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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cardinal Health Inc | NYSE:CAH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-3.73 | -3.62% | 99.25 | 102.26 | 98.24 | 101.68 | 3,445,968 | 01:00:00 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to § 240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4
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Proposed maximum aggregate value of transaction:
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(5
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1
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Amount Previously Paid:
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(2
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Notice of Annual Meeting of Shareholders
To Be Held November 8, 2017 |
September 21, 2017
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JESSICA L. MAYER
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Executive Vice President, Deputy General Counsel and
Corporate Secretary
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•
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In July 2017, we acquired the Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses (the "Patient Recovery Business") from Medtronic plc for $6.1 billion. These well-established, industry-leading product lines are complementary to our medical product business, fit naturally into our customer offering and expand our global reach. The new portfolio will help us further expand our scope in the operating room, in long-term care facilities and in home healthcare, reaching customers across the entire continuum of care.
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•
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In our Pharmaceutical segment, our Specialty Solutions business had outstanding growth, expanding its therapeutic reach and growing its hospital and physician customer base, and we saw excellent performance from our Red Oak Sourcing generic sourcing venture with CVS Health Corporation.
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•
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In our Medical segment, our medical products distribution business had its strongest growth in recent years, and we continued to expand our Cardinal Health branded product portfolio with nearly 12,000 product SKUs in 850 categories, more than double from five years ago. We also saw excellent growth from our naviHealth business.
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•
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Revenue increased 7% to a record $130.0 billion.
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•
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GAAP diluted earnings per share ("EPS") decreased 7% to $4.03, while non-GAAP diluted EPS
*
increased 3% to $5.40, reflecting a challenging generic pharmaceutical pricing environment.
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•
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Our Pharmaceutical segment grew revenue 7%, while segment profit decreased 12% largely driven by the generic pharmaceutical pricing environment, partially offset by the benefits from Red Oak Sourcing.
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•
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Our Medical segment grew revenue 9% and segment profit 25%, with profit growth being driven by contributions from the naviHealth business, Cardinal Health branded products and distribution services.
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•
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We returned $1.2 billion to shareholders, including $1.80 per share in dividends and $600 million in share repurchases.
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*
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We provide the reasons we use non-GAAP financial measures and the reconciliations to their most directly comparable U.S. Generally Accepted Accounting Principles ("GAAP") financial measures on pages 18 through 20 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 (the "Fiscal 2017 Form 10-K").
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Cardinal Health
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2017 Proxy Statement
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ii
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Cardinal Health
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2017 Proxy Statement
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Cardinal Health
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2017 Proxy Statement
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iii
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Page
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iv
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Cardinal Health
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2017 Proxy Statement
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By telephone.
You may vote your shares 24 hours a day by calling the toll free number 1-800-652-VOTE (8683) within the United States, U.S. territories or Canada, and following instructions provided by the recorded message. You will need to enter identifying information that appears on your proxy card or the Notice. The telephone voting system allows you to confirm that your votes were properly recorded.
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By Internet.
You may vote your shares 24 hours a day by logging on to a secure website,
www.envisionreports.com/CAH
, and following the instructions provided. You will need to enter identifying information that appears on your proxy card or the Notice. As with the telephone voting system, you will be able to confirm that your votes were properly recorded.
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By mail.
If you received a proxy card, you may mark, sign and date your proxy card and return it by mail in the enclosed postage-paid envelope.
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Cardinal Health
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2017 Proxy Statement
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1
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2
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Cardinal Health
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2017 Proxy Statement
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David J. Anderson
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Age
68
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Director since
2014
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Senior Vice President and Chief Financial Officer of Honeywell International Inc. (retired); Former Executive Vice President and Chief Financial Officer of Alexion Pharmaceuticals, Inc.
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||||
Independent Director
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Director Qualification Highlights
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|||
Other Public Boards:
American Electric Power Company, Inc., a public utility holding company (since 2011); B/E Aerospace, Inc., a manufacturer of aircraft interior products (2014 -2017); Fifth Street Asset Management Inc., an alternative asset manager (2014 - 2015)
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ü
Financial Literacy / Expertise - Former CFO roles
ü
Healthcare
ü
International
ü
Executive Leadership
ü
Strategic Planning / Acquisitions
ü
Technology
ü
Operations
ü
Regulatory / Public Policy
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Cardinal Health
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2017 Proxy Statement
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3
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Colleen F. Arnold
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Age
60
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Director since
2007
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Senior Vice President, Sales and Distribution, International Business Machines Corporation (retired)
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Independent Director
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Director Qualification Highlights
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Other Public Boards:
None
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ü
Technology
ü
International and Global Leadership
ü
Operations
ü
Executive Leadership
ü
Strategic Planning
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George S. Barrett
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Age
62
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Director since
2009
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Chairman and Chief Executive Officer, Cardinal Health, Inc.
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||||
Other Public Boards
: Eaton Corporation plc, a diversified power management company (2011 - 2015)
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Director Qualification Highlights
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ü
Healthcare
ü
Operations
ü
Strategic Planning
ü
Executive Leadership
ü
International
ü
Regulatory / Public Policy
ü
Financial Expertise
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4
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Cardinal Health
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2017 Proxy Statement
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Carrie S. Cox
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Age
60
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Director since
2009
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Chairman and Chief Executive Officer of Humacyte, Inc.; Executive Vice President and President of Global Pharmaceuticals, Schering-Plough Corporation (retired)
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||||
Independent Director
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Director Qualification Highlights
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Other Public Boards:
Texas Instruments Incorporated, a developer, manufacturer and marketer of semiconductors (since 2004); Celgene Corporation, a biopharmaceutical company (since 2009)
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ü
Healthcare
ü
International
ü
Operations
ü
Executive Leadership
ü
Strategic Planning
ü
Regulatory / Public Policy
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Calvin Darden
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Age
67
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Director since
2005
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Senior Vice President of U.S. Operations of United Parcel Service, Inc. (retired)
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Independent Director
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Director Qualification Highlights
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Other Public Boards:
Target Corporation, an operator of large-format general merchandise discount stores (since 2003); Coca-Cola Enterprises, Inc., a marketer, manufacturer and distributor of nonalcoholic beverages in selected international markets (2004 - 2016)
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ü
Operations
ü
Distribution / Supply Chain
ü
Executive Leadership
ü
Strategic Planning
ü
Labor Relations
ü
International
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Cardinal Health
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2017 Proxy Statement
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5
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Bruce L. Downey
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Age
69
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Director since
2009
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Chairman and Chief Executive Officer of Barr Pharmaceuticals, Inc. (retired); Partner of NewSpring Health Capital II, L.P.
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Independent Director
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Director Qualification Highlights
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Other Public Boards:
Momenta Pharmaceuticals, Inc., a biotechnology company (since 2009)
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ü
Healthcare
ü
Regulatory / Public Policy
ü
Operations
ü
International
ü
Financial Expertise
ü
Executive Leadership
ü
Strategic Planning
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Patricia A. Hemingway Hall
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Age
64
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Director since
2013
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President and Chief Executive Officer of Health Care Service Corporation (retired)
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||||
Independent Director
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Director Qualification Highlights
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Other Public Boards:
ManpowerGroup, Inc., a workforce solutions company (since 2011)
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ü
Healthcare
ü
Regulatory / Public Policy / Government
ü
Operations
ü
Financial Expertise
ü
Executive Leadership
ü
Strategic Planning
ü
Technology
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6
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Cardinal Health
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2017 Proxy Statement
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Clayton M. Jones
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Age
68
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Director since
2012
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Chairman, President and Chief Executive Officer of Rockwell Collins, Inc. (retired)
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||||
Independent Director
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Director Qualification Highlights
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Other Public Boards:
Deere & Company, an agricultural and construction machinery manufacturer (since 2007); Motorola Solutions, Inc., a data communications and telecommunications equipment provider (since 2015); Rockwell Collins, Inc. (2001 - 2014)
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ü
Operations
ü
Executive Leadership
ü
Strategic Planning
ü
Technology
ü
Financial Expertise
ü
International
ü
Regulatory / Public Policy / Government
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Gregory B. Kenny
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Age
64
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Director since
2007
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President and Chief Executive Officer of General Cable Corporation (retired)
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Independent Lead Director
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Director Qualification Highlights
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Other Public Boards:
Ingredion Incorporated, a corn refining and ingredient company (since 2005); AK Steel Holding Corporation, an integrated producer of flat-rolled, carbon and electrical stainless steels and tubular products (since January 2016); General Cable Corporation (1997 - 2015)
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ü
Executive Leadership
ü
Operations
ü
Strategic Planning
ü
International
ü
Financial Expertise
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Cardinal Health
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2017 Proxy Statement
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7
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Nancy Killefer
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Age
63
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Director since
2015
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Senior Partner, Public Sector Practice, McKinsey & Company, Inc. (retired)
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||||
Independent Director
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Director Qualification Highlights
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Other Public Boards:
The Advisory Board Company, a provider of software and solutions to the healthcare and education industries (since 2013); Avon Products, Inc., a global manufacturer and marketer of beauty products (since 2013); CSRA, Inc., a provider of information technology services to the U.S. federal government (since 2015); Computer Sciences Corporation, a global provider of information technology services (2013 - 2015)
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ü
Strategic Planning
ü
Healthcare
ü
Regulatory / Public Policy / Government
ü
Technology
ü
Executive Leadership
ü
Financial Expertise
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David P. King
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Age
61
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Director since
2011
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Chairman, President and Chief Executive Officer of Laboratory Corporation of America Holdings
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||||
Independent Director
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Director Qualification Highlights
|
|||
Other Public Boards:
Laboratory Corporation of America Holdings (since 2007)
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ü
Healthcare
ü
Regulatory / Public Policy
ü
Strategic Planning
ü
Operations
ü
Executive Leadership
ü
Financial Expertise
ü
International
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8
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Cardinal Health
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2017 Proxy Statement
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Cardinal Health
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2017 Proxy Statement
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9
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•
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works closely with the Chairman in developing the agenda, materials and schedule for Board meetings and approves the agenda and information sent to the Board;
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•
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consults with and advises the Chairman on matters arising between Board meetings relating to our business, strategy, operations or governance;
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•
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leads the Board's annual self-evaluation in coordination with the Nominating and Governance Committee;
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•
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reviews the results of the evaluation of individual directors with those directors;
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•
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contributes to the annual performance assessment of the Chief Executive Officer;
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•
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participates in engagement with major shareholders;
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•
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sets the agenda for and leads all executive sessions of independent directors;
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•
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serves as a liaison between the Chairman and the independent directors; and
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•
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has the authority to call additional executive sessions of the independent directors.
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†
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Total shareholder return over the period from August 31, 2009, when Mr. Barrett became Chairman and Chief Executive Officer, through June 30, 2017 expressed as a percentage, calculated based on changes in stock price assuming reinvestment of dividends.
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10
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Cardinal Health
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2017 Proxy Statement
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Audit Committee
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||
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Members:
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The Audit Committee’s primary duties are to:
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Clayton M. Jones (Chair)
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•
oversee the integrity of our financial statements, including reviewing annual and quarterly financial statements and earnings releases and the effectiveness of our internal and disclosure controls;
•
appoint the independent auditor and oversee its qualifications, independence and performance, including pre-approving all services by the independent auditor;
•
review our internal audit plan and oversee our internal audit department;
•
approve the appointment of our Chief Legal and Compliance Officer and oversee our ethics and compliance program and our compliance with applicable legal and regulatory requirements; and
•
oversee our major financial and information technology risk exposures and our process for assessing and managing risk through our enterprise risk management program.
The Board has determined that each member of the Audit Committee is an “audit committee financial expert” for purposes of the SEC rules.
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David J. Anderson*
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Bruce L. Downey
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Patricia A. Hemingway Hall
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Meetings in fiscal 2017:
8
*Mr. Anderson served on the Audit Committee until December 2016 and was re-appointed to the Committee on September 14, 2017 after his employment with Alexion ended.
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Nominating and Governance Committee
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Members:
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The Nominating and Governance Committee’s primary duties are to:
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Gregory B. Kenny (Chair)
|
|
•
identify, review and recommend candidates for the Board, including recommending criteria to the Board for potential Board candidates and assessing the qualifications, attributes, skills, contributions and independence of individual directors and director candidates;
•
make recommendations to the Board concerning the structure, composition and functions of the Board and its committees;
•
advise the Board on Board leadership and leadership structure;
•
review our corporate governance guidelines and practices and recommend changes;
•
conduct the annual Board evaluation and oversee the process for the evaluation of each director; and
•
oversee our policies and practices regarding political expenditures.
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Colleen F. Arnold
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Patricia A. Hemingway Hall
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Meetings in fiscal 2017:
4
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Cardinal Health
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2017 Proxy Statement
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11
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Human Resources and Compensation Committee
|
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Members:
|
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The Compensation Committee’s primary duties are to:
•
approve compensation for the Chief Executive Officer, establish relevant performance goals, and evaluate his performance;
•
approve compensation for our other executive officers and oversee their evaluations;
•
make recommendations to the Board with respect to the adoption of, and administer, equity and incentive compensation plans;
•
review our non-management directors’ compensation program and recommend changes to the Board;
•
oversee the management succession process for the Chief Executive Officer and senior executives;
•
oversee workplace diversity initiatives and progress;
•
oversee and assess material risks related to compensation arrangements; and
•
assess the independence of Compensation Committee’s consultant and evaluate its performance.
The Compensation Discussion and Analysis, which begins on page 22, discusses how the Compensation Committee makes compensation-related decisions regarding our named executive officers.
The Compensation Committee acts as the administrator of our incentive plans and delegates to our officers authority to administer the plans with respect to participants who are not officers subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act").
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David P. King (Chair)
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Carrie S. Cox
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Calvin Darden
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Nancy Killefer
|
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Meetings in fiscal 2017:
6
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|
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||
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12
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Cardinal Health
|
2017 Proxy Statement
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•
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the Board's effectiveness, structure, composition and culture;
|
•
|
quality of Board discussions, including time devoted to discussion and presentations;
|
•
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the Board's performance in oversight of strategy, succession planning, business performance, regulatory compliance, risk management and other key areas; and
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•
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agenda topics for future meetings.
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Cardinal Health
|
2017 Proxy Statement
|
13
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•
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adopted a proxy access right for shareholders;
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•
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enhanced our disclosures regarding the Board's role in strategy and risk oversight;
|
•
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formalized additional responsibilities for the independent Lead Director and enhanced our disclosure about the Lead Director’s role and activities;
|
•
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formalized our annual individual director evaluation process and expanded our disclosure about the annual Board evaluation process;
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•
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enhanced our executive compensation clawback provision;
|
•
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provided more detailed disclosure in the Proxy Summary and the Compensation Discussion and Analysis Executive Summary; and
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•
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added a chart of director qualifications and experience in the proxy statement.
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14
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Cardinal Health
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2017 Proxy Statement
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The Opioid Epidemic and Risk Management
As a pharmaceutical distributor, we provide a safe and secure channel for transporting prescription medications of all types, including opioid pain medications, from manufacturers approved by the Food and Drug Administration to licensed pharmacies. Our role is to ensure medications of all kinds—oncology, blood pressure, antibiotic, pain and other medications—are available to pharmacies that are licensed by their state and regulated by the Drug Enforcement Administration to dispense these medications to patients with valid medical prescriptions. As a pharmaceutical distributor, we do not manufacture, market, promote or dispense these medications, and we do not interact with patients, diagnose medical conditions, write prescriptions or otherwise practice medicine. As part of our safe and secure distribution channel, we maintain a rigorous anti-diversion program to prevent opioid pain medications from being diverted for improper uses.
Our Board is highly engaged in oversight of our anti-diversion program and is committed to helping with the complex national opioid abuse public health crisis. Our anti-diversion program includes state-of-the-art controls designed to prevent diversion of pain medication from legitimate uses. The Board regularly reviews and discusses with management the effectiveness of our anti-diversion program, which focuses on our regulatory obligation to detect and report suspicious orders. The Board also monitors and discusses the causes of, and our role in helping to address, this national epidemic. In 2014, in response to a shareholder demand, the Board appointed a committee of independent directors to conduct a review of our anti-diversion program utilizing independent counsel. The committee found, among other things, that we had implemented and maintained a robust system of controls to detect and report suspicious orders and that our Board was well informed of those controls. Since that review, the Board has continued to actively focus on the effectiveness of our anti-diversion program and to support its continued enhancements through regular reviews with management.
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Cardinal Health
|
2017 Proxy Statement
|
15
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16
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Cardinal Health
|
2017 Proxy Statement
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Cardinal Health
|
2017 Proxy Statement
|
17
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Fiscal Year
Ended
June 30, 2017
($)
|
Fiscal Year
Ended
June 30, 2016
($)
|
||||
Audit fees (1)
|
9,546,537
|
|
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9,722,883
|
|
|
Audit-related fees (2)
|
2,722,451
|
|
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3,780,485
|
|
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Tax fees (3)
|
841,082
|
|
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980,523
|
|
|
All other fees
|
—
|
|
|
—
|
|
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Total fees
|
13,110,070
|
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14,483,891
|
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(1)
|
Audit fees include fees paid to Ernst & Young LLP related to the annual audit of our consolidated financial statements, the annual audit of the effectiveness
|
(2)
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Audit-related fees include fees for services related to acquisitions and divestitures, audit-related research and assistance, internal control reviews, service auditor’s examination reports and employee benefit plan audits.
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(3)
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Tax fees include fees for tax compliance and other tax-related services. The aggregate fees billed to us by Ernst & Young LLP for tax compliance and other tax-related services for fiscal 2017 were $797,514 and $43,568, respectively, and for fiscal 2016 were $546,722 and $433,801, respectively.
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18
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Cardinal Health
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2017 Proxy Statement
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Cardinal Health
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2017 Proxy Statement
|
19
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•
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each person known by us to own beneficially more than 5% of our outstanding common shares;
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•
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our directors;
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•
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our executive officers named in the Summary Compensation Table on page 30; and
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•
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all executive officers and directors as a group.
|
Name of Beneficial Owner
|
Common Shares
|
Additional Restricted and
Performance Share
Units (11)
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|||||||
Number
Beneficially
Owned
|
Percent
of
Class
|
||||||||
Wellington Management Group LLP (1)
|
40,120,566
|
|
|
12.7
|
|
|
—
|
|
|
BlackRock, Inc. (2)
|
23,919,543
|
|
|
7.6
|
|
|
—
|
|
|
The Vanguard Group (3)
|
22,358,098
|
|
|
7.1
|
|
|
—
|
|
|
Barrow, Hanley, Mewhinney & Strauss, LLC (4)
|
21,364,753
|
|
|
6.8
|
|
|
—
|
|
|
State Street Corporation (5)
|
16,617,021
|
|
|
5.3
|
|
|
—
|
|
|
David J. Anderson (6)(7)
|
7,785
|
|
|
*
|
|
|
—
|
|
|
Colleen F. Arnold (7)
|
7,511
|
|
|
*
|
|
|
19,569
|
|
|
George S. Barrett (8)
|
1,752,605
|
|
|
*
|
|
|
86,199
|
|
|
Donald M. Casey Jr. (8)
|
313,002
|
|
|
*
|
|
|
99,090
|
|
|
Carrie S. Cox (7)
|
6,758
|
|
|
*
|
|
|
16,306
|
|
|
Calvin Darden (7)
|
12,972
|
|
|
*
|
|
|
19,608
|
|
|
Bruce L. Downey (7)
|
16,975
|
|
|
*
|
|
|
18,387
|
|
|
Jon L. Giacomin (8)
|
148,271
|
|
|
*
|
|
|
24,684
|
|
|
Patricia A. Hemingway Hall (7)
|
6,323
|
|
|
*
|
|
|
2,612
|
|
|
Clayton M. Jones (7)
|
6,323
|
|
|
*
|
|
|
6,018
|
|
|
Michael C. Kaufmann (8)(9)
|
486,626
|
|
|
*
|
|
|
47,990
|
|
|
Gregory B. Kenny (7)
|
12,492
|
|
|
*
|
|
|
19,584
|
|
|
Nancy Killefer (7)
|
4,295
|
|
|
*
|
|
|
—
|
|
|
David P. King (7)
|
8,975
|
|
|
*
|
|
|
9,446
|
|
|
Craig S. Morford (8)
|
142,510
|
|
|
*
|
|
|
108,768
|
|
|
All Executive Officers and Directors as a Group (18 Persons)(10)
|
3,071,048
|
|
|
*
|
|
|
521,343
|
|
|
*
|
Indicates beneficial ownership of less than 1% of the outstanding shares.
|
(1)
|
Based on information obtained from a Schedule 13G/A filed with the SEC on February 9, 2017 by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP. The address of these entities is 280 Congress Street, Boston, Massachusetts 02210. These entities reported that, as of December 30, 2016, Wellington Management Group LLP had shared voting power with respect to 9,616,602 shares and shared
|
20
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Cardinal Health
|
2017 Proxy Statement
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|
(2)
|
Based on information obtained from a Schedule 13G/A filed with the SEC on January 23, 2017 by BlackRock, Inc. ("BlackRock"). The address of BlackRock is 55 East 52nd Street, New York, New York 10055. BlackRock reported that, as of December 31, 2016, it had sole voting power with respect to 19,458,612 shares and sole dispositive power with respect to all shares shown in the table. The number and percentage of shares held by BlackRock may have changed since the filing of the Schedule 13G/A.
|
(3)
|
Based on information obtained from a Schedule 13G/A filed with the SEC on February 10, 2017 by The Vanguard Group ("Vanguard"). The address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard reported that, as of December 31, 2016, it had sole voting power with respect to 500,349 shares, shared voting power with respect to 62,268 shares, sole dispositive power with respect to 21,797,227 shares and shared dispositive power with respect to 560,871 shares. The number and percentage of shares held by Vanguard may have changed since the filing of the Schedule 13G/A.
|
(4)
|
Based on information obtained from a Schedule 13G filed with the SEC on February 10, 2017 by Barrow, Hanley, Mewhinney & Strauss, LLC ("Barrow Hanley"). The address of Barrow Hanley is 2200 Ross Avenue, 31st Floor, Dallas, TX 75201-2761. Barrow Hanley reported that, as of December 31, 2016, it had sole voting power with respect to 5,459,797 shares, shared voting power with respect to 15,904,956 shares, and sole dispositive power with respect to all shares shown in the table. The number and percentage of shares held by Barrow Hanley may have changed since the filing of the Schedule 13G.
|
(5)
|
Based on information obtained from a Schedule 13G filed with the SEC on February 10, 2017 by State Street Corporation ("State Street"). The address of State Street is State Street Financial Center, One Lincoln Street, Boston, MA 02111. State Street reported that, as of December 31, 2016, it had sole voting power with respect to 90,515 shares, shared voting power with respect to 16,526,506 shares, and shared dispositive power with respect to all shares shown in the table. The number and percentage of shares held by State Street may have changed since the filing of the Schedule 13G.
|
(6)
|
Includes 400 common shares held by Mr. Anderson's spouse.
|
(7)
|
Common shares listed as being beneficially owned by our non-management directors include (a) outstanding restricted share units ("RSUs") that may be settled within 60 days, as follows: Mr. Anderson—6,323 shares; Ms. Arnold—6,323 shares; Ms. Cox—6,323 shares; Mr. Darden—6,323 shares; Mr. Downey—6,323 shares; Ms. Hemingway Hall—4,475 shares; Mr. Jones—6,323 shares; Mr. Kenny—7,113 shares; Ms. Killefer—4,295 shares; and Mr. King—6,323 shares; and (b) phantom stock over which the participants have sole voting rights under our DCP, as follows: Mr. Anderson—62 shares; Ms. Arnold—1,188 shares; Mr. Darden—5,514 shares; and Mr. Kenny—5,379 shares.
|
(8)
|
Common shares listed as being beneficially owned by our named executives include (a) outstanding stock options that are currently exercisable or will be exercisable within 60 days, as follows: Mr. Barrett—1,320,419 shares; Mr. Casey—260,841 shares; Mr. Giacomin—123,751 shares; Mr. Kaufmann—346,477 shares; and Mr. Morford—141,120 shares; and (b) outstanding RSUs that will be settled within 60 days, as follows: Mr. Casey—10,006 shares; Mr. Giacomin—1,779 shares; and Mr. Kaufmann —13,341 shares.
|
(9)
|
Includes 10 common shares held by Mr. Kaufmann's spouse.
|
(10)
|
Common shares listed as being beneficially owned by all executive officers and directors as a group include (a) outstanding stock options for an aggregate of 2,281,968 shares that are currently exercisable or will be exercisable within 60 days; (b) an aggregate of 85,270 RSUs that may or will be settled in common shares within 60 days; and (c) an aggregate of 12,143 shares of phantom stock over which the participants have sole voting rights under our DCP.
|
(11)
|
"Additional Restricted and Performance Share Units" include vested and unvested RSUs and vested performance share units ("PSUs") that will not be settled in common shares within 60 days. RSUs and PSUs do not confer voting rights and generally are not considered "beneficially owned" shares under the SEC rules.
|
|
|
Cardinal Health
|
2017 Proxy Statement
|
21
|
|
Name
|
Title
|
George S. Barrett
|
Chairman and Chief Executive Officer
|
Michael C. Kaufmann
|
Chief Financial Officer
|
Donald M. Casey Jr.
|
Chief Executive Officer—Medical Segment
|
Jon L. Giacomin
|
Chief Executive Officer—Pharmaceutical Segment
|
Craig S. Morford
|
Chief Legal and Compliance Officer
|
•
|
In July 2017, we acquired the Patient Recovery Business from Medtronic plc for $6.1 billion. These well-established, industry-leading product lines are complementary to our medical product business, fit naturally into our customer offering and expand our global reach. The new portfolio will help us further expand our scope in the operating room, in long-term care facilities and in home healthcare, reaching customers across the entire continuum of care.
|
•
|
In our Pharmaceutical segment, our Specialty Solutions business had outstanding growth, expanding its therapeutic reach and growing its hospital and physician customer base, and we saw excellent performance from our Red Oak Sourcing generic sourcing venture with CVS Health Corporation.
|
•
|
In our Medical segment, our medical products distribution business had its strongest growth in recent years, and we continued to expand our Cardinal Health branded product portfolio with nearly 12,000 product SKUs in 850 categories, more than double from five years ago. We also saw excellent growth from our naviHealth business.
|
•
|
Revenue increased 7% to a record $130.0 billion.
|
•
|
GAAP diluted EPS decreased 7% to $4.03, while non-GAAP diluted EPS
‡
increased 3% to $5.40, reflecting a challenging generic pharmaceutical pricing environment.
|
•
|
Our Pharmaceutical segment grew revenue 7%, while segment profit decreased 12% largely driven by the generic pharmaceutical pricing environment, partially offset by the benefits from Red Oak Sourcing.
|
•
|
Our Medical segment grew revenue 9% and segment profit 25%, with profit growth being driven by contributions from the naviHealth business, Cardinal Health branded products and distribution services.
|
•
|
We returned $1.2 billion to shareholders, including $1.80 per share in dividends and $600 million in share repurchases.
|
‡
|
We provide the reasons we use non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures on pages 18 through 20 of the Fiscal 2017 Form 10-K.
|
22
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
•
|
Reward performance.
We tie most of executive pay to performance based on financial, operational and individual performance.
|
•
|
Drive stock ownership.
Long-term incentive grants combined with stock ownership guidelines provide executives with meaningful ownership stakes and align their interests with shareholders.
|
•
|
Emphasize long-term incentive compensation.
We emphasize performance and retention through the use of long-term incentive compensation, which supports sustainable long-term shareholder return.
|
•
|
Attract, retain and reward the best talent to achieve superior results for shareholders.
We need to attract and retain top talent to drive superior results for our shareholders. We have structured our compensation programs to be competitive in the marketplace, with a focus on pay and performance alignment.
|
|
WHAT WE HAVE
|
WHAT WE DON'T HAVE
|
||
ü
|
Significant portion of executive pay "at risk"
|
û
|
No dividend equivalents on unvested PSUs or RSUs
|
ü
|
Different metrics for annual incentives and PSUs
|
û
|
No repricing of underwater options without shareholder approval
|
ü
|
Caps on annual cash incentive and PSU payouts
|
û
|
No hedging or pledging of company stock
|
ü
|
Minimum vesting period for long-term incentive awards
|
û
|
No executive pensions or supplemental retirement plans
|
ü
|
Stock ownership guidelines for directors and executive officers
|
û
|
No "single trigger" change of control arrangements
|
ü
|
Compensation recoupment ("clawback") provisions
|
û
|
No excise tax gross-ups upon change of control
|
ü
|
Long-standing, proactive shareholder engagement program
|
|
|
|
|
|
|
|
Cardinal Health
|
2017 Proxy Statement
|
23
|
|
|
24
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
(in millions)
|
Actual
|
Threshold
|
Goal
|
Maximum
|
Comments
|
|||
Adjusted non-GAAP operating earnings
|
$2,734
|
$2,853
|
$3,089
|
$3,749
|
Achieved 89% of the goal
|
|||
Enterprise funding percentage (1)
|
33%
|
40%
|
100%
|
200%
|
|
(1)
|
Had we achieved threshold performance, the enterprise funding percentage would have been subject to adjustment up or down by up to 10 percentage points based on tangible capital performance.
|
•
|
strategy, deal execution and financing efforts for the Patient Recovery Business acquisition;
|
•
|
outstanding growth in our Specialty Solutions and Nuclear Pharmacy Services businesses and excellent performance from Red Oak Sourcing;
|
•
|
significant and timely progress on the Pharmaceutical segment's project to replace certain finance and operating information systems and the pharmaceutical distribution business's SG&A expense control; and
|
•
|
strong performance of the naviHealth business and the Medical segment's distribution services.
|
Name
|
Target
(Percent of Base Salary)
|
Target
Amount
($)
|
Actual Amount
($)
|
Actual
(Percent of Target)
|
||||||
Barrett
|
150
|
|
1,980,000
|
|
|
0
|
|
|
0
|
|
Kaufmann
|
100
|
|
746,438
|
|
|
186,609
|
|
|
25
|
|
Casey
|
100
|
|
705,014
|
|
|
176,253
|
|
|
25
|
|
Giacomin
|
100
|
|
567,151
|
|
|
141,788
|
|
|
25
|
|
Morford
|
85
|
|
469,328
|
|
|
117,332
|
|
|
25
|
|
|
|
Cardinal Health
|
2017 Proxy Statement
|
25
|
Name
|
Annual Grant Target
($)
|
Actual Grants
|
|||||||||||
Stock
Options
($)
|
RSUs
($)
|
Target
PSUs
($)
|
Total
($)
|
||||||||||
Barrett
|
9,500,000
|
3,166,667
|
|
|
3,166,667
|
|
|
3,166,667
|
|
|
9,500,001
|
||
Kaufmann
|
2,850,000
|
997,500
|
|
|
997,500
|
|
|
950,000
|
|
|
2,945,000
|
||
Casey
|
2,850,000
|
997,500
|
|
|
997,500
|
|
|
950,000
|
|
|
2,945,000
|
||
Giacomin
|
2,850,000
|
950,000
|
|
|
950,000
|
|
|
950,000
|
|
|
2,850,000
|
||
Morford
|
1,550,000
|
516,667
|
|
|
516,667
|
|
|
516,667
|
|
|
1,550,001
|
|
Performance
(%)
|
Funding Percentage
|
||||
Threshold
|
7.0
|
|
|
50
|
|
|
Goal
|
12.0
|
|
|
100
|
|
|
Maximum
|
17.0
|
|
|
200
|
|
|
Actual
|
14.1
|
|
(1)
|
133
|
|
|
(1)
|
Non-GAAP diluted EPS CAGR was 11.9% and average annual dividend yield was 2.2% over the performance period. As permitted by the terms of the PSU agreements, the Compensation Committee excluded the respective $0.02 and $0.04 per share net positive effect of certain discrete tax items from fiscal 2014 and 2017 non-GAAP diluted EPS.
|
Name
|
Target
Number of Shares
(#)
|
Number of Shares
Earned
(#)
|
|||||
Barrett
|
37,333
|
|
|
49,653
|
|
|
|
Kaufmann
|
9,800
|
|
|
13,034
|
|
|
|
Casey
|
9,800
|
|
|
13,034
|
|
|
|
Giacomin
|
8,253
|
|
|
10,976
|
|
|
|
Morford
|
5,600
|
|
|
7,448
|
|
|
26
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
|
•
|
participating in meetings of the Compensation Committee;
|
•
|
providing compensation data on the Comparator Group; and
|
•
|
providing support, advice and recommendations related to compensation for our Chief Executive Officer and other executive officers, the design of our executive compensation program (including the plan design for annual and long-term incentives), the composition of our Comparator Group and director compensation.
|
|
Cardinal Health
|
2017 Proxy Statement
|
27
|
Aetna
|
Express Scripts
|
Quest Diagnostics
|
AmerisourceBergen
|
FedEx
|
Sysco
|
Anthem
|
Henry Schein
|
Thermo Fisher Scientific
|
Baxter International
|
Humana
|
United Parcel Service
|
Becton, Dickinson
|
Kimberly-Clark*
|
UnitedHealth Group
|
Boston Scientific
|
LabCorp
|
Walgreens Boots Alliance
|
CIGNA
|
McKesson
|
|
CVS Health
|
Owens & Minor
|
|
•
|
revenue ranging from 0.2 to 2 times our annual revenue;
|
•
|
market capitalization ranging from 0.2 to 5 times our market capitalization;
|
•
|
inclusion in the peer group of 5 or more of the other companies in our Comparator Group; and
|
•
|
inclusion in our Global Industry Classification Standard (GICS) sub-industry group, Health Care Equipment and Services.
|
|
Multiple of Base Salary/
Annual Cash Retainer
|
|
Chairman and Chief Executive Officer
|
6x
|
|
Chief Financial Officer and Segment CEOs
|
4x
|
|
Other executive officers
|
3x
|
|
Non-management directors
|
5x
|
28
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
|
Cardinal Health
|
2017 Proxy Statement
|
29
|
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)(4)
|
Total
($)
|
|||||||||||||
George S. Barrett
Chairman and Chief Executive Officer
|
2017
|
1,320,000
|
|
|
—
|
|
|
6,333,255
|
|
|
3,166,434
|
|
|
—
|
|
|
—
|
165,488
|
|
|
10,985,177
|
|
2016
|
1,320,000
|
|
|
—
|
|
|
6,491,739
|
|
|
3,330,665
|
|
|
2,386,755
|
|
|
—
|
131,928
|
|
|
13,661,087
|
|
|
2015
|
1,320,000
|
|
|
—
|
|
|
5,983,334
|
|
|
3,320,657
|
|
|
2,510,508
|
|
|
—
|
135,232
|
|
|
13,269,731
|
|
|
Michael C. Kaufmann
Chief Financial Officer
|
2017
|
746,438
|
|
|
186,609
|
|
|
1,947,561
|
|
|
997,432
|
|
|
—
|
|
|
—
|
14,979
|
|
|
3,893,019
|
|
2016
|
721,311
|
|
|
—
|
|
|
1,575,006
|
|
|
826,402
|
|
|
880,723
|
|
|
—
|
27,251
|
|
|
4,030,693
|
|
|
2015
|
688,630
|
|
|
—
|
|
|
4,540,005
|
|
|
841,018
|
|
|
1,053,260
|
|
|
—
|
36,338
|
|
|
7,159,251
|
|
|
Donald M. Casey Jr.
Chief Executive Officer—Medical Segment
|
2017
|
705,014
|
|
|
176,253
|
|
|
1,947,561
|
|
|
997,432
|
|
|
—
|
|
|
—
|
10,800
|
|
|
3,837,060
|
|
2016
|
671,311
|
|
|
—
|
|
|
1,505,062
|
|
|
806,369
|
|
|
894,188
|
|
|
—
|
22,830
|
|
|
3,899,760
|
|
|
2015
|
650,000
|
|
|
—
|
|
|
3,005,055
|
|
|
805,967
|
|
|
618,118
|
|
|
—
|
31,653
|
|
|
5,110,793
|
|
|
Jon L. Giacomin
Chief Executive Officer—Pharmaceutical Segment |
2017
|
567,151
|
|
|
141,788
|
|
|
1,900,060
|
|
|
949,930
|
|
|
—
|
|
|
—
|
14,966
|
|
|
3,573,895
|
|
2016
|
542,623
|
|
|
—
|
|
|
1,400,062
|
|
|
701,196
|
|
|
602,314
|
|
|
—
|
27,770
|
|
|
3,273,965
|
|
|
2015
|
480,685
|
|
|
—
|
|
|
1,237,482
|
|
|
629,304
|
|
|
679,692
|
|
|
—
|
37,170
|
|
|
3,064,333
|
|
|
Craig S. Morford
Chief Legal and Compliance Officer
|
2017
|
552,151
|
|
|
117,332
|
|
|
1,033,386
|
|
|
516,631
|
|
|
—
|
|
|
—
|
14,967
|
|
|
2,234,467
|
|
2016
|
531,311
|
|
|
—
|
|
|
1,620,055
|
|
|
420,707
|
|
|
576,487
|
|
|
—
|
37,579
|
|
|
3,186,139
|
|
|
2015
|
510,000
|
|
|
—
|
|
|
800,016
|
|
|
400,477
|
|
|
559,598
|
|
|
—
|
35,453
|
|
|
2,305,544
|
|
(1)
|
As discussed in Compensation Discussion and Analysis above, while we did not achieve the performance threshold for a 40% payout under our annual incentive plan, the Compensation Committee, in its discretion, awarded payouts to our named executives other than Mr. Barrett at 25% of their respective targets under under the Management Incentive Plan (the "MIP"). Mr. Barrett declined to be considered for an annual incentive payout, and the Compensation Committee did not award him a payout.
|
(2)
|
The amounts reported represent the aggregate grant date fair value of PSUs (at target) and RSUs granted during each fiscal year. The amounts reported in each fiscal year do not represent amounts paid to or realized by the named executives. See the Grants of Plan-Based Awards for Fiscal 2017 table on page 32 and the accompanying footnotes for information on the grant date fair value of each award granted in fiscal 2017. The value of the Fiscal 17-19 PSUs granted during fiscal 2017 assuming achievement of the maximum 200% funding would be: Mr. Barrett—$6,333,255; Mr. Kaufmann—$1,900,060; Mr. Casey—$1,900,060; Mr. Giacomin—$1,900,060; and Mr. Morford—$1,033,386. The named executives may never realize any value from the PSUs.
|
(3)
|
The amounts reported represent the grant date fair value of nonqualified stock options granted during each fiscal year and do not represent amounts paid to or realized by the named executives. See the Grants of Plan-Based Awards for Fiscal 2017 table on page 32 and the accompanying footnotes for information on the grant date fair value of stock options granted during fiscal 2017 and the assumptions used in determining the grant date fair value. The named executives may never realize any value from these stock options, and to the extent they do, the amounts realized may be more or less than the amounts reported above.
|
(4)
|
The elements of compensation included in the “All Other Compensation” column for fiscal 2017 are set forth in the table below.
|
30
|
Cardinal Health
|
2017 Proxy Statement
|
|
Name
|
Company
401(k) Savings
Plan
Contributions
($)
|
Company
Deferred
Compensation
Plan
Contributions
($)
|
Perquisites
($)(a)
|
Total
($)
|
||||||
Barrett
|
10,800
|
4,000
|
|
|
150,688
|
|
|
165,488
|
|
|
Kaufmann
|
10,800
|
4,179
|
|
|
—
|
|
|
14,979
|
|
|
Casey
|
10,800
|
0
|
|
|
—
|
|
|
10,800
|
|
|
Giacomin
|
10,800
|
4,166
|
|
|
—
|
|
|
14,966
|
|
|
Morford
|
10,800
|
4,167
|
|
|
—
|
|
|
14,967
|
|
|
(a)
|
The amounts shown include the value of perquisites and other personal benefits if the aggregate value exceeded $10,000. Where we report perquisites and other personal benefits, we quantify each perquisite or personal benefit if it exceeds $25,000. The amount reported for Mr. Barrett for fiscal 2017 included the incremental cost to us of his personal use of corporate aircraft ($149,731) and home security system monitoring fees.
|
•
|
to receive an annual base salary of at least $1,320,000;
|
•
|
to participate in our annual cash incentive award program with a target annual award of at least 150% of his annual base salary, payable based on performance objectives that our Compensation Committee determines in consultation with him; and
|
•
|
to receive an annual long-term incentive award grant comprised of PSUs, stock options, RSUs and other incentives as determined by the Committee with a target value of $9,500,000, with each annual award subject to the Board's discretion based on both company and individual performance.
|
|
Cardinal Health
|
2017 Proxy Statement
|
31
|
Name/
Award Type
|
Grant
Date
|
Approval
Date
|
Estimated Potential Payouts
Under Non-Equity Incentive Plan Awards (1)
|
Estimated Potential Payouts Under Equity Incentive Plan
Awards (2)
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(5)
|
Grant
Date Fair
Value of
Stock and
Option
Awards
($)(6)
|
||||||||||||||
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||||||||
Barrett
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive
|
|
8/4/2016
|
792,000
|
|
1,980,000
|
|
3,960,000
|
|
|
|
|
|
|
|
|
|||||||
PSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
19,033
|
|
38,065
|
|
76,130
|
|
|
|
|
3,166,627
|
|
||||||
Option
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
|
189,380
|
|
83.19
|
|
3,166,434
|
|
|||||||
RSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
38,065
|
|
|
|
3,166,627
|
|
||||||||
Kaufmann
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive
|
|
8/4/2016
|
298,575
|
|
746,438
|
|
1,492,876
|
|
|
|
|
|
|
|
|
|||||||
PSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
5,710
|
|
11,420
|
|
22,840
|
|
|
|
|
950,030
|
|
||||||
Option
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
|
59,655
|
|
83.19
|
|
997,432
|
|
|||||||
RSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
11,991
|
|
|
|
997,531
|
|
||||||||
Casey
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive
|
|
8/4/2016
|
282,005
|
|
705,014
|
|
1,410,028
|
|
|
|
|
|
|
|
|
|||||||
PSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
5,710
|
|
11,420
|
|
22,840
|
|
|
|
|
950,030
|
|
||||||
Option
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
|
59,655
|
|
83.19
|
|
997,432
|
|
|||||||
RSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
11,991
|
|
|
|
997,531
|
|
||||||||
Giacomin
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive
|
|
8/4/2016
|
226,860
|
|
567,151
|
|
1,134,302
|
|
|
|
|
|
|
|
|
|||||||
PSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
5,710
|
|
11,420
|
|
22,840
|
|
|
|
|
950,030
|
|
||||||
Option
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
|
56,814
|
|
83.19
|
|
949,930
|
|
|||||||
RSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
11,420
|
|
|
|
950,030
|
|
||||||||
Morford
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive
|
|
8/4/2016
|
187,731
|
|
469,328
|
|
938,656
|
|
|
|
|
|
|
|
|
|||||||
PSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
3,106
|
|
6,211
|
|
12,422
|
|
|
|
|
516,693
|
|
||||||
Option
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
|
30,899
|
|
83.19
|
|
516,631
|
|
|||||||
RSUs
|
8/15/2016
|
8/4/2016
|
|
|
|
|
|
|
6,211
|
|
|
|
516,693
|
|
(1)
|
This information relates to annual cash incentive award opportunities with respect to fiscal 2017 performance.
|
(2)
|
"Equity Incentive Plan Awards" are PSUs granted during the fiscal year under our 2011 LTIP that are eligible to vest after a three-year performance period based on the sum of (i) non-GAAP diluted EPS CAGR and (ii) average annual dividend yield. We accrue cash dividend equivalents that are payable when, and only to the extent that, the PSUs vest.
|
(3)
|
"All Other Stock Awards" are RSUs granted during the fiscal year under our 2011 LTIP that vest ratably over three years and accrue cash dividend equivalents that are payable when, and only to the extent that, the RSUs vest.
|
(4)
|
"All Other Option Awards" are nonqualified stock options granted during the fiscal year under our 2011 LTIP that vest ratably over three years and have a term of 10 years.
|
(5)
|
The stock options have an exercise price equal to the closing price of our common shares on the NYSE on the grant date.
|
(6)
|
We valued the PSUs and RSUs by multiplying the closing price of our common shares on the NYSE on the grant date ($83.19) by the number of PSUs (at target) and RSUs awarded. We valued the stock options granted utilizing a lattice model with the following assumptions: expected stock option life:
7.05
years; dividend yield:
2.16%
; risk-free interest rate:
1.42%
; and expected volatility:
23.86%
. The amounts reported represent the grant date fair value and do not represent amounts paid to or realized by the named executives. The named executives may never realize any value from the PSUs or stock options. To the extent they realize value from stock options, the amounts realized may be more or less than the amounts reported above.
|
32
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
Cardinal Health
|
2017 Proxy Statement
|
33
|
Award
|
Performance Measure
|
|
Calculation
|
Annual Cash Incentive
|
Adjusted non-GAAP operating earnings
(1)
|
|
Non-GAAP operating earnings
(2)
adjusted to exclude annual cash incentive expense to the extent below or above target performance, contributions to the DCP and 401(k) Savings Plan when we exceed pre-established performance goals and income or expense related to the performance of our DCP assets that is included within distribution, selling, general and administrative expenses in our consolidated statement of earnings.
|
|
Tangible capital
(1)
|
|
12-month average of total assets, less
total liabilities (other than interest-bearing long-term obligations), goodwill and other intangibles, net, and cash and equivalents.
|
PSUs
|
Sum of non-GAAP diluted EPS CAGR and average annual dividend yield
|
|
Non-GAAP diluted EPS CAGR is non-GAAP diluted EPS
(3)
for the last fiscal year of the performance period divided by non-GAAP diluted EPS for the last fiscal year preceding the performance period; the quotient is then raised to the power of one divided by the number of years in the performance period.
|
|
|
|
Average annual dividend yield is the sum of all cash dividends paid per share during a performance period divided by the number of years in the performance period; the quotient is then divided by our closing share price on the grant date.
|
(1)
|
We generally exclude the results of acquired or divested businesses from the adjusted non-GAAP operating earnings and tangible capital calculations if they are not included in our Board-approved annual budget. Accordingly, we excluded a few small acquisitions for fiscal 2017. The Compensation Committee also may make other adjustments to adjusted non-GAAP operating earnings and tangible capital for purposes of determining whether we achieved our performance goals, although none were made for fiscal 2017.
|
(2)
|
Non-GAAP operating earnings is operating earnings, excluding LIFO inventory credits and charges, restructuring and employee severance costs, amortization and other acquisition-related costs, impairments and gains and losses on disposal of assets and net litigation recoveries and charges.
|
(3)
|
Non-GAAP diluted EPS is non-GAAP net earnings from continuing operations attributable to Cardinal Health, Inc. divided by the diluted weighted average shares outstanding. Non-GAAP net earnings from continuing operations attributable to Cardinal Health, Inc. is net
earnings attributable to Cardinal Health, Inc., adjusted to exclude earnings and losses from discontinued operations, LIFO inventory credits and charges, restructuring and employee severance costs, amortization and other acquisition-related costs, impairments and gains and losses on disposal of assets, net litigation recoveries and charges, loss on extinguishment of debt and tax benefits and expenses associated with each of the items mentioned above. For purposes of the PSUs, the Compensation Committee may approve adjustments to how we calculate non-GAAP net earnings attributable to Cardinal Health, Inc. to reflect a change by us to the definition of that measure as presented to investors, exceptional acquisitions or divestitures, changes in accounting principles or other exceptional items that are not reflective of our operating performance.
|
34
|
Cardinal Health
|
2017 Proxy Statement
|
|
Name
|
Option Awards
|
Stock Awards
|
|||||||||||||||
Option Grant Date
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number of Securities Underlying
Unexercised Options
(#)
Unexercisable (1)
|
Option Exercise Price
($/Sh)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)(2)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)(3)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)(2)(3)
|
|||||||||
Barrett
|
8/15/2011
|
308,302
|
|
|
—
|
|
|
41.60
|
8/15/2021
|
|
|
|
|
|
|
||
|
8/15/2012
|
330,738
|
|
|
—
|
|
|
39.81
|
8/15/2022
|
|
|
|
|
|
|
||
|
8/15/2013
|
279,770
|
|
|
—
|
|
|
51.49
|
8/15/2023
|
|
|
|
|
|
|
||
|
8/15/2014
|
141,346
|
|
|
70,674
|
|
|
71.43
|
8/15/2024
|
|
|
|
|
|
|
||
|
8/15/2015
|
63,231
|
|
|
126,464
|
|
|
84.27
|
8/15/2025
|
|
|
|
|
|
|
||
|
8/15/2016
|
—
|
|
|
189,380
|
|
|
83.19
|
8/15/2026
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
79,848
|
|
(4)
|
6,221,756
|
106,264
|
|
(5)
|
8,280,091
|
||
Kaufmann
|
8/15/2011
|
76,909
|
|
|
—
|
|
|
41.60
|
8/15/2021
|
|
|
|
|
|
|
||
|
8/15/2012
|
96,291
|
|
|
—
|
|
|
39.81
|
8/15/2022
|
|
|
|
|
|
|
||
|
8/15/2013
|
68,316
|
|
|
—
|
|
|
51.49
|
8/15/2023
|
|
|
|
|
|
|
||
|
8/15/2014
|
35,798
|
|
|
17,900
|
|
|
71.43
|
8/15/2024
|
|
|
|
|
|
|
||
|
8/15/2015
|
15,689
|
|
|
31,378
|
|
|
84.27
|
8/15/2025
|
|
|
|
|
|
|
||
|
8/15/2016
|
—
|
|
|
59,655
|
|
|
83.19
|
8/15/2026
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
35,779
|
|
(6)
|
2,787,900
|
27,644
|
|
(7)
|
2,154,020
|
||
Casey
|
8/15/2012
|
83,731
|
|
|
—
|
|
|
39.81
|
8/15/2022
|
|
|
|
|
|
|
||
|
8/15/2013
|
75,148
|
|
|
—
|
|
|
51.49
|
8/15/2023
|
|
|
|
|
|
|
||
|
8/15/2014
|
34,306
|
|
|
17,154
|
|
|
71.43
|
8/15/2024
|
|
|
|
|
|
|
||
|
8/15/2015
|
15,308
|
|
|
30,618
|
|
|
84.27
|
8/15/2025
|
|
|
|
|
|
|
||
|
8/15/2016
|
—
|
|
|
59,655
|
|
|
83.19
|
8/15/2026
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
32,123
|
|
(8)
|
2,503,024
|
27,051
|
|
(9)
|
2,107,814
|
||
Giacomin
|
8/15/2012
|
26,166
|
|
|
—
|
|
|
39.81
|
8/15/2022
|
|
|
|
|
|
|
||
|
8/15/2013
|
21,349
|
|
|
—
|
|
|
51.49
|
8/15/2023
|
|
|
|
|
|
|
||
|
8/15/2014
|
9,766
|
|
|
4,884
|
|
|
71.43
|
8/15/2024
|
|
|
|
|
|
|
||
|
9/15/2014
|
16,024
|
|
|
8,013
|
|
|
74.96
|
9/15/2024
|
|
|
|
|
|
|
||
|
8/15/2015
|
13,312
|
|
|
26,624
|
|
|
84.27
|
8/15/2025
|
|
|
|
|
|
|
||
|
8/15/2016
|
—
|
|
|
56,814
|
|
|
83.19
|
8/15/2026
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
19,807
|
|
(10)
|
1,543,361
|
24,993
|
|
(11)
|
1,947,455
|
||
Morford
|
8/15/2011
|
12,795
|
|
|
—
|
|
|
41.60
|
8/15/2021
|
|
|
|
|
|
|
||
|
8/15/2012
|
37,444
|
|
|
—
|
|
|
39.81
|
8/15/2022
|
|
|
|
|
|
|
||
|
8/15/2013
|
39,038
|
|
|
—
|
|
|
51.49
|
8/15/2023
|
|
|
|
|
|
|
||
|
8/15/2014
|
17,046
|
|
|
8,524
|
|
|
71.43
|
8/15/2024
|
|
|
|
|
|
|
||
|
8/15/2015
|
7,987
|
|
|
15,974
|
|
|
84.27
|
8/15/2025
|
|
|
|
|
|
|
||
|
8/15/2016
|
—
|
|
|
30,899
|
|
|
83.19
|
8/15/2026
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
20,758
|
|
(12)
|
1,617,463
|
15,301
|
|
(13)
|
1,192,254
|
(1)
|
These stock options vest 33% on the first, second and third anniversaries of the grant date.
|
(2)
|
The market value is the product of
$77.92
, the closing price of our common shares on the NYSE on June 30, 2017, and the number of unvested stock awards.
|
(3)
|
Fiscal 15-17 PSUs are actual amounts that vested upon our achieving the performance goal over the performance period. Based on current performance in accordance with the SEC rules, PSUs for the fiscal 2016-2018 ("Fiscal 16-18 PSUs") assume payout at target and Fiscal 17-19 PSUs assume payout at threshold.
|
(4)
|
Reflects RSUs that vest as follows:
41,318
shares on August 15, 2017;
25,841
shares on August 15, 2018; and
12,689
shares on August 15, 2019.
|
|
Cardinal Health
|
2017 Proxy Statement
|
35
|
(5)
|
Reflects
49,653
Fiscal 15-17 PSUs,
37,578
Fiscal 16-18 PSUs and
19,033
Fiscal 17-19 PSUs.
|
(6)
|
Reflects RSUs that vest as follows:
11,180
shares on August 15, 2017;
13,341
shares on September 15, 2017;
7,261
shares on August 15, 2018; and
3,997
shares on August 15, 2019.
|
(7)
|
Reflects
13,034
Fiscal 15-17 PSUs,
8,900
Fiscal 16-18 PSUs and
5,710
Fiscal 17-19 PSUs.
|
(8)
|
Reflects RSUs that vest as follows:
10,938
shares on August 15, 2017;
10,006
shares on September 15, 2017;
7,182
shares on August 15, 2018; and
3,997
shares on August 15, 2019.
|
(9)
|
Reflects
13,034
Fiscal 15-17 PSUs,
8,307
Fiscal 16-18 PSUs and
5,710
Fiscal 17-19 PSUs.
|
(10)
|
Reflects RSUs that vest as follows:
7,645
shares on August 15, 2017;
1,779
shares on September 15, 2017;
6,576
shares on August 15, 2018;
3,807
shares on August 15, 2019.
|
(11)
|
Reflects
10,976
Fiscal 15-17 PSUs,
8,307
Fiscal 16-18 PSUs and
5,710
Fiscal 17-19 PSUs.
|
(12)
|
Reflects RSUs that vest as follows:
5,598
shares on August 15, 2017;
4,678
shares on November 15, 2017;
3,732
shares on August 15, 2018;
4,679
shares on November 15, 2018; and
2,071
on August 15, 2019.
|
(13)
|
Reflects
7,448
Fiscal 15-17 PSUs,
4,747
Fiscal 16-18 PSUs and
3,106
Fiscal 17-19 PSUs.
|
Name
|
Option Awards
|
|
Stock Awards
|
|
||||||||
Number
of Shares
Acquired on
Exercise
(#)
|
Value Realized
on Exercise
($)
|
Number
of Shares
Acquired on Vesting
(#)(1)
|
Value Realized
on Vesting
($)
|
|||||||||
Barrett
|
685,989
|
|
(2)
|
32,061,337
|
|
(2)
|
135,230
|
|
|
11,305,228
|
|
|
Kaufmann
|
—
|
|
|
—
|
|
|
48,167
|
|
|
3,915,506
|
|
|
Casey
|
59,180
|
|
|
2,545,598
|
|
|
45,043
|
|
|
3,682,153
|
|
|
Giacomin
|
62,951
|
|
|
2,892,986
|
|
|
13,911
|
|
|
1,148,123
|
|
|
Morford
|
—
|
|
|
—
|
|
|
19,324
|
|
|
1,615,486
|
|
|
(1)
|
This column represents the vesting during fiscal 2017 of PSUs granted during fiscal 2014 for the fiscal 2014-2016 performance period and RSUs granted during fiscal 2014, 2015 and 2016. The number of shares acquired on vesting includes the following PSUs and RSUs deferred at the election of the named executive, net of required withholdings: Mr. Casey—
2,939
RSUs; and Mr. Morford—
12,401
PSUs and
5,741
RSUs. See “Deferred Compensation” below for a discussion of deferral terms.
|
(2)
|
During fiscal 2017, Mr. Barrett exercised an option granted in August 2010, which had an expiration date of August 2017.
|
36
|
Cardinal Health
|
2017 Proxy Statement
|
|
Name/Award Type
|
Executive
Contributions
in Last FY
($)(1)(2)
|
Cardinal
Health
Contributions
in Last FY
($)(2)
|
Aggregate
Earnings
in Last FY
($)(3)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at Last
FYE
($)(4)
|
|||||||||
Barrett
|
|
|
|
|
|
|
|
|
|
|||||
DCP
|
126,923
|
|
|
8,000
|
|
|
284,198
|
|
|
—
|
2,388,404
|
|
|
|
Deferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
—
|
|
|
|
Kaufmann
|
|
|
|
|
|
|
|
|
|
|||||
DCP
|
130,128
|
|
|
7,146
|
|
|
351,567
|
|
|
—
|
3,250,142
|
|
|
|
Deferred shares
|
—
|
|
|
—
|
|
|
(2,019
|
)
|
|
—
|
1,747,824
|
|
|
|
Casey
|
|
|
|
|
|
|
|
|
|
|||||
DCP
|
104,504
|
|
|
4,000
|
|
|
4,688
|
|
|
—
|
434,240
|
|
|
|
Deferred shares
|
244,495
|
|
|
—
|
|
|
(21,242
|
)
|
|
—
|
5,210,355
|
|
|
|
Giacomin
|
|
|
|
|
|
|
|
|
|
|||||
DCP
|
279,406
|
|
|
7,600
|
|
|
232,420
|
|
|
—
|
1,782,876
|
|
|
|
Deferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
—
|
|
|
|
Morford
|
|
|
|
|
|
|
|
|
|
|||||
DCP
|
489,941
|
|
|
7,900
|
|
|
206,622
|
|
|
—
|
1,436,213
|
|
|
|
Deferred shares
|
1,509,233
|
|
|
—
|
|
|
(100,668
|
)
|
|
—
|
5,793,897
|
|
|
(1)
|
The DCP amounts shown include salary and fiscal 2016 cash incentive awards deferred during fiscal 2017. DCP amounts do not include the following amounts deferred from the fiscal 2017 cash incentive awards that were paid in fiscal 2018: Mr. Kaufmann—$18,661; Mr. Giacomin—$14,179.
|
(2)
|
DCP amounts included as contributions in the table and also reported as fiscal 2017 compensation in the Summary Compensation Table of this proxy statement are as follows: Mr. Barrett—$
130,923
; Mr. Kaufmann—$
42,473
; Mr. Casey—$
0
; Mr. Giacomin—$
72,196
; and Mr. Morford—$
17,621
.
|
(3)
|
We calculate the aggregate DCP earnings based upon the change in value of the investment options selected by the named executive during the year. Aggregate deferred shares earnings are calculated based upon the change in their total value from the first day of the fiscal year (or the vesting date, if later) to the last day of the fiscal year.
|
(4)
|
DCP amounts included in the aggregate balance at June 30, 2017 in the table and also reported as fiscal 2016 and 2015 compensation in the Summary Compensation Table of this proxy statement are as follows: Mr. Barrett—$
277,077
; Mr. Kaufmann—$
117,810
; Mr. Casey—$
0
; Mr. Giacomin—$
253,706
; and Mr. Morford—$
51,241
.
|
|
Cardinal Health
|
2017 Proxy Statement
|
37
|
|
|
Annual Incentives (MIP)
|
|
Long-Term Incentive Plan Awards
|
Termination for Cause (1)
|
|
None.
|
|
We may cancel unexercised stock options and unvested stock awards and require repayment of proceeds realized from vested awards for a specified period of time.
|
Involuntary Termination without Cause
|
|
If involuntarily terminated without cause after the beginning of the fourth quarter, the executive receives a prorated incentive payment based upon the length of employment during that fiscal year; if terminated earlier, there is no right to an incentive payment.
|
|
If involuntarily terminated without cause after the end of a performance period, the executive receives his PSUs as if he had remained employed through the settlement date; otherwise unvested equity awards are forfeited and the executive must exercise vested stock options within 90 days.
|
Termination Due to Retirement (2)
|
|
Prorated incentive payment based upon the length of employment during that fiscal year.
|
|
•
Stock options and RSUs held for at least six months vest, prorated based upon the length of employment during the vesting period, on an accelerated basis and outstanding stock options remain exercisable until the expiration of option term.
•
PSUs held for at least six months vest on the original vesting date, subject to achievement of the performance goals, but the amount is prorated based upon the length of employment during the performance period.
|
Termination Due to Death or Disability (3)
|
|
Prorated incentive payment based upon the length of employment during that fiscal year.
|
|
•
Stock options and RSUs held for at least six months vest on an accelerated basis and stock options remain exercisable until expiration of option term.
•
PSUs held for at least six months vest on the original vesting date, subject to achievement of the performance goals.
|
Change of Control (4)
|
|
No effect on amount or timing of any payments.
|
|
•
Awards vest on an accelerated basis only if (a) a qualifying termination occurs within two years after a change of control (including a "good reason" termination by the executive or an involuntary termination without cause) or (b) the surviving entity does not provide qualifying replacement awards.
•
In general, if employment terminates within two years after change of control, stock options remain exercisable until the earlier of three years from termination or expiration of option term.
•
The number of PSUs received is based on the actual performance before the change of control and expected performance for the remainder of the performance period.
|
(1)
|
A “termination for cause” under the MIP and 2011 LTIP generally means termination of employment for fraud or intentional misrepresentation, embezzlement, misappropriation, conversion of assets or the intentional violation of our written policies or procedures. Mr. Barrett's employment agreement also defines “termination for cause," which is discussed below under “Tables for Named Executives."
|
(2)
|
“Retirement” means termination of employment (other than by death or disability or a termination for cause) after attaining either age 55 and at least 10 years of continuous service or, for awards granted after July 1, 2017, age 60 and at least five years of continuous service. None of the named executives currently qualify for retirement
|
38
|
Cardinal Health
|
2017 Proxy Statement
|
|
(3)
|
“Disability” exists under the MIP and 2011 LTIP when an executive who is under the regular care of a physician is continuously unable to substantially perform his job or to be employed in any occupation for which the executive is qualified by education, training or experience. Mr. Barrett's employment agreement also defines “disability," which is discussed below under "Tables for Named Executives."
|
(4)
|
Under the 2011 LTIP, a “change of control” generally occurs when:
|
•
|
a person or group acquires 30% or more of Cardinal Health’s outstanding common shares or voting securities, subject to limited exceptions;
|
•
|
during any two-year period, individuals who as of the beginning of such two-year period constituted the Board cease for any reason to constitute at least a majority of the Board, unless the replacement directors are approved as described in the 2011 LTIP;
|
•
|
there is a consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of Cardinal Health's assets or another business combination unless (i) after the transaction all or substantially all of the owners of Cardinal Health's outstanding common shares or voting securities prior to the transaction own more than 50% of such securities after the transaction in substantially the same proportions; (ii) no person, subject to certain exclusions, owns 30% or more of the outstanding common shares or voting securities of the resulting entity (unless such ownership level existed before the transaction); and (iii) a majority of the directors of the resulting entity were members of Cardinal Health's Board (including applicable replacements as described above) when the transaction was approved or the transaction agreement was executed; or
|
•
|
our shareholders approve a complete liquidation or dissolution of Cardinal Health.
|
|
Cardinal Health
|
2017 Proxy Statement
|
39
|
Executive Benefits and Payments Upon
Termination of Employment or Change of Control (1) |
Involuntary Termination Without Cause or Termination by the Executive for Good Reason
($)(2)
|
Termination Due to Death or Disability
($)(3)
|
Involuntary Termination Without Cause or Termination by the Executive for Good Reason Within Two Years of Change of Control
($)(2)
|
||||||
Cash severance
|
6,600,000
|
|
|
—
|
|
|
6,600,000
|
|
|
Annual cash incentive
|
1,980,000
|
|
|
1,980,000
|
|
|
1,980,000
|
|
|
Long-term incentive awards (accelerated vesting) (4)
|
—
|
|
|
15,483,520
|
|
|
15,483,520
|
|
|
Medical and dental benefits (5)
|
25,771
|
|
|
25,771
|
|
|
25,771
|
|
|
Interest on deferred payments
|
50,890
|
|
|
11,744
|
|
|
50,890
|
|
|
Total
|
8,656,661
|
|
|
17,501,035
|
|
|
24,140,181
|
|
|
(1)
|
Assumes Mr. Barrett’s compensation to be a base salary of $
1,320,000
and that his fiscal 2017 cash incentive payout was at target, or $
1,980,000
(actual payout was $
0
).
|
(2)
|
The actual payments made under Mr. Barrett's employment agreement will be reduced to the extent necessary to eliminate any "golden parachute" excise tax under the Code provided that the value of the adjusted payments and benefits is not less than the amount Mr. Barrett otherwise would have received on an after-tax basis.
|
(3)
|
Under Mr. Barrett’s employment agreement, “disability” means he is absent from his duties on a full-time basis for at least 120 consecutive days, or an aggregate period of at least 180 days, as a result of incapacity due to mental or physical illness that is determined by a physician to be total and permanent.
|
(4)
|
Assumes the accelerated vesting of
112,976
PSUs at target,
386,518
stock options and
79,848
RSUs in the event of (a) a change of control with involuntary termination without cause or a termination by Mr. Barrett for "good reason" within two years after the change of control or if the surviving entity does not provide qualifying replacement awards or (b) a termination due to death or disability. We valued the accelerated vesting of stock awards by multiplying the closing price of our common shares on June 30, 2017 by the number of stock awards. We valued the accelerated vesting of stock options as the difference between the closing price of our common shares on June 30, 2017 and the exercise price for each stock option.
|
(5)
|
Under Mr. Barrett’s employment agreement, we are required to continue to provide him and his eligible dependents with the same medical and dental benefits coverage he would have been entitled to receive if he had remained an active employee for two years. The amounts reported are based on estimates determined by independent consultants.
|
40
|
Cardinal Health
|
2017 Proxy Statement
|
|
Executive Benefits and Payments Upon
Termination of Employment or Change of Control
|
Involuntary Termination Without Cause
($)
|
Termination Due to Death or Disability
($)
|
Involuntary Termination Without Cause or Termination by the Executive for Good Reason Within Two Years of Change of Control
($)
|
||||||
Kaufmann
|
|
|
|
|
|
|
|||
Cash severance
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual cash incentive (1)
|
746,438
|
|
|
746,438
|
|
|
746,438
|
|
|
Long-term incentive awards (accelerated vesting) (2)
|
—
|
|
|
5,251,021
|
|
|
5,251,021
|
|
|
Total
|
746,438
|
|
|
5,997,459
|
|
|
5,997,459
|
|
|
Casey
|
|
|
|
|
|
|
|||
Cash severance
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual cash incentive (1)
|
705,014
|
|
|
705,014
|
|
|
705,014
|
|
|
Long-term incentive awards (accelerated vesting) (2)
|
—
|
|
|
4,915,097
|
|
|
4,915,097
|
|
|
Total
|
705,014
|
|
|
5,620,111
|
|
|
5,620,111
|
|
|
Giacomin
|
|
|
|
|
|
|
|||
Cash severance
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual cash incentive (1)
|
567,151
|
|
|
567,151
|
|
|
567,151
|
|
|
Long-term incentive awards (accelerated vesting) (2)
|
—
|
|
|
3,778,979
|
|
|
3,778,979
|
|
|
Total
|
567,151
|
|
|
4,346,130
|
|
|
4,346,130
|
|
|
Morford
|
|
|
|
|
|
|
|||
Cash severance
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual cash incentive (1)
|
469,328
|
|
|
469,328
|
|
|
469,328
|
|
|
Long-term incentive awards (accelerated vesting) (2)
|
—
|
|
|
2,962,983
|
|
|
2,962,983
|
|
|
Total
|
469,328
|
|
|
3,432,311
|
|
|
3,432,311
|
|
|
(1)
|
Assumes that the annual cash incentive payouts were at the following fiscal 2017 target amounts: Mr. Kaufmann—
$746,438
(actual payout was $186,609); Mr. Casey—
$705,014
(actual payout was $176,253); Mr. Giacomin—
$567,151
(actual payout was $141,788); and Mr. Morford—
$469,328
(actual payout was $117,332).
|
(2)
|
Assumes the accelerated vesting of long-term incentive awards in the event of (a) a change of control with involuntary termination without cause or a termination by the executive for "good reason" within two years after the change of control or if the surviving entity does not provide qualifying replacement awards or (b) a termination due to death or disability, as follows: Mr. Kaufmann—
30,120
PSUs at target,
108,933
stock options and
35,779
RSUs; Mr. Casey—
29,527
PSUs at target,
107,427
stock options and
32,123
RSUs; Mr. Giacomin—
27,980
PSUs at target,
96,335
stock options and
19,807
RSUs; and Mr. Morford—
16,558
PSUs at target,
55,397
stock options and
20,758
RSUs. We valued the accelerated vesting of stock awards by multiplying the closing price of our common shares on June 30, 2016 by the number of stock awards. We valued the accelerated vesting of stock options as the difference between the closing price of our common shares on June 30, 2017 and the exercise price for each stock option.
|
|
Cardinal Health
|
2017 Proxy Statement
|
41
|
|
|
Compensation Element
|
Amount
($)
|
|
Retainer (1)
|
100,000
|
|
RSUs (2)
|
160,000
|
|
Committee chair annual retainers (1):
|
|
|
Audit Committee
|
20,000
|
|
Compensation Committee
|
15,000
|
|
Nominating and Governance Committee
|
10,000
|
|
Lead Director:
|
|
|
Annual retainer (1)
|
20,000
|
|
Annual RSUs
|
20,000
|
|
(1)
|
Retainer amounts are paid in cash in quarterly installments.
|
(2)
|
Each non-management director receives an annual RSU grant on the date of our Annual Meeting of Shareholders. We value the RSUs based on the closing share price on the grant date. RSUs vest one year from the grant date (or on the date of the next Annual Meeting of Shareholders, if earlier) and settle in common shares. We accrue cash dividend equivalents that are payable upon vesting of the RSUs.
|
42
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
Name
|
Fees Earned
or Paid
in Cash
($)
|
Stock
Awards
($)(1)
|
All Other
Compensation
($)
|
Total
($)
|
|||||
David J. Anderson
|
100,000
|
160,000
|
|
|
260,000
|
||||
Colleen F. Arnold
|
100,000
|
160,000
|
|
|
260,000
|
||||
Carrie S. Cox
|
100,000
|
160,000
|
3,500
|
|
(2)
|
263,500
|
|||
Calvin Darden
|
100,000
|
160,000
|
|
|
260,000
|
||||
Bruce L. Downey
|
100,000
|
160,000
|
3,000
|
|
(2)
|
263,000
|
|||
Patricia A. Hemingway Hall
|
100,000
|
160,000
|
|
|
260,000
|
||||
Clayton M. Jones
|
120,000
|
160,000
|
|
|
280,000
|
||||
Gregory B. Kenny
|
130,000
|
180,000
|
6,500
|
|
(2)
|
316,500
|
|||
Nancy Killefer
|
100,000
|
160,000
|
|
|
260,000
|
||||
David P. King
|
115,000
|
160,000
|
|
|
275,000
|
(1)
|
These awards are RSUs granted under the Directors EIP. We valued the RSUs by multiplying the closing price of our common shares on the NYSE on the grant date ($65.38) by the number of RSUs awarded. As of June 30, 2017, the aggregate number of shares underlying unvested RSU awards held by each director serving on that date was 2,447 shares, except for Mr. Kenny which was 2,753 shares.
|
(2)
|
Represents a company match attributable to a charitable contribution under our matching gift program.
|
|
Cardinal Health
|
2017 Proxy Statement
|
43
|
44
|
Cardinal Health
|
2017 Proxy Statement
|
|
§
|
Total shareholder return over the period from August 31, 2009, when Mr. Barrett became Chairman and Chief Executive Officer, through June 30, 2017 expressed as a percentage, calculated based on changes in stock price assuming reinvestment of dividends.
|
|
Cardinal Health
|
2017 Proxy Statement
|
45
|
46
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
|
•
|
the name and address of the shareholder making the recommendation;
|
•
|
the name and address of the person recommended for nomination;
|
•
|
if the shareholder is not a shareholder of record, a representation and satisfactory proof of share ownership;
|
•
|
a statement in support of the shareholder’s recommendation, including sufficient information to permit the Nominating and Governance Committee to evaluate the candidate’s qualifications, skills and experience;
|
•
|
a description of all direct or indirect arrangements or understandings between the shareholder and the candidate recommended by the shareholder;
|
•
|
information regarding the candidate as would be required to be included in a proxy statement filed in accordance with SEC rules; and
|
•
|
the candidate’s written, signed consent to serve if elected.
|
|
Cardinal Health
|
2017 Proxy Statement
|
47
|
|
|
|
48
|
Cardinal Health
|
2017 Proxy Statement
|
|
|
JESSICA L. MAYER
|
Executive Vice President, Deputy General Counsel and Corporate Secretary
|
|
Cardinal Health
|
2017 Proxy Statement
|
49
|
1 Year Cardinal Health Chart |
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