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CVS mulls options amid dispute over Mullany hiring
December 17th, 2010
WOONSOCKET, R.I. – It appears increasingly unlikely that former Walmart executive Hank Mullany will join CVS/pharmacy.
In the wake of a decision by a Delaware judge to prevent, at least temporarily, Mullany from becoming president of the drug chain, sources close to parent company CVS Caremark Corp. indicate that it is making plans to put the issue behind it and move on.
Without commenting directly on CVS' intentions, a spokeswoman said in a statement, "We are disappointed with the court's decision and are fully evaluating all of our options. In the interim, Larry Merlo, president and chief operating officer of CVS Caremark, will continue to be responsible for CVS/pharmacy retail operations, supported by his seasoned senior leadership team."
Judge Travis Laster of Delaware Chancery Court on Wednesday granted Walmart's request for a preliminary injunction to bar Mullany from being hired by CVS after a hearing on the matter. A trial is scheduled to begin in March.
In its lawsuit, Walmart claims Mullany's move to CVS would violate a noncompete agreement because of his extensive knowledge of confidential information about the discounter's current operations and future plans. Mullany, who joined Walmart in 2006, was an executive vice president at the Bentonville, Ark.-based company and president of the Walmart North division, with responsibility for 1,300 stores in 19 states.
CVS and Walmart both operate pharmacy businesses that are among the nation's three largest, and both sell the full range of traditional front-end "drug store" merchandise.
For CVS, the ongoing legal dispute creates the prospect of leaving a critical management post without a full-time occupant for an extended period. The start of the trial is several months away, and whatever decision the court reaches could well be appealed.
Merlo had held the post of CVS/pharmacy president until last May when, as part of a corporate succession plan, he was named president and chief operating officer of CVS Caremark. At the same time, he was designated to succeed Tom Ryan as chief executive officer of the corporation when Ryan steps down from that role next year.
CVS Caremark announced the appointment of Mullany to head its retail operations on Dec. 3 and indicated he would start the job several days later. However, just hours after the CVS announcement of Mullany's hiring, Walmart obtained a temporary restraining order from the Delaware Court of Chancery.