| | 42 | | | Executive compensation program encompasses the following: | Highlights of Our Executive Compensation Program—Linking Pay with Performance and Mitigating Risk | |
| What We Do | | | | | | Use financial metrics to make a substantial portion of executive pay contingent on performance. | | | | | | | | | Engage with stockholders on compensation and governance. | | | | | | | | | Cap payouts under our annual cash bonus plan and performance share plans. | | | | | | | | | Apply robust clawback obligations to annual cash bonus and equity awards for executive officers. | | | | | | | | | Require our CEO to own stock equal in value to six times his base salary, and our CFO and other executive officers to own stock equal in value to three times their respective base salaries. | | | | | | | | | Require executive officers to retain all options and equity grants until required ownership levels are met. | | | | | | | | | Consider and implement, as appropriate, the advice provided by the independent compensation consultant to the Compensation Committee. | | | | | | | | | Consider a peer group in establishing named executive officer compensation and published compensation survey data for all other executive officers. | | | | | | | | | Prohibit short sales, hedging or pledging of our stock by our executive officers and directors. | | | | | | | | | Require forfeiture of awards upon violation of restrictive covenants. | | | | | | | | | Require a double-trigger for change in control payments. | | | | | | | | | Consider burn rate in equity grant decisions and manage use of equity awards conservatively. | | | What We Do
Not Do | | | | | | Tie incentive compensation to specific product sales, including prescription opioid medication sales. | | | | | | | | | Grant stock options with an exercise price lower than fair market value. | | | | | | | | | Backdate or retroactively grant options or restricted stock units. | | | | | | | | | Pay dividends on unearned and unvested performance shares. | | | | | | | | | Reprice stock options. | | | | | | | | | Provide tax gross-ups in the event of a change in control. | | |
Fiscal 2023 compensation design: target pay mix(1) (1)
Long-Term Incentives representation reflects grant date value of fiscal 2023 awards. (2)
Adjusted Free Cash Flow, Adjusted EPS, and Adjusted Operating Income are non-GAAP financial measures. See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
34 ![[MISSING IMAGE: lg_amerisource-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-21-008422/lg_amerisource-pn.jpg)
| | Executive compensation | | | 43 | |
Say-on-pay results and shareholder engagement | | 2021 AmerisourceBergen Proxy | Executive CompensationAt our 2023 Annual Meeting of Shareholders, our say-on-pay proposal received approximately 95% support. The Board and Related Matters
2020 Say-On-Pay VoteCompensation Committee are encouraged by this strong level of shareholder approval and Stockholder Engagement
In fiscal 2020, we continued to emphasize our pay for performance culture. The compensationinterpret this as an endorsement of our named executive officers was approved by stockholders in March 2020 with approximately 95% of stockholder votes cast in favor of our 2020 “say-on-pay” resolution. Our “say-on-pay” resolutions have received consistently strong support since the inception of the “say-on-pay” voting requirement implemented under the Dodd-Frank Wall Street Reformcurrent compensation program and Consumer Protection Act of 2010. The Compensation Committee considered the results of the stockholder vote and believes it supports the view thatfiscal 2022 compensation for our named executive officers closely aligns with our stockholders’ interests.decisions.
| | | | |
In addition to vote outcomes, regular shareholder outreach and engagement are critical inputs, which are shared with our full Board and management to help inform their decision-making process. We engage with shareholders throughout the year to seek their feedback on our governance and executive compensation practices, in addition to other topics important to our long-term growth and value creation. As demonstrated in the chart below, we engaged with a number of our largest shareholders, as well as proxy advisory firms and investor organizations, and in certain meetings, included an independent director to represent the perspective of the Board. We appreciate the opportunity to hear direct feedback from our shareholders. Extensive shareholder outreach and engagement(1) We discussed a range of important topics with shareholders during fiscal 2023. With respect to executive compensation, we discussed the implementation of the ESG metric in our 2023 short-term cash incentive program and the Compensation Committee’s process for reviewing our reported financial results quarterly and making final executive compensation decisions after fiscal year end. We continued to hear support for our efforts to incorporate ESG in a way that is both aligned with our business and objectively measurable. We have also received positive feedback on the disclosure regarding the Compensation Committee’s decision-making process and, based on additional input, we further enhanced that disclosure in this proxy statement.
During fiscal 2020, the Compensation Committee reviewed our executive compensation peer group and worked to further align pay opportunities for our executive officers with our compensation philosophy. The Compensation Committee also approved performance metrics for incentive pay that, consistent with prior years, were designed to correlate with the way we evaluate our operational results, reflect measures of performance that drive returns for our stockholders and support our long-term strategy.
2020 Fiscal Year Executive Compensation Objectives and Actions
The Compensation Committee reviews and determines executive officer compensation, including the amount of base salary, short-term incentive awards and long-term incentive awards made to our named executive officers. In making these decisions, the Compensation Committee takes into account our financial and business results, individual performance and competitive data. In light of these considerations, the Compensation Committee made the following executive compensation decisions in fiscal year 2020:
•
Continued to emphasize equity-based incentives under which executive officers earn amounts only when AmerisourceBergen’s performance is strong and our stockholders have benefited.
•
Established fiscal year 2020 performance goals for our annual cash bonus plan, including a target adjusted EPS of $7.37 per share, a target adjusted operating income of $2.13 billion, and a target adjusted free cash flow of $1.48 billion. These performance goals were calculated consistently with the way in which our publicly disclosed non-GAAP financial measures were calculated. (See Appendix A for more information about our non-GAAP financial measures, including reconciliations to GAAP.)
•
Set target incentive levels for fiscal year 2020 cash bonuses of 150% of base salary for the CEO and of 100% of base salary for the other named executive officers.
•
Approved fiscal year 2020 cash bonus payouts that were paid at 127.2% of target to all of our named executive officers.
•
Granted annual equity incentive awards to our named executive officers after considering our compensation philosophy and the Compensation Committee’s assessment of the executive officer’s expected future contributions. In fiscal year 2020, the grant value of each annual equity award was divided among performance shares (50%), stock options (30%) and restricted stock units (20%).
•
Approved performance metrics of compound annual adjusted EPS (“Compound Annual Adjusted EPS”) and adjusted average annual return on invested capital (“Average Annual Adjusted ROIC”) for the performance shares granted to our named executive officers in fiscal year 2020 (covering the three-year performance period ending September 30, 2022). (See “Performance Share Awards—Payout of FY18-FY20 Performance Shares” below for more information about Average Annual Adjusted ROIC.)
We believe that the fiscal year 2020 compensation of our executive officers was aligned with AmerisourceBergen’s fiscal year 2020 adjusted results and met our compensation objectives. Our compensation policies have enabled us to attract and retain talented and experienced executive officers. We believe that these policies have benefited AmerisourceBergen over time and will position us for growth in future years.
Setting Executive Compensation
We consider market pay practices as a starting reference point when setting executive compensation. The Compensation Committee assesses whether our level of executive pay is appropriate when compared to industry and market standards. The Compensation Committee’s independent compensation consultant assists the Compensation Committee in developing a peer group of companies to serve as the basis for comparing the pay of our named executive officers to the market. We conduct a detailed market review of executive pay to evaluate each element of pay and benefit competitiveness, review pay practices and compare performance against our peer group.
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| | 44 | | | Executive compensation | |
Compensation governance best practices We believe that our executive pay is reasonable and provides appropriate incentives to our executive officers to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. The Board and its committees regularly evaluate major risks to our business, including how risks taken by management could affect the value of executive compensation. Highlights of our executive compensation program – linking pay with performance and mitigating risk | | What we do | | | What we do not do | | | | Executive Compensation![[MISSING IMAGE: ic_tick-pn.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/ic_tick-pn.jpg) Use financial metrics to make a substantial portion of executive pay contingent on performance Engage with shareholders on compensation Conduct an annual say-on-pay vote Cap payouts under our annual cash bonus plan and Related Matters | 2021 AmerisourceBergen Proxy
performance share plans OurRequire our CEO to own stock equal in value to six times his base salary, and our CFO and other executive officers to own stock equal in value to three times their respective base salaries Require executive officers to retain all equity awards until required ownership levels are met Require our CEO to hold 50% of performance share awards for two years after vesting and other NEOs to hold 50% of performance share awards for one year after vesting Review peer group consists of companies with business modelsdata, as available, and operations comparable to our own, including our two largest direct competitors, and companies that we believe have a similar financial and operational profile. Metrics used to select our peer group include: revenue; market capitalization; number of employees; net income; operating income margin; and return on invested capital. We believe that the companies included in our peer group reflect the type and complexity of business risks managed by our named executive officers and that we compete with many of the companies in our peer group for executive talent. In fiscal year 2020, the Compensation Committee, in consultation with its independent compensation consultant, evaluated our peer group to ensure that our peer group companies remained appropriate. Starting with review of compensation in fiscal year 2021, the Compensation Committee has added Cigna Corporation and Humana Inc. to the peer group to reflect their respective acquisitions of Express Scripts and Kindred Healthcare. Due to Cigna Corporation’s acquisition of Express Scripts, we have removed Express Scripts from our peer group. As determined by the Compensation Committee, our peer group is as follows:
| Peer Group | | | Abbott Laboratories | | | Henry Schein, Inc. | | | Quest Diagnostics Incorporated | | | Cardinal Health, Inc. | | | Humana Inc. | | | Sysco Corporation | | | Cigna Corporation | | | IQVIA Holdings Inc. | | | Target Corporation | | | CVS Health Corporation | | | The Kroger Co. | | | United Parcel Service, Inc. | | | Eli Lilly and Company | | | Laboratory Corporation of America | | | Walgreens Boots Alliance, Inc. | | | FedEx Corporation | | | McKesson Corporation | | | | | | HCA Healthcare, Inc. | | | Mylan N.V. | | | | |
The Compensation Committee reviews peer group proxy statement data in evaluating our named executive officers’ pay and published compensation survey data in evaluatingestablishing executive officer compensation
Have our other executive officers’ pay. When assessing pay levels,CFO and Chief Accounting Officer review adjustments reflected in our reported, non-GAAP financial results with the Compensation Committee also reviews our executive officers’ compensation in relation to each other. The Compensation Committee’s consultant concluded that our overall competitive posture for executive pay in fiscal 2020 remained aligned with our pay for performance compensation philosophy.on a quarterly basis Target Percentile Compensation Opportunity
We target total direct compensation opportunity at the 50th percentile relative to our peer group. We believe that targeting pay opportunities at the median of our peer group enables us to retain talented and experienced executive officers and is consistent with market-leading practices.
Components of the Executive Compensation Program
| Pay Element | | | | Award Type | | | | Purpose | | | | Fixed vs. Variable | | | | Performance Measure | | | Base Salary | | | | Cash | | | | •
Provide a regular stream of income and security
| | | | Fixed | | | | The Compensation Committee takes into account job performance, scope of role, duties and responsibilities, expected future contributions, peer group and other market pay data. | | | Short-Term Incentive | | | | Cash | | | | •
Motivate executives to improve financial performance year-over-year
•
Reward executive officers who deliver targeted financial results
| | | | Variable | | | | Actual payout based on Company performance. | | | Long-Term Incentives | | | | Performance Shares, Restricted Stock Units and Stock Options | | | | •
Motivate executive officers to achieve superior business results over long-term
•
Enhance alignment between management and stockholder interests
•
Support stock ownership requirements
| | | | Variable | | | | Actual value is determined by Company performance over a three-year time frame and/or linked to stock price. | |
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Base Salary
In fiscal 2020, we made adjustments to base salaries to reflect executives’ individual performance and to better align them with the market. As a result, in November 2019, Messrs. Collis, Cleary, Chou and Mauch and Ms. Clark received increases to their base salaries of 6.9%, 7.7%, 2.3%, 3.7%, and 15.0%.
FY2020 Short-Term Cash IncentiveThe Compensation Committee determines whether to exercise discretion to modify the calculated payouts and approves the performance goalsfinal payouts for the prior fiscal year’s incentive plans following fiscal year end Apply robust clawback obligations to annual cash bonus and equity awards for executive officers Require forfeiture of awards upon violation of restrictive covenants Require a double-trigger for change in control payments Consider burn rate in equity grant decisions and manage use of equity awards conservatively | | | Tie incentive levels for eachcompensation to specific product sales, including prescription opioid medication sales Permit short sales, hedging, or pledging of our stock by our executive officers and assigns a relative weighting to each performance measure under our cash incentive plan. For each performance measure, there is a threshold and a target. Threshold refers to the minimum acceptable level of performance and target is the desired level of performance. We do not pay a bonus for performance that is below the threshold established for financial performance goals and we pay a bonus of 25% of the target amount if performance is at the threshold. For performance that exceeds the threshold but does not meet the target, bonus payments are based on the level of performance and are increased ratably until the target is reached. All cash incentive awards are issued to the executive officers pursuant to our Omnibus Incentive Plan. Executive officers may receive an amount in excess of their target bonus (up to a maximum of 200% of the target amount) if we exceed target amounts with respect to applicable key performance metrics. Therefore, an individual’s actual bonus consists of (i) an amount that is based upon having met or exceeded the thresholds (which we refer to as the “earned” bonus) and (ii) if applicable, an amount that is based upon the extent to which actual performance exceeded target amount (which we refer to as a “stretch” bonus). In 2020, the key performance metrics for all of the named executive officers were the Company’s adjusted EPS and the Company’s adjusted operating income. Executive officers were only eligible to receive a “stretch” bonus to the extent such metric exceeded its target range. The stretch portion is calculated by increasing the earned bonus by an additional 5% for every 1% that actual performance exceeds target on the key performance metric. Each key performance metric is equally weighted for purposes of calculating the stretch bonus.
In November 2019, the Compensation Committee approved the following corporate-level performance goals for our fiscal year 2020 cash incentive plan:
| | Corporate Performance Measure(1) | | | | Weighting | | | | Threshold | | | | Target | | | | Actual | | | | Adjusted EPS | | | | 30% | | | | $6.63 | | | | $7.37 | | | | $7.90 | | | | Adjusted Operating Income | | | | 40% | | | | $1.91 billion | | | | $2.13 billion | | | | $2.20 billion | | | | Adjusted Free Cash Flow | | | | 30% | | | | $1.26 billion | | | | $1.48 billion | | | | $1.90 billion | |
(1)
See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations.directors
The Compensation Committee chose adjusted EPS, adjusted operating income and adjusted free cash flow as corporate-level performance goals because they are the key metrics used by management to set business goals and evaluate our financial results. In addition, we communicate our expectations about future business performance to investors by providing an adjusted EPS guidance range each fiscal year. We generally set adjusted EPS targets to reflect our long-term business goal of growing adjusted EPS in the low to mid-single digits, while allowing for reasonable flexibility to set our annual targets based on the impact of industry trends, other market factors and special items from year to year.![[MISSING IMAGE: ic_crosemark-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/ic_crosemark-bw.jpg) The Compensation Committee chose adjusted operating income to encourage our executive officers to grow our Company’s profitability. We use adjusted free cash flow as a corporate-level financial metric because the amount of free cash flow that we generate each year is essential for us to maintain appropriate working capital, complete acquisitions, and return capital to stockholders through dividends. We define the non-GAAP financial measure of adjusted free cash flow as net cash provided by operating activities plus cash payments made relating to unfavorable legal settlements, minus cash payments received related to favorable legal settlements, and minus capital expenditures. Target adjusted free cash flow did not increase in fiscal year 2020 due to expected operating losses at PharMEDium, a subsidiary of the Company which has since been shut down, as well as higher expected cash taxes and capital expenditures as compared to the prior year.
In fiscal 2020, AmerisourceBergen exceeded the target on the adjusted EPS, adjusted operating income, and adjusted free cash flow performance metrics. As a result, the bonus payout for corporate-level metrics was, in the aggregate, approximately 127.2% of the target incentive amount.
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
Target and actual fiscal year 2020 cash bonuses for our named executive officers were as follows:
| | | | | | Target Incentive | | | | | | | | Name | | | | 2020 Base
Salary
($) | | | | Percent of
Base Salary
(%) | | | | Target Amount
($) | | | | Maximum
Bonus
Potential
($) | | | | Percentage
Payout versus
Target Incentive
(%) | | | | Actual Bonus
Payout
($) | | | | Steven H. Collis | | | | | | 1,325,000 | | | | | | | 150 | | | | | | | 1,987,500 | | | | | | | 3,975,000 | | | | | | | 127.2 | | | | | | | 2,528,034 | | | | | James F. Cleary | | | | | | 700,000 | | | | | | | 100 | | | | | | | 700,000 | | | | | | | 1,400,000 | | | | | | | 127.2 | | | | | | | 890,377 | | | | | John G. Chou | | | | | | 675,000 | | | | | | | 100 | | | | | | | 675,000 | | | | | | | 1,350,000 | | | | | | | 127.2 | | | | | | | 858,578 | | | | | Gina K. Clark | | | | | | 575,000 | | | | | | | 100 | | | | | | | 575,000 | | | | | | | 1,150,000 | | | | | | | 127.2 | | | | | | | 731,381 | | | | | Robert P. Mauch | | | | | | 700,000 | | | | | | | 100 | | | | | | | 700,000 | | | | | | | 1,400,000 | | | | | | | 127.2 | | | | | | | 890,377 | | |
The fiscal year 2020 cash bonuses for the named executive officers were designed to reflect enterprise-wide performance. As a result, 100% of their respective earned bonus payments was dependent upon the achievement of corporate-level performance goals with adjusted EPS weighted at 30% of the total target incentive, adjusted operating income weighted at 40% of the total target incentive and adjusted free cash flow weighted at 30% of the total target incentive. Additionally, because AmerisourceBergen exceeded the target amounts for adjusted EPS performance and adjusted operating income, which were the two key performance metrics for the named executive officers, each of them received a stretch bonus to the extent that adjusted EPS and adjusted operating income exceeded their respective targets.
After reviewing the Company’s strong performance, including the response to the challenges presented by the COVID-19 pandemic, the Compensation Committee concluded that it would not exercise any discretion to adjust the size of named executive officers’ cash bonuses for fiscal year 2020.
Looking Ahead: Fiscal Year 2021 Cash Bonus
In November 2020, the Compensation Committee approved performance measures for our fiscal year 2021 annual cash incentive plan. In 2021, the fiscal year cash bonus will continue to be paid upon the attainment of financial performance metrics, subject to the Compensation Committee’s continued discretion to adjust any portion of a calculated award. In fiscal 2021, all named executive officers’ cash bonus opportunities will continue to be based on the Company’s adjusted EPS, adjusted operating income and adjusted free cash flow. In fiscal 2021, adjusted free cash flow will also be treated as a key metric for purposes of calculating the stretch bonus.
Performance goals are intended to be challenging and to provide an incentive to achieve the goals set out in our fiscal year 2021 business plan and the strategic and other priorities established by our long-range plan. The fiscal year 2021 target incentive level for the CEO is 165% of base salary and for the other named executive officers is 100% of base salary, with the opportunity for each named executive officer to earn up to a maximum of 200% of target incentive if we exceed our financial performance goals.
Long-Term Equity Incentives
We use equity awards to motivate our executive officers to achieve superior business results over the long term. Equity awards support our stock ownership requirements and further enhance the alignment between management and stockholder interests. For fiscal year 2020, the allocation of the annual equity award for our executive officers was 50% in performance shares, 30% in stock options and 20% inBackdate or retroactively grant restricted stock units. For fiscal year 2021, the allocation of the annual equity award for our executive officers is 60% in performance shares and 40% in restricted stock units. This mix provides an incentive to achieve favorable long-term results at a reasonable cost to the Company. Additionally, beginning in fiscal year 2021, restricted stock units will vest ratably each year during the three-year vesting period. All long-term equity incentives are awarded under our Omnibus Incentive Plan.
In fiscal year 2020, we awarded our named executive officers 107,738 target performance shares, options to purchase 334,042 shares of our Common Stock and 43,096 restricted stock units of our Common Stock. These awards represented approximately 40.3% of the total equity incentives granted to management and other employees in fiscal year 2020. We believe that it was appropriate to award approximately 40.3% of total annual equity incentives to our named executive officers because they are in the best position to drive our future results and implement our long-term business strategy. Equity incentives represented approximately 71.7% of
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Mr. Collis’s total direct compensation and approximately 58.9%, on average, of the total direct compensation of the other named executive officers in fiscal year 2020.
In approving fiscal year 2020 long-term equity incentive awards, the Compensation Committee considered a number of factors:
•
Skills, experience, time in role and expected future contributions. The size of an equity award depends, in part, on the scope of an executive officer’s job responsibilities and the impact he or she can be expected to have on our future operating results.
•CompanyPay dividends on unearned and unvested performance. The Compensation Committee reviews our prior year financial performance and the executive officers’ leadership and focus on fostering our strategic initiatives. shares
•Market alignment. The Compensation Committee sets the target value of equity awards so that our executive officers will have a target long-term incentive near the median of our peer group. The target values are informed by the Compensation Committee’s review of the competitive positioning of each element of pay based on compensation data prepared by the external compensation consultant with reference to our peer group for our named executive officers and with reference to published market compensation survey data for the other executive officers.
•
The emphasis placed on equityProvide tax gross-ups in the mix of total compensation. The Compensation Committee believes that incentive compensation should constitute the majority of each executive officer’s overall compensation package to provide incentives to meet our performance objectives and grow our stock price over time.
•
Average annual share burn rate. The Compensation Committee also takes into account the average annual shares awarded for total equity incentives granted to employees in order to provide stock options, restricted stock units and performance shares to eligible employees at a reasonable rate and cost to AmerisourceBergen and its stockholders.
Equity awards are subject to vesting, forfeiture and clawback provisions, described in more detail below and in the sections following the Summary Compensation Table. When an executive officer becomes eligible for retirement and retires, unvested equity awards will continue to vest according to their schedule. We believe these requirements support our goal of retaining executive officers and aligning individual performance with our long-term growth. The post-retirement provisions provide an additional incentive for executive officers, particularly those near retirement, to continue to focus on our long-term performance. Forfeiture and clawback provisions serve as a means to redress detrimental behavior by current and former employees. For additional information about our long-term equity incentive awards see the narrative discussion following the Summary Compensation Table below.
Performance Share Awards
Our performance plan is designed to encourage our executive officers to focus on initiatives that promote the achievement of our long-term goals. Performance share awards are granted annually, and each performance award is based on a performance period covering three fiscal years. Performance shares are subject to the attainment of performance goals approved by the Compensation Committee. Vesting (or payout of shares) is based on cumulative performance at the end of the applicable three-year performance cycle.
A participating executive officer has the opportunity to earn a payout of between 0% and 200% of his or her target award. If threshold performance for a particular metric is not attained, the executive officer forfeits the right to receive any payout based on that metric. Threshold performance for each metric will result in a share payout equal to 50% of the target award. Target performance for each metric will result in a share payout equal to 100% of the target award. Attaining the maximum goal for each metric will result in a share payout equal to 200% of the target award. Each of our named executive officers was an executive officer of the Company when performance share awards were granted in fiscal year 2018. Accordingly, each named executive officer received performance shares for the FY18—FY20 performance period.
The Compensation Committee has selected compound annual adjusted EPS and average annual adjusted ROIC as the metrics used for awarding performance shares. Compound annual adjusted EPS was chosen because adjusted EPS is a key metric used by management to set business goals and evaluate our financial results. Average annual adjusted ROIC reflects adjusted operating income divided by invested capital over time. We use adjusted operating income and thus average annual adjusted ROIC to encourage our executive officers to grow our Company’s profitability.
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
Payout of FY18—FY20 Performance Shares
In November 2020, the Compensation Committee approved the vesting and payment of the FY18—FY20 performance shares at 186.1% of their target award level. The Compensation Committee’s determination was based on AmerisourceBergen’s achievement of a Compound Annual Adjusted EPS growth rate of 10.34% and an Average Annual Adjusted ROIC of 18.33%, in each case, for the three-year performance period ended September 30, 2020. (See the footnotes to the table below for how these non-GAAP performance measures are calculated.)
The award metrics for the FY18—FY20 performance share awards were as follows:
| | | | | | Threshold | | | | Target | | | | Maximum | | | | Actual
Performance | | | | Metric | | | | Weighting | | | | Baseline | | | | Goal | | | | Payout
Ratio | | | | Goal | | | | Payout
Ratio | | | | Goal | | | | Payout
Ratio | | | | | | | | | | | Compound Annual Adjusted EPS Growth(1) | | | | | | 75% | | | | | | $ | 5.88 | | | | | | | 3% | | | | | | | 50% | | | | | | | 6% | | | | | | | 100% | | | | | | | 10% | | | | | | | 200% | | | | | | | 10.34% | | | | | Average Annual Adjusted ROIC(2) | | | | | | 25% | | | | | | | — | | | | | | | 14% | | | | | | | 50% | | | | | | | 17% | | | | | | | 100% | | | | | | | 20% | | | | | | | 200% | | | | | | | 18.33% | | |
(1)
Compound Annual Adjusted EPS Growth is the mean annual growth rate of adjusted EPS from the baseline over the three-year performance period.
(2)
Average Annual Adjusted ROIC is calculated by taking the average of the Company’s annual adjusted ROIC during the three-year performance period. Annual Adjusted ROIC is calculated by dividing after-tax adjusted operating income by invested capital.
Based on our performance, and the respective weighting of each performance metric, the number of shares earned for the FY18—FY20 performance share awards was calculated as follows:
| Metric | | | | Percentage of Target
Award Allocated | | | | | | | | Target Share
Amount | | | | | | | | Performance
Multiplier | | | | | | | | Awards Earned | | | Compound Annual Adjusted EPS Growth | | | | 75% | | | | X | | | | Target Amount of Performance Shares Granted | | | | X | | | | Performance-Determined Payout Ratio | | | | = | | | | Awards Earned Based on Compound Annual Adjusted EPS Performance | | | Average Annual Adjusted ROIC | | | | 25% | | | | X | | | | Target Amount of Performance Shares Granted | | | | X | | | | Performance-Determined Payout Ratio | | | | = | | | | Awards Earned Based on Average Annual Adjusted ROIC Performance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Performance Share Awards Earned | |
FY18—FY20 Performance Shares Earned:
| | Name | | | | Target Amount of Performance Shares | | | | Shares Earned | | | | Steven H. Collis | | | | | | 51,593 | | | | | | | 96,021 | | | | | James F. Cleary | | | | | | 11,608 | | | | | | | 21,604 | | | | | John G. Chou | | | | | | 13,543 | | | | | | | 25,205 | | | | | Gina K. Clark | | | | | | 8,384 | | | | | | | 15,604 | | | | | Robert P. Mauch | | | | | | 13,543 | | | | | | | 25,205 | | |
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters
FY20—FY22 Performance Share Metrics
The Compensation Committee approved the terms of the FY20—FY22 performance shares in November 2019, including the following performance metrics and weightings:
| Metric | | | | Weighting | | | Compound Annual Adjusted EPS Growth | | | | | | 75% | | | | Average Annual Adjusted ROIC | | | | | | 25% | | |
The Compensation Committee believes the Compound Annual Adjusted EPS Growth and Average Annual Adjusted ROIC goals for the performance shares covering the three-year performance period (beginning on October 1, 2019 and ending September 30, 2022) are challenging and difficult to achieve, but attainable with significant skill and effort on the part of our executive leadership team. The Compound Annual Adjusted EPS and Average Annual Adjusted ROIC goals of the FY20—FY22 performance share awards are confidential and consistent with our long-range plan. In the case of the FY20—FY22 performance share awards, performance will be assessed as of September 30, 2022.
Benefits and Other Compensation Elements
Other Compensation
Our named executive officers receive a limited amount of other benefits as part of a competitive compensation package. These benefits include, as discussed below, a Company matching contribution under our 401(k) plan, which is available to all employee participants. We provide an allowance for tax and financial planning services for our executive officers to give them the opportunity to maximize the benefits from the compensation and benefits programs offered to them and to enable them to focus more of their time and attention on achieving our financial and strategic goals. In addition, we provide executive officers with a physical examination benefit. Further, our CEO receives certain security and driver services through the Company. Additionally, from time to time, we have paid for relocation costs when it is desirable for an executive to relocate. No relocation costs were paid to the named executive officers in fiscal year 2020. In the aggregate, these other benefits constitute only a small percentage of each named executive officer’s total compensation.
Deferred Compensation
Executive officers may defer receipt of part or all of their cash compensation under our deferred compensation plan. The plan is intended to promote retention of executive officers by providing a long-term, tax-efficient savings opportunity at a low cost to us. Amounts deferred under the plan are deemed invested in the plan investment options chosen by the executive officer. The executive officer’s account is adjusted for any notional gains and losses on the amounts deferred under the plan.
Employee and Retirement Benefits
Core employee benefits are available to the executive officers on the same basis as all domestic employees generally. These benefits include medical and dental coverage, disability insurance, life insurance and a 401(k) plan.
We offer a benefit restoration plan to selected key management, including the named executive officers. We implemented this plan in 2006 to address the absence of any non-legacy executive retirement plan following the 2001 merger that formed the Company and to permit executive officers to receive the full amount of the Company match generally available to other employees under the 401(k) plan. In fiscal year 2020, the benefit restoration plan provided an annual contribution amount equal to 4% of a participant’s salary and bonus to the extent that his or her compensation exceeded IRS limits applicable to our 401(k) plan. Benefits under the plan are subject to certain vesting requirements based on age and length of service (other than in the event of death, disability or a change in control).
Severance and Change in Control Benefits
Employment Agreements. Employment agreements in effect during fiscal 2020 for our named executive officers are described under “Executive Compensation and Related Matters—Employment Agreements.” Our standard employment agreements for executive officers cover termination (including in the event of a change
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
in control) and severance and include non-competition, confidentiality, and related provisions. The employment agreements do not include specified amounts of salary, bonus opportunities, or equity-based compensation for future years.
Severance Benefits. We provide severance benefits under specified circumstances to give executive officers a measure of financial security following the loss of employment, to protect the Company from competitive activities after the departure of certain executive officers, and because we believe that these benefits are important to attract and retain our executive officers in a competitive industry. We will provide severance benefits if we discharge an executive officer without cause or such executive officer leaves the Company for good reason. Good reason means a reduction in base salary or our failure to comply with our obligations (including, in some cases, by diminishing the executive officer’s authority, duties and responsibilities) under his or her employment agreement. The terms of the severance benefits for our named executed officers are set out in employment agreements and various plans, which are described in the section of this proxy statement titled “Executive Compensation and Related Matters—Potential Payments Upon Termination of Employment on Change in Control.”
We do not provide severance benefits if an executive officer is terminated for cause or leaves without good reason. In that case, we would only pay the amount of accrued obligations.
Change in Control. The vesting of equity awards will be accelerated if an executive officer’s employment is involuntarily terminated within two years after a change in control. In the event of a change in control a shortened performance period, which extends only through the end of the fiscal quarter preceding the change in control, will be used to determine the payout under awards of performance shares. We provide these benefits to offer some financial protection to employees following an involuntary loss of employment in connection with a change in control and to enable our executive officers to focus on important business decisions should we be acquired without regard to how the transaction may affect them personally. We believe that this structure provides executive officers with an appropriate incentive to cooperate in completing a change in control transaction. The Board and the Compensation Committee also have discretion under our equity plans to take certain actions in the event of a change in control. These actions include canceling options that are not exercised within 30 days after a change in control; cashing out outstanding options; canceling any restricted stock awards in exchange for the payment of cash, property or a combination of cash and property equal to the award’s value; or substituting other property (including securities of another entity) for awards granted under our equity plans.
In addition, the Compensation Committee has discretion under the Annual Incentive Plan to pay the annual cash incentive awards during any year in which a change in control occurs. If this discretion is exercised, bonus payments would be made at target level and/or based on performance for the portion of the fiscal year until the change in control event and paid within 75 days of the change in control.
| |
Under the employment agreements for our executive officers, if amounts otherwise payable to an executive officer in connection with a change in control would constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code, the Company will reduce such payments to an amount that would avoid any excise taxes under Section 4999 of the Internal Revenue Code, but only if such reduction would provide the executive officer with a greater net after-tax benefit than would no reduction.
Additionally, an executive officer may receive additional severance if his or her employment is involuntarily terminated without cause or such executive officer leaves the Company for Good Reason upon or within two years following a change in control. See the section of this proxy statement titled “Executive Compensation and Related Matters—Potential Payments Upon Termination of Employment or Change in Control” below.
Executive Compensation Governance
Compensation Forfeiture and Recoupment (“Clawback”) Provisions
Our executive officers receive their annual cash bonus and equity awards under our Omnibus Incentive Plan, pursuant to which such awards are subject to forfeiture and clawback provisions. The forfeiture or clawback of shares or other amounts received would apply if the executive officer is terminated for cause, breaches restrictive covenants (during the employment period or two years thereafter), engages in any conduct that results in AmerisourceBergen having to restate its financial statements (during the employment period or three years thereafter), or engages in certain other misconduct. All of our other employees who are eligible for equity awards also receive those awards pursuant to the Omnibus Incentive Plan. Accordingly, forfeiture and clawback provisions apply to all employees who receive equity awards from us.
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| | Executive compensation | | | 45 | |
Compensation philosophy and objectives The Compensation Committee supports a compensation philosophy for our NEOs that: Executive compensation decision-making process Our Compensation Committee meets at least four times per year to review and approve, among other things, executive compensation strategy, individual pay packages, incentive plan designs and equity grant practices, performance and payouts for incentive plans, and CEO and other NEO performance, as well as to make recommendations on succession planning and talent development. The Compensation Committee reviews preliminary plan design and compensation proposals at least one meeting prior to considering formal approval so that its members can ask questions and provide feedback, which is then incorporated into the final proposal. In fiscal 2023, the Compensation Committee met six times.
2021 AmerisourceBergen Proxy | Executive Compensation| | 46 | | | Executive compensation | |
Year-round compensation planning •
Review adjustments reflected in the Company’s reported, non-GAAP metrics •
Discuss a report from the Company’s internal Benefits Committee •
The Compensation Committee’s independent compensation consultant attends all meetings and meets with Compensation Committee members independently as needed •
The Compensation Committee meets in executive session without management present as needed | | | | | | | | | | | | | | | •
Assess incentive plan performance •
Determine final payouts for the prior fiscal year, including whether to exercise discretion to modify the calculated payouts •
Assess CEO performance for the prior fiscal year (without the CEO present) •
Set NEO compensation for the new fiscal year •
Determine the incentive plans’ design and Related Matters
goals for the new fiscal year Additionally, in connection with•
Approve equity awards for the previously disclosed Corporate Integrity Agreement withnew fiscal year •
Review, update, and approve the Office of Inspector GeneralCompensation Committee’s annual governance items •
Review the CD&A and approve the Compensation Committee’s Report for the annual proxy statement | | | •
Discuss the results of the DepartmentCompany’s Annual Meeting of HealthShareholders and Human Services, we adopted a Financial Recoupment Policy. Under this policy, cashSay-on-Pay vote outcomes •
Discuss the Company’s executive compensation strategy for the following fiscal year •
Review the Company’s CEO succession and equitycontingency readiness plan •
Evaluate and discuss the Compensation Committee’s performance for the prior fiscal year | | | •
Preliminary discussion on executive compensation awarded to executive officersprogram design for the upcoming fiscal year •
Review and senior employees in certain businesses are subject to additional forfeiture and clawback provisions. Clawback Disclosure Policy
The Company has a clawback disclosure policy that applies to all incentive compensation made to any officer (as such term is defined under Section 16approve of the Securities Exchange Act of 1934, as amended) underCompany’s peer group for the fiscal year
•
Review the Company’s Omnibus Incentive Plantalent process and Annual Incentive Plan. Under the policy, if incentivekey talent assessments | | | •
Discuss market trends for executive compensation is ever forfeited or required to be repaid by an officer and the underlying event has been publicly disclosed, then we will disclose the aggregate amount forfeited or to be repaid. The disclosure will include a general descriptionpositioning of the circumstances giving riseCompany’s pay program as compared to the clawback and will be made in a document filed publicly with the SEC or posted to a clearly identifiable location on our investor website at investor.amerisourcebergen.com. The disclosure policy is subject to exceptions: (i) if such disclosure would violate an individual’s privacy rights; (ii) if such disclosure would result in or exacerbate existing or threatened litigation; or (iii) if such disclosure is contrary to law or regulation. The policy is administered by the Board, which has exclusive authority to interpret and carry out the policy.market Equity Award Grant Practices
We have a written policy on equity grants designed to formalize our equity grant practices and ensure that equity awards will generally be made at specified times. Our equity award policy is designed to encourage consistency in practice, but is not intended to and does not limit the authority•
Review preliminary estimates of the Compensation Committee under our equity incentive plans, including the Omnibus Incentive Plan. The Compensation Committee generally will review and approve annual equity awards to executive officers and other eligible employees in November of each year, which is near the beginning of our fiscal year. This allows the Compensation Committee to make annual equity awards at the beginning of the relevantplan performance cycle with the benefit of reviewing results from the immediately preceding performance cycle. We also may make equity awards at other times during the year for new hires or for other reasons, including, for example, a job promotion, as a result of an acquisition or for retention purposes. In accordance with our policy and our Omnibus Incentive Plan, the Compensation Committee has delegated limited authority to our CEO to approve grants to non-executive officers. Such awards may only be made on the first business day of a month. The Compensation Committee must approve any equity awards to our named executive officers. The exercise price of any stock option award is the closing price of our Common Stock on the date of grant. We do not backdate or retroactively grant options or restricted stock units. We generally schedule Board and Compensation Committee meetings at least one year in advance and, as noted above, generally make annual equity awards to our executive officers at approximately the same time each year. We do not time our equity awards to take advantage of the release of earnings or other major announcements by us or market conditions.
Executive Stock Ownership•
Our executive officers must own shares of our Common Stock in an amount equal to a multiple of their base salary. Stock ownership aligns management’s interests with those of our stockholders and provides a continuing incentive for management to focus on long-term growth. Under our executive stock ownership guidelines, our CEO must own shares worth six times his base salary and the other executive officers must own shares worth three times their base salaries. Executive officers who become subject to the guidelines have five years from the date of hire or change in status, whichever is later, to comply with the ownership requirements, but must retain all options and equity grants until required ownership levels are met. Following its annual review, the Compensation Committee determined that each of the named executive officers is in compliance with the guidelines.
Derivatives Trading and Hedging Prohibition
AmerisourceBergen considers it improper and inappropriate for its directors, officers and employees to engage in short-term or speculative transactions in our securities, including hedging or monetization transactions. Many forms of speculative transactions are inconsistent with the goal to improve our long-term performance. Accordingly, AmerisourceBergen has a policy that prohibits directors, officers and employees from engaging in the following transactions involving AmerisourceBergen securities: short sales, hedging or monetization transactions, and transactions in publicly-traded options on our securities, such as puts, calls and other derivatives.
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
Tax Considerations
When settingDiscuss proposed executive compensation we consider many factors, such as attracting and retaining executives and providing appropriate performance incentives. We also consider the after-tax cost to the Company in establishing executive compensation programs, both individually and in the aggregate, but tax deductibility is not our sole consideration. Section 162(m) of the Internal Revenue Code generally disallows a federal income tax deduction to public companiesplan design for annual compensation over $1 million (per individual) paid to their chief executive officer, chief financial officer and the next three most highly compensated executive officers (as well as certain other officers who were covered employees in years after 2016). The 2017 Tax Act eliminated most offiscal year
•
Review preliminary recommendations on NEO compensation for the exceptions from the $1 million deduction limit, except for certain arrangements in place as of November 2, 2017. As a result, mostnext fiscal year | |
| | Executive compensation | | | 47 | |
Roles and responsibilities | | | Role of the compensation payable to our named executive officers in excess of $1 million per person in a year will not be fully deductible.committee | | | | | | •
Compensation Committee Report
The Compensation and Succession Planning Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for our 2021 Annual Meeting of Stockholders and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. This report is provided by the following independent directors, who comprise the Compensation and Succession Planning Committee:
Michael J. Long, Chair
Richard W. Gochnauer
Kathleen W. Hyle
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Compensation Committee Matters
General
Our Compensation Committee is composed of independent directors. The Compensation Committee isIs responsible for the design of our executive compensation program, oversight of our incentive plans, and review of our executive talent development strategy and succession planning. The Compensation Committee reviews
•
Facilitates the Board of Director’s annual assessment of the CEO’s performance. •
Reviews and approves the individual elements of compensation of our executives, including our named executive officers. The Compensation Committee also overseesNEOs, as well as the design of and awards made under our long-term incentive plan. •
Reviews and approves executive benefit plans, programs, and perquisites. •
Oversees our savings, retirement, health and welfare plans. The Compensation Committeeplans and has delegated the administration of our benefit plans to an internal Benefits Committee, composed of senior finance, human resources, and legal executives. The internal Benefits Committee oversees the selection of investment options under our savings plans and the performance of the investment advisers and plan administrators. Processes and Procedures
Meetings. The Compensation Committee met four times•
As needed, participates in fiscal year 2020. The Compensation Committee Chair, in consultationengagements with the other Compensation Committee membersCompany’s largest shareholders to gather feedback on the Company’s executive compensation program and management, prepares agendas that address an annual calendar of topics and other matters. The Compensation Committee meets without management present, whenever necessary, to discuss matters it deems appropriate. Role of External Compensation Consultant. The Compensation Committee has sole authority to retain and terminate any consultant or other external advisor, and to approve the fees and other terms of engagement for such consultant or advisor. Each year, the Compensation Committee evaluates the qualifications, performance, independence and potential for conflicts of interest of its compensation consultant and any other external advisors to the Compensation Committee. This evaluation takes place at the beginning of the fiscal year in the case of an ongoing engagement or prior to the selection of a new consultant or advisor.
Pearl Meyer & Partners (“Pearl Meyer”) serves asinform the Compensation Committee’s decision-making process.
| | |
![[MISSING IMAGE: ic_uptriangle-pn.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/ic_uptriangle-pn.jpg) | | | Role of external compensation consultant. The Compensation Committee has determined that Pearl Meyer and the individual Pearl Meyer consultants are independent and have not had any economic interests or other relationships with AmerisourceBergen or the Compensation Committee members that would conflict with their obligation to provide the Compensation Committee with impartial and objective advice. Pearl Meyer did not provide any services to our management in fiscal year 2020.consultant | | | | | | •
The Compensation Committee’s independent compensation consultant advises the Compensation Committee on all aspects of executive compensation, includingincluding: comparative data,data; competitive positioning of executive pay,pay; plan design,design; long-term incentive pay practicespractices; and market trends. •
As directed by the Compensation Committee, the consultant prepares analysisanalyses and recommendations relating to the compensation of our executive officers,NEOs, including pay recommendations for our Chief Executive Officer. Representatives of Pearl MeyerCEO. •
The Compensation Committee’s independent compensation consultant attended Compensation Committeecommittee meetings and met privately from time to time with the Compensation Committeecommittee and individual Compensation Committeecommittee members to plan for Compensation Committeecommittee meetings and discuss executive compensation matters. | | |
| | | Role of Management.management •
Our Chief Executive OfficerCEO gives the Compensation Committee a performance assessment and pay recommendation for senior management, including each of the other named executive officers. NEOs, and does not participate in discussions regarding his own performance or pay determinations. •
Management, in consultation with the Compensation Committee’s compensation consultant, may also make recommendations on matters of compensation philosophy and plan design. •
Executives may attend the Compensation Committee meetings, but they are not present when the Compensation Committee meets in executive session and they do not make recommendations regarding their own pay. | | | | | | | | |
The Compensation Committee has sole authority to retain and terminate any consultant or other external advisor, and to approve the fees and other terms of engagement for such consultant or advisor. Each year, the Compensation Committee evaluates the qualifications, performance, independence, and potential for conflicts of interest of its compensation consultant and any other external advisors to the Compensation Committee. This evaluation takes place at the beginning of the fiscal year in the case of an ongoing engagement or prior to the selection of a new consultant or advisor. Pearl Meyer & Partners (“Pearl Meyer”) served as the Compensation Committee’s compensation consultant during fiscal 2023. The Compensation Committee determined that Pearl Meyer and the individual Pearl Meyer consultants are independent and have not had any economic interests or other relationships with the Company or the Compensation Committee members that would conflict with their obligation to provide the Compensation Committee with impartial and objective advice. Pearl Meyer did not provide any services to our management in fiscal 2023 and, accordingly, no fees were paid for any additional services in fiscal 2023.
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Peer group Each year, the Compensation Committee, in consultation with its independent compensation consultant, evaluates a peer group of companies that will serve as a reference for comparing the pay of our NEOs to the market. We assess companies that best reflect the complexity of our industry and competition for customers, shareholders, and talent to determine whether our level of executive pay is appropriate when compared to industry and market standards. We also conduct a detailed market review of executive pay to evaluate each element of pay and benefit competitiveness, review pay practices, and compare performance against our peer group. Our peer group consists of companies with business models and operations comparable to our own, including our two largest direct competitors, and companies that we believe have a similar financial and operational profile. Metrics used to select our peer group include: revenue; market capitalization; number of employees; net income; operating income margin; and return on invested capital. Following review with its independent compensation consultant in fiscal 2023, the Compensation Committee concluded that our fiscal 2022 peers remained appropriate and made no changes to the peer group. The fiscal 2023 peer group included: The Compensation Committee reviews peer group proxy statement data in evaluating our CEO’s pay and published compensation survey data in evaluating our other NEOs’ pay. When assessing pay levels, the Compensation Committee also reviews our NEOs’ compensation in relation to each other. The Compensation Committee’s independent consultant concluded that our overall competitive posture for executive pay in fiscal 2023 remained aligned with our pay for performance compensation philosophy.
| | Executive compensation | | | 49 | |
2023 NEO compensation Our executive compensation program consists of three core components: base pay, short-term incentives, and long-term incentives, with the majority of compensation being at-risk, variable, or performance-based. The Compensation Committee’s decisions regarding the fiscal 2023 pay program are described in detail below. Base salary Base salary is intended to provide a fixed and steady source of income and security. The Compensation Committee takes into account a variety of factors, including scope of role, duties, and responsibilities, expected future contributions, our pay philosophy, median pay of our designated peer group and other market data, and internal pay equity. In fiscal 2023, following an assessment taking into account the factors described above, the Compensation Committee made adjustments to our NEOs’ base salaries, other than Mr. Collis, as shown below. In the cases of Mr. Mauch and Ms. Campbell, their adjustments took into consideration a progression towards the market median for their roles as Chief Operating Officer and Chief Legal Officer, respectively. | | Executive | | | Increase % in
base salary for
fiscal 2023 | | | New base
salary of NEOs | | | | Mr. Collis | | | | | —% | | | | | $ | 1,400,000 | | | | | Mr. Cleary | | | | | 3% | | | | | $ | 795,000 | | | | | Mr. Mauch | | | | | 15% | | | | | $ | 975,000 | | | | | Ms. Campbell | | | | | 22% | | | | | $ | 670,000 | | | | | Ms. Clark | | | | | 3% | | | | | $ | 640,000 | | |
Compensation committee considerations of adjusted (non-GAAP) metrics in compensation decisions Cencora uses non-GAAP financial measures to perform financial planning and to evaluate the Company’s operating performance. We also furnish the same non-GAAP measures to investors on a quarterly basis. Our annual cash bonus plan and long-term incentive plan each use certain of the same non-GAAP measures that management uses internally and that we publicly disclose, which we believe provides consistency and transparency between our financial reporting and compensation outcomes and effectively measures and rewards operational performance. Those measures reflect adjustments made based on predetermined and publicly disclosed criteria, as further described in Appendix A to this proxy statement. Quarterly review of adjustments and final determination of executive compensation payouts Cencora’s reported non-GAAP financial results are presented to the Compensation Committee by the CFO and the Chief Accounting Officer quarterly, along with reconciliations to GAAP, and are the starting point for the Compensation Committee’s annual incentive compensation decisions. As part of its year-end approval of executive compensation, the Compensation Committee determines whether to exercise discretion to modify the payouts that are calculated under our incentive plans from the Company’s reported non-GAAP financial results. Short-term incentive compensation Our short-term incentive plan is intended to both motivate NEOs to improve financial performance year-over-year and reward NEOs who deliver on targeted financial results and other objectives. For fiscal 2023, the Compensation Committee set the target cash bonus incentive levels for our NEOs as follows: an increase from 150% to 175% of base salary for the CEO and from 100% to 125% of base salary for our Chief Operating Officer to better align their annual incentives with market practice following an assessment of peer practices and to support retention of our key executives. Based on that review, the Committee also maintained a cash bonus target of 100% of base salary for the other NEOs.
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Fiscal 2023 cash bonus measures and goals Each year, the Compensation Committee selects enterprise-level performance measures that it believes are the key metrics used for setting business goals and evaluating our financial results. The Compensation Committee also sets goals for these performance measures that it views to be challenging, yet attainable, based on the Company’s fiscal year plan, which is approved by the Board and takes into account, among other things: the prior fiscal year’s results, internal operating plans for our business units, the Company’s strategic initiatives, external conditions specific to our industry, and the macroeconomic environment. For fiscal 2023, the Compensation Committee set target goals as follows: •
The adjusted operating income and adjusted EPS targets were set to achieve 2% and 4% growth, respectively, over fiscal 2022 results. These growth targets reflected lower expected COVID therapy income in fiscal 2023 versus fiscal 2022. •
The adjusted free cash flow target was set at $1.8 billion, which was lower than fiscal 2022 due to various factors, including consideration of the timing of customer cash receipts at fiscal year-end and the payment under the Distributor Settlement Agreement that became effective in 2022. For fiscal 2023, the Compensation Committee approved maintaining the previously selected financial measures of adjusted operating income, adjusted EPS, and adjusted free cash flow and, based on feedback from shareholders, added an ESG measure covering 10% of the payout opportunity. The Compensation Committee selected three components for the ESG metric that were objectively measurable and aligned with the Company’s ESG pillars of purpose-driven team members, resilient and sustainable operations, and healthy communities for all. The fiscal 2023 cash bonus measures for our NEOs are as follows: (1)
Adjusted Operating Income, Adjusted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures. See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations.
| | Executive compensation | | | 51 | |
Fiscal 2023 cash bonus goals and outcomes In November 2022, the Compensation Committee approved the following enterprise-level performance goals for these measures, which also performed as follows: (1)
Actual results between threshold and target were calculated by straight-line interpolation. For the financial metrics, actual results above target were calculated based on the “stretch” bonus, equal to an additional 5% for every 1% that actual performance exceeds target, up to a maximum of 200%. For the ESG metric, only a target opportunity was available. As a result, the maximum overall payout opportunity for fiscal 2023 was 190%. (2)
Adjusted Operating Income, Adjusted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures. See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. (3)
As this was our first incentive plan cycle incorporating an ESG metric, the Compensation Committee took a measured approach by setting only a target goal for this metric. Unlike the financial metrics, the fiscal 2023 ESG metric has only a target and no threshold or maximum opportunity. All three components of the ESG metric were measured over the fiscal 2023 performance period. (4)
A leadership role is defined as vice president or above. (5)
Inclusion index score is based on a sub-section of an externally-developed employee engagement survey designed to assess how inclusive and supportive is the Company’s work environment.
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Fiscal 2023 cash bonus payouts Cencora exceeded the target goals for the enterprise-level performance measures and delivered strong business execution and performance for fiscal 2023, resulting in each of the NEOs earning a stretch bonus in accordance with the terms of our Annual Incentive Plan (“AIP”). Adjusted free cash flow was particularly strong due to better-than-expected growth in the U.S. human health distribution business and good working capital management. The Compensation Committee reviewed and discussed the Company’s achievement of financial and strategic objectives and its reported non-GAAP financial results. Following this review, the Compensation Committee determined that it would apply discretion to reduce the fiscal 2023 cash bonus awards for the NEOs from 134.2% to 131.9% of target to reflect the foreign currency exchange impact relative to rates utilized when the Company established its fiscal 2023 budget. Target and actual fiscal 2023 cash bonuses (as reduced by the Compensation Committee’s discretion) for our NEOs were as follows: | | Name | | | Base salary
($) | | | x | | | AIP
% | | | = | | | AIP target
($) | | | x | | | Payout level
%(1) | | | = | | | Calculated payout
($) | | | | Steven H. Collis | | | | | 1,400,000 | | | | | | x | | | | | | 175% | | | | | | = | | | | | | 2,450,000 | | | | | | x | | | | | | 131.9% | | | | | | = | | | | | $ | 3,231,550 | | | | | James F. Cleary | | | | | 795,000 | | | | | | x | | | | | | 100% | | | | | | = | | | | | | 795,000 | | | | | | x | | | | | | 131.9% | | | | | | = | | | | | $ | 1,048,605 | | | | | Robert P. Mauch | | | | | 975,000 | | | | | | x | | | | | | 125% | | | | | | = | | | | | | 1,218,750 | | | | | | x | | | | | | 131.9% | | | | | | = | | | | | $ | 1,607,531 | | | | | Elizabeth S. Campbell | | | | | 670,000 | | | | | | x | | | | | | 100% | | | | | | = | | | | | | 670,000 | | | | | | x | | | | | | 131.9% | | | | | | = | | | | | $ | 883,730 | | | | | Gina K. Clark | | | | | 640,000 | | | | | | x | | | | | | 100% | | | | | | = | | | | | | 640,000 | | | | | | x | | | | | | 131.9% | | | | | | = | | | | | $ | 844,160 | | |
(1)
As described above, the Compensation Committee applied discretion to reduce the final payout for our NEOs to 131.9%. Long-term equity incentive compensation | | We use equity awards to motivate our NEOs to achieve superior business results and to retain our executive team over the long term. Equity awards support our stock ownership requirements and further enhance the alignment of NEO and shareholder interests. Consistent with fiscal 2022, for fiscal 2023, the annual equity award for our NEOs was allocated as 60% performance shares and 40% time-based restricted stock units. Restricted stock units vest ratably each year during the three-year vesting period, while performance shares have a three-year performance period. In addition, equity awards are subject to vesting, ownership, and retention requirements, as described in more detail below and in the sections following the Summary Compensation Table. | | | | |
In approving long-term equity incentive awards, the Compensation Committee considers several factors, including: | | •
skills, experience, and time in role •
expected future contributions •
Company performance | | | •
market alignment •
having the majority of NEO pay at-risk or variable •
average annual share burn | |
| | Executive compensation | | | 53 | |
Fiscal 2023 equity incentives For fiscal 2023, the Compensation Committee awarded the following amounts in long-term incentives to our NEOs: | | Name | | | Performance shares
target # of shares | | | Performance shares
grant value(1) | | | RSUs
# of shares | | | RSUs
grant value(1) | | | | Steven H. Collis | | | | | 47,412 | | | | | $ | 7,500,104 | | | | | | 31,608 | | | | | $ | 5,000,070 | | | | | James F. Cleary | | | | | 13,276 | | | | | $ | 2,100,130 | | | | | | 8,851 | | | | | $ | 1,400,140 | | | | | Robert P. Mauch | | | | | 18,965 | | | | | $ | 3,000,073 | | | | | | 12,644 | | | | | $ | 2,000,154 | | | | | Elizabeth S. Campbell | | | | | 9,103 | | | | | $ | 1,440,004 | | | | | | 6,069 | | | | | $ | 960,055 | | | | | Gina K. Clark | | | | | 6,069 | | | | | $ | 960,055 | | | | | | 4,046 | | | | | $ | 640,037 | | |
(1)
Amounts in this column represent the grant date fair values of performance shares and restricted stock units, respectively, shown in accordance with Accounting Standards Codification (“ASC”) Topic 718, and do not correspond to the actual economic value that may be received by our NEOs upon vesting. For the performance shares, which are subject to performance conditions, we report the value at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under ASC 718, excluding the effect of estimated forfeitures. For this purpose, the probable outcome of the performance shares is assumed to be at target level attainment. See Note 10 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, relating to assumptions made in the valuations. | | CEO
Equity incentives represented approximately 76% of Mr. Collis’s total target direct compensation | | | | | | | Other NEOs
Equity incentives represented approximately 66%, on average, of the total target direct compensation of the other NEOs | | | | |
We believe that it was appropriate to award this amount of equity incentives to our NEOs because they are in the best position to drive our future results and implement our long-term business strategy. Performance share awards Our performance plan is designed to encourage our NEOs to focus on initiatives that promote the achievement of our long-term goals. Performance share awards are granted annually in November and cover a three-year performance period. Performance shares are subject to the attainment of predetermined goals approved by the Compensation Committee that it believes to be challenging, yet attainable. Specific targets for these goals are disclosed retroactively to avoid the potential for competitive harm. Vesting (or payout of shares) is based on performance at the end of the applicable three-year performance cycle. NEOs have the opportunity to earn a payout of between 0% and 200% of their target award. As with our fiscal 2022 performance share awards, in consideration of feedback received from shareholders, the Compensation Committee included the following features in our fiscal 2023 performance share awards: 1.
A relative total shareholder return (“TSR”) modifier with above median performance required for a target payout, as described in more detail below; and 2.
A post-vest holding requirement of two years for the CEO, and one year for the other NEOs on 50% of earned performance shares.
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Fiscal 2023 performance shares metrics Consistent with fiscal 2022, the Compensation Committee selected the following metrics for the reasons cited below for the performance shares granted in fiscal 2023, which covers the three-year performance period beginning October 1, 2022 and ending September 30, 2025: | | Metric | | | Weighting | | | Rationale | | | | Compound Annual Adjusted
EPS growth(1) | | | | | | Key metric used by management to set business goals and for shareholders to evaluate our financial results | | | | Average Annual Adjusted ROIC(2) | | | | | | Defined as Adjusted Operating Income/Invested Capital Over Time, this measure encourages our NEOs to grow our Company’s profitability | | | | Relative TSR modifier with above
median target (55th percentile)(3) | | | +/- 15% | | | Stock performance relative to companies in the S&P 500 Healthcare Providers & Services Index(4) further aligns NEO incentives with shareholder interests | |
(1)
Compound Annual Adjusted EPS Growth is the mean annual growth rate of adjusted EPS from the baseline over the three-year performance period. (2)
Average Annual Adjusted ROIC is calculated by taking the average of the Company’s annual adjusted ROIC during the three-year performance period. Annual Adjusted ROIC is calculated by dividing after-tax adjusted operating income by invested capital, where invested capital is the 12-month average of accounts receivable, inventories, accounts payable, net property and equipment, goodwill, intangible assets, and right-of-use assets. (3)
TSR is calculated as share price appreciation (or reduction) over the performance period, including reinvestment of dividends when paid, divided by the share price at the beginning of the period. The value of performance shares awarded will be decreased or increased by up to 15% based on this relative TSR measure. In the event of a negative absolute Cencora TSR over the three-year period, payout is capped at 100% of target, regardless of whether actual performance is above target for compound annual adjusted EPS growth or average annual adjusted ROIC. (4)
As of September 30, 2023, the S&P 500 Healthcare Providers & Services Index included: | | Cardinal Health, Inc. | | | Elevance Health, Inc. | | | McKesson Corporation | | | | Centene Corporation | | | HCA Healthcare, Inc. | | | Molina Healthcare, Inc. | | | | The Cigna Group | | | Henry Schein, Inc. | | | Quest Diagnostics Incorporated | | | | CVS Health Corporation | | | Humana Inc. | | | UnitedHealth Group Incorporated | | | | DaVita, Inc. | | | Laboratory Corporation of America | | | Universal Health Services, Inc. | |
The Compensation Committee sets the goals for these metrics in consideration of several factors, including the Company’s long-range plan, as approved by the Board, which considers, among other things: the Company’s multi-year operating plans and strategic initiatives; projected business conditions; macroeconomic conditions; and anticipated capital deployment. The Compensation Committee believes the goals set for these performance shares are challenging and difficult to achieve, but attainable and consistent with our long-range plan. The specific goals for all of our outstanding performance share awards are confidential, competitively sensitive information and are disclosed after the performance period ends.
| | Executive compensation | | | 55 | |
Fiscal 2021 performance share payouts (2021-2023 performance period) In November 2020, each of our NEOs received performance shares for the three-year performance period spanning fiscal 2021 through fiscal 2023. In November 2023, the Compensation Committee approved the vesting and payment of these performance shares based on the Company’s achievement of a Compound Annual Adjusted EPS growth rate of 14.92% and an Average Annual Adjusted ROIC of 18.73%, in each case for the performance period ended September 30, 2023, which aggregated to 167.6% of target, calculated as shown in the table below. Plan and goals were set prior to the acquisition of Alliance Healthcare (which increased EPS and reduced ROIC) and were positively impacted by broad-based performance across multiple business units, strong pharmaceutical utilization trends, and sales of COVID treatments. (1)
Compound Annual Adjusted EPS Growth is the mean annual growth rate of Adjusted EPS from the baseline over the three-year performance period. (2)
Average Annual Adjusted ROIC is calculated by taking the average of the Company’s annual adjusted ROIC during the three-year performance period. Annual Adjusted ROIC is calculated by dividing after-tax adjusted operating income by invested capital, where invested capital is the 12-month average of accounts receivable, inventories, accounts payable, property and equipment, goodwill, intangible assets, and right of use assets. (3)
Please note that the relative TSR modifier was introduced with the fiscal 2022 grants and, therefore, will be incorporated into the total payout result beginning with the performance period ending September 30, 2024. Based on our performance, and the respective weighting of each performance metric, the number of shares earned by our NEOs for the fiscal 2021 through fiscal 2023 performance period was calculated as follows: Fiscal 2021 — fiscal 2023 performance shares earned | | Name | | | Target # of performance shares | | | x | | | Total payout result | | | = | | | Shares earned(1) | | | | Steven. F. Collis | | | | | 57,232 | | | | | | x | | | | | | 167.6% | | | | | | = | | | | | | 95,943 | | | | | James F. Cleary | | | | | 16,352 | | | | | | x | | | | | | 167.6% | | | | | | = | | | | | | 27,412 | | | | | Robert P. Mauch | | | | | 17,987 | | | | | | x | | | | | | 167.6% | | | | | | = | | | | | | 30,153 | | | | | Elizabeth S. Campbell | | | | | 891 | | | | | | x | | | | | | 167.6% | | | | | | = | | | | | | 1,493 | | | | | Gina K. Clark | | | | | 8,176 | | | | | | x | | | | | | 167.6% | | | | | | = | | | | | | 13,706 | | |
(1)
Please note that the total shares earned may vary from a straight calculation of the target number of performance shares times the payout result due to rounding.
| | 56 | | | Executive compensation | |
Additional benefits and perquisites Other compensation Our NEOs receive a limited number of other benefits as part of a competitive compensation package, which constitutes in the aggregate only a small percentage of their total compensation. As discussed below, these benefits include: •
participation in our group health and welfare plans, which is generally available to all employees; •
a Company matching contribution under our 401(k) plan, which is available to all employee participants; •
participation in the Company’s Deferred Compensation Plan, which is available to senior management; •
a Company matching contribution under our benefit restoration plan (the “Benefit Restoration Plan”), which is available to select key management, to address matching contributions on compensation above the 401(k) limit; •
an allowance for tax and financial planning services for our executive officers to enable them to focus more of their time and attention on achieving our financial and strategic goals and assist them in maximizing the benefits offered to them; •
a physical examination benefit to promote the health and wellness of our key leaders; and •
for our CEO, certain personal travel and security services. The Compensation Committee encourages our CEO to use the Company’s leased aircraft for personal travel to increase his safety, security, and productivity. Our CEO received an allowance of up to $200,000 for personal travel on the Company aircraft, the value of which is based on the aggregate incremental cost of the flight. For similar reasons, the Company also pays for a car and driver to transport the CEO locally, which may include personal trips that are logged separately for mileage and time. In addition, the Company pays for home security monitoring and maintenance of that system. Our CEO does not receive tax reimbursement for imputed income derived from any of these benefits. General employee benefits Core employee benefits are available to the NEOs on the same basis as all domestic employees generally. These benefits include medical and dental coverage, disability insurance, life insurance, and a 401(k) plan that includes a Company match. Deferred compensation NEOs may defer receipt of part of their compensation under our Deferred Compensation Plan. The plan is intended to promote retention of NEOs by providing a long-term, tax-efficient savings opportunity at a low cost to the Company. Amounts deferred under the plan are deemed invested in the plan investment option(s) chosen by the participant. The participant’s account is adjusted for any notional gains and losses on the amounts deferred under the plan. Benefit restoration plan We offer our Benefit Restoration Plan to our NEOs. We implemented this plan in 2006 to address the absence of any non-legacy executive retirement plan following the 2001 merger that formed the Company and to permit members of key management to receive the full amount of the Company match generally available to other employees under the 401(k) plan. In fiscal 2023, the benefit restoration plan provided an annual contribution amount equal to 4% of a participant’s salary and bonus to the extent that their compensation exceeded Internal Revenue Service (IRS) limits applicable to our 401(k) plan. Benefits under the plan are subject to certain vesting requirements based on age and length of service (other than in the event of death, disability, or a change in control). Employment agreements Employment agreements in effect during fiscal 2023 for our NEOs are described under “Executive compensation — Employment agreements.” Our standard NEO employment agreements cover termination (including in the event of a change in control) and severance and include non-competition, confidentiality, and related provisions. The employment agreements do not include specified amounts of salary, bonus opportunities, or equity-based compensation for future years.
| | Executive compensation | | | 57 | |
Severance benefits We provide severance benefits under specified circumstances to give NEOs a measure of financial security following the loss of employment, to protect the Company from competitive activities after the departure of NEOs, and because we believe that these benefits are important to attract and retain talent in a competitive industry. We will provide severance benefits if we discharge a NEO without cause or such NEO leaves the Company with good reason, each as defined in the applicable employment agreement. We do not provide severance benefits if a NEO is terminated for cause or leaves without good reason. In that case, we would only pay the amount of accrued obligations. In fiscal 2023, the Compensation Committee adopted an executive severance policy that applies to any employment or severance agreement that is amended or entered into with a NEO following the policy’s November 9, 2022 effective date. Under the terms of the policy, cash-based severance benefits for involuntary terminations must be limited to an amount equal to 2.99 times the executive’s base salary, plus the executive’s target annual bonus, unless the employment or severance agreement receives shareholder approval. The Compensation Committee believes that this policy will serve to carefully balance the interests of shareholders with the Company’s needs to remain competitive in the market. The terms of the severance benefits for our NEOs are set out in employment agreements and various plans, which are described in the section of this proxy statement titled “Executive compensation — Potential payments upon termination of employment or change in control.” Our equity awards have a “double-trigger” change in control feature, whereby the vesting of equity awards will be accelerated if a NEO’s employment is involuntarily terminated upon or within two years after a change in control. In the event of a change in control, a shortened performance period, which extends only through the end of the fiscal quarter preceding the change in control, will be used to determine the payout under awards of performance shares. We provide these benefits to offer some financial protection to NEOs following an involuntary loss of employment in connection with a change in control and to enable our NEOs to focus on important business decisions should we be acquired without regard to how the transaction may affect them personally. We believe that this structure provides NEOs with an appropriate incentive to cooperate in completing a change in control transaction. The Board and the Compensation Committee also have discretion under our equity plans to take certain actions in the event of a change in control. These actions include: canceling options that are not exercised within a specified period; cashing out outstanding options; canceling any restricted stock unit awards in exchange for the payment of cash, property, or a combination of cash and property equal to the award’s value; or substituting other property (including securities of another entity) for awards granted under our equity plans. In addition, the Compensation Committee has discretion under the AIP to pay the annual cash incentive awards during any year in which a change in control occurs. If this discretion is exercised, bonus payments would be paid out at target level and/or based on performance for the portion of the fiscal year until the change in control event and paid within 75 days of the change in control. Under our Benefit Restoration Plan, any unvested amounts will vest immediately upon a change in control. Under the employment agreements for our NEOs, if amounts otherwise payable to a NEO in connection with a change in control would constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the Code), the Company will reduce such payments to an amount that would avoid any excise taxes under Section 4999 of the Code, but only if such reduction would provide the NEO with a greater net after-tax benefit than would no reduction. Additionally, a NEO may receive additional severance if their employment is involuntarily terminated without cause or such NEO leaves the Company with good reason upon or within two years following a change in control. See the section of this proxy statement titled “Executive compensation — Potential payments upon termination of employment or change in control” below.
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Other compensation policies and practices Stock ownership guidelines Our NEOs must own shares of our Common Stock in an amount equal to a multiple of their base salary. Stock ownership aligns management’s interests with those of our shareholders and provides a continuing incentive for management to focus on long-term growth. | | Position | | | Stock ownership guidelines | | | Compliance period | | | Current status | | | | CEO | | | 6 times base salary ![[MISSING IMAGE: bc_sixrows-pn.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/bc_sixrows-pn.jpg) | | | 5 years from date of hire or
change in status | | | Met | | | | Other NEOs | | | 3 times base salary ![[MISSING IMAGE: bc_threerows-pn.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/bc_threerows-pn.jpg) | |
| | Equity we consider for purposes of meeting our stock ownership guidelines | | | Yes | | | Directly-held shares of our stock Shares held in our Employee Stock Purchase Plan Outstanding time-vested restricted stock units | | | No | | | Stock options Unvested performance shares | |
Under our executive stock ownership guidelines, our CEO must own shares worth six times his base salary and the other NEOs must own shares worth three times their respective base salaries. NEOs who become subject to the guidelines have five years from the date of hire or change in status, whichever is later, to comply with the ownership requirements, but must retain all options and equity grants until required ownership levels are met. Following its annual review, the Compensation Committee determined that each of the NEOs is in compliance with the guidelines. We have a policy against the hedging and pledging of our securities that is applicable to our employees (including executive officers) and non-employee directors. See page 33 for more information. Compensation forfeiture and recoupment (“Clawback”) policies Dodd-Frank clawback policy In November 2023, the Compensation Committee adopted the Dodd-Frank Compensation Recoupment Policy (the “Dodd-Frank Clawback Policy”) to comply with final rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the SEC and the NYSE. The Dodd-Frank Clawback Policy, effective as of October 2, 2023, provides for the mandatory recoupment of erroneously awarded incentive-based compensation in the event of an accounting restatement. Compensation recoupment policy In December 2021, the Compensation Committee adopted a comprehensive Compensation Recoupment Policy aimed at enhancing and updating the Company’s existing clawback provisions (the “Compensation Recoupment Policy”). The Compensation Recoupment Policy applies to incentive-based cash and equity compensation granted to covered participants after December 9, 2021, the effective date of the Compensation Recoupment Policy. In November 2023, the Compensation Committee amended the Compensation Recoupment Policy to comply with the final rules issued under the Dodd-Frank Act with respect to clawback policies and modify the period for which the Compensation Committee may recoup vested or distributed incentive-based compensation. The Compensation Recoupment Policy is in addition to and separate from the Dodd-Frank Clawback Policy and the Company’s Financial Recoupment Policy (described below) and does not limit any recoupment provisions of the Company’s Omnibus Incentive Plan, effective March 16, 2014 (the “2014 Omnibus Incentive Plan,” together with the 2022 Omnibus Incentive Plan, the “Omnibus Incentive Plan”), the 2022 Omnibus Incentive Plan (or any successor plan), the Company’s Annual Incentive Plan or similar plan, or any other Company incentive plan or policy. The Compensation Recoupment Policy provides for forfeiture or recoupment of certain cash and equity incentive compensation in the event of a restatement of our financial statements or detrimental conduct that occurs after the effective date of the Compensation Recoupment Policy. Specifically, forfeiture or recoupment is authorized if any of the following occur (each, a “covered event”):
45
| | Executive compensation | | | 59 | |
•
A covered participant engages in misconduct that results in a restatement of our financial statements, due to a material error, during the covered participant’s employment or within three years thereafter; or •
A covered participant: (i)
is terminated for cause, or the Compensation Committee determines that the covered participant committed an act during employment that was not discovered until after termination of such employment and that would have been grounds for termination for cause; (ii)
breaches a confidentiality, non-solicitation, non-competition, non-disparagement, or inventions assignment covenant with the Company; (iii)
materially breaches an employment or service agreement or our Code of Ethics and Business Conduct (or any related material policy); (iv)
fails to cooperate in any investigation or legal proceeding; or (v)
commits fraud, gross negligence, or willful misconduct in the course of employment that adversely affects our business or affairs. The Compensation Recoupment Policy applies to our officers as defined under Section 16 of the Exchange Act and any other individual receiving an equity grant under our Omnibus Incentive Plans or any successor plan. In the event of a covered event under the Compensation Recoupment Policy, the Compensation Committee may require forfeiture or recoupment of outstanding equity or cash incentive compensation that vested or was distributed as follows: (i)
for a covered participant who is an employee of the Company on the date the Compensation Committee determines that a covered event occurs (the “determination date”): during the period beginning on the first day of the third completed fiscal year immediately prior to the determination date and ending on the last day of the fiscal year in which the determination date occurs; or (ii)
for a covered participant whose employment with the Company has terminated within three years prior to the determination date: the period beginning on the first day of the third completed fiscal year immediately prior to the covered participant’s employment termination date and ending on the last day of the fiscal year in which the determination date occurs. Clawback disclosure policy The Company has a clawback disclosure policy that applies to all incentive compensation made to any officer (as such term is defined under Section 16 of the Exchange Act) under the Company’s Omnibus Incentive Plan and AIP. Under the policy, if incentive compensation is ever forfeited or required to be repaid by an officer and the underlying event has been publicly disclosed, then we will disclose the aggregate amount forfeited or to be repaid. The disclosure will include a general description of the circumstances giving rise to the clawback and will be made in a document filed publicly with the SEC or posted to a clearly identifiable location on our investor website at investor.cencora.com. The disclosure policy is subject to exceptions: (i)
if such disclosure would violate an individual’s privacy rights; (ii)
if such disclosure would result in or exacerbate existing or threatened litigation; or (iii)
if such disclosure is contrary to law or regulation. The policy is administered by the Board, which has exclusive authority to interpret and carry out the policy. Equity award grant practices We have a written policy on equity grants designed to formalize our equity grant practices and ensure that equity awards will generally be made at specified times. Our equity award policy is designed to encourage consistency in practice, but is not intended to and does not limit the authority of the Compensation Committee under our equity incentive plans, including the 2022 Omnibus Incentive Plan. The Compensation Committee generally will review and approve annual equity awards to NEOs and other eligible employees in November of each year, which is near the beginning of our fiscal year. This allows the Compensation Committee to make annual equity awards at the beginning of the relevant performance cycle with the benefit of reviewing results from the immediately preceding performance cycle. We also may make equity awards at other times during the year for new hires or for other reasons, including, for example, a job promotion, as a result of an acquisition or for retention purposes. In accordance with our policy and our 2022 Omnibus Incentive Plan,
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the Compensation Committee has delegated limited authority to our CEO to approve grants to employees that are not designated as Section 16 officers. Such awards may only be made on the first business day of a month. The Compensation Committee must approve any equity awards to our Section 16 officers, including the NEOs. We do not backdate or retroactively grant restricted stock units. We generally schedule Board and Compensation Committee meetings at least one year in advance and, as noted above, generally make annual equity awards to our NEOs at approximately the same time each year. We do not time our equity awards to take advantage of the release of earnings or other major announcements by us or market conditions. Tax considerations When setting executive compensation, we consider many factors, such as attracting and retaining executives and providing appropriate performance incentives. We also consider the after-tax cost to the Company in establishing executive compensation programs, both individually and in the aggregate, but tax deductibility is not our sole consideration. Section 162(m) of the Code generally disallows a federal income tax deduction to public companies for annual compensation over $1 million (per individual) paid to their chief executive officer, chief financial officer, the next three most highly compensated executive officers as well as certain other officers who were in those positions in years after 2016. As a result, most of the compensation payable to our NEOs in excess of $1 million per person in a year will not be fully deductible.
Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy| | Executive compensation | | | 61 | |
Report of the Compensation Committee The Compensation & Succession Planning Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for the Company’s 2024 Annual Meeting and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. This report is provided by the following independent directors, who comprise the Compensation & Succession Planning Committee: The Compensation & Succession Planning Committee | | Kathleen W. Hyle, Chair | | | Lorence H. Kim, M.D. | | | Dennis M. Nally | |
The foregoing Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the report by reference therein.
Executive Compensation TablesExecutive compensation tables Summary compensation table The following table sets forth the compensation paid to, or earned by, our NEOs during fiscal 2023. | | Name and principal position | | | Year | | | Salary
($) | | | Stock
awards(1)
($) | | | Non-equity
incentive plan
compensation(2)
($) | | | All other
compensation(3)
($) | | | Total
($) | | | | Steven H. Collis
Chairman, President and Chief Executive Officer | | | | | 2023 | | | | | | 1,400,000 | | | | | | 12,500,174 | | | | | | 3,231,550 | | | | | | 379,516 | | | | | | 17,511,240 | | | | | | | 2022 | | | | | | 1,400,000 | | | | | | 11,250,120 | | | | | | 3,215,332 | | | | | | 870,300 | | | | | | 16,735,752 | | | | | | | 2021 | | | | | | 1,400,000 | | | | | | 10,500,201 | | | | | | 2,249,071 | | | | | | 724,543 | | | | | | 14,873,815 | | | | | James F. Cleary
Executive Vice President and Chief Financial
Officer | | | | | 2023 | | | | | | 795,000 | | | | | | 3,500,270 | | | | | | 1,048,605 | | | | | | 105,498 | | | | | | 5,449,373 | | | | | | | 2022 | | | | | | 770,000 | | | | | | 3,200,064 | | | | | | 1,071,777 | | | | | | 279,860 | | | | | | 5,321,701 | | | | | | | 2021 | | | | | | 750,000 | | | | | | 3,000,120 | | | | | | 1,194,902 | | | | | | 224,086 | | | | | | 5,169,108 | | | | | Robert P. Mauch
Executive Vice President and Chief Operating Officer | | | | | 2023 | | | | | | 975,000 | | | | | | 5,000,227 | | | | | | 1,607,531 | | | | | | 115,092 | | | | | | 7,697,850 | | | | | | | 2022 | | | | | | 850,000 | | | | | | 3,500,188 | | | | | | 1,183,131 | | | | | | 285,423 | | | | | | 5,818,742 | | | | | | | 2021 | | | | | | 800,000 | | | | | | 3,300,088 | | | | | | 1,274,562 | | | | | | 233,447 | | | | | | 5,608,097 | | | | | Elizabeth S. Campbell
Executive Vice President and Chief Legal Officer | | | | | 2023 | | | | | | 670,000 | | | | | | 2,400,059 | | | | | | 883,730 | | | | | | 73,443 | | | | | | 4,027,232 | | | | | Gina K. Clark
Executive Vice President and Chief Communications & Administration Officer | | | | | 2023 | | | | | | 640,000 | | | | | | 1,600,092 | | | | | | 844,160 | | | | | | 85,947 | | | | | | 3,170,199 | | | | | | | 2022 | | | | | | 620,000 | | | | | | 1,500,242 | | | | | | 862,990 | | | | | | 193,928 | | | | | | 3,177,160 | | | | | | | 2021 | | | | | | 600,000 | | | | | | 1,500,060 | | | | | | 955,922 | | | | | | 161,427 | | | | | | 3,217,409 | | |
(1)
Stock Awards. The amounts reported as stock awards represent the grant date fair values of equity awards shown in accordance with Accounting Standards Codification (“ASC”) Topic 718, and do not correspond to the actual economic value that may be received by our NEOs upon vesting. See Note 10 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, relating to assumptions made in the valuations. For awards that are subject to performance conditions, we report the fair values at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period as determined under ASC Topic 718, excluding the effect of estimated forfeitures. For this purpose, the performance shares granted in fiscal 2023 for the 2023 — 2025 performance period are reported in the Summary Compensation Table based on a probable outcome that is assumed to be at target level attainment. The table below shows the value of the fiscal 2023 performance shares at the grant date assuming a maximum level of attainment, as compared to the grant date fair value reflected in the Summary Compensation Table. | | | | | Fiscal 2023 – fiscal 2025 performance shares | | | | Name | | | At target level attainment
($) | | | At maximum level attainment
($) | | | | Mr. Collis | | | | | 7,500,104 | | | | | | 15,000,208 | | | | | Mr. Cleary | | | | | 2,100,130 | | | | | | 4,200,260 | | | | | Mr. Mauch | | | | | 3,000,073 | | | | | | 6,000,146 | | | | | Ms. Campbell | | | | | 1,440,004 | | | | | | 2,880,008 | | | | | Ms. Clark | | | | | 960,055 | | | | | | 1,920,110 | | |
All long-term equity incentive awards were made pursuant to our Omnibus Incentive Plan. In accordance with the dividend rate applicable to the declaration of dividends on our Common Stock from time to time, dividends on unvested restricted stock units and unvested performance shares are accrued and paid upon vesting and, with regard to performance shares, the attainment of the required performance. The dividend rate is not preferential. There are no dividends paid on outstanding units or shares prior to vesting and, with regard to performance shares, without attainment of the required performance. See the sections of this proxy statement titled “Compensation discussion and analysis — Long-term equity incentive compensation” for additional information regarding the fiscal 2023 equity awards and “Potential payments upon termination of employment or change in control” for a description of the impact of termination of employment on vesting and exercisability of equity awards. (2)
Non-Equity Incentive Plan Compensation. The amounts reported as Non-Equity Incentive Plan Compensation represent the annual cash bonuses awarded to the NEOs pursuant to our AIP for the fiscal year shown. (See the cash bonus discussion in the section of this proxy statement titled “Compensation discussion and analysis — Short-term incentive compensation.”)
Summary Compensation Table
The following table sets forth the compensation paid to or earned during fiscal year 2020 by (i) our Chairman, President and Chief Executive Officer, (ii) our Executive Vice President and Chief Financial Officer, and (iii) the three other most highly compensated executive officers, whom we collectively refer to in this proxy statement as our named executive officers.
| | Name and Principal Position | | | | Year | | | | Salary
($)(1) | | | | Stock
Awards
($)(2) | | | | Option
Awards
($)(2) | | | | Non-Equity
Incentive
Plan
Compensation
($)(3) | | | | All
Other
Compensation
($)(4) | | | | Total
($) | | | | Steven H. Collis
Chairman, President and Chief Executive Officer | | | | | | 2020 | | | | | | | 1,325,000 | | | | | | | 6,825,043 | | | | | | | 2,925,004 | | | | | | | 2,528,034 | | | | | | | 692,059 | | | | | | | 14,295,140 | | | | | | | 2019 | | | | | | | 1,240,000 | | | | | | | 5,600,004 | | | | | | | 2,400,404 | | | | | | | 1,866,596 | | | | | | | 202,926 | | | | | | | 11,309,930 | | | | | | | 2018 | | | | | | | 1,240,000 | | | | | | | 5,599,992 | | | | | | | 2,400,007 | | | | | | | 2,050,733 | | | | | | | 223,383 | | | | | | | 11,514,115 | | | | | James F. Cleary
Executive Vice President and Chief Financial Officer | | | | | | 2020 | | | | | | | 700,000 | | | | | | | 1,750,038 | | | | | | | 750,008 | | | | | | | 890,377 | | | | | | | 192,520 | | | | | | | 4,282,943 | | | | | | | 2019 | | | | | | | 638,750 | | | | | | | 1,470,008 | | | | | | | 630,112 | | | | | | | 652,305 | | | | | | | 62,306 | | | | | | | 3,453,481 | | | | | | | 2018 | | | | | | | 575,000 | | | | | | | 1,259,940 | | | | | | | 540,006 | | | | | | | 485,640 | | | | | | | 246,637 | | | | | | | 3,107,223 | | | | | John G. Chou
Executive Vice President and
Chief Legal Officer | | | | | | 2020 | | | | | | | 675,000 | | | | | | | 1,610,141 | | | | | | | 690,013 | | | | | | | 858,578 | | | | | | | 215,107 | | | | | | | 4,048,839 | | | | | | | 2019 | | | | | | | 660,000 | | | | | | | 1,470,008 | | | | | | | 630,112 | | | | | | | 662,340 | | | | | | | 86,155 | | | | | | | 3,508,615 | | | | | | | 2018 | | | | | | | 660,000 | | | | | | | 1,469,969 | | | | | | | 630,007 | | | | | | | 727,679 | | | | | | | 82,949 | | | | | | | 3,570,604 | | | | | Gina K. Clark
Executive Vice President and Chief Communications & Administration Officer | | | | | | 2020 | | | | | | | 575,000 | | | | | | | 1,050,040 | | | | | | | 450,015 | | | | | | | 731,381 | | | | | | | 149,182 | | | | | | | 2,955,618 | | | | | | | 2019 | | | | | | | 500,000 | | | | | | | 909,954 | | | | | | | 390,061 | | | | | | | 501,773 | | | | | | | 64,402 | | | | | | | 2,366,190 | | | | | Robert P. Mauch
Executive Vice President and Group President | | | | | | 2020 | | | | | | | 700,000 | | | | | | | 1,750,038 | | | | | | | 750,008 | | | | | | | 890,377 | | | | | | | 219,214 | | | | | | | 4,309,637 | | | | | | | 2019 | | | | | | | 675,000 | | | | | | | 1,470,008 | | | | | | | 630,112 | | | | | | | 677,394 | | | | | | | 85,087 | | | | | | | 3,537,601 | | | | | | | 2018 | | | | | | | 675,000 | | | | | | | 1,469,969 | | | | | | | 630,007 | | | | | | | 563,392 | | | | | | | 67,269 | | | | | | | 3,405,637 | | |
(1)
Salary. The amounts reported as salary represent the base salaries paid to each of the named executive officers for each fiscal year shown. Amounts shown for Mr. Collis include $63,431 and $372,053 deferred into our deferred compensation plan for fiscal years 2019 and 2020, respectively. Amounts shown for Mr. Chou include $228,449, $363,840 and $331,170 deferred into our deferred compensation plan for fiscal years 2018, 2019 and 2020, respectively. Amounts shown for Ms. Clark include $18,269 and $132,751 deferred into our deferred compensation plan for fiscal years 2019 and 2020, respectively. Amounts shown for Mr. Mauch include $21,748 deferred into our deferred compensation plan for fiscal year 2018.
(2)
Stock Awards and Option Awards. The amounts reported as stock awards and option awards represent the grant date fair values of equity awards shown in accordance with Accounting Standards Codification (“ASC”) Topic 718, disregarding the estimate of forfeitures related to service-based vesting conditions. Such values do not reflect whether the recipient has actually realized a financial benefit from the award. There were no forfeitures by named executive officers in fiscal years 2018, 2019, or 2020. See Note 11 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 relating to assumptions made in the valuations.
For awards that are subject to performance conditions and are included in the table above as stock awards, we report the fair values at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under ASC Topic 718, excluding the effect of estimated forfeitures. For this purpose, the probable outcome is assumed to be at target level attainment and the grant date fair values of the FY20—FY22 performance shares at target level attainment were as follows: Mr. Collis—$4,875,018, Mr. Cleary—$1,250,027, Mr. Chou—$1,150,076, Ms. Clark—$750,016, and Mr. Mauch—$1,250,027. The following represents the grant date fair value of the performance share awards at maximum level attainment: Mr. Collis—$9,750,036, Mr. Cleary—$2,500,054, Mr. Chou—$2,300,152, Ms. Clark—$1,500,032, and Mr. Mauch—$2,500,054.
Long-term equity incentive awards were made pursuant to our Omnibus Incentive Plan. Stock options have an exercise price equal to the closing price of our Common Stock on the date of grant. Stock options vest at the rate of 25% per year beginning on the first anniversary of the grant date and may be exercised over a term of seven years from the date of grant. Unvested options normally cease to vest upon any termination of employment other than involuntary termination of employment within two years after a change in control or upon retirement to the extent and according to the schedule set forth in the applicable award agreement. If we terminate a named executive officer for cause, all outstanding options (vested and unvested) are immediately canceled. (See the section of this proxy statement titled “Potential Payments Upon Termination of Employment or Change in Control” for a description of the impact of termination of employment on vesting and exercisability of restricted stock units and stock options.)
Restricted stock unit awards vest on the third anniversary of the grant date. Unvested restricted stock units are forfeited if the executive leaves the Company prior to vesting, except by reason of death or disability or upon an involuntary termination of employment within two years after a change in control. In accordance with the dividend rate applicable to the declaration of dividends on our Common Stock
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters| | Executive compensation | | | 63 | |
(3)
All Other Compensation. The following table shows the specific components of the amounts of all other compensation for fiscal 2023: | | Name | | | Employee
investment
plan(a)
($) | | | Benefits
restoration
plan(b)
($) | | | Financial
planning and tax
preparation
($) | | | Executive physical
examination
benefit
($) | | | Personal travel,
security
and driving
services(c)
($) | | | Total
($) | | | | Steven H. Collis | | | | | 16,250 | | | | | | 133,763 | | | | | | 18,060 | | | | | | 3,000 | | | | | | 208,443 | | | | | | 379,516 | | | | | James F. Cleary | | | | | 16,742 | | | | | | 67,396 | | | | | | 18,060 | | | | | | 3,300 | | | | | | — | | | | | | 105,498 | | | | | Robert P. Mauch | | | | | 16,250 | | | | | | 77,782 | | | | | | 18,060 | | | | | | 3,000 | | | | | | — | | | | | | 115,092 | | | | | Elizabeth S. Campbell | | | | | 16,604 | | | | | | 35,871 | | | | | | 17,968 | | | | | | 3,000 | | | | | | — | | | | | | 73,443 | | | | | Gina K. Clark | | | | | 16,250 | | | | | | 51,637 | | | | | | 18,060 | | | | | | — | | | | | | — | | | | | | 85,947 | | |
(a)
These amounts represent Company contributions under the Company’s Employee Investment Plan, our 401(k) plan, which were posted to the NEOs’ accounts during fiscal 2023. (b)
These amounts represent Company contributions to the Company’s Benefit Restoration Plan that were posted to the NEOs’ accounts during fiscal 2023. (c)
These amounts represent costs paid by the Company for Mr. Collis related to the aggregate incremental cost of his personal use of the Company’s leased aircraft ($200,000), home security system monitoring and maintenance, and personal driving services. To calculate the aggregate incremental cost of personal use of the Company’s aircraft, the Company determines the total variable operating cost for each personal trip, such as fuel, the operating cost based on contracted hourly rates and flight time, catering, and ground transportation. The aggregate incremental cost of a “deadhead” flight related to personal travel would also be included. Certain fixed costs do not change based on usage or are already built into the contracted hourly rate, such as pilot salary and routine maintenance, and are therefore not separately evaluated for purposes of the aggregate incremental cost calculation. The cost of personal use of a car and driver is valued based on the miles traveled in the vehicle for personal use plus the driver’s time at his hourly rate for such trips. Any income taxes related to the perquisites reported in this column are the responsibility of Mr. Collis.
from time to time, dividends on unvested restricted stock units are accrued and paid upon vesting. The dividend rate is not preferential. A restricted stock unit is a right to receive shares of our Common Stock that is delivered at the time and to the extent that the restricted stock unit vests.
Performance shares vest at the end of the three-year performance period applicable to the awards, subject to achievement of the performance metrics and except as noted below. Performance shares are settled using shares of our Common Stock. Each performance share represents the right to receive one share of our Common Stock. The Common Stock is not restricted upon payout of the award. If threshold performance for a performance metric is not achieved, the executive will forfeit the right to receive any payout based on that metric. Except as set forth below, the executive must remain continuously employed by us through the end of the original performance period in order to receive a payout of the award. An executive will forfeit his or her award under the performance plan upon voluntary termination of employment or termination for cause prior to vesting. An executive is entitled to receive a pro-rata portion of his or her award in the event of the executive’s death, disability or involuntary termination without cause prior to vesting, provided such event occurs after at least eighteen months from the beginning of the performance period. In addition, in the event of the executive’s death or disability, the performance period will be measured only through the end of the most recently completed quarter prior to such event. Upon a change in control of AmerisourceBergen, an executive will be entitled to receive a payout, if any, based upon a shortened performance period (extending from the beginning of the performance period through the end of the fiscal quarter preceding the change in control), but the vesting and the payout of the award, if any, would be made at the end of the original performance period so long as the executive is continuously employed by us. However, in the case of the executive’s involuntary termination with or without cause within two years of a change in control, the performance award will vest on the date of the executive’s termination. If an executive voluntarily retires, the executive will be entitled to receive a payout of his or her award at the end of the three-year performance period, if any, depending on assessment of our performance at the end of the three-year performance period. In accordance with the dividend rate applicable to the declaration of dividends on our Common Stock from time to time, dividends on unvested performance shares are accrued and paid upon vesting. If the required performance is attained, the executive will receive a cash payment equal in value to the total dividends that would have been paid on the award. The dividend rate is not preferential. There are no dividends paid on outstanding performance shares during the performance period.
(3)
Non-Equity Incentive Plan Compensation. The amounts reported as Non-Equity Incentive Plan Compensation represent the annual cash bonuses awarded to the named executive officers pursuant to our Omnibus Incentive Plan for the fiscal year shown. (See the cash bonus discussion in the section of this proxy statement titled “Compensation Discussion and Analysis—FY2020 Short-Term Cash Incentive.”)
(4)
All Other Compensation. The following table shows the specific components of the amounts of all other compensation for fiscal year 2020:
| | Name | | | | Year | | | | Employee
Investment
Plan
($)(1) | | | | Benefit
Restoration
Plan
($)(2) | | | | Financial
Planning
and Tax
Preparation
($) | | | | Dividends
Paid Upon
Vesting of
Equity
Awards
($)(3) | | | | Executive
Physical
Examination
Benefit
($) | | | | Security
and Driving
Services
($) | | | | Total
($) | | | | Steven H. Collis | | | | | | 2020 | | | | | | | 11,400 | | | | | | | 116,464 | | | | | | | 16,210 | | | | | | | 543,784 | | | | | | | 3,000 | | | | | | | 1,201 | | | | | | | 692,059 | | | | | James F. Cleary | | | | | | 2020 | | | | | | | 11,400 | | | | | | | 42,892 | | | | | | | 16,210 | | | | | | | 119,018 | | | | | | | 3,000 | | | | | | | — | | | | | | | 192,520 | | | | | John G. Chou | | | | | | 2020 | | | | | | | 11,400 | | | | | | | 42,294 | | | | | | | 13,705 | | | | | | | 144,708 | | | | | | | 3,000 | | | | | | | — | | | | | | | 215,107 | | | | | Gina K. Clark | | | | | | 2020 | | | | | | | 11,400 | | | | | | | 31,871 | | | | | | | 16,210 | | | | | | | 86,701 | | | | | | | 3,000 | | | | | | | — | | | | | | | 149,182 | | | | | Robert P. Mauch | | | | | | 2020 | | | | | | | 11,400 | | | | | | | 43,896 | | | | | | | 16,210 | | | | | | | 144,708 | | | | | | | 3,000 | | | | | | | — | | | | | | | 219,214 | | |
(1)
These amounts represent Company contributions under the AmerisourceBergen Employee Investment Plan, our 401(k) plan, which were posted to the executives’ accounts during fiscal year 2020.
(2)
These amounts represent Company contributions to the AmerisourceBergen Corporation Benefit Restoration Plan, which were posted to the executives’ accounts during fiscal year 2020.
(3)
These amounts represent dividends paid upon vesting of restricted stock units and performance shares for awards that vested in fiscal year 2020.
47
Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy| | 64 | | | Executive compensation | |
Grants of plan-based awards The following table sets forth certain information regarding grants of plan-based awards to each of our NEOs during fiscal 2023. | | | | | | | | | | | Estimated possible payouts under
non-equity incentive plan awards | | | Estimated future payouts under
equity incentive plan awards | | | All other
stock
awards:
number
of shares
of stock
or units
(#) | | | All other
option
awards:
number of
securities
underlying
options
(#) | | | Exercise
or base
prices of
option
awards
($/Sh) | | | Grant date
fair value of
stock and
option
awards(3)
($) | | | | Name | | | Type | | | Grant date | | | Threshold(1)
($) | | | Target(1)
($) | | | Maximum(1)
($) | | | Threshold(2)
($) | | | Target(2)
($) | | | Maximum(2)
($) | | | | Steven H. Collis | | | Restricted
stock units | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 31,608 | | | | | | — | | | | | | — | | | | | | 5,000,070 | | | | | Performance
shares | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | 23,706 | | | | | | 47,412 | | | | | | 94,824 | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,500,104 | | | | | Cash bonus | | | n/a | | | | | 612,500 | | | | | | 2,450,000 | | | | | | 4,655,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | James F. Cleary | | | Restricted
stock units | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,851 | | | | | | — | | | | | | — | | | | | | 1,400,140 | | | | | Performance
shares | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | 6,638 | | | | | | 13,276 | | | | | | 26,552 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,100,130 | | | | | Cash bonus | | | n/a | | | | | 198,750 | | | | | | 795,000 | | | | | | 1,510,550 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Robert P. Mauch | | | Restricted
stock units | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,644 | | | | | | — | | | | | | — | | | | | | 2,000,154 | | | | | Performance
shares | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | 9,483 | | | | | | 18,965 | | | | | | 37,930 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,000,073 | | | | | Cash bonus | | | n/a | | | | | 304,688 | | | | | | 1,218,750 | | | | | | 2,315,625 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Elizabeth S. Campbell | | | Restricted
stock units | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,069 | | | | | | — | | | | | | — | | | | | | 960,055 | | | | | Performance
shares | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | 4,552 | | | | | | 9,103 | | | | | | 18,206 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,440,004 | | | | | Cash bonus | | | n/a | | | | | 167,500 | | | | | | 670,000 | | | | | | 1,273,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Gina K.
Clark | | | Restricted
stock units | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,046 | | | | | | — | | | | | | — | | | | | | 640,037 | | | | | Performance
shares | | | 11/9/2022 | | | | | — | | | | | | — | | | | | | — | | | | | | 3,035 | | | | | | 6,069 | | | | | | 12,138 | | | | | | — | | | | | | — | | | | | | — | | | | | | 960,055 | | | | | Cash bonus | | | n/a | | | | | 160,000 | | | | | | 640,000 | | | | | | 1,216,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(1)
These amounts represent possible payouts of fiscal 2023 cash bonuses under the AIP. The amounts shown in the “Threshold” column represent the minimum amount payable under the AIP based on the assumption that corporate and business unit performance met the thresholds established for the financial performance goals. We generally do not pay a bonus for performance that is below the threshold established for financial performance goals and we pay a bonus of 25% of the target amount for performance that is at the threshold established for financial performance goals. For performance that exceeds threshold but does not meet target, bonus payments are based on the level of performance and are increased ratably. Actual payouts for fiscal 2023 are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. (2)
These share amounts represent the possible performance share award payouts under the 2022 Omnibus Incentive Plan at various levels of attainment for the performance period beginning October 1, 2023 and ending September 30, 2025. (3)
Amounts in this column represent the grant date fair value of restricted stock units, and performance shares. For awards made to our NEOs on November 9, 2022, the dollar value shown for restricted stock units is based on the closing price of our Common Stock of $158.19 per share on November 9, 2022. For awards that are subject to performance conditions in the table above, such as the performance shares, we report the value at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under Accounting Standards Codification Topic 718, excluding the effect of estimated forfeitures. For this purpose, the probable outcome of the performance shares is assumed to be at target level attainment.
Grants of Plan-Based Awards
The following table sets forth certain information regarding grants of plan-based awards to each of our named executive officers during fiscal year 2020.
| | | | | | Estimated Possible Payouts
Under
Non-Equity Incentive Plan Awards | | | | Estimated Future Payouts
Under
Equity Incentive Plan Awards | | | | | | | | Name | | | | Type | | | | Grant Date | | | | Threshold
($)(1) | | | | Target
($)(1) | | | | Maximum
($)(1) | | | | Threshold
(#)(2) | | | | Target
(#)(2) | | | | Maximum
(#)(2) | | | | All Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | | Exercise
or Base
Price of
Option
Awards
($/ Sh) | | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($)(3) | | | | Steven H. Collis | | | | Restricted Stock Units | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,651 | | | | — | | | | — | | | | $1,950,025 | | | | | | | | Performance Shares | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | 28,314 | | | | 56,627 | | | | 113,254 | | | | — | | | | — | | | | — | | | | $4,875,018 | | | | | | | | Stock Options | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 176,099 | | | | $86.09 | | | | $2,925,004 | | | | | | | | Cash Bonus | | | | n/a | | | | $496,875 | | | | $1,987,500 | | | | $3,975,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | James F. Cleary | | | | Restricted Stock Units | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,808 | | | | — | | | | — | | | | $500,011 | | | | | | | | Performance Shares | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | 7,260 | | | | 14,520 | | | | 29,040 | | | | — | | | | — | | | | — | | | | $1,250,027 | | | | | | | | Stock Options | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 45,154 | | | | $86.09 | | | | $750,008 | | | | | | | | Cash Bonus | | | | n/a | | | | $175,000 | | | | $700,000 | | | | $1,400,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | John G. Chou | | | | Restricted Stock Units | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,344 | | | | — | | | | — | | | | $460,065 | | | | | | | | Performance Shares | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | 6,680 | | | | 13,359 | | | | 26,718 | | | | — | | | | — | | | | — | | | | $1,150,076 | | | | | | | | Stock Options | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 41,542 | | | | $86.09 | | | | $690,013 | | | | | | | | Cash Bonus | | | | n/a | | | | $168,750 | | | | $675,000 | | | | $1,350,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | Gina K. Clark | | | | Restricted Stock Units | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,485 | | | | — | | | | — | | | | $300,024 | | | | | | | | Performance Shares | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | 4,356 | | | | 8,712 | | | | 17,424 | | | | — | | | | — | | | | — | | | | $750,016 | | | | | | | | Stock Options | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,093 | | | | $86.09 | | | | $450,015 | | | | | | | | Cash Bonus | | | | n/a | | | | $143,750 | | | | $575,000 | | | | $1,150,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | Robert P. Mauch | | | | Restricted Stock Units | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,808 | | | | — | | | | — | | | | $500,011 | | | | | | | | Performance Shares | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | 7,260 | | | | 14,520 | | | | 29,040 | | | | — | | | | — | | | | — | | | | $1,250,027 | | | | | | | | Stock Options | | | | 11/13/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 45,154 | | | | $86.09 | | | | $750,008 | | | | | | | | Cash Bonus | | | | n/a | | | | $175,000 | | | | $700,000 | | | | $1,400,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | |
(1)
These amounts represent possible payouts of fiscal year 2020 cash bonuses under the Omnibus Incentive Plan. The amounts shown in the “Threshold” column represent the minimum amount payable under the Omnibus Incentive Plan based on the assumption that corporate and business unit performance met the thresholds established for the financial performance goals. We generally do not pay a bonus for performance that is below the threshold established for financial performance goals and we pay a bonus of 25% of the target amount for performance that is at the threshold established for financial performance goals. For performance that exceeds threshold but does not meet target, bonus payments are based on the level of performance and are increased ratably until target is reached. Actual payouts for fiscal year 2020 are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
(2)
These share amounts represent the possible performance share award payouts at various levels of attainment for the performance period beginning October 1, 2019 and ending September 30, 2022.
(3)
Amounts in this column represent the grant date fair value of restricted stock units, performance shares and nonqualified stock options. For awards made to our named executive officers on November 13, 2019, the dollar value shown for restricted stock units is based on the closing price of our Common Stock of $86.09 per share on November 13, 2019. For awards that are subject to performance conditions, such as the performance shares, in the table above, we report the value at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under Accounting Standards Codification Topic 718, excluding the effect of estimated forfeitures. For this purpose, the probable outcome of the performance shares is assumed to be at target level attainment. The dollar amount shown for nonqualified stock options was determined on the basis of a binomial method of valuation.
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters| | Executive compensation | | | 65 | |
Outstanding equity awards at 2023 fiscal year end | | Name | | | Grant date | | | Option awards | | | Stock awards | | | | Number of
securities
underlying
unexercised
options
exercisable
(#) | | | Number of
securities
underlying
unexercised
options
unexercisable(1)
(#) | | | Option
exercise
price
($) | | | Option
expiration
date | | | Number of
shares or
units of
stock that
have not
vested(2)
(#) | | | Market
value of
shares or
units of
stock that
have not
vested(3)
($) | | | Equity
incentive
plan awards:
number of
unearned
shares, units
or other
rights that
have not
vested(4)
(#) | | | Equity
incentive
plan awards:
market value
or payout
value of
unearned
shares, units
or other
right that
have not
vested(3)
($) | | | | Steven H. Collis | | | | | 11/15/2017 | | | | | | 75,000 | | | | | | — | | | | | | 77.53 | | | | | | 11/15/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/14/2018 | | | | | | 129,054 | | | | | | — | | | | | | 89.58 | | | | | | 11/14/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/13/2019 | | | | | | 132,074 | | | | | | 44,025 | | | | | | 86.09 | | | | | | 11/13/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/10/2020 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 12,719 | | | | | | 2,289,038 | | | | | | — | | | | | | — | | | | | | | 11/10/2021 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 23,871 | | | | | | 4,296,064 | | | | | | 107,416 | | | | | | 19,331,658 | | | | | | | 11/9/2022 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 30,346 | | | | | | 5,461,370 | | | | | | 94,824 | | | | | | 17,065,475 | | | | | | | Total | | | | | | 336,128 | | | | | | 44,025 | | | | | | | | | | | | | | | | | | 66,936 | | | | | | 12,046,472 | | | | | | 202,240 | | | | | | 36,397,133 | | | | | James F. Cleary | | | | | 11/15/2017 | | | | | | 38,136 | | | | | | — | | | | | | 77.53 | | | | | | 11/15/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/14/2018 | | | | | | 33,877 | | | | | | — | | | | | | 89.58 | | | | | | 11/14/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/13/2019 | | | | | | 33,865 | | | | | | 11,289 | | | | | | 86.09 | | | | | | 11/13/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/10/2020 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 3,634 | | | | | | 654,011 | | | | | | — | | | | | | — | | | | | | | 11/10/2021 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 6,790 | | | | | | 1,221,996 | | | | | | 30,554 | | | | | | 5,498,803 | | | | | | | 11/9/2022 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 8,480 | | | | | | 1,526,146 | | | | | | 26,552 | | | | | | 4,778,563 | | | | | | | Total | | | | | | 105,878 | | | | | | 11,289 | | | | | | | | | | | | | | | | | | 18,904 | | | | | | 3,402,153 | | | | | | 57,106 | | | | | | 10,277,366 | | | | | Robert P. Mauch | | | | | 11/14/2018 | | | | | | 33,877 | | | | | | — | | | | | | 89.58 | | | | | | 11/14/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/13/2019 | | | | | | 33,865 | | | | | | 11,289 | | | | | | 86.09 | | | | | | 11/13/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/10/2020 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 3,998 | | | | | | 719,520 | | | | | | — | | | | | | — | | | | | | | 11/10/2021 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 7,427 | | | | | | 1,336,637 | | | | | | 33,420 | | | | | | 6,014,597 | | | | | | | 11/9/2022 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 12,139 | | | | | | 2,184,656 | | | | | | 37,930 | | | | | | 6,826,262 | | | | | | | Total | | | | | | 67,742 | | | | | | 11,289 | | | | | | | | | | | | | | | | | | 23,564 | | | | | | 4,240,813 | | | | | | 71,350 | | | | | | 12,840,859 | | | | | Elizabeth S. Campbell | | | | | 11/14/2018 | | | | | | 5,162 | | | | | | — | | | | | | 89.58 | | | | | | 11/14/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/10/2020 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 1,188 | | | | | | 213,804 | | | | | | — | | | | | | — | | | | | | | 11/10/2021 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 2,547 | | | | | | 458,384 | | | | | | 11,458 | | | | | | 2,062,096 | | | | | | | 11/9/2022 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 6,069 | | | | | | 1,092,238 | | | | | | 18,206 | | | | | | 3,276,534 | | | | | | | Total | | | | | | 5,162 | | | | | | — | | | | | | | | | | | | | | | | | | 9,804 | | | | | | 1,764,426 | | | | | | 29,664 | | | | | | 5,338,630 | | | | | Gina K. Clark | | | | | 11/13/2019 | | | | | | 20,319 | | | | | | 6,774 | | | | | | 86.09 | | | | | | 11/13/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 11/10/2020 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 1,817 | | | | | | 327,005 | | | | | | — | | | | | | — | | | | | | | 11/10/2021 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 3,184 | | | | | | 573,024 | | | | | | 14,324 | | | | | | 2,577,890 | | | | | | | 11/9/2022 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | 3,884 | | | | | | 699,003 | | | | | | 12,138 | | | | | | 2,184,476 | | | | | | | Total | | | | | | 20,319 | | | | | | 6,774 | | | | | | | | | | | | | | | | | | 8,885 | | | | | | 1,599,033 | | | | | | 26,462 | | | | | | 4,762,366 | | |
(1)
Stock options vest at a rate of 25% per year on the anniversary of the grant date over the four-year period from the date of grant. (2)
Restricted stock units vest ratably on the anniversary of the grant date over a three-year period. (3)
Based on the closing price of our Common Stock of $179.97 per share on Friday, September 29, 2023, the last trading day of our most recently completed fiscal year. (4)
Represents the number of performance shares at maximum level attainment. Performance shares vest, if at all, subject to attainment of the applicable performance metrics at the end of the three-year performance period.
Outstanding Equity Awards at 2020 Fiscal Year End
| | | | | | Option Awards | | | | Stock Awards | | | | Name | | | | Grant Date | | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1) | | | | Option
Exercise
Price
($) | | | | Option
Expiration
Date | | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)(2) | | | | Market
Value of
Shares or
Units of
Stock that
Have Not
Vested
($)(3) | | | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)(4) | | | | Equity Incentive
Plan Awards:
Market Value or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
($)(3) | | | | Steven H. Collis | | | | | | 11/12/2014 | | | | | | | 188,070 | | | | | | | — | | | | | | $ | 88.71 | | | | | | | 11/12/2021 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/11/2015 | | | | | | | 153,406 | | | | | | | — | | | | | | $ | 98.24 | | | | | | | 11/11/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/09/2016 | | | | | | | 154,981 | | | | | | | 51,661 | | | | | | $ | 75.61 | | | | | | | 11/09/2023 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/15/2017 | | | | | | | 84,746 | | | | | | | 84,746 | | | | | | $ | 77.53 | | | | | | | 11/15/2024 | | | | | | | 20,637 | | | | | | $ | 2,000,138 | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/14/2018 | | | | | | | 32,263 | | | | | | | 96,791 | | | | | | $ | 89.58 | | | | | | | 11/14/2025 | | | | | | | 17,861 | | | | | | $ | 1,731,088 | | | | | | | 89,306 | | | | | | $ | 8,655,538 | | | | | | | | | | | 11/13/2019 | | | | | | | — | | | | | | | 176,099 | | | | | | $ | 86.09 | | | | | | | 11/13/2026 | | | | | | | 22,651 | | | | | | $ | 2,195,335 | | | | | | | 113,254 | | | | | | $ | 10,976,578 | | | | | | | | | | | | | | | | | | 613,466 | | | | | | | 409,297 | | | | | | | | | | | | | | | | | | | | | 61,149 | | | | | | $ | 5,926,561 | | | | | | | 202,560 | | | | | | $ | 19,632,116 | | | | | James F. Cleary | | | | | | 09/01/2015 | | | | | | | 17,599 | | | | | | | — | | | | | | $ | 99.27 | | | | | | | 09/01/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/11/2015 | | | | | | | 6,583 | | | | | | | — | | | | | | $ | 98.24 | | | | | | | 11/11/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/09/2016 | | | | | | | 28,782 | | | | | | | 9,594 | | | | | | $ | 75.61 | | | | | | | 11/09/2023 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/15/2017 | | | | | | | 19,068 | | | | | | | 19,068 | | | | | | $ | 77.53 | | | | | | | 11/15/2024 | | | | | | | 4,643 | | | | | | $ | 450,000 | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/14/2018 | | | | | | | 8,469 | | | | | | | 25,408 | | | | | | $ | 89.58 | | | | | | | 11/14/2025 | | | | | | | 4,689 | | | | | | $ | 454,458 | | | | | | | 23,442 | | | | | | $ | 2,271,999 | | | | | | | | | | | 11/13/2019 | | | | | | | — | | | | | | | 45,154 | | | | | | $ | 86.09 | | | | | | | 11/13/2026 | | | | | | | 5,808 | | | | | | $ | 562,911 | | | | | | | 29,040 | | | | | | $ | 2,814,557 | | | | | | | | | | | | | | | | | | 80,501 | | | | | | | 99,224 | | | | | | | | | | | | | | | | | | | | | 15,140 | | | | | | $ | 1,467,369 | | | | | | | 52,482 | | | | | | $ | 5,086,556 | | | | | John G. Chou | | | | | | 11/13/2013 | | | | | | | 11,204 | | | | | | | — | | | | | | $ | 68.49 | | | | | | | 11/13/2020 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/12/2014 | | | | | | | 36,491 | | | | | | | — | | | | | | $ | 88.71 | | | | | | | 11/12/2021 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/11/2015 | | | | | | | 45,793 | | | | | | | — | | | | | | $ | 98.24 | | | | | | | 11/11/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/09/2016 | | | | | | | 44,280 | | | | | | | 14,761 | | | | | | $ | 75.61 | | | | | | | 11/09/2023 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/15/2017 | | | | | | | 22,246 | | | | | | | 22,246 | | | | | | $ | 77.53 | | | | | | | 11/15/2024 | | | | | | | 5,417 | | | | | | $ | 525,016 | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/14/2018 | | | | | | | 8,469 | | | | | | | 25,408 | | | | | | $ | 89.58 | | | | | | | 11/14/2025 | | | | | | | 4,689 | | | | | | $ | 454,458 | | | | | | | 23,442 | | | | | | $ | 2,271,999 | | | | | | | | | | | 11/13/2019 | | | | | | | — | | | | | | | 41,452 | | | | | | $ | 86.09 | | | | | | | 11/13/2026 | | | | | | | 5,344 | | | | | | $ | 517,940 | | | | | | | 26,718 | | | | | | $ | 2,589,509 | | | | | | | | | | | | | | | | | | 168,483 | | | | | | | 103,867 | | | | | | | | | | | | | | | | | | | | | 15,450 | | | | | | $ | 1,497,414 | | | | | | | 50,160 | | | | | | $ | 4,861,508 | | | | | Gina K. Clark | | | | | | 11/11/2015 | | | | | | | 16,027 | | | | | | | — | | | | | | $ | 98.24 | | | | | | | 11/11/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/09/2016 | | | | | | | 22,140 | | | | | | | 7,380 | | | | | | $ | 75.61 | | | | | | | 11/09/2023 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/15/2017 | | | | | | | 13,771 | | | | | | | 13,771 | | | | | | $ | 77.53 | | | | | | | 11/15/2024 | | | | | | | 3,354 | | | | | | $ | 325,070 | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/14/2018 | | | | | | | 5,242 | | | | | | | 15,729 | | | | | | $ | 89.58 | | | | | | | 11/14/2025 | | | | | | | 2,902 | | | | | | $ | 281,262 | | | | | | | 14,512 | | | | | | $ | 1,406,503 | | | | | | | | | | | 11/13/2019 | | | | | | | — | | | | | | | 27,093 | | | | | | $ | 86.09 | | | | | | | 11/13/2026 | | | | | | | 3,485 | | | | | | $ | 337,766 | | | | | | | 17,424 | | | | | | $ | 1,688,734 | | | | | | | | | | | | | | | | | | 57,180 | | | | | | | 63,973 | | | | | | | | | | | | | | | | | | | | | 9,741 | | | | | | $ | 944,098 | | | | | | | 31,936 | | | | | | $ | 3,095,237 | | | | | Robert P. Mauch | | | | | | 11/12/2014 | | | | | | | 16,561 | | | | | | | — | | | | | | $ | 88.71 | | | | | | | 11/12/2021 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/11/2015 | | | | | | | 41,214 | | | | | | | — | | | | | | $ | 98.24 | | | | | | | 11/11/2022 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/09/2016 | | | | | | | 44,280 | | | | | | | 14,761 | | | | | | $ | 75.61 | | | | | | | 11/09/2023 | | | | | | | — | | | | | | $ | — | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/15/2017 | | | | | | | 22,246 | | | | | | | 22,246 | | | | | | $ | 77.53 | | | | | | | 11/15/2024 | | | | | | | 5,417 | | | | | | $ | 525,016 | | | | | | | — | | | | | | $ | — | | | | | | | | | | | 11/14/2018 | | | | | | | 8,469 | | | | | | | 25,408 | | | | | | $ | 89.58 | | | | | | | 11/14/2025 | | | | | | | 4,689 | | | | | | $ | 454,458 | | | | | | | 23,442 | | | | | | $ | 2,271,999 | | | | | | | | | | | 11/13/2019 | | | | | | | — | | | | | | | 45,154 | | | | | | $ | 86.09 | | | | | | | 11/13/2026 | | | | | | | 5,808 | | | | | | $ | 562,911 | | | | | | | 29,040 | | | | | | $ | 2,814,557 | | | | | | | | | | | | | | | | | | 132,770 | | | | | | | 107,569 | | | | | | | | | | | | | | | | | | | | | 15,914 | | | | | | $ | 1,542,385 | | | | | | | 52,482 | | | | | | $ | 5,086,556 | | |
(1)
Stock options vest at a rate of 25% per year on the anniversary of the grant date over the four-year period from the date of grant, with the exception of the options granted to Mr. Cleary on September 1, 2015, which vested at a rate of 20% per year on the anniversary of the grant date over the five-year period from the date of grant.
(2)
Restricted stock units vest 100% on the third anniversary of the grant date.
(3)
Based on the closing price of our Common Stock of $96.92 per share on Wednesday, September 30, 2020, the last trading day of our last completed fiscal year.
(4)
Represents the number of performance shares at maximum level attainment. Performance shares vest, if at all, subject to attainment of the applicable performance metrics at the end of the three-year performance period.
49
Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy| | 66 | | | Executive compensation | |
Option exercises and stock vested in fiscal 2023 The following table sets forth the number of shares acquired upon the vesting of performance shares and the value realized upon exercise of stock options and vesting of restricted stock units during fiscal 2023 by each of the NEOs. | | Name | | | Option awards | | | Stock awards | | | | Number of shares
acquired on exercise
(#) | | | Value realized on
exercise(1)
($) | | | Number of shares
acquired on vesting
(#) | | | Value realized on
vesting(2)
($) | | | | Steven H. Collis | | | | | 151,892 | | | | | | 13,785,306 | | | | | | 143,247 | | | | | | 24,553,906 | | | | | James F. Cleary | | | | | 38,376 | | | | | | 3,797,689 | | | | | | 40,249 | | | | | | 6,911,515 | | | | | Robert P. Mauch | | | | | — | | | | | | — | | | | | | 43,671 | | | | | | 7,510,367 | | | | | Elizabeth S. Campbell | | | | | 3,305 | | | | | | 318,668 | | | | | | 12,803 | | | | | | 2,021,499 | | | | | Gina K. Clark | | | | | 48,513 | | | | | | 5,011,807 | | | | | | 20,599 | | | | | | 3,528,149 | | |
(1)
Value realized on exercise is based on the fair market value of our Common Stock on the date of exercise minus the exercise price and does not necessarily reflect cash actually received by the NEO. (2)
Value realized on vesting is based on the fair market value of our Common Stock on the date of vesting before tax withholding and does not necessarily reflect cash actually received by the NEO. Pension benefits Our NEOs do not participate in any pension or supplemental pension plan. Non-qualified defined contribution and other deferred compensation in fiscal 2023 The following table sets forth information regarding participation by our NEOs in the Deferred Compensation Plan and Benefit Restoration Plan during fiscal 2023 and at fiscal year end. | | | | | Executive
contributions in
last fiscal year(1)
($) | | | Registrant
contributions in
last fiscal year(1)
($) | | | Aggregate
earnings in last
fiscal year(2)
($) | | | Aggregate
withdrawals/
distributions
($) | | | Aggregate
balance at last
fiscal year-end(3)
($) | | | | Steven H. Collis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | | | 580,300 | | | | | | — | | | | | | 1,181,135 | | | | | | — | | | | | | 7,669,332 | | | | | Benefit Restoration Plan | | | | | — | | | | | | 133,763 | | | | | | 198,310 | | | | | | — | | | | | | 2,146,124 | | | | | James F. Cleary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Benefit Restoration Plan | | | | | — | | | | | | 67,396 | | | | | | 29,251 | | | | | | — | | | | | | 338,650 | | | | | Robert P. Mauch | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | | | 118,313 | | | | | | — | | | | | | 22,550 | | | | | | — | | | | | | 380,549 | | | | | Benefit Restoration Plan | | | | | — | | | | | | 77,782 | | | | | | 25,565 | | | | | | — | | | | | | 492,753 | | | | | Elizabeth S. Campbell | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Benefit Restoration Plan | | | | | — | | | | | | 35,871 | | | | | | 4,511 | | | | | | — | | | | | | 64,870 | | | | | Gina K. Clark | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | | | — | | | | | | — | | | | | | 25,624 | | | | | | — | | | | | | 185,341 | | | | | Benefit Restoration Plan | | | | | — | | | | | | 51,637 | | | | | | 27,197 | | | | | | — | | | | | | 367,093 | | |
(1)
The amounts shown as executive contributions to the Deferred Compensation Plan are included in the Summary Compensation Table as base salary, non-equity incentive compensation, or a combination thereof, as elected by the executive in accordance with the terms of the Deferred Compensation Plan. The amounts shown as Company contributions to the Benefit Restoration Plan are also reported as compensation to the NEO in the Summary Compensation Table, as described in footnote 3 thereto. (2)
Amounts shown represent the net change to the NEO’s account in fiscal year 2023 for the aggregate gains and losses on the plan investments under the Deferred Compensation Plan and the Benefit Restoration Plan, respectively. The amounts shown are not considered above market or preferential earnings and are not reported as compensation in the Summary Compensation Table.
Option Exercises and Stock Vested in Fiscal Year 2020
The following table sets forth the number of shares acquired upon the vesting of performance shares and the value realized upon exercise of stock options and vesting of restricted stock units during fiscal year 2020 by each of the named executive officers.
| | | | | | Option Awards | | | | Stock Awards | | | | Name | | | | Number of
Shares Acquired
on Exercise
(#) | | | | Value Realized
on Exercise
($)(1) | | | | Number of
Shares Acquired
on Vesting
(#) | | | | Value Realized
on Vesting
($)(2) | | | | Steven H. Collis | | | | | | 199,049 | | | | | | $ | 4,036,955 | | | | | | | 114,537 | | | | | | $ | 10,900,027 | | | | | James F. Cleary | | | | | | — | | | | | | | — | | | | | | | 25,043 | | | | | | $ | 2,389,854 | | | | | John G. Chou | | | | | | 56,006 | | | | | | $ | 1,995,928 | | | | | | | 30,495 | | | | | | $ | 2,898,179 | | | | | Gina K. Clark | | | | | | 25,794 | | | | | | $ | 329,358 | | | | | | | 18,249 | | | | | | $ | 1,739,995 | | | | | Robert P. Mauch | | | | | | 31,573 | | | | | | $ | 879,723 | | | | | | | 30,495 | | | | | | $ | 2,898,179 | | |
(1)
Value realized on exercise is based on the fair market value of our Common Stock on the date of exercise minus the exercise price and does not necessarily reflect cash actually received by the named executive officer.
(2)
Value realized on vesting is based on the fair market value of our Common Stock on the date of vesting before tax withholding and does not necessarily reflect cash actually received by the named executive officer.
Pension Benefits
The named executive officers do not participate in any pension or supplemental pension plan.
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters| | Executive compensation | | | 67 | |
(3)
The following amounts represent executive contributions to the Deferred Compensation Plan that were previously reported as compensation in the Summary Compensation Table for fiscal 2023 and previous fiscal years, commencing with fiscal 2007: Mr. Collis: $3,150,142; Mr. Mauch: $396,053 and Ms. Clark: $151,020. The following amounts represent Company contributions to the Benefit Restoration Plan that were previously reported as compensation in the Summary Compensation Table for fiscal 2023 and previous fiscal years, commencing with fiscal 2007: Mr. Collis: $1,465,012; Mr. Cleary: $288,908; Mr. Mauch: $349,503, Ms. Campbell: $35,871, and Ms. Clark: $200,118. Deferred compensation plan Eligible executive officers may elect to defer up to 50% of their annual cash compensation and have the deferred amount credited to an account under the Deferred Compensation Plan. Deferral elections are made in December for compensation to be earned in the next year. Election forms must be filed for each year an executive officer wishes to defer compensation, and each form shall specify the method of payment of benefits and the time such payment is to commence. Participants select the notional investment options under the plan, which are the same as those under the Company’s 401(k) plan, and may change their election at any time by contacting the plan administrator. The deferred benefits will be distributed in accordance with the terms of the plan, and payment will be made at the times elected by the executive officer in accordance with the election form. An executive officer must specify whether he or she wishes to receive payment starting in the year of retirement or in the year after retirement and may elect to receive the deferred benefits (i) over annual periods ranging from three to fifteen years and payable in quarterly installments or (ii) in a single distribution. We pay all costs and expenses incurred in the administration of the plan. Benefit restoration plan Selected key management, including all of the NEOs, participate in the Benefit Restoration Plan. The Benefit Restoration Plan credits the account of each eligible participant with an annual amount equal to four percent (4%) of the participant’s base salary and bonus incentive to the extent that his or her compensation exceeds the annual compensation limit established for our 401(k) plan by the Code. The compensation limit was $305,000 for calendar year 2022 and $330,000 for calendar year 2023. Annual accruals under the Benefit Restoration Plan commenced effective as of January 1, 2006. In addition to annual accruals, certain eligible participants were credited upon the plan’s effective date of January 1, 2006, with an initial amount based on his or her service between the time of the merger that formed AmerisourceBergen in 2001 and the plan’s implementation. Fidelity Investments administers the Benefit Restoration Plan. Participants are permitted to allocate the amounts in their accounts among notional investment options specified by the Benefit Restoration Plan administrator from time to time. Such allocation is for the purposes of determining gains and losses based on the performance of the underlying notional investments. Account balances under the Benefit Restoration Plan begin to vest in part at age 55, but do not vest in full until an employee reaches age 62 or age 55 with more than 15 years of service, except that vesting is accelerated for disability, death and a change in control, provided the participant is employed by the Company on the date of the applicable event. If a participant is terminated for cause, he or she forfeits all vested and unvested account balances under the Benefit Restoration Plan.
Non-Qualified Defined Contribution and
Other Deferred Compensation in Fiscal Year 2020
The following table sets forth information regarding participation by the named executive officers in AmerisourceBergen’s deferred compensation plan and benefit restoration plan during fiscal year 2020 and at fiscal year end.
| | Name | | | | Executive
Contributions
in Last
Fiscal
Year to
Deferred
Compensation
Plan
($)
(a) | | | | AmerisourceBergen
Contributions
in Last
Fiscal
Year to
AmerisourceBergen
Corporation
Benefit
Restoration
Plan
($)(1)
(b) | | | | Aggregate
Earnings
in Last
Fiscal
Year in
Deferred
Compensation
Plan
($)(2)
(c) | | | | Aggregate
Earnings
in Last
Fiscal
Year in
Benefit
Restoration
Plan
($)(2)
(d) | | | | Aggregate
Withdrawals/
Distributions
($)
(e) | | | | Aggregate
Balance
at Last
Fiscal Year
End in
Deferred
Compensation
Plan
($)(3)
(f) | | | | Aggregate
Balance
at Last
Fiscal Year
End in
Benefit
Restoration
Plan
($)(3)
(g) | | | | Steven H. Collis | | | | | | 372,053 | | | | | | | 116,464 | | | | | | | 996,011 | | | | | | | 148,641 | | | | | | | — | | | | | | | 5,256,049 | | | | | | | 1,672,757 | | | | | James F. Cleary | | | | | | — | | | | | | | 42,892 | | | | | | | — | | | | | | | 11,852 | | | | | | | — | | | | | | | — | | | | | | | 147,598 | | | | | John G. Chou | | | | | | 331,170 | | | | | | | 42,294 | | | | | | | 84,214 | | | | | | | 45,228 | | | | | | | — | | | | | | | 1,202,894 | | | | | | | 602,030 | | | | | Gina K. Clark | | | | | | 132,751 | | | | | | | 31,871 | | | | | | | 16,183 | | | | | | | 18,087 | | | | | | | — | | | | | | | 167,880 | | | | | | | 224,197 | | | | | Robert P. Mauch | | | | | | — | | | | | | | 43,896 | | | | | | | 4,778 | | | | | | | 22,087 | | | | ��� | | | — | | | | | | | 72,498 | | | | | | | 295,150 | | |
(1)
The amounts shown as Company contributions to the benefit restoration plan are also reported as compensation to the named executive officer in the Summary Compensation Table.
(2)
Amounts shown represent the net change to the named executive officer’s account in fiscal year 2020 for the aggregate gains and losses on the plan investments under the benefit restoration plan and the deferred compensation plan. The amounts shown are not considered above market or preferential earnings and are not reported as compensation in the Summary Compensation Table.
(3)
The amounts reflected in columns (f) and (g) for the named executive officers, with the exception of the amounts reflected in columns (a), (b), (c) and (d), if any, have been reported in prior Company proxy statements.
Deferred Compensation Plan. Eligible executive officers may elect to defer up to 50% of their annual cash compensation and have the deferred amount credited in an account under the deferred compensation plan. Deferral elections are made in December for compensation to be earned in the next year. Election forms must be filed for each year an executive officer wishes to defer compensation, and each form shall specify the method of payment of benefits and the time such payment is to commence. Participants select the investment options under the plan, which are the same as those under the Company’s 401(k) plan, and may change their election at any time by contacting the plan administrator. Aggregate earnings and losses on plan investments are credited to participants’ accounts on a quarterly basis. The deferred benefits will be distributed by us in accordance with the terms of the plan, and payment will be made at the times elected by the executive officer in accordance with the election form. An executive officer must specify whether he or she wishes to receive payment starting in the year of retirement or in the year after retirement and may elect to receive the deferred benefits (i) over annual periods ranging from three to fifteen years and payable in quarterly installments or (ii) in a single distribution. We pay all costs and expenses incurred in the administration of the plan.
AmerisourceBergen Corporation Benefit Restoration Plan. Selected key management, including all of the named executive officers, participate in the benefit restoration plan. The benefit restoration plan credits the account of each eligible participant with an annual amount equal to four percent (4%) of the participant’s base salary and bonus incentive to the extent that his or her compensation exceeds the annual compensation limit established for our 401(k) plan by the Internal Revenue Code. The compensation limit was $285,000 for 2020. Annual accruals under the benefit restoration plan commenced effective as of January 1, 2006. In addition to annual accruals, certain eligible participants were credited upon the plan’s effective date of January 1, 2006 with an initial amount based on his or her service between the time of the merger that formed AmerisourceBergen in 2001 and the plan’s implementation. Fidelity Investments administers the benefit restoration plan. Participants are permitted to allocate the amounts in their accounts among investment options specified by the benefit restoration plan administrator from time to time. Such allocation is only for the purposes of determining gains and losses based on the performance of the underlying investments. Fidelity credits participant accounts with plan benefits following the close of each calendar year. Account balances under the benefit restoration plan do not vest in full until an employee reaches age 62 (or age 55 with more than 15 years of service), except that vesting is accelerated for disability, death and a change in control (as long as the participant is employed by the Company on the date of the change in control). If a participant is terminated for cause, he or she forfeits all vested and unvested account balances under the benefit restoration plan.
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
Employment Agreements
We have employment agreements with each of our named executive officers. The employment agreements are substantially similar in form and substance.| | 68 | | | Executive compensation | |
Employment agreements We have employment agreements with each of our NEOs. The employment agreements are substantially similar in form and substance, except for differentiation in amounts of compensation. Each employment agreement provides the following: •
| | Base Salary | | | Continuation of base salary in effect for the named executive officer,NEO, subject to increase in accordance with our prevailing practice from time to time. | •
| | | Bonus and Benefits | | | Incentive compensation, annual bonus and benefits in accordance with our prevailing practice from time to time. | •
| | | Termination Rights on our partof Company | | | Our rights to terminate the executiveNEO’s employment for cause or without cause. | •
| | | Termination Rights on the executive’s partof NEOs | | | The NEO’s rights to terminate forwith good reason (upon at least 60 days’ prior written notice and opportunity for the Company to cure) or without good reason (upon at least 30 days’ prior written notice). | •
| | | Non-Compete and Non-Solicit Obligations | | | During employment, and for a period of two years following termination of employment, each of the named executive officersNEOs has agreed not to (i) compete, directly or indirectly, with any business in which we or our subsidiaries engage or are considering for development or investment or (ii) solicit any of our employees for employment. The non-compete obligation of our named executive officersNEOs also includes the obligation to abide by non-compete obligations to which we are subject as a result of a divestiture or other contractual restrictions. | •
| | | Severance and Benefits on Termination after Change in Control | | | Severance payments and other benefits in the event of (i) termination by AmerisourceBergenthe Company other than for cause, or by the executive forNEO with good reason, and (ii) a qualifying termination following a change in control, as described in greater detail below under “Potential Payments Upon Terminationpayments upon termination of Employmentemployment or Changechange in Control.control.”
Potential Payments Upon Termination of Employment or Change in Control
Termination of Employment without Cause or Resignation with Good Reason. Our named executive officers’ employment agreements provide for severance payments in the event that we terminate their employment without cause or they leave the Company for good reason. The table below identifies what would constitute cause or good reason to terminate employment under the agreements:
| Cause for termination means: | | | | Good reason for termination means: | |
Potential payments upon termination of employment or change in control Termination of employment without cause or resignation with good reason Our NEOs’ employment agreements provide for severance payments in the event that we terminate their employment without cause or they leave the Company with good reason. Treatment of equity awards upon termination of employment or a change in control is described under “Equity Awards” on page 74. The table below identifies what would constitute cause or good reason to terminate employment under the agreements: | | Cause for termination means: | | | Good reason for termination means: | | | | •
Continued failure to substantially perform job duties (other than due to illness or injury) | | | •
Reduction in base salary | | | | •
Willful misconduct that is materially and demonstrably injurious to the Company | | | •
Material failure to provide agreed-upon position and responsibilities or compensation | | | | •
Conviction of a felony or conviction of a misdemeanor involving moral turpitude that materially harms the Company | | | | | | | •
Material failure to comply with the Company’s code of conduct or employment policies | | | | Reduction in base salary | | | Willful misconduct | | | | Diminution of authority, duties or responsibilities |
| | Executive compensation | | | 69 | | | Conviction of a felony or a misdemeanor involving moral turpitude that materially harms the Company | | | | Failure to provide agreed position or pay | |
In order to receive the severance payments set forth in the employment agreement, the named executive officer must sign a release of any and all claims relating to his
|
In order to receive the severance payments upon termination without cause or with good reason as set forth in the employment agreement, the NEO must sign a customary release of any and all claims relating to the executive officer’s employment with us. Severance payments and benefits include: | | Base Salary | | | •
•
paymentPayment of base salary for a period of two years following the losstermination of employment;employment.
| | | | Bonus | | | •
paymentPayment of a pro rata bonus for the portionyear of termination, which, for NEOs other than Mr. Collis, is based on actual performance, and for Mr. Collis is based on target performance, in each case prorated for the year completed prior to lossperiod of employment and, inbefore the termination of employment.
•
In the case of Messrs.Mr. Collis, and Chou, a two-year bonus continuation payment based onof an amount equal to two times the average annual bonuses paid in the preceding three years;completed years, to be paid in two annual equal installments. | | | | Benefits | | | •
reimbursementReimbursement of costs incurred byfor the executiveNEO to continue health coverage for up to 24 months after the termination of employment;employment.
•
executiveExecutive outplacement assistance; andassistance.
•
accrued but unpaid cash compensation,Vesting of any outstanding equity awards to the extent the terms governing such as unpaid base salary, vacation pay and business expenses (paid in a lump sum within 30 days of termination of employment).equity awards provide for accelerated or continued vesting.
To the extent compliance with Section 409A of the Internal Revenue Code is necessary to avoid the application of an excise tax to any of the foregoing payments and benefits, the employment agreements provide for deferral (without interest) of any affected amounts due in the six months following the termination of employment.
| |
Additionally, the NEO is entitled to accrued but unpaid cash compensation, such as unpaid base salary, vacation pay, business expenses, any bonus for the prior fiscal year that has not been paid prior to the termination of employment, and any vested benefits accrued and due under the Company’s benefit plans (the “Accrued Obligations”), regardless of whether the NEO signs or revokes a release. To the extent compliance with Section 409A of the Code is necessary to avoid the application of an excise tax to any of the foregoing payments and benefits, the employment agreements provide for deferral (without interest) of any affected amounts due in the six months following the termination of employment. Termination of employment with cause or resignation without good reason If we terminate a NEO’s employment for cause or the NEO resigns without good reason, we will not pay the NEO any severance benefits under the employment agreements. We will, however, pay the executive officer the Accrued Obligations. In addition, certain outstanding equity awards will continue to vest if the voluntary termination is on account of retirement, as described in the table entitled “Potential payments upon termination of employment or change in control.” Disability or death If a NEO becomes disabled or dies, we will pay the NEO, or the NEO’s estate, the NEO’s Accrued Obligations. In addition, any account balances under the Benefit Restoration Plan would vest upon the NEO’s total and permanent disability or death, and certain outstanding equity awards will continue to vest or vesting will be accelerated, as applicable. The value of the outstanding awards that would continue to vest or be accelerated, as applicable, as of September 30, 2023, is set forth in the table entitled “Potential payments upon termination of employment or change in control.” Change in control The Company provides severance benefits under the employment agreements in connection with a change in control only in the event of a qualifying termination of employment without cause or with good reason within 24 months following the change in control (i.e., a “double trigger”). We do not provide cash severance or enhanced benefits under the employment agreements with our NEOs solely in connection with a change in control of the Company. Account balances under the Benefit Restoration Plan will immediately vest upon a change in control as long as the NEO remains employed by us on the date of the change in control. Equity awards will vest in connection with a termination of employment by us following a change in control, as summarized under “Equity awards” on page 74. Further, the Compensation Committee has discretion under our AIP to pay bonuses to eligible executive officers during any year in which a change in control occurs. If this discretion is exercised, bonus payments would be based on performance for the portion of the fiscal year through the change in control event and paid within 75 days of the change in control.
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2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters| | 70 | | | Executive compensation | |
If payments and benefits otherwise payable to the NEO in connection with a change in control would constitute excess parachute payments within the meaning of Section 280G of the Code, the Company will reduce such payments and benefits to an amount that would avoid any excise taxes under Section 4999 of the Code, but only if such reduction would provide the NEO with a greater net after-tax benefit than would no reduction. Except for the employment agreement with Mr. Collis, under the executive officer employment agreements, if an NEO’s employment is terminated by the Company without cause or the NEO terminates employment with the Company with good reason, in either case upon or within two years following a change in control, the executive officer is entitled to increased severance, in addition to the amount described above under “Termination of employment without cause or resignation with good reason,” in the form of a cash amount equal to two times the NEO’s average annual bonus earned over the prior three years, paid over a period of two years following termination of employment. In the case of Mr. Collis, upon a termination without cause or with good reason within two years following a change in control, in lieu of the continued base salary and annual bonus payments described above under “Termination of employment without cause or resignation with good reason,” Mr. Collis will be entitled to continued base salary for three years following termination of employment and three times the average annual bonus paid to Mr. Collis for the preceding three years, paid over a three-year period following termination of employment. Retirement benefits and deferred compensation Following retirement or other termination of employment, our NEOs will receive payment of retirement benefits and deferred compensation under the various plans in which they participate. The value of the deferred compensation as of September 30, 2023, is set forth in the table on page 66 entitled “Executive compensation — Nonqualified defined contribution and other deferred compensation in fiscal 2023.” Certain outstanding equity awards would continue to vest if the NEO retires after meeting the retirement criteria of the award and retired. The value of the outstanding awards that would continue to vest upon retirement as of September 30, 2023, for those NEOs who have met the retirement criteria is set forth in the table entitled “Potential payments upon termination of employment or change in control.” There are no special or enhanced benefits under our retirement plans and deferred compensation plans for our NEOs except in the event of an ‘s disability or death or as a result of a change in control as described above. Recoupment and clawback Our NEOs’ employment agreements and their compensation payable thereunder are subject to the Incentive Compensation Restriction and Financial Recoupment Program of our Corporate Integrity Agreement and any applicable clawback or recoupment policies implemented by the Board or otherwise required by law. Our Compensation Recoupment Policy is summarized under “Compensation forfeiture and recoupment (“Clawback”) policies” in the Compensation Discussion and Analysis section on page 58. Potential payments upon termination of employment or change in control The table below quantifies the potential payments and the benefits that would continue to vest or be accelerated, as applicable, at, following, or in connection with the various scenarios described below, as if the termination of employment or change in control of the Company had occurred on September 30, 2023:
Termination of Employment with Cause or Resignation without Good Reason. If we terminate an executive for cause or he or she resigns without good reason, we will not pay the executive any cash severance. We will, however, pay him or her accrued but unpaid cash compensation through the date of termination. These amounts will include base salary through the date of termination, declared but unpaid bonus, accrued vacation pay and outstanding employee business expenses.
Disability or Death. If a named executive officer becomes disabled or dies, we will pay the executive, or his or her estate, the executive’s pro rata target bonus and an amount equal to his or her accrued but unpaid cash compensation (including base salary, vacation pay and outstanding business expenses). We will pay this amount in a lump sum in cash within 30 days from the date of disability or death, except for the portion attributable to the cash bonus. That amount will be paid when the annual bonuses are paid to all employees generally. In addition, any account balances under the benefit restoration plan would vest upon an executive’s disability or death.
Change in Control. The Company provides severance benefits in connection with a change in control only in the event of a qualifying termination of employment following the change in control, i.e., a double trigger, as described below. We do not provide cash severance or enhanced benefits under the employment agreements with our named executive officers solely in connection with a change in control of the Company. Certain of our benefit plans, however, provide for accelerated vesting in connection with a change in control as follows:
•
account balances under the benefit restoration plan will immediately vest upon a change in control as long as the executive is still employed by us;
•
if the executive is involuntarily terminated by us, whether or not for cause, within two years after a change of control, unvested stock options will vest and restrictions on stock awards will lapse; and
•
unvested performance shares will vest in the case of an executive’s involuntary termination of employment, whether or not for cause, within two years of a change in control and the payout of the award, if any, will be based on a shortened performance period (extending from the beginning of the performance period through the end of the fiscal quarter preceding the change in control).
Further, our internal Benefits Committee has discretion under our Omnibus Incentive Plan to pay bonuses to eligible employees during any year in which a change in control occurs. If this discretion is exercised, bonus payments would be based on performance for the portion of the fiscal year until the change in control event and paid within 75 days of the change in control. In the event of a change in control, the Board may, in its discretion, cancel outstanding options that are not exercised within 30 days of the change in control, cash out the value of outstanding options or restricted stock or make any other adjustments it deems appropriate under the Omnibus Incentive Plan. The Board may also cancel any award made under the Omnibus Incentive Plan in exchange for payment of an equal value in cash or stock.
If payments and benefits otherwise payable to the executive officer in connection with a change in control would constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code, the Company will reduce such payments and benefits to an amount that would avoid any excise taxes under Section 4999 of the Internal Revenue Code, but only if such reduction would provide the executive officer with a greater net after-tax benefit than would no reduction.
Additionally, under the executive officer employment agreements, if an executive officer’s employment is terminated by the Company without cause or the executive leaves the Company for good reason, in either case upon or within two years following a change in control, the executive officer is also entitled to a cash amount equal to two times the executive’s average annual bonus earned over the prior three years, paid over a period of two years following termination of employment.
Retirement Benefits and Deferred Compensation. Following retirement or termination of employment, our named executive officers will receive payment of retirement benefits and deferred compensation under the various plans in which they participate. The value of the deferred compensation as of September 30, 2020 is set forth in the table entitled “Executive Compensation and Related Matters—Nonqualified Defined Contribution and Other Deferred Compensation in Fiscal Year 2020.” There are no special or enhanced benefits under our retirement benefits and deferred compensation plans for our named executive officers except in the event of an executive’s disability or death or as a result of a change in control as described above.
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Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy| | Executive compensation | | | 71 | |
| | Name | | | Benefit(1) | | | Death or
disability
($)
(a) | | | Voluntary
termination
by executive
or retirement(2)
($)
(b) | | | Termination
by company
without
cause or by
executive with
good reason(3)
($)
(c) | | | Termination
by company
for cause
($)
(d) | | | Account
balances
under the
benefit
restoration
plan upon
change
in control
($)
(e) | | | Involuntary
termination
without
cause or by
executive
officer with
good reason
within Two
Years of
change
in control(4)
($)
(f) | | | | Steven H. Collis | | | Fiscal 2023 Bonus | | | | | 3,231,550 | | | | | | 3,231,550 | | | | | | 2,450,000 | | | | | | — | | | | | | — | | | | | | 2,450,000 | | | | | Salary Continuation | | | | | — | | | | | | — | | | | | | 2,800,000 | | | | | | — | | | | | | — | | | | | | 4,200,000 | | | | | Bonus Continuation | | | | | — | | | | | | — | | | | | | 5,328,291 | | | | | | — | | | | | | — | | | | | | 7,992,437 | | | | | Health Plan Premiums | | | | | — | | | | | | — | | | | | | 37,861 | | | | | | — | | | | | | — | | | | | | 56,792 | | | | | Outplacement | | | | | — | | | | | | — | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 20,000 | | | | | Continued or Accelerated Vesting
of Performance Shares(5) | | | | | 6,443,886 | | | | | | 18,198,566 | | | | | | 14,976,623 | | | | | | — | | | | | | — | | | | | | 18,198,566 | | | | | Continued or Accelerated Vesting
of Restricted Stock Units(6) | | | | | 12,046,472 | | | | | | 12,046,472 | | | | | | 5,461,370 | | | | | | — | | | | | | — | | | | | | 12,046,472 | | | | | Continued or Accelerated Vesting
of Stock Options(7) | | | | | 4,133,067 | | | | | | 4,133,067 | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,133,067 | | | | | Benefit Restoration Plan(8) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 25,854,975 | | | | | | 37,609,655 | | | | | | 31,074,146 | | | | | | — | | | | | | — | | | | | | 49,097,334 | | | | | James F. Cleary | | | Fiscal 2023 Bonus | | | | | 1,048,605 | | | | | | 1,048,605 | | | | | | 1,048,605 | | | | | | — | | | | | | — | | | | | | 1,048,605 | | | | | Salary Continuation | | | | | — | | | | | | — | | | | | | 1,590,000 | | | | | | — | | | | | | — | | | | | | 1,590,000 | | | | | Bonus Continuation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,104,704 | | | | | Health Plan Premiums | | | | | — | | | | | | — | | | | | | 66,818 | | | | | | — | | | | | | — | | | | | | 66,818 | | | | | Outplacement | | | | | — | | | | | | — | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 20,000 | | | | | Continued or Accelerated Vesting
of Performance Shares(5) | | | | | 1,832,934 | | | | | | 5,138,683 | | | | | | 4,222,216 | | | | | | — | | | | | | — | | | | | | 5,138,683 | | | | | Continued or Accelerated Vesting
of Restricted Stock Units(6) | | | | | 3,402,153 | | | | | | 3,402,153 | | | | | | 1,526,146 | | | | | | — | | | | | | — | | | | | | 3,402,153 | | | | | Continued or Accelerated Vesting
of Stock Options(7) | | | | | 1,059,811 | | | | | | 1,059,811 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,059,811 | | | | | Benefit Restoration Plan(8) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 7,343,504 | | | | | | 10,649,253 | | | | | | 8,473,785 | | | | | | — | | | | | | — | | | | | | 14,430,775 | | | | | Robert P. Mauch | | | Fiscal 2023 Bonus | | | | | 1,607,531 | | | | | | 1,607,531 | | | | | | 1,607,531 | | | | | | — | | | | | | — | | | | | | 1,607,531 | | | | | Salary Continuation | | | | | — | | | | | | — | | | | | | 1,950,000 | | | | | | — | | | | | | — | | | | | | 1,950,000 | | | | | Bonus Continuation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,232,047 | | | | | Health Plan Premiums | | | | | — | | | | | | — | | | | | | 56,574 | | | | | | — | | | | | | — | | | | | | 56,574 | | | | | Outplacement | | | | | — | | | | | | — | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 20,000 | | | | | Continued or Accelerated Vesting
of Performance Shares(5) | | | | | 2,004,866 | | | | | | 6,420,430 | | | | | | 5,417,997 | | | | | | — | | | | | | — | | | | | | 6,420,430 | | | | | Continued or Accelerated Vesting
of Restricted Stock Units(6) | | | | | 4,240,813 | | | | | | 4,240,813 | | | | | | 2,184,656 | | | | | | — | | | | | | — | | | | | | 4,240,813 | | | | | Continued or Accelerated Vesting
of Stock Options(7) | | | | | 1,059,811 | | | | | | 1,059,811 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,059,811 | | | | | Benefit Restoration Plan(8) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 8,913,021 | | | | | | 13,328,585 | | | | | | 11,236,758 | | | | | | — | | | | | | — | | | | | | 17,587,207 | | | | | Elizabeth S. Campbell | | | Fiscal 2023 Bonus | | | | | 883,730 | | | | | | 883,730 | | | | | | 883,730 | | | | | | — | | | | | | — | | | | | | 883,730 | | | | | Salary Continuation | | | | | — | | | | | | — | | | | | | 1,340,000 | | | | | | — | | | | | | — | | | | | | 1,340,000 | | | | | Bonus Continuation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,058,793 | | | | | Health Plan Premiums | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Outplacement | | | | | — | | | | | | — | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 20,000 | | | | | Continued or Accelerated Vesting
of Performance Shares(5) | | | | | 687,365 | | | | | | — | | | | | | 687,365 | | | | | | — | | | | | | — | | | | | | 2,669,315 | | | | | Continued or Accelerated Vesting
of Restricted Stock Units(6) | | | | | 1,764,426 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,764,426 | | | | | Continued or Accelerated Vesting
of Stock Options(7) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Benefit Restoration Plan(8) | | | | | 64,870 | | | | | | — | | | | | | — | | | | | | — | | | | | | 64,870 | | | | | | — | | | | | Total | | | | | 3,400,391 | | | | | | 883,730 | | | | | | 2,931,095 | | | | | | — | | | | | | 64,870 | | | | | | 7,736,264 | | |
Potential Payments Upon Termination of Employment or Change in Control
The table below quantifies the potential payments that would be owed to each named executive officer under various scenarios involving the termination of employment or change in control of the Company as of September 30, 2020. The amounts presented are in addition to the balances under our deferred| | 72 | | | Executive compensation plan (set forth on page 51):| | Name | | | | Benefit | | | | Death and
Termination
with
Disability
($)(1) | | | | Termination
by Executive
without Good
Reason
($) | | | | Termination
by Company
without
Cause or by
Executive for
Good Reason
($) | | | | Termination
by Company
for Cause
($) | | | | Change
in
Control
($) | | | | Involuntary
Termination
with or without
Cause within
Two Years of
Change in
Control
($)(2) | | | | Steven H. Collis | | | | Accrued Unpaid Salary | | | | | | 25,481 | | | | | | | 25,481 | | | | | | | 25,481 | | | | | | | 25,481 | | | | | | | — | | | | | | | — | | | | | | | | | 2020 Bonus | | | | | | 1,987,500 | | | | | | | — | | | | | | | 1,987,500 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Salary Continuation | | | | | | — | | | | | | | — | | | | | | | 2,650,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Bonus Continuation | | | | | | — | | | | | | | — | | | | | | | 3,504,808 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | COBRA Premiums | | | | | | — | | | | | | | — | | | | | | | 25,427 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Outplacement | | | | | | — | | | | | | | — | | | | | | | 10,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Accelerated Vesting of Equity(3) | | | | | | 14,173,459 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 21,104,338 | | | | | | | | | Benefit Restoration Plan(4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Total | | | | | | 16,186,440 | | | | | | | 25,481 | | | | | | | 8,203,216 | | | | | | | 25,481 | | | | | | | — | | | | | | | 21,104,338 | | | | | James F. Cleary | | | | Accrued Unpaid Salary | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | — | | | | | | | — | | | | | | | | | 2020 Bonus | | | | | | 700,000 | | | | | | | — | | | | | | | 700,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Salary Continuation | | | | | | — | | | | | | | — | | | | | | | 1,400,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Bonus Continuation | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | COBRA Premiums | | | | | | — | | | | | | | — | | | | | | | 25,427 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Outplacement | | | | | | — | | | | | | | — | | | | | | | 10,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Accelerated Vesting of Equity(3) | | | | | | 3,474,391 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 5,260,336 | | | | | | | | | Benefit Restoration Plan(4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Total | | | | | | 4,187,853 | | | | | | | 13,462 | | | | | | | 2,148,889 | | | | | | | 13,462 | | | | | | | — | | | | | | | 5,260,336 | | | | | John G. Chou | | | | Accrued Unpaid Salary | | | | | | 12,981 | | | | | | | 12,981 | | | | | | | 12,981 | | | | | | | 12,981 | | | | | | | — | | | | | | | — | | | | | | | | | 2020 Bonus | | | | | | 675,000 | | | | | | | — | | | | | | | 675,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Salary Continuation | | | | | | — | | | | | | | — | | | | | | | 1,350,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Bonus Continuation | | | | | | — | | | | | | | — | | | | | | | 1,231,278 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | COBRA Premiums | | | | | | — | | | | | | | — | | | | | | | 29,578 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Outplacement | | | | | | — | | | | | | | — | | | | | | | 10,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Accelerated Vesting of Equity(3) | | | | | | 3,637,048 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 5,310,469 | | | | | | | | | Benefit Restoration Plan(4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Total | | | | | | 4,325,029 | | | | | | | 12,981 | | | | | | | 3,308,837 | | | | | | | 12,981 | | | | | | | — | | | | | | | 5,310,469 | | | | | Gina K. Clark | | | | Accrued Unpaid Salary | | | | | | 11,058 | | | | | | | 11,058 | | | | | | | 11,058 | | | | | | | 11,058 | | | | | | | — | | | | | | | — | | | | | | | | | 2020 Bonus | | | | | | 575,000 | | | | | | | — | | | | | | | 575,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Salary Continuation | | | | | | — | | | | | | | — | | | | | | | 1,150,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Bonus Continuation | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | COBRA Premiums | | | | | | — | | | | | | | — | | | | | | | 30,894 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Outplacement | | | | | | — | | | | | | | — | | | | | | | 10,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Accelerated Vesting of Equity(3) | | | | | | 2,246,088 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 3,324,872 | | | | | | | | | Benefit Restoration Plan(4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Total | | | | | | 2,832,146 | | | | | | | 11,058 | | | | | | | 1,776,952 | | | | | | | 11,058 | | | | | | | — | | | | | | | 3,324,872 | | | | | Robert P. Mauch | | | | Accrued Unpaid Salary | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | 13,462 | | | | | | | — | | | | | | | — | | | | | | | | | 2020 Bonus | | | | | | 700,000 | | | | | | | — | | | | | | | 700,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Salary Continuation | | | | | | — | | | | | | | — | | | | | | | 1,400,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Bonus Continuation | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | COBRA Premiums | | | | | | — | | | | | | | — | | | | | | | 37,777 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Outplacement | | | | | | — | | | | | | | — | | | | | | | 10,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | | | Accelerated Vesting of Equity(3) | | | | | | 3,721,137 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 5,507,082 | | | | | | | | | Benefit Restoration Plan(4) | | | | | | 295,150 | | | | | | | 295,150 | | | | | | | — | | | | | | | — | | | | | | | 295,150 | | | | | | | — | | | | | | | | | Total | | | | | | 4,729,749 | | | | | | | 308,612 | | | | | | | 2,161,239 | | | | | | | 13,462 | | | | | | | 295,150 | | | | | | | 5,507,082 | | |
| (1)
In the case of death, the present value of amounts owed as salary continuation will be paid within a specified time after death. There is no bonus continuation in the event of death.
(2)
The benefits shown are in addition to any amounts that the named executive officer would receive (i) as a result of the accelerated vesting of account balances under the benefit restoration plan upon a change in control, as shown in the column “Change in Control,” or (ii) if the termination of his or her employment was without cause, as shown in the column “Termination by Company without Cause or by Executive for Good Reason.”
(3)
The value of the accelerated vesting of unvested restricted stock units is calculated by multiplying the number of shares of unvested restricted stock units held by the named executive officer as of Wednesday, September 30, 2020 by $96.92, the closing price of our Common Stock on that date. The value of the accelerated vesting of unvested options is calculated by multiplying the number of unvested options held by the named executive officer on Wednesday, September 30, 2020 by the difference between the exercise price of the options and $96.92, the closing price of a share of our Common Stock on that date. Unvested restricted stock units vest immediately in the case of disability or death and upon an involuntary termination of employment within two years of a change in control of the Company. Unvested stock options vest upon death or disability and upon an involuntary termination of employment within two years of a change in control of the Company. The value of the accelerated vesting of unvested performance shares is calculated by multiplying the number of performance shares that would vest based upon the performance to date by $96.92, the closing price of our Common Stock on Wednesday, September 30, 2020. Unvested performance shares vest upon death or disability and upon an involuntary termination of employment within two years of a change in control of the Company. In the case of death or disability, unvested performance shares vest only to the extent the employee
|
| | Name | | | Benefit(1) | | | Death or
disability
($)
(a) | | | Voluntary
termination
by executive
or retirement(2)
($)
(b) | | | Termination
by company
without
cause or by
executive with
good reason(3)
($)
(c) | | | Termination
by company
for cause
($)
(d) | | | Account
balances
under the
benefit
restoration
plan upon
change
in control
($)
(e) | | | Involuntary
termination
without
cause or by
executive
officer with
good reason
within Two
Years of
change
in control(4)
($)
(f) | | | | Gina K. Clark | | | Fiscal 2023 Bonus | | | | | 844,160 | | | | | | 844,160 | | | | | | 844,160 | | | | | | — | | | | | | — | | | | | | 844,160 | | | | | Salary Continuation | | | | | — | | | | | | — | | | | | | 1,280,000 | | | | | | — | | | | | | — | | | | | | 1,280,000 | | | | | Bonus Continuation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,700,195 | | | | | Health Plan Premiums | | | | | — | | | | | | — | | | | | | 15,478 | | | | | | — | | | | | | — | | | | | | 15,478 | | | | | Outplacement | | | | | — | | | | | | — | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 20,000 | | | | | Continued or Accelerated Vesting
of Performance Shares(5) | | | | | 859,297 | | | | | | 2,381,183 | | | | | | 1,951,535 | | | | | | — | | | | | | — | | | | | | 2,381,183 | | | | | Continued or Accelerated Vesting
of Restricted Stock Units(6) | | | | | 1,599,033 | | | | | | 1,599,033 | | | | | | 699,003 | | | | | | — | | | | | | — | | | | | | 1,599,033 | | | | | Continued or Accelerated Vesting
of Stock Options(7) | | | | | 635,943 | | | | | | 635,943 | | | | | | — | | | | | | — | | | | | | — | | | | | | 635,943 | | | | | Benefit Restoration Plan(8) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 3,938,433 | | | | | | 5,460,320 | | | | | | 4,810,176 | | | | | | — | | | | | | — | | | | | | 8,475,993 | | |
(1)
Cash severance benefits under employment agreements entered into after November 9, 2022, would be subject to the limits under our executive severance policy, as described further on page 57. (2)
The benefits shown in column (b) include the continued vesting of unvested equity that would apply under each grant’s retirement provisions, with respect to each NEO who met the eligibility requirements for retirement as of September 30, 2023. Under the Company’s 2014 Omnibus Incentive Plan with respect to grants made prior to March 10, 2022, retirement is defined as any voluntary termination of employment (i) after reaching age 62 and completing 60 full months of continuous employment with us or (ii) after reaching age 55, where the sum of age and years of continuous employment with us equals at least 70. Under the Company’s 2022 Omnibus Incentive Plan, with respect to grants made after March 10, 2022, retirement is defined as termination of employment (other than for cause) after reaching age 55, where the sum of age and years of continuous employment equals at least 65. Messrs. Collis, Cleary and Mauch and Ms. Clark are currently eligible for retirement under their outstanding equity awards. Upon retirement, restricted stock units and options continue to vest to the extent and according to the schedule set forth in the applicable award agreement, and performance shares will vest based on actual performance as if the participant had continued in service through the applicable vesting date. (3)
If the NEO’s employment is terminated by us other than for cause or by the executive officer with good reason, other than upon or within two years following a change in control, the NEO is entitled to two years of continued base salary. Mr. Collis also receives an amount equal to two times the average annual bonuses paid in the preceding three completed years, to be paid over two years. The NEOs receive payment of a bonus for the year of termination, which, for the NEOs other than Mr. Collis, is based on actual performance (assuming 100% attainment of the individual performance objectives), and for Mr. Collis is based on target performance, in each case prorated for the period of employment before the termination of employment. The NEOs may receive reimbursement to continue health coverage for up to 24 months after termination of employment, and outplacement assistance. The NEOs also receive continued equity vesting as described in footnotes (5), (6), and (7) below. The amounts shown in column (c) represent these total severance amounts. (4)
For our NEOs other than Mr. Collis, if the NEO’s employment is terminated by us other than for cause or by the NEO with good reason upon or within two years following a change in control, the NEO is entitled to two years of continued base salary and a bonus payment equal to two times the NEO’s average annual bonuses earned over the prior three completed years, to be paid over two years. In the event Mr. Collis’ employment is terminated by us other than for cause or by Mr. Collis with good reason upon or within two years of change in control, Mr. Collis is entitled to three years of continued base salary, and a bonus payment equal to three times the average of the annual bonuses earned by Mr. Collis over the three completed years prior to the termination date, to be paid over three years. The NEOs receive payment of a bonus for the year of termination, which, for the NEOs other than Mr. Collis, is based on actual performance, and for Mr. Collis is based on target performance, in each case prorated for the period of employment before the termination of employment. The NEOs may also receive reimbursement to continue health coverage for up to 24 months after the termination of employment (and, for Mr. Collis, in the event of termination other than for cause or by the NEO with good reason following a change in control, up to 36 months) and certain outplacement assistance. The NEOs also receive equity vesting as described in footnotes (5), (6) and (7) below. The amounts shown in column (f) represent these total severance amounts. The benefits shown in column (f) are in addition to any benefits that the NEO would receive as a result of the accelerated vesting of account balances under the Benefit Restoration Plan upon a change in control, as shown in column (e). (5)
The value of the continued or accelerated vesting of unvested performance shares is calculated by multiplying the number of unvested performance shares that would vest at target by $179.97, the closing price of our Common Stock on September 29, 2023. Provided the NEO has been employed for at least 18 months from the grant date, a pro-rata portion of the unvested performance shares vest upon death or disability (based on performance through the end of the quarter prior to the death or disability). Provided the NEO has been employed for at least 18 months from the grant date and subject to execution and non-revocation of a release, a pro-rata portion of the unvested performance shares vest (based on actual performance) in the event of termination of employment
| | Executive compensation | | | 73 | |
by us without cause (other than within two years following a change in control of the Company). In the event of retirement during a performance period, unvested performance shares will vest based on actual performance. For performance shares granted on or after November 9, 2022, in the event of a termination of employment by us without cause, if the NEO met the criteria for retirement treatment by the time of termination, the performance shares would continue to vest based on actual performance pursuant to the retirement provisions. In the event of termination of employment by us, upon or within two years following a change in control, the unvested performance shares will vest based on performance through the end of the calendar quarter ending prior to the change in control. In accordance with SEC rules, equity awards that vested as of September 30, 2023, including performance shares for the fiscal 2021 — fiscal 2023 performance period, are not reflected in the table above. The remaining unvested performance shares that would continue to vest or accelerate vesting for each scenario are included at target performance. (6)
The value of the continued or accelerated vesting of unvested restricted stock units is calculated by multiplying the number of shares of unvested restricted stock units held by the NEO as of September 30, 2023, by $179.97, the closing price of our Common Stock as of that date. Unvested restricted stock units vest immediately in the case of disability, death, or upon an involuntary termination of employment by us that occurs within two years of a change in control of the Company. Unvested restricted stock units remain outstanding and continue to vest in the event of retirement. In the event of a termination of employment by us without cause, if the NEO met the criteria for retirement treatment: (i) for restricted stock units granted on or after November 9, 2022, the unvested restricted stock units would continue to vest pursuant to the retirement provisions; however, (ii) for restricted stock units granted prior to November 9, 2022, the unvested restricted stock units would forfeit. (7)
The value of the continued or accelerated vesting of unvested options is calculated by multiplying the number of unvested options held by the NEO on September 30, 2023, by the difference between the exercise price of the options and $179.97, the closing price of a share of our Common Stock as of that date. Unvested stock options vest upon termination of employment by us within two years following a change in control of the Company. Unvested stock options continue to vest and become exercisable in the event of retirement. (8)
The amounts shown represent the value of unvested account balances under the Benefit Restoration Plan for events that would result in the accelerated vesting and payment of those benefits. Account balances under the Benefit Restoration Plan do not vest in full until an employee reaches age 62 (or age 55 with more than 15 years of service), except that vesting is accelerated upon (i) disability, (ii) death, or (iii) upon a change in control of the Company (so long as the participant is employed by the Company on the date of the applicable event). Unvested account balances are forfeited if the participant’s employment terminates for any reason other than death, disability, or following a change in control before the applicable retirement date. If a participant is terminated for cause, the participant forfeits all vested and unvested account balances under the Benefit Restoration Plan. Distribution of account balances upon termination of employment, death, disability or change in control are made in a lump sum.
| | 74 | | | Executive compensation | |
Equity awards Our restricted stock unit, performance share and stock option awards include provisions that result in the vesting or forfeiture of awards, depending on the reason for termination of employment, which provisions are outlined below. In addition, in the event of a change in control, the Board may, in its discretion, cancel outstanding options that are not exercised within 30 days of the change in control, cash out the value of outstanding options or restricted stock units or make any other adjustments it deems appropriate under the Omnibus Incentive Plan. The Board may also cancel any award made under the Omnibus Incentive Plan in exchange for payment of an equal value in cash or stock. | | Reason for termination | | | Unvested awards | | | Impact on expiration date
of vested options | | | | Termination for Cause | | | •
Forfeit | | | Immediately upon termination | | | | Voluntary Termination by Executive Officer (other than Retirement) | | | •
Forfeit | | | 3 months from date of termination | | | | Termination by Cencora without Cause (other than upon or within 2 Years after a Change in Control and, for grants made beginning November, 2022, other than Retirement) | | | •
Forfeit restricted stock units •
Forfeit options •
Performance shares forfeited if termination is prior to 18 months from the beginning of the measurement period.performance period; otherwise, pro-rated performance shares continue to vest based on actual performance, subject to execution and non-revocation of an release | | | 1 year from date of termination | | | | Termination by Cencora without Cause upon or within 2 Years after a Change in Control | | | •
Restricted stock units vest54
Options vest 2021 AmerisourceBergen Proxy | Executive Compensation
•
Performance shares vest based on performance through the end of the quarter preceding change in control event | | | 1 year from date of termination | | | | Death or Disability | | | •
Restricted stock units vest •
Forfeit options •
Performance shares forfeited if death is prior to 18 months from the beginning of the performance period; otherwise, pro-rated Performance shares vest based on performance through the end of the quarter preceding death | | | 1 year from date of death/termination | | | | Retirement | | | •
Restricted stock units and Related Matters
(4)
The amounts shown representoptions continue to vest to the value of unvested account balances underextent and according to the benefit restoration plan for events that would resultschedule set forth in the accelerated vesting and payment of those benefits. Account balances under the benefit restoration plan do not vest in full until an employee reaches age 62 (or age 55 with more than 15 years of service), except that vesting is accelerated upon disability or death and uponapplicable award agreement. If retirement occurs before a change in control, of the Company (so long as the participant is employed by the Companyrestricted stock units will vest on the date of the change in control). Unvested account balances are forfeitedcontrol (if earlier than the specified vesting date), and if retirement occurs after a change in control, the restricted stock units will vest on the date of retirement
•
Performance shares vest based on actual performance as if the participant is terminated for any reason other than death or disability. If a participant is terminated for cause, he or she forfeits all vested and unvested account balances underhad continued in service through the benefit restoration plan. Distribution of account balances upon termination of employment, death, disability or change in control are made in a lump sum.applicable vesting date Equity Awards. Our restricted stock unit, performance share and stock option awards include provisions that result
| | | Expires at the end of the stated term in the vesting or forfeiture of awards, depending on the reason for termination of employment. These provisions are as follows: | Reason for Termination | | | | Unvested Awards | | | | Impact on Expiration Date of
Vested Optionsapplicable award agreement | | | Termination for Cause | | | | Forfeit | | | | Immediately upon termination | | | Voluntary Termination by Executive | | | | Forfeit | | | | 3 months from date of termination | | | Termination without Cause | | | | Forfeit Restricted Stock Units
Forfeit Options
Performance Shares forfeited if termination is prior to 18 months from the beginning of the performance period; otherwise, payout at end of performance period is reduced pro-rata for period of employment | | | | 1 year from date of termination | | | Involuntary Termination by AmerisourceBergen within 2 Years of Change in Control | | | | Restrictions lapse on Restricted Stock Units
Options vest
Performance Shares vest with performance period measured only through end of quarter preceding change in control event | | | | 1 year from date of termination | | | Death | | | | Restrictions lapse on Restricted Stock Units
Forfeit Options
Performance Shares forfeited if death is prior to 18 months from the beginning of the performance period; otherwise, performance shares vest and payout is reduced for period of employment and performance period is measured only through end of quarter preceding death | | | | 1 year from date of death | | | Disability | | | | Restrictions lapse on Restricted Stock Units
Forfeit Options
Performance Shares forfeited if disability occurs prior to 18 months from the beginning of the performance period; otherwise, Performance Shares vest and payout is reduced for period of employment and performance period is measured only through end of quarter preceding disability | | | | 1 year from date of termination | | | Retirement | | | | Restricted Stock Units, Performance Shares and Options continue to vest to the extent and according to the schedule set forth in the applicable award agreement | | | | Expires at the end of the stated term in the applicable award agreement | |
55
Executive Compensation and Related Matters | 2021 AmerisourceBergen Proxy
CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform Act of 2010, the Company is required to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to its CEO to the total compensation paid to the median employee.
Using a Consistently Applied Compensation Measure (CACM), we determined that the median of the annual total compensation of our employees who were employed as of September 1, 2020, other than the CEO and certain non-U.S. employees, was $59,388. Our CEO’s total compensation was $14,307,639, and the ratio of our CEO’s total annual compensation to that of the median paid employee was 241:1.
SEC rules allow us to select a methodology for identifying our median employee in a manner that is most appropriate based on our size, organizational structure and compensation plans, policies and procedures. Consistent with Instruction 2 to Item 402(u) of Regulation S-K, we may identify our median employee for purposes of providing pay ratio disclosure once every three years and calculate and disclose total compensation for that employee each year; provided that, during the last completed fiscal year, there has been no change in the employee population or employee compensation arrangements that we reasonably believe would result in a significant change to the prior pay ratio disclosure. We reviewed the changes in our employee population and employee compensatory arrangements and determined there has been no change in our employee population or employee compensatory arrangements that would significantly impact our prior year’s pay ratio disclosure.
For our disclosure in the 2020 proxy statement, we determined that our total population consisted of 22,074 employees. We used annual base pay as CACM to identify the median employee. After identifying the median employee based on annual base pay, we calculated total annual compensation for that employee and the CEO using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table in this proxy statement. We also added the value of employer provided medical, dental and disability contributions to both the CEO and the median employee compensation, as such benefits represent a significant portion of our employees’ total compensation.
In 2020, we excluded approximately 714 associates from the countries identified below. The excluded associates represent the Company’s entire employee population in each such country and account for less than 5% of the Company’s total employee population.
| | | Argentina | | | | 71 | | | | Greece | | | | 11 | | | | Poland | | | | 27 | | | | | | Brazil | | | | 113 | | | | Hungary | | | | 14 | | | | Romania | | | | 9 | | | | | | Bulgaria | | | | 10 | | | | India | | | | 134 | | | | Russian Federation | | | | 59 | | | | | | China | | | | 77 | | | | Kenya | | | | 3 | | | | Serbia | | | | 4 | | | | | | Croatia | | | | 13 | | | | Malaysia | | | | 11 | | | | Thailand | | | | 15 | | | | | | Czechia | | | | 8 | | | | Mexico | | | | 55 | | | | Turkey | | | | 19 | | | | | | Ecuador | | | | 7 | | | | Peru | | | | 36 | | | | Ukraine | | | | 18 | | |
Because the SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies, assumptions, exemptions, and estimates, the pay ratios reported by other companies may not be comparable with the ratio we have provided.
56
2021 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Item 3—Advisory Vote to Approve the Compensation of our Named Executive Officers
In accordance with the requirements of Section 14A of the Exchange Act, we are including this proposal, commonly known as a “say-on-pay” proposal, which gives our stockholders the opportunity to endorse the compensation paid to our named executive officers through the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to AmerisourceBergen’s named executive officers, as disclosed in AmerisourceBergen’s proxy statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative discussion.”
In deciding how to vote on this proposal, we encourage you to read the Compensation Discussion and Analysis section beginning on page 31 for a detailed description of our executive compensation philosophy and programs, the compensation decisions of the Compensation and Succession Planning Committee under those programs and the factors considered in making those decisions.
AmerisourceBergen’s executive compensation program is strongly focused on pay for performance principles. We emphasize a compensation philosophy that rewards our executives when they deliver targeted financial results and subjects a significant portion of their compensation to risk if they do not. The compensation of our named executive officers varies depending upon the achievement of pre-established performance goals. Through stock ownership requirements and equity incentives, we also align the interests of our executives with those of our stockholders and the long-term interests of AmerisourceBergen. Our executive compensation policies have enabled AmerisourceBergen to attract and retain talented and experienced senior executives and have benefited AmerisourceBergen over time.
We believe that the fiscal year 2020 compensation of our named executive officers is reasonable and competitive, aligns with AmerisourceBergen’s fiscal year 2020 results and positions us for future growth.
We are asking our stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement. Because your vote is advisory, it will not be binding upon the Board; however, the Board values stockholders’ opinions, and the Compensation and Succession Planning Committee will take into account the outcome of the vote when considering future executive compensation decisions.
The Board unanimously recommends that you vote For the advisory resolution approving the compensation of AmerisourceBergen’s named executive officers as described in this proxy statement.
57
Related Person Transactions | 2021 AmerisourceBergen Proxy
Related Person Transactions
Prohibition of Loans to Directors and Officers
Our corporate governance principles prohibit us from making any loans or extensions of credit to directors or executive officers. We do not have any programs under which we extend loans to either directors or officers.
Related Persons Transactions Policy
We have a written Related Persons Transactions Policy, which is posted on our website at investor.amerisourcebergen.com. The Audit Committee must approve or ratify any transaction, arrangement or relationship exceeding $120,000 in which the Company and any related person has a direct or indirect material interest. This policy includes any series of transactions that exceeds $120,000 in the aggregate in any calendar year. Related persons include:
•
directors and nominees;
•
executive officers;
•
persons controlling more than 5% of our Common Stock;
•
the immediate family members of each of these individuals; and
•
a firm, corporation or other entity in which any of these individuals is employed or is a partner or principal or in which any of these individuals has more than 5% ownership interest.
Related persons must notify our Executive Vice President and Chief Legal Officer in advance of any proposed transaction with us. They must explain the principal features of the proposed transaction, including its potential value and benefit to us. Our Executive Vice President and Chief Legal Officer will refer all proposed related person transactions exceeding $120,000 to the Audit Committee for review.
The Audit Committee will consider the proposed transaction at its next regularly scheduled meeting. In reviewing the proposed transaction, the committee will take into account those factors it considers appropriate, including the business reasons for the transaction and whether the terms of the transaction are fair to the Company and no less favorable than would be provided by an unaffiliated third party. The committee will also consider, if applicable, whether the proposed transaction would impair the independence of a director or present an improper conflict of interest for directors, nominees or executive officers. Directors with an interest in any proposed transaction will not vote on the proposed transaction. The committee will review annually any ongoing related person transactions.
Related Persons Transactions
Walgreens Boots Alliance, through Walgreens Boots Alliance Holdings LLC (formerly known as WAB Holdings LLC), is a person controlling more than 5% of our Common Stock, and transactions between us and Walgreens Boots Alliance are subject to our Related Persons Transactions Policy.
We have a strategic relationship with Walgreens Boots Alliance established through various agreements and arrangements. Under certain of these agreements and arrangements, Walgreens Boots Alliance also has the right to designate up to two members of our Board upon achieving specified ownership levels of our Common Stock. We have summarized these agreements and arrangements with Walgreens Boots Alliance below.
As previously disclosed, in March 2013, we entered into various agreements and arrangements with Walgreens Boots Alliance, including a ten-year pharmaceutical distribution agreement pursuant to which we distribute branded and generic pharmaceutical products to Walgreens Boots Alliance (the “US PVA”) and a generics purchasing services arrangement that provides us with the ability to access generics and related pharmaceutical products through a global sourcing arrangement with Walgreens Boots Alliance Development GmbH (the “WBAD Arrangement”). In May 2016, the US PVA and the WBAD Arrangement were extended until 2026. In fiscal year 2020, Walgreens Boots Alliance accounted for approximately 33% of our revenues.
We also entered into a Shareholders Agreement with Walgreens Boots Alliance in March 2013. The Shareholders Agreement contains, among other things, certain restrictions on Walgreens Boots Alliance’s ability to transfer its shares of our Common Stock. The Shareholders Agreement also contains certain standstill provisions that, among other things and subject to certain exceptions, prohibit Walgreens Boots Alliance from acquiring additional shares of our Common Stock. The standstill provisions prohibit Walgreens Boots Alliance from entering into voting agreements or granting a proxy to any other person; participating or engaging in a proxy
58
2021 AmerisourceBergen Proxy | Related Person Transactions
solicitation with respect to AmerisourceBergen; seeking to control or influence the management or policies of AmerisourceBergen; or entering into or proposing a merger, business combination or other similar extraordinary transaction involving AmerisourceBergen. The foregoing restrictions do not prohibit Walgreens Boots Alliance from, subject to certain requirements, making private proposals to AmerisourceBergen subject to the approval of our Board, or competing with third-party acquisition proposals. The Shareholders Agreement also contains various provisions relating to board representation, voting arrangements, registration rights and other matters. The subsidiaries of Walgreens Boots Alliance that hold our Common Stock (including Walgreens Boots Alliance Holdings) are also subject to the above-mentioned restrictions and provisions.
Walgreens Boots Alliance became entitled to designate a director to our Board when it, together with its subsidiaries, achieved ownership of 5% or more of our Common Stock. Walgreens Boots Alliance met this 5% threshold as of April 9, 2014. On January 8, 2021, Walgreens Boots Alliance filed a Schedule 13D/A with the Securities and Exchange Commission disclosing that it owned 56,854,867 shares of our Common Stock, or approximately 27.7% of our shares of Common Stock outstanding as of December 31, 2020. Ornella Barra is currently serving on our Board as Walgreens Boots Alliance’s designee and is a nominee for director. Ms. Barra is also a member of our Compliance and Risk Committee and Finance Committee.
Walgreens Boots Alliance will be entitled to designate a second director to our Board upon the acquisition in full by it, together with its subsidiaries, in one or more open market transactions, of 19,859,795 shares of our Common Stock (subject to certain adjustments). As of January 8, 2021, Walgreens Boots Alliance had acquired 11,461,043 shares of our Common Stock through open market transactions (all of which took place in April 2014). If, after having acquired 19,859,795 shares in the open market, Walgreens Boots Alliance divests our equity securities such that it owns less than 14%, but at least 5% of the Common Stock, Walgreens Boots Alliance will no longer be entitled to designate two directors to the Board and will only be entitled to designate one director to the Board. If Walgreens Boots Alliance divests our equity securities such that it owns less than 5% of the Common Stock, Walgreens Boots Alliance will no longer be entitled to designate any directors to the Board, and the Shareholders Agreement will, subject to certain exceptions, terminate.
For so long as Walgreens Boots Alliance has the right to designate a director to our Board, subject to certain exceptions, including matters related to acquisition proposals, Walgreens Boots Alliance will be obligated to vote all of its shares of our Common Stock in accordance with the recommendation of the Board on all matters submitted to a vote of our stockholders (including the election of directors).
In January 2021, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Walgreens Boots Alliance pursuant to which we will acquire the majority of the Alliance Healthcare wholesale distribution businesses of Walgreens Boots Alliance, together with certain European pre-wholesale and other services businesses, as well as certain of Walgreens Boots Alliance’s retail pharmacy operations from Walgreens Boots Alliance in select European markets, for approximately $6.5 billion, comprised of $6.275 billion in cash, subject to certain purchase price adjustments, and 2 million shares of our Common Stock. Walgreens Boots Alliance’s operations in China, Italy and Germany are not part of this transaction. This transaction is subject to the satisfaction of customary closing conditions, including receipt of applicable regulatory approvals.
In connection with entering into the Share Purchase Agreement, we agreed that on or prior to the date on which the transactions contemplated thereby are consummated (the “Closing Date”) , the US PVA and the WBAD Arrangement will be extended by three years through 2029. We also agreed that, by the Closing Date, we will enter into a distribution agreement pursuant to which we will supply branded and generic pharmaceutical products to Walgreens Boots Alliance’s pharmacies in the United Kingdom. In January 2021, we also entered into an agreement with Walgreens Boots Alliance to explore a series of strategic initiatives designed to create incremental growth and efficiencies in sourcing, logistics and distribution.
Also in connection with entering into the Share Purchase Agreement, we agreed that on or prior to the Closing Date, we will enter into an Amended and Restated Shareholders Agreement, which will amend and restate in its entirety the Shareholders Agreement and, among other things, increase by 1% the percentage of outstanding shares of our Common Stock which Walgreens Boots Alliance and its affiliates are permitted to hold.
Transactions with Persons Related to Management
Mr. Mauch’s sister is employed as the president of Xcenda, a business within the AmerisourceBergen Consulting Services operating segment. She received approximately $725,000 in compensation in fiscal year 2020. Compensation amounts for this individual include salary, bonus and equity compensation, if applicable. The compensation for this individual was established in accordance with our standard employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions.
59
Ownership of and Trading In Our Stock | 2021 AmerisourceBergen Proxy| | Executive compensation | | | 75 | |
CEO pay ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, the Company is required to calculate and disclose the ratio of the total compensation paid to its CEO to the total compensation paid to the median employee. Using a Consistently Applied Compensation Measure (“CACM”), as described further below, we determined that the annual total compensation of our median employee was $76,034. Our CEO’s total compensation, as described further below, was $17,523,413. Therefore, the ratio of our CEO’s total annual compensation to that of the median paid employee was 230:1. Our CACM was applied as follows: •
As disclosed in our fiscal 2022 Annual Proxy Statement, we evaluated our employee population, identified a new median employee as of July 1, 2022, and determined that our total population consisted of 43,838 employees (excluding the CEO). •
We determined that there were no material changes to our employee population in fiscal year 2023 and, therefore, determined that we would use the same median employee as in fiscal year 2022, who remained employed by the Company throughout fiscal year 2023. •
We calculated total annual compensation for that employee using the same methodology we use for our NEOs as set forth in the Summary Compensation Table in this proxy statement. •
For both the median employee and the CEO, we added in the value of employer contributions to group medical, dental, life, and disability coverage to determine the total compensation stated above, as such benefits represent a significant portion of our employees’ total compensation. Because the SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies, assumptions, exemptions, and estimates, the pay ratios reported by other companies may not be comparable with the ratio we have provided. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Pay versus performance The following information is presented to disclose the relationship between executive compensation actually paid (“CAP”), as calculated under applicable SEC rules, and the Company’s financial performance. As required by SEC rules, the table presented below discloses CAP for (i) the Company’s principal executive officer (“PEO”) and (ii) the Company’s NEOs other than the PEO (the “Non-PEO NEOs”), on an average basis. The methodology for calculating amounts presented in the columns “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs,” including details regarding the amounts that were deducted from, and added to, the Summary Compensation Table (“SCT”) totals to arrive at the values presented for CAP, are provided in the footnotes to the table. A discussion of the relationship between CAP and the Company performance measures (i) listed in the table below and (ii) that the Company has deemed most important in linking CAP during fiscal 2023 to Company performance is also presented below. The calculations and analysis below do not necessarily reflect the Company’s approach to aligning executive compensation with performance. For information concerning the Company’s compensation philosophy and how the Company aligns executive compensation with financial performance, refer to the Compensation Discussion and Analysis on page 40 of this proxy statement. | | Year
(a) | | | Summary
compensation
table total
for PEO(1)(2)
($)
(b) | | | Compensation
actually paid
to PEO(1)(3)
($)
(c) | | | Average
summary
compensation
table total
for non-PEO
NEOs(1)(2)
($)
(d) | | | Average
CAP
to non-PEO
NEOs(1)(3)
($)
(e) | | | Value of initial fixed $100
investment based on:(4) | | | Net
income
($ millions)
(h) | | | Adjusted
diluted
EPS
($)(5)
(i) | | | | Total
shareholder
return
($)
(f) | | | Peer group
total
shareholder
return
($)(4)
(g) | | | | Fiscal 2023 | | | | | 17,511,240 | | | | | | 33,835,589 | | | | | | 5,086,164 | | | | | | 8,310,891 | | | | | | 193.34 | | | | | | 128.13 | | | | | | 1,733 | | | | | | 11.99 | | | | | Fiscal 2022 | | | | | 16,735,752 | | | | | | 26,067,277 | | | | | | 4,449,340 | | | | | | 6,444,163 | | | | | | 143.70 | | | | | | 118.43 | | | | | | 1,667 | | | | | | 11.03 | | | | | Fiscal 2021 | | | | | 14,873,815 | | | | | | 39,787,688 | | | | | | 4,602,193 | | | | | | 10,407,833 | | | | | | 125.20 | | | | | | 122.56 | | | | | | 1,545 | | | | | | 9.26 | | |
(1)
Steven H. Collis served as the Company’s PEO for each fiscal year presented. The individuals comprising the Non-PEO NEOs for each fiscal year presented are as follows: for fiscal 2023, James F. Cleary, Robert P. Mauch, Gina K. Clark, and Elizabeth S. Campbell; for fiscal 2022, James F. Cleary, Robert. P. Mauch, Gina K. Clark, and Silvana Battaglia; and for fiscal 2021, James F. Cleary, Robert P. Mauch, Gina K. Clark, and John G. Chou.
Ownership of and Trading In Our Stock| | 76 | | | Executive compensation | |
(2)
The dollar amounts reported in column (b) are the amounts of total compensation reported for the Company’s PEO for each corresponding fiscal year in the “Total” column of the SCT. The dollar amounts reported in column (d) are the average amounts of total compensation reported for the Non-PEO NEOs for each corresponding fiscal year in the “Total” column of the SCT. Refer to the SCT set forth on page 62 of this proxy statement for further detail. (3)
The dollar amounts reported in columns (c) and (e) represent the amounts of CAP to PEO and average CAP to Non-PEO NEOs, respectively. CAP does not necessarily represent cash and/or equity value transferred to the PEO or applicable Non-PEO NEO without restriction, but rather is a value calculated in accordance with applicable SEC rules. CAP reflects the exclusions and inclusions of certain amounts as set forth below. As the Company does not have a defined benefit plan, no adjustments for pension benefits are included in the below tables. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the SCT. | | Year | | | SCT total for
PEO
($) | | | Exclusion of
stock awards
and option
awards for PEO
($) | | | Inclusion of
equity values
for PEO
($) | | | CAP
to PEO
($) | | | | Fiscal 2023 | | | | | 17,511,240 | | | | | | (12,500,174) | | | | | | 28,824,523 | | | | | | 33,835,589 | | | | | Fiscal 2022 | | | | | 16,735,752 | | | | | | (11,250,120) | | | | | | 20,581,645 | | | | | | 26,067,277 | | | | | Fiscal 2021 | | | | | 14,873,815 | | | | | | (10,500,201) | | | | | | 35,414,074 | | | | | | 39,787,688 | | |
| | Year | | | Average
SCT total for
non-PEO
NEOs
($) | | | Average
exclusion of
stock awards
and option
awards for
non-PEO
NEOs
($) | | | Average
inclusion of
equity values
for non-PEO
NEOs
($) | | | Average
CAP
to non-PEO
NEOs
($) | | | | Fiscal 2023 | | | | | 5,086,164 | | | | | | (3,125,162) | | | | | | 6,349,889 | | | | | | 8,310,891 | | | | | Fiscal 2022 | | | | | 4,449,340 | | | | | | (2,525,163) | | | | | | 4,519,986 | | | | | | 6,444,163 | | | | | Fiscal 2021 | | | | | 4,602,193 | | | | | | (2,550,086) | | | | | | 8,355,726 | | | | | | 10,407,833 | | |
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables: | | Year | | | Year-end fair
value of equity
awards
granted during
fiscal year that
remained
outstanding
and
unvested as of
last day of
fiscal
year for PEO
($) | | | Plus,
change in fair
value from
last day of
prior fiscal year
to last day of
fiscal year of
outstanding
and unvested
equity awards
for PEO
($) | | | Plus,
vesting-date
fair value of
equity
awards
granted
during
fiscal
year that
vested
during
fiscal year
for PEO
($) | | | Plus,
change in fair
value from
last day of
prior
fiscal year
to vesting date
of unvested
equity awards
that vested
during fiscal
year for PEO
($) | | | Minus,
fair value at
last day of
prior fiscal year
of equity awards
that failed to
meet
applicable
vesting
conditions
during fiscal
year for PEO
($) | | | Plus,
value of
dividends or
other earnings
paid on equity
awards not
otherwise
included for
PEO
($) | | | Total –
inclusion of
equity values
for PEO
($) | | | | Fiscal 2023 | | | | | 14,972,771 | | | | | | 7,221,775 | | | | | | 211,618 | | | | | | 6,418,359 | | | | | | — | | | | | | — | | | | | | 28,824,523 | | | | | Fiscal 2022 | | | | | 11,642,181 | | | | | | 5,727,847 | | | | | | — | | | | | | 3,211,617 | | | | | | — | | | | | | — | | | | | | 20,581,645 | | | | | Fiscal 2021 | | | | | 15,030,404 | | | | | | 11,804,432 | | | | | | — | | | | | | 8,579,238 | | | | | | — | | | | | | — | | | | | | 35,414,074 | | |
| | Year | | | Average
year-end fair
value
of equity
awards
granted
during
fiscal
year that
remained
outstanding
and unvested
as of last
day of
fiscal year
for non-PEO
NEOs
($) | | | Plus,
average
change in fair
value from
last day of
prior fiscal
year to
last day of
fiscal year of
outstanding and
unvested
equity awards
for non-PEO
NEOs
($) | | | Plus,
average
vesting-date
fair value of
equity
awards
granted
during
fiscal year that
vested
during
fiscal year
for non-PEO
NEOs
($) | | | Plus,
average
change in
fair
value from
last day of
prior fiscal
year to
vesting date
of unvested
equity
awards
that vested
during fiscal
year for
non-PEO NEOs
($) | | | Minus,
average fair
value at last
day of prior
fiscal year
of equity
awards
that failed
to meet
applicable
vesting
conditions
during fiscal
year for
non-PEO
NEOs
($) | | | Plus,
average
value
of dividends or
other
earnings
paid on
equity
awards not
otherwise
included for
non-PEO
NEOs
($) | | | Total –
average
inclusion of
equity
values
for non-PEO
NEOs
($) | | | | Fiscal 2023 | | | | | 3,753,521 | | | | | | 1,321,780 | | | | | | 43,514 | | | | | | 1,231,074 | | | | | | — | | | | | | — | | | | | | 6,349,889 | | | | | Fiscal 2022 | | | | | 2,662,853 | | | | | | 1,185,599 | | | | | | — | | | | | | 671,534 | | | | | | — | | | | | | — | | | | | | 4,519,986 | | | | | Fiscal 2021 | | | | | 3,650,284 | | | | | | 2,680,338 | | | | | | — | | | | | | 2,025,104 | | | | | | — | | | | | | — | | | | | | 8,355,726 | | |
(4)
For purposes of calculating the total shareholder return (“TSR”) for our peer group, the S&P 500 Health Care Index (the “Peer Group TSR”) was utilized pursuant to Item 201(e) of Regulation S-K and as is reflected in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. In accordance with applicable SEC rules, the Peer Group TSR was calculated on a market
Beneficial Ownership of Common Stock| | Executive compensation | | | 77 | |
capitalization weighted basis according to the respective issuers’ stock market capitalization at the beginning of each period for which a return is indicated. TSR for both the Company and the peer group is based on an initial $100 investment, measured on a cumulative basis from the market close on September 30, 2020, through and including the end of the fiscal year for which TSR is being presented in the table. TSR calculations reflect reinvestment of dividends. (5)
We determined Adjusted Diluted EPS (“Adjusted EPS”) to be the most important financial performance measure used to link Company performance to CAP to the PEO and Non-PEO NEOs in fiscal 2023. This performance measure may not have been the most important financial performance measure for fiscal 2022 and 2021 and we may determine a different financial performance measure to be the most important financial performance measure in future years. Adjusted EPS is a non-GAAP financial measure. See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. The table above and the graphs below compare the CAP to our PEO and the average of the CAP to our non-PEO NEOs with the Company’s: (i) cumulative TSR; (ii) Peer Group TSR; (iii) GAAP net income; and (iv) our Adjusted EPS, in each case for the fiscal years ended September 30, 2023, 2022, and 2021. TSR amounts reported in the table above and the graphs below assume an initial fixed investment of $100 and that all dividends, if any, were reinvested. Relationship Between PEO and Non-PEO NEO CAP and Company TSR The following chart sets forth the relationship between CAP to the PEO, the average CAP to the Non-PEO NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years. Given the emphasis in our executive compensation program on long-term incentives, which are tied to our stock price, we believe that the CAP to our PEO and Non-PEO NEO is closely aligned with our stock price performance. Specifically, for each year shown in the table above and the graph below, more than half of the target compensation to the PEO and Non-PEO NEOs was delivered in the form of long-term, stock-based incentives, as described in the Compensation Disclosure and Analysis section of this proxy statement. PEO and average non-PEO NEO Compensation Actually Paid vs. Company TSR
This table shows how much of our outstanding Common Stock is beneficially owned by each of the named executive officers, each of the directors and all directors and executive officers as a group as of November 30, 2020. The table also shows how much of our outstanding Common Stock is beneficially owned by owners of more than 5% of our outstanding Common Stock.| | 78 | | | Executive compensation | |
Relationship Between Company TSR and Peer Group TSR The following graph compares the Company’s cumulative TSR over the three most recently completed fiscal years to Peer Group TSR over the same period. As shown in the chart, the Company’s TSR has outperformed the Peer Group TSR for each of the fiscal years shown. Comparison of cumulative TSR of Cencora and peer group TSR
According to the rules adopted by the SEC, a person “beneficially owns” securities if the person has or shares the power to vote them or to direct their investment or has the right to acquire beneficial ownership of such securities within 60 days through the exercise of an option, warrant, right of conversion of a security or otherwise. Except as otherwise noted, the beneficial owners listed have sole voting and investment power with respect to the shares shown. An asterisk in the Percent of Class column indicates beneficial ownership of less than 1%, based on 205,244,070 shares of Common Stock outstanding as of the close of regular trading on the NYSE on November 30, 2020.
| | Name and Address of Beneficial Owner(1) | | | | Title of Beneficial Owner | | | | Aggregate Number
of Shares
Beneficially
Owned (#) (2) | | | | Percent
of Class (%) | | | | Steven H. Collis(3) | | | | Chairman, President and Chief Executive Officer | | | | | | 991,845 | | | | | | | * | | | | | James F. Cleary(3) | | | | Executive Vice President and Chief Financial Officer | | | | | | 145,857 | | | | | | | * | | | | | John G. Chou(3) | | | | Executive Vice President and Chief Legal Officer | | | | | | 271,118 | | | | | | | * | | | | | Gina K. Clark(3) | | | | Executive Vice President and Chief Communications & Administration Officer | | | | | | 110,366 | | | | | | | * | | | | | Robert P. Mauch(3) | | | | Executive Vice President and Group President | | | | | | 218,732 | | | | | | | * | | | | | Ornella Barra(4) | | | | Director | | | | | | 56,854,867 | | | | | | | 27.7% | | | | | D. Mark Durcan(5) | | | | Director | | | | | | 7,716 | | | | | | | * | | | | | Richard W. Gochnauer(5) | | | | Director | | | | | | 12,364 | | | | | | | * | | | | | Lon R. Greenberg(5) | | | | Director | | | | | | 11,318 | | | | | | | * | | | | | Jane E. Henney, M.D.(5) | | | | Lead Independent Director | | | | | | 18,376 | | | | | | | * | | | | | Kathleen W. Hyle(5) | | | | Director | | | | | | 15,477 | | | | | | | * | | | | | Michael J. Long(5) | | | | Director | | | | | | 12,271 | | | | | | | * | | | | | Henry W. McGee(5) | | | | Director | | | | | | 13,925 | | | | | | | * | | | | | Dennis M. Nally(5) | | | | Director | | | | | | 546 | | | | | | | * | | | | | All directors and executive officers as a group (16 people)(6) | | | | | | | | | | 58,692,977 | | | | | | | 28.4% | | | | | BlackRock, Inc.(7) | | | | | | | | | | 11,762,803 | | | | | | | 5.7% | | | | | Vanguard Group Inc.(8) | | | | | | | | | | 18,707,428 | | | | | | | 9.1% | | | | | Walgreens Boots Alliance Holdings LLC(9) | | | | | | | | | | 56,854,867 | | | | | | | 27.7% | | |
| | Executive compensation | | | 79 | |
Relationship Between PEO and Non-PEO NEO CAP and Adjusted EPS The following chart sets forth the relationship between CAP to the PEO, the average CAP to the Non-PEO NEOs, and the Company’s Adjusted EPS during the three most recently completed fiscal years. Aside from our stock price performance, we believe that Adjusted EPS is the most important financial metric that ties our executives’ compensation to our performance. We have improved our Adjusted EPS from 2021 to 2023, as reflected in the table above and illustrated in the graph below. Our year-over-year CAP outcomes over that same period do not always align directionally with the year-over-year Adjusted EPS outcomes because the greatest sensitivity to our executives’ compensation is tied to our stock price. As such, we expect that stock price will continue to have a much larger impact on CAP than Adjusted EPS. PEO and average non-PEO NEO Compensation Actually Paid vs. Adjusted EPS
*| | 80 | | | Executive compensation | |
Relationship Between PEO and Non-PEO NEO CAP and Net Income The following chart sets forth the relationship between CAP to the PEO, the average CAP to the Non-PEO NEOs, and the Company’s Net Income during the three most recently completed fiscal years. The Company’s GAAP net income has increased in the past three years, while CAP to the PEO and, on average, to the Non-PEO NEOs has varied significantly each year. The improvement in our GAAP net income from 2021 through 2023 does not directly align with our CAP outcomes. This is primarily because the Company does not use GAAP net income to determine executive compensation opportunities or outcomes. As a result, while the Company is required to include GAAP net income as a comparison in this Pay Versus Performance table and the graph below, we would not necessarily expect to see alignment between our CAP and GAAP net income outcomes. PEO and average non-PEO NEO Compensation Actually Paid vs. net income List of most important financial performance measures The following table presents an unranked list of the most important financial performance measures, including the Company-Selected Measure, used by the Company to link CAP for all NEOs to Company performance for fiscal 2023. | | Measure | | | | Adjusted EPS* | | | | Adjusted Operating Income* | | | | Adjusted Free Cash Flow* | | | | Adjusted ROIC* | |
*
Represents a non-GAAP financial measure. See Appendix A for additional information regarding non-GAAP financial measures, including required GAAP to non-GAAP reconciliations.
Less than 1.0%
(1)
The address for each named executive officer and director is: AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, PA 19087.
(2)
Based on information furnished to us by the respective stockholders or obtained by us from sources we believe are reliable. We believe that, unless otherwise indicated, the beneficial owners have sole voting and investment power over the shares shown opposite their names.
(3)
Common Stock and the percent of class listed as being beneficially owned by our named executive officers include outstanding options to purchase shares of Common Stock, which are exercisable within 60 days of November 30, 2020, as follows: Mr. Collis—783,788 shares; Mr. Chou—202,017 shares; Mr. Cleary—119,386 shares; Ms. Clark—83,461 shares; and Mr. Mauch—178,411 shares.
(4)
The aggregate number of shares beneficially owned by Ms. Barra consists of the 56,854,867 shares that are held by Walgreens Boots Alliance Holdings LLC. By virtue of her position as Co-Chief Operating Officer of Walgreens Boots Alliance, Inc., Ms. Barra may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the 56,854,867 shares held by Walgreens Boots Alliance Holdings LLC.
(5)
Common Stock and the percent of class listed as being beneficially owned by our non-employee directors include outstanding options to purchase shares of Common Stock, which are exercisable within 60 days of November 30, 2020, as follows: Ms. Barra—0 shares; Mr. Durcan—0 shares; Mr. Gochnauer—0 shares; Mr. Greenberg—0 shares; Dr. Henney—0 shares; Ms. Hyle—3,085 shares; Mr. Long—0 shares; Mr. McGee—0 shares; and Mr. Nally—0 shares.
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2021 AmerisourceBergen Proxy | Ownership of and Trading In Our Stock(6)| | Item | | | | 3 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Includes all directors and executive officers, including the named executive officers. The aggregate number of shares beneficially owned by all directors and executive officers as a group includes the 56,854,867 shares that are held by Walgreens Boots Alliance Holdings LLC. See footnote (4) above.
| (7)
This information is based on a Schedule 13G filed with the SEC on February 5, 2020 by BlackRock, Inc., which reports sole voting power with respect to 10,079,787 shares, shared voting power with respect to 0 shares, and an aggregate beneficial ownership of 11,762,803 shares. In such filing, BlackRock, Inc. lists its address as 55 East 52nd Street, New York, NY 10055.
(8)
This information is based on a Schedule 13G filed with the SEC on February 12, 2020 by The Vanguard Group, which reports sole voting power with respect to 232,484 shares, shared voting power with respect to 49,192 shares, and an aggregate beneficial ownership of 18,707,428 shares. In such filing, the Vanguard Group lists its address as 100 Vanguard Blvd., Malvern, PA 19355.
(9)
This information is based on a Schedule 13D/A filed with the SEC on November 14, 2016 by Walgreens Boots Alliance, Inc. which reports that Walgreens Boots Alliance Holdings LLC, WBA Investments, Inc., and Walgreens Boots Alliance, Inc. have shared voting power and shared dispositive ownership with respect to 56,854,867 shares. None of these entities reported ownership of shares with sole voting power or sole dispositive power. In such filing, Walgreen Boots Alliance, Inc. lists its address as 108 Wilmot Road, Deerfield, IL 60015.
Equity Compensation Plan Information
The following table sets forth information as of September 30, 2020 regarding our existing compensation plans pursuant to which equity securities are authorized for issuance to employees and non-employee directors.
| | Plan Category | | | | Number of securities
to be issued upon
exercise of outstanding
options, warrants,
and rights (#)
(a) | | | | Weighted-average
exercise price of
outstanding options,
warrants and rights ($)
(b) | | | | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities
reflected in column (a)) (#)
(c) | | | | Equity compensation plans approved by
security holders | | | | | | 7,358,442(1) | | | | | | $ | 86 | | | | | | | 9,186,623(2) | | | | | Equity compensation plans not approved
by security holders | | | | | | — | | | | | | | N/A | | | | | | | — | | | | | Total | | | | | | 7,358,442 | | | | | | $ | 86 | | | | | | | 9,186,623 | | |
(1)
Includes shares of our Common Stock to be issued upon exercise of outstanding options and vesting of restricted stock units and performance share awards under our Equity Incentive Plan and our Omnibus Incentive Plan.
(2)
Includes shares available for future issuances of equity awards (including options, restricted stock units and performance share awards) under the Omnibus Incentive Plan. As of March 6, 2014, we ceased to use the Equity Incentive Plan for issuances of equity awards.
Delinquent Section 16(a) Reports
Section 16(a)
| Ratification of the Exchange Act requires our directors and executive officersappointment of Ernst & Young LLP as well as persons who beneficially own more than 10 percent of our Common Stock to file with the SEC reports of ownership and changes in beneficial ownership of our Common Stock. Directors, executive officers and greater than 10 percent stockholders are required to furnish us with copies of all Section 16(a) forms they file. Cencora’s independent registered public accounting firm for fiscal 2024 | |
Ratification of the appointment of Ernst & Young LLP You are voting on the ratification of the appointment of Ernst & Young LLP (“EY”) as Cencora’s independent registered public accounting firm for the fiscal year ending September 30, 2024. The Audit Committee of the Board has appointed EY to serve as our independent registered public accounting firm for fiscal 2024. Although our governing documents do not require the submission of the appointment of Cencora’s independent registered public accounting firm to the shareholders for approval, the Board considers it desirable that the shareholders ratify the appointment of EY. Should the shareholders not ratify the appointment of EY as Cencora’s independent registered public accounting firm for the fiscal 2024, the Audit Committee will investigate the reasons and will reconsider whether it is appropriate to select another independent registered public accounting firm, but is not required to do so. Even if EY’s appointment is ratified, the Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders. Independent registered public accounting firm services Audit services provided by EY for fiscal 2024 will include examination of the consolidated financial statements of Cencora and services related to periodic SEC filings. Audit services for fiscal 2024 also will include the audit of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Additionally, EY may provide audit-related, tax and other services comparable in nature to the services performed in fiscal 2022 and 2023, as described under the heading “Audit and non-audit fees.” Representatives of the independent registered public accounting firm at the 2024 annual meeting of shareholders Representatives of EY are expected to participate at the 2024 Annual Meeting of Shareholders. Such representatives will have an opportunity to make a statement and will be available to respond to appropriate questions. | | | | | We believe that during fiscal year 2020 all of our directors and executive officers complied with these requirements with the following exception: on February 14, 2020, we filed a Form 4 for Mr. Long to report the sale of 27,308 shares of Common Stock made by an investment manager on behalf of Mr. Long on February 5, 2020 without first notifying AmerisourceBergen of the sale. 61
Stockholder Proposal | 2021 AmerisourceBergen Proxy
Item 4—Stockholder Proposal to Adopt a Policy that the Chairman of the Board be an Independent Director
The following stockholder proposal has been submitted to the Company for action at the 2021 Annual Meeting by Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, New York 11021. Mr. Steiner has named John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278 as his proxy for this proposal. Mr. Steiner has indicated that he has beneficially owned at least $2,000 of our Common Stock continuously for at least one year and that he intends to own at least such amount through the 2021 Annual Meeting. In accordance with proxy regulations, the following is the complete text of the proposal, which is reproduced as submitted to us other than minor formatting changes. All statements contained in the stockholder proposal and supporting statement are the sole responsibility of the proponent. The Board does not support the adoption of this proposal as it believes it is not in the best interest of the Company or its stockholders.
Proposal 4—Independent Board Chairman
Shareholders request that our Board of Directors adopt a policy, and amend our governing documents as necessary to require that the Chairman of the Board of Directors to be an independent member of the Board whenever possible. Although it would be better to have an immediate transition to an independent Board Chairman, the Board would have the discretion to phase in this policy for the next Chief Executive Officer transition.
If the Board determines that a Chairman who was independent when selected is no longer independent, the Board shall select a new Chairman who satisfies the requirements of the policy within a reasonable amount of time.
Boeing is an example of a company changing course and naming an independent board chairman in October 2019. Boeing did not wait for the next CEO succession.
Support for proposals to appoint an independent board chair received 17% higher support at U.S. companies in 2020. Two such proposals received majority support due to management oversight failings. These two companies were Boeing, which fired its CEO after two total fatality crashes of factory fresh Boeing 737 MAX airliners which in turn grounded the entire worldwide fleet of 737 MAX airliners for more than 18 months and Baxter International, which had to restate its financial results in 2019.
Since management performance setbacks often result in higher support for this proposal topic, the mere submission of this proposal will be an incentive for AmerisourceBergen management to perform better leading up to the 2021 annual meeting.
Now is an ideal time to transition to an independent board chairman since opioid fines could reach $150 billion in a worst-case scenario according to Claims Journal. Opioid litigation is an overhang for the 3 main drug distributors in the U.S. and AmerisourceBergen is one of the 3 main drug distributors.
Please vote yes: Independent Board Chairman—Proposal 4
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2021 AmerisourceBergen Proxy | Stockholder Proposal
AmerisourceBergen Corporation’s Statement in Opposition to the Stockholder Proposal
The Board of Directors recommendsrecommend that you vote AGAINST Proposal No. 4 (Item 4 onFOR the Proxy Card) for the following reasons:
Our stockholders benefit most when the Board has the ability to determine the leadership structure that best serves the stockholders’ interests.
Our Board has always retained the flexibility to determine the best leadership structure for the Company and its stockholders based on the facts and circumstances at the time. Our stockholders benefit most when our Board has the freedom to make decisions that are in the best interestsratification of the Company and its stockholders rather than pursuant to a predetermined policy.appointment of EY as Cencora’s independent registered public accounting firm for fiscal 2024.
| |
Our Lead Independent Director and majority independent Board provide ample management oversight.
Our Board believes that there is already substantial oversight of management.
•
We have a strong Lead Independent Director with robust duties. When our Chairman is not an independent director, a Lead Independent Director is selected by a majority of our independent directors. In March 2016, our independent directors appointed Dr. Jane E. Henney to serve as Lead independent Director and she was most recently re-appointed to this role in March 2020. Dr. Henney’s responsibilities as Lead Independent Director are substantially similar to many functions typically fulfilled by a Chairman. Dr. Henney is a member of the Executive Committee, serves ex officio on all other Board committees, sets the agenda for, and chairs, executive sessions held without the Chairman present, approves Board agendas and materials, adds agenda items at her discretion, and calls special meetings of the Board. Information regarding Dr. Henney’s other responsibilities and powers as Lead Independent Director can be found in the Corporate Governance section of this proxy statement and in our corporate governance principles, which are available on our website. Since joining the Board, Dr. Henney’s strong leadership has greatly contributed to the success of our Company. Outside of her service on our Board, Dr. Henney’s distinguished career includes serving as Commissioner of Food and Drugs at the U.S. Food and Drug Administration and as Home Secretary at the National Academy of Medicine.
•
We maintain a majority independent Board. Pursuant to our corporate governance principles, we are required to maintain a minimum of 70% independent directors. Currently, 80% of our directors—8 out of 10—are independent as defined under NYSE regulations.
•
All of our independent directors are active participants on our Board and our Board committees. Our Audit Committee, Compensation and Succession Planning Committee, and Governance, Sustainability and Corporate Responsibility Committee are chaired by and comprised entirely of independent directors. This results in our independent directors having oversight of key aspects of the Company, including review of our regulatory and compliance framework and efforts by the Company to mitigate the risks associated with the distribution of controlled substances. Under our corporate governance principles, our non-employee directors are encouraged to contact senior managers of the Company without senior corporate management present. Further, our Board and Board committees have the right to retain independent outside financial, legal, or other advisors at any time.
•
Our independent directors meet regularly. An executive session of the independent directors is held before each set of regularly scheduled committee meetings. An executive session of committee members is held at the end of each meeting of the Board committees that are comprised entirely of independent directors, and an executive session of independent directors, together with the one non-management director who is a designee of our largest stockholder, is also held at the end of each meeting of the full Board of Directors, in each case, with the Lead Independent Director. These executive sessions allow additional time for the independent and non-management directors to fulfill their duty to provide oversight of the Company and its management. The independent directors also meet regularly with the Chairman, individually and as a group, so that they have the opportunity to discuss any issues specifically raised during the executive sessions.
The consolidation of the Chairman and CEO roles was well-considered, and the Board believes that we have the optimal governance structure in place at this time.
Since becoming CEO in 2011, Mr. Collis has demonstrated excellent leadership by growing existing businesses, expanding into new markets and achieving strong financial results. Mr. Collis has extensive business and
63
Stockholder Proposal | 2021 AmerisourceBergen Proxy
operating experience in wholesale pharmaceutical distribution, and in-depth knowledge of the healthcare distribution and services market. Serving as both Chairman and CEO enables Mr. Collis to employ his deep knowledge of AmerisourceBergen and our rapidly changing and competitive industry in a unified role to focus the Board on key areas essential to our strategic plan, thereby enhancing the long-term value of the Company. Having a single Chairman and CEO also enhances the Company’s ability to communicate with a single and consistent voice to stockholders, customers, employees and other stakeholders. All of these factors impacted the Board’s decision to combine the roles.
Our Board continues to believe that, at this time, a combined Chairman and Chief Executive Officer paired with a strong Lead Independent Director and a majority independent Board does not impede independent oversight of management or the Company’s activities. Further, in November 2018, the Board determined that it was in the best interests of the Company to split the role of Chairman and CEO in the future, commencing with the Company’s next CEO. At that time, the Chairman role will be assumed by an independent director.
For the foregoing reasons, the Board of Directors believes that this proposal is not in the best interests of AmerisourceBergen or our stockholders and therefore recommends a vote AGAINST the adoption of this stockholder proposal.
64
| | 82 | | | Audit committee matters | |
Selection and engagement of audit firm Under its charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of Cencora’s external auditor. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the external auditor’s qualifications, performance and independence. In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to Cencora. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit Committee reviews the process that we and EY undertake to ensure the rotation of the audit partner responsible for reviewing the audit, and evaluates the qualifications and experience of the individual selected to serve as lead partner for our audit. EY has been retained as Cencora’s external auditor since 1985. The members of the Audit Committee believe that the continued retention of EY to serve as our external auditor is in the best interests of Cencora and its shareholders. Audit and non-audit fees During the fiscal years ended September 30, 2023 and 2022, EY, Cencora’s independent registered public accounting firm, billed the Company the fees set forth below in connection with services rendered by the independent registered public accounting firm to the Company: | | | | | Fiscal year | | | | EY fee category | | | 2023
($) | | | 2022
($) | | | | Audit Fees(1) | | | | | 12,658,850 | | | | | | 12,016,150 | | | | | Audit-Related Fees(2) | | | | | 543,700 | | | | | | 4,132,600 | | | | | Tax Fees(3) | | | | | 4,156,181 | | | | | | 3,851,977 | | | | | All Other Fees(4) | | | | | 308,500 | | | | | | 1,368,000 | | | | | Total | | | | | 17,667,231 | | | | | | 21,368,727 | | |
(1)
Audit fees consisted of fees for the audit of Cencora’s annual financial statements, consultation concerning financial accounting and reporting standards and consultation concerning matters relating to Section 404 of the Sarbanes-Oxley Act of 2002, reviews of quarterly financial statements as well as services normally provided in connection with statutory and regulatory filings or engagements, comfort letters, consents and assistance with and review of Company documents filed with the SEC. Audit fees also included fees for the audit of the effectiveness of the Company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. (2)
Audit-related fees consisted of fees for assurance and related services, such as Service Organization Controls reports and employee benefit plan audits. Audit-related fees in fiscal 2022 also included due diligence fees related to the acquisition of PharmaLex Holding GmbH. (3)
Tax fees consisted of fees for services related to tax compliance, tax advice and tax planning services. (4)
Other fees consisted of pre-approved consulting services relating to certain Company initiatives, including fees in fiscal 2022 in connection with acquired technology systems. Our Audit Committee reviewed and approved all fees charged by EY in accordance with the policy described above and monitored the relationship between audit and permissible non-audit services provided. The policy is intended to ensure that the fees earned by EY are consistent with the maintenance of the independent registered public accounting firm’s independence in the conduct of its auditing functions. Pre-approval policies The Audit Committee’s policy is to pre-approve all audit services and all non-audit services that the Company’s independent registered public accounting firm is permitted to perform for the Company under applicable federal securities regulations. As permitted by applicable regulations, the committee’s policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent registered public accounting firm and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the committee. Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.
2021 AmerisourceBergen Proxy | Other Information| | Audit committee matters | | | 83 | |
Report of the Audit Committee The Audit Committee consists of the three directors named at the end of this report. All of the Audit Committee members are independent under applicable SEC and NYSE rules and our corporate governance principles. The Board has concluded that each member is “financially literate” and that two of the members qualify as “audit committee financial experts.” The key responsibilities of the Audit Committee are set forth in its charter, which was most recently approved by the Board in November 2023 and is available on our website at investor.cencora.com/governance/committees. The Audit Committee is responsible for, among other matters, the appointment, retention, and compensation of the independent auditor and in connection therewith annually considers the performance of Ernst & Young LLP. Cencora’s management has primary responsibility for the Company’s financial statements and its internal control over financial reporting. Cencora’s independent registered public accounting firm, EY, is responsible for performing an independent audit of Cencora’s consolidated financial statements and for issuing a report on the effectiveness of Cencora’s internal control over financial reporting. The Audit Committee meets regularly with EY, with and without management present, to review the overall scope and plans for EY’s audit work and to discuss the results of its audit procedures, the evaluation of Cencora’s internal control over financial reporting and the overall quality of Cencora’s accounting and financial reporting. Cencora’s management has represented to the Audit Committee that the financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 were prepared in accordance with U.S. generally accepted accounting principles and that our internal control over financial reporting was effective as of September 30, 2023. The Audit Committee reviewed and discussed with Cencora’s management and EY the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and our internal control over financial reporting. The Audit Committee discussed with EY, which is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles, the firm’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles, the reasonableness of significant judgments reflected in the financial statements and the clarity of disclosures in the financial statements. The Audit Committee also discussed with EY the matters related to the conduct of the audit that are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (“PCAOB”), including the matters required to be discussed by the PCAOB Auditing Standard No. 1301, “Communications with Audit Committees.” In addition, the Audit Committee discussed with EY the firm’s independence from the Company and its management, including the matters in the written disclosures and letter that were received by the Audit Committee from EY as required by applicable requirements of the PCAOB regarding EY’s communications with the Audit Committee concerning independence. The Audit Committee further considered whether the provision of non-audit related services by EY to the Company is compatible with maintaining the independence of that firm from the Company. The Audit Committee also discussed with EY the firm’s audit of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in Cencora’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The Audit Committee | | Dennis M. Nally, Chair | | | Richard W. Gochnauer | | | Henry W. McGee | |
The foregoing Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the report by reference therein.
Other Information| | Item | | | | 4 | | | |
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Availability| | Approval of an amendment of the Annual Report on Form 10-KCopiescertificate of our Annual Report on Form 10-Kincorporation to provide for the fiscal year ended September 30, 2020 (without exhibits or documents incorporatedexculpation of officers as permitted by reference therein) are available without charge to stockholders upon written request to the Corporate and Investor Relations Department, AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087, by calling (610) 727-7000 or via the Internet at investor.amerisourcebergen.com.Delaware law
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On November 8, 2023, the Board unanimously voted to approve, and to recommend to our shareholders that they approve, certain amendments to the Cencora, Inc. Amended and Restated Certificate of Incorporation (the “Charter”) to permit the exculpation of officers, as is consistent with recent changes to the Delaware General Corporation Law (the “DGCL”). Article VII of the Charter currently includes “exculpatory provisions” that eliminate directors’ liability for monetary damages to the fullest extent possible under applicable law. As a Delaware corporation, the DGCL permits the Company to eliminate directors’ personal liability for monetary damages resulting from a breach of the fiduciary duty of care, subject to exceptions prescribed by the DGCL, including for intentional misconduct or knowing violations of the law. Such “exculpatory provisions” are common amongst large public companies, and they allow the Company to recruit and retain highly qualified persons to serve as directors. Under prior Delaware law, the statutory exculpatory provisions could only be extended to directors of corporations. However, effective August 1, 2022, the Delaware legislature amended the DGCL to permit Delaware corporations to extend similar exculpatory protections for officers, subject to the conditions and limitations under Section 102(b)(7) of the DGCL. The Board believes that it is in the best interests of the Company and its shareholders to provide such exculpatory provisions to the officers of the Company to the extent permitted by the DGCL, as recently amended. In making this determination, the Board considered that the DGCL provision limits exculpation of officers only to claims that do not involve breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Further, the statutory exculpation does not extend to derivative claims brought by or in the right of the Company. In weighing the potential benefits and drawbacks to shareholders, the Board further considered that officers, like directors, are exposed to a substantial risk of lawsuits that could seek to impose personal monetary liability. The Board believes that these new exculpatory protections recognized by the Delaware legislature will, if adopted, allow the Company to continue to attract and retain highly qualified officers and enable them to exercise good business judgment and act in the best interests of the shareholders, while minimizing their potential personal liability and reducing distractions arising from frivolous litigation, including diversion of management attention and the resultant waste of corporate resources. The description of the proposal set forth above is qualified in its entirety by reference to the text of Article VII, Section 7.01 of the proposed Cencora, Inc. Amended and Restated Certificate of Incorporation, as amended by the proposed amendments described herein (the “Restated Charter”), attached as Exhibit A to this proxy statement. For convenience of reference, the proposed changes described herein to the current Charter, with deleted text shown in strikethrough and added or moved text shown as bolded and underlined, are attached to this proxy statement as Exhibit B. Shareholders are also asked to consider Proposal 5, which relates to additional proposed amendments to our Charter. Proposals 4 and 5 are independent of each other and changes to the Charter will only be made to the extent either or both proposals are approved by shareholders. For example, if Proposal 4 is approved by shareholders, our Charter would be amended to effect the change to Article VII, Section 7.01 of the Charter, even if Proposal 5 is not approved. Any amendments to our Charter will be made only to the extent that shareholders approve such amendments, and any amendments that are approved by the shareholders will become effective upon filing of the Restated Charter with the Secretary of State of the State of Delaware, which the Company anticipates filing shortly after the 2024 Annual Meeting.
Frequently Asked Questions About the 2021 Annual Meeting of Stockholders and Voting at the Meeting
Why am I being furnished this proxy statement?
The Board of Directors of AmerisourceBergen is furnishing this proxy statement in connection with its solicitation of proxies for use at the 2021 Annual Meeting of Stockholders to be held on March 11, 2021, and at any adjournments thereof. Our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 accompanies this notice and proxy statement, but is not incorporated as a part of the proxy statement and is not to be regarded as part of the proxy solicitation material.
Who is soliciting my proxy?
The Board of Directors is soliciting your proxy in order to provide you with an opportunity to vote on all matters scheduled to come before the meeting whether or not you attend the virtual meeting.
What if I received a Notice of Internet Availability of Proxy Materials?
We are providing access to our proxy materials over the Internet. Accordingly, on or about January 28, 2021, we are mailing to our record and beneficial stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access our proxy materials over the Internet and vote online. If you received a Notice of Internet Availability of Proxy Materials, you will not receive a printed copy of our proxy materials by mail unless you request one. If you wish to receive a printed copy of our proxy materials for the 2021 Meeting of Stockholders, you should follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials.
Who can attend the Annual Meeting? How do I attend?
This year’s Annual Meeting will be held in a virtual format through a live webcast.
Only stockholders of record of our Common Stock at the close of business on January 11, 2021 (the “record date”) have a right to attend the Annual Meeting. In order to be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/ABC2021, you must enter the 16-digit control number found next to the label “Control Number” on your Notice of Internet Availability, proxy card, or voting instruction form, or in the email sending you the Proxy Statement. If you are a beneficial shareholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode.
We encourage you to log in to the website and access the webcast early, beginning approximately 15 minutes before the Annual Meeting start time. If you have experience technical difficulties, please contact the technical support telephone number posted on the virtual stockholder meeting log in page.
Who is entitled to vote?
You may vote if you owned shares of our Common Stock as of the close of business on January 11, 2021, which is the record date. You are entitled to one vote for each share of Common Stock that you own. As of January 11, 2021, we had 204,615,240 shares of Common Stock outstanding.
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Other Information | 2021 AmerisourceBergen ProxyVote required and effectiveness The affirmative vote of the holders of a majority of shares of the Company’s outstanding and issued Common Stock as of the record date is required to adopt this proposal. Any amendments to our Charter that are approved and adopted by the Company’s shareholders will become effective upon filing the Restated Charter with the Secretary of State of the State of Delaware, which the Company anticipates filing shortly after the Annual Meeting. | | | | | The Board recommends that you vote FOR the approval of an amendment of the certificate of incorporation to provide for the exculpation of officers as permitted by Delaware law. | |
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| | Approval of miscellaneous amendments to the certificate of incorporation | |
The Board is taking the opportunity afforded by presenting Proposal 4 for shareholders’ approval to also propose additional amendments to our Charter for shareholders’ approval. Our Charter was last substantively amended in March 2017 and the Board believes that various changes are in order. Those changes are: •
Section 5.03 (Annual Election of Directors) — To remove outdated references to the phasing out of our previously-classified Board, as our Board was fully declassified as of March 2014. •
Section 5.06 (Vacancies) — With respect to filling director vacancies, to clarify when “any” increase in the number of directors occurs (i.e., in the event of death, resignation, removal, and newly-created directorships that result from (i) an increase in the number of directors or (ii) the failure by shareholders to elect the whole authorized number of directors). •
Section 5.07 (Directors’ Meetings, Consents and Elections) — To clarify that meetings of the Board and any Board committee may be held via remote communications. •
Section 7.04 (Miscellaneous) — To remove unnecessary language relating to indemnification and the advancement of expenses, which is addressed elsewhere in Article VII of the Charter. These amendments would be made by way of amending and restating our Charter, as set forth in the Restated Charter. The proposed amendment to Article VII, Section 7.01 is discussed in Proposal 4 above and is also incorporated into the Restated Charter. Approval of any amendment pursuant to Proposal 4 and 5 also constitutes approval by the shareholders of the Restated Charter, which will only include the amendments approved by the shareholders. The Board of Directors believes it is appropriate to make the proposed amendments described in this Proposal 5 to our Charter for the following reasons: •
Section 5.03. At the 2011 annual meeting of shareholders, the Company’s shareholders voted to approve the “declassification” of the Board, such that directors would be elected on an annual basis commencing with the Company’s 2012 annual meeting of shareholders. This declassification was complete as of the Company’s 2014 annual meeting of shareholders, with each director proposed for election at that meeting and each subsequent annual meeting being elected on an annual basis. Accordingly, the language in Section 5.03 that refers to a phasing out of the prior classified board structure is now both outdated and unnecessary. •
Section 5.06. The revisions to this section are intended to clarify the meaning of the current language in the Charter; namely, that “any” vacancy includes a vacancy arising by reason of death, resignation, removal, newly-created directorships resulting from an increase in the number of directors, or the failure of the stockholders to elect the whole authorized number of directors. •
Section 5.07. Pursuant to Section 141(i) of the DGCL, meetings of the Board and any Board committee may be held remotely, unless otherwise restricted by a corporation’s certificate of incorporation or bylaws. The revisions to this section are meant to clarify the ability of the Board and Board committees to hold meetings on a remote basis, consistent with the requirements of the DGCL. •
Section 7.04. The redactions from, and clarifications set forth in, Section 7.04 are intended to remove superfluous language that is addressed elsewhere in Article VII and clarify the meaning of the language set forth in that section. The description of the proposed miscellaneous amendments to our Charter is qualified in its entirety by reference to the text of the proposed Restated Charter, attached as Exhibit A to this proxy statement. For convenience of reference, the proposed Restated Charter as described herein, with deleted text shown in strikethrough and added or moved text shown as bolded and underlined, are attached to this proxy statement as Exhibit B.
Approval of this Proposal 5 constitutes approval of the Restated Charter that includes all of the amendments to our Charter as described in this Proposal 5. The amendments described in this Proposal 5 are interdependent so that the shareholders are approving all or none of the amendments set forth in the sections described above. Shareholders are also asked to consider Proposal 4, which relates to exculpation of officers. Proposals 4 and 5 are independent of each other and changes to our Charter will only be made to the extent either or both proposals are approved by shareholders. If Proposal 4 is not approved by shareholders, but this Proposal 5 is approved by shareholders, we will not make the amendments to Article VII, Section 7.01 described in Proposal 4, notwithstanding the language included in Exhibits A and B to this proxy statement. Vote required and effectiveness The affirmative vote of the holders of a majority of shares of the Company’s outstanding and issued Common Stock as of the record date is required to adopt this proposal. Any amendments to our Charter that are approved and adopted by the Company’s shareholders will become effective upon filing the Restated Charter with the Secretary of State of the State of Delaware, which the Company anticipates filing shortly after the Annual Meeting. | | | | | The Board recommends that you vote FOR the approval of the miscellaneous amendments to the Charter described in this Item 5. | |
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Enhance majority vote standard for director elections The following shareholder proposal has been submitted to the Company for action at the 2024 Annual Meeting by Kenneth Steiner of Great Neck, New York, owner of at least $2,000 in market value of the Company’s Common Stock. Mr. Steiner has named John Chevedden as his proxy for this proposal. In accordance with proxy regulations, the following is the complete text of the proposal, which is reproduced as submitted to us other than minor formatting changes. All statements contained in the shareholder proposal and supporting statement are the sole responsibility of the proponent. Proposal 6 — Enhance Majority Vote Standard for Director Elections Resolved, Enhance Majority Vote Standard for Director Elections by including this text in the bylaws: A plurality voting standard will apply only if there is a shareholder-nominated director on the company proxy card. This will update the bylaws because the current majority vote text in the Cencora governing documents was drafted prior to the relatively new universal proxy rules for director elections. According to the 2023 Cencora annual meeting proxy a plurality voting standard will apply instead of a majority voting standard if: •
A shareholder has provided us with notice of a nominee for director in accordance with our bylaws; and •
That nomination has not been withdrawn on or prior to the day next preceding the date the Company first provides its notice of meeting for such meeting to shareholders. The problem with the above language is that the majority vote standard goes out the window if a shareholder, who own $1000 of Cencora stock, nominates himself and does nothing to promote his candidacy. The language in the Resolved statement above will ensure that the plurality vote standard will only apply when there is a serious director candidate. Please vote yes: Enhance majority vote standard for director elections — Proposal 6
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Cencora’s statement in opposition to the shareholder proposal The Board of Directors recommends that you vote AGAINST the Shareholder Proposal (Item 6 on the Proxy Card) for the following reasons: The shareholder Proposal (Item 6) requests that the Company amend the Company’s bylaws to provide that a “plurality voting standard will apply only if there is a shareholder-nominated director on the Company proxy card.” The Board has considered this proposal and concluded that its adoption is not in the best interests of the Company and its shareholders. The Board recommends a vote AGAINST this proposal because: •
The proposal is unnecessary to address the concerns set forth by the proponent, given the December 2023 amendment to the bylaws that clarified the applicable voting standards for the election of directors; and •
Implementation of the proposal as requested would result in an inappropriate and insurmountable conflict between the Board’s current composition, on the one hand, and the use of a majority vote standard for director elections in uncontested elections, on the other. Current Cencora voting standards and bylaw provisions To align with best practice and to ensure accountability to our shareholders, our bylaws and corporate governance principles provide for a majority vote standard for the election of directors in uncontested director elections. Pursuant to a majority voting standard, a director is elected to the Board if the number of votes cast in favor of a director nominee exceeds the number of votes cast against such director nominee’s election. Additionally, consistent with market and corporate governance best practices, in the event of a contested election, directors are elected by a plurality of votes cast, meaning that director nominees who receive the most votes are elected, regardless of whether they obtained a majority. On December 26, 2023, the Board amended the bylaws to clarify the circumstances in which a plurality voting standard applies in the election of directors. Consistent with market practice, the amended bylaws clarify that a plurality voting standard applies to director elections only in the event of a “Contested Election,” which is defined as “any meeting of shareholders at which the number of nominees for election of directors exceeds the number of directors to be elected as of the tenth (10th) day preceding the date that the Corporation first mails its notice of meeting for such meeting to the shareholder” (emphasis added). The definition of a Contested Election as set forth in the amended bylaws is generally consistent with market practice and ensures that a plurality voting standard will apply only if there are more director nominees than number of directors to be elected. We believe that the proponent’s stated concerns that a majority voting standard could apply “if a shareholder, who own (sic) $1000 of Cencora stock, nominates himself and does nothing to promote his candidacy” are both misplaced and incorrect. The Company’s bylaws set forth a robust methodology for ensuring the qualification and appropriateness of director candidates, including through the advance notice provisions described in Section 2.03(c) of the bylaws. We also note the proponent’s position that the proposal “will ensure that the plurality voting standard will apply only when there is a serious director candidate.” However, we believe that the amended bylaws clearly set forth the limited circumstances when a plurality voting standard would apply — that is, at a meeting for which there are more director nominees than available board seats. Accordingly, adoption of the proposal is unnecessary.
Conflict between proposal and Cencora’s current Board composition As described above, the proposal requests that the Company amend its bylaws to state that “[a] plurality voting standard will apply only if there is a shareholder-nominated director on the company proxy card.” The proponent does not clarify or define what is meant by “shareholder-nominated director.” As disclosed elsewhere in this proxy statement, Walgreens Boots Alliance, or WBA, owns approximately 15% of our Common Stock. We also are party to the Shareholders Agreement with WBA, pursuant to which WBA has the right, among other matters, to designate a director to our Board while it holds 5% or more of our Common Stock. Ornella Barra currently serves on the Board as WBA’s designated director and is WBA’s director designee for nomination for election at the 2024 Annual Meeting. The proposed change to the bylaws that is requested by the proponent would have the practical effect of triggering a plurality voting standard any time that Ms. Barra, another WBA director nominee, or any other shareholder-nominated director appears on the Company’s proxy card for a meeting of shareholders. This would have the unintended consequence of triggering plurality voting in an uncontested director election solely due to the fact that a “shareholder-nominated director” is being put forth for election. A plurality voting standard in an uncontested director election is widely viewed as counter to shareholder rights. For example, ISS cites “a plurality vote standard in uncontested director elections” as a “problematic provision” that may lead to adverse voting recommendations by ISS. Similarly, Glass Lewis has expressed that a majority voting standard is advantageous in an uncontested election. The Company does not believe that the proponent’s intent is to implement a plurality voting standard in an uncontested director election solely because Ms. Barra or another shareholder-appointed nominee appears on the proxy card. Rather, the Company’s position is that the amended bylaws better address the concerns raised by the proponent — that a plurality voting standard should apply only in the event of a true contested election — and avoid the unintended consequences of forcing a plurality voting standard due to the Company’s current Board composition. Conclusion In summary, the Board believes that the proposal is both unnecessary and could lead to unintended consequences that would not be aligned with shareholder rights or our shareholders’ best interests. | | | | | For the foregoing reasons, the Board of Directors recommends a vote AGAINST the adoption of this shareholder proposal. | |
Stock ownership information Security ownership of certain beneficial owners, officers and directors The following table sets forth the Common Stock beneficially owned by each of the named executive officers, each of the directors and director nominees and all directors and executive officers as a group as of November 30, 2023. The table also shows the Common Stock that is beneficially owned by holders of more than 5% of our outstanding Common Stock. According to the rules adopted by the SEC, a person “beneficially owns” securities if the person has or shares the power to vote them or to direct their investment or has the right to acquire beneficial ownership of such securities within 60 days through the exercise of an option, warrant, right of conversion of a security or otherwise. Except as otherwise noted, the beneficial owners listed have sole voting and investment power with respect to the shares shown. An asterisk in the Percent of Class column indicates beneficial ownership is less than 1%, based on 199,728,449 shares of Common Stock outstanding as of November 30, 2023. | | Name and address of
beneficial owner(1) | | | Title | | | Aggregate number of
shares beneficially owned(2)
(#) | | | Percent of
class
(%) | | | | Named executive officers | | | | | | | | | | | | | | | | | | | Steven H. Collis(3) | | | Chairman, President and Chief Executive Officer | | | | | 636,726 | | | | | | * | | | | | James F. Cleary(3) | | | Executive Vice President and Chief Financial Officer | | | | | 193,097 | | | | | | * | | | | | Robert P. Mauch(3) | | | Executive Vice President and Chief Operating
Officer | | | | | 127,130 | | | | | | * | | | | | Elizabeth S. Campbell(3) | | | Executive Vice President and Chief Legal Officer | | | | | 20,327 | | | | | | * | | | | | Gina K. Clark(3) | | | Executive Vice President and Chief
Communications & Administration Officer | | | | | 52,995 | | | | | | * | | | | | Non-employee directors and
director nominees | | | | | | | | | | | | | | | | | | | Ornella Barra(4) | | | Director | | | | | 30,489,956 | | | | | | 15.3% | | | | | Werner Baumann(5) | | | Director | | | | | — | | | | | | * | | | | | D. Mark Durcan(5) | | | Director | | | | | 14,272 | | | | | | * | | | | | Richard W. Gochnauer(5) | | | Director | | | | | 20,841 | | | | | | * | | | | | Lon R. Greenberg(5) | | | Director | | | | | 16,641 | | | | | | * | | | | | Kathleen W. Hyle(5) | | | Director | | | | | 17,845 | | | | | | * | | | | | Lorence H. Kim, M.D.(5)(6) | | | Director | | | | | — | | | | | | * | | | | | Henry W. McGee(5) | | | Director | | | | | 15,014 | | | | | | * | | | | | Redonda G. Miller, M.D.(5) | | | Director | | | | | | | | | | | * | | | | | Dennis M. Nally(5) | | | Director | | | | | 5,126 | | | | | | * | | | | | Lauren M. Tyler(5) | | | Director | | | | | — | | | | | | * | | | | | All directors and executive
officers as a group
(18 people)(7) | | | | | | | | 31,650,730 | | | | | | 15.8% | | | | | 5% and greater owners | | | | | | | | | | | | | | | | | | | Walgreens Boots Alliance
Holdings LLC(8)
108 Wilmot Road
Deerfield, IL 60015 | | | | | | | | 30,489,956 | | | | | | 15.3% | | | | | Vanguard Group Inc.(9)
100 Vanguard Blvd.
Malvern, PA 19355 | | | | | | | | 20,345,297 | | | | | | 10.2% | | | | | BlackRock, Inc.(10)
55 East 52nd Street
New York, NY 10055 | | | | | | | | 17,642,496 | | | | | | 8.8% | | |
*
Less than 1.0%
| | 92 | | | Stock ownership information | |
(1)
The address for each named executive officer, director, and director nominee is: Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. (2)
Based on information furnished to us by the respective shareholders or obtained by us from sources we believe are reliable. We believe that, unless otherwise indicated, the beneficial owners have sole voting and investment power over the shares shown opposite their names. (3)
Common Stock and the percent of class listed as being beneficially owned by our named executive officers include outstanding options to purchase shares of Common Stock, which are exercisable within 60 days of November 30, 2023, as follows: What shares can I vote?| | Name | | | Shares
(#) | | | | Mr. Collis | | | | | 305,153 | | | | | Mr. Cleary | | | | | 79,031 | | | | | Mr. Mauch | | | | | 79,031 | | | | | Ms. Campbell | | | | | 5,162 | | | | | Ms. Clark | | | | | 27,093 | | |
(4)
The aggregate number of shares beneficially owned by Ms. Barra consists of the 30,489,956 shares that are held by Walgreens Boots Alliance Holdings LLC. By virtue of her position as Chief Operating Officer, International of Walgreens Boots Alliance, Inc., Ms. Barra may be deemed to have shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the 30,489,956 shares held by Walgreens Boots Alliance Holdings LLC. (5)
No non-employee director holds options that are exercisable or restricted stock units that vest within 60 days of November 30, 2023. (6)
Dr. Kim and his spouse have shared voting power with respect to 168 shares. (7)
Includes all directors and executive officers, including the named executive officers. The aggregate number of shares beneficially owned by all directors and executive officers as a group includes the 30,489,956 shares that are held by Walgreens Boots Alliance Holdings LLC. (8)
This information is based on Amendment No. 15 to Schedule 13D filed with the SEC on November 14, 2023 by Walgreens Boots Alliance, Inc., which reported that Walgreens Boots Alliance Holdings LLC, WBA Investments, Inc., and Walgreens Boots Alliance, Inc. have shared voting power and shared dispositive ownership with respect to 30,489,956 shares as of November 9, 2023. None of these entities reported ownership of shares with sole voting power or sole dispositive power. (9)
This information is based on Amendment No. 17 to Schedule 13G filed with the SEC on January 10, 2023 by The Vanguard Group, which reported sole voting power with respect to 0 shares, shared voting power with respect to 238,165 shares, sole dispositive power with respect to 19,675,132 shares, and shared dispositive power with respect to 670,165 as of December 31, 2022. (10)
This information is based on Amendment No. 14 to Schedule 13G filed with the SEC on January 25, 2023 by BlackRock, Inc., which reported sole voting power with respect to 16,163,993 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 17,642,496 shares, and shared dispositive power with respect to 0 shares as of December 31, 2022.
| | Stock ownership information | | | 93 | |
Equity compensation plan information The following table sets forth information as of September 30, 2023 regarding our existing compensation plans pursuant to which equity securities are authorized for issuance to employees and non-employee directors. | | | | | (a) | | | (b) | | | (c) | | | | Plan category | | | Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(#) | | | Weighted-average
exercise price of
outstanding
options, warrants
and rights
($) | | | Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
(#) | | | | Equity compensation plans approved by security holders | | | | | 2,581,730(1) | | | | | | 85 | | | | | | 22,751,592(2) | | | | | Equity compensation plans not approved by security holders | | | | | — | | | | | | N/A | | | | | | — | | | | | Total | | | | | 2,581,730 | | | | | | 85 | | | | | | 22,751,592 | | |
(1)
Includes shares of our Common Stock to be issued upon exercise of outstanding options and vesting of restricted stock units and performance share awards under the Company’s Equity Incentive Plan (the “Equity Incentive Plan”) and our Omnibus Incentive Plan. (2)
Includes shares available for future issuances of equity awards (including options, restricted stock units and performance share awards) under the Omnibus Incentive Plan. As of March 6, 2014, we ceased to use the Equity Incentive Plan for issuances of equity awards. Delinquent section 16(a) reports Section 16(a) of the Exchange Act requires directors, individuals designated by the Board as “officers,” under Section 16(a) and beneficial owners of more than 10 percent of our Common Stock (collectively, “Section 16 Insiders”) to file with the SEC reports of ownership and changes in beneficial ownership of our Common Stock. We believe, based upon our review of such reports filed with the SEC and the representations of the Section 16 Insiders that, for the fiscal year ended September 30, 2023, all of the Section 16 Insiders filed their respective beneficial ownership and change in ownership reports with the SEC in a timely manner.
Frequently asked questions about the 2024 annual meeting of shareholders and voting at the meeting Why am I being furnished this proxy statement? The Board is furnishing this proxy statement in connection with its solicitation of proxies for use at the 2024 Annual Meeting to be held on March 12, 2024, and at any adjournments, postponements, or continuations thereof. Our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 accompanies this notice and proxy statement, but is not incorporated as a part of the proxy statement and is not to be regarded as part of the proxy solicitation material. Who is soliciting my proxy? The Board is soliciting your proxy in order to provide you with an opportunity to vote on all matters to be presented at the meeting whether or not you virtually attend the 2024 Annual Meeting. What if I received a Notice of Internet Availability of Proxy Materials? We are providing access to our proxy materials over the Internet. Accordingly, on or about January 29, 2024, we are mailing to our record and beneficial shareholders a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access our proxy materials over the Internet and vote online. If you received a Notice of Internet Availability of Proxy Materials, you will not receive a printed copy of our proxy materials by mail unless you request one. If you wish to receive a printed copy of our proxy materials for the 2024 Annual Meeting, you should follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials. Who can attend the annual meeting? How do I attend? The 2024 Annual Meeting will be held in a virtual-only format via live webcast at www.virtualshareholdermeeting.com/COR2024. Only shareholders of record of our Common Stock as of the close of business on January 16, 2024 (the “record date”) have a right to vote at the 2024 Annual Meeting. Shareholders of record as of the record date will be able to attend and participate in the virtual 2024 Annual Meeting by visiting www.virtualshareholdermeeting.com/COR2024. and entering the 16-digit control number on your Notice of Internet Availability, voting instructions form or on your proxy card for purposes of asking questions and casting your votes for the 2024 Annual Meeting ballot items. Only shareholders and proxy holders who enter their valid control number will be able to submit questions and vote. If you are a beneficial shareholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. We encourage you to log in to the website and access the webcast approximately 15 minutes before the 2024 Annual Meeting start time. If you experience technical difficulties, please contact the technical support telephone number posted on the virtual shareholder meeting login page. Who is entitled to vote? You may vote if you owned shares of our Common Stock as of the close of business on January 16, 2024, which is the record date. You are entitled to one vote for each share of Common Stock that you own. As of January 16, 2024, we had 199,479,628 shares of Common Stock outstanding. What shares can I vote? You may vote all shares of our Common Stock owned by you as of the record date. These shares of our Common Stock include: •
Shares held directly in your name as the shareholder of record. •
Shares of which you are the beneficial owner but not the shareholder of record. These are shares that are held for you through a broker, trustee or other nominee such as a bank, including shares purchased through any 401(k) plan or our employee stock purchase plan. For shares held in a plan, vote prior to 11:59 p.m., Eastern Time, on March 8, 2024.
| | Frequently asked questions about the 2024 annual meeting of shareholders and voting at the close of business on January 11, 2021, the record date. These shares include:•
Shares held directly in your name as the stockholder of record.
meeting | •
Shares of which you are the beneficial owner but not the stockholder of record. These are shares that are held for you through a broker, trustee or other nominee such as a bank, including shares purchased through any 401(k) plan or our employee stock purchase plan.
| How do I vote my shares?
If you hold your shares in your own name as the stockholder of record, you have three options for voting and submitting your proxy before the meeting:
•
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How do I vote my shares? Registered shareholders If you hold your shares in your own name as the shareholder of record, you have four options for voting and submitting your proxy before the meeting: | | | | | | | | | | | | | | | By Internet—Internet | | | By telephone | | | By mail | | | Mobile device | | | | We encourage you to vote and submit your proxy over the Internet at www.proxyvote.com in advance of the meeting or during the meeting at www.virtualshareholdermeeting.com/ABC2021.www.virtualshareholder
meeting.com/COR2024. | •
By telephone—
| | You may vote and submit your proxy by calling 1-800-690-69031.800.690.6903 in advance of the meeting. | •
By mail—
| | If you received your proxy materials by mail, you may vote by completing, signing and returning the enclosed proxy card. | If you hold
| | Scan the QR code provided on your shares through an account with a bank, broker or other nominee, you may view materials at www.proxyvote.com and may vote by completing and signing the proxy/voting instruction form that the bank, broker or other nominee will provide to you, or by using telephone or Internet voting arrangements described on the voting instruction form or other materials that the bank, broker or other nominee will provide to you.How do I revoke my proxy?
If you are the stockholder of record, you may revoke your proxy at any time before the polls close at the meeting. You may revoke your proxy by:
•
Changing your vote in the manner described below.
card | •
Notifying Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087 in writing that you are revoking your proxy before it is voted at the meeting.
If you hold your shares through an account with a bank or broker, your ability to revoke your proxy depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker.
May I change my vote?
You may change your vote at any time before the polls close at the meeting. You may change your vote by:
•
Signing another proxy card with a later date and returning it to us prior to the meeting.
•
Voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on March 10, 2021.
If you hold your shares through an account with a bank or broker, your ability to change your vote depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker.
What if I return my proxy card but do not provide voting instructions?
Proxy cards that are signed and returned but do not contain instructions will be voted as follows:
•
For the election of the ten nominees for director named on page 9 of this proxy statement;
•
For
|
Beneficial owners (shareholders in “street name”) If you hold your shares through an account with a bank, broker or other nominee, you may view materials at www.proxyvote.com and may vote by completing and signing the voting instruction form that the bank, broker or other nominee will provide to you, or by using telephone or Internet voting arrangements described on the voting instruction form or other materials that the bank, broker or other nominee will provide to you. How do I revoke my proxy? If you are the shareholder of record, you may revoke your proxy at any time before the polls close at the meeting. You may revoke your proxy by: •
Changing your vote in the manner described below. •
Notifying the Corporate Secretary at Cencora, Inc., 1 West First Avenue, Conshohocken, Pennsylvania 19428 in writing that you are revoking your proxy prior to 5:00 p.m., Eastern Time, on March 8, 2024. If you hold your shares through an account with a bank or broker, your ability to revoke your proxy depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker. May I change my vote? You may change your vote at any time before the polls close at the meeting. You may change your vote by: •
Signing another proxy card with a later date and returning it to us prior to the meeting. •
Voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on March 11, 2024. •
Virtually attending the meeting and voting online during the meeting. Note that virtual attendance alone will not revoke your prior vote; you must also vote online during the meeting. If you hold your shares through an account with a bank or broker, your ability to change your vote depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker. What if I return my proxy card but do not provide voting instructions? Proxy cards that are signed and returned but do not contain instructions will be voted as follows: •
“For” the election of each of the eleven nominees for director named on page 8 of this proxy statement; •
“For” the approval, on an advisory basis, of the fiscal 2023 compensation of our named executive officers as described in this proxy statement; •
“For” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2024;
| | 96 | | | Frequently asked questions about the 2024 annual meeting of shareholders and voting at the meeting | |
•
“For” the adoption of an officer exculpation provision in the Company’s certificate of incorporation; •
“For” the approval of miscellaneous amendments to the Company’s certificate of incorporation; •
“Against” the shareholder proposal set forth in this proxy statement, if properly presented at the 2024 Annual Meeting; and •
In accordance with the best judgment of the individuals named as proxies on the proxy card on any other matters properly brought before the meeting. What does it mean if I receive more than one proxy card or instruction form? It means that you have multiple accounts with our transfer agent and/or banks or brokers. Please vote all of your shares of our Common Stock. We recommend that you consolidate as many accounts as possible under the same name and address. For assistance consolidating accounts where you are the shareholder of record, you may contact our transfer agent, Computershare, at 1.800.522.6645. Will my shares be voted if I do not provide my proxy? If you are a registered shareholder and do not provide a proxy, in order to vote your shares, you must do so over the Internet or by telephone prior to the meeting or by virtually attending the 2024 Annual Meeting and voting online during the meeting. If a beneficial owner of shares does not provide the bank or broker holding such shares with specific voting instructions, under the rules of the NYSE, the shareholder’s bank or broker may generally vote on “routine” matters, but cannot vote on “non-routine” matters. “Broker non-votes” occur when a beneficial owner of shares held in street name fails to provide instructions to the broker, bank, or other holder of record as to how to vote on matters deemed non-routine. Proposal 1 (election of directors), Proposal 2 (say-on-pay advisory vote), Proposal 4 (adoption of an officer exculpation provision in the Company’s Certificate of Incorporation), Proposal 5 (adoption of miscellaneous amendments to the Company’s Certificate of Incorporation) and Proposal 6 (Shareholder Proposal) are non-routine matters. Proposal 3 (ratification of auditor) is a routine matter. If a shareholder’s bank or broker does not receive the shareholder’s instructions on how to vote the shareholder’s shares on a non-routine matter, the shareholder’s bank or broker will inform the Company it does not have the beneficial owner’s authority to vote on the non-routine matter. In these cases, the broker, bank, or other holder of record can register your shares as being present at the 2024 Annual Meeting for purposes of determining the presence of a quorum, but will not be able to vote on those matters for which specific authorization is required under the NYSE rules. We encourage beneficial shareholders to provide voting instructions to the bank, broker, or agent holding their shares by carefully following the instructions in the notice provided by the shareholder’s bank, broker, or agent. May shareholders ask questions at the meeting? Yes. If you wish to submit a question, you may do so in two ways. To ask a question in advance of the 2024 Annual Meeting, you may log into www.proxyvote.com and enter your 16-digit control number and use the Submit a Question for Management box. Alternatively, you will be able to submit questions live during the 2024 Annual Meeting of Shareholders through the Q&A box by accessing the meeting website at www.virtualshareholdermeeting.com/COR2024 if you have entered the meeting website as an authenticated shareholder using your 16-digit control number. After the formal business of the 2024 Annual Meeting has concluded and adjourned, the chair of the 2024 Annual Meeting will answer questions from shareholders during the designated question and answer (“Q&A”) period of the 2024 Annual Meeting agenda. In order to give as many shareholders as possible the opportunity to ask questions, we ask that questions are succinct and cover only one topic per question. Up to three minutes will be allocated to read and respond to each question that we are able to answer during the 2024 Annual Meeting. The Q&A session will continue until all relevant questions have been answered, subject to time constraints. Shareholders’ views, constructive comments, and criticisms are welcome, but the Company will not address questions that do not conform with the 2024 Annual Meeting Rules of Conduct, including but not limited to questions that are irrelevant to the business of the Company or to the business of the 2024 Annual Meeting, in furtherance of a shareholder’s personal or business interests, which are not matters of interest to shareholders generally, or out of order or not otherwise suitable for the conduct of the 2024 Annual Meeting. The Rules of Conduct may be found by accessing the meeting website at www.virtualshareholdermeeting.com/COR2024. If there are any matters of individual concern to a shareholder or questions that are not answered, they may be raised separately after the 2024 Annual Meeting by contacting Investor Relations at InvestorRelations@cencora.com.
| | Frequently asked questions about the 2024 annual meeting of shareholders and voting at the meeting | | | 97 | |
How many votes must be present to hold the meeting? In order for us to conduct our meeting, a majority of the shares of our Common Stock outstanding as of January 16, 2024 must be present in order to constitute a quorum. Your shares are counted as present at the meeting if you virtually attend the meeting or if you properly return a proxy over the Internet, by telephone or by mail. Shares voted by banks or brokers on behalf of beneficial owners are also counted as present at the meeting. In addition, abstentions and broker non-votes will be counted for purposes of establishing a quorum with respect to any matter properly brought before the meeting. How many votes are needed to elect a director (Item 1 on the proxy card) and how are votes counted? The affirmative vote of a majority of the votes cast will be required for the election of each director (Item 1 on the proxy card). A majority of the votes cast means that the votes cast “for” a director exceed the number of votes cast “against” that director. Abstentions and broker non-votes have no effect in determining if a majority of the votes have been cast in favor of a director. How many votes are needed for Items 2 through 6 to pass and how are the votes counted? The Company is incorporated in the State of Delaware and our shares are listed on the New York Stock Exchange (“NYSE”). As a result, the DGCL and NYSE listing standards govern the voting standards applicable to actions taken by our shareholders. Please see the below chart for a summary of the required votes, as well as the impacts of abstentions and broker non-votes, for Items 2 through 6 set forth on the proxy card: | Item | | | Board voting
recommendation | | | Voting approval
standard | | | Effect of
abstention(1) | | | Effect of Broker
non-vote(2) | | | | 2 | | | Advisory vote to approve the fiscal 2023 compensation of the Company’s named executive officers | | | | | | For | | | Majority of shares
present and entitled to
vote on the matter(3) | | | Counted
“against” | | | No effect | | | | 3 | | | Ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2021;2024 | | | | | | For | | |
•
ForMajority of shares
present and entitled to
vote on the approval, onmatter(3)
| | | Counted
“against” | | | Not applicable | | | | 4 | | | Adoption of an advisory basis,officer exculpation provision in the Company’s Certificate of Incorporation. | | | | | | For | | | Majority of the compensation shares
of our named executive officers as described in this proxy statement;the Company’s issued
and outstanding
Common Stock(4) | | | Counted
“against” | | | Counted
“against” | | | | 5 | | | Adoption of miscellaneous amendments to the Company’s Certificate of Incorporation | | | | | | For | | | Majority of the shares
of the Company’s issued
and outstanding
Common Stock(4) | | | Counted
“against” | | | Counted
“against” | | | | | | 6 | | | Shareholder proposal on voting standard for election of directors. | | | | | | Against | | | Majority of shares
present and entitled to
vote on the matter(3) | | | Counted
“against” | | | No effect | | |
(1)
Under the DGCL, shares that abstain with respect to Items 2, 3, 4, 5 and 6 constitute shares that are present and entitled to vote and, accordingly, have the practical effect of being voted “against” such items. (2)
Under NYSE rules, Item 3 is considered a “routine” proposal on which brokers are permitted to vote in their discretion even if the beneficial owners do not provide voting instructions. However, Items 2, 4, 5 and 6 are not considered to be routine matters and brokers will not be entitled to vote thereon unless beneficial owners provide voting instructions. Broker non-votes will not be counted toward the tabulation of votes on Items 2 and 6 and will be counted “against” Items 4 and 5. (3)
Under our bylaws, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter to approve Items 2, 3 and 6 set forth on the proxy card. (4)
Under the DGCL, the affirmative vote of the holders of a majority of the outstanding stock entitled to vote on the matter are required to approve Items 4 and 5.
66
2021 AmerisourceBergen Proxy | Other Information
•
Against| | 98 | | | Frequently asked questions about the stockholder proposal set forth in this proxy statement, if properly presented2024 annual meeting of shareholders and voting at the 2021meeting | |
How will proxies be voted on other items or matters that properly come before the meeting? If any other items or matters properly come before the meeting, the proxies received will be voted on those items or matters in accordance with the discretion of the proxy holders. Is Cencora aware of any other items of business that will be presented at the meeting? We are not aware of any other business to be presented at the 2024 Annual Meeting. However, if any other matter should properly come before the 2024 Annual Meeting, the accompanying proxy confers discretionary authority with respect to such matter. Will there be any further solicitation of proxies for the meeting? Our directors, officers and employees may solicit proxies by telephone, text message, email, facsimile or in person. In addition, we have hired Morrow Sodali (“Morrow”), 333 Ludlow St, 5th Floor, South Tower, Stamford, CT 06902 to assist us in soliciting proxies, if necessary. Morrow may solicit proxies by telephone, text message, email, facsimile or in person. We will pay Morrow a fee of approximately $12,000, plus expenses, for providing such services. We reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to their customers or principals who are the beneficial owners of shares of our Common Stock. All costs and expenses of any solicitation, including the cost of preparing this proxy statement and posting it on the Internet and mailing the Notice of Internet Availability of Proxy Materials, will be borne by Cencora. Will the director nominees be in attendance at the meeting? We currently expect all of our director nominees to virtually attend the 2024 Annual Meeting and all directors are expected to attend our annual meetings pursuant to our governance principles. All of our directors attended the 2023 Annual Meeting of Shareholders.
Other information Availability of the annual report on form 10-K | | Copies of our Annual Meeting;Report on Form 10-K for the fiscal year ended September 30, 2023 (without exhibits or documents incorporated by reference therein) are available without charge to shareholders by contacting us at: | | | | | | Cencora, Inc.
Attention: Investor Relations Department
1 West First Avenue
Conshohocken, Pennsylvania 19428 | | | | | | | 610.727.7000 | | | | | | | investor.cencora.com | |
Requirements for submission of proxy proposals, nomination of directors and other business
of shareholders Shareholder proposals for inclusion in the 2025 proxy statement Any shareholder proposal that is intended to be presented by such shareholder at Cencora’s 2025 Annual Meeting of Shareholders must be received in writing by October 1, 2024 in order to be considered for inclusion in the 2025 proxy statement and the form of proxy relating to the 2025 Annual Meeting of Shareholders. All proposals should be submitted, along with proof of ownership of Cencora, Inc. Common Stock in accordance with SEC Rule 14a-8(e)(2), to: Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. Shareholder proposals must comply with SEC Rule 14a-8, Delaware law and our bylaws. Failure to deliver a proposal by these means may result in it not being deemed timely received. Other shareholder proposals for presentation at the 2025 annual meeting of shareholders Shareholders of record who do not submit a proposal for inclusion in Cencora’s proxy materials under SEC Rule 14a-8, but who instead intend to nominate a person for election as director or to introduce an item of business at the 2025 Annual Meeting of Shareholders must provide advance written notice to us in accordance with our bylaws. Our bylaws set forth the procedures that must be followed and the information that must be provided in order for a shareholder to nominate a person for election as director or to introduce an item of business at the 2025 Annual Meeting of Shareholders. We must receive notice of your intention to introduce a nomination or other item of business at the 2025 Annual Meeting of Shareholders no earlier than November 12, 2024 and no later than December 12, 2024. Such notice should be addressed to Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428, and must include the information set forth in our bylaws. You may obtain a copy of our bylaws upon request by writing to the Secretary at our principal executive offices. The proxy solicited by our Board for the 2025 Annual Meeting of Shareholders will confer discretionary authority with respect to any such proposal. The chair of the 2025 Annual Meeting of Shareholders may refuse to allow the transaction of any business or acknowledge the nomination of any person not made in compliance with the procedures set forth for such matters in our bylaws. Proxy access shareholder proposals for the 2025 annual meeting of shareholders Eligible shareholders who do not seek to use the advance notice provisions for nomination of directors in Section 2.03(c) of our bylaws, but who instead intend to nominate a person for election as director under the proxy access provision in our bylaws must comply with the provisions of and provide notice to us in accordance with Section 3.16 of our bylaws. That Section sets forth the shareholder eligibility requirements and other procedures that must be followed and the information
| •
In accordance with the best judgment of the individuals named as proxies on the proxy card on any other matters properly brought before the meeting.
| 100 | What does it mean if I receive more than one proxy card or instruction form?
It means that you have multiple accounts with our transfer agent and/or banks or brokers. Please vote all of your shares. We recommend that you consolidate as many accounts as possible under the same name and address. For assistance consolidating accounts where you are the stockholder of record, you may contact our transfer agent, Computershare, at 1-800-522-6645.
Will my shares be voted if I do not provide my proxy?
If you are a registered stockholder and do not provide a proxy, in order to vote your shares, you must do so over the Internet
| | Other information | |
that must be provided to us in order for an eligible shareholder to have included in our proxy materials for the 2025 Annual Meeting of Shareholders up to two nominees for election as director at the Annual Meeting of Shareholders. We must receive the required notice and information specified in Section 3.16 no earlier than September 1, 2024 and no later than October 1, 2024. Such notice should be addressed to: Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. You may obtain a copy of our bylaws upon request by writing to the Secretary at our principal executive offices. The proxy solicited by our Board of Directors for the 2025 Annual Meeting of Shareholders will confer discretionary authority with respect to any such nomination. In addition to satisfying the above requirements, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s director nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than January 11, 2025 to the Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. Other shareholder communications with the Board Interested parties may communicate with the Board by submitting at any time in writing to: Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. These communications may be from an interested party to the Board, any committee or any director on matters that relate reasonably to their respective duties and responsibilities. Such communications do not include shareholder proposals (discussed above) and shareholder recommendations for director nominee candidates (discussed under “Board and Governance Matters — Shareholder recommendations for director nominees”). Cencora’s Secretary will determine, in his good faith judgment, which communications will be relayed to the Board, any committee or any director. Householding As permitted by telephone prior to the meeting. If you hold shares through an account with a bank or broker, your shares may be voted even if you do not provide voting instructions to your bank or broker. Banks and brokers have the authority under the rules of the SEC, we have adopted the procedure of “householding” whereby we deliver a single set of proxy materials to one address shared by two or more of our shareholders. This procedure can result in significant cost savings. We have delivered only one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We will promptly deliver, upon written or oral request, a separate copy of the proxy materials to any shareholder at the shared address to which a single copy of these documents was delivered.
| | To make such a request, please
contact Broadridge Financial
Solutions, Inc. at: | | | | | | | Broadridge Financial Solutions, Inc.
Attention: Householding Department
51 Mercedes Way
Edgewood, New York Stock Exchange, or NYSE, to vote shares for which their customers do not provide voting instructions on certain routine matters. The ratification of the appointment of our independent registered public accounting firm (Item 2 on the Proxy Card) is considered a routine matter for which banks and brokers may vote without specific instructions from their customers.11717 | | | | | | | 1.866.540.7095 | |
If you are a shareholder currently sharing an address with another of our shareholders and wish to have your future proxy materials householded, or your materials are currently householded and you would prefer to receive separate materials in the future, please make a request to change your householding status, as indicated above.
May stockholders ask questions at the meeting?Appendix A Supplemental information: GAAP to non-GAAP reconciliation To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we have presented the following non-GAAP financial measures elsewhere in this proxy statement: (i)
adjusted operating income; (ii)
adjusted diluted earnings per share; and (iii)
adjusted free cash flow. The non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies. The following is a reconciliation of the identified GAAP financial measures to their most directly comparable non-GAAP financial measures: | | | | | Fiscal year ended September 30, 2023 | | | | (in thousands, except per share data) | | | Operating income
($) | | | Diluted earnings per share
($) | | | | GAAP | | | | | 2,340,731 | | | | | | 8.53 | | | | | Gains from antitrust litigation settlements | | | | | (239,092) | | | | | | (0.90) | | | | | LIFO expense | | | | | 204,595 | | | | | | 0.77 | | | | | Turkey highly inflationary impact | | | | | 86,967 | | | | | | 0.47 | | | | | Acquisition-related intangibles amortization | | | | | 551,046 | | | | | | 2.04 | | | | | Litigation and opioid-related credit, net(1) | | | | | (24,693) | | | | | | (0.19) | | | | | Acquisition-related deal and integration expenses | | | | | 139,683 | | | | | | 0.52 | | | | | Restructuring and other expenses | | | | | 229,884 | | | | | | 0.86 | | | | | Gain on divestiture of non-core businesses | | | | | — | | | | | | (0.20) | | | | | Other, net | | | | | — | | | | | | (0.03) | | | | | Tax reform(2) | | | | | — | | | | | | 0.11 | | | | | Adjusted non-GAAP | | | | | 3,289,121 | | | | | | 11.99(3) | | |
(1)
Includes the receipt of $83.4 million from the H.D. Smith opioid litigation indemnity escrow. (2)
Tax expense relating to 2020 Swiss tax reform and a gain on the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Income, Net in our Consolidated Statement of Operations. (3)
The sum of the components does not equal the total due to rounding. In addition, for the fiscal year ended September 30, 2023, adjusted free cash flow of $3,130.5 million consisted of net cash provided by operating activities of $3,911.3 million, minus capital expenditures of $458.4 million, the gains from antitrust litigation settlements of $239.1 million and the receipt of $83.4 million from the H.D. Smith opioid indemnity escrow. The non-GAAP financial measures are presented because management uses non-GAAP financial measures to: •
evaluate the Company’s operating performance, •
perform financial planning, and •
determine incentive compensation.
Yes. Representatives of AmerisourceBergen will answer stockholders’ questions of general interest at the end of the meeting and questions may also be submitted in advance. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your Control Number. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/ABC2021.Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. Any adjustments to arrive at our non-GAAP financial results, including for litigation costs, are made based on pre-determined criteria and principles. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are outside the control of the Company or are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. Adjustments are reviewed by the Audit Committee of the Board of Directors prior to disclosure in a quarterly earnings release. We have included the following non-GAAP earnings-related financial measures in this proxy statement: Adjusted operating income Adjusted operating income is a non-GAAP financial measure that excludes: •
gains from antitrust litigation settlements; •
LIFO expense; •
Turkey highly inflationary impact; •
acquisition-related intangibles amortization; •
litigation and opioid-related credit, net; •
acquisition-related deal and integration expenses; and •
restructuring and other expenses. Acquisition-related intangibles amortization is excluded because it is a non-cash item and does not reflect the operating performance of the acquired companies. We exclude acquisition-related deal and integration expenses and restructuring and other expenses that are unpredictable and/or non-recurring. We exclude the amount of litigation and opioid-related expenses (credit) and other expenses, such as LIFO expense, that are unusual, non-operating, unpredictable, non-recurring or non-cash in nature because we believe these exclusions facilitate the analysis of our ongoing operational performance. Adjusted diluted earnings per share Adjusted diluted earnings per share excludes (in each case net of the tax effect calculated using the applicable effective tax rate for those items): •
the per share impact of adjustments, including gains from antitrust litigation settlements; •
LIFO expense; •
Turkey highly inflationary impact; •
acquisition-related intangibles amortization; •
litigation and opioid-related credit, net; •
acquisition-related deal and integration expenses; •
restructuring and other expenses; •
gain on divestiture of non-core businesses; •
other, net; and •
tax reform. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the per share impact of the items that are outside the control of the Company or that we consider to not be indicative of our ongoing operating performance due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. Adjusted free cash flow Adjusted free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities, excluding significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures. Adjusted free cash flow is used internally by management for measuring operating cash flow generation and setting performance targets and has historically been used as one of the means of providing guidance on possible future cash flows.
How many votes must be present to hold the meeting?
In order for us to conduct our meeting, a majority of the shares of our Common Stock outstanding as of January 11, 2021 must be present in order to constitute a quorum. Your shares are counted as present at the meeting if you attend the meeting or if you properly return a proxy over the Internet, by telephone or by mail. Shares voted by banks or brokers on behalf of beneficial owners are also counted as present at the meeting. In addition, abstentions and broker non-votes will be counted for purposes of establishing a quorum with respect to any matter properly brought before the meeting. Broker non-votes occur on a matter when a bank or broker is not permitted under applicable rules and regulations to vote on a matter without instruction from the beneficial owner of the underlying shares and no instruction has been given.
How many votes are needed to elect a director and how are votes counted?
The affirmative vote of a majority of the votes cast will be required for the election of each director (Item 1 on the Proxy Card).
A majority of the votes cast means that the votes cast “for” a director exceed the number of votes cast “against” that director. Abstentions and broker non-votes are disregarded when determining if a majority of the votes have been cast in favor of a director.
How many votes are needed for each proposal to pass and how are the votes counted?
The affirmative vote of a majority of the shares present in person or by proxy and entitled to vote will be required for:
•
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year (Item 2 on the Proxy Card);
•
The approval, on an advisory basis, of the compensation of our named executive officers as described in this proxy statement (Item 3 on the Proxy Card);
67
EXHIBIT A CENCORA, INC.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION Cencora, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1.
The name of the corporation is Cencora, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was March 16, 2001 and the name under which the corporation was originally incorporated is AABB Corporation. 2.
Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”), the Amended and Restated Certificate of Incorporation of the corporation attached hereto as Exhibit A (the “Certificate”), which is incorporated herein by this reference, and which restates, integrates and further amends provisions of the Certificate of Incorporation of the corporation as heretofore amended and/or restated, has been duly proposed to and approved by the corporation’s Board of Directors and duly adopted in accordance with the DGCL. 3.
This Certificate shall become effective at 12:01 a.m. Eastern Daylight Time on [ ], 2024. 4.
The text of the Amended and Restated Certificate of Incorporation of Cencora Inc., together with all subsequent amendments, is hereby amended and restated in its entirety to read as set forth in Exhibit A hereto. IN WITNESS WHEREOF, the corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its duly authorized officer and the foregoing facts stated herein are true and correct. | | Date: | | | CENCORA, INC. | | | | | | | Other Information | 2021 AmerisourceBergen Proxy
By:
•
The approval of the stockholder proposal set forth in this proxy statement, if properly presented at the 2021 Annual Meeting (Item 4 on the Proxy Card); and
| | | | | | | Name:
Any other proposal that might properly come before the meeting.
| | | | | | | Abstentions will be counted toward the tabulation of votes on Items 2 through 4, and will have the effect of negative votes. Under NYSE rules, Item 2 is considered a routine matter on which brokers will be permitted to vote in their discretion even if the beneficial owners do not provide voting instructions. However, Items 3 and 4 are not considered routine matters under NYSE rules, and brokers will not be permitted to vote on Items 3 and 4 unless the beneficial owners provide voting instructions. Broker non-votes will not be counted toward the tabulation of votes on Items 3 and 4.Title:
How will proxies be voted on other items or matters that properly come before the meeting?
If any other items or matters properly come before the meeting, the proxies received will be voted on those items or matters in accordance with the discretion of the proxy holders.
| |
Is AmerisourceBergen aware of any other item of business that will be presented at the meeting?
We are not aware of any other business to be presented at the 2021 Annual Meeting of Stockholders. However, if any other matter should properly come before the 2021 Annual Meeting of Stockholders, the enclosed proxy confers discretionary authority with respect to such matter.
Will there be any further solicitation of proxies for the meeting?
Our directors, officers and employees may solicit proxies by telephone or in person. In addition, we have hired Morrow & Co., LLC, 470 West Ave, Stamford, CT 06902 to assist us in soliciting proxies, if necessary. Morrow may solicit proxies by telephone or in person. We will pay Morrow a fee of $12,000, plus expenses, for providing such services. All costs and expenses of any solicitation, including the cost of preparing this proxy statement and posting it on the Internet and mailing the Notice of Internet Availability of Proxy Materials, will be borne by AmerisourceBergen.
Will AmerisourceBergen reimburse any expenses of banks, brokers, nominees and fiduciaries?
Yes, we will reimburse the expenses of banks, brokers, nominees and fiduciaries that send notices, proxies and proxy materials to our stockholders for such service.
Will the director nominees be in attendance at the meeting?
We currently expect all of our director nominees to be in attendance at the 2021 Annual Meeting of Stockholders. It has been customary for our directors to attend our annual meetings. All of our directors attended the 2020 Annual Meeting of Stockholders.
Requirements for Submission of Proxy Proposals, Nomination of Directors and Other Business of Stockholders
Stockholder Proposals for Inclusion in the 2022 Proxy Statement. Any stockholder proposal that is intended to be presented by such stockholder at AmerisourceBergen’s 2022 Annual Meeting of Stockholders must be received in writing by September 30, 2021 in order to be considered for inclusion in the 2022 proxy statement and the form of proxy relating to the 2022 meeting. All proposals should be submitted, along with proof of ownership of AmerisourceBergen Common Stock in accordance with SEC Rule 14a-8(e)(2), to: Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 W. First Avenue, Conshohocken, PA 19428. Stockholder proposals must comply with SEC Rule 14a-8, Delaware law and our bylaws. Failure to deliver a proposal by these means may result in it not being deemed timely received.
Other Stockholder Proposals for Presentation at the 2022 Annual Meeting of Stockholders. Stockholders of record who do not submit a proposal for inclusion in AmerisourceBergen’s proxy materials under SEC Rule 14a-8, but who instead intend to nominate a person for election as director or to introduce an item of business at the 2022 Annual Meeting of Stockholders must provide advance written notice to us in accordance with our bylaws. Our bylaws set forth the procedures that must be followed and the information that must be provided in order for a stockholder to nominate a person for election as director or to introduce an item of business at
68
2021 AmerisourceBergen Proxy | Other InformationEXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF CENCORA, INC. (SEE ATTACHED)
the 2022 Annual Meeting of Stockholders. We must receive notice of your intention to introduce a nomination or other item of business at the 2022 Annual Meeting of Stockholders no earlier than November 10, 2021 and no later than December 10, 2021. Such notice should be addressed to Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 W. First Avenue, Conshohocken, PA 19428, and must include the information set forth in our bylaws. You may obtain a copy of our bylaws upon request by writing to the Secretary at our principal executive offices. The proxy solicited by our Board of Directors for the 2022 Annual Meeting of Stockholders will confer discretionary authority with respect to any such proposal.CENCORA, INC.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION ARTICLE I NAME The name of the corporation is Cencora, Inc. (hereinafter referred to as the “Corporation”). ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The registered office of the Corporation in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801, and the registered agent in charge thereof shall be The Corporation Trust Company. ARTICLE III CORPORATE PURPOSE Section 3.01 Purpose. The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the DGCL, as amended from time to time, and to possess and exercise all of the powers and privileges granted by such law and other law of Delaware. Section 3.02 Term. The Corporation is to have perpetual existence. ARTICLE IV CAPITALIZATION Section 4.01 Authorized Capital. The aggregate number of shares of stock which the Corporation shall have authority to issue is 610,000,000 shares, divided into two (2) classes consisting of 600,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”) and 10,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”). Section 4.02 Common Stock. The Common Stock shall be subject to the express terms of any series of Preferred Stock. (a) Voting. Except as may be provided in this Certificate or in a Preferred Stock Certificate of Designation (as defined below), if any, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes as provided by law, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. The election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. (b) Dividends. Subject to any other provisions of this Certificate, and to the rights of holders of Preferred Stock, if any, holders of Common Stock shall be entitled to receive ratably on a per share basis such dividends and other distributions in cash, stock or property of the Corporation as may be declared by the Board of Directors (the “Board”) of the Corporation from time to time out of the assets or funds of the Corporation legally available therefor. (c) Distribution of Assets. Subject to the express terms of any series of Preferred Stock, in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders. Section 4.03 Preferred Stock. (a) The Board is authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the applicable provisions of the DGCL (a “Preferred Stock Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, with such designations, preferences, and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board (as such resolutions may be amended by a resolution or resolutions subsequently adopted by the Board), and as are not stated and expressed in this Certificate including, but not limited to, determination of any of the following: (i) the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of
The Chairman of the 2022 Annual Meeting of Stockholders may refuse to allow the transaction of any business or acknowledge the nomination of any person not made in compliance with the procedures set forth for such matters in our bylaws.shares then outstanding and except where otherwise provided in the applicable Preferred Stock Certificate of Designation) from time to time by action of the Board; (ii) the dividend rate and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative, and if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of stock; (iii) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation; (iv) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof; (v) whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (vi) the rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; (vii) whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class of stock in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class of stock, restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class of stock ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction; (viii) whether the series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may provide, among other things and subject to the other provisions of this Certificate, that each share of such series shall carry one vote or more or less than one vote per share, that the holders of such series shall be entitled to vote on certain matters as a separate class (which for such purpose may be comprised of such series or of such series and one or more other series or classes of stock of the Corporation) and that all the shares of such series entitled to vote on a particular matter shall be deemed to be voted on such matter in the manner that a specified portion of the voting power of the shares of such series or separate class are voted on such matter; and (ix) any other preferences, qualifications, privileges, options and other relative or special rights and limitations of that series. (b) Voting Rights. Except as otherwise required by law, as otherwise provided herein or as otherwise determined by the Board in the applicable Preferred Stock Certificate of Designation as to the shares of any series of Preferred Stock prior to the issuance of any such shares, the holders of Preferred Stock shall have no voting rights and shall not be entitled to any notice of meeting of stockholders. (c) Dividends. Holders of Preferred Stock shall be entitled to receive, when and as declared by the Board, out of funds legally available for the payment thereof, dividends at the rates fixed by the Board for the respective series, and no more, before any dividends shall be declared and paid, or set apart for payment, on Common Stock with respect to the same dividend period. (d) Preference on Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of each series of Preferred Stock will be entitled to receive the amount fixed for such series plus, in the case of any series on which dividends will have been determined by the Board to be cumulative, an amount equal to all dividends accumulated and unpaid thereon to the date of final distribution whether or not earned or declared before any distribution shall be paid, or set aside for payment, to holders of Common Stock. If the assets of the Corporation are not sufficient to pay such amounts in full, holders of all shares of Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed in the resolution or resolutions providing for the issue of the series of Preferred Stock. Neither the merger nor consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph except to the extent specifically provided for herein or in the applicable Preferred Stock Certificate of Designation.
Proxy Access Stockholder Proposals for the 2022 Annual Meeting of Stockholders. Eligible stockholders who do not seek to use the advance notice provisions for nomination of directors in Section 2.03(c) of our bylaws, but who instead intend to nominate a person for election as director under the proxy access provision in our bylaws must comply with the provisions of and provide notice to us in accordance with Section 3.16 of our bylaws. That Section sets forth the stockholder eligibility requirements and other procedures that must be followed and the information that must be provided to us in order for an eligible stockholder to have included in our proxy materials for the 2022 Annual Meeting of Stockholders up to two nominees for election as director at the Annual Meeting of Stockholders. We must receive the required notice and information specified in Section 3.16 no earlier than August 31, 2021 and no later than September 30, 2021. Such notice should be addressed to Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 W. First Avenue, Conshohocken, PA 19428. You may obtain a copy of our bylaws upon request by writing to the Secretary at our principal executive offices. The proxy solicited by our Board of Directors for the 2022 Annual Meeting of Stockholders will confer discretionary authority with respect to any such nomination.(e) Redemption. The Corporation, at the option of the Board, may redeem all or part of the shares of any series of Preferred Stock on the terms and conditions fixed in the applicable Preferred Stock Certificate of Designation for such series. (f) Certificate of Designations. For all purposes, this Certificate shall include each certificate of designations, if any, setting forth the terms of a series of Preferred Stock. (g) Authorized Shares. Subject to the rights, if any, of the holders of any series of Preferred Stock set forth in a certificate of designations, an amendment of this Certificate to increase or decrease the number of authorized shares of any series of Preferred Stock (but not below the number of shares thereof then outstanding) may be adopted by resolution adopted by the Board of the Corporation and approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Common Stock of the Corporation, and all other outstanding shares of stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL or any similar provisions hereafter enacted, with such outstanding shares of Common Stock and other stock considered for this purpose as a single class, and no vote of the holders of any series of Preferred Stock, voting as a separate class, shall be required therefore. ARTICLE V BOARD OF DIRECTORS Section 5.01 Election of Directors. Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. Except as may be provided in this Certificate or in a Preferred Stock Certificate of Designation, if any, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. Section 5.02 Number of Directors. The number of directors on the Board shall be fixed from time to time by a bylaw or amendment thereof duly adopted by the Board or the stockholders. Section 5.03 Annual Election of Directors. The directors of the Corporation shall be elected annually for terms expiring at the next annual meeting of stockholders. Each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Section 5.04 Nominations. Subject to the rights of holders of any series of Preferred Stock or any other class of stock of the Corporation (other than the Common Stock) then outstanding, nominations for the election of directors may be made by the affirmative vote of a majority of the entire Board or by any stockholder of record entitled to vote generally in the election of directors subject to ARTICLE VI, Section 6.04. Section 5.05 Removal. Any director may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors. In the event of any increase or decrease in the authorized number of directors, each director then serving as such shall nevertheless continue as a director until the expiration of his or her current term, or his or her earlier death, resignation or removal. Section 5.06 Vacancies. Subject to the rights of the holders of any series of Preferred Stock or any other class of stock of the Corporation (other than the Common Stock) then outstanding, any vacancies in the Board for any reason, including by reason of death, resignation, removal, newly-created directorships resulting from an increase in the number of Directors, or the failure of the stockholders to elect the whole authorized number of directors, shall be filled only by the Board, acting by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum, and any directors so elected shall hold office until the next election of directors and until their successors are duly elected and qualified. Section 5.07 Directors’ Meetings, Consents and Elections. Meetings of the Board and of any committee thereof may be held at any place, within or without the State of Delaware, or by remote communications, if the Bylaws so provide. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting as provided by statute, if the Bylaws of the Corporation so provide. The elections of directors need not be by written ballot unless the Bylaws of the Corporation so provide. ARTICLE VI STOCKHOLDERS Section 6.01 Cumulative Voting. No stockholder of the Corporation shall be entitled to exercise any right of cumulative voting.
Other Stockholder Communications. Stockholder communications may be submitted at any time in writing to: Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, PA 19087. Stockholder communications are communications from any stockholder to the Board of Directors, any committee or any director on matters that relate reasonably to their respective duties and responsibilities. Stockholder communications do not include stockholder proposals (discussed above) and stockholder recommendations for director nominee candidates (discussed under “Corporate Governance and Related Matters—Stockholder Engagement—Stockholder Recommendations for Director Nominees”). AmerisourceBergen’s Secretary will determine, in his good faith judgment, which stockholder communications will be relayed to the Board of Directors, any committee or any director.Section 6.02 No Preemptive Rights. Except for rights issued pursuant to ARTICLE VIII hereof, no stockholder of the Corporation shall have any preemptive or preferential right, nor be entitled to such as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of the Corporation of any class or series, whether issued for money or for consideration other than money, or of any issue of securities convertible into stock of the Corporation. Section 6.03 Stockholder Action. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is specifically denied. Special meetings of the stockholders of the Corporation may be called only by (a) the Board pursuant to a resolution duly adopted by a majority of the members of the Board or (b) the stockholders of the Corporation holding at least 25% of the outstanding shares of Common Stock, subject to the procedures and other requirements set forth in the Bylaws. Section 6.04 Notice. Advance notice of new business and stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation. ARTICLE VII LIMITATION OF DIRECTORS’ AND OFFICERS’ LIABILITY; INDEMNIFICATION BY THE CORPORATION Section 7.01 Limitation on Liability. The liability of the directors and officers of the Corporation to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable, shall be eliminated or limited to the fullest extent permitted under applicable law. If applicable law is amended after approval by the stockholders of this ARTICLE VII to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation to the Corporation or its stockholders shall be eliminated or limited to the fullest extent permitted by applicable law as so amended. Section 7.02 Indemnification. The Corporation shall indemnify any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, trust or other enterprise, with respect to actions taken or omitted by such person in any capacity in which such person serves the Corporation or such other corporation, trust or other enterprise, to the full extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director, officer or trustee, as the case may be, and shall inure to the benefit of such person’s heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any person in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized in advance, or unanimously consented to, by the Board of the Corporation. Any person who is or was a director, officer, trustee, employee or agent of a subsidiary of the Corporation shall be deemed to be serving in such capacity at the request of the Corporation for purposes of this ARTICLE VII, Section 7.02. Any repeal or modification of this ARTICLE VII, Section 7.02, shall not adversely affect any rights to indemnification that any person may have at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. Section 7.03 Expenses. Directors and officers of the Corporation shall have the right to be paid by the Corporation expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The Corporation may, to the extent authorized from time to time by the Board, advance such expenses to any person who is or was serving at the request of the Corporation as a director, officer or trustee of another corporation, trust or other enterprise. Section 7.04 Miscellaneous. (a) The authorization of the Corporation to confer rights to indemnification and to the advancement of expenses provided by this ARTICLE VII shall not preclude the Corporation from conferring any other right that any person may have or hereafter acquire under this Certificate, the Bylaws, any statute, agreement, vote of stockholders or disinterested directors, or otherwise. (b) Any repeal or modification of this ARTICLE VII shall be prospective and shall not affect the rights or protections or increase the liability of any director, officer or agent of the Corporation (or any other persons to which applicable law permits the Corporation to provide indemnification) under this ARTICLE VII in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification. (c) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of such person’s status as such, whether or not the
Corporation shall have the power to indemnify such person against such liability under the provisions of this ARTICLE VII. Any person who is or was a director, officer, employee or agent of the Corporation or a subsidiary of the Corporation shall be deemed to be serving in such capacity at the request of the Corporation for purposes of this ARTICLE VII, Section 7.02. ARTICLE VIII STOCKHOLDER RIGHTS Section 8.01 Stockholder Rights. The Board is hereby authorized to create and issue, whether or not in connection with the issuance and sale of any of its stock or other securities or property, rights entitling the holders thereof to purchase from the Corporation shares of stock or other securities of the Corporation or any other corporation. The times at which and the terms upon which such rights are to be issued shall be determined by the Board and set forth in the contracts or instruments that evidence such rights. The authority of the Board with respect to such rights shall include, but not be limited to, determination of the following: (a) the initial purchase price per share or other unit of the stock or other securities or property to be purchased upon exercise of such rights; (b) provisions relating to the times at which and the circumstances under which such rights may be exercised or sold or otherwise transferred, either together with or separately from, any other stock or securities of the Corporation; (c) provisions which adjust the number or exercise price of such rights, or amount or nature of the stock or other securities or property receivable upon exercise of such rights, in the event of a combination, split or recapitalization of any stock of the Corporation, a change in ownership of the Corporation’s stock or other securities or a reorganization, merger, consolidation, sale of assets or other occurrence relating to the Corporation or any stock of the Corporation, and provisions restricting the ability of the Corporation to enter into any such transaction absent an assumption by the other party or parties thereof of the obligations of the Corporation under such rights; (d) provisions which deny the holder of a specified percentage of the outstanding stock or other securities of the Corporation the right to exercise such rights and/or cause the rights held by such holder to become void; (e)
provisions which permit the Corporation to redeem such rights; and (f)
the appointment of a rights agent with respect to such rights. ARTICLE IX BUSINESS COMBINATIONS Section 9.01 Section 203 of the DGCL. In accordance with Section 203(b) of the DGCL, the Corporation shall be governed by the provisions contained in Section 203(a) of the DGCL regarding restrictions on business combinations with interested stockholders. ARTICLE X TRANSACTION WITH DIRECTORS AND OFFICERS Section 10.01 Transaction With Directors and Officers. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (a) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum, or (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders, or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction. ARTICLE XI AMENDMENTS Section 11.01 Bylaws. In furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation without the assent or vote of the stockholders
of the Corporation. The stockholders may, at any annual or special meeting of the stockholders of the Corporation, duly called and upon proper notice thereof, make, alter, amend or repeal the Bylaws by the affirmative vote of a majority of the votes cast for and against the adoption, alteration, amendment or repeal by the holders of shares of stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the adoption, alteration, amendment or repeal. Section 11.02 Certificate. The Corporation reserves the right to amend, alter, change or repeal the provisions in this Certificate and in any certificate amendatory hereof in the manner now or hereafter prescribed by law, and all rights conferred on in this Certificate on stockholders, directors and officers are subject to this reserved power.
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Appendix A | 2021 AmerisourceBergen Proxy
Supplemental Information: GAAP to Non-GAAP Reconciliation
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), we have presented the following non-GAAP financial measures elsewhere in this proxy statement: (i) adjusted gross profit; (ii) adjusted operating income and adjusted operating income margin; (iii) adjusted diluted earnings per share; and (iv) adjusted free cash flow. The non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies.
The following is a reconciliation of the identified GAAP financial measures to their most directly comparable non-GAAP financial measures:
| | | | | | Fiscal Year Ended September 30, 2020 | | | | (In thousands, except per share data) | | | | Gross
Profit | | | | Operating
(Loss) Income | | | | Diluted
Earnings
Per Share | | | | GAAP | | | | | $ | 5,191,884 | | | | | | $ | (5,135,354) | | | | | | $ | (16.65) | | | | | Gain from antitrust litigation settlements | | | | | | (9,076) | | | | | | | (9,076) | | | | | | | (0.03) | | | | | LIFO expense | | | | | | 7,422 | | | | | | | 7,422 | | | | | | | 0.03 | | | | | PharMEDium shutdown and remediation costs | | | | | | 12,556 | | | | | | | 59,371 | | | | | | | 0.22 | | | | | New York State Opioid Stewardship Act | | | | | | 14,800 | | | | | | | 14,800 | | | | | | | 0.06 | | | | | Acquisition-related intangibles amortization | | | | | | — | | | | | | | 110,478 | | | | | | | 0.41 | | | | | Employee severance, litigation and other(1) | | | | | | — | | | | | | | 6,807,307 | | | | | | | 27.66 | | | | | Impairment of PharMEDium assets | | | | | | — | | | | | | | 361,652 | | | | | | | 1.37 | | | | | Contingent consideration adjustment | | | | | | — | | | | | | | (12,153) | | | | | | | (0.02) | | | | | Loss on early retirement of debt | | | | | | — | | | | | | | — | | | | | | | 0.08 | | | | | Certain discrete tax benefits(2) | | | | | | — | | | | | | | — | | | | | | | (3.49) | | | | | Tax reform(3) | | | | | | — | | | | | | | — | | | | | | | (1.75) | | | | | Adjusted Non-GAAP | | | | | $ | 5,217,586 | | | | | | $ | 2,204,447 | | | | | | $ | 7.90(4) | | |
| (1)
Includes a $6.6 billion legal expense accrual in connection with opioid lawsuits.
| (2)
Represents discrete tax benefits primarily attributable to the income tax deductions resulting from the permanent shutdown of the PharMEDium business.
| (3)
Represents a tax benefit relating to Swiss tax reform.
| (4)
The sum of the components does not equal the total due to rounding.
The following is a reconciliation of GAAP basic shares outstanding to Non-GAAP diluted shares outstanding:
| | | | | FY 2020 | B-1 | | | Basic shares outstanding | | | | | | 204,783 | | | | Stock option and restricted stock unit dilution | | | | | | — | | | | GAAP diluted shares outstanding | | | | | | 204,783 | | | | Stock option and restricted stock unit dilution(1)
| | | | | | 1,839 | | | | Non-GAAP diluted shares outstanding | | | | | | 206,622 | | |
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Exhibit B CENCORA, INC.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION ARTICLE I NAME The name of the corporation is Cencora, Inc. (hereinafter referred to as the “Corporation”). ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The registered office of the Corporation in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801, and the registered agent in charge thereof shall be The Corporation Trust Company. ARTICLE III CORPORATE PURPOSE Section 3.01 Purpose. The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the DGCL, as amended from time to time, and to possess and exercise all of the powers and privileges granted by such law and other law of Delaware. Section 3.02 Term. The Corporation is to have perpetual existence. ARTICLE IV CAPITALIZATION Section 4.01 Authorized Capital. The aggregate number of shares of stock which the Corporation shall have authority to issue is 610,000,000 shares, divided into two (2) classes consisting of 600,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”) and 10,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”). Section 4.02 Common Stock. The Common Stock shall be subject to the express terms of any series of Preferred Stock. (a) Voting. Except as may be provided in this Certificate or in a Preferred Stock Certificate of Designation (as defined below), if any, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes as provided by law, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. The election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. (b) Dividends. Subject to any other provisions of this Certificate, and to the rights of holders of Preferred Stock, if any, holders of Common Stock shall be entitled to receive ratably on a per share basis such dividends and other distributions in cash, stock or property of the Corporation as may be declared by the Board of Directors (the “Board”) of the Corporation from time to time out of the assets or funds of the Corporation legally available therefor. (c) Distribution of Assets. Subject to the express terms of any series of Preferred Stock, in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders. Section 4.03 Preferred Stock. (a) The Board is authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the applicable provisions of the DGCL (a “Preferred Stock Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, with such designations, preferences, and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board (as such resolutions may be amended by a resolution or resolutions subsequently adopted by the Board), and as are not stated and expressed in this Certificate including, but not limited to, determination of any of the following:
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For the non-GAAP presentation, diluted weighted average common shares outstanding has been adjusted to include the impact of the stock options and restricted stock units that were anti-dilutive for GAAP presentation.
In addition, for the fiscal year ended September 30, 2020 adjusted free cash flow of $1,894.9 million consisted of net cash provided by operating activities of $2,207.0 million, plus $66.7 million in cash payments made relating to unfavorable legal settlements, minus $9.1 million in cash payments received related to favorable legal settlements, and minus capital expenditures of $369.7 million.
The non-GAAP financial measures are presented because management uses non-GAAP financial measures to evaluate the Company’s operating performance, to perform financial planning, and to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides
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2021 AmerisourceBergen Proxy | Appendix A(i) the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding and except where otherwise provided in the applicable Preferred Stock Certificate of Designation) from time to time by action of the Board; (ii) the dividend rate and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative, and if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of stock; (iii) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation; (iv) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof; (v) whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (vi) the rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; (vii) whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class of stock in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class of stock, restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class of stock ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction; (viii) whether the series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may provide, among other things and subject to the other provisions of this Certificate, that each share of such series shall carry one vote or more or less than one vote per share, that the holders of such series shall be entitled to vote on certain matters as a separate class (which for such purpose may be comprised of such series or of such series and one or more other series or classes of stock of the Corporation) and that all the shares of such series entitled to vote on a particular matter shall be deemed to be voted on such matter in the manner that a specified portion of the voting power of the shares of such series or separate class are voted on such matter; and (ix) any other preferences, qualifications, privileges, options and other relative or special rights and limitations of that series. (b) Voting Rights. Except as otherwise required by law, as otherwise provided herein or as otherwise determined by the Board in the applicable Preferred Stock Certificate of Designation as to the shares of any series of Preferred Stock prior to the issuance of any such shares, the holders of Preferred Stock shall have no voting rights and shall not be entitled to any notice of meeting of stockholders. (c) Dividends. Holders of Preferred Stock shall be entitled to receive, when and as declared by the Board, out of funds legally available for the payment thereof, dividends at the rates fixed by the Board for the respective series, and no more, before any dividends shall be declared and paid, or set apart for payment, on Common Stock with respect to the same dividend period. (d) Preference on Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of each series of Preferred Stock will be entitled to receive the amount fixed for such series plus, in the case of any series on which dividends will have been determined by the Board to be cumulative, an amount equal to all dividends accumulated and unpaid thereon to the date of final distribution whether or not earned or declared before any distribution shall be paid, or set aside for payment, to holders of Common Stock. If the assets of the Corporation are not sufficient to pay such amounts in full, holders of all shares of Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed in the resolution or resolutions providing for the issue of the series of Preferred Stock. Neither the merger nor consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph except to the extent specifically provided for herein or in the applicable Preferred Stock Certificate of Designation.
useful supplementary information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are outside the control of the Company or are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. We have included the following non-GAAP earnings-related financial measures in this proxy statement:
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Adjusted gross profit: Adjusted gross profit is a non-GAAP financial measure that excludes the gain from antitrust litigation settlements, LIFO expense, certain PharMEDium shutdown and remediation costs, and the expense related to the New York State Opioid Stewardship Act (the “NYS Opioid Act”). Gain from antitrust litigation settlements and LIFO expense are excluded because the Company cannot control the amounts recognized or timing of these items. PharMEDium remediation costs are excluded because they were unpredictable expenses. The expense related to the NYS Opioid Act and PharMEDium shutdown costs are excluded because they are unusual and non-recurring. Management believes that this non-GAAP financial measure is useful to investors as a supplemental measure of the Company’s ongoing operating performance. The gain from antitrust litigation settlements relates to the settlement of lawsuits that have been filed against brand pharmaceutical manufacturers alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The PharMEDium remediation costs related to costs incurred in connection with suspended production activities following U.S. Food and Drug Administration inspections. PharMEDium shutdown costs are costs incurred in connection with the permanent shutdown of the PharMEDium business. LIFO expense is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences. The NYS Opioid Act, which went into effect on July 1, 2018, established an annual $100 million fund and requires manufacturers, distributors, and importers to ratably share the assessment based upon opioids sold or distributed to or within New York state. In December 2018, the NYS Opioid Act was ruled unconstitutional by the U.S. District Court for the Southern District of New York but, in September 2020, the United States Court of Appeals for the Second Circuit reversed the District Court’s decision.
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Adjusted operating income and adjusted operating income margin: Adjusted operating income is a non-GAAP financial measure that excludes the gain from antitrust litigation settlements, LIFO expense, certain PharMEDium shutdown and remediation costs, the expense related to the NYS Opioid Act, acquisition-related intangibles amortization, employee severance, litigation and other, impairment of PharMEDium assets, and a contingent consideration adjustment. In the fiscal year ended September 30, 2020, employee severance, litigation, and other included a $6.6 billion legal expense accrual in connection with opioid lawsuits. Adjusted operating expense margin is the ratio of adjusted operating expenses to total revenue. Acquisition-related intangibles amortization is excluded because it is a non-cash item and does not reflect the operating performance of the acquired companies. We exclude employee severance amounts that relate to unpredictable and/or non-recurring business restructurings. We exclude the amount of litigation settlements and other expenses, such as the accrual related to opioid lawsuits and investigations, as well as PharMEDium shutdown and remediation costs, a contingent consideration adjustment and the impairment of PharMEDium assets, that are unusual, non-operating, unpredictable, non-recurring or non-cash in nature because we believe these exclusions facilitate the analysis of our ongoing operational performance. The contingent consideration adjustment reflects an adjustment made by one of the Company’s non-wholly-owned subsidiaries, Profarma Distribuidora de Produtos Farmacêuticos S.A., of its previous estimate of contingent consideration related to the purchase price of a prior business acquisition.
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Adjusted diluted earnings per share: Adjusted diluted earnings per share excludes the per share impact of adjustments including gain from antitrust litigation settlements; LIFO expense; PharMEDium shutdown and remediation costs; the expense related to the NYS Opioid Act; acquisition-related intangibles amortization; employee severance, litigation, and other; impairment of PharMEDium assets; a contingent consideration adjustment; and loss on early retirement of debt; in each case net of the tax effect calculated using the applicable effective tax rate for those items. The per share impact of certain discrete tax benefits primarily attributable to the income tax deduction recognized in connection with the permanent shutdown of PharMEDium as well as the CARES Act and the per share impact of certain benefits relating to tax reform in Switzerland are also excluded from adjusted diluted earnings per share for the fiscal year ended September 30, 2020. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the per share impact of the items that are outside the control of the Company or that we consider to not be indicative of our ongoing operating performance due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. Diluted weighted average common shares outstanding has been adjusted to include the impact
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Appendix A | 2021 AmerisourceBergen Proxy(e) Redemption. The Corporation, at the option of the Board, may redeem all or part of the shares of any series of Preferred Stock on the terms and conditions fixed in the applicable Preferred Stock Certificate of Designation for such series. (f) Certificate of Designations. For all purposes, this Certificate shall include each certificate of designations, if any, setting forth the terms of a series of Preferred Stock. (g) Authorized Shares. Subject to the rights, if any, of the holders of any series of Preferred Stock set forth in a certificate of designations, an amendment of this Certificate to increase or decrease the number of authorized shares of any series of Preferred Stock (but not below the number of shares thereof then outstanding) may be adopted by resolution adopted by the Board of the Corporation and approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Common Stock of the Corporation, and all other outstanding shares of stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL or any similar provisions hereafter enacted, with such outstanding shares of Common Stock and other stock considered for this purpose as a single class, and no vote of the holders of any series of Preferred Stock, voting as a separate class, shall be required therefore. ARTICLE V BOARD OF DIRECTORS Section 5.01 Election of Directors. Election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. Except as may be provided in this Certificate or in a Preferred Stock Certificate of Designation, if any, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. Section 5.02 Number of Directors. The number of directors on the Board shall be fixed from time to time by a bylaw or amendment thereof duly adopted by the Board or the stockholders. Section 5.03 Annual Election of Directors. Commencing with the 2012 annual meeting of the stockholders of the Corporation, theThe directors of the Corporation shall be elected annually for terms expiring at the next annual meeting of stockholders. Directors elected at the 2010 annual meeting of stockholders to a three-year term shall hold office until the 2013 annual meeting of stockholders and directors elected at the 2011 annual meeting of stockholders to a three-year term shall hold office until the 2014 annual meeting of stockholders. Each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Section 5.04 Nominations. Subject to the rights of holders of any series of Preferred Stock or any other class of stock of the Corporation (other than the Common Stock) then outstanding, nominations for the election of directors may be made by the affirmative vote of a majority of the entire Board or by any stockholder of record entitled to vote generally in the election of directors subject to ARTICLE VI, Section 6.04. Section 5.05 Removal. Any director may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors. In the event of any increase or decrease in the authorized number of directors, each director then serving as such shall nevertheless continue as a director until the expiration of his or her current term, or his or her earlier death, resignation or removal. Section 5.06 Vacancies. Subject to the rights of the holders of any series of Preferred Stock or any other class of stock of the Corporation (other than the Common Stock) then outstanding, any vacancies in the Board for any reason, including by reason of anydeath, resignation, removal, newly-created directorships resulting from an increase in the number of directors, or the failure of the stockholders to elect the whole authorized number of directors, shall be filled only by the Board, acting by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum, and any directors so elected shall hold office until the next election of directors and until their successors are duly elected and qualified. Section 5.07 Directors’ Meetings, Consents and Elections. Meetings of the Board and of any committee thereof may be held outsideat any place, within or without the State of Delaware or by remote communications, if the Bylaws so provide. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting as provided by statute, if the Bylaws of the Corporation so provide. The elections of directors need not be by written ballot unless the Bylaws of the Corporation so provide.
of the stock options and restricted stock units that were anti-dilutive for the GAAP presentation due to a GAAP net loss in the fiscal year ended September 30, 2020. Management believes that adjusted diluted shares outstanding is useful to investors because it facilitates the calculation of adjusted diluted earnings per share.
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Adjusted free cash flow: For the Company, adjusted free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities, excluding other significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the impact of items that are inherently unusual, unpredictable, and non-recurring in nature.
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ARTICLE VI STOCKHOLDERS Section 6.01 Cumulative Voting. No stockholder of the Corporation shall be entitled to exercise any right of cumulative voting. Section 6.02 No Preemptive Rights. Except for rights issued pursuant to ARTICLE VIII hereof, no stockholder of the Corporation shall have any preemptive or preferential right, nor be entitled to such as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of the Corporation of any class or series, whether issued for money or for consideration other than money, or of any issue of securities convertible into stock of the Corporation. Section 6.03 Stockholder Action. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is specifically denied. Special meetings of the stockholders of the Corporation may be called only by (a) the Board pursuant to a resolution duly adopted by a majority of the members of the Board or (b) the stockholders of the Corporation holding at least 25% of the outstanding shares of Common Stock, subject to the procedures and other requirements set forth in the Bylaws. Section 6.04 Notice. Advance notice of new business and stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation. ARTICLE VII LIMITATION OF DIRECTORS’ AND OFFICERS’ LIABILITY;
INDEMNIFICATION BY THE CORPORATION Section 7.01 Limitation on Liability. The liability of thedirectors and officers of the Corporation shall be entitled to the benefits of all limitations on the liability of directors generally that are now or hereafter become available under the DGCL. Without limiting the generality of the foregoing, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any transaction from which the director derived an improper personal benefit. Any repeal or modificationor officer, as applicable, shall be eliminated or limited to the fullest extent permitted under applicable law. If applicable law is amended after approval by the stockholders of this ARTICLE VII, Section 7.01 shall be prospective only, and shall not affect, to the detriment of any director, any limitation onto authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officerof the Corporation existing at the time of such repeal or modificationto the Corporation or its stockholders shall be eliminated or limited to the fullest extent permitted by applicable law as soamended. Section 7.02 Indemnification. The Corporation shall indemnify any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, trust or other enterprise, with respect to actions taken or omitted by such person in any capacity in which such person serves the Corporation or such other corporation, trust or other enterprise, to the full extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director, officer or trustee, as the case may be, and shall inure to the benefit of such person’s heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any person in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized in advance, or unanimously consented to, by the Board of the Corporation. Any person who is or was a director, officer, trustee, employee or agent of a subsidiary of the Corporation shall be deemed to be serving in such capacity at the request of the Corporation for purposes of this ARTICLE VII, Section 7.02. Any repeal or modification of this ARTICLE VII, Section 7.02, shall not adversely affect any rights to indemnification that any person may have at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. Section 7.03 Expenses. Directors and officers of the Corporation shall have the right to be paid by the Corporation expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The Corporation may, to the extent authorized from time to time by the Board, advance such expenses to any person who is or was serving at the request of the Corporation as a director, officer or trustee of another corporation, trust or other enterprise. Section 7.04 Miscellaneous. (a) The Corporation may, to the extent authorized from time to time by the Board, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation and to any person serving at the request of the Corporation as an employee or agent of another corporation, trust or other enterprise.
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(a)(b) The authorization of the Corporation to confer rights to indemnification and to the advancement of expenses conferred inprovided by this sectionARTICLE VII shall not be exclusive ofpreclude the Corporation from conferring any other right that any person may have or hereafter acquire under this Certificate, the Bylaws, any statute, agreement, vote of stockholders or disinterested directors, or otherwise. (b)(c) Any repeal or modification of this section by the stockholdersARTICLE VIIshall be prospective and shall not affect the rights or protections or increase the liability of any director, officer or agent of the Corporation shall not adversely affect any rights to (or any other persons to which applicable law permits the Corporation to provideindemnification)and to advancement of expenses that any person may have at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modificationunder this ARTICLE VII in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification. (c)(d) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of such person’s status as such, whether or not the Corporation shall have the power to indemnify such person against such liability under the provisions of this ARTICLE VII. Any person who is or was a director, officer, employee or agent of the Corporation or a subsidiary of the Corporation shall be deemed to be serving in such capacity at the request of the Corporation for purposes of this ARTICLE VII, Section 7.02. ARTICLE VIII STOCKHOLDER RIGHTS Section 8.01 Stockholder Rights. The Board is hereby authorized to create and issue, whether or not in connection with the issuance and sale of any of its stock or other securities or property, rights entitling the holders thereof to purchase from the Corporation shares of stock or other securities of the Corporation or any other corporation. The times at which and the terms upon which such rights are to be issued shall be determined by the Board and set forth in the contracts or instruments that evidence such rights. The authority of the Board with respect to such rights shall include, but not be limited to, determination of the following: (a) the initial purchase price per share or other unit of the stock or other securities or property to be purchased upon exercise of such rights; (b) provisions relating to the times at which and the circumstances under which such rights may be exercised or sold or otherwise transferred, either together with or separately from, any other stock or securities of the Corporation; (c) provisions which adjust the number or exercise price of such rights, or amount or nature of the stock or other securities or property receivable upon exercise of such rights, in the event of a combination, split or recapitalization of any stock of the Corporation, a change in ownership of the Corporation’s stock or other securities or a reorganization, merger, consolidation, sale of assets or other occurrence relating to the Corporation or any stock of the Corporation, and provisions restricting the ability of the Corporation to enter into any such transaction absent an assumption by the other party or parties thereof of the obligations of the Corporation under such rights; (d) provisions which deny the holder of a specified percentage of the outstanding stock or other securities of the Corporation the right to exercise such rights and/or cause the rights held by such holder to become void; (e) provisions which permit the Corporation to redeem such rights; and (f) the appointment of a rights agent with respect to such rights. ARTICLE IX BUSINESS COMBINATIONS Section 9.01 Section 203 of the DGCL. In accordance with Section 203(b) of the DGCL, the Corporation shall be governed by the provisions contained in Section 203(a) of the DGCL regarding restrictions on business combinations with interested stockholders. ARTICLE X TRANSACTION WITH DIRECTORS AND OFFICERS Section 10.01 Transaction With Directors and Officers. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or
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![[MISSING IMAGE: tm2039342d1-pc_02proxy.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-21-008422/tm2039342d1-pc_02proxy.jpg) other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (a) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum, or (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders, or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction. ARTICLE XI AMENDMENTS Section 11.01 Bylaws. In furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation without the assent or vote of the stockholders of the Corporation. The stockholders may, at any annual or special meeting of the stockholders of the Corporation, duly called and upon proper notice thereof, make, alter, amend or repeal the Bylaws by the affirmative vote of a majority of the votes cast for and against the adoption, alteration, amendment or repeal by the holders of shares of stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the adoption, alteration, amendment or repeal. Section 11.02 Certificate. The Corporation reserves the right to amend, alter, change or repeal the provisions in this Certificate and in any certificate amendatory hereof in the manner now or hereafter prescribed by law, and all rights conferred on in this Certificate on stockholders, directors and officers are subject to this reserved power.
![[MISSING IMAGE: px_24cencoraproxy2pg01-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/px_24cencoraproxy2pg01-bw.jpg) CENCORA, INC.ATTN: CORPORATE SECRETARY 1 WEST FIRST AVENUE CONSHOHOCKEN, PA 19428SCAN TO VIEW MATERIALS & VOTEVOTE BY INTERNETBefore The Meeting — Go to www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on March 11, 2024 for shares held directly and by 11:59 p.m. Eastern Time on March 8, 2024 for shares held in a Plan. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.During The Meeting — Go to www.virtualshareholdermeeting.com/COR2024You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.VOTE BY PHONE — 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on March 11, 2024 for shares held directly and by 11:59 p.m. Eastern Time on March 8, 2024 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:V27186-P01855-Z86610KEEP THIS PORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION ONLY CENCORA, INC.The Board of Directors recommends you vote FOR each of the listed nominees and FOR proposals 2, 3, 4 and 5.1.Election of Eleven Directors.Nominees:1a. Ornella Barra1b. Werner Baumann1c. Steven H. Collis1d. D. Mark Durcan1e. Richard W. Gochnauer1f. Lon R. Greenberg1g. Kathleen W. Hyle1h. Lorence H. Kim, M.D.1i. Redonda G. Miller, M.D.1j. Dennis M. Nally1k. Lauren M. TylerFor Against Abstain! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !2.Advisory vote to approve the compensation of the Company’s named executive officers.3.Ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 20244.Approval of an amendment of the certificate of incorporation to provide for the exculpation of officers as permitted by Delaware law.5.Approval of miscellaneous amendments to the certificate of incorporation.The Board of Directors recommends you vote AGAINST proposal 6.6.Shareholder proposal regarding voting standard for election of directors.NOTE: In their discretion, the proxy holders may vote on such other business as may properly come before the meeting or any adjournment, postponement, or continuation thereof.For Against Abstain! ! !! ! !! ! !! ! !For Against Abstain! ! !Please sign exactly as your name(s) appear(s) hereon. When signing as attorney-in-fact, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer(s) and specify the title(s) of such officer(s).Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date
![[MISSING IMAGE: px_24cencoraproxy2pg02-bw.jpg]](https://capedge.com/proxy/PRE 14A/0001104659-24-004480/px_24cencoraproxy2pg02-bw.jpg) Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement, Letter to Shareholders and Annual Report on Form 10-K are available at www.proxyvote.com. V27187-P01855-Z86610 CENCORA, INC.Annual Meeting of ShareholdersMarch 12, 2024 4:00 PM ETThis proxy is solicited by the Board of DirectorsThe undersigned shareholder of CENCORA, INC., a Delaware corporation, hereby appoints Steven H. Collis, Elizabeth S. Campbell, and Kourosh Q. Pirouz, or any one of them, as proxies, each with the power to appoint his or her substitute and to act alone, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of CENCORA, INC. that the shareholder is entitled to vote at the Annual Meeting of Shareholders to be held virtually at 4:00 PM, ET on March 12, 2024, at www.virtualshareholdermeeting.com/COR2024 and any adjournment, postponement, or continuation thereof.If the undersigned holds shares of common stock of CENCORA, INC. in the corporation’s employee stock purchase plan or in a benefit plan of the corporation, the undersigned hereby authorizes and directs the trustee or administrator of the respective plan to vote all shares in the account of the undersigned under the respective plan in the manner indicated on the reverse side of this ballot at the Annual Meeting, and any adjournment, postponement or continuation thereof.This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR the election of each of the nominees, FOR proposals 2, 3, 4 and 5, and AGAINST proposal 6. In their discretion, the proxy holders are authorized to vote on such other business as may properly come before the meeting or any adjournment, postponement, or continuation thereof.Continued and to be signed on reverse side
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