UPDATE 2-Incoming CVS Caremark CEO to start earlier

* Merlo, COO, to become CEO on March 1

* Outgoing CEO to stay on as nonexec chairman through May

* Shares down 0.4 pct in morning trading (Adds share activity, background)

NEW YORK, Jan 24 (Reuters) - CVS Caremark Corp CVS.N said on Monday that Larry Merlo will take the reins as the drugstore chain operator's chief executive in March, two months earlier than expected.

Merlo, who is currently CVS’ chief operating officer, will become CEO on March 1, replacing Thomas Ryan. He had been expected to become CEO in May, according to a succession plan laid out last year. The company did not explain why Merlo’s start date had been moved up.

Ryan will stay on as nonexecutive chairman until he retires at CVS’ annual shareholder meeting in May.

Merlo had been temporarily heading up CVS’ retail business, which includes 7,100 drugstores, until last week, when CVS named two executives to oversee the unit on an interim basis. In December, a Delaware court blocked a Wal-Mart Stores executive from taking the job. [ID:nN18121141]

CVS shares were down 15 cents, or 0.4 percent, at $35.26 in morning trading. (Reporting by Phil Wahba, editing by Gerald E. McCormick, Dave Zimmerman)