Fired McKesson Worker Loses Fight on CEO's Exit PackageDawn Kopecki
Shareholders of McKesson Corp. today voted down an attempt to reduce the payout that Chief Executive Officer John Hammergren would receive if he were fired in the event of a sale, according to Kris Fortner, a company spokesman.
Hammergren stands to receive $292 million under a so-called change in control at the San Francisco-based company, which distributes pharmaceuticals and medical products. The Teamsters union put a measure before shareholders at McKesson’s annual meeting today that would have urged the board to reduce that amount, which includes about $114 million in pension pay and $140.6 million in unvested stock awards and options that would become payable immediately. The union sought to reduce such accelerated vesting.
The potential payout seems unfair compared with McKesson employees who are “living paycheck to paycheck,” said Glenn Gray, a former warehouse operator for McKesson’s distribution center in Lakeland, Florida, who introduced the measure at today’s meeting. Gray had also addressed shareholders last year, asking Hammergren to help improve employee’s wages and benefits.
About four months after that, Gray, 48, was fired. Now, the former forklift driver is a full time Teamsters’ activist.
“They shouldn’t continue to give lavish giveaways of unearned money to executives on their way out the door,” Gray said. “They should think more about their associates.”
McKesson’s Fortner didn’t disclose today’s vote tally. A similar measure that went before shareholders in 2012 also failed, with 44 percent of the vote. In the company’s latest proxy filing on June 19, McKesson’s board opposed the Teamster’s proposal, telling investors that accelerated vesting is “an important tool for motivating our executives in the face of a potential change in control transaction.”
All told, Hammergren and a handful of top executives stand to get $283 million or more in accelerated stock awards if they’re fired under a change in control, according to the Teamsters. Hammergren’s change-in-control package, combined with $289 million more in company stock and options he already owns, would bring his total kitty in the event of a termination to $581 million on paper -- a figure based on valuations as of March 31.
The company hasn’t reported a loss since the fourth quarter of 2009, when the U.S. unemployment rate hovered near 10 percent. Its shares have risen more than sixfold since Hammergren became CEO in 2001, compared with a 59.2 percent increase in the Standard & Poor’s 500 Index through last night.
“You’ve got employees struggling while the company is doing quite well,” said Gray.
Union workers at the Lakeland plant earn an average of $13 an hour, according to the Teamsters, and many can’t afford to participate in McKesson’s retirement plans, Gray said. The company’s health plans, which range in cost depending on coverage and the number of wellness incentives an employee earns, present another struggle for some, he said.
Fortner, the McKesson spokesman, said that four Teamsters organizations have accepted the company’s health-care plans during the last two years. “We see this as further proof that our health plan offerings are highly competitive and effective,” he said.
Gray and the Teamsters say he was unlawfully fired from the company in November 2013 over his union activities and for speaking out at last July’s shareholders meeting. The National Labor Relations Board, a federal agency that investigates claims of labor-rights violations, backed Gray’s claim that he was dismissed over union activities, and included it in a labor-relations case it filed against the company. An administrative law judge is expected to issue a ruling in that case later this year.
McKesson is fighting those allegations, Fortner said. Gray’s dismissal was based on “legitimate business reasons,” he said. He cited Gray’s personal privacy in declining to discuss details. Gray declined to comment on what reasons the company had given him.
In the measure proposed to shareholders today, the union suggested paying out only a prorated portion of executives’ unvested equity awards. The idea was endorsed by proxy advisory firm Institutional Shareholder Services. It has also drawn support from CtW Investment Group, which represents investors with $250 billion in retirement assets under management, and the New York State Common Retirement Fund, which oversees $160.7 billion in retirement money, according to officials at both organizations.