Exhibit 10.36

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2010 – 2012 LONG-TERM INCENTIVE PLAN

PRESIDENT, PHARMACY BENEFIT MANAGEMENT

 

1. Purpose

The purpose of the CVS Caremark (the “Company”) 2010 – 2012 Pharmacy Benefit
Management Long-Term Incentive Plan, (the “PBM LTI Plan” or the “Plan”), is to
motivate the Executive to achieve the 2010 – 2011 and 2011 – 2012 Earnings
before Interest and Taxes Compound Annual Growth Rate (“EBIT CAGR”) goals for
the Pharmacy Benefit Management (“PBM”) business unit, which have been approved
by the Management Planning and Development Committee (the “Committee”) of the
Board of Directors (the “Board”). Funding of incentive awards will be based on
actual results measured against pre-established financial goals.

 

2. Administration

The Plan shall be administered by the Committee of the Board under the
provisions of the 2010 Incentive Compensation Plan (the “2010 ICP”). The
Committee shall have full and final authority, in each case subject to and
consistent with the provisions of the 2010 ICP, to grant Awards, and determine
the amount, terms and conditions and all other matters relating to Awards. In
addition, the Committee shall have full and final authority, in each case,
subject to and consistent with the provisions of the 2010 ICP to construe and
interpret rules and regulations for the administration of the Plan, correct
defects, supply omissions or reconcile inconsistencies therein, and to make all
other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan.

Capitalized terms not otherwise defined herein shall have the meaning assigned
to such term(s) in the 2010 ICP.

 

3. Eligibility

The President, Caremark Pharmacy Services (a “162(m) Eligible Person” or an
“Eligible Person”) shall be eligible to receive an award under the PBM LTI Plan.
Only the Committee has the authority to determine the eligibility of employees
who are subject to Section 162(m) of the Internal Revenue Code (“Section
162(m)”) or who have been identified by the Committee as individuals who may be
subject to Section 162(m) (collectively, “162(m) Eligible Persons” and each of
whom shall also be include in the term “Eligible Persons” unless otherwise
noted).

Eligibility for a Plan award is contingent upon the Eligible Person being
employed by the Company on the last day of the Performance Period. The Committee
may, for any reason and in its sole discretion, at any time prior to the end of
the Performance Period, determine the Eligible Person’s eligibility for
participation in the Plan. The Eligible Person is subject to the terms and
conditions relating to incentive awards set forth in this Plan Document.

A 162(m) Eligible Person shall be subject to the limitations required to comply
with the provisions of Section 162(m). Subject to the requirements of
Section 162(m), the Committee shall retain sole discretion to determine a 162(m)
Eligible Person’s eligibility for an award, the target award and the amount of
the actual award. In no event shall a 162(m) Eligible Person’s award exceed the
amount permitted by Section 162(m).

 

4. Performance Period

 

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The PBM LTI Plan shall consist of two Performance Periods, each measured by the
achievement of the PBM EBIT CAGR against pre-established goals. The first
Performance Period shall commence January 1, 2010 and shall end on December 31,
2011. The second Performance Period shall commence January 1, 2011 and shall end
on December 31, 2012.

 

5. Awards

(A) The target Award opportunity for each Performance Period shall be
$1,500,000.

(B) An Award is considered “earned” when such Award has been approved by the
Committee (an “Earned Award”). Generally, an Award cannot be “earned” until the
completion of the Performance Period for which such Award is granted.

 

  (i) No portion of the Award shall be earned if actual performance is less than
81.5% of the target EBIT CAGR for the applicable Performance Period.

 

  (ii) At 100% of the target EBIT CAGR, 100% of the target Award for the
applicable Performance Period will be earned.

 

  (iii) At 124.1% of the target EBIT CAGR, 200% of the target Award for the
applicable Performance Period will be earned.

 

  (iv) Pro rating of actual performance results and payouts will be done on a
straight-line basis.

(C) Settlement of Earned Awards. At the end of the Performance Period, the
Earned Award that shall be distributed to the President, Caremark Pharmacy
Services will be distributed equally in cash and in shares of CVS Caremark
common stock (the “Shares”).

 

  (i) Any Earned Award will be granted to the Eligible Person on or before
March 15 of the year following the end of the applicable Performance Period.

 

  (ii) Any Shares to be issued in connection with an Earned Award shall be
issued pursuant to the 2010 ICP. The stock portion of the Earned Award will
equal the number of Shares multiplied by the Fair Market Value (the “FMV”) (the
closing price) of CVS Caremark stock on the date the Award is approved by the
Committee.

 

  a. Any Shares awarded to the Eligible Person in connection with an Earned
Award must be held by him until the completion of his Employment Term as such
term is defined in his Employment Agreement dated January 1, 2010 (the
“Employment Agreement”).

 

  (iii) Subject to an Eligible Person’s prior election to defer any or all of
the Earned Award pursuant to Section 7, the cash portion of Earned Award will be
paid to the Eligible Person as soon as practicable after the Earned Award is
approved by the Committee. The stock portion of the Earned Award will be settled
through the issuance to the Eligible Person of a certificate for Shares.

 

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6. Calculation of PBM EBIT CAGR

EBIT CAGR will be calculated based on actual financial performance, as reported
in accordance with GAAP, used solely for the calculation of incentive payments,
as adjusted based on Permitted Financial Adjustments approved by the Committee.

 

7. Deferral Elections

In accordance with the rules promulgated by the Committee, an Eligible Person
may elect to defer any or all of such Earned Award.

 

8. Termination of Employment

In the event the Eligible Person ceases to be employed by the Company, or any
subsidiary of the Company, prior to the completion of the Performance Period, if
the Eligible Person is or will be a covered officer in the Company’s proxy
statement for 2011 or 2012 and the circumstances under which the Eligible
Person’s termination occurs are not specifically outlined below, the payment of
such Earned Award will be determined and administered, at the sole discretion of
the Committee, in accordance with Section 162(m) in order to preserve the
Company’s ability to deduct performance-based compensation.

(A) In the event the Eligible Person ceases to be employed by the Company, or
any subsidiary of the Company, prior to the completion of the Performance
Period, due to the Eligible Person’s Resignation, or the termination of the
Eligible Person by the Company for Cause, as Resignation and Cause are each
defined in Eligible Person’s Employment Agreement, any Award granted but not yet
earned for the Performance Period shall be forfeited.

(B) In the event the Eligible Person ceases to be employed by the Company, or
any subsidiary of the Company, prior to the completion of the Performance
Period, by reason of death, any Award not yet earned in accordance with
Section 5 shall be pro rated pursuant to Paragraph 8 (E) below.

(C) In the event the Eligible Person ceases to be actively employed by the
Company, or any subsidiary of the Company, prior to the completion of the
Performance Period due to the Eligible Person becoming totally and permanently
disabled (as defined in the Company’s Long-Term Disability Plan, or, if not
defined in such plan, as defined by the Social Security Administration) while
actively employed by Company or a subsidiary of the Company, and Award granted
but not yet earned for the Performance Period shall be pro rated pursuant to
Paragraph 8 (E) below.

(D) In the event the Eligible Person ceases to be employed by the Company, or
any subsidiary of the Company, due to a Termination by the Company without Cause
(as defined above in Paragraph 8 (A) or a “Termination by the Executive for Good
Reason” (as defined in his Employment Agreement), any Award granted but not yet
earned for the Performance Period shall be pro rated pursuant to Paragraph 8
(E) below.

(E) Pro Rating.

 

  (i)

If the Eligible Person ceases to be employed by the Company, or any subsidiary
of the Company, in accordance with Paragraph 8 (B), (C) or (D) above and the
Award approved by the Committee is to be pro rated the Earned Award to be paid
to the Eligible Person will be calculated based on the Eligible Person’s target
award in the case of Paragraph 8(B) and (C) and in the case of Paragraph 8(D)
based on the Company’s actual performance

 

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during the applicable Performance Period and in each case then multiplied by the
following fraction: (a) the numerator shall be the number of whole months
elapsed since the beginning of the Performance Period and (b) the denominator
shall be 24. For purposes of this calculation, the number of months in the
numerator in sub-section (a) shall include any partial month in which the
Eligible Person has worked.

 

  (ii) Any payment to an Eligible Person under Paragraph 8(B) and (C) shall be
made at the time of such death or disability, as the case may be, and any
payment made under Paragraph 8(D) will be made after actual performance has been
certified by the Committee.

 

9. Tax Withholding

The Company will withhold from the Eligible Person’s Earned Award, subject to
the Eligible Person’s election to defer all or a portion of the Earned Award,
all required federal, state and local payroll taxes, including Medicare taxes.
If the Eligible Person’s Social Security wages have not reached the Social
Security maximum taxable wage base at the time the Earned Award is paid or
Shares are delivered, Social Security taxes will also be withheld from the
Award.

If the Eligible Person elects to defer an Earned Award, the Company may require
the Eligible Person to remit to the Company in advance of the actual deferral of
such Earned Award, the required FICA withholding taxes, including Social
Security and Medicare taxes, in order to ensure compliance with the
Sarbanes-Oxley Act of 2002.

Except as may be elected by the Eligible Person, at the Settlement Date for any
Shares, the number of Shares to be delivered by the Company to the Eligible
Person shall be reduced by the smallest number of Shares having a FMV at least
equal to the dollar amount of federal, state or local tax withholding required
to be withheld by the Company with respect to such Shares on the Settlement
Date. In lieu of having the number of Shares delivered reduced, the Eligible
Person may elect to pay the Company by personal check or by such other means
satisfactory to the Company for any amounts required to be withheld by the
Company in connection with the settlement of the Shares.

 

10. Change in Control of the Company

Upon the occurrence of a change in control of the Company, as defined in
Section 10(c) of the 2010 ICP (a “Change in Control”), the performance criteria
for any the Performance Period shall be deemed to have been fully satisfied and
all outstanding Awards under the PBM LTI Plan shall be come immediately
nonforfeitable. The Eligible Person shall receive the Target Award for the
Performance Period to be paid as soon as administratively possible, subject to
the applicable Plan provisions and federal regulations governing payment of such
Award(s), including but not limited to the Eligible Person’s deferral elections,
and Sections 162(m), 4999 and 409A of the Internal Revenue Code (“Code”).

 

11. Recoupment of Awards Due to Fraud or Financial Misconduct

The provisions of this Section 11 shall apply to each Award. If the Board
determines that fraud or financial misconduct has occurred in a manner that
subjects the Eligible Person to recoupment of any Earned Award under the
Company’s Recoupment Policy, as in effect from time to time, the Eligible Person
shall immediately repay to the Company (a) the entire cash portion of the Earned
Award that is subject to recoupment, or a portion thereof as determined by the
Board (the “Cash Recoupment Amount”), and (b) the value, or a portion

 

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thereof as determined by the Board, of any pre-tax economic benefit that the
Eligible Person derived from any Shares issued in connection with an Earned
Award that is subject to recoupment (the “Share Recoupment Value”).

Eligible Person shall immediately repay to the Company the value of any pre-tax
economic benefit that Eligible Person derived from such RSUs, if the Board
determines that financial or operational results used to determine the award
were meaningfully altered based on fraud or material financial misconduct in a
manner which subjects Eligible Person to recoupment under the Company’s
Recoupment Policy, as in effect from time to time. The amount to be repaid by
Eligible Person shall be the amount necessary to disgorge the value enjoyed or
realized by Eligible Person from the RSUs and the underlying Shares, as
determined by the Board, or a portion of such value as may be determined by the
Board in its sole discretion. In making its determinations under this paragraph,
the Board may, by way of example only, (i) with respect to any Shares which have
been transferred to Eligible Person in settlement of the RSUs and which are
beneficially owned by Eligible Person as of a date the repayment obligation
arises, require Eligible Person to repay to the Company the FMV of such Shares
as of the date of such repayment and/or (ii) with respect to any Shares which
were transferred to Eligible Person in settlement of the RSUs and as to which
beneficial ownership has been transferred by Eligible Person as of the date a
repayment obligation arises, require Eligible Person to repay to the Company the
FMV of such Shares as of the date such Shares were transferred by Eligible
Person. In each case the amount to be repaid by Eligible Person shall also
include any dividends (including any economic benefit thereof) or distributions
received by Eligible Person with respect to any RSU Shares and, in calculating
the value to be repaid, adjustments may be made for stock splits or other
capital changes or corporate transactions, as determined by the Board.

If Eligible Person has deferred payment of any portion of the amounts relating
to an RSU that are subject to repayment hereunder, the amount of Eligible
Person’s deferred stock compensation accrual shall be reduced by the amount
subject to repayment, plus all Company matching amounts and earnings on such
amount. If Eligible Person fails to repay the required value immediately upon
request by the Board, the Company may seek reimbursement of such value from
Eligible Person by reducing salary or any other payments that may be due to
Eligible Person, to the extent legally permissible, and/or through initiating a
legal action to recover such amount, which recovery shall include any reasonable
attorneys fees incurred by the Company in bringing such action.

If the Eligible Person has deferred payment of any portion of the Cash
Recoupment Amount, the amount of the Eligible Person’s deferred compensation
accrual shall be reduced by the amount subject to repayment, plus all Company
matching amounts and earnings on such amount. If the Eligible Person has
deferred receipt of any portion of the Shares that are subject to repayment
hereunder, the amount of the Eligible Person’s deferred stock compensation
accrual shall be reduced by the amount subject to repayment, plus all Company
matching amounts and earnings on such amount.

If the Eligible Person fails to repay the required Cash Recoupment Amount and/or
the Share Recoupment Value immediately upon request by the Board, the Company
may seek reimbursement of such amounts from the Eligible Person by reducing
salary or any other payments that may be due to the Eligible Person, to the
extent legally permissible, and/or through initiating a legal action to recover
such amount, which recovery shall include any reasonable attorneys fees incurred
by the Company in bringing such action.

 

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12. Miscellaneous

(A) Not a Contract of Employment. The adoption and maintenance of the PBM LTI
Plan shall not be deemed to be a contract of between the Company and an Eligible
Person and shall not be consideration for the employment of an Eligible Person.
Nothing contained herein shall be deemed to give the Eligible Person the right
to be retained in the employ of the Company or to restrict the right of the
Company to discharge an Eligible Person at any time nor shall the PBM LTI Plan
be deemed to give the Company the right to require an Eligible Person to remain
in the employ of the Company or to restrict an Eligible Person’s right to
terminate their employment at any time.

(B) Non-Assignability of Benefits. No Eligible Person, Beneficiary or
distributee of benefits under the PBM LTI Plan shall have any power or right to
transfer, assign, anticipate, hypothecate or otherwise encumber any part or all
of the amounts payable hereunder, which are expressly declared to be
unassignable and nontransferable. Any such attempted assignment or transfer
shall be void. No amount payable hereunder shall, prior to actual payment
hereof, be subject to seizure by any creditor or any such Eligible Person,
Beneficiary or other distributee for the payment of any debt judgment or other
obligation, by a proceeding at law or in equity, nor transferable by operation
of law in the event of the bankruptcy, insolvency or death of such Eligible
Person, Beneficiary or other distributes hereunder.

(C) Amendment and Termination. The Board may amend, alter, suspend, discontinue
or terminate the PBM LTI Plan or the Committee’s authority to grant Awards under
the PBM LTI Plan without the consent of Eligible Persons, except that without
the consent of an affected Eligible Person, no such Board action may materially
and adversely affect the rights of such Eligible Person under any previously
granted and outstanding Awards. The Committee may waive any conditions or rights
under, or amend, alter, suspend, discontinue or terminate any Award(s)
previously granted, except as otherwise provided in the PBM LTI Plan, provided
that, without the consent of the affected Eligible Person, no such Committee
action may materially and adversely affect the rights of such Eligible Person
under such Award(s).

(D) Compliance with Legal and Other Requirements. Notwithstanding any PBM LTI
Plan provision to the contrary, the Committee may at any time impose such
restrictions on the PBM LTI Plan and participation therein as the Committee may
deem advisable from time to time in order to comply with or preserve compliance
with any applicable laws, including any applicable federal and state securities
laws and exemptions from registrations thereunder.

Further, to the extent it would not violate an applicable provision of
Section 409A of the Code the Company may, to the extent deemed necessary or
advisable by the Committee, postpone the issuance or delivery of CVS Caremark
stock or payment of other benefits under any Earned Award until completion of
such registration or qualification of such stock or other required action under
any federal or state law, rule or regulation, listing or other required action
with respect to any stock exchange or automated quotation system upon which such
stock are listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate, and may require any Eligible
Person to make such representations, furnish such information and comply with or
be subject to such other conditions as it may consider appropriate in connection
with the issuance or delivery of stock or payment of other benefits in
compliance with applicable laws, rules and regulations, listing requirements, or
other obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results

 

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or would result in any postponement of the issuance or delivery of stock or
payment of benefits under any award or the imposition of any other conditions on
such issuance, delivery or payment, to the extent that such postponement or
other condition would represent a greater burden on an Eligible Person than
existed on the 90th day preceding the Change in Control.

(E) Section 409A. The company intends that this PBM LTI Plan not violate any
applicable provision of, or result in any additional tax or penalty under,
Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended, and
that to the extent any provisions of the PBM LTI Plan do not comply with Code
Section 409A the Company will make such changes in order to comply with Code
Section 409A. In all events, the provisions of CVS Caremark Corporation’s
Universal Definitions Document are hereby incorporated by this reference and to
the extent required to avoid a violation of the applicable rules under all
Section 409A by reason of Section 409A(a)(2)(B)(i) of the Code, payment of any
amounts subject to Section 409A of the Code shall be delayed until the relevant
date of payment that will result in compliance with the rules of
Section 409A(a)(2)(B)(i) of the Code.

(F) Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, stock, or other property), re-capitalization, forward or
reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other similar corporate
transaction or event affects the stock such that an adjustment is appropriate
under the PBM LTI Plan, then the Committee shall, in such manner as it may deem
equitable, adjust the number and kind of Shares of stock subject to or
deliverable in respect of outstanding Awards.

(G) Limitation on Rights Conferred by Awards Granted under the PBM LTI Plan.
Neither the PBM LTI Plan nor any action taken under the PBM LTI Plan shall be
construed as conferring on an Eligible Person any of the rights of a shareholder
of CVS Caremark until the Eligible Person is duly issued or transferred Shares
in accordance with the terms of an Earned Award.

(H) Unfunded Status of Awards; Creation of Trusts. The PBM LTI Plan is intended
to constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to an Eligible Person or obligation to
deliver stock pursuant to an Award, nothing contained in any Award shall give
any such Eligible Person any rights that are greater than those of a general
creditor of CVS Caremark, provided that the Committee may authorize the creation
of trusts and deposit therein cash, stock, other awards or other property, or
make other arrangements to meet CVS Caremark’s obligations under the PBM LTI
Plan. Such trusts or other arrangements shall be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines with the consent of
each affected Eligible Person.

 

13. Governing Law

The validity, construction and effect of the PBM LTI Plan, and any rules and
regulations under the PBM LTI Plan shall be determined in accordance with the
Rhode Island law, without giving effect to principles of conflicts of laws, and
applicable federal law.

 

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