Back to Business at Caremark

CVS' partner pledges to put a nasty merger fight behind it.
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CEO Mac Crawford can finally relax.

At a calm shareholder meeting on Friday, Caremark investors

approved a merger with


(CVS) - Get Report

that had been hotly contested for months. Caremark said that "a substantial majority" of its shareholders had voted in favor of the merger, although the company shared no details about how many investors attempted to block it.

Crawford, set to retire from day-to-day management with rich change-of-control benefits, seemed more relieved than thrilled with his hard-fought victory in the end.

"I'm pretty quiet," Crawford explained after the meeting. "My employees don't see me high-fiving them down the hall," either.

Besides, he added, "It doesn't really matter what you did yesterday."

Rather, Crawford indicated, Caremark is now squarely focused on tomorrow and a bright future with CVS. Still, whether he likes it or not, critics still hope to punish him and his fellow board members for their past behavior.

CtW Investment Group is already urging CVS to fully review Caremark's past stock-option grants -- which look clearly backdated to some -- then share its findings with the public and ban any affected Caremark directors from serving on the combined company's board. CtW formally raised this suggestion at CVS's shareholder meeting on Thursday but didn't reiterate its stand during Caremark's own special meeting on Friday.

Brishen Rogers, an attorney for CtW, said he was "surprised and frusrtated" that Caremark had called for no public comments after addressing the formal business at hand. Caremark allowed questions, but fielded none, before the voting polls closed.

"The merger itself is accomplished at this point," Rogers conceded after the meeting. "But we still want to protect the value of the

combined company" going forward.

CtW, whose clients will rank as major stockholders of the new company, remains concerned about Caremark's compensation policies. Besides issuing stock options that look backdated, the firm says, Caremark has promised lucrative change-of-control benefits to company executives who will actually keep their jobs.

Crawford disagrees. He insists that he alone will be collecting change-of-control awards that have long been included in his contract. In contrast, he says, other Caremark executives will be pocketing "retention bonuses" for their continued service instead.

Crawford himself will serve as non-executive chairman of the combined company. Although some expect him to leave soon, the 58-year-old Crawford indicated on Friday that he will lead the board as long as his health allows.

To be fair, the recent takeover battle -- which included a hostile bid from

Express Scripts


-- could have aged Crawford a bit. From the start, he has come under fire for allegedly seeking a sweetheart deal for company executives while shortchanging ordinary shareholders in the process. Express Scripts, which initially came in with a higher offer for the company, took pains to boost that perception.

Crawford, in turn, found fault with Express Scripts on Friday. He insisted that Express Scripts had "very meticulously" crafted an offer that met none of the requirements set forth under the rules laid out in Caremark's merger agreement with CVS. Then, he suggested, Express Scripts acted as if it had been wronged instead.

"They refused to sign a confidentiality agreement on the same terms as CVS," Crawford said. "That's the first thing. ...

Then they would keep complaining about not having confidential information."

Crawford hinted that he, personally, would have handled the entire matter differently.

"I would have come in with a firm proposal," he said. "I know enough about this business to know what the synergies" are going to be.

Express Scripts originally projected higher synergies than CVS had, even without looking at Caremark's books. But CVS, in turn, raised its own synergy targets and somehow uncovered new revenue opportunities, to boot.

Crawford portrayed those targets as highly achievable on Friday. Indeed, he sees swift progress for the combined company overall. He expects the merger deal to close next week and the "heavy lifting" associated with integration to be addressed within six months to a year.

Meanwhile, Crawford portrayed the CVS-Caremark merger as a "historical ... game-changing event" for the pharmaceutical industry.

"I won't say this hasn't been a grueling three months; it has been," Crawford admitted on Friday. But "the real story here is the future. ... It is time for us now to go back to business."