Business Context and Reporting Period
Company: McKesson Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: April 26, 2022
Subject: Adoption of amended executive compensation policies and equity award terms.
Key Financial Metrics
This filing does not contain financial performance data. The document does not provide values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes
The Compensation Committee adopted the following changes on April 26, 2022:
- Executive Severance Policy: Adopted an Amended and Restated policy providing severance for "Qualifying Terminations" (termination without cause not covered by Change in Control Policy). Benefits are the lesser of 12 months' base salary plus one month per year of service, or 24 months' base salary.
- Management Incentive Plan (MIP): Amended to remove outdated references to Section 162(m) of the Internal Revenue Code. Updated the Statement of Terms and Conditions (effective fiscal year 2023) to include terminations under the new Executive Severance Policy as eligible for "Severance" benefits (payment of current fiscal year's award based on actual performance if terminated on or after January 1).
- 2013 Stock Plan: Amended the Statement of Terms and Conditions for outstanding and future awards to include terminations under the Executive Severance Policy as eligible for "Severance" benefits. Benefits include six months of continued vesting eligibility or retirement treatment for those eligible for "Normal Retirement" within six months of termination.
Guidance, Outlook, and Risks
Management Commentary: The amendments align executive compensation plans with recent tax law changes and ensure consistency across severance definitions for executive officers.
Risks and Contingencies: Payments under the Executive Severance Policy are contingent upon the executive's timely execution and non-revocation of a release of claims. Payments may be halted or recouped if the executive fails to comply with restrictive covenants.
Investor Verification Checklist
- Verify the specific definitions of "Cause" and "Separation from Service" in the new Executive Severance Policy.
- Confirm the effective date of the MIP Statement of Terms and Conditions for fiscal year 2023.
- Review the impact of the 2013 Stock Plan amendment on outstanding equity awards held by named executive officers.
- Assess potential future liabilities related to the 24-month cap on severance payments for long-tenured executives.