WOONSOCKET – CVS Health Corp.’s President and CEO Larry J. Merlo saw a decrease in his total compensation in 2017, marking the third consecutive year he’s seen a drop.
Merlo earned $12.2 million last year as CVS’ top executive, about $6 million less than in 2016, according to federal filings released Thursday. Merlo earned $18.3 million in 2016, which was about $10.6 million less than he realized in 2015 due to the anticipated end in pension payments.
While Merlo’s $1.6 million annual salary remained the same as in 2017, he saw another decline in stock awards and option awards, with each declining from $4 million to $3.4 million – a 15.6 percent drop. Merlo realized a significant decline in non-equity incentive plan compensation, falling to $3.1 million last year from $7.9 million in 2016.
The value of Merlo’s pension declined by $751,000 from year to year to $42.9 million. Merlo is the only executive participant in the supplemental executive retirement plan benefits program.
In a letter to its stockholders, CVS acknowledged its growth last year was less than what the Woonsocket-based retail and pharmacy benefits conglomerate and its shareholders are used to. CVS stated while it delivered earnings in line with expectations, net revenue grew just 4 percent year over year and adjusted earnings per share increased by 1 percent, mainly due to “the loss of retail pharmacy prescriptions associated with pharmacy network changes.” To counter that trend, CVS said it implemented a four-point plan to return the company to “healthier levels” of earnings growth over the coming years.
On the plus side, CVS said in its letter the company generated “substantial” cash flow, utilizing it to deliver on its approach to capital allocation and “enhance returns” to its stockholders. Using that approach returned $6 billion to stockholders through “dividends and share repurchases,” CVS said. The company also reiterated its proposed acquisition of Aetna, which the shareholders approved last month, and expects the two companies will “remake the consumer healthcare experience.”
“This acquisition, which has already received the approval of both companies’ stockholders, is expected to unlock long-term value that further advances our return to robust growth, and it positions the combined company as America’s front door to quality health care. We look forward to garnering regulatory approval, closing the transaction, and beginning our work to better address the challenges in the U.S. health care system,” CVS said in its letter.
Stockholders can vote on the company’s executive compensation at the annual meeting June 4 at 8 a.m. at CVS’ headquarters in Woonsocket.
In other executive financials, CVS Executive Vice President and Chief Operating Officer Jonathan C. Roberts received $6.8 million in compensation in 2017, a drop from $8.6 million in 2016. Roberts was named the company’s COO after Thomas M. Moriarty ($4.5 million compensation last year) was named executive vice president, general counsel, and chief policy and external affairs officer.
Executive Vice President and Chief Financial Officer David M. Denton was compensated $4.3 million in 2017, a drop from $5.5 million the year before. Executive Vice President and CVS Pharmacy President Helena B. Foulkes, who left the company in February and became CEO of Saks Fifth Avenue, received $4.1 million in compensation last year, after receiving total compensation of $5.2 million in 2016.
James Bessette is the PBN researcher.
