CVS Health

Annual Meeting of Stockholders

Board and Corporate Governance Highlights

The CVS Health Board continues to evaluate the Company’s corporate governance policies and practices to ensure that the right mix of individuals are present in our boardroom and to best serve the stockholders we represent by ensuring effective oversight of our strategy and management. We are committed to maintaining the highest standards of corporate governance, and have established a strong and effective framework by which the Company is governed and reviewed.

  Further Information
2018-2019 Board and Corporate Governance Developments  
  • In November 2018, Fernando Aguirre, Mark T. Bertolini, Roger N. Farah and Edward J. Ludwig were elected to our Board of Directors, providing our Board with additional depth from their knowledge of Aetna’s business and their complementary expertise, which will be essential to the combined company as we transform the way health care is delivered in America
  pages 10, 13 and 14
  • In connection with the Aetna Transaction, we changed the name of the Patient Safety and Clinical Quality Committee to the Medical Affairs Committee, to reflect the expanded work of the Committee regarding medical-related strategies, policies and practices that relate to promoting member health, enhancing access to cost-effective quality health care, and advancing safety and efficacy of care

  page 30

  • We formed the Investment and Finance Committee to assist the Board in reviewing the Company’s policies, strategies, transactions and performance regarding its investment portfolio, and to oversee the Company’s capital and financial resources
  page 26
Board Communication and Stockholder Rights  
  • Our Board supports our stockholder outreach program and has responded to stockholder input with changes in our compensation program and other areas
  pages 8 and 22
  • Majority voting in director elections
  page 19
  • Proxy access by-law
  page 19
  • Annual election of all directors
  pages 9-17
  • Annual “say-on-pay” vote
  page 35
  • Right to act by written consent and to call special meetings

  • Pursuant to a 2018 management proposal that our stockholders approved, we amended our Certificate of Incorporation to lower the threshold required for stockholders to call a special meeting from 25% to 15% of the voting power of the Company’s outstanding capital stock

  See our Certificate of Incorporation and By-laws at https://investors.cvshealth.com under “Governance Documents”

Director Alignment with Stockholder Interests  
  • At least 75% of our directors’ annual retainer mix is paid in shares of CVS Health common stock
  pages 31-32
  • Directors must own at least 10,000 shares of CVS Health common stock
  page 80
  • Directors had excellent meeting attendance, averaging 99%
  page 31
Board Oversight of Risk  
  • Full Board and individual Committees focus on understanding and assessing Company risks
  page 21
  • Our independent Chair and our CEO are focused on the Company’s and the Board’s risk management efforts and ensure that enterprise risks are appropriately brought to the Board and/or its Committees for review
  page 21
  • At least annually, the Audit Committee reviews our policies and practices with respect to risk assessment and risk management, including discussing with management our major risks and the steps that have been taken to monitor and mitigate such risks
  page 25
  • The Management Planning and Development Committee is responsible for reviewing and assessing potential risks arising from the Company’s compensation policies and practices
  page 28
  • Beginning in 2019 the Nominating and Corporate Governance Committee is responsible for oversight of our policies, practices and risks related to cybersecurity and data and information security governance, a responsibility shifted from the Audit Committee

  page 27

Stockholder Outreach – Governance and Compensation Actions

Following our 2018 Annual Meeting of Stockholders, the Management Planning and Development Committee reviewed the results of the stockholder advisory vote on executive compensation. Due to changes we made to our compensation programs in response to stockholder feedback after the 2017 Annual Meeting, approximately 91% of votes were cast in favor of the proposal, an increase from 61% in 2017. In the latter part of 2018 and early 2019, we reached out to holders of approximately 41% of our outstanding common stock and spoke with holders of nearly 19% of our outstanding shares, as well as one of the leading proxy advisory firms. We discussed with them a number of topics, including our strategy in the evolving health care industry, our Board composition and practices, our initiatives around corporate social responsibility, including enhanced initiatives to help fight the national opioid abuse crisis, and our executive compensation programs. In response to these meetings, we have made a number of changes to our governance structure, practices and programs for which we have received positive feedback from our stockholders. Below are some of the actions we took.

  What we heard     Our response  
  How has the skill set of the Board been supplemented following the Aetna Transaction?     We added four members of the Aetna board to our Board of Directors, supplementing the depth of our Board’s knowledge of the health care industry, consumer products and brand management, international business operations and medical technology with their deep knowledge of Aetna’s business and complementary expertise and new perspectives. Please see their biographies on pages 10-17.  
  How have the responsibilities of your Board Committees changed in light of operational and industry changes?     We added a new Investment and Finance Committee to oversee our investment portfolio, changed the name of the Patient Safety and Clinical Quality Committee to the Medical Affairs Committee to reflect the expanded work of the Committee, and shifted responsibilities among the various Committees, including delegating oversight of our policies, practices and risks related to cybersecurity and data and information security governance to the Nominating and Corporate Governance Committee, whose members possess expertise in those subjects. Please see the Committee descriptions on pages 24-31.  
  How is CVS Health addressing the opioid abuse crisis that is facing the U.S.?     We believe we are part of the solution to the opioid abuse crisis. CVS Health is dedicated to helping communities address and prevent opioid abuse. The Company has a range of programs aimed at addressing various aspects of the issues regarding opioids, including safe medication disposal units, pharmacist counseling, enhanced utilization management through our PBM, our youth education program, Pharmacists Teach, and making opioid overdose reversal medication widely and more easily available. Please see the new opioid response page on our website at http://www.cvshealth.com/OpioidResponse.  
  How have you improved your executive compensation program?      We made a number of changes to simplify our program and improve transparency, and we received positive feedback from our stockholders. We have denominated the long-term incentive program in performance stock units (PSUs) that are subject to a two-year holding period after settlement, and replaced time-vested restricted stock units with PSUs, increasing the performance-based component of our long-term incentive programs as well as the portion of our equity grants that is subject to a holding period. Please see the Compensation Discussion and Analysis on pages 38-62.  
           

For more information on changes to our compensation programs, see the letter from the Management Planning and Development Committee on page 37 and the Compensation Discussion and Analysis beginning on page 38 of the proxy statement. For more information on corporate governance at CVS Health, please refer to pages 9-32 of the proxy statement and to our website at http://investors.cvshealth.com/corporate-governance.