CVS CEO Larry Merlo's pay jumps to more than $18M

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, the company said in an SEC filing this week.

CVS said Merlo's pay package for 2012 included a $1.29 million salary; a $6.4 million bonus, formally known as “non-equity incentive plan compensation," nearly twice as much as in 2011; $10.3 million in stock and stock option awards; and $209,246 in “other compensation.”

Merlo earned every penny, according to CVS spokesman Mike DeAngelis.

"Last year, CVS Caremark had an outstanding year, and continued to deliver strong financial results and enhanced returns to shareholders in a challenging economic environment, performing favorably against our peer group in several key areas," DeAngelis told WPRI.com in an email. "Mr. Merlo’s compensation in 2012 reflects these strong results."

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Merlo’s other compensation was made up of $31,296 for personal use of CVS’s corporate jet; $15,000 for financial planning services; $575 for home security; and $162,375 in additional retirement contributions.

CVS also said Merlo is currently entitled to a lump-sum payment of $21.8 million from an executive pension plan upon his retirement. He would be eligible for up to $40 million if CVS is sold and he leaves his job.

Merlo, 57, succeeded longtime CVS chief Tom Ryan as the Woonsocket-based drugstore giant’s chief executive in March 2011. The company has steadied itself after a rocky experience during the recession, posting a record $123 billion in revenue last year after benefiting from the expansion of its MinuteClinic franchise and capitalizing on problems at competitor Walgreen Inc.

CVS also said it paid $6.1 million to Chief Financial Officer David Denton; $5.9 million to CVS/pharmacy President Mark Cosby; $7.9 million to Executive Vice President Per Lofberg; and $7.9 million to pharmacy-benefit management chief Jonathan Roberts, who took over that job from Lofberg last September.

"Consistent with our pay-for-performance philosophy, we believe that annual compensation for the company’s executives is tied closely to our overall level of success during the fiscal year," DeAngelis said.

(WPRI.com’s compensation estimates differ from some amounts reported in SEC filings because the filings add in yearly changes in the actuarial value of executives’ pensions; including that would increase Merlo's total compensation to $20.3 million.)

CVS also said it pays each outside member of its board of directors an annual retainer of $260,000, with additional money going to those who serve as chairpersons. The full board met eight times in 2012, and each director went to at least 75% of the board and committee meetings they were supposed to attend, CVS said.

CVS Caremark is the largest for-profit employer in Rhode Island and one of only two Fortune 500 companies headquartered in the state. The other is Textron, the Providence-based aerospace conglomerate.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

An earlier version of this article referred to Jonathan Roberts by the wrong surname.