CVS’ Merlo made $28.9M last year

CVS HEALTH Corp. President and CEO Larry Merlo  saw his compensation fall last year to $28.9 million. It was $32.3 million in 2014. / COURTESY CVS
CVS HEALTH Corp. President and CEO Larry Merlo saw his compensation fall last year to $28.9 million. It was $32.3 million in 2014. / COURTESY CVS

WOONSOCKET – Compensation for the chief executive of CVS Health Corp. last year fell slightly to $28.9 million compared with 2014, matching a trend seen among the highest-paid CEOs throughout the country.
President and CEO Larry J. Merlo’s total compensation package fell 10.5 percent from $32.3 million in 2014.
The drop was caused largely by a decrease in his non-equity incentive plan, which fell 15.5 percent to $9.7 million, and a drop in his pension value and deferred compensation, falling to $6.1 million compared with $8.1 million in 2014, according to federal documents filed Friday.
Merlo’s non-equity incentive plan comprises how much he earned as annual cash incentive awards ($3.7 million) and the cash portion of his 2013-2015 long-term incentive plan ($6 million).
The decreases match a trend recognized among CEOs of the biggest U.S. companies, as the median pay for CEOs of nearly 300 large publicly traded companies fell 3.8 percent to $10.9 million last year, according to a Wall Street Journal analysis of compensation data from MyLogIQ. The aggregate decline, caused by slowed cash bonuses and pared-back pension growth, is the worst seen in any year since the financial crisis.
Merlo, 60, has held the position of CEO since March 2011 and president since 2010. He’s been with CVS and its subsidiaries for more than 30 years. For 2015, the company reported revenue increasing 10 percent to $153.3 billion and profit rising to $5.2 billion, or $4.62 per diluted share, compared with $4.6 billion, or $3.96 per diluted share.
The company grew after its acquisition of Omnicare, a leading provider of pharmacy services to the long-term care market, and bolstered its pharmacy business with the purchase of more than 1,670 pharmacies and nearly 80 retail clinics from Target Corp. The latter fueled a 20 percent increase to the company’s number of pharmacies; its clinics grew by 8 percent.
CVS returned more than $6 billion to stockholders through dividends and share repurchases, according to the federal filing.
“CVS Health enjoyed a successful 2015 that was highlighted by excellent performance across our enterprise and two key acquisitions that support our strategy for growth in an evolving health care market,” Merlo and David W. Dorman, chairman of the company’s board of directors, wrote in a letter to shareholders.
“That strategy is focused on creating superior value for patients, payors and providers through an unmatched suite of integrated assets.”
Merlo’s base salary grew 15.5 percent to $1.6 million, his stock awards and option awards remained relatively flat at $6.7 million and $4 million, respectively.
Shareholders of record at the close of business on March 24 may vote on the executive compensation during the CVS annual meeting of stockholders beginning at 9 a.m. on May 19 at the company’s headquarters.
The four next highest-paid executives include:

  • Jonathan C. Roberts: $7.7 million (executive vice president and president of CVS/caremark)
  • David M. Denton: $7 million (executive vice president and chief financial officer)
  • Helena B. Foulkes: $6.1 million (executive vice president and president of CVS/pharmacy)
  • Thomas M. Moriarty: $5.9 million (executive vice president, chief health strategy officer and general counsel)

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