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

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.

Ryan, who lives in Narragansett, earned $3.4 million in his last months as chairman and CEO of CVS, including $546,154 in salary, $41,602 worth of corporate jet use and $442,552 to pay his executive assistant for his first five years of retirement. Ryan earned between $15.5 million and $124 million in 2010.

CVS also said it paid $4.6 million to Chief Financial Officer David Denton; $9.6 million to executive vice president Mark Cosby; $7.1 million to pharmacy-benefit management chief Per Lofberg; and $4.5 million to chief legal officer Douglas Sgarro, who is leaving the company by May 31.

(’s compensation estimates differ from some amounts reported in SEC filings because those add in yearly changes in the actuarial value of executives’ pensions; including that would increase the totals to $14.1 million for Merlo; $7.1 million for Lofberg; and $5.6 million for Sgarro.)

CVS Caremark, which finished 2011 on a high note, is Rhode Island’s largest private company and the state’s sixth-biggest employer. The company’s stock price rose 17% in 2011 and is up 10% this year.

• Related: Warren Buffett makes bigger bet on RI’s CVS with $290M stake (Feb. 16)

(photo: Ted Nesi/WPRI)

16 thoughts on “CVS Caremark CEO Merlo got 33% raise in 2011; earned $12M

    • Bob,

      I consider myself a strong conservative leaning towards the private sector. But increase in last years shareholder value is a poor benchmark for such an increase in compensation. It begs the question: Does a compensation of only $8 mil mean that shareholders should expect nothing? And will the bonus be returned if the stock drops in the next 5 years.

      For the last 20 years, I’ve watched share prices be rigged in many companies to meet next years bonus only to see in the subsequent 5 years the share price plummet.

      There is no claw-back of the bonus when this happens.

  1. CVS should be ashamed of themselves. They have cut bonuses to their employees all year and low ball merit raises. And this guy gets a33% raise. It doesn’t sound like my company has much integrity. They don’t get it. What goes around comes around.

  2. So the immediate reaction is to attack the big money maker and the evil corporation. Yet every day a pro athlete signs a contract for just as much money. Is this amount of money extreme? Absolutely! But in the corporate world CEO’s get paid based on results, just like pro athletes. Has anyone considered the fact that when someone gets paid this amount of money 50% of their pay goes to the government in the form of payroll taxes as follows: 35% federal tax, social security 6.2%, medicare tax 1.45%, TDI tax 1.3%, RI State Tax 5.99%. So Rhode Island will get roughly $720,000 in tax revenue from the one individual for 2011. Now if we raise taxes on him as proposed in the legislature what do you think he will do?

    a. Smile and happily pay them because he is so wealthy
    b. Move a few miles away to MA or CT to save hundreds of thousands of dollars

    Gee…..difficult decision? Ever consider that we are actually competing with other states to keep these individuals who pay taxes? Well for everyone we drive out that pays taxes, someone comes in that needs services and doesn’t pay taxes. This continues the decline in Rhode Island. Roughly 50% of the population do not pay any payroll taxes, yet they qualify for all kinds of services that the rest of us pay for. In fact, many get the earned income credit. For those who don’t know what that is, not only do you not pay any taxes if you don’t earn enough income, the government actually pays you thousands of dollars based on how many dependents you have. Yes, pay NO taxes and get MONEY from the IRS. Look it up! Guess who pays for that, those of us who are actually paying taxes.

    So the next time you buy the BS that the rich don’t pay any taxes, do your homework.

    By the way, I am not rich, I am a working stiff with more than one job trying to support a family who is sick and tired of what the Democrats have done to our state. We already have a tax system in place where the rich pay much more in taxes. In fact, when they die and pass it on to their kids the government takes even more in taxes, on an estate they already paid taxes on. It is 35% now but will be 55% in 2013. So that means that this same CEO pays 50% in taxes when he earns it, and then when he dies 55% of that will be taxed.

    Now don’t forget all of the other taxes he will pay, such as property tax, sales tax, gas tax, sewer tax, etc. Are you starting to get the picture? Think he still doesn’t pay enough taxes?

    In addition, these individuals are the ones who help fund our charitable organizations. You don’t think the 50% who don’t pay taxes are do you?

    Are you starting to get it now?

    • Yea, because Larry Merlo Only cares about one thing, the shareholder and that’s what’s wrong with our country today. No integrity for the customer or the colleague, only the almighty dollar. No decision is made at this company that is not cleared by Finance.

  3. It is obvious this posting has become a bash CVS posting. I got news for you guys, the others…Walgreens, Rite-Aid, etc…also pay their CEO’s big $$ and are mainly concerned with shareholders. If you are unhappy with corporate management don’t work for a corporation. Do you think it is much different anywhere else? Start your own small business and you will be much happier.

    • The SHAREHOLDERS ARE THE MOST IMPORTANT. Guy do you have a 401K? If you do you most likely own stock in many companies. I bet you are or were a public sector employee. About owning a small business, only a fool would open a small business in this part of the country.

      • I get it. Stocks. The people. 401k. I get it. Do you? Does Larry? Is he living up to cvs’s mission statement. If he thinks so, then so be it.

    • yeah, well at least at walgreens, their staff is friendly and they fully staf the stores and the pharmacists know you by name.

      At Rite-aid, they are just plain stupid.

      CVS understaffs their stores –the one hour photo person always has to stop what they are doing to ring out customers–making one hour photo into 3 hour photo (glad I got a digital camera and can just look at pic on my computer!)….Their pharmacy sucks–there were times i waited 20 minutes in line to pick up perscriptions…waiting for 2-3 hours for them to be filled or 3 days for the medicine to come in!

      That CVS CEO deserves the boot rather than a bonus–he’s just another ruthless corporate facist!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s