Fixing caulking around Windows

[Nader Hachem]

Hey all,

I have a window in my home bedroom that seems to have old caulking that's looks like it's breaking down on the side of the window and I want to recaulk. The gap is maybe an inch big.

On the side of the window it looks like there is this yellow foam pad behind what was the caulking that now broke down. How would I approach this? Just remove the old caulking, clean and recaulk over the pad? Or should I replace that pad too? Not sure what it is.

Thanks guys