Our Policies

In January 2011, our Board of Directors adopted the most recent version of our Corporate governance guidelines, which meets or exceeds the listing standards adopted by the New York Stock Exchange (NYSE). These guidelines are available on our investor relations website at http://info.cvscaremark.com/investors.

Our Corporate Governance Guidelines include:

• Annual election of all directors
• Conflict of Interest Policy with annual certification
• Majority voting for uncontested director elections
• Stock ownership guidelines for all directors and executive officers
• Insider Trading Policy with annual certification
• All stock-based incentive plans have stockholder approval
• Stockholders ratify auditors
• Comprehensive Corporate Code of Conduct
• Ethics Hotline

Board Independence

According to our Corporate governance guidelines, the majority of directors must meet the NYSE Bright Line requirements for independence as well as our own categorical standards for director independence. The Board determines the independence of each director each March and will re-evaluate its determinations as needed during the year. This year, 11 of the 12 nominees for election as directors at the 2011 annual meeting of stockholders were determined to be independent. Only Directors determined by the Board to meet independence standards serve on our Board’s Audit, Nominating and Corporate governance, and Management Planning and Development Committees. For details on the Board Committee composition, visit our investor relations website at http://info.cvscaremark.com/investors.

Board Attendance

Directors are expected to attend Board and their respective committee meetings, as well as the annual meeting of stockholders. In 2010, each Director attended at least 75 percent of the Board and committee meetings of which he or she was a member.

Director Orientation and Continuing Education

All new Directors are strongly encouraged to participate in our Director orientation program and receive a comprehensive briefing on the Company, its operations and policies. Ongoing learning opportunities are also available to all Directors. The Nominating and Corporate governance Committee oversees the orientation and continuing education program for Directors.

Board Leadership Structure

Our Board believes that the Company and its stockholders are best served by having the flexibility to either have the same individual serve as Chairman and Chief Executive Officer, or two different persons in those roles. This is demonstrated by recent actions related to the Company’s change in management.

Following the 2011 annual meeting of stockholders, the Board will be led by an independent Chairman. The independent Chairman will preside over all meetings of the Board and work with the CEO to set Board meeting agendas and schedule Board meetings. The Chairman will have the authority to call and to lead independent Director sessions and the ability to retain independent legal, accounting or other advisors in connection with these sessions; facilitate communication and serve as a liaison between the CEO and the other independent directors; and advise the CEO of the informational needs of the Board.

The Board believes that Board independence and oversight of management will be effectively maintained through the independent Chairman, Board’s composition and committee system. If in the future the Board decides that a non-independent chairman should lead, then it will appoint an independent Lead Director.

The Board also believes that it is not necessary to adopt a rigid policy restricting its discretion in selecting the Chairman of the Board (as well as restricting the ability to combine the positions of Chairman and CEO if future circumstances warrant), because this would deprive the Board of the ability to select the most qualified and appropriate individual to lead the Board as Chairman at any particular point in time.

Contact with the Board of Directors

Stockholders and other parties interested in communicating directly with the Board of Directors may do so in writing to the Company. The Corporate Secretary of the Company reviews all such correspondence and regularly forwards to the Board a summary of all correspondence that deals with the functions of the Board or its committees. Directors regularly review a log of all correspondence received by the Company that is addressed to members of the Board.

Stockholder Proposals

In accordance with Securities and Exchange Commission (SEC) rules, we reprint properly submitted stockholder proposals and supporting statements, as they were submitted to us, in our annual proxy statement. Once filed, we proactively engage with the filing parties in order to better understand and address their concerns. It is worth noting that among S&P 500 companies including CVS Caremark, an increasing number of stockholder proposals have been filed in recent years on topics relating to climate change, political contributions, corporate governance structure and executive compensation.