Chairman Voluntarily Reduces Pension by $45 million, Compensation Committee Implements Changes to Long-Term Equity and Cash Compensation Programs
SAN FRANCISCO, Calif., February 28, 2014 – 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 programs.
“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.
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