Exhibit 10.2
RETENTION
AGREEMENT
This Agreement is made as of the 5th
day of August, 2005 by and between CVS Corporation, a Delaware
corporation (the “ Company ”) and Thomas Ryan
(the “ Executive ”).
WHEREAS, Executive is the Chairman
of the Board of Directors, President and Chief Executive Officer of
the Company; and
WHEREAS, the Company believes it is
in the best interests of its shareholders that the Executive remain
as Chairman, President and Chief Executive Officer and, therefore,
wishes to enter into this Agreement in order to provide a
meaningful incentive to the Executive to remain with the
Company;
NOW, THEREFORE, in consideration of
the promises and mutual covenants contained herein and for other
good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive agree as
follows:
1.01 (a) The provision of
Section 1.01 of the CVS Corporation Supplemental Retirement
Plan I for Select Senior Management (“SERP”) that
limits the number of Years of Service of a Member to be taken into
account in determining a Member’s Annual Benefits under the
SERP to no more than thirty (30) shall not apply to
Executive;
(b) Upon his termination of
employment with the Company, Executive will be provided for a
period of five (5) years (i) the services of an assistant
and office space for Executive and such assistant which is
appropriate in light of Executive’s prior position with the
Company, at a cost reasonably determined by the Company and paid by
the Company and (ii) the services of a financial planning
advisor consistent with such services provided to the Executive at
the time of such termination; and
(c) The provisions of
Section 1.01(a) and (b) shall not apply if the
Executive’s employment with the Company is terminated prior
to the earlier of (i) a Change in Control (as defined in the
Employment Agreement) or (ii) January 1, 2010 for reasons
other than by reason of Termination Without Cause or a Constructive
Termination Without Cause (both as defined in the Employment
Agreement) or Executive’s disability (as defined in the
Company’s long-term disability plan), except that in each
case if such termination is by reason of Executive’s death
Section 1.01(a) shall continue to apply.
1.02 The existing employment
agreement between the Company and the Executive dated as of
December 4, 1996, and as amended since that date (the “
Employment Agreement ”) is hereby amended as
follows:
(a) Section 2(b) is amended by
changing “Executive’s 60 th birthday” to “January
1, 2010”.
(b) The amendment dated as of
January 1, 1999 to the Employment Agreement shall no longer
have any force or effect and Section 3 of the Employment
Agreement is amended to read as follows:
3. Position, Duties and
Responsibilities.
(a) Generally. Executive
shall serve as Chairman, President and Chief Executive Officer of
the Company, as a member of the Board of Directors of the Company,
and as President and Chief Executive Officer of CVS Pharmacy, Inc.
For so long as he is serving on the Board of Directors of the
Company (the “ Board ”), Executive agrees to
serve as a member of any committee of the Board if the Board shall
elect Executive to such positions. In any and all such capacities,
Executive shall report only to the Board. Executive shall have and
perform such duties, responsibilities, and authorities as are
customary for the Chairman, President and Chief Executive Officer
of corporations of similar size and businesses as the Company, and
as are customary for the President and Chief Executive Officer of
corporations of similar size and businesses as CVS Pharmacy, Inc.,
as they each may exist from time to time and as are consistent with
such positions and status. Executive shall devote substantially all
of his business time and attention (except for periods of vacation
or absence due to illness), and his best efforts, abilities,
experience, and talent to the positions of Chairman, President and
Chief Executive Officer and for the businesses of the Company and
to the positions of President and Chief Executive Officer of CVS
Pharmacy, Inc. and for the businesses of CVS Pharmacy,
Inc.
(b) Other Activities.
Anything herein to the contrary notwithstanding, nothing in this
Agreement shall preclude the Executive from (i) service on the
boards of directors of a reasonable number of other corporations or
the boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such activities do
not materially interfere with the proper performance of his duties
and responsibilities under this Agreement.
(c) Place of Employment.
Executive’s principal place of employment shall be the
corporate offices of the Company.
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(d) Rank of Executive Within
Company. As Chairman, President and Chief Executive Officer of
CVS Corporation, Executive shall be the highest-ranking executive
of CVS Corporation; and as President and Chief Executive Officer of
CVS Pharmacy, Inc., Executive shall be the highest ranking
executive of CVS Pharmacy, Inc.
(c) Section 4 is amended by
changing “Compensation Committee” to “Management
Planning and Development Committee”.
(d) Section 8(b) is amended by
deleting “65% of Base Salary paid to him during such year
prior to the Commencement Date” and inserting in its place
“the most recently established target annual incentive bonus
amount”.
(e) Section 10(a)(ii) is
amended to read as follows:
“pro rata annual incentive
award for the year in which Executive’s death occurs based on
the most recently established target annual incentive bonus amount
for Executive”.
(f) Section 10(c)(iii) and
10(e)(iii) are amended to read as follows:
“pro rata annual incentive
award for the year in which Executive’s termination occurs
based on the most recently established target annual incentive
bonus amount for Executive”.
(g) Section 10(c)(iv) is
amended to read as follows:
“an amount equal to the most
recently established target annual incentive bonus amount for
Executive multiplied by three, payable in equal monthly payments
over the Severance Period.”
(h) Section 10(e)(iv) is
amended to read as follows:
“an amount equal to three
times the higher of (A) the most recently established target
annual incentive bonus amount for Executive or (B) the average
cash bonus payable to Executive for the three years preceding the
Change in Control, payable in a cash lump sum promptly (but in no
event later than 15 days) following the Executive’s
termination of employment.”
(i) The definition of “
Approved Early Retirement ” in Section 10(f) is
amended by changing the words “attaining age 60” to
“January 1, 2010”.
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