Chairman Voluntarily Reduces Pension by $45 million, Compensation
Committee Implements Changes to Long-Term Equity and Cash Compensation
SAN FRANCISCO--(BUSINESS WIRE)--
McKesson Corporation (NYSE: MCK) today announced that its Board of
Directors has implemented further changes to the Company’s governance
and compensation practices. These changes build on the modifications
announced on January 21, 2014.
John H. Hammergren, the Company’s Chairman, President, and Chief
Executive Officer, acted to voluntarily reduce his pension benefit in a
letter he submitted to Jane E. Shaw, Ph.D., Chair of the Compensation
Committee of the Board of Directors. The letter resulted from
conversations between Mr. Hammergren and the Board of Directors
following their consideration of shareholder feedback. Effective
immediately, the benefit Mr. Hammergren would have been contractually
entitled to under the Executive Benefit Retirement Plan (EBRP) as of
March 31, 2013 was decreased by approximately $45 million. This change
significantly reduces the benefit amount and eliminates the volatility
of pension benefit calculations which result from fluctuations in
interest rate or other actuarial assumptions.
In addition, the Compensation Committee redesigned its long-term equity
and cash incentive programs, as well as its compensation peer group,
based on investor feedback and a comprehensive review by its new
independent compensation consultant under the direction of Dr. Shaw.
Beginning with fiscal year 2015, payouts to executive officers under
McKesson’s restricted stock unit program will be determined solely by
comparing McKesson’s total shareholder return (TSR) over a three-year
period against TSR for the S&P 500 Health Care Index for the same
period. The Committee also changed the performance period from one to
three years; the first payout under this new program will occur in May
2017. The Compensation Committee also made adjustments to the financial
metrics being used in the company’s annual and long-term cash incentive
“We continue to address the input we hear from our shareholders and are
committed to maintaining industry-leading governance and compensation
practices,” said Dr. Shaw. “We commend John’s leadership in acting to
voluntarily modify his employment agreement, yet even more importantly,
we applaud him for his leadership of McKesson over the past 15 years.
Under his guidance, McKesson has built one of the best management teams
in healthcare, created tremendous value for its customers, and delivered
outstanding financial performance, generating total shareholder return
at a compound annual growth rate of more than 16% over the last decade.
We thank him for his contributions and look forward to his continued
stewardship as Chairman and CEO.”
About McKesson Corporation
McKesson Corporation, currently ranked 14th on the FORTUNE 500, is a
healthcare services and information technology company dedicated to
making the business of healthcare run better. McKesson partners with
payers, hospitals, physician offices, pharmacies, pharmaceutical
companies and others across the spectrum of care to build healthier
organizations that deliver better care to patients in every setting.
McKesson helps its customers improve their financial, operational, and
clinical performance with solutions that include pharmaceutical and
medical-surgical supply management, healthcare information technology,
and business and clinical services. For more information, visit www.mckesson.com.
Investors and Financial Media:
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and Business Media:
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Source: McKesson Corporation