DEF 14A 1 cvs3833491-def14a.htm DEFINITIVE PROXY STATEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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CVS Health Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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Table of Contents

Notice of 2021 Annual Meeting of Stockholders and Proxy Statement

May 13, 2021

Virtual Meeting at 8:00 a.m., Eastern Time

www.virtualshareholdermeeting.com/CVS2021

CVS Health Corporation
One CVS Drive

Woonsocket, Rhode Island 02895

The Annual Meeting will be held solely by means of remote communication for the health and safety of our stockholders and employees. This Notice of 2021 Annual Meeting and Proxy Statement is being mailed or transmitted beginning on or about April 2, 2021 to stockholders of record at the close of business on March 17, 2021.

Table of Contents

Transform Health 2030 charts our course
for the next decade in four key areas

For more information about our Corporate Social Responsibility strategy and achievements, see the back pages of this proxy statement.

Table of Contents


Message from Our Chair and Chief Executive Officer

Dear Fellow Stockholders: In 2020, CVS Health made significant progress executing our long-term strategic plan by utilizing our powerful combination of diversified assets to make health care more accessible, affordable and simply better. We have executed our strategy to deliver strong 2020 results. We have also played an important role during these unprecedented times as a trusted health services provider, delivering care in local communities across the U.S. Our colleagues on the front lines have been administering essential COVID-19 tests and vaccinations to millions of Americans. At the same time, we are delivering personalized care in our CVS locations, virtually and in the home. OVERALL 2020 FINANCIAL PERFORMANCE CVS Health delivered strong total revenue growth of 4.6% in 2020, primarily driven by growth in the Health Care Benefits and Retail/LTC segments. We delivered GAAP diluted earnings per share of $5.47, with adjusted earnings per share that was above the high end of our guidance range, at $7.50. We are pleased with the continued progress we made in 2020, building upon our foundation to accelerate future growth and expand our integrated offerings. In addition, our significant cash flow generation has enabled us to delever in accordance with our plan. In 2020, we repaid $4.25 billion of net long-term debt, and $12.2 billion since the close of the Aetna transaction, which is expected to provide us with more flexibility to deliver enhanced value to our stockholders. We remain confident in our outlook for 2021 as we continue to execute our strategy to improve the way health care is delivered to consumers in the U.S. HEALTH SERVICES AND INTEGRATED VALUE* We have made measurable progress with our strategy by integrating our assets to deliver a superior experience, while addressing the total cost of care. In 2020, we created health platforms that combine local points-of-care, remote monitoring, and access to health care professionals – all within a personalized consumer-centric model. We saw strong demand for our programs that better manage chronic conditions. We continued to expand access through our integrated care delivery approach with additional HealthHUB^® locations. One new program combining CVS Health solutions included a first-of-its-kind health benefit that offers low- or no-copay MinuteClinic^® services, virtual care and at home care, which will be expanded in 2021 based on strong market reaction. Importantly, all the care we deliver whether in-person, virtually or at home is being connected digitally to provide a seamless and integrated care experience.	CORPORATE SOCIAL RESPONSIBILITY Our Corporate Social Responsibility strategy remains committed to sustainability, and diversity and inclusion across communities and our workforce. For the second straight year, CVS Health was named in the prestigious Dow Jones Sustainability World Index. We have renewed and strengthened our commitment to addressing the racial health disparities and social injustices that weaken our nation and affect health. Over the next five years, we are investing nearly $600 million to advance employee, community and public policy initiatives that address inequality with a focus in underserved communities. Diversity powers our ability to support patients and customers with empathy, respect and cultural sensitivity, helping to build healthier communities. CORPORATE GOVERNANCE Over the course of the year, management and the Board thoughtfully worked on the advancement of our strategic plan, the evolution of CVS Health as a diversified health services company and succession planning, with the appointment of Karen as CEO. We thank Larry Merlo for his years of strong leadership. We continued our long-standing practice of engaging with our stockholders and the feedback we received has driven some of the changes you’ll read about in this proxy statement. We pride ourselves on our strong governance practices and we thank you for your continued support. As always, we welcome your feedback. ANNUAL MEETING OF STOCKHOLDERS As we look to our 2021 Annual Meeting, we are working to vaccinate millions of Americans and help the communities we serve get access to the health services they need. In these unprecedented times, health care is top of mind and we are proud to deliver quality care to our local communities. Our 2021 Annual Meeting of Stockholders will be held virtually on Thursday, May 13, 2021, at 8:00 a.m., Eastern Time. We ask you to please vote at your earliest convenience. Your vote is important. Thank you for your continued interest and investment in CVS Health. We appreciate your support as we continue to reimagine health care, making it more accessible, affordable and simply better. Sincerely,

	David W. Dorman Chair of the Board	Karen S. Lynch President and Chief Executive Officer


*	Adjusted earnings per share is a non-GAAP measure. See Annex A to this proxy statement.


2021 Proxy Statement	i

Table of Contents

Notice of Annual Meeting of Stockholders	1

Proxy Statement Highlights	4

Corporate Governance and Related Matters	12
Item 1: Election of Directors	12

The Board’s Role and Activities in 2020	22

Board Structure and Processes	27

Committees of the Board	28

Audit Committee Matters	37
Item 2: Ratification of the Appointment of Our Independent Registered Public Accounting Firm for 2021	37

Executive Compensation and Related Matters	39
Item 3: Say on Pay, a Proposal to Approve, on an Advisory Basis, the Company’s Executive Compensation	39

Letter from the Management Planning and Development Committee	42

Compensation Committee Report	43

Compensation Discussion and Analysis	44
Summary	46

2020 Business and Performance Highlights	49

Compensation Program Discussion	51

Compensation of Named Executive Officers	70
Summary Compensation Table	70

Grants of Plan-Based Awards	72

Outstanding Equity Awards at Fiscal Year-End	73

Option Exercises and Stock Vested	75

Pension Benefits	76

Nonqualified Deferred Compensation	77

Payments/(Forfeitures) Under Termination Scenarios	78

CEO Pay Ratio	82

Stockholder Proposals	83
Item 4: Stockholder Proposal for Reducing the Threshold for Our Stockholder Right to Act by Written Consent	83
Item 5: Stockholder Proposal Regarding Our Independent Board Chair	85

Ownership of and Trading in Our Stock	87
Executive Officer and Director Stock Ownership Requirements	87

Share Ownership of Directors and Certain Executive Officers	88

Share Ownership of Principal Stockholders	89

Other Information	90
Information About the Annual Meeting and Voting	90

Stockholder Proposals and Other Business for Our Annual Meeting in 2022	94

Other Matters	94

Annex A – Reconciliation of Certain Amounts to the Most Directly Comparable GAAP Measure	A-1


ii	CVS Health

Table of Contents

Notice of Annual Meeting of Stockholders

	DATE AND TIME May 13, 2021 8:00 a.m. Eastern Time

	LOCATION The Annual Meeting will be held exclusively online at www.virtualshareholdermeeting.com/CVS2021

How to Vote Your vote is important to the future of CVS Health. You are eligible to vote if you were a stockholder of record at the close of business on March 17, 2021. Even if you plan to attend the Annual Meeting, please vote as soon as possible using one of the following methods. In all cases, you should have your proxy card in hand:

	USE THE INTERNET www.proxyvote.com

	USE A MOBILE DEVICE Scan this QR Code

	CALL TOLL-FREE 1-800-690-6903

	MAIL YOUR PROXY CARD Follow the instructions on your voting form

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 13, 2021:

The proxy statement and 2020 Annual Report are available at www.cvshealthannualmeeting.com and at www.proxyvote.com.

The Annual Meeting will be accessible only at www.virtualshareholdermeeting.com/CVS2021 (the “Annual Meeting website”). We encourage you to access the Annual Meeting website prior to the start time and allow ample time to log into the Annual Meeting webcast and test your computer system. To be admitted to the Annual Meeting, you must enter the control number found on the proxy card or voting instruction form that accompanied your proxy materials when requested by the Annual Meeting website. You may vote during the Annual Meeting by following the instructions available on the Annual Meeting website.

Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described in the proxy materials.

You are cordially invited to join our 2021 Annual Meeting of Stockholders, to be held on Thursday, May 13, 2021, at 8:00 a.m. Eastern Time. Our Annual Meeting will be conducted exclusively online.

Items to be Voted

•	Elect 13 director nominees named in this proxy statement;
•	Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2021;
•	Say on pay, an advisory vote to approve the Company’s executive compensation;
•	Act on two stockholder proposals, if properly presented; and
•	Conduct any other business properly brought before the Annual Meeting.

Eligibility to Vote

Stockholders of record at the close of business on March 17, 2021 may vote at the Annual Meeting.

By Order of the Board of Directors,

Colleen M. McIntosh

Senior Vice President, Corporate Secretary and Chief Governance Officer
CVS Health Corporation
One CVS Drive
Woonsocket, Rhode Island 02895
(principal executive office)
April 2, 2021

Your vote is important.

Our proxy statement and proxy card are being mailed or transmitted to stockholders entitled to vote at the Annual Meeting beginning on or about April 2, 2021. Whether or not you plan to attend the Annual Meeting, please vote your shares. In addition to voting by mail or during the Annual Meeting by following the instructions available on the Annual Meeting website, stockholders of record have the option of voting by telephone or via the Internet. If your shares are held in the name of a bank, broker or other holder of record (i.e., in “street name”), please read your voting instructions to see which of these options are available to you. Even if you are attending the Annual Meeting virtually, we encourage you to vote in advance by Internet, phone or mail.

We are pleased to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rules that allow issuers to furnish proxy materials to their stockholders on the Internet. As a result, beginning on or about April 2, 2021, we are mailing a notice of Internet availability to many of our stockholders instead of paper copies of our proxy statement and our 2020 Annual Report, which contains our Annual Report on Form 10-K for the year ended December 31, 2020, including our financial statements. The notice contains instructions on how to access those documents over the Internet. The notice also contains instructions on how stockholders can receive a paper copy of our proxy materials, including the proxy statement, our 2020 Annual Report and proxy card.

2021 Proxy Statement

Table of Contents

The Value We Create

Financials		2020 Highlights

* Adjusted EPS is a non-GAAP measure. See Annex A to this proxy statement.		2020: Delivered strong performance during a challenging year • Delivered GAAP diluted EPS of $5.47 and Adjusted EPS of $7.50* • Achieved run-rate integration synergies of over $900 million • Generated strong cash flow from operations of $15.9 billion • On track to achieving our 2022 leverage ratio target Enhancing the consumer experience through expansion of digital services and new approaches to meeting consumer needs • Delivering new market solutions in response to the COVID-19 pandemic, including testing and vaccines • Seamlessly connecting digital services and platforms with in-person, virtual and home care to create a holistic and personalized consumer experience at scale • Providing care in non-traditional settings with the ability to link to physical assets • Continuing HealthHUB expansion nationally with additional health services capabilities • Offering help with better management of chronic conditions through targeted care management programs, such as Transform Diabetes Care^®, Transform Oncology Care^® and the CVS Kidney Care^® program Achieving sustainable growth by demonstrating integrated value of unique portfolio of health products and services • Expanding new innovative, consumer-oriented solutions to improve health, lower medical costs and improve outcomes • Growing membership while also expanding health care services to existing customers

2	CVS Health

Table of Contents

Our COVID-19 Response

CVS Health is uniquely positioned to help the country through the COVID-19 pandemic. The Company has focused its resources on the well-being and safety of employees, consumers and the communities it serves. The following are key actions taken through mid-February 2021:

Employees
•	Providing regular supply of personal protective equipment and adding safety features to retail stores.
•	Provided enhanced benefits, including bonuses to frontline employees, dependent care, paid sick leave for part-time employees and paid time off to employees who test positive or are quarantined due to exposure.
•	Hired over 15,000 clinicians and pharmacy technicians in the fourth quarter of 2020 as part of our readiness investments.

Consumers and Members
•	Proactively reached out to over one million most at-risk members for COVID-19.
•	Opened crisis response line for members experiencing anxiety related to COVID-19 and expanded 24/7 access to Aetna Nurse Medical Line for Aetna and Caremark members.
•	Expanded telehealth options offered by MinuteClinic to help patients access safe, affordable and convenient non-emergency care.
•	Extended maintenance prescriptions and waived early refill limits to support medication adherence.
•	Waived fees associated with prescription home delivery and associated front store products.

Plan Sponsors
•	Launched Return Ready, a comprehensive configurable and integrated end-to-end COVID-19 testing solution to assist employers and universities with the return of their employees, students and staff.
•	Provided assistance through premium credits.

Providers
•	Waived advance approvals, streamlined credentialing process, relaxed telemedicine policies and removed prior authorization requirements. Offering flexible plan designs to help reduce financial burdens.

Communities
•	Administe

SEC Form DEF 14A filed by CVS Health Corporation