Shareholders and institutional investors rally around executive pay and governance reforms to improve accountability and oversight
IRVING, TEXAS — In a critical victory for corporate citizenship and responsibility, McKesson shareholders defeated on Wednesday the company’s “Say on Pay” executive compensation vote and threw their support behind much needed corporate governance reforms aimed at holding the nation’s largest drug distributor accountable for its role in fueling the opioid crisis. In an effort led by the International Brotherhood of Teamsters, a long-term shareholder in McKesson, a majority of McKesson shareholders voted to reject the board’s request to approve McKesson’s executive compensation policies. The Teamsters argued the company’s executive pay practices risked insulating CEO John Hammergren’s from the legal, political and reputational risks surrounding the company’s role in the opioid crisis. In addition, the company acquiesced to the Teamsters demand to separate the positions of Chair and CEO.
In response, Teamsters General Secretary-Treasurer Ken Hall issued the following statement: “For the first time ever, shareholders have voted to hold a company accountable for its role in the opioid epidemic. The historic mandate from McKesson shareholders is clear: the country’s largest drug distributor cannot get away with ballooning executive pay and failures in oversight as Americans die every day from opioid addiction. These reforms will not bring back the lives taken by the opioid crisis, but hopefully will provide greater oversight and accountability for how prescription drugs are distributed in this country. This shareholder vote should serve as a wake-up call to AmerisourceBergen, Cardinal Health and other companies involved in the manufacturing or distribution of prescription opioids that shareholders want to see change. We cannot afford another decade of business as usual. The Teamsters will not back down from this fight.”
McKesson is the largest drug distributor in the United States, responsible for delivering a third of all medicines in North America. Together with Cardinal Health and AmerisourceBergen – collectively known as the “Big Three” — the company has been a key player in supplying opioid products to communities across the country. In West Virginia, one of states hit hardest by the opioid epidemic, the “Big Three” shipped enough doses of hydrocodone and oxycodone between 2007 and 2012 to provide 235 pills to every man, woman and child in the state. At the same time, the three companies reported a combined $17 billion in profits and their CEOs
The International Brotherhood of Teamsters has been leading a growing shareholder effort to hold the “Big Three” distributors accountable for their role in fueling the opioid epidemic. The organization and its affiliated pension and benefit funds have more than $100 billion in assets invested in the capital markets and are long-term investors in each of the three largest wholesale distributors. In addition to calls for executive pay and governance reform, the Teamsters have urged the board of directors of each of the companies to set up an independent committee to investigate opioid sales practices and compliance programs.
Today’s vote against McKesson’s pay practices is only the fourth defeat this year for an S&P 500 company and the second time in four years that McKesson’s executive pay has been voted down by shareholders, with investors rejecting the proposal in 2013.