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UPDATE 1-McKesson directors re-elected amid CEO pay controversy
07/31/2013 Email this story  |  Printable Version

By Braden Reddall

SAN FRANCISCO, July 31 (Reuters) - Shareholders re-elected all of McKesson Corp's board members on Wednesday, defying the recommendations of influential proxy advisers and investors who protested the inflated compensation and dual roles of Chairman and CEO John Hammergren.

The company said all directors received a majority vote at the annual shareholders meeting in favor of their remaining on the board. No specific numbers were disclosed.

Shareholder advisory firms had called for some directors to go. ISS, the most influential, recommended ejection of the board's entire compensation committee: committee Chairman Alton Irby, Edward Mueller, Christine Jacobs and David Lawrence.

The CTW Investment Group, part of a Change to Win labor federation that includes pension funds invested in McKesson, had wanted Irby out, along with Jane Shaw, head of the corporate governance committee. On Tuesday, it issued a statement calling McKesson "the new poster-child of out-of-control CEO pay."

Concerns over governance at the San Francisco health technology and distribution company have rumbled for some time. A majority of the shareholders voted last year in favor of a non-binding resolution calling for splitting the chairman and CEO roles, both of which Hammergren retains.

Critics have called attention in particular to a lump-sum pension payment of $159 million that the longtime chief of McKesson would have received, disclosed in an SEC filing, had he retired. The Wall Street Journal called it one of the largest pensions in history, inflated over time by special concessions made by the board, such as credit for years in service.

McKesson executives have argued that its governance and compensation have helped drive strong performance, which in turn has elevated compensation for executives. The company's shares have climbed more than 27 percent in 2013. Over the CEO's 14-year tenure, the stock has more than quadrupled.

"We appreciate the support shown by our shareholders today and the thoughtful way many have engaged with us as they carefully considered the proposals presented," Hammergren said in a statement after the preliminary voting results were announced.

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