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CVS Caremark CEO Ryan set to retire next year,
Merlo slated as his successor
May 12th, 2010
WOONSOCKET, R.I. – Tom Ryan, chairman, president and chief executive officer of CVS Caremark Corp., plans to retire from the CEO post at next year's annual shareholder meeting in May.
The company said Wednesday that its board of directors is appointing Larry Merlo, 54, as president and chief operating officer, and Merlo is expected to succeed Ryan as CEO. Merlo also is being named to the board. CVS Caremark previously didn't have a COO.
"I felt this was the right time to move forward with our transition plan," the 58-year-old Ryan said in a statement. "In my 36 years with the company, including 16 years as president, I have never felt better about our position than I do now. We have tremendous assets, an incredibly talented management team and a strategy that is resonating in the marketplace. I made my decision knowing that CVS Caremark is in an excellent position and that we have the right team in place to build on our success."
A veteran executive with 31 years of experience, including 20 years with CVS, Merlo effective immediately will assume added duties, including human resources, legal, corporate compliance and government relations, CVS Caremark said. He most recently served as executive vice president of CVS Caremark and president of the CVS/pharmacy retail operations, overseeing a network more than 7,000 drug stores with sales of more than $55 billion.
"This is an exciting time for CVS Caremark as our integrated health care model gains further traction and we take full advantage of the opportunities to build on our unique market position," Merlo said in a statement. "In my new role, I look forward to continuing our positive momentum and to further enhancing the long-term value of the company. Tom has inspired our organization to achieve great things, and we look forward to building on his legacy."
The company said it's starting a search for Merlo's successor as CVS/pharmacy president and will consider internal and external candidates. Merlo will continue to handle the CVS/pharmacy president responsibilities until a replacement is named.
To facilitate the leadership transition, CVS Caremark said it has formed an Office of the Chairman that includes Ryan, Merlo and Per Lofberg, president of Caremark Pharmacy Services, the company's pharmacy benefit management business.
"The plan we are announcing today will provide for a smooth, seamless transition in the leadership of CVS Caremark," Ryan commented. "Larry Merlo is a high-energy, customer-focused leader who has delivered outstanding results in every position he has held. He has worked alongside me for the past 20 years and has been instrumental in developing our vision for CVS Caremark as an integrated health care company. With his experience and proven track record, Larry is the ideal executive to lead our business forward.
"Moreover, in Larry and Per, we have two of the most talented and knowledgeable managers in the industry. With their complementary backgrounds, CVS Caremark is in excellent hands," Ryan added.
A 30-year veteran of the PBM industry and former chairman of Merck-Medco Managed Care LLC (which became Medco Health Solutions), Lofberg joined CVS Caremark in January 2010 to strengthen the PBM business, expand its market position and further develop the company's unique integrated health care model.
"Larry has been a terrific partner as we've worked together this year," Lofberg stated, "and I look forward to our further collaboration as we continue to develop our integrated health care offering and build on the success we have already achieved."
Terry Murray, lead director on the CVS Caremark board, noted Ryan's role in growing the company from a regional drug chain to a health care powerhouse.
"Tom's accomplishments at CVS Caremark have been nothing short of spectacular," Murray remarked. "Under his leadership, CVS has evolved from a regional drug store chain with revenue of $5 billion in 1994 to the nation's largest pharmacy health care provider with revenue approaching $100 billion. We thank Tom for all he has done over the past 36 years and look forward to his continued leadership during the transition period ahead."
Wall Street reacted well to the CEO succession plan, which was announced before the market opened. CVS Caremark shares rose 50 cents Wednesday to close at $36.32.
*Editor's Note: CVS Caremark stock information added May 13.