargaining power and make it harder for PBMs to exclude them from their networks, he said.
February 16th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
The good news just keeps on coming for CVS Caremark, Rhode Island’s biggest private company.
Legendary investor Warren Buffett’s Berkshire Hathaway bought nearly 1.5 million more shares of Woonsocket-based CVS stock in the fourth quarter of 2011, bringing the company’s total position to about 7.1 million shares.
The market value of Berkshire’s CVS shares was $289.8 million on Dec. 31, up from $190.2 million Sept. 30, according to this Seeking Alpha breakdown. “American companies look very cheap compared to investment alternatives,” Buffett told CNBC in November.
While Berkshire’s stake in CVS makes up a tiny 0.5% of the company’s entire $66.2 billion U.S. stock portfolio, the increase is “significant as Buffett enlarged the stake by a sizable amount,” the Seeking Alpha post argues.
• Related: Woonsocket’s CVS Caremark set to finish 2011 on a high note (Dec. 30)
February 7th, 2012 at 12:12 pm by Ted Nesi under Nesi's Notes, On the Main Site
Markets in everything, as they say. I’m going to let Bloomberg’s Chris Burritt handle this one:
Walgreen Co. and CVS Caremark Corp., the biggest U.S. drugstore chains, are betting they can generate sales by answering a question few men want to ask: whether or not they’re firing blanks.
In April, Walgreen’s 7,800 U.S. stores plan to start selling a fertility test that determines if a man is producing enough sperm to get a woman pregnant. Walgreen and CVS have already started selling SpermCheck Fertility online. …
[SpermCheck] helps “customers take a proactive role in their health and wellness,” said Carolyn Castel, a spokeswoman for CVS, based in Woonsocket, Rhode Island. …
Walgreen and CVS “recognized the need for the product and that it would bring new revenues to their stores,” said [SpermCheck parent's CEO Ray Lopez], who met with buyers from the two retailers at a family planning trade show in Orlando in August.
Bloomberg doesn’t say whether you can buy one of the tests at your local CVS/pharmacy yet, but the Woonsocket giant has them on sale for $30 at CVS.com.
January 25th, 2012 at 3:01 pm by Ted Nesi under Nesi's Notes, On the Main Site
Looks like CVS Caremark isn’t the only big local business that has high hopes for 2012. Bloomberg reports:
Textron Inc. climbed the most in more than two years after forecasting higher 2012 profit than analysts estimated amid growing demand for Cessna aircraft and Bell helicopters.
Textron jumped 15 percent to $24.85 at 10:48 a.m. in New York trading. Earlier the stock advanced as much as 16 percent, its biggest intraday gain since July 2009. Before today, the shares had lost 20 percent of their value in the past year. ….
Chief Executive Officer Scott Donnelly is working to leverage the company’s businesses with measures such as having Cessna and Bell share overseas service centers and sales forces. Textron is winding down its finance unit, which struggled during the recession.
“The 2012 guidance is a positive surprise,” since most investors expected a forecast slightly below estimates, Julian Mitchell, a New York-based analyst with Credit Suisse Group AG, said in a note to clients.
Textron may be #233 on the Fortune 500, but it isn’t a big employer in the state. The company has just over 300 workers here in Rhode Island these days.
January 12th, 2012 at 10:17 am by Ted Nesi under Nesi's Notes
Only two Fortune 500 companies are headquartered in Rhode Island these days – CVS Caremark in Woonsocket (#21) and Textron in Providence (#233). I’ve written already that CVS is kicking off 2012 on a high note. Now comes word in a Reuters report that Textron is “conducting a strategic review that could include options such as spinning off parts of the aerospace and defense conglomerate.”
Despite its size, Textron’s actual presence in Rhode Island is quite small. While the company had about 32,000 employees worldwide as of last year, it isn’t even in the top 50 among Rhode Island employers, according to the EDC.
Update: ”Textron currently employees just over 300 people here in Rhode Island,” spokesman David Sylvestre told WPRI.com on Thursday.
Update #2: And speaking of CVS, the company settled a longstanding FTC investigation today for $5 million.
January 7th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
As I mentioned recently, Woonsocket’s CVS Caremark had plenty of reasons to celebrate as Rhode Island’s biggest public company finished 2011 and looked forward to the new year. Dow Jones Newswires’ John Kell offers more evidence:
A year after analysts were calling CVS Caremark Corp.’s (CVS) $27 billion acquisition of pharmacy-benefits manager Caremark a bust, Wall Street is changing its tune as the drugstore chain’s businesses jell.
CVS shares ended 2011 with a 17% gain, exceeding the broader market and far better than the 15% drop for peer Walgreen Co. (WAG). CVS is trading at a roughly 3 1/2-year high.
The Street’s tune change comes as analysts have praised the retailer’s annual presentation last month, when CVS gave a solid view for 2012 and the first quarter while boosting its quarterly dividend 30%. …
[William Blair analyst Mark Miller] conceded that just a year after William Blair and others were calling for a breakup of the company, “today, after what may be one of the largest turnarounds that we have ever seen for such a large company, CVS Caremark is now able to sell ‘quantifiable results,’ providing further validation of its integrated business model.”
Kell’s full article is here. CVS already employs 5,800 Rhode Islanders, sixth-most of any organization in Rhode Island, and the state could certainly use additional the jobs if the company’s renewed success gives it reason to add workers at its Woonsocket campus.
December 30th, 2011 at 10:20 am by Ted Nesi under Nesi's Notes, On the Main Site
CVS Caremark executives will have plenty of reasons to raise a glass of champagne this New Year’s Eve.
Months of squabbling without resolution between Walgreen and pharmacy-benefits manager Express Scripts will put about 90 million prescriptions up for grabs next year, and CVS expects to swoop in and nab up to 23 million of them. Last week, CVS raised its dividend 30% and projected its profit will jump in 2012 even before accounting for any business it takes away from Walgreen.
The news boosted shares of CVS, Rhode Island’s biggest private company, above $40 a share for the first time since 2008. Warren Buffett’s Berkshire Hathaway sank $190 million into the company earlier this year. Goldman Sachs and Barclays project the shares could reach $44, with the latter picking CVS as one of its top seven retail stocks for 2012. A Seeking Alpha contributor declared CVS “an investor’s dream.”
Barron’s has been arguing this fall that the 2007 merger of CVS and Caremark Rx is finally bearing fruit after a rocky first few years of integration; an analyst with Cohen & Steers Capital Management told the magazine the company “is turning the corner.” Going forward, medical experts have high hopes for CVS’s MinuteClinics and its competitors, and the company is also pushing mobile purchases.
It’s not all roses – this month CVS also agreed to pay $20 million to settle claims that it defrauded customers including California’s enormous pension fund, and a number of investigations into its business practices are still under way. Nevertheless, 2012 looks like it could be a promising year for the Woonsocket company that’s #21 on the Fortune 500 and employs 5,800 Rhode Islanders, sixth-most of any organization in the state.
Update: And the news just gets better for CVS. “Walgreen CEO Greg Wasson said Friday chances are probably ‘slim to none’ that the drugstore operator will reach an agreement with pharmacy benefits manager Express Scripts before their current contract ends Saturday,” the AP reports.
• Related: 1.2 billion prescriptions, and more CVS by the numbers (Feb. 22)
December 14th, 2011 at 4:13 pm by Ted Nesi under Nesi's Notes, On the Main Site
Former CVS Caremark CEO Tom Ryan’s $68 million pay package landed him at No. 5 on a new list of America’s highest-paid corporate chiefs.
Only four companies paid their CEOs more than Woonsocket-based CVS in 2010, according to a survey of 2,647 companies by GMI Ratings, The Guardian reported. They were McKesson, Omnicare, TRW Automotive Holdings and Verisk Analytics. CEO pay went up 27% overall last year.
Dow Jones Newswires reported last spring that Ryan’s 2010 compensation package was in fact nearly twice as large as the $68 million reported by GMI Ratings. The wire service pegged his pay at $124 million after accounting for a one-time payment of $58.4 million upon his retirement.
November 14th, 2011 at 6:13 pm by Ted Nesi under Nesi's Notes
Could the Oracle of Omaha be making a cameo in Woonsocket sometime soon?
Legendary investor Warren Buffett’s Bershire Hathaway sank quite a bit of money into shares of CVS Caremark, Rhode Island’s biggest Fortune 500 company, during the third quarter, Bloomberg reports:
Warren Buffett’s Berkshire Hathaway Inc. took stakes in CVS Caremark Corp., Intel Corp. and Visa Inc. as investment manager Todd Combs builds his portfolio. …
“American companies look very cheap compared to investment alternatives,” Buffett said today in a CNBC interview. …
Berkshire held 5.66 million shares of CVS Caremark Corp., the largest U.S. provider of prescription drugs, valued at $190 million as of Sept. 30.
CVS Caremark has been on an upswing of late. Its stock closed Monday at $38.77, and it’s now regained much of the ground lost after the financial crisis struck in 2008 and then problems in its PBM division sent the shares swooning in 2009.
And that’s not all. CVS has generally favored the health reform law President Obama signed last year, and is lobbying the administration to allow its pharmacists and other employees to help consumers figure out the new health insurance exchanges the states are setting by 2014.
• Related: 1.2 billion prescriptions, and more CVS by the numbers (Feb. 22)
(h/t: Bill Hamilton)
July 27th, 2011 at 9:15 am by Ted Nesi under Nesi's Notes
Larry Merlo, who succeeded Tom Ryan as CVS Caremark’s president and CEO earlier this year, is set to testify before the Senate Finance Committee this morning.
The topic of the 10 a.m. hearing is “CEO Perspectives on How the Tax Code Affects Hiring, Businesses and Economic Growth.” The chief executives of Wal-Mart, Kimberly-Clark and PMC-Sierra are also scheduled to take part.
This isn’t the first time CVS and taxes have been on Washington’s radar. At a House hearing earlier this year, a witness testified that the Woonsocket-based company pays one of the highest effective corporate tax rates in the country, at 38.8%, mainly because most of its business is conducted here in the United States.
Update: Merlo will tell the committee the U.S. tax code is bad for business, according to Bloomberg News. “Without a consequential rate reduction, tax considerations will have to be an even more significant component of our overall investment analysis,” he’s quoted as saying.
(h/t: The Hill)
July 21st, 2011 at 9:13 am by Ted Nesi under Nesi's Notes
Woonsocket must be buzzing about this news, fresh off the Bloomberg wire:
Express Scripts Inc. (ESRX) agreed to buy Medco Health Solutions Inc. (MHS) for $29.1 billion to become the largest pharmacy-benefits manager in the U.S. …
Buying larger Medco would give Express Scripts the scale to dominate the market for contracts to manage drug benefits for corporate and government clients. …
“Wow, I didn’t see this coming,” Art Henderson, an analyst at Jefferies & Co. in Nashville, Tennessee, said in an e-mail today. “There are unbelievable synergies here, but I am sure this will go through a lengthy” review by U.S. antitrust regulators.
The takeover would be the largest in pharmacy services in at least a decade, surpassing the $21.7 billion deal that formed CVS Caremark Corp. in 2007. … Franklin Lakes, New Jersey-based Medco is the largest by revenue, followed by Woonsocket, Rhode Island-based CVS Caremark and Express Scripts, run by Chairman and CEO George Paz.
For what it’s worth, CVS shares are up nearly 3% in pre-market trading.
May 27th, 2011 at 10:27 am by Ted Nesi under Nesi's Notes
I can almost hear the cheering in Woonsocket all the way over here in East Providence (via Bloomberg):
CVS Caremark Corp., the largest U.S. buyer and seller of prescription drugs, won a $3 billion contract to provide pharmacy benefits to U.S. federal employees. Medco Health Solutions Inc. had held the contract.
Blue Cross Blue Shield Association planned to move the contract to another provider by 2012, Medco said today in a public filing. The new agreement with CVS will run through 2014, according a statement from CVS.
CVS, based in Woonsocket, Rhode Island, has been trying to recapture business after losing $4.8 billion in 2010 contracts to rivals for reasons including price and service. A pharmacy- benefits manager, or PBM, negotiates drug prices with manufacturers and retailers on behalf of clients. CVS generated $96.4 billion in revenue in the year ended Dec. 31.
CVS rose 2.7 percent to $39.18 at 9:31 a.m. in New York Stock Exchange composite trading. Medco, based in Franklin Lakes, New Jersey, sank $6.53, or 10 percent, to $57.91.
Snagging the federal contract is a huge coup for CVS not only because it’s so valuable, at $3 billion annually, but also because it’s a vote of confidence in the company’s pharmacy-benefit management division, which has been a key source of trouble for Rhode Island’s largest private employer since November 2009. And stealing the three-year deal from archrival Medco makes it all the sweeter for CVS.
As I write this, CVS shares are trading at $38.99 on the New York Stock Exchange, which looks to be their highest level in nearly three years.
May 5th, 2011 at 4:56 pm by Ted Nesi under Nesi's Notes, The Saturday Morning Post
What’s next for CVS Caremark?
The Woonsocket pharmacy giant reported a drop of nearly 8% in its first-quarter profit on Thursday, the same day we learned the company had fallen three spots on the annual Fortune 500 list, from No. 18 to No. 21. But earnings still beat Wall Street’s forecasts, and its shares rose 2% to close at $36.79.
On today’s post-earnings conference call, Rhode Island’s largest private employer “came out swinging at its critics,” who are calling for the company to undo its 2007 merger with Caremark, Reuters reports.
“Despite conjecture in the marketplace, there are no plans to split up the company,” new CEO Larry Merlo said. “Breaking up the company would be a step in the wrong direction for plan members, retail customers, and certainly our payors.”
It’s up to Merlo, who comes from the retail side of CVS, to fix what’s really holding down earnings – the underperformance of its pharmacy-benefit management unit, which was Caremark’s specialty when the two joined up. Investors will be keeping a close eye on how he handles that going forward.
Today on Nesi’s Notes:
> Rhode Island’s ‘underemployment’ rate is stuck at a whopping 19%
> The firefighters union is all in favor of Pare’s crackdown on disability pensions
> Jack McConnell will likely be sworn in as RI’s newest federal judge by July 4
> 38 Studios’ first game ‘Reckoning’ is scheduled for an early 2012 release
from Tim White:
> Watch Target 12′s exclusive investigation “Meet the DOT DoZZZer” tonight at 10 and 11
et cetera:
~ A historian says it’s time to give a fair shake to Ulysses S. Grant (Salon)
~ Which pundit’s predictions are most accurate? Study says Krugman – and Cal Thomas is worst (Romenesko)
~ Signs the economy is improving: Americans in their 20s are finally moving out of their parents’ (Bloomberg)
~ The economic pluses and minuses of cutting government workers’ pay (WSJ)
~ A brief history of the iPad, in the form of an enormous infographic (DiscountCoder)
(photo: Wikipedia/Dennis Mojado)
April 19th, 2011 at 9:26 am by Ted Nesi under Nesi's Notes
As CVS comes under increasing pressure to undo its 2007 merger with Caremark Rx Inc., investors will be taking note of stories like this one in today’s Los Angeles Times:
The California Public Employees’ Retirement System is negotiating a lucrative pharmacy benefits management contract with Caremark Rx Inc., a company being sued for defrauding the pension fund of tens of millions of dollars. …
Caremark is accused of endangering CalPERS members by making unauthorized and illegal changes to prescriptions submitted between 2003 and 2006, often by switching patients to cheaper drugs or canceling prescriptions outright. Caremark representatives would contact physicians’ offices by telephone and “obtain authorization from virtually anyone in the doctor’s office, including receptionists and others with no authorization or competence to make medical decisions,” the lawsuit said.
Caremark also falsified dates in transaction records to improve its required “turn-around-time” performance as required by CalPERS, according to the complaint. …
Caremark spokeswoman Christine K. Cramer said the lawsuit had no merit and that the company was defending itself against the allegations.
(h/t: NYT)
April 4th, 2011 at 1:10 pm by Ted Nesi under Nesi's Notes
Most of the front page of Saturday’s Providence Journal was taken up with a banner headline and accompanying package about how the General Assembly’s leaders have given raises of more than 3% to 102 staffers over the past year, as you can see at right. The headline: “Double-digit raises in time of austerity.”
It was a good story by the indefatigable Kathy Gregg, and I’m certainly not going to defend these raises. Whether deserved or not, handing them out was a pretty tone-deaf move by Speaker Fox and Senate President Paiva Weed as they deal with a $331 million budget deficit and month after month of double-digit unemployment.
It’s striking, though, that the Projo ran two stories (plus a Bob Kerr column) about the legislative raises in one week, but didn’t publish a single story about the $124 million that Woonsocket’s CVS Caremark paid ex-CEO Tom Ryan last year. His nine-digit windfall was more than six times the General Assembly’s entire $19 million annual payroll this year.
The Journal wouldn’t have had to do the story itself (although WPRI did) – The Associated Press wire ran an article about it, which the paper could have printed. Granted, it was Dow Jones that came up with the $124 million figure – but even the lower $15.5 million total reported by WPRI and the AP seems newsworthy.
The dollar figures of the five legislative staffers’ salaries that made Saturday’s front page were peanuts by comparison. The largest among them was the $162,986 salary of Fox’s chief of staff, Frank Anzeveno. At CVS, Ryan made $162,986 every day last year – by 11:30 a.m.
True, the General Assembly’s employees are government workers, while Tom Ryan and CVS are in the private sector. But CVS received half of Rhode Island’s $40 million in business tax breaks in 2010 – and the company noted in a recent SEC filing that it gets “a significant portion” of its revenue from taxpayers, through programs like Medicare and Medicaid.
The Journal’s headline about pay increases “in time of austerity” could apply to CVS, too.
The company – Rhode Island’s largest private employer – laid off 150 workers in Woonsocket last October, as first reported by WPRI. Its stock still hasn’t fully recovered from the 20% plunge it took under Ryan’s watch in November 2009. Its earnings forecast for 2011 is weak. It’s being investigated by 24 states and the FTC.
CVS’s compensation practices have come under fire nationally. Ryan was the 18th most-overpaid CEO in the U.S. in 2009, according to a Bloomberg-commissioned study of 271 compensation packages last year, and The Corporate Library gave the company a “D” for its executive pay policy in 2010.
Compensation at the General Assembly is a newsworthy story for Rhode Islanders, but it seems to me that compensation at CVS is, too – yet only one of them merited an article in the paper (and on the front page, no less). Sometimes what doesn’t get covered is just as interesting as what does.
(photo: CVS Caremark)
March 30th, 2011 at 11:06 am by Ted Nesi under General Talk, Nesi's Notes
CVS's $15 million man
CVS gave Tom Ryan a fond financial farewell prior to his retirement earlier this month as the company’s CEO.
CVS Caremark paid Ryan $15.5 million in 2010, down from $16.2 million in 2009 and $19.2 million in 2008, according to WPRI.com calculations based on a new SEC filing by the Woonsocket-based company.
Ryan’s 2010 pay package included a $1.48 million salary; a $2.2 million bonus (formally known as “non-equity incentive plan compensation”); $11.5 million in stock and stock option awards; and $281,481 in “other compensation.”
The “other compensation” was made up of $71,872 worth of personal use of CVS’s corporate jet; $2,391 worth of personal use of a CVS company car; $15,000 for financial planning services; $3,028 for home security; $186,250 in retirement contributions; and $2,940 in life insurance premiums, the company said.
Ryan was not the highest paid CVS executive in 2010, however. That distinction went to Per Lofberg, the new chief of the company’s troubled pharmacy-benefit management (PBM) division, who earned $15.6 million.
CVS paid $9 million to Larry Merlo, Ryan’s successor as CEO. Chief Financial Officer David Denton got $3.4 million and Chief Legal Officer Douglas Sgarro received $4.2 million. All the executives got salary increases last year except Lofberg, who was still a new employee in 2010, despite what the company described as its “challenging” performance last year.
Ryan, Merlo and Sgarro are the only three active participants in CVS’s “Supplemental Retirement Plan I for Select Senior Management,” a pension plan which is unfunded and has now been closed to new participants, the company said.
Merlo succeeded Ryan as CVS’s CEO on March 1 after replacing him as its president last year. Ryan will also step down as the company’s chairman after its annual meeting in May, when David Dorman will take that job.
Once Ryan retires, “he will receive compensation and benefits consistent with his outstanding agreements and the terms of the benefit plans in which he participates,” CVS said.
(WPRI.com’s compensation estimates differ from three of the amounts CVS reported in its SEC form because those add in yearly changes in the actuarial value of executives’ pensions; including that would increase the totals to $29.2 million for Ryan; $10.9 million for Merlo; and $4.9 million for Sgarro.)
Outsiders have expressed concern about compensation policy at CVS. The Corporate Library, an independent advisory group, gave the company a “D” for executive pay based on Ryan’s 2010 earnings.
Update: Or did Tom Ryan make $124 million last year? That’s the figure Dow Jones Newswires came up with after digging through the footnotes:
Thomas Ryan received total 2010 compensation of $29.2 million for the last year of a dozen-year stint at the helm of CVS Caremark Corp. (CVS), and another $50.4 million from stock-award vestings and the exercise of stock options.
Additionally, the executive decided to take his pension benefit in a lump sum, rather than in annuity payments, upon his retirement this year, netting him another roughly $58.4 million. That results in a take of nearly $125 million for his final 14 months or so on the job after certain adjustments.
My apologies to Ryan for lowballing his pay by $108 million. (In my defense, The Associated Press went with $15.5 million, too.) I’m hoping to discover a similar-sized error in my own paycheck this Friday.
(photo: CVS Caremark)
February 22nd, 2011 at 7:00 am by Ted Nesi under General Talk
CVS Caremark Corp. isn’t just far and away the largest business in Rhode Island; it’s also the 18th-largest public company in the whole United States.
So it’s always interesting to get a reminder of just how enormous Woonsocket’s retail behemoth has become, an opportunity provided in the annual report the company filed with the SEC last week.
Without further ado, then, here are some numbers from the report, each one transcribed with extra care.
1.2 billion. That’s the total number of prescriptions filled by CVS last year between its retail pharmacies (636 million) and its pharmacy-benefit management business (585 million).
7,182. The total number of CVS retail drugstores (although 54 of them don’t have a pharmacy).
60. The number of CVS retail stores in Rhode Island.
339. The number of CVS retail stores in Massachusetts.
827. The number of CVS retail stores in California, which has more than any other state. Florida is second with 708, followed by Texas with 524.
$96.4 billion. CVS Caremark’s total revenue in 2010.
$98.7 billion. CVS Caremark’s total revenue in 2009.
$43.8 billion. CVS Corp.’s revenue in 2006, the year before it merged with Caremark Rx.
211,000. The number of CVS employees at the end of 2009.
201,000. The number of CVS employees at the end of 2010 – down 10,000 from a year earlier.
79,000. The number of those employees who worked part-time, or fewer than 30 hours a week.
92. The number of top 100 U.S. drugstore markets where CVS is currently operating. It’s got the first- or second-largest market share in 72 of those.
18%. The percentage of all 3.5 billion U.S. retail prescriptions filled by a CVS store last year.
41. The number of U.S. states with a CVS store, not including Puerto Rico and Washington, D.C.
24. The number of state attorneys general participating in a multi-state investigation of CVS’s business practices. CVS says it “has been cooperating in these investigations, and continues to provide documents and other information as requested.”
13. The number of years Thomas Ryan will have been CEO of CVS when he retires on March 1.
25,000 square feet. The size of the largest CVS store; most new stores are between 10,000 and 13,000.
750,000 square feet. The total size of CVS’s corporate offices in Woonsocket, which are currently being expanded.
February 7th, 2011 at 9:04 am by Ted Nesi under General Talk
Last week, 
CVS Caremark reported weak fourth-quarter results and offered a disappointing forecast for its earnings this year.
That led Jim Cramer, the wild-eyed host of CNBC’s “Mad Money,” to offer some tough talk about Rhode Island’s biggest company:
But as Cramer pointed out during “Stop Trading,” competitors in the business aren’t having the same problems. …
Cramer didn’t see these problems at rival Medco Health Solutions, though. Nor are rivals in CVS’s other business – retail drugstores – hurting, either. If they were, stocks like Walgreen wouldn’t be up. Cramer blamed the problems on CVS specifically and not the industries within which it operates.
CVS is the “poster boy for poor execution,” Cramer said, adding, “They’ve got to get it together.”
CVS gets a new CEO next month when Larry Merlo formally takes over from longtime chief Tom Ryan.
January 24th, 2011 at 7:00 am by Ted Nesi under General Talk
This is cool. A new network of 40,000 help-wanted websites debuted last week, with a twist: They all combine locations and professions with the suffix “.jobs” – as in RhodeIsland.jobs or Nurses.jobs – and employers can post their job openings on them for free.
The idea is to break the stranglehold of Monster and CareerBuilder over online employment listings, according to The Washington Post. The sites are run by the DirectEmployers Association, a nonprofit backed by big companies including Rhode Island’s CVS Caremark and Citizens Financial.
ICANN, the nonprofit that Clinton administration created in the 1990s to manage the Internet address system, gave DirectEmployers the OK to create the new .jobs sites last month over the objections of the established job sites, which – surprise! – lobbied ICANN to protect their lucrative niche:
For-profit competitors vociferously complained to ICANN that the new leeway would harm their brands and business models. …
“Of all the solutions you hear of, this is the one you think has the most viable solution moving forward. This will have a profound effect on the jobs-list industry,” said a senior recruiting executive for a top Fortune 500 technology company, who was not authorized by his bosses to speak publicly. Monster costs about $400 per job. …
[Randy Goldberg, vice president for recruiting for the Hyatt hotel chain,] said the key advantage of the .jobs sites is that employers can directly post all of their openings for free on one universal network of sites, and can ensure that none of those positions have been filled.
I can see why Monster and CareerBuilder – not to mention their newspaper partners – are worried. The new sites are clean and straightforward, not to mention memorably branded. Try RhodeIsland.jobs or Providence.jobs for yourself and see if you agree. The Post says the sites are currently available for every state and any city with 5,000 or more residents, with more to come.
Not every profession gets its own site, though; I typed in “reporter.jobs” and it didn’t exist. Telling, no?
And here’s what I got when I visited CentralFalls.jobs:
Ouch.
January 21st, 2011 at 7:37 am by Ted Nesi under General Talk
There were not one but two interesting stories about our own CVS Caremark in the national press yesterday that I wanted to highlight but didn’t get to while working on Mafia coverage.
In Washington, newly empowered House Republicans kicked off the first in a series of planned committee hearings to look at simplifying the federal tax code. Business lobbyists took the opportunity to make their familiar argument for reducing the statutory corporate tax rate, which tops out at 35%.
As part of the hearing, Democrats brought in Martin Sullivan, a former Treasury Department adviser. He made the interesting point that the actual effective tax rate companies pay varies widely based on what industries they’re in:
While many corporations have effective tax rates approximately equal to the 35% statutory rate, other corporations have effective rates in the low twenties, the teens, and even the single digits. The major reason for these low effective tax rates is the ability of some corporations to shift a significant portion of their profits into low-tax jurisdictions.
To illustrate the point, Sullivan showed lawmakers this table for 14 major U.S. companies. Lo and behold, which company is paying the highest effective tax rate? Woonsocket’s own CVS, at nearly 39% over the last three years, according to Sullivan:
“As the table shows, low effective tax rates are common in industries like pharmaceuticals and computer equipment where it is easy to shift technology and manufacturing to low-tax jurisdictions,” Sullivan said. “In industries where customer markets and the provision of services are largely domestic, the opportunities for reducing taxes through cross-border profit shifting are limited.” CVS obviously falls into the latter category.
If you’re interested in this topic, I highly recommend Bloomberg News’ investigation from last fall of how Google managed to cut its taxes by $3.1 billion using legal maneuvers known as – no joke – the “Double Irish” and the “Dutch Sandwich.”
The other CVS story was a Wall Street Journal article headlined “From Pews to Prescriptions.” Apparently CVS has run into some trouble after agreeing to spend $2.3 million to buy a century-old Memphis church and turn it into a CVS/pharmacy shop:
Today church members and CVS are locked in a fierce battle with preservationists opposed to CVS’s plans to bulldoze the church – built in 1912 – and erect a pharmacy. …
“Based on what I’ve seen, greed has won over the community,” said June West, executive director of Memphis Heritage, a nonprofit preservation group.
The fight here is part of a broader national debate over what to do with historic urban churches as their denominations dwindle in cities across the U.S.
At a packed city council meeting in August, the Methodists showed up wearing red-and-white buttons that read: “CVS=Jobs.” … Preservationists from Memphis Heritage and other groups wore stickers showing a red line slashed through the letters “CVS.”
(photo: CVS in Cleveland Park, Washington, D.C. / Flickr)
January 18th, 2011 at 4:56 pm by Ted Nesi under General Talk
Rhode Island’s biggest company, CVS Caremark, is a retail behemoth.
With about 7,100 stores nationwide – including 56 in Rhode Island alone – a big challenge for CVS over the coming years will be how to keep increasing sales in its stores outside of simply adding more locations. (Though incoming CEO Larry Merlo told me last summer expansion will be part of the plan, too.)
One way to do that is to increase the variety of products sold in CVS/pharmacy stores. To do that, CVS and competitors like Walgreens and Target are starting to beef up their grocery aisles, The New York Times reports:
CVS/pharmacy last year redesigned about 200 of its stores in urban areas like Boston, Detroit and New York, and expects to make over about 20 percent of its 7,100 stores in all.
As a result, people who typically went to the grocery store once a week to stock up are instead stopping by places whose food items used to be limited to a bag of chips or a can of soup. And retailers are viewing it as an opportunity to increase sales by getting people in their stores more frequently. …
The refurbished CVS/Pharmacy stores have larger grocery sections, and also have self-checkout kiosks for quicker trips.
There are no plans to bring the expanded grocery selections to CVS stores in Rhode Island “at this time,” spokesman Mike DeAngelis told me in an e-mail. I’m sure it’s just a matter of time, though, if the company really plans to roll it out at 1,400 locations eventually.
CVS’ grocery expansion is currently “focused on urban locations such as New York City, Boston, Detroit, Philadelphia and Washington, D.C.,” DeAngelis said, “as our customer research determined that urban customers are shopping our stores more for general store needs due to a lack of those services in urban markets.”
(photo: CVS Caremark)
October 29th, 2010 at 10:11 am by Ted Nesi under General Talk
Thursday was quite a busy day here at Channel 12, and it looks like today will be no different, so blogging may be light again on this second-to-last business day before the election. In the meantime, here’s a wrap-up of yesterday’s big stories:
Chafee leads for governor. The independent candidate has opened the first clear lead anyone has had this year in the gubernatorial contest while Caprio is fading fast, according to our new WPRI 12 poll out yesterday. The survey showed Chafee at 33%, Caprio and Robitaille tied at 26% and Block at 4%, with 11% undecided. Here’s my full story on WPRI.com with insight from our political analyst Joe Fleming.
Roberts, Kilmartin on top. Though not by much in the lieutenant governor’s case – incumbent Elizabeth Roberts’ lead over independent Bob Healey, who wants to get rid of the LG’s office, is down to just seven points. Democrat Peter Kilmartin has a 14-point advantage for attorney general in a splintered field of candidates. Here’s my full WPRI.com story on those races, again featuring Joe Fleming.
More polls on the way. WPRI will release more results from our exclusive poll this evening. At 5 p.m., we’ll let you know which party is leading the generic ballot for the General Assembly and whether voters want to remove “and Providence Plantations” from the state’s name. Then at 6 p.m., we’ll have the latest numbers for the much-watched 1st Congressional District race between David Cicilline and John Loughlin – believe me, you don’t want to miss that one.
No car tax for RIPTA’s GM. Target 12′s Tim White ran an exclusive investigation last night that found the R.I. Public Transit Authority’s longtime general manager, Al Mascola, has never paid car taxes since joining RIPTA in 2000 because he keeps his three vehicles registered in Delaware. You can read Tim’s full report and watch the video here. Along with Tim’s main story, I have a companion WPRI.com piece explaining why the car tax came back and whether it’s going to go away (short answer: probably not).
CVS axing 150 workers in Woonsocket. Finally, a story first reported by WPRI.com (thank you to The Wall Street Journal for crediting us) – CVS Caremark is laying off 300 people nationwide, half of them here at its corporate campus in Woonsocket, less than a week before it reports third-quarter earnings. The state may have stopped the bleeding that’s left it with the same number of jobs as in 1987, but in recent months we’ve still been getting word of large-scale layoffs at big local employers like CVS, Bank of America, Stanley Bostitch and Blue Cross & Blue Shield.
October 28th, 2010 at 12:30 pm by Ted Nesi under General Talk
CVS Caremark Corp. will lay off approximately 300 employees nationwide, including about 150 here at its headquarters in Woonsocket, Eyewitness News has confirmed.
The job cuts will take place within the pharmacy giant’s “non-store retail field operations, as well as our corporate functions,” CVS spokesman Mike DeAngelis said in an e-mailed statement a few minutes ago.
The affected employees are being informed by CVS human resources. The company has about 3,450 employees at its Woonsocket corporate campus and more than 6,300 in Rhode Island.
More to come.
Update: My full article is now on WPRI.com. I’ll post any updates there.
