larry merlo

CVS CEO Larry Merlo’s pay jumps to more than $18 million

March 20th, 2013 at 5:00 am by 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.

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• The Saturday Morning Post: CVS Caremark is on a hot streak (Feb. 23)


A boffo quarter for CVS may be a sign of good things to come

May 2nd, 2012 at 3:02 pm by 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.)


CVS CEO: Health care must change, with or without Obamcare

April 17th, 2012 at 3:26 pm by 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.

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CVS Caremark CEO Merlo got 33% raise in 2011; earned $12M

March 16th, 2012 at 2:17 pm by 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.

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CVS CEO Merlo testifying before Congress on taxes today

July 27th, 2011 at 9:15 am by 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)


CVS paid Tom Ryan $15.5M in final year as CEO

March 30th, 2011 at 11:06 am by 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)