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

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Message from Our Chair and Our Chief Executive Officer		1
Notice of Annual Meeting of Stockholders		3
Proxy Statement Highlights		4
Corporate Governance and Related Matters		9
	Item 1: Election of Directors	9
The Board’s Role and Activities in 2018		20
Board Structure and Processes		23
Committees of the Board as of the Annual Meeting		24
Board Meetings and Attendance		31
Non-Employee Director Compensation		31
Audit Committee Matters		33
	Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm for 2019	33
Executive Compensation and Related Matters		35
	Item 3: Say on Pay, a Proposal to Approve, on an Advisory Basis, the Company’s Executive Compensation	35
Letter from the Management Planning and Development Committee		37
Compensation Committee Report		37
Compensation Discussion and Analysis		38
Summary		38
Business and Performance Highlights		42
Detailed Program Discussion		44
Compensation of Named Executive Officers		63
Important Information Regarding the Presentation of Executive Compensation		63
Summary Compensation Table		63
Grants of Plan-Based Awards		66
Outstanding Equity Awards at Fiscal Year-End		67
Option Exercises and Stock Vested		69
Pension Benefits		69
Nonqualified Deferred Compensation		70
Payments/(Forfeitures) Under Termination Scenarios		72
CEO Pay Ratio		75
Stockholder Proposal		76
	Item 4: Stockholder Proposal Regarding Exclusion of Legal or Compliance Costs from Financial Performance Adjustments for Executive Compensation	76
Executive Officers and Ownership of and Trading in Our Stock		79
Executive Officers of CVS Health		79
Executive Officer and Director Stock Ownership Requirements		80
Share Ownership of Directors and Certain Executive Officers		81
Share Ownership of Principal Stockholders		82
Section 16(a) Beneficial Ownership Reporting Compliance		82
Other Information		83
Information About the 2019 Annual Meeting and Voting		83
Stockholder Proposals and Other Business for Our Annual Meeting in 2020		85
Other Matters		85
Annex A		A-1

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Notice of Annual Meeting of Stockholders

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Proxy Statement Highlights

This summary highlights selected information in this Proxy Statement – please review the entire document before voting.

All of our Annual Meeting materials are available in one place at www.cvshealthannualmeeting.com. There, you can download electronic copies of our Annual Report and Proxy Statement, and use the link to vote.

Voting Items

	Board Recommendation			Further information
Item 1 Election of directors		FOR each director nominee	Our 16 directors are seasoned leaders who bring a mix of skills and qualifications to the Board	◥	9-17
Item 2 Ratify the appointment of the Company’s independent registered public accounting firm for 2019		FOR	Based on its recent evaluation, our Audit Committee believes that the retention of Ernst & Young LLP is in the best interests of the Company and its stockholders	◥	33-34
Item 3 Say on pay - an advisory vote on the approval of the Company’s executive compensation		FOR	Our executive compensation program reflects our unwavering commitment to paying for performance and reflects feedback received from stockholder outreach	◥	35-36
Item 4 Stockholder proposal regarding exclusion of legal or compliance costs from financial performance adjustments for executive compensation		AGAINST	The proposal is overly restrictive and broad, preventing the Board from exercising discretion to consider important additional factors. Further, we believe that our approach to incentive compensation for our senior executives, which considers individual results, company performance and the values set forth in our Code of Conduct, is an appropriate way to align the interests of our senior executives with the long-term interests of our stockholders	◥	76-78

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Proxy Statement Highlights  The CVS Health Board

The CVS Health Board

You are asked to vote on the election of the following 16 nominees to serve on the Board of Directors of CVS Health. All directors are elected by a majority of votes cast, and all presently serve on the CVS Health Board. The information reflected below is as of our Annual Meeting date, May 16, 2019.

			Director Since		Other Public Company Boards	CVS Health Committees
	Name, Primary Occupation	Age		Independent		A	I&F	MP&D	N&CG	MA	E
	Fernando Aguirre Former Chairman, President and CEO of Chiquita Brands International, Inc.	61	2018	YES	1
	Mark T. Bertolini Former Chairman and CEO of Aetna Inc.	62	2018	NO	1
	Richard M. Bracken Former Chairman and CEO of HCA Holdings, Inc.	66	2015	YES	None
	C. David Brown II Partner & Member of Executive Committee of Nelson Mullins Riley & Scarborough	67	2007	YES	1
	Alecia A. DeCoudreaux President Emerita of Mills College and Former Executive at Eli Lilly and Company	64	2015	YES	None
	Nancy-Ann M. DeParle1 Co-Founding Partner of Consonance Capital Partners, LLC and Former Director of White House Office of Health Reform	62	2013	YES	1
	David W. Dorman Chair of the Board of CVS Health Corporation and Former Chairman and CEO of AT&T Corporation	65	2006	YES	1
	Roger N. Farah Chairman of Tiffany & Co. and Former Executive at Tory Burch and Ralph Lauren	66	2018	YES	3
	Anne M. Finucane Vice Chairman and Member of the Executive Management Team of Bank of America Corporation	66	2011	YES	None
	Edward J. Ludwig Former Chairman and CEO of Becton, Dickinson and Company	67	2018	YES	1
	Larry J. Merlo President and CEO of CVS Health Corporation	63	2010	NO	None
	Jean-Pierre Millon Former President and CEO of PCS Health Systems, Inc.	68	2007	YES	None
	Mary L. Schapiro Vice Chair of Public Policy and Special Advisor to the Chairman of Bloomberg L.P.	63	2017	YES	1
	Richard J. Swift2 Former Chairman, President and CEO of Foster Wheeler Ltd.	74	2006	YES	2
	William C. Weldon Former Chairman and CEO of Johnson & Johnson	70	2013	YES	2
	Tony L. White Former Chairman, President and CEO of Applied Biosystems, Inc.	72	2011	YES	1

	Member		A	Audit		MP&D	Management Planning and Development		MA	Medical Affairs
	Committee Chair		I&F	Investment and Finance		N&CG	Nominating and Corporate Governance		E	Executive

1	Ms. DeParle will become Chair of the Nominating and Corporate Governance Committee and a member of the Executive Committee at the time of the Annual Meeting.
2	At the time of the Annual Meeting, Mr. Swift will be retired from two of the four other public company boards of directors on which he currently sits.

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Proxy Statement Highlights  The CVS Health Board

SELECTING OUR DIRECTORS

Director Independence			Director Tenure				Financial Expertise
14 Independent	2 Not Independent		7 0-3 years	4 4-7 years	5 >7 years		12 Financial Experts	4 Financially Literate
14 directors, including our Chair, are independent of the Company and management. Mr. Merlo, our President and CEO, and Mr. Bertolini, former Chairman and CEO of Aetna, are our only non-independent directors.			Our directors bring a balance of experience and fresh perspective to our boardroom. The average tenure of our directors is 5.7 years.				Five members of our Audit Committee are designated Audit Committee Financial Experts. Seven other board members have qualifications to be financial experts, and the remainder are financially literate.

DIRECTOR SKILLS AND EXPERIENCE

Our directors possess relevant experience, skills and qualifications that contribute to a well-functioning Board to effectively oversee the Company’s strategy and management. Our directors’ principal areas of expertise include:

	11/16			13/16			8/16
Business Development and Corporate Transactions			Health Care and Regulated Industries			Public Company Board Service
	8/16			8/16			7/16
Business Operations			International Business Operations			Public Policy and Government Affairs
	8/16			12/16			10/16
Corporate Governance			Leadership (Current or Former CEOs)			Risk Management
	13/16			4/16			5/16
Finance			Legal and Regulatory Compliance			Technology and Innovation

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Proxy Statement Highlights  The CVS Health Board

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

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Proxy Statement Highlights  The CVS Health Board

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.

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. For more information on corporate governance at CVS Health, please refer to pages 9-32 of this proxy statement and to our website at http://investors.cvshealth.com/corporate-governance.

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Corporate Governance and Related Matters

	Item 1: Election of Directors
	Our Board of Directors has nominated 16 candidates for election as directors at the Annual Meeting. All 16 nominees currently serve as directors. If elected, each nominee will hold office until the next annual meeting. The Nominating and Corporate Governance Committee believes that the Board is well-balanced and that it fully and effectively addresses the Company’s needs. All of our nominees are seasoned leaders, the majority of whom are or were chief executive officers or other senior executives, who bring to the Board skills, qualifications and perspectives gained during their tenure at a vast array of public companies, private companies, non-profits, governmental and regulatory agencies and other organizations. We have indicated below for each nominee certain of the experience, qualifications, attributes or skills that led the Committee and the Board to conclude that the nominee should continue to serve as a director. Please note that for each director we have only listed the core attributes that the Board considered to be most relevant to each nominee. Each director nominee possesses qualifications in addition to those listed under his or her name.
		The Board of Directors unanimously recommends a vote FOR the election of all director nominees.

2019 Board of Directors

1 Richard Swift	2 Jean-Pierre Millon	3 Fernando Aguirre	4 Alecia DeCoudreaux	5 Edward Ludwig	6 Tony White
7 Roger Farah	8 Larry Merlo	9 David Dorman	10 Anne Finucane	11 David Brown	12 Mary Schapiro
13 Mark Bertolini	14 Nancy-Ann DeParle	15 William Weldon	16 Richard Bracken

For more information about our directors, please refer to pages 10-17 of this proxy statement.

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Corporate Governance and Related Matters  Item 1

BIOGRAPHIES OF OUR INCUMBENT BOARD NOMINEES

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Director Qualification Criteria; Diversity

Recognizing that the selection of qualified directors is complex and crucial to the long-term success of the Company, the Nominating and Corporate Governance Committee has established in its charter guidelines for the identification and evaluation of candidates for membership on the Board. Under its charter, the Committee recommends to the Board criteria for Board membership and recommends individuals for membership on our Board. The criteria used by the Committee in nominating directors are found in the Committee’s charter and provide that candidates should be distinguished individuals who are prominent in their fields or otherwise possess exemplary qualities that will enable them to effectively function as directors. While the Committee does not believe it appropriate to establish any specific minimum qualifications for candidates, it focuses on the following qualities in identifying and evaluating candidates for Board membership:

●	Background, experience and skills
●	Character, reputation and personal integrity
●	Judgment
●	Independence
●	Diversity
●	Viewpoint
●	Commitment to the Company and service on the Board
●	Any other factors that the Committee may determine to be relevant and appropriate

The Committee makes these determinations in the context of the existing composition of the Board so as to achieve an appropriate mix of characteristics. Consistent with this philosophy, the Committee is committed to including in each search qualified candidates who reflect diverse backgrounds, including diversity of gender and race. The Committee also takes into account all applicable legal, regulatory and stock exchange requirements concerning the composition of the Board and its committees. The Committee reviews these guidelines from time to time as appropriate (and in any event at least annually) and modifies them as it deems appropriate.

The Committee also reviews the composition of the Board in light of the current challenges and needs of the Board and the Company, and determines whether it may be appropriate to add or remove individuals after considering, among other things, the need for audit committee expertise and issues of independence, diversity, judgment, character, viewpoint, reputation, age, skills, background and experience.

The Committee values diversity, which it broadly views in terms of, among other things, gender, race, background and experience, as a factor in selecting members to serve on the Board. Our nominees reflect that diversity, including in terms of race, gender and ethnic background. In addition, to ensure that it has access to a broad range of qualified, experienced and diverse candidates, the Committee may use the services of an independent search firm to help identify and assist in the evaluation of candidates.

Board Evaluation Process

When considering current directors for re-nomination to the Board, the Committee takes into account the performance of each director, which is part of the Committee’s annual Board evaluation process. That process includes individual interviews of each director by our General Counsel, followed by a report summarizing his findings. The Committee then recommends actions for the Board to consider and adopt as it sees fit.

Board Refreshment; Retirement Age

The Committee and the Board believe that setting a retirement age for CVS Health directors is advisable to facilitate the addition of new directors. Accordingly, our Corporate Governance Guidelines provide that no director who is or would be over the age of 74 at the expiration of his or her current term may be nominated to a new term, unless the Board waives the retirement age for a specific director in exceptional circumstances. In the event any waiver is provided, the Board will disclose the rationale for its decision.

In March 2019, the Board approved a waiver of the retirement age for Mr. Swift, who is currently 74. The Board believes that Mr. Swift’s continued leadership as Chair of the Audit Committee is critically important during the first full year following the closing of the Aetna Transaction. Oversight of the Company’s financial statements, and its internal audit and risk management functions, during the post-merger period will benefit from Mr. Swift’s extensive experience. In making its decision, the Board also considered Mr. Swift’s impending retirement from two of the other boards on which he currently sits.

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Corporate Governance and Related Matters  Item 1

Majority Voting

As discussed elsewhere in this proxy statement, directors are elected by a majority of the votes cast at the Annual Meeting (assuming that the election is uncontested). Under our by-laws, each nominee who is a current director is required to submit an irrevocable resignation, which resignation would become effective upon (1) that person not receiving a majority of the votes cast in an uncontested election, and (2) acceptance by the Board of that resignation in accordance with the policies and procedures adopted by the Board. The Board, acting on the recommendation of the Committee, will no later than at its first regularly scheduled meeting following certification of the stockholder vote, determine whether to accept the resignation of the unsuccessful incumbent. Absent a determination by the Board that a compelling reason exists for concluding that it is in the best interests of the Company for an unsuccessful incumbent to remain as a director, the Board will accept that person’s resignation. In the event any resignation is not accepted, the Board will disclose the rationale for its determination.

Compensation Committee Interlocks and Insider Participation

As of March 21, 2019, the members of the Management Planning and Development Committee are Mr. Brown (Chair), Mr. Dorman, Mr. Farah, Ms. Finucane, Mr. Weldon and Mr. White. None of the members of the Management Planning and Development Committee has ever been an officer or employee of the Company. There are no interlocking relationships between any of our executive officers and any Management Planning and Development Committee member.

Stockholder Submission of Nominees

The Committee will consider any director candidates proposed by stockholders who submit a written request to our Corporate Secretary (including via our proxy access by-law, described below). All candidates should meet the Director Qualification Criteria, discussed above. The Committee evaluates all director candidates and nominees in the same manner regardless of the source. If a stockholder would like to nominate a person for election or re-election to the Board, he or she must provide notice to the Company as provided in our by-laws and described in this proxy statement. The notice must include a written consent indicating that the candidate is willing to be named in the proxy statement as a nominee and to serve as a director if elected and any other information that the SEC would require to be included in a proxy statement when a stockholder submits a proposal. See “Other Information – Stockholder Proposals and Other Business for Our Annual Meeting in 2020” for additional information related to proposals, including any nominations, for our 2020 Annual Meeting.

Proxy Access

CVS Health has had a proxy access by-law since January 2016. The key terms of its proxy access by-law are:

	A stockholder, or a group of up to 20 stockholders, owning at least 3% of the Company’s outstanding common stock continuously for at least 3 years	May nominate and include in the Company’s proxy materials director nominees constituting up to the greater of 2 nominees or 20% of the Board	Provided that the stockholders and the nominees satisfy the requirements specified in the Company’s by-laws

Independence Determinations for Directors

Under our Corporate Governance Guidelines, a substantial majority of our Board must be comprised of directors who meet the director independence requirements set forth in the Corporate Governance Rules of the New York Stock Exchange (NYSE) Listed Company Manual. Under NYSE Rules, no director qualifies as “independent” unless the Board affirmatively determines that the director has no material relationship with the Company.

Our Board has adopted categorical standards to assist in making director independence determinations. Any relationship that falls within the following standards or relationships will not, in itself, preclude a determination of independence. These categorical standards are set forth in Annex A to the Company’s Corporate Governance Guidelines, which are available on our website at http://investors.cvshealth.com/corporate-governance/documents or upon request to our Corporate Secretary.

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Corporate Governance and Related Matters  The Board’s Role and Activities in 2018

2019 Determinations
The Nominating and Corporate Governance Committee of the Board undertook its annual review of director and nominee independence in March 2019. The Committee recommended and the Board determined that each of Mmes. DeCoudreaux, DeParle, Finucane and Schapiro, and each of Messrs. Aguirre, Bracken, Brown, Dorman, Farah, Ludwig, Millon, Swift, Weldon and White, is independent. The Committee recommended and the Board determined that Mr. Bertolini is not independent due to his leadership of Aetna until the closing of the merger in November 2018. Mr. Merlo is not an independent director because of his employment as President and CEO of the Company.

The Board’s Role and Activities in 2018

The Board acts as the ultimate decision-making body of the Company and advises and oversees management, which is responsible for the day-to-day operations and management of the Company. In carrying out its responsibilities, the Board reviews and assesses CVS Health’s long-term strategy and its strategic, competitive and financial performance.

The Board oversaw the transformational Aetna Transaction, which closed on November 28, 2018. The Board believes that the Aetna Transaction is a key aspect of the Company’s strategy to create an innovative health care model that addresses many of the issues facing the nation’s health care system and furthers the Company’s purpose of helping people on their path to better health. CVS Health’s revenues in 2018 increased by 5.3 percent to a record $194.6 billion, and the Company continued to generate significant cash flow in 2018, with cash flow from operations totaling $8.9 billion. The Board returned over $2 billion to stockholders in 2018 based on a cash dividend of $2.00 per share. The Company has a clear line of sight to deliver more than $750 million of synergies in year two following the Aetna Transaction, and the Board is monitoring progress toward that goal.

THE BOARD’S ROLE IN STRATEGY AND SUCCESSION PLANNING

The Board reviews the Company’s financial performance on a regular basis at Board meetings and through periodic updates, with a particular focus on peer and competitive comparisons. The Board also periodically reviews the Company’s long-term strategy, and assesses its strategic, competitive and financial performance, on both an absolute basis and in relation to the performance, practices and policies of its peers and competitors. While the Board receives updates regarding strategic matters throughout the year, at least one Board meeting per year is focused almost entirely on the Company’s short- and long-term strategic direction. The Board receives reports from management and expert speakers are often invited to present to the Board. At this meeting the Board provides input and oversight on short-term strategic goals and sets the long-term strategic direction of the Company.

The Board also reviews the Company’s succession planning, including succession planning in the case of the incapacitation, retirement or removal of the CEO. In that regard, the CEO provides an annual report to the Board recommending and evaluating potential successors, along with a review of any development plans recommended for such individuals. The CEO also provides to the Board, on an ongoing basis, his recommendation as to a successor in the event of an unexpected emergency. The Board also reviews succession planning with respect to the Company’s other key executive officers.

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Corporate Governance and Related Matters  The Board’s Role and Activities in 2018

THE BOARD’S ROLE IN RISK OVERSIGHT

The Board’s role in risk oversight involves both the full Board and its Committees, as well as members of management.

Risk Oversight Framework

Board of Directors ●Focuses on understanding Company-wide risks and ensuring that risk matters are appropriately brought to the Board and/or its Committees for review. ●Ensures that the Corporate Governance Guidelines, the Board’s leadership structure and the Board’s practices facilitate the effective oversight of risk and communication with management.

●	The CFO, Treasurer, Chief Compliance Officer, Chief Audit Executive and General Counsel periodically report on the Company’s risk management policies and practices, including risk assessments and evaluation of compliance and legal risks to relevant Board Committees and to the full Board. The Board is regularly updated on specific risks in the course of its review of corporate strategy, business plans and reports to the Board by its respective Committees.
●	As part of CVS Health’s ongoing Enterprise Risk Management process, each of our major business units is responsible for identifying risks that could affect achievement of business goals and strategies, assessing the likelihood and potential impact of significant risks, prioritizing risks and actions to be taken in mitigation and/or response, and reporting to management’s Executive Risk Steering Committee on actions to monitor, manage and mitigate significant risks.
●	The Audit Committee is charged with the primary role in carrying out risk oversight responsibilities on behalf of the Board. Pursuant to its charter, the Audit Committee annually reviews our policies and practices with respect to risk assessment and risk management, including discussing with management the Company’s major risk exposures and the steps that have been taken to monitor and mitigate such exposures. The Audit Committee also reviews CVS Health’s major financial risk exposures as well as major operational, compliance, reputational and strategic risks, including developing steps to monitor, manage and mitigate those risks. In 2019 responsibility for oversight of risks related to cybersecurity and data and information security governance was transferred from the Audit Committee to the Nominating and Corporate Governance Committee, whose members possess expertise regarding those subjects.
●	Each of our other Board Committees is responsible for oversight of risk management practices for categories of risks relevant to their functions. For example, the Management Planning and Development Committee has oversight responsibility for our overall compensation structure, including review of its compensation practices, with a view to assessing associated risk.

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Corporate Governance and Related Matters  The Board’s Role and Activities in 2018

See “Compensation Risk Assessment” on page 29 for additional information. The Medical Affairs Committee reviews and assesses risks arising from the Company’s provision of health care services across the enterprise, including safety issues related to opioid abuse, and the steps taken to monitor and mitigate those risks. The Investment and Finance Committee reviews risks related to the Company’s investment portfolio and its capital and financial resources.

●

The Board considers its role in risk oversight when evaluating our Corporate Governance Guidelines and its leadership structure. Both the Corporate Governance Guidelines and the Board’s leadership structure facilitate the Board’s oversight of risk and communication with management. Our independent Chairman and our CEO are focused on CVS Health’s and the Board’s risk management efforts and ensure that risk matters are appropriately brought to the Board and/or its Committees for their review.

THE BOARD’S ROLE IN CORPORATE SOCIAL RESPONSIBILITY OVERSIGHT

The Nominating and Corporate Governance Committee of the Board of Directors, pursuant to its charter, is formally charged with oversight of the Company’s Corporate Social Responsibility (CSR) strategy and performance. The Company’s Senior Vice President of CSR and Philanthropy regularly updates the Committee on CSR risks and opportunities, and the Committee provides feedback and direction on the Company’s approach to key issues. The Committee also reviews the annual CSR Report, refreshed for 2018 as Better Health, Better Community, Better World, prior to its publication. It is available on the Company’s website at https://cvshealth.com/social-responsibility.

STOCKHOLDER OUTREACH

The Company values each of its stockholders and their opinions, and we regularly interact with our stockholders on a variety of matters. In the latter part of 2018 and early 2019, at the direction of the Board, the Company engaged in a stockholder outreach effort to best understand and address any concerns stockholders might have. Additional details regarding our outreach effort and the actions taken are found on pages 8, 35 and 39 of this proxy statement.

Much of our dialogue with stockholders was focused on corporate governance, financial results, social responsibility issues such as the Company’s response to the opioid abuse crisis, and executive compensation matters. Matters related to the Aetna Transaction were also discussed with our stockholders during the outreach process following the closing of that transaction.

CONTACT WITH THE BOARD, THE CHAIR AND OTHER INDEPENDENT DIRECTORS

Stockholders and other parties interested in communicating directly with the Board, the independent Chair of the Board or with the independent directors as a group may do so by writing to CVS Health Corporation, One CVS Drive, MC 1160, Woonsocket, RI 02895. The Nominating and Corporate Governance Committee has approved a process for handling letters received by the Company and addressed to the Board, the independent Chair of the Board or to independent members of the Board. Under that process, our Corporate Secretary reviews all such correspondence and regularly forwards to the Board copies of all correspondence that, in her opinion, deals with the functions of the Board or its Committees or that she otherwise determines requires their attention.

CODE OF CONDUCT

CVS Health has adopted a Code of Conduct that applies to all of our directors, officers and employees, including our CEO, CFO and Chief Accounting Officer. Our Code of Conduct is available on our website at http://investors.cvshealth.com and will be provided to stockholders without charge upon request to our Corporate Secretary. We intend to post amendments to, or waivers of, our Code of Conduct (to the extent applicable to our executive officers or directors) at that location on our website within the timeframe required by SEC rules.

RELATED PERSON TRANSACTION POLICY

In accordance with SEC rules, the Board has adopted a written Related Person Transaction Policy. The Nominating and Corporate Governance Committee has been designated as the Committee responsible for reviewing, approving or ratifying any related person transactions under the Policy, since it already has responsibility for evaluating the impact of conflicts involving directors on independence. The Nominating and Corporate Governance Committee will review the Policy on an annual basis and will amend the Policy as it deems appropriate.

Pursuant to the Policy, all executive officers, directors and director nominees are required to notify our General Counsel or Corporate Secretary of any financial transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships, involving the Company in which an executive officer, director, director nominee, five percent beneficial owner or any immediate family member of such a person has a direct or indirect material interest.

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Corporate Governance and Related Matters  Board Structure and Processes

The General Counsel or the Corporate Secretary presents any reported new related person transactions, and proposed transactions involving related persons that might be deemed to be related person transactions, to the Nominating and Corporate Governance Committee at its next regular meeting, or earlier if appropriate. The General Counsel or Corporate Secretary provides the Nominating and Corporate Governance Committee with an analysis and recommendation regarding each reported transaction. The Committee reviews these transactions, including the analysis and recommendation. The Nominating and Corporate Governance Committee may conclude, upon review of all relevant information, that the transaction does not constitute a related person transaction, and thus that no further review is required under the Policy. If after its review, the Nominating and Corporate Governance Committee determines not to approve or ratify a related person transaction, the transaction will not be entered into or continued, as the Committee shall direct. The Nominating and Corporate Governance Committee may ratify or approve a related person transaction if, upon consideration of all relevant information, the transaction is in, or not inconsistent with, the best interests of the Company and its stockholders.

In March 2019, the Nominating and Corporate Governance Committee reviewed certain transactions reported under the Policy and determined that no transactions constituted reportable related person transactions under the Policy.

CORPORATE GOVERNANCE GUIDELINES

The Board has adopted Corporate Governance Guidelines, which are available on our investor relations website at http://investors.cvshealth.com/corporate-governance/documents and are also available to stockholders at no charge upon request to our Corporate Secretary. These Guidelines meet the listing standards adopted by the NYSE, on which our common stock is listed.

Board Structure and Processes

THE BOARD’S LEADERSHIP STRUCTURE

David W. Dorman is our independent Chair of the Board. The independent Chair presides at all meetings of the Board, and works with our CEO to set Board meeting agendas and the schedule of Board meetings. In addition, the independent Chair has the following duties and responsibilities:

●	the authority to call, and to lead, independent director sessions;
●	the ability to retain independent legal, accounting or other advisors in connection with these sessions;
●	the responsibility to facilitate communication and serve as a liaison between the CEO and the other independent directors; and
●	the duty to advise the CEO of the informational needs of the Board.

The Board believes that Board independence and oversight of management will be maintained effectively through the independent Chair, the Board’s composition and its Committee system.

DIRECTOR EDUCATION

CVS Health’s Corporate Governance Guidelines establishes recommendations for director education.

All new members of the Board are encouraged to participate in the Company’s orientation program for directors. Other directors may also attend the orientation program. As newly elected directors following the Aetna Transaction, each of Messrs. Aguirre, Bertolini, Farah and Ludwig took part in an orientation program to familiarize them with the CVS Health businesses and board processes.

In addition, during the September/October Board meeting, the directors participate in an in-depth review of the strategy of the Company and have the opportunity to meet with senior management and gain detailed insights into the business. At these meetings, external speakers are often invited to share insights, best practices and emerging trends with the Board.

All directors are encouraged to participate in continuing education programs, with any associated expenses to be reimbursed by the Company, in order to stay current and knowledgeable about the business of the Company.

Such orientation and continuing education programs are overseen by the Nominating and Corporate Governance Committee of the Board.

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

Committees of the Board as of the Annual Meeting

CVS Health’s Board oversees and guides the Company’s management and its business. Committees support the role of the Board on issues that are better addressed by smaller, more focused subsets of Directors.

For most of 2018, the Board utilized five standing committees. The Investment and Finance Committee was added in November 2018 upon the closing of the Aetna Transaction, and that Committee held its first meeting in January 2019. The table below presents, as of May 16, 2019, the standing Committees of the Board, the membership of such Committees and the number of times each such Committee met in 2018. For further details regarding Committee membership and activities see pages 25-31.

Name

Audit Committee

Investment and Finance Committee

Management Planning and Development Committee

Nominating and Corporate Governance Committee

Medical Affairs Committee

Executive Committee

Fernando Aguirre

Mark T. Bertolini

Richard M. Bracken

C. David Brown II

Alecia A. DeCoudreaux

Nancy-Ann M. DeParle

David W. Dorman

Roger N. Farah

Anne M. Finucane

Edward J. Ludwig

Larry J. Merlo

Jean-Pierre Millon

Mary L. Schapiro

Richard J. Swift

William C. Weldon

Tony L. White

2018 Meetings

10

0

6

4

4

2

	Committee Chair
*	Audit Committee Financial Expert
†	Mr. Aguirre joined the Audit and Nominating and Corporate Governance Committees in November 2018.
‡	Ms. DeParle will become Chair of the Nominating and Corporate Governance Committee and a member of the Executive Committee at the time of the 2019 Annual Meeting.
**	Mr. Farah joined the Management Planning and Development and Medical Affairs Committees in November 2018.
●	Mr. Ludwig joined the Audit, Investment and Finance and Executive Committees and assumed the role of Chair of the Investment and Finance Committee in November 2018.

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

Management Planning and Development Committee

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

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Corporate Governance and Related Matters  Committees of the Board as of the Annual Meeting

Medical Affairs Committee (formerly Patient Safety and Clinical Quality Committee)

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Corporate Governance and Related Matters  Board Meetings and Attendance

Executive Committee

Board Meetings and Attendance

During 2018, there were eight meetings of the Board. Directors are expected to make every effort to attend the Annual Meeting, all Board meetings and the meetings of the Committees on which they serve. All of our directors at the time of our 2018 Annual Meeting of Stockholders attended that Annual Meeting. In 2018, all directors attended more than 75% of the meetings of the Board and the Committees of which he or she was a member, with attendance averaging over 99%.

One Board meeting was our annual meeting of independent directors. The independent directors also regularly hold executive sessions during regularly scheduled Board meetings in which our management does not participate.

Non-Employee Director Compensation

CVS Health’s approach to compensating non-employee directors for Board service is to provide directors with an annual retainer comprised of a mandatory 75% paid in shares of our common stock and 25% paid in cash (or up to 100% stock at the director’s election). The payment of a significant portion of the annual retainer, and additional retainers as outlined below, in our common stock is consistent with our policy of using equity compensation to better align directors’ interests with stockholders. This also enhances the directors’ ability to meet and continue to comply with our stock ownership guidelines described below.

For the 2018-2019 Board year, the total annual retainer for non-employee directors remained $280,000, consisting of shares of our stock valued at $210,000 (the mandatory annual stock retainer) and a cash payment of $70,000 (unless the director elected to receive up to 100% of the annual retainer in shares of our common stock).

Additional retainers were paid to the Chairs of the Committees and the Board as follows: Audit, $25,000; Investment and Finance, $15,000 (pro-rated to $7,500 for the 2018-2019 Board year); Management Planning and Development, $20,000; Medical Affairs, $15,000; Nominating and Corporate Governance, $15,000; and Independent Chair of the Board, $275,000.

At least 75% of each additional retainer must be paid in shares of our common stock, with the remaining 25% paid in cash, unless the director elects to be paid an additional percentage in shares. Each retainer was paid in two equal installments, in June and November of 2018. Directors may elect to defer receipt of shares, and deferred shares are credited with dividend reinvestment shares to the extent dividends are paid to stockholders. There are no meeting fees.

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Corporate Governance and Related Matters  Non-Employee Director Compensation

On November 6, 2018, the Management Planning and Development Committee and Exequity LLP reviewed a director compensation study prepared by Exequity, and the Board approved the Director compensation package for non-employee Directors for the 2019-2020 Board year. The Board retainer will be increased to $310,000, with at least 75% paid in stock, and all of the Chair retainers will remain the same as the current Board year.

Non-Employee Director Retainer Mix

ALL OTHER COMPENSATION AND BENEFITS

Directors are eligible to participate in the employee discount program and are subject to the same terms of the program as our employees. Directors are generally reimbursed for business expenses incurred directly in connection with their roles and duties on the Board, such as services provided by an executive assistant, travel, meals and lodging. We allow all directors to enroll themselves and their eligible dependents in our prescription drug benefit program, paying the same premium rates as employees. If a director retires from the Board with at least five years of service, we will allow continued participation in the prescription drug benefit plan for life, but the director must bear the full cost of the premium after retirement.

The following table shows amounts paid to each of our non-employee directors in 2018.

Non-Employee Director Compensation – 2018

Name		Fees Earned and Paid in Cash1 ($)		Cash Fees Elected to be Paid in Stock2 ($)		Stock Awards2 ($)		All Other Compensation3 ($)		Total ($)
Fernando Aguirre		35,007		—		104,993		—		140,000
Mark T. Bertolini		35,007		—		104,993		—		140,000
Richard M. Bracken		73,913		—		221,087		2,043		297,043
C. David Brown II		0		75,000		225,000		2,043		302,043
Alecia A. DeCoudreaux		70,083		—		209,917		973		280,973
Nancy-Ann M. DeParle		70,083		—		209,917		—		280,000
David W. Dorman		100		142,400		427,500		—		570,000
Roger N. Farah		35,007		—		104,993		—		140,000
Anne M. Finucane		70,083		—		209,917		—		280,000
Edward J. Ludwig		36,888		—		110,612		—		147,500
Jean-Pierre Millon		70,083		—		209,917		2,043		282,043
Mary L. Schapiro		0		70,000		210,000		—		280,000
Richard J. Swift		76,250		—		228,750		2,043		307,043
William C. Weldon		0		70,000		210,000		—		280,000
Tony L. White		70,083		—		209,917		2,043		282,043

1	The amounts shown include cash payments made in lieu of fractional shares to Mmes. DeCoudreaux, DeParle and Finucane and Messrs. Aguirre, Bertolini, Bracken, Dorman, Farah, Ludwig, Millon, Swift and White.
2	These awards are fully vested at grant and the amounts shown represent both the fair market value and the full fair value at grant. During 2018, each director receiving a 12-month retainer received 2,970 shares of stock with a total value of $210,000 (the mandatory annual stock retainer) on the date of grant; each director electing to receive the remaining annual retainer in stock also received 990 shares valued at $70,000 on the date of grant. Two directors elected to receive their additional chairperson retainers in stock in lieu of cash. The four directors elected at the time of the Aetna Transaction each received a six-month retainer consisting of 1,308 shares valued at $105,000; Mr. Ludwig also received 70 shares valued at $5,625 as a six-month retainer for his service as Chair of the Investment and Finance Committee; the remainder of each such retainer was paid in cash. As of December 31, 2018, our directors had deferred receipt of shares of Company common stock as follows: Mr. Brown, 59,107 shares; Ms. DeCoudreaux, 10,667 shares; Ms. DeParle, 3,470 shares; Mr. Dorman, 17,047 shares; Ms. Finucane, 5,750; Ms. Schapiro, 7,887; Mr. Swift, 62,371 shares; and Mr. Weldon, 21,525 shares.
3	Represents Company contributions for director health and prescription benefits.

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Audit Committee Matters

	Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm for 2019
	The Audit Committee of the Company’s Board of Directors has appointed Ernst & Young LLP (Ernst & Young), an independent registered public accounting firm, to audit the financial statements of the Company for the fiscal year ending December 31, 2019, and recommended to our full Board that it approve that appointment. We are submitting the appointment by the Committee to you for your ratification.
		The Board of Directors unanimously recommends a vote FOR this proposal.

AUDIT COMMITTEE REPORT

During 2018, the Committee was composed of either five or six independent directors, with Messrs. Aguirre and Ludwig joining the Committee after their election to the Board in November 2018 and Ms. DeParle rotating off the Committee at that time. Set forth below is the report of the current Committee on its activities with respect to CVS Health’s audited financial statements for the fiscal year ended December 31, 2018 (audited financial statements).

●	The Committee has reviewed and discussed the audited financial statements with management;
●	The Committee has discussed with Ernst & Young, CVS Health’s independent registered public accounting firm, the matters required to be discussed under applicable auditing standards;
●	The Committee has received the written disclosures and the letter from Ernst & Young pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Committee concerning independence, and has discussed with Ernst & Young its independence from the Company; and
●	Based on the review and discussions referred to above and relying thereon, the Committee recommended to the Board of Directors that the audited financial statements be included in CVS Health’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for filing with the SEC.

Richard J. Swift, Chair		Fernando Aguirre		Alecia A. DeCoudreaux		Edward J. Ludwig		Jean-Pierre Millon		Mary L. Schapiro

INDEPENDENT ACCOUNTING FIRM INDEPENDENCE AND FEE APPROVAL POLICY

The Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm. The Committee has retained Ernst & Young as CVS Health’s external audit firm since September 2007. In order to assure continuing external auditor independence, the Committee periodically considers whether there should be a rotation of the audit firm. Further, in conjunction with the mandated rotation of the external audit firm’s lead engagement partner, the Committee and its Chair are directly involved in the selection of Ernst & Young’s new lead engagement partner. Based on its most recent evaluation of Ernst & Young, the members of the Committee believe that the continued retention of Ernst & Young to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders. Among the factors considered by the Committee in reaching this recommendation are the following: the quality of Ernst & Young’s staff, work and quality control; its capability and technical expertise, given the complexity of the Company’s business, including its expertise in the health benefits business acquired by the Company in the Aetna Transaction; its independence from the Company; the quality and candor of its communications with the Company and the Committee; and the benefits of its tenure as auditors, including enhanced audit quality and competitive fees.

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Audit Committee Matters  Item 2

All audit services, audit-related services and tax services were pre-approved by the Committee, and the Committee is ultimately responsible for audit fee negotiations associated with the retention of Ernst & Young. The Committee has considered whether Ernst & Young’s provision of services is compatible with maintaining Ernst & Young’s independence. The Committee’s audit approval policy provides for pre-approval of audit, audit-related and tax services that are specifically described on an annual basis to the Committee and, in addition, individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policy also requires specific approval by the Committee if total fees for audit-related and tax services would exceed total fees for audit services in any fiscal year. The policy authorizes the Committee to delegate to one or more of its members pre-approval authority with respect to permitted services, so long as such pre-approvals are reported to the full Committee at its next scheduled meeting.

Representatives of Ernst & Young will be at the Annual Meeting to answer your questions and will have the opportunity to make a statement if they so desire.

If you do not ratify the appointment of Ernst & Young, the Committee will reconsider its appointment, although in the event of reconsideration the Committee may determine that Ernst & Young should continue in its role. Even if you do ratify the appointment, the Committee retains its discretion to reconsider its appointment if it believes that reconsideration is necessary in the best interest of the Company and the stockholders.

FEES OF INDEPENDENT ACCOUNTING FIRM

The following table summarizes the fees paid to Ernst & Young for services rendered during fiscal 2018 and 2017.

		Fiscal Year Ended 12/31/18 ($)		Fiscal Year Ended 12/31/17 ($)
Audit Fees1		24,210,000		10,530,000
Audit-Related Fees2		2,269,395		1,318,736
Tax Fees3		1,642,816		1,420,837
All Other Fees		—		—

1	Represents the aggregate fees and expenses billed for the audit of our consolidated financial statements and the audit of our internal control over financial reporting for the fiscal year, the reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, audits of our insurance captives, services provided in connection with statutory and regulatory filings for the fiscal year, and consultations on technical matters. Audit fees increased in 2018 due to additional audit procedures associated with the new lease accounting standard, goodwill impairments, debt offering, and the Aetna Transaction.
2	Represents the aggregate fees billed for audit and other services that are typically performed by auditors, including audits of our employee benefit plans, compliance reporting, non-financial metric reporting and certain agreed upon procedures.
3	Includes $152,500 and $170,000 for the years ended December 31, 2018 and 2017, respectively, related to tax compliance and preparation services.

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Executive Compensation and Related Matters

	Item 3: Say on Pay, a Proposal to Approve, on An Advisory Basis, the Company’s Executive Compensation
		The Board of Directors unanimously recommends a vote FOR this proposal.

BACKGROUND

We are asking our stockholders to approve, on an advisory basis, the compensation paid to our Named Executive Officers, as described in the Compensation Discussion and Analysis (CD&A) and the Executive Compensation section of this proxy statement. Although the advisory vote is not binding upon the Company, the Management Planning and Development Committee (referred to in this Item 3 as the Committee), which is responsible for designing and administering our executive compensation program, values our stockholders’ opinions and will continue to consider the outcome of the vote in its ongoing evaluation of our executive compensation program.

At CVS Health, our executive compensation philosophy and practice reflect our unwavering commitment to paying for performance – both short- and long-term. We define performance as the achievement of results against challenging internal financial targets that take into account our results relative to that of our peer companies, as well as industry and market conditions. We believe that our multi-faceted executive compensation plans, with their integrated focus on short- and long-term metrics, provide an effective framework by which progress against our strategic goals may be appropriately measured and rewarded.

OUR 2018 VOTE; STOCKHOLDER OUTREACH

Following our 2018 Annual Meeting of Stockholders, the Committee reviewed the results of the stockholder advisory vote on executive compensation. Approximately 91% of votes were cast in favor of the proposal, an increase from 61% in 2017.

Management and the Board had conducted extensive outreach with our stockholders following our 2017 Annual Meeting to better understand their perspectives on our compensation program, particularly for those who voted against our say-on-pay proposal. As a result of investor feedback, the Committee approved several changes to our compensation program for 2018 in an effort to simplify and enhance the performance-based nature of the program and to increase overall transparency. The 2018 changes followed a number of enhancements made to our executive compensation programs following stockholder feedback in prior years. In the latter part of 2018 and early 2019, we reached out to stockholders representing approximately 41% of our outstanding shares and held calls or meetings with holders of nearly 19% of our outstanding shares, as well as one of the leading proxy advisory firms. During our outreach, we discussed the changes to our executive compensation programs that were put into place in 2018 and received positive feedback.

The Committee had implemented several changes to our 2018 plan design aimed principally at enhancing the performance-based nature of the program and increasing overall transparency, including:

●	denominating long-term incentive plan awards in stock, i.e., performance stock units, or PSUs, rather than denominating them in cash and settling them in stock, which simplifies the reporting of the awards and further aligns the program to our stockholders;
●	enhancing the performance mix of long-term incentives, by replacing time-based restricted stock units with PSUs, and implementing a two-year post-vest holding period for shares delivered under PSUs; and
●	revising the comparator group for measuring relative total shareholder return (TSR) under our Long-Term Incentive Plan (LTIP) from the full S&P 500 to an index of approximately 90 companies that more closely reflects our business.

We are also enhancing the disclosure and providing more insight into the Committee’s evaluation of each executive’s individual goals and performance under the annual incentive plan.

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Executive Compensation and Related Matters  Item 3

OUR 2018 PERFORMANCE AND PAY ACTIONS

In 2018, the Company delivered on our financial expectations. As a result, revenues grew 5.3% and adjusted earnings per share were $7.08,¹ at the top end of our previous guidance range. Earnings (loss) per share on a GAAP basis was $(0.57), due primarily to goodwill impairment charges taken with respect to the Company’s Long-Term Care business. We returned more than $2 billion to stockholders through cash dividends during 2018, but suspended both dividend increases and our stock buyback program in connection with the Aetna Transaction as we take steps to return to our target debt leverage ratio through disciplined capital allocation.

The value of our Named Executive Officers’ compensation is significantly influenced by the value of our stock. Approximately 70% of target total compensation under our program is provided through stock-based pay (stock options, performance stock units and the performance-based LTIP). As a result of our long vesting periods and the two-year holding requirement for net shares issued under the LTIP, the members of our executive team, like our stockholders, have been affected by the decrease in our stock price and only ultimately achieve the full target grant value of their equity compensation by creating long-term stockholder value.

CONCLUSION; RESOLUTION

We urge stockholders to read the letter from the Committee found on page 37 and the CD&A beginning on page 38 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narratives appearing on pages 63-74, which provide detailed information on the compensation of our Named Executive Officers. The Committee and the Board of Directors believe that the policies and procedures articulated in the CD&A are effective in achieving our goals and that the compensation of our Named Executive Officers reported in this proxy statement has contributed to CVS Health’s long-term success.

Stockholders are being asked to vote on the following resolution:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the CVS Health executive officers named in the Summary Compensation Table, as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures).”

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Letter from the Management Planning and Development Committee and Compensation Committee Report

DEAR CVS HEALTH CORPORATION STOCKHOLDER,

As the members of the Board’s Management Planning and Development Committee (for purposes of this letter and the CD&A, the Committee), we are responsible for and highly focused on overseeing the design and implementation of competitive compensation programs that align pay and performance, support our long-term strategic goals, and drive stockholder value.

It was a milestone year for CVS Health. In 2018 we successfully completed our transformational acquisition of Aetna, began effective implementation of our integration strategy, and took important steps toward building the integrated healthcare model that will bring substantial value to our various stakeholders. During this time, we maintained strong financial performance and delivered on our operating expectations. The Committee took into account all of these factors, in addition to the direct feedback we heard from our stockholders, as we implemented the 2018 compensation program and structured the compensation program for 2019.

In 2018, following a thorough review of the compensation program and significant stockholder engagement, the Committee implemented a number of substantive enhancements that both responded to stockholder feedback and continued to support our core compensation principles. These changes were designed to simplify and enhance the performance-based nature of the program, and to increase overall transparency. Stockholder feedback since these changes were implemented, through the 2018 say-on-pay proposal, which received 91% support, and subsequent stockholder engagement in late 2018 and early 2019, has been positive.

We remain firmly committed to incent management to remain focused on drivers of sustainable performance over the long term. As a result of the Aetna Transaction which closed in late 2018 and as our strategy continues to evolve, the Committee has reviewed the performance metrics within our compensation program to ensure appropriate alignment. For 2019, the Committee determined to grant the performance stock units (PSUs) portion of our long-term incentive program following the Company’s Investor Day presentation in June using an EPS growth rate and a leverage ratio as the performance metrics for the awards. We believe these metrics are key to driving long-term, sustained growth and will be critical measures of success for you, our stockholders.

We believe that our compensation programs drive the right behaviors for our executives, which in turn benefits our stockholders by driving our business strategies and goals. We look forward to ongoing dialogue and collaboration with our stockholders as we transform the consumer health care experience.

Compensation Committee Report

We met with management to review and discuss the Compensation Discussion and Analysis (the CD&A). Based on that review and discussion, we recommended to the Board that the CD&A be included in this proxy statement. 

David W. Dorman	Tony L. White	Anne M. Finucane	C. David Brown II (Chair)	William C. Weldon	Roger N. Farah

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Compensation Discussion and Analysis  Summary

Compensation Discussion and Analysis

The CD&A explains how our executive compensation programs are designed and operate with respect to our named executive officers (NEOs or Named Executive Officers), who for 2018 are:

Larry J. Merlo	President and Chief Executive Officer (CEO)
Eva C. Boratto	Executive Vice President (EVP) and Chief Financial Officer (CFO)
Jonathan C. Roberts	EVP and Chief Operating Officer (COO)
Derica W. Rice	EVP and President – CVS Caremark
Thomas M. Moriarty	EVP, Chief Policy and External Affairs Officer and General Counsel
David M. Denton	Former EVP and CFO

In connection with the closing of the Aetna Transaction, David M. Denton left the Company and Eva C. Boratto, formerly CVS Health’s Executive Vice President – Controller and Chief Accounting Officer, was appointed as Executive Vice President and Chief Financial Officer. Ms. Boratto joined the Company in 2010 and has an extensive financial background that spans more than 20 years and includes senior positions in both the pharmaceutical and pharmacy benefit management (PBM) industries.

Derica W. Rice joined the Company on March 30, 2018 and serves as President of CVS Caremark and Executive Vice President of the Company. He previously served as CFO at Eli Lilly and Company.

The CD&A is organized into the following sections:

Summary	◥	page 38
Business and Performance Highlights	◥	page 42
Detailed Program Discussion	◥	page 44

Summary

OUR EXECUTIVE COMPENSATION CORE PRINCIPLES

Five core principles drive our executive compensation philosophy:

I	II	III	IV	V
Support, Communicate and Drive Achievement of our business strategies and goals	Attract and Retain the highest-caliber executive officers by providing compensation opportunities comparable to those offered by other companies with which we compete for business and talent	Motivate High Performance from executive officers in an incentive-driven culture by delivering greater rewards for superior performance and reduced awards for underperformance	Align Interests of our executive officers and our stockholders, and foster an equity ownership environment	Reward Achievement of short-term results as well as long-term stockholder value creation

Management and the Committee believe these principles motivate our executive officers to take personal responsibility for the performance of the business and deliver long-term stockholder value, consistent with CVS Health’s values of Innovation, Collaboration, Caring, Integrity and Accountability.

Our compensation programs:

●	Are tailored to our short- and long-term business strategies and drive performance,
●	Reflect the rapidly changing health care landscape,
●	Drive sustainable performance in an era where human, social, natural, and intellectual capital are joining financial and operating capital as performance drivers, and
●	Operate within strong governance parameters.

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Compensation Discussion and Analysis  Summary

STOCKHOLDER OUTREACH AND CONSIDERATION OF 2018 “SAY ON PAY” VOTE

Following our 2018 Annual Meeting of Stockholders, the Committee reviewed the results of the stockholder advisory vote on executive compensation. Approximately 91% of votes were cast in favor of the proposal, an increase from 61% in 2017. Management and the Board had conducted extensive outreach with our stockholders following our 2017 Annual Meeting to better understand their perspectives on our compensation program, particularly for those who voted against our say-on-pay proposal. As a result of investor feedback, the Committee approved several changes to our compensation program for 2018 in an effort to simplify and enhance the performance-based nature of the program and to increase overall transparency. The 2018 changes followed a number of enhancements made to the program following stockholder feedback in prior years.

In the latter part of 2018 and early 2019, we reached out to stockholders representing approximately 41% of our outstanding shares and had conversations with stockholders who requested engagement representing nearly 19% of our outstanding shares, as well as one of the leading proxy advisory firms. During our outreach, we discussed a range of relevant topics with stockholders, including the changes to our executive compensation programs that were put into place in 2018 and received positive feedback.

2018 Enhancements To Executive Compensation Program

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Compensation Discussion and Analysis  Summary

The above changes are in addition to enhancements made to our compensation program in prior years as a result of stockholder input that remain in effect, including:

●	Adding transparency to the individual component of our annual cash incentive program,
●	Reducing maximum awards under the annual cash incentive program,
●	Providing that dividend equivalents on unvested RSUs (a portion of our long-term incentive program prior to 2018) are only paid out when and if awards vest, and
●	Revising the TSR modifier beginning with the 2017-2019 LTIP performance cycle by applying it in pro-rated quartiles that reduce payouts for performance below the 50th percentile.

COMPENSATION PROGRAM DESIGN

Our pay-for-performance philosophy places a majority of an executive officer’s compensation at risk and emphasizes long-term incentives tied to individual and Company performance as well as continued service. As a result, the only fixed compensation paid is base salary, which represents 9% of the CEO’s total target compensation and no more than 16% of the other NEOs’ total target compensation.

2018 CEO Target Pay Mix

IMPACT OF LTIP PLAN DESIGN CHANGES: TRANSITION IN PSU SETTLEMENT

In 2016, in response to stockholder feedback, the Company moved from an LTIP award that was partially settled in cash to awards denominated in cash and settled 100% in stock. This resulted in a change in our reporting as previously awards were reported half in the year of grant and half in the year of vesting. In accordance with SEC guidance, the LTIP payouts for the 2016 and 2017 grants are reported at the end of the three-year performance period as cash even though they will be settled and paid fully in stock. Although our stockholders generally approved of the design (payment in stock that is subject to a two-year post-vesting holding period), they found the multi-year reporting confusing and that it resulted in an incomplete analysis of our compensation program. To address these concerns, commencing with the 2018 grants, LTIP awards are made in PSUs (LTIP PSUs) that are reported in the year of the grant as stock awards in the Summary Compensation Table (SCT) and Grants of Plan-Based Awards Table.

During the transition period, which includes the payout of the 2016-2018 performance cycle and will continue through the payout of the 2017-2019 performance cycle, there will be timing issues that occur as awards for multiple years will appear in the SCT as follows:

●	Last year’s SCT included the cash portion earned for the 2015-2017 LTIP performance cycle (the stock portion was reported in 2015).
●	The 2018 SCT in this proxy statement includes 100% of the value earned for the 2016-2018 LTIP performance cycle (reported in the “Non-Equity Incentive Plan Compensation” column) and 100% of the grant date fair value at target performance for the awards granted for the 2018-2020 LTIP performance cycle (reported in the “Stock Awards” column).
●	The 2019 SCT in next year’s proxy statement will include 100% of any value earned for the 2017-2019 LTIP performance cycle (reported in the “Non-Equity Incentive Plan Compensation” column) and 100% of the grant date fair value at target performance for the awards granted for 2019-2021 LTIP performance cycle (reported in the “Stock Awards” column).

We will return to normal, single-cycle reporting in the 2020 Summary Compensation Table.

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Compensation Discussion and Analysis  Summary

The table below shows the Committee’s compensation determinations for our CEO for the last three years, and as such is a better and more comparable representation of the CEO’s compensation. This table is different from the SEC-required 2018 SCT that begins on page 63 only in that it removes the double reporting of LTIP awards. For example, the value earned for the 2016-2018 LTIP performance cycle that paid out in 2018, which was granted in 2016, is not included for fiscal 2018 below, but is included in the SCT. As reflected in the table below, the value at target of the compensation to Mr. Merlo in 2018 remained consistent from the prior years.

CEO Annual Compensation Determinations

		Salary ($)		Annual Cash Incentive Award1 ($)		RSU ($)		EBITDA PSU Grant Value ($)		Stock Option Grant Value ($)		LTIP Grant Value2 ($)		All Other Compensation ($)		Total Compensation1 ($)
2018		1,630,000		2,605,000		0		3,374,955		3,374,995		6,749,992		667,156		18,402,098
2017		1,630,000		2,128,800		3,374,960		0		3,374,998		6,750,000		754,106		18,012,859
2016		1,630,000		2,382,000		3,991,931		0		3,999,990		6,750,000		847,456		19,601,377

1	Excludes payout of LTIP awards granted for the following three-year performance periods: 2014-2016, 2015-2017, and 2016-2018. Such payouts were reported in the “Non-Equity Incentive Plan Compensation” column of the SCT for each of the respective years.
2	Includes the LTIP award granted in each respective year at target performance. For 2016 and 2017, the awards were cash-denominated with settlement in shares following the three-year performance period. For 2018, the award was granted as LTIP PSUs.

PAY FOR PERFORMANCE ALIGNMENT

The vast majority of our NEOs’ pay is tied to challenging performance measures. We saw strong operational and financial performance in 2018, particularly the closing of the Aetna Transaction, one of the largest business combinations in history. Despite these successes, we did not meet the rigorous performance targets underlying both our short-and long-term incentive awards. As a result, our NEOs’ actual realized pay with respect to 2018 is well below the target grant value, demonstrating the strong performance-based and at-risk nature of our pay programs.

●	The 2018 corporate performance result for our annual cash incentive award was 88.8% of target. Individual performance assessments for many executives, including our CEO, resulted in a further reduction to annual cash incentive payouts.
●	In addition, based on three-year Return on Net Assets (RoNA) results and our relative TSR performance for the performance period that ended in 2018, the 2016-2018 LTIP award vested at 52.4% of target.

To illustrate the alignment with stockholder value, the following table compares the three-year target compensation to the realizable compensation for our CEO.

	2016 - 2018 CEO Target Compensation vs. Realizable Compensation

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Compensation Discussion and Analysis  Business and Performance Highlights

LEADING PRACTICES IN COMPENSATION PROGRAMS

Our pay practices align with our core compensation principles and facilitate our implementation of those principles. They also demonstrate our commitment to sound compensation and governance practices.

	Our executive compensation program motivates executive officers to take personal responsibility for the performance of CVS Health			Core Executive Compensation Principles Designed to Promote Company Growth Performance Measures Aligned with Stockholder Interests Majority of the Total Compensation Opportunity is Performance-Based 75% of Long-term Incentives are Performance-Based LTIP Awards and 2018 EBITDA PSUs Settled in Common Stock that is Subject to Retention Requirement (Holding Period) TSR Modifier Provides for Reduced Payout for Below Median Performance Robust Stock Ownership Guidelines
	We apply leading executive compensation practices			No Excise Tax Gross-Ups No Option Repricing No Recycling of Shares Recoupment Policy Broad Anti-Pledging and Hedging Policies Executive Severance Policy Limited Perquisites and Personal Benefits SERP Closed to New Participants Double Trigger Vesting of Equity Awards Dividend Equivalents on RSUs Paid Only When Awards Vest Board Committee Oversight of Comprehensive Annual Compensation Program Risk Assessment Cap on Annual Cash Incentive Awards for NEOs Replaced Cash Denominated LTIP with Performance Stock Units Replaced Time-Vested RSUs with Performance Stock Units Simplified and Improved Disclosure for Annual Cash Incentive Program
	NEW THIS YEAR			LTIP Awards Denominated in Shares of Common Stock (see page 49) Increased the Stock Ownership Guidelines for the CEO and Business Planning Committee (BPC) Members, and Added Ownership Guidelines for All Other Corporate-level EVPs and SVPs (see pages 59 and 80) Enhanced Recoupment Policy to Include Disclosure of any Recoupments (see page 58)

Business and Performance Highlights

We are a health innovation company helping people on their path to better health. Whether in one of our pharmacies or through our health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 92 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings. The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

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Compensation Discussion and Analysis  Business and Performance Highlights

We had strong financial performance and delivered on our operating expectations in 2018. It was also a milestone year for CVS Health as we successfully completed our transformational acquisition of Aetna, began effective implementation of our integration strategy, and took important steps toward building the integrated healthcare model that will bring substantial value to our various stakeholders. CVS Health believes that Aetna complements its competitive strategy, which is built on a diversified set of core and emerging businesses that enable it to better compete with more cost-effective products, pursue profitable growth across a range of opportunities, and lead the transformation of health care.

	5.3% revenue growth		Completed $70 billion acquisition of Aetna		Maintained dividend of $2.00 per share

The rapidly changing health care landscape continues to include uncertainties concerning health care policy. During 2018, we faced headwinds from reduced generic launches, continued reimbursement pressure and the slowing of brand drug price inflation. Compensation to our executives, including the cash incentive component, the long-term incentive plan performance cycle ending in 2018 and the value of our outstanding stock awards, is – and should be – affected by such factors, regardless of whether or not management can influence those factors.

For more information on our financial performance and strategy, please refer to our 2018 Annual Report available at www.cvshealthannualmeeting.com. Please also refer to page 60 of this proxy statement for additional information about how we calculate: (i) MIP Adjusted Operating Profit, a metric used to determine annual cash awards; (ii) Return on Net Assets, a metric used in connection with our long-term incentive awards; and (iii) Adjusted EBITDA, a metric used in connection with our long-term equity awards.

We are committed to helping people on their path to better health. Our values of innovation, collaboration, caring, integrity and accountability affect how we drive performance. We remain firmly committed to evaluating and incenting management to remain focused on drivers of sustainable performance over the long-term, even though we recognize that this focus is not always reflected in our stock price. We invest in our employees at all levels of the Company by rewarding performance that balances risk and reward, is consistent with our values, and supports short- and long-term goals and, ultimately, value creation for our stockholders. We provide opportunities for professional growth and development and aim to offer affordable benefits and programs that meet the diverse needs of our employees and their families. Feedback from stockholders during our annual outreach confirms strong support for this commitment and for the value we place on other forms of capital—including human, natural, social and intellectual:

●	We include retail customer service and PBM and long-term care (LTC) client/member satisfaction metrics in our pay calculations.
●	In 2018 we introduced the CVS Beauty Mark and made a commitment not to digitally alter or change a person’s shape, size, proportion, skin or eye color or enhance or alter lines, wrinkles or other individual characteristics. We want our beauty aisle to be a place where our customers can always come to feel good, while representing and celebrating the authenticity and diversity of the communities we serve.
●	Our decision to remove tobacco from pharmacy stores continues to show positive results by reinforcing the value of our brand in health care. We continue our work to create the first tobacco-free generation and made more than $4 million in grants in 2018 to organizations that provide an array of programming that supports our Be The First focus areas, including youth tobacco and e-cigarette prevention in classrooms and communities across the country; supporting clinicians with trainings and resources on screening youth for tobacco use; helping youth become tobacco-free advocates in their own communities; and creating more smoke-free college campuses across the country.
●	We have implemented an industry-leading program to increase access to naloxone in 48 states, where patients do not require an individual prescription. Following the Surgeon General’s Advisory on Naloxone and Opioid Overdose in April 2018, we have further expanded our efforts to educate patients about naloxone. Today, all CVS Pharmacy locations have in-store signage and in-store radio messages to educate patients about the availability and accessibility of the life-saving drug. We are dedicated to helping the communities we serve address and prevent opioid abuse. In 2018, we enhanced our commitment to supporting addiction recovery programs, providing grants to 21 community health centers across the U.S. that deliver medication-assisted treatment and other addiction recovery services. These investments work to ensure clear, safe and effective protocols for opioid prescriber practices; to strengthen and systematize partnerships with specialists and community based organizations; and to help create safe, non-judgmental environments for all patients.
●	We value the recruiting and reputational advantages of placing first in our sector of World’s Most Admired Companies and of being ranked as one of Forbes Most Valuable Brands; Points of Light’s The Civic 50; Military Times Best for Vets; Newsweek’s Green Ranking of America’s Greenest Companies; and Corporate Responsibility Magazine’s 100 Best Corporate Citizens.

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●	We have made significant investments in our colleagues by raising the minimum starting wage enterprise-wide and offering paid family leave for all new parents, both effective April 1, 2018. We also increased pay ranges and rates for many of our retail hourly employees effective July 1, 2018, and we did not increase employee health plan premiums for the 2018-2019 plan year despite a 5% increase in costs, indicative of our commitment to ensuring access to affordable health care.
●	Our holistic approach to leveraging diversity within our talent pipeline, talent development, leadership accountability and supplier diversity initiatives, earned us a spot on the DiversityInc Top 50 Companies for Diversity list in 2018.
●	We are a proud member of the Billion Dollar Roundtable, an organization that recognizes and supports corporations that achieve $1 billion in annual spending on diverse- and women-owned suppliers.
●	We achieved a 100% score on The Disability Equality Index, a joint initiative of the American Association of People with Disabilities and the US Business Leadership Network for our commitment to recruiting and retaining talent from the differently-abled community and our utilization of companies owned by differently-abled suppliers.
●	We achieved a perfect score for the fourth consecutive year on the 2018 Corporate Equality Index, a national benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality administered by the Human Rights Campaign Foundation.

Detailed Program Discussion

CVS HEALTH VALUES

When determining compensation awards and incentive payments, the Committee validates that our results were achieved in line with the Company’s five core values:

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Compensation Discussion and Analysis  Detailed Program Discussion

ELEMENTS OF COMPENSATION PROGRAM

The Committee believes each element of our executive compensation program furthers one or more of our five core principles:

The table below outlines each element of our executive compensation program for 2018, its connection to our five core principles, and how it supports our long-term strategy and growth. Information about our voluntary deferral program and other benefits can be found beginning on page 56.

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Performance Metrics Support Corporate Strategy and Long-Term Growth

The Committee recognizes that external factors that are beyond CVS Health’s control may impact its stock price. Consequently, the Committee believes that other performance indicators, including profitability and cash flow, should also be factored into our executive compensation program. By using a variety of pay vehicles and balancing short- and long-term awards, the Committee believes our program supports retention and long-term growth creation because the metrics are measured independently and no single factor impacts all elements of performance.

The table below describes the performance metrics the Committee set for 2018.

Pay Element		2018 Performance Metric (weightings)		Rationale
Annual Cash Incentive		MIP Adjusted Operating Profit (80%)		●Key measure of profitability followed closely by investors
Financial/ Operational Goal		Retail Customer Service and PBM and LTC Client/Member Satisfaction Adjusted by MIP Adjusted Operating Profit Result (20%)		●Important drivers of recurring revenue and the achievement of long-term strategic and operational goals
Individual Goal		Individual Performance Goals (modifier 0-120%)		●Drives specific, job-related performance that is linked to overall company performance
LTIP PSUs		Aetna Transaction-related Operational Synergies and Product Offering Goals (100%)		●Operational Synergies: Measures the value of cost synergies delivered as a result of the Aetna Transaction. The LTIP PSUs will vest at between zero and 200% of the number of units granted based on our achievement in 2020 of Aetna Transaction-related cost synergies. Subject to satisfaction of the Product Offering Goals, the LTIP PSUs will vest at target (100%) if we deliver $750 million of synergies in 2020 ●Product Offering Goals: Delivery of integrated programs that deliver transformational value to clients and members. To align with the success of the Aetna Transaction and our commitment to investors, in order for any LTIP PSUs to vest, by December 31, 2020, we must, in the reasonable judgment of the Committee, (i) develop a robust pipeline of integrated offerings designed to deliver transformational value to clients and members, and (ii) successfully launch at least one such offering
		TSR (modifier +/-25%)		●TSR modifier adjusts any LTIP PSU payout resulting from the achievement of the operational synergy metric and product offering goals based on our performance relative to the broad market of companies with which we compete for talent and capital
EBITDA PSUs		2020 Adjusted EBITDA (100%)		●Measures profitability and cash flow

BASE SALARY

The Committee annually reviews the base salaries of all senior officers, including the NEOs, and adjusts them periodically as needed to maintain market position and consistency with evolving responsibilities. Upon consideration of this competitive market analysis and input from its independent compensation consultant, the Committee increased salaries for Messrs. Roberts, Moriarty and Denton in 2018. Ms. Boratto and Mr. Rice were new to their roles in 2018 and were not NEOs in 2017. Mr. Roberts completed his first year as Chief Operating Officer in 2017, and the Committee adjusted his salary in 2018 to reflect appropriate competitive positioning against peers in that role in comparably-sized companies. Mr. Moriarty assumed significant additional responsibilities in 2018 in the areas of public affairs and external communications, both of critical importance to the Company as we acquired Aetna, and the Committee increased his salary in acknowledgement of that expanded portfolio. Mr. Denton left the Company in connection with the closing of the Aetna Transaction.

NEO and 2018 Title(s)		2017 Salary ($)		2018 Salary ($)		Percentage Increase
Larry J. Merlo, President and CEO		1,630,000		1,630,000		0%
Eva C. Boratto, EVP and CFO		n/a	1	850,000		n/a
Jonathan C. Roberts, EVP and COO		1,050,000		1,200,000		14%
Derica W. Rice, EVP and President – CVS Caremark		n/a	1	1,050,000		n/a
Thomas M. Moriarty, EVP, Chief Policy and External Affairs Officer and General Counsel		750,000		850,000		13%
David M. Denton, Former EVP and CFO		850,000		900,000		6%

1	Neither Ms. Boratto nor Mr. Rice was a NEO in 2017.

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2018 ANNUAL CASH INCENTIVE

Our NEOs participate in our annual cash incentive program under which they are eligible for a cash award based on the achievement of pre-established financial, operating and individual performance objectives. In the first quarter of each year, the Committee approves for each NEO an annual target bonus amount expressed as a percentage of the executive’s base salary — 200% for Mr. Merlo, 175% for Mr. Roberts, and 150% for each of Ms. Boratto and Messrs. Rice, Moriarty and Denton. Awards are paid out, if earned, in the first quarter of the following year based on the following formula:

NEO Base Salary Paid in 2018

X

Target Annual Incentive %

X

Corporate Performance %

X

Individual Performance Modifier %

=

Final Award

Corporate Performance

For 2018, the Committee measured company performance using MIP Adjusted Operating Profit (80% weighting) and retail customer service and PBM and LTC client/member satisfaction results adjusted by the MIP Adjusted Operating Profit result (20% weighting). The Committee established challenging targets for MIP Adjusted Operating Profit that are both consistent with the earnings guidance we provided to investors and which require year-over-year growth. Our customer service and client/member satisfaction metrics ensure that we are providing excellent service and position us to retain and win new business. The MIP Adjusted Operating Profit and customer service and client/member satisfaction goals for 2018 were set above 2017 actual performance.

Individual Performance

The Committee also approved individual goals and objectives for business operations, merger and integration, and talent and organizational development. Each NEO’s individual performance was evaluated against his or her goals and assigned a value between 0 and 120. The Committee did not assign specific weightings to any NEO’s goals. The individual performance modifier cannot exceed 120 or 20% of what would have been earned based on corporate performance. An individual performance modifier of less than 100 will reduce payouts below what would have been earned based solely on corporate performance. In all cases, total payouts cannot exceed 200% of target when including both Company and individual performance.

Actual Performance

Company performance was 88.8% for 2018 — a result of 2018 MIP Adjusted Operating Profit (performance of 99% of target, resulting in funding of 90%, weighted 80%) and customer service and client/member satisfaction results (performance 93% of target, resulting in funding of 84%, weighted 20%).

2018 Objective Goals

*	Dollars in millions.

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The Committee evaluates each NEO’s performance and considers Mr. Merlo’s input on the performance of the other NEOs. In determining the annual cash incentive for Mr. Merlo, the Committee consulted with the other independent members of the Board. For 2018, the Committee assigned a numeric performance result for each NEO’s individual performance against his or her pre-established goals. The Committee used its judgment in evaluating each NEO’s performance.

Executive	Fiscal 2018 Individual Performance Assessment
Larry J. Merlo	●The Committee recognized Mr. Merlo’s leadership in driving and overseeing the consummation of the Company’s acquisition of Aetna, and also noted that results of operations missed its target, due to shortfalls in the LTC and PBM lines of business.
Eva C. Boratto	●Ms. Boratto provided comprehensive leadership to the Company and the Finance function in particular as the Company navigated through successful integration planning and commenced integrating with Aetna while concurrently managing its core business lines.
Jonathan C. Roberts	●The Committee acknowledged Mr. Roberts’ strong contributions to our successful integration planning for the Aetna Transaction and the superior performance of the Retail business. It noted that operating results of both the LTC and PBM lines of business fell short of their goals.
Derica W. Rice	●Mr. Rice joined the Company as President of the PBM business in early 2018. The Committee recognized his early leadership successes and also acknowledged the shortfall in PBM operating results.
Thomas M. Moriarty	●Mr. Moriarty played a critical role in guiding the Company through the complex state and federal regulatory processes necessary to secure approval of the Aetna Transaction.
David M. Denton	●Under Mr. Denton’s separation agreement with the Company (Separation Agreement), his pro-rated 2018 annual cash incentive is based on the average percentage of funding payout awarded to the CEO and his peers.

The actual payout of each NEO’s 2018 annual cash incentive award, as approved by the Committee, is set forth in the table below:

2018 Annual Cash Incentive Award

	NEO 2018 Eligible Earnings ($)	Target Annual Incentive %	Company Performance %	Individual Performance Modifier %	Final Award ($)	Final Payout as a % of Target
Larry J. Merlo	1,630,000	200%	88.8%	90%	2,605,000	79.9%
Eva C. Boratto	630,303	150%	88.8%	120%	1,007,000	106.5%
Jonathan C. Roberts	1,162,500	175%	88.8%	75%	1,355,000	66.6%
Derica W. Rice	791,477	150%	88.8%	90%	949,000	79.9%
Thomas M. Moriarty	825,000	150%	88.8%	100%	1,099,000	88.8%
David M. Denton1	781,818	150%	88.8%	n/a	1,073,925	n/a

1	Mr. Denton’s 2018 annual cash incentive award was set in accordance with his Separation Agreement. See page 57.

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LONG-TERM INCENTIVE COMPENSATION

Each year the Committee makes long-term incentive compensation grants to employees, including the NEOs. Following the Committee’s comprehensive review of our compensation program, which included input from our stockholders, the Committee approved changes to the long-term incentive compensation program to reduce time-vested awards and increase the performance aligned component. As a result, NEOs no longer receive time-vested RSUs. For 2018, the long-term incentive compensation is comprised of stock options and two forms of PSUs as set forth below. The LTIP PSUs are tied to the future success of and synergies resulting from the Aetna Transaction modified by relative TSR. The PSUs that replaced the RSUs may be earned based on Adjusted EBITDA goals, and we refer to them as EBITDA PSUs. Both EBITDA PSUs and LTIP PSUs are subject to a three-year performance period and a two-year post-vesting holding period.

Long-Term Incentive Target Mix

2018 Long-Term Incentive Target Mix

2018 EBITDA PSU and Stock Option Grant Decisions

The EBITDA PSU portion of our long-term incentive program features formulaically determined payouts based on performance goals established at the beginning of the three-year performance period. The Committee approved 2020 Adjusted EBITDA as the performance measure for the 2018 EBITDA PSUs. The target, threshold and maximum goals are aligned with the Company’s long-term targets communicated to investors and were set at a level expected to generate strong profitability. The Committee set the Adjusted EBITDA targets to contemplate the closing of the Aetna Transaction during the performance period. These Adjusted EBITDA targets are consistent with the Company’s public disclosures about the transaction, adjusted for the impacts of tax reform and the related investments of savings by both companies. The goals for 2020 Adjusted EBITDA range from a threshold of $19,852 million, to a target of $20,892 million, to a maximum of $21,937 million. Shares resulting from EBITDA PSU awards earned after the three-year performance period are subject to an additional two-year holding period.

The following table sets out the grant date fair value of stock options and EBITDA PSUs granted on April 1, 2018.

Executive Name	2018 Stock Option Grant Date Fair Value ($)	2018 EBITDA PSU Grant Date Fair Value ($)
Larry J. Merlo	3,375,000	3,375,000
Eva C. Boratto	300,000	300,000
Jonathan C. Roberts	2,125,000	2,125,000
Derica W. Rice	1,000,000	1,000,000
Thomas M. Moriarty	1,250,000	1,250,000
David M. Denton1	1,000,000	1,000,000

1	Pursuant to Mr. Denton’s Separation Agreement, the portion delivered as EBITDA PSUs was pro-rated for service time during the performance cycle, and the portion delivered as stock options continues to vest and remains exercisable through the third anniversary of his separation.

LONG-TERM INCENTIVE PLAN (LTIP) PSUs

The LTIP PSU portion of our long-term incentive program features formulaically determined payouts based on performance against financial goals established at the beginning of the three-year performance period and modified by relative TSR measured over the same period. The TSR modifier adjusts LTIP PSU payouts based on our performance relative to the broad market of companies with which we compete for talent and capital. Shares resulting from LTIP PSU awards earned after the three-year performance period are subject to an additional two-year holding period.

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The following summarizes LTIP awards granted in the last three years, each of which are described in more detail below.

	2016	2017	2018	2019	2020	2021	2022
2016-2018 50% of long- term equity	●Denominated as cash value and settled 100% in stock ●Based on Return on Net Assets, with target set at 42.93% ●Subject to rTSR modifier (+/- 25%)			Shares earned are subject to a 2-year holding period
	2017-2019 50% of long- term equity	●Denominated as cash value and settled 100% in stock ●Based on Return on Net Assets, with target set at 43.76% ●Subject to rTSR modifier (+/- 25%)			Shares earned are subject to a 2-year holding period
		2018-2020 50% of long- term equity*	●100% PSUs ●Based on achievement of Aetna Transaction-related synergies ($750 million at target) in 2020 and development of a pipeline of integrated offerings, and launch of one, by December 31, 2020 ●Subject to rTSR modifier (+/- 25%)			Shares earned are subject to a 2-year holding period

*	Excludes Additional LTIP PSU awards granted in 2018 and described below.

2018-2020 LTIP PSU Awards

In early 2018, the Committee established alternative performance metrics for the 2018-2020 LTIP PSU grant. A RoNA metric would apply if the Aetna Transaction closed after June 2019. Because the Committee recognized that the pending acquisition of Aetna could materially alter RoNA results, the Committee also established alternative metrics designed to align with the success of the Aetna Transaction and our commitment to investors which would apply if the Aetna Transaction closed before June 2019. The Aetna Transaction closed in November 2018, so the performance metrics applicable to the 2018-2020 LTIP PSUs are: achievement of Aetna Transaction-related cost synergies (the Synergy Goal) in 2020 and the development of a robust pipeline of integrated offerings designed to deliver transformational value to clients and members and the launch of at least one such offering by December 31, 2020 (the Product Offering Goals). The 2018-2020 LTIP PSUs will vest at between zero and 200% of the number of units granted based on our achievement of the Synergy Goal ($750 million at target), provided the Product Offering Goals have been met. Both the Synergy Goal and the Product Offering Goals must be met for any vesting to occur. The 2018-2020 LTIP PSUs are also subject to a relative TSR modifier.

The following table sets out the grant date fair value at target and number of 2018-2020 LTIP PSUs granted to each NEO. Except as noted below with respect to Ms. Boratto, LTIP PSUs for this cycle were granted on April 1, 2018. If earned, the awards below will be paid in stock in early 2021, and the stock will be subject to a two-year holding period. The awards are not guaranteed and can range from 0%-250% of target (Company performance of 0%-200% of target subject to a +/- 25% rTSR modifier). Payouts are formulaic, though the Committee has discretion to reduce the payout of the awards.

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Executive Name	Grant Date Fair Value of 2018-2020 LTIP PSU Grants at Target ($)		LTIP PSUs (#)
Larry J. Merlo	6,750,000		120,128
Eva C. Boratto1	2,000,000		27,051
Jonathan C. Roberts	3,750,000		66,737
Derica W. Rice	2,125,000		37,818
Thomas M. Moriarty	2,000,000		35,593
David M. Denton2	2,000,000		35,593

1	In connection with her promotion to CFO, Ms. Boratto received $1,500,000 in 2018-2020 LTIP PSUs on November 28, 2018. The above reflects the sum of her annual award granted on April 1, 2018 and her additional award granted on November 28, 2018.
2	Pursuant to his Separation Agreement, Mr. Denton’s 2018-2020 LTIP PSU award has been pro-rated for service provided during the performance period to 10,875 LTIP PSUs with a value of $611,111, and is payable at the end of the performance period. See page 57.

Additional 2018-2020 LTIP Awards Related to the Aetna Transaction

In August 2018, the Committee approved one-time LTIP PSU awards to certain individuals, including several of the NEOs, in recognition of the critical role each played in the Aetna Transaction, which we refer to as Additional LTIP PSUs. Our CEO and then-outgoing CFO did not receive Additional LTIP PSUs. The performance metrics for the Additional LTIP PSUs are identical to the metrics for the 2018-2020 LTIP PSUs described above, and the grants were made contingent upon the close of the Aetna Transaction. The purpose of these awards was to recognize the effort needed to ensure the continued success of ongoing operations through the transition period, to recognize the additional effort needed to integrate Aetna and achieve the target synergies announced in connection with the deal, and to incent these key leaders to remain with the Company. In determining the size of the these one-time grants, the Committee considered several factors, including the magnitude of the role the executive would play in driving the success of the Aetna integration while concurrently maintaining the forward growth momentum of the core businesses, retention of key talent, and potential for expanded responsibilities in the Company. As with our regular LTIP PSU grant, the additional grant to NEOs carries a two-year post-vesting holding requirement.

Executive Name	Grant Date Fair Value of 2018-2020 Additional LTIP PSU Grants at Target ($)		Additional LTIP PSUs (#)
Larry J. Merlo	0		0
Eva C. Boratto	2,500,000	1	31,950
Jonathan C. Roberts	3,750,000		50,471
Derica W. Rice	3,000,000		40,376
Thomas M. Moriarty	3,500,000		47,106
David M. Denton	0		0

1	Ms. Boratto’s 2018-2020 Additional LTIP PSU award was granted in two installments: she received an award in August 2018 in her former role as the Company’s Chief Accounting Officer and an award in November 2018 upon her promotion to CFO.

2016-2018 LTIP Performance Period Results

The Committee set the 2016-2018 LTIP RoNA goal in early 2016 to align with the Company’s long-term targets communicated to investors in 2015 and at a level expected to generate strong operational execution and asset management. The RoNA result for the three year performance cycle was 42.13%, 80 basis points below target, which resulted in a payout of 69.8% prior to the application of the relative TSR modifier.

Our relative TSR performance over this same period reduced the payout level by 25% to a final result of 52.4%. This outcome highlights the strong alignment of pay to performance under our compensation program.

The following tables set forth the target goal, our actual performance, the range of potential payouts as a percent of target and the actual results for the 2016-2018 LTIP grant.

	% of RoNA Target		Payout Level as a % of Target
Threshold (minimum level of performance) (41.34%)	96.3%		40%
Actual (42.13%)	98.1%		69.8%
Target (42.93%)	100.0%		100%
Maximum (45.56%)	106.1%		200%
Final payout after application of rTSR modifier of -25% (reflecting 10th percentile)			52.4%

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2016 – 2018 LTIP Grant Opportunities and Actual Award Payments

Executive Name		Minimum Award (% of Target)			Threshold Award (% of Target)			Target Award (% of Target)			Maximum Award (% of Target)1			Target Grant Value of Award ($)		Actual Value of Total Award At 52.4% ($)		Actual # of Shares Delivered in Settlement of Award Net of Tax Withholding
Larry J. Merlo		0	%		40	%		100	%		200	%		6,750,000		3,537,000		33,431
Eva C. Boratto2		0	%		40	%		100	%		200	%		300,000		157,200		1,893
Jonathan C. Roberts		0	%		40	%		100	%		200	%		3,000,000		1,572,000		27,183
Derica W. Rice3		—			—			—			—			—		—		—
Thomas M. Moriarty		0	%		40	%		100	%		200	%		1,875,000		982,500		10,869
David M. Denton4		0	%		40	%		100	%		200	%		2,000,000		—		—

1	Assumes 0% rTSR modifier, which can range from -25% to +25%.
2	Ms. Boratto was not a NEO at the time of the 2016-2018 LTIP grant.
3	Mr. Rice joined the Company in 2018 and therefore did not receive an LTIP grant in 2016.
4	Pursuant to his Separation Agreement, Mr. Denton’s 2016-2018 LTIP grant was pro-rated based on service provided during the performance period, and was paid in cash. See page 57.

2017-2019 LTIP Performance Cycle

The performance goal for the 2017-2019 LTIP grant is based on RoNA, and is subject to a modifier based on our relative TSR performance vs. the S&P 500 over the same three-year period (+/- 25% for above or below median performance). The Committee set the RoNA goal in early 2017 at 43.76%, a challenging level designed to drive performance. The goal aligns with the Company’s long-term targets communicated to investors in 2016, and was set higher than the actual results for the 2014-2016 performance cycle of 40.56%.

LINKING PAY TO PERFORMANCE

For 2018, as in previous years, the Committee reviewed a historical assessment of the relationship between CVS Health’s performance and executive pay relative to our 2018 Peer Group (as described below). The following graphs illustrate the results of the Committee’s assessment and illustrate the relationship between:

●	our CEO’s realized compensation (base salary earned, incentives earned, value of RSUs that vested during the period, the value of stock options exercised during the period, and changes in the value of unvested RSUs and unexercised options held during the period); and
●	CVS Health’s performance as measured by TSR – over one-year (2017), three-year (2015 – 2017) and five-year (2013 – 2017) periods (the most recent periods for which financial and compensation data were available at the time).

In the following graphs, data points that are within the shaded area designate ideal pay-performance relationships. Data points below the shaded area identify peer companies where pay was lower than expected given the organization’s performance, and those data points above the shaded area identify companies where pay was higher than anticipated.

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The Committee believes this historical view validates that our executive compensation programs work as intended and link pay and performance while demonstrating the Committee’s commitment to maintaining design and administration practices that ensure alignment with stockholder interests. The Committee reviews this analysis annually after current data becomes available.

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EXECUTIVE COMPENSATION PLANNING AND REVIEW PROCESS

The Committee follows the framework below to review, discuss and approve all aspects of our executive compensation program.

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Pay Positioning

CVS Health positions its aggregate target total direct compensation opportunity (base salary plus annual and long-term incentives) for its executive officers at competitive pay levels using the median of our peer group for reference. Positioning varies by job, and the Committee considers a number of factors including market competitiveness, specific duties and responsibilities of the executive versus those of peers, and succession planning. The Committee believes it is appropriate to reward the executive management team with compensation above the competitive median if the ambitious financial targets associated with its variable pay programs are exceeded in a way that is consistent with the Company’s core values.

2018 Compensation Peer Group

The Committee assesses financial performance and compensation competitiveness against a group of peer companies that it selects based on input from its independent compensation consultant. The 2018 peer group consisted of the following companies from across general industries that are similar to CVS Health in terms of industry affiliation, labor market, and operations and character image. The Committee reviews the peer group annually and periodically makes changes. No changes were made to the peer group for 2018.

2019 Compensation Peer Groups

In consideration of the Aetna Transaction, the Committee has determined that two compensation peer groups are appropriate for 2019 considering our diverse business segments and aggregate revenues. The Committee used the compensation peer groups described below as reference points when reviewing and setting compensation levels in 2019. A list of the companies included in the 2019 peer groups can be found on page 62.

●	General Industry Group - 30 largest U.S. companies, irrespective of industry, but excluding banks. The companies in this group have revenues from $63 billion to $500 billion, and median revenue of $120 billion.
●	Health Care and Retail Group - 20 companies with operations comparable to CVS Health’s, 13 of which are health care organizations and 7 of which are retailers. The median revenue for companies in this group is $100 billion.

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OTHER COMPENSATION ARRANGEMENTS AND BENEFITS

The Company maintains medical and dental benefits, life insurance and short- and long-term disability insurance programs for all of its employees. Executive officers are eligible to participate in these programs on the same basis and with the same level of financial subsidy as our other salaried employees.

Executive officers may participate in the CVS Future Fund, which is our qualified defined contribution, or 401(k), plan. An eligible CVS Health employee may defer up to 85% of his or her total eligible compensation, defined as salary plus annual cash incentive, to a maximum defined by the IRS. In 2018, that maximum was $18,500, plus an additional $6,000 for those age 50 and above. After the first full year of employment, CVS Health will match the employee’s deferral dollar-for-dollar up to a maximum equaling 5% of total eligible compensation. CVS Health’s matching cash contributions into the CVS Health Future Fund for the NEOs who participated are included in “All Other Compensation” and described in the notes following the Summary Compensation Table beginning on page 64.

We offer other benefits that are available to eligible employees, including executive officers, as follows.

Deferred Compensation Plan and Deferred Stock Plan

Eligible executive officers may choose to defer earned and vested compensation into the Deferred Compensation Plan (DCP) and the Deferred Stock Compensation Plan (DSP), which are available to any U.S. employees meeting the Plans’ eligibility criteria. The plans are intended to provide retirement savings in a tax-efficient manner and to enhance stock ownership. The DCP offers a variety of investment crediting choices, none of which represents an above-market return. The individual contributions of each of the NEOs during fiscal 2018 to the DCP and the DSP, including earnings on those contributions, any distributions during 2018 and their respective total account balances as of the end of 2018, are shown in the Nonqualified Deferred Compensation Table on page 71.

Perquisites and Other Personal Benefits

We provide the following personal benefits to our NEOs:

●	Financial planning: An allowance of $15,000 to cover the cost of a Company-provided financial planner to assist with personal financial and estate planning. We believe it is important to provide to our executives the professional expertise required to ensure that they maximize the efficiencies of our compensation and benefit programs and are able to devote their full attention to the management of the Company.
●	Limited personal use of corporate aircraft: We maintain corporate aircraft that may be used by our employees to conduct Company business. Pursuant to an executive security program established by the Board upon the Committee’s recommendation, the CEO is required to use our aircraft for all travel needs, including personal travel, in order to minimize and more efficiently use his travel time, protect the confidentiality of his travel and our business, and enhance his personal security. Certain other NEOs were also permitted to use our corporate aircraft for personal travel on a very limited basis during fiscal 2018. The cost of such personal use is included in “All Other Compensation” and described in the notes following the Summary Compensation Table.
●	Home security: An allowance to the NEOs to cover the costs of the installation and maintenance of home security monitoring systems. While the Committee believes these security costs are business expenses, disclosure of these costs as personal benefits is required.

The value of all of these items is treated as income taxable to the NEOs. The aggregate incremental cost to the Company of providing these personal benefits to each of the NEOs during fiscal 2018 is shown in the Summary Compensation Table beginning on page 63.

Partnership Equity Program

In addition to the core long-term incentive compensation plans described above (collectively, the ICPs), since 1997 the Company has maintained the Partnership Equity Program (the PEP). The PEP is designed to ensure that those executives with significant impact on the future success of CVS Health have a substantial “at-risk” personal equity investment in CVS Health common stock and is generally provided to selected newly-hired or newly-promoted senior executives in critical positions who can drive the strategic objectives of the Company. The Committee believes that the PEP strongly links the economic interests of

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senior executives with CVS Health stockholders, provides future long-term compensation opportunities that are competitive in the external marketplace and reflect internal responsibility levels, and assures key management stability, retention, motivation and long-term focus on corporate strategy. To invest in the PEP, an executive chooses to purchase a number of “Employee-Purchased RSUs,” which are matched by CVS Health on a one-for-one basis (Company-Matching RSUs) and vest on the fifth anniversary of the purchase date.

In addition, the executive receives an option to purchase shares of CVS Health common stock equal to ten times the number of Company-Matching RSUs. The stock option grant vests ratably on each of the third, fourth and fifth anniversaries of the grant date. The vesting for each of the stock option grant and the Company-Matching RSU award is contingent upon the executive retaining the Employee-Purchased RSUs until all of the stock options and Company-Matching RSUs are vested and upon the continued employment of the executive through the vesting period.

Upon his hire in March 2018, Mr. Rice was provided the opportunity to participate in the PEP and credited with an initial pre-tax amount to be invested in the PEP. The investment value provided to Mr. Rice is reflected as a sign-on bonus in the Summary Compensation Table on page 63 and in the Grants of Plan-Based Awards Table on page 66.

Agreements with Named Executive Officers
As previously disclosed, we have an employment agreement (Employment Agreement) with Mr. Merlo and change in control agreements (CIC Agreements, and together with the Employment Agreement, the Agreements) with Messrs. Rice, Roberts and Moriarty, and Ms. Boratto. Mr. Denton had a CIC Agreement, but left the Company in November 2018.

In addition, CVS Health entered into a Separation Agreement with Mr. Denton on June 25, 2018 in connection with his termination of employment with the Company. Under the Separation Agreement, during the twenty-four month period immediately following his November 2018 separation date (the Severance Period), Mr. Denton will continue to (i) receive his base salary (as in effect immediately prior to the separation date) and (ii) subject to a valid COBRA election, participate in the Company’s medical and other health benefit plans and programs that he participated in immediately prior to the separation date at Company-subsidized rates, subject to the terms and conditions of each such plan or program. During the Severance Period, Mr. Denton is entitled to: (i) a reimbursement of up to $15,000 per year for tax preparation and financial planning services during 2018 and 2019 (reduced by amounts previously reimbursed for 2018), and (ii) a one-time payment of $15,000 of attorneys’ fees in connection with the negotiation of his Separation Agreement. The last paragraph under “Payments/(Forfeitures) Under Termination Scenarios” reflects the provisions of Mr. Denton’s Separation Agreement with respect to his annual bonus, previously-granted CVS Health stock options, RSUs, PSUs and LTIP awards. The Separation Agreement also contains a release of claims against the Company and customary confidentiality and cooperation covenants and incorporates by reference any other covenants to which Mr. Denton already is subject, including his Restrictive Covenant Agreement.

In accordance with his Offer Letter dated January 17, 2018, Mr. Rice’s base salary is $1,050,000, and his annual cash incentive target is 150% of his annual base salary. In addition, Mr. Rice’s annual equity grant target opportunity for 2018 was established at $2,000,000 and his 2018-2020 LTIP PSU target opportunity was set at $2,125,000. Further, Mr. Rice received a $700,000 sign-on bonus, paid $200,000 in March 2018, $250,000 within the first 60 days of employment, and $250,000 within 60 days of the first anniversary of his hire date. In addition, Mr. Rice received a sign-on RSU grant valued at $1,500,000 and was credited with an initial pre-tax amount of $500,000 to be invested in the PEP (described above), which is reflected as a bonus in the Summary Compensation Table. Mr. Rice also received standard relocation benefits under the Company’s broad-based relocation program that included tax assistance. If Mr. Rice voluntarily terminates his employment and is not receiving severance, or if his employment is terminated by the Company for Cause (as defined in his Offer Letter), prior to the two-year anniversary of his hire date, Mr. Rice must repay $500,000 of the sign-on bonus promptly upon termination of his employment.

The Committee believes that the interests of stockholders are best served by ensuring that the interests of our senior management are aligned with our stockholders. The CIC Agreements with NEOs (other than Mr. Merlo) are intended to eliminate, or at least reduce, the reluctance of senior management to pursue potential change-in-control transactions that may be in stockholders’ best interests. The Agreements serve to eliminate distraction caused by uncertainty about personal financial circumstances during a period in which CVS Health requires focused and thoughtful leadership to ensure a successful outcome. Accordingly, the Agreements provide certain specified “double trigger” severance benefits to the covered executives in the event of their termination under certain circumstances following a change in control. The Committee believes a “double trigger” severance benefit provision is more appropriate, as it provides an incentive for greater continuity in management following a change in control. “Double trigger” benefits require that two events occur in order for severance to be paid, typically a change in control of the Company followed by the executive’s involuntary termination of employment. The 2010 and 2017 Incentive Compensation Plans that govern the terms of outstanding equity awards to all NEOs also require a “double trigger” for vesting of equity change in control benefits.

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The Committee reviews the Company’s severance benefits annually with the assistance of its independent compensation consultant to evaluate both their effectiveness and competitiveness. The review for fiscal 2018 found the current level of benefits to be within competitive norms for design. Details of hypothetical payments that would have been made to the NEOs upon a change in control on December 31, 2018 and under various termination scenarios; provisions for the treatment of equity awards, supplemental executive retirement plan and other benefits; and estimated payments that would be made to the executives whose employment terminates following a change in control may be found in “Payments/(Forfeitures) Under Termination Scenarios” beginning on page 72.

Supplemental Executive Retirement Plan
We maintain an unfunded supplemental executive retirement plan (SERP), which is designed to supplement the retirement benefits of selected executive officers. The SERP is a legacy plan in which participation has decreased over the years as individuals have retired. We have not provided SERP benefits to new participants since 2010. Mr. Merlo is the only active executive officer in the SERP. Mr. Merlo has reached the maximum amount of service under the SERP based on his more than 30 years with the Company. As a result, any increase to his benefits would be primarily as a result of performance-based bonuses. See the Pension Benefits Table on page 70 for more information.

KEY POLICIES RELATED TO COMPENSATION

Recoupment

Since 2009, we have maintained a recoupment policy that applies to all annual and long-term incentive awards granted to executive officers. The policy applies in cases where financial or operational results used to determine an award amount are meaningfully altered based on fraud or material financial misconduct (collectively, Misconduct), as determined by the Board, and applies to any executive officer determined to have been involved in the Misconduct.

The policy applies to Misconduct committed during the performance period that is discovered during the performance period or the three-year period following the performance period. The policy allows us to recoup the entire award, not only excess amounts generated by the Misconduct, subject to the determination of the Board, and the policy may apply even where there is no financial restatement.

In addition, in March 2019 the Board approved an amendment to the Recoupment Policy to increase transparency of the policy. The amendment requires CVS Health to publicly disclose the circumstances of any recoupment from any “executive officer” under the Recoupment Policy to the extent the underlying event already has been publicly disclosed in CVS Health’s filings with the SEC and the disclosure would not violate applicable law, violate legal privilege, breach contractual obligations or be likely to result in, or exacerbate any existing or threatened, employee, stockholder or other litigation, arbitration, investigation or proceeding against the Company.

Anti-Gross-Up Policy

CVS Health maintains a broad policy against tax gross-ups. The only current exception to our anti-gross-up policy is for tax payments that may be due under our broad-based relocation policy, which is applicable to a large number of employees (i.e., those who must relocate upon hire, transfer or promotion).

Insider Trading Policy, Including Anti-Pledging and Hedging

A significant percentage of executive compensation has been and continues to be payable in CVS Health common stock. The Board and executive management of CVS Health take seriously their responsibilities and obligations to exhibit the highest standards of behavior relative to trading our stock. All transactions in our stock by any director, executive officer or designated employee who has a significant role in, or access to, our financial reporting process (collectively, lnsiders), must be pre-cleared by either the General Counsel, the Corporate Secretary, or their designee. Insiders are generally prohibited from trading in any of our securities except during periods of varying length beginning shortly after the release of our financial results for each quarter,

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and Insiders and other employees may be required to refrain from trading during other designated periods when significant developments or announcements are anticipated. In addition, it is our policy that Insiders and other employees may not engage in any of the following activities with respect to our securities:

●	Trading in our securities on a short-term basis (stock purchased in the open market must be held for at least six months);
●	Purchasing stock on margin or pledging our stock or any stock incentive award as collateral for a loan or margin account;
●	Engaging in short sales of our stock;
●	Buying or selling puts, calls, exchange traded options or other derivative securities based on our stock; or
●	Engaging in any other hedging transactions with respect to our stock, which includes transactions designed to offset any decrease in the market value of equity securities.

Our most senior executives and Board members are generally required to use a 10b5-1 trading plan to sell our stock, and our other executives are encouraged to use 10b5-1 trading plans. A 10b5-1 trading plan is a contract that allows the individual to sell a pre-determined number of shares at a time in the future when pre-determined conditions in the plan are met. However, there are extensive guidelines that govern the use of 10b5-1 trading plans including the timing of entry or modification of a plan, the price at which shares will be traded, a “cooling off” period after the plan is entered into during which no trades can take place, minimum and maximum terms, restrictions on the number of plans an individual can maintain, a prohibition on trading outside of the plan, and pre-approval of plans (and any modification of plans) by the General Counsel or Corporate Secretary.

Stock Ownership Guidelines

The Committee oversees the Company’s stock ownership guidelines, which require the Company’s directors and executive officers to maintain ownership of a minimum number of shares, in the case of directors, or stock valued at a multiple of annual salary, in the case of executive officers. In 2018, the Committee increased the multiple of salary for the CEO and BPC members, and expanded the ownership requirement to cover all corporate-level executive vice presidents and senior vice presidents. For additional details, see “Executive Officer and Director Stock Ownership Requirements” on page 80.

COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE

With exceptions only for compensation paid pursuant to certain binding contracts as described in Section 162(m) of the Internal Revenue Code (IRC 162(m)), the tax deduction for annual compensation of each of our NEOs is limited to $1 million. While the Committee considers the tax deductibility of executive compensation as a factor, the Committee believes it is important to structure the Company’s executive compensation program and practices in a manner that the Committee determines is in the best interests of CVS Health and its stockholders. This includes the establishment of objective performance criteria at the beginning of a performance cycle, before results are known, and the certification of financial results by an independent Committee of the Board. The Committee retains discretion to operate the Company’s executive compensation programs in a manner designed to promote varying Company goals. As a result, the Committee may from time to time conclude that certain compensation arrangements are in the best interests of CVS Health and its stockholders and consistent with its compensation philosophy and strategy, despite the fact that the arrangements might not qualify for tax deductibility.

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NON-GAAP FINANCIAL MEASURES USED IN COMPENSATION DISCUSSION AND ANALYSIS

Throughout this CD&A, we refer to various financial measures. Many of these financial measures are calculated in accordance with U.S. generally accepted accounting principles, or GAAP. However, there are some financial measures that management adjusts and uses to assess our year-over-year performance. These adjusted financial measures are commonly referred to as non-GAAP. An explanation of how we calculate these non-GAAP financial measures is included below.

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RELATIVE TSR PEER GROUP FOR 2018-2020 LTIP GRANTS

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2019 COMPENSATION PEER GROUP

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Compensation of Named Executive Officers

Important Information Regarding the Presentation of Executive Compensation

As discussed in detail on pages 40-41, we changed our approach to the denomination of our LTIP awards, which resulted in an overlap in disclosure of both awards granted and earned during a fiscal year. During the transition period, which will continue through the payment of the 2017-2019 performance cycle, there will be timing issues that occur as awards for multiple years will appear in the SCT. The following table shows the Committee’s compensation determinations for our CEO when removing the double reporting.

	CEO Annual Compensation Determinations
	Salary ($)	Annual Cash Incentive Award1 ($)	RSU ($)	EBITDA PSU Grant Value ($)	Stock Option Grant Value ($)	LTIP Grant Value2 ($)	All Other Compensation ($)	Total Compensation1 ($)
2018	1,630,000	2,605,000	0	3,374,955	3,374,995	6,749,992	667,156	18,402,098
2017	1,630,000	2,128,800	3,374,960	0	3,374,998	6,750,000	754,106	18,012,859
2016	1,630,000	2,382,000	3,991,931	0	3,999,990	6,750,000	847,456	19,601,377

1	Excludes payout of LTIP awards granted for the following three-year performance periods: 2014-2016, 2015-2017, and 2016-2018. Such payouts were reported in the “Non-Equity Incentive Plan Compensation” column of the SCT for each of the respective years.
2	Includes the LTIP award granted in each respective year at target performance. For 2016 and 2017, the awards were cash-denominated with settlement in shares following the three-year performance period. For 2018, the award was granted as LTIP PSUs.

Summary Compensation Table

The following Summary Compensation Table shows information about the compensation received by our CEO, our CFOs and each of our three other most highly compensated executive officers for services rendered in all capacities during the 2018 fiscal year and the applicable comparable data for the 2017 and 2016 fiscal years.

Summary Compensation Table

Name & Principal 2018 Positions1	Year	Salary ($)	Bonus ($)2	Stock Awards ($)3	Option Awards ($)4		Non-Equity Incentive Plan Compensation ($)6	Change In Pension Value and Nonqualified Deferred Compensation Earnings ($)7	All Other Compensation ($)8	Total ($)
Larry J. Merlo	2018	1,630,000	—	10,124,947	3,374,995		6,142,000	—	667,156	21,939,098
President and Chief	2017	1,630,000	—	3,374,960	3,374,998		3,118,800	—	754,106	12,252,864
Executive Officer	2016	1,630,000	—	3,999,931	3,999,990		7,882,000	—	847,456	18,359,377
Eva C. Boratto	2018	630,303	—	4,799,831	299,997		1,164,200	—	78,090	6,972,421
Executive Vice	2017
President and Chief	2016
Financial Officer
Jonathan C. Roberts	2018	1,162,500	—	9,624,917	2,124,994		2,927,000	—	227,557	16,066,968
Executive Vice	2017	1,033,333	—	1,999,953	1,999,994		1,605,000	—	244,484	6,882,764
President and Chief	2016	950,000	—	2,249,961	2,249,999		2,907,000	—	274,147	8,631,107
Operating Officer
Derica W. Rice	2018	791,477	950,000	8,124,848	1,705,312	5	949,000	—	285,436	12,806,073
Executive Vice	2017
President and	2016
President –
CVS Caremark

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Name & Principal 2018 Positions1		Year		Salary ($)		Bonus ($)2		Stock Awards ($)3		Option Awards ($)4		Non-Equity Incentive Plan Compensation ($)6		Change In Pension Value and Nonqualified Deferred Compensation Earnings ($)7		All Other Compensation ($)8		Total ($)
Thomas M. Moriarty		2018		825,000		—		6,749,933		1,249,993		2,081,500		—		77,430		10,983,856
Executive		2017		750,000		—		1,249,971		1,249,998		1,160,000		—		102,585		4,512,554
Vice President, Chief Policy and External Affairs Officer and General Counsel		2016		750,000		—		999,983		999,987		2,026,000		—		174,770		4,950,740
David M. Denton		2018		781,818		—		2,999,935		999,993		—		—		782,805		5,564,551
Former Executive Vice		2017		850,000		—		999,977		999,997		1,193,000		—		334,979		4,377,953
President and Chief Financial Officer		2016		850,000		—		999,983		999,987		2,380,000		—		319,026		5,548,996

1	Ms. Boratto was appointed Executive Vice President and Chief Financial Officer in November 2018; she was not a NEO in prior years. Mr. Rice began serving as Executive Vice President and President – CVS Caremark in March 2018 and was formally appointed to those positions in June 2018. Mr. Denton left the Company effective November 19, 2018.
2	In connection with joining the Company Mr. Rice received cash sign-on bonus payments of $450,000 in 2018 and an additional $500,000 bonus which he used to purchase RSUs under the PEP.
3	Included in this column is the full grant date fair value of all RSU and PSU awards made to each NEO in the applicable year. Also includes sign-on RSUs and RSUs granted under the Company’s PEP Program to Mr. Rice on May 31, 2018. Mr. Rice’s PEP RSUs will cliff vest on the fifth anniversary of the grant date. The grant date fair value of each grant is computed in accordance with FASB ASC Topic 718, excluding forfeiture estimates. The grant date fair values for PSUs granted in 2018 are based upon the probable outcome of the performance conditions associated with these PSUs as of the grant date, and specifically, the values of the LTIP PSUs and Additional LTIP PSUs are calculated using a Monte Carlo Model. For further discussion of the relevant assumptions and methodologies used to value the 2018 stock awards in this column, please see the discussion of stock awards contained in our 2018 Annual Report, Notes to Consolidated Financial Statements at Note 11, “Stock Incentive Plans”. Additional details regarding the grants of stock awards and option awards can be found in the Grants of Plan-Based Awards Table. Each PSU represents one share of our common stock and upon vesting will be paid in shares of our common stock, net of applicable withholding taxes, subject to a two-year holding period. As discussed on page 40, in response to stockholder feedback, beginning with the 2018-2020 performance cycle LTIP awards will be denominated 100% in PSUs. As a result, and consistent with SEC reporting rules, LTIP awards will be reported in the Summary Compensation Table in the year of grant. The grant date fair value of the LTIP PSUs and Additional LTIP PSUs granted to the NEOs in 2018, assuming the highest level of performance conditions associated with these PSUs occurs and prior to the application of the rTSR modifier, which can range from -25% to +25%, is as follows:

Name		Award Type		Date of Grant		Grant Date Fair Value Assuming Highest Level of Performance Conditions Achieved ($)
Larry J. Merlo		EBITDA PSUs		April 1, 2018		6,749,909
		LTIP PSUS		April 1, 2018		13,499,985
Eva C. Boratto		EBITDA PSUs		April 1, 2018		599,953
		LTIP PSUs		April 1, 2018		999,957
		LTIP PSUs		November 28, 2018		2,999,965
		Additional LTIP PSUs		August 31, 2018		2,499,898
		Additional LTIP PSUs		November 28, 2018		2,499,888
Jonathan C. Roberts		EBITDA PSUs		April 1, 2018		4,249,938
		LTIP PSUs		April 1, 2018		7,499,904
		Additional LTIP PSUs		August 31, 2018		7,499,991
Derica W. Rice		EBITDA PSUs		April 1, 2018		1,999,927
		LTIP PSUs		April 1, 2018		4,249,987
		Additional LTIP PSUs		August 31, 2018		5,999,874
Thomas M. Moriarty		EBITDA PSUs		April 1, 2018		2,499,971
		LTIP PSUs		April 1, 2018		3,999,941
		Additional LTIP PSUs		August 31, 2018		6,999,952
David M. Denton		EBITDA PSUs		April 1, 2018		1,999,927
		LTIP PSUs		April 1, 2018		3,999,941

4

Grant date fair value of the options granted to the NEOs on April 1, 2018, except as described in note 5. These options have an exercise price of $62.21 (the closing price of our common stock on April 1, 2018) and will vest in equal installments on the first, second, third and fourth anniversaries of the date of grant and expire seven years from the date of grant. The option values are calculated using a modified Black-Scholes Model for pricing options. Refer to our 2018 Annual Report, Notes to Consolidated Financial Statements at Note 11, “Stock Incentive Plans,” for all relevant valuation assumptions used to determine the grant date fair value of these options.

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Compensation of Named Executive Officers  Summary Compensation Table

5

Also includes the grant date fair value of the options granted to Mr. Rice on May 31, 2018 under the PEP. These PEP options have an exercise price of $63.39 (the closing price of our common stock on May 31, 2018) and will vest in three equal installments on the third, fourth and fifth anniversaries of the date of grant and expire in ten years from the date of grant. The option values are calculated using a modified Black-Scholes Model for pricing options. The assumptions used to determine the grant date fair value of these options were:

6	The figures shown include amounts earned in 2018 as annual cash incentive awards (see page 48). For the 2016-2018 performance cycle, LTIP awards were settled in stock and are reported in the final year of the cycle. This cycle is reported in the Non-Equity Incentive Plan column because they are denominated in cash and then paid in common stock that is subject to a two-year holding requirement. Beginning with the 2018-2020 performance cycle, LTIP awards will be granted in PSUs and reported in the “Stock Awards” column in the year of grant.
7	The amounts reported in this column represent only changes in pension value, as the Company does not pay above-market earnings on deferred compensation. The value of Mr. Merlo’s pension benefit decreased by $1,273,824 in 2018 from the prior year’s valuation; however under SEC rules the negative change in the pension value is disclosed as $0. The Company adopted a policy in 2010 stating that it will not offer SERP benefits to new participants. Mr. Merlo is the only active executive officer participating in the SERP. For additional information on the SERP, see “Pension Benefits” beginning on page 69.
8	Set forth below is additional information regarding the amounts disclosed in the “All Other Compensation” column for 2018.

All Other Compensation – 2018

Name & Principal 2018 Positions		Perquisites & Other Personal Benefits A ($)		Company Contributions to Defined Contribution Plans B ($)		Termination Payments C ($)		Other D ($)
Larry J. Merlo President and Chief Executive Officer		112,470		187,940		—		366,746
Eva C. Boratto Executive Vice President and Chief Financial Officer		15,844		46,215		—		16,031
Jonathan C. Roberts Executive Vice President and Chief Operating Officer		26,837		118,125		—		82,595
Derica W. Rice Executive Vice President and President – CVS Caremark		285,436		—		—		—
Thomas M. Moriarty Executive Vice President, Chief Policy and External Affairs Officer and General Counsel		22,471		13,750		—		41,209
David M. Denton Former Executive Vice President and Chief Financial Officer		21,562		—		506,442		254,801

A	The amounts in this column reflect the following: for Mr. Merlo, $13,500 for financial planning services, costs associated with home security, and $96,017 associated with personal use of Company aircraft; for Ms. Boratto, $15,000 for financial planning services, and costs associated with personal use of Company aircraft; for Mr. Roberts, $15,000 for financial planning services, $3,104 associated with personal use of Company aircraft, $8,278 associated with the CVS Health Charity Classic, and costs associated with home security; for Mr. Rice, $153,513 associated with relocation benefits under the Company’s broad-based relocation program, $116,091 in tax assistance provided in connection with the relocation benefits, $15,000 for financial planning services, and costs associated with personal use of Company aircraft; for Mr. Moriarty $15,000 for financial planning services, $2,150 associated with personal use of Company aircraft, $5,000 associated with the CVS Health Charity Classic, and costs associated with home security; and for Mr. Denton, $15,000 for financial planning services, $6,472 associated with personal use of Company aircraft, and costs associated with home security. The Company determines the amount associated with personal use of Company aircraft by calculating the incremental cost to the Company based on the cost of fuel, trip-related maintenance, deadhead flights, crew travel expenses, landing fees, trip-related hangar costs and smaller variable expenses.
B	The amounts in this column include Company matching contributions to the CVS Health Future Fund of $13,750 for each of Messrs. Merlo, Roberts and Moriarty and Ms. Boratto. These amounts also include Company matching contributions credited to notional accounts in the unfunded Deferred Compensation Plan equal to: $174,190 for Mr. Merlo; $32,465 for Ms. Boratto; and $104,375 for Mr. Roberts.
C	The amounts in this column reflect the following for Mr. Denton: salary continuation of $105,682 received in the 2018 calendar year, $385,760 representing the realized value of accelerated PSUs and $15,000 in attorneys’ fees all paid pursuant to his Separation Agreement. For a description of the Separation Agreement, see the last paragraph under “Payments/(Forfeitures) Under Termination Scenarios”.
D	The amounts in this column include cash dividend equivalents paid by the Company on unvested RSUs as follows: for Mr. Merlo, $197,398; for Ms. Boratto, $16,031; for Mr. Roberts, $70,943; for Mr. Moriarty, $41,209; and for Mr. Denton, $254,801. Also includes cash dividends paid by the Company on deferred RSUs, as noted in the Non-Qualified Deferred Compensation Table, for Mr. Merlo, $169,348 and Mr. Roberts, $11,652.

cvshealthannualmeeting.com

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Executive Compensation Tables  Grants of Plan-Based Awards

Grants of Plan-Based Awards

This table reflects awards granted under the CVS Health Corporation 2017 Incentive Compensation Plan (the 2017 ICP) in the respective amounts listed. The Management Planning and Development Committee approved the grants for 2018, which include stock options, PSU and, for Mr. Rice, stock options and RSUs granted in connection with his participation in the PEP.

Grants of Plan-Based Awards – 2018

Name & Principal 2018 Positions		Award Type			Date of Committee Action		Grant Date		Est. Future Payouts Under Non-Equity Incentive Plan Awards						Est. Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($ / Sh)		Grant Date Fair Value of Stock and Option Awards ($)
									Threshold ($)1		Target ($)		Maximum ($)		Threshold (#)1		Target (#)		Maximum (#)
Larry J. Merlo President and Chief Executive Officer		Stock Options			2/15/2018		4/1/2018																394,091		62.21		3,374,995
		EBITDA PSUs			2/15/2018		4/1/2018								27,126		54,251		108,502								3,374,955
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								48,051		120,128		240,256								6,749,992
		Annual Cash							1,630,000		3,260,000		6,520,000		—		—		—								—
Eva C. Boratto Executive Vice President and Chief Financial Officer		Stock Options			2/15/2018		4/1/2018																35,030		62.21		299,997
		EBITDA PSUs			2/15/2018		4/1/2018								2,411		4,822		9,644								299,977
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								3,559		8,898		17,796								499,979
		LTIP (18-20)	3,4		8/16/2018		8/31/2018								6,729		16,823		33,646								1,249,949
		LTIP (18-20)	3,5		11/6/2018		11/28/2018								7,261		18,153		36,306								1,499,982
		LTIP (18-20)	3,4,5		11/6/2018		11/28/2018								6,051		15,127		30,254								1,249,944
		Annual Cash							472,727		945,455		1,890,909		—		—		—								—
Jonathan C. Roberts Executive Vice President and Chief Operating Officer		Stock Options			2/15/2018		4/1/2018																248,131		62.21		2,124,994
		EBITDA PSUs			2/15/2018		4/1/2018								17,079		34,158		68,316								2,124,970
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								26,695		66,737		133,474								3,749,952
		LTIP (18-20)	3,4		8/16/2018		8/31/2018								20,188		50,471		100,942								3,749,995
		Annual Cash							1,017,188		2,034,375		4,068,750		—		—		—								—
Derica W. Rice Executive Vice President and President – CVS Caremark		Stock Options			2/15/2018		4/1/2018																116,767		62.21		999,993
		EBITDA PSUs			2/15/2018		4/1/2018								8,037		16,074		32,148								999,963
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								15,127		37,818		75,636								2,124,993
		PEP Stock Options	6		11/8/2017		5/31/2018																78,870		63.39		705,319
		RSUs	6		11/8/2017		5/31/2018														23,663						1,499,998
		PEP RSUs	6		11/8/2017		5/31/2018														7,887						499,957
		LTIP (18-20)	3,4		11/6/2017		8/31/2018								16,150		40,376		80,752								2,999,937
		Annual Cash							593,608		1,187,216		2,374,432		—		—		—								—
Thomas M. Moriarty Executive Vice President, Chief Policy and External Affairs Officer and General Counsel		Stock Options			2/15/2018		4/1/2018																145,959		62.21		1,249,993
		EBITDA PSUs			2/15/2018		4/1/2018								10,047		20,093		40,186								1,249,986
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								14,237		35,593		71,186								1,999,971
		LTIP (18-20)	3,4		8/16/2018		8/31/2018								18,842		47,106		94,212								3,499,976
		Annual Cash							618,750		1,237,500		2,475,000		—		—		—								—
David M. Denton Former Executive Vice President and Chief Financial Officer		Stock Options			2/15/2018		4/1/2018																116,767		62.21		999,993
		EBITDA PSUs			2/15/2018		4/1/2018								8,037		16,074		32,148								999,964
		LTIP (18-20)	2,3		2/15/2018		4/1/2018								14,237		35,593		71,186								1,999,971
		Annual Cash							586,364		1,172,727		2,345,455		—		—		—								—

1

Represents the threshold achievement in order to receive a payout under the respective plan; performance below the threshold results in no payout.

2

Beginning with the 2018-2020 LTIP cycle, awards will be denominated 100% in PSUs. These awards are included in the SCT in the “Stock Awards” column. For the 2016-2018 and 2017-2019 LTIP cycles, awards were denominated in cash and have been or will be settled 100% in CVS Health common stock adjusted for performance. At the end of the three-year cycle, final awards are or will be disclosed in the SCT in the “Non-Equity Incentive Plan Compensation” column.

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Executive Compensation Tables  Outstanding Equity Awards at Fiscal Year-End

3	The award earned, based on the performance of the Company against the applicable performance metrics, will be modified by up to +/- 25% based on CVS Health’s performance as measured by relative TSR. All “Est. Future Payouts Under Equity Incentive Plan Awards” assume a relative TSR modifier of 0%.
4	Aetna Transaction-related Additional LTIP PSU award for the respective NEOs.
5	Awards granted in connection with Ms. Boratto’s promotion to Executive Vice President and Chief Financial Officer.
6	Represents sign-on options and RSU awards granted under the PEP and the 2017 ICP. Mr. Rice’s PEP options will vest one-third on each of the third, fourth and fifth anniversaries of the grant date. Mr. Rice’s PEP RSUs will cliff vest on the fifth anniversary of the grant date.

The stock option awards shown above vest in equal installments on the first, second, third and fourth anniversaries of the grant date and expire seven years from the grant date, except for Mr. Rice’s PEP options, which vest one-third on each of the third, fourth and fifth anniversaries of the grant date and expire ten years from the grant date. As described above, the Company’s policy is to establish the exercise price for stock options as the closing price of the Company’s common stock on the grant date. Annual RSU grants typically vest in increments of 50% on the third anniversary of the grant date and 50% on the fifth anniversary of the grant date. Mr. Rice’s PEP RSUs will cliff vest on the fifth anniversary of the grant date.

Outstanding Equity Awards at Fiscal Year-End

This table reflects stock option, PSU and RSU awards granted to our Named Executive Officers under our ICPs that were outstanding as of December 31, 2018.

Outstanding Equity Awards at 2018 Year-End

Stock Option Awards1

Stock Awards

Name & Principal 2018 Positions

Grant Date

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise Price ($)

Option Expiration Date

Grant Date

Number of Shares or Units of Stock That Have Not Vested (#)

Market Value of Shares or