2nd UPDATE: CVS's Merlo To Assume CEO Post Ahead Of Plan

CVS Caremark Corp. (CVS) said President and Chief Operating Officer Larry Merlo will succeed retiring Chief Executive Thomas Ryan as CEO on March 1, two months earlier than planned when the move was announced in May.

The May news had surprised Wall Street, given the relatively young age of Ryan, now 58, and his major role in combining drugstore operator CVS and pharmacy benefits manager Caremark. At the time, the company named Merlo to his current posts, elected him a director and said he was slated to take over the chief executive post following Ryan's retirement at this May's annual meeting.

Carolyn Castel, a CVS spokeswoman, said the accelerated timetable to replace Ryan as CEO is attributable solely to Merlo's ability to handle the job even sooner than the original expectations. Merlo has been with CVS nearly 20 years, and Ryan joined CVS as a pharmacist 36 years ago, rose to CEO in 1998 and became chairman in 2007.

CVS also said Monday that Chairman Ryan will become non-executive chairman when Merlo takes the CEO post in March, and serve in that position until the annual meeting in May, at which point CVS plans to elect current director David Dorman non-executive chairman. Dorman also serves as non-executive chairman of Motorola Solutions Inc. (MSI), one of the two companies formed by the split up of Motorola Inc. earlier this month. When he takes the chair of the CVS board he will turn the Motorola Solutions chair to its current CEO and become that company's lead independent director.

Motorola Solutions said on Dec. 1 that Dorman would be chairman when the company began independent operations and serve in that post until May, at which point its CEO would assume the chairmanship. A Motorola Solutions spokesman said its plan was made to coincide with its own annual meeting in May; Castel couldn't promptly speak to when CVS told Dorman of its decision or when Dorman accepted the post.

Dorman has worked for private equity firm Warburg Pincus and was the chairman and CEO of what is now AT&T Inc. (T) for three years until it merged with SBC Communications in November 2005.

CVS's succession plans have faced setbacks in filling Merlo's vacated position as the erstwhile president of its pharmacy and retail operations. Last month, a Delaware judge blocked CVS's attempt to hire Hank Mullany, a former Wal-Mart Stores Inc. (WMT) executive, as president of its CVS/pharmacy division. Wal-Mart had filed a lawsuit alleging Mullany's non-competition agreement with the world's largest retailer prohibits him from working at CVS.

Last week, CVS said it abandoned its attempts to hire Mullany as president of CVS/pharmacy and instead named its two highest-ranking retail executives to manage the retail business on an interim basis as it searches for a new president.

Shares of CVS were up 5 cents at $35.46 in recent trading. The stock is up about 12.5% in the past three months and more than 6% over the past year.

-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com

--Matt Jarzemsky contributed to this article.

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