EXHIBIT 10.39

 

CVS Caremark Corporation

Senior Executive Severance Policy

 

It is the policy of CVS Caremark Corporation (the “Company”) that the Company
shall not enter into a Future Severance Agreement with a Senior Executive
providing Benefits in an amount exceeding the Severance Benefits Limitation
unless such Future Severance Agreement receives shareholder approval.

 

For purposes of this Policy the following terms shall have the indicated
meanings:

 

“Benefits” means the (i) cash amounts payable by the Company in the event of
termination of the Senior Executive’s employment, (ii) special benefits or
perquisites provided in the event of termination of the Senior Executive’s
employment, and (iii) payments, including tax gross-ups, related to offsetting
the Senior Executive’s excise taxes under Section 4999 of the Internal Revenue
Code.  The term “Benefits” includes both lump-sum payments and the estimated
present value of any periodic payments made or special benefits or perquisites
provided following the date of termination of a Senior Executive’s employment
with the Company.

 

Notwithstanding the foregoing, the term “Benefits” does not include:

 

·                  Salary, incentive compensation, vacation pay and other
compensation and benefits earned or accrued prior to the date of the termination
of the Senior Executive’s employment including, without limitation, the pro-rata
portion (based on the portion of the performance period elapsed through the date
of termination) of any outstanding annual or long-term incentive award;

 

·                  Compensation and awards provided under the terms of any
deferred compensation, retirement or savings plans;

 

·                  The payment, vesting, acceleration or other handling of
previously granted equity or equity-based awards (including payment of cash in
lieu of issuing shares in connection with the vesting or exercise of an equity
or equity-based award) provided under plans, programs or arrangements applicable
to one or more groups of employees in addition to the Senior Executives;

 

·                  The value of health and welfare benefits provided for up to
2.99 years following termination or amounts paid in lieu thereof;

 

·                  Post-termination and other special benefits or perquisites
provided under plans, programs or arrangements of the Company applicable to one
or more groups of employees in addition to the Senior Executives;

 

·                  Amounts paid for post-termination covenants (such as a
covenant not to compete);

 

·                  Amounts payable under retention plans implemented in
connection with corporate transactions;

 

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·                  Amounts paid to “make-whole” any forfeiture of benefits from
a prior employer; or

 

·                  Any payment that the Management Planning and Development
Committee (the “Committee”) determines in good faith to be a reasonable
settlement of any potential claims against the Company.

 

“Effective Date” means March 31, 2011, the effective date of this Policy.

 

“Future Severance Agreement” means an employment, severance or termination
agreement between the Company (or one of its subsidiaries) and a Senior
Executive relating to termination of employment entered into after the Effective
Date, including any material modification (but excluding any mere extension or
renewal) made after the Effective Date to an employment, severance or
termination agreement with a Senior Executive that is in effect as of the
Effective Date.

 

“Senior Executive” means a person who at the time of entering into a Future
Severance Agreement has been determined by the Company to be subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934, as
amended.

 

“Severance Benefits Limitation” means 2.99 times the sum of (i) the Senior
Executive’s annual base salary, plus (ii) the Senior Executive’s target annual
bonus, each as in effect immediately prior to the date of the Senior Executive’s
termination of employment.  For purposes of clause (ii) of the preceding
sentence, the amount of annual bonus shall be determined without regard to form
of payment (e.g., cash, equity or other property).

 

The Committee shall make any necessary determinations regarding the
interpretation of the provisions of this Policy, in its sole discretion,
including but not limited to determination of the value of any Benefits
provided.

 

The Committee shall have the right to amend, waive or cancel this Policy at any
time if it determines in its sole discretion that such action would be in the
best interests of the Company, provided that any such action shall be promptly
disclosed.

 

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