MCK » Topics » Director Compensation

This excerpt taken from the MCK DEF 14A filed Jun 15, 2009.
Director Compensation
 
The Company believes that compensation for non-employee directors should be competitive and should encourage ownership of the Company’s stock. The compensation for each non-employee director of the Company includes an annual cash retainer, an annual restricted stock unit (“RSU”) award and per-meeting fees. The Presiding Director and committee chairs also receive an additional annual retainer. Non-employee directors are paid their reasonable expenses for attending Board and committee meetings. Directors who are employees of the Company or its subsidiaries do not receive any compensation for service on the Board. The Governance Committee annually


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reviews the level and form of the Company’s director compensation and, if it deems appropriate, recommends to the Board changes in director compensation.
 
Cash Compensation
 
Directors may receive their annual retainers and meeting fees in cash or defer their cash compensation into the Company’s Deferred Compensation Administration Plan III (“DCAP III”). Directors may elect in advance to defer up to 100% of their annual retainer (including any committee chair or Presiding Director retainer) and all of their meeting fees earned during any calendar year into the Company’s DCAP III. The minimum deferral period for any amounts deferred is five years, and if a director ceases to be a director of the Company for any reason other than death, disability or retirement, the account balance will be paid in January or July, which is at least six months following his or her separation. In the event of death, disability or retirement, the account balance will be paid in accordance with the director’s distribution election. To attain retirement, a director must have served on the Board for at least six successive years. The Compensation Committee approves the interest rate to be credited each year to amounts deferred into the DCAP III, and the interest rate for calendar year 2009 was set at 8.0% per annum.
 
The following table summarizes the cash compensation provided to non-employee directors:
 
         
Non-Employee Director Cash Compensation
     
 
Annual cash retainer
  $ 75,000  
Additional retainer for Presiding Director
  $ 10,000  
Additional retainer for Chairperson of the Audit Committee
  $ 20,000  
Additional retainer for Chairperson of the Compensation Committee
  $ 20,000  
Additional retainer for Chairperson of all other committees
  $ 10,000  
Meeting fee for each Audit Committee meeting attended
  $ 2,000  
Meeting fee for each Board or other committee meeting attended
  $ 1,500  
 
Equity Compensation
 
Each July, non-employee directors receive an automatic annual grant of RSUs with an approximate value as of the grant date equal to $150,000. The actual number of RSUs under the grant is determined by dividing $150,000 by the closing price of the Company’s common stock on the grant date (with any fractional unit rounded up to the nearest whole unit); provided, however, that the number of units granted in any annual grant will in no event exceed 5,000 units, in accordance with the requirements of our 2005 Stock Plan.
 
The RSUs granted to non-employee directors vest immediately. If a director meets the director stock ownership guidelines (currently $300,000 in shares and share equivalents), then the director will, on the grant date, receive the shares underlying the RSU grant, unless the director elects to defer receipt of the shares. The determination of whether a director meets the director stock ownership guidelines is made as of the last day of the deferral election period preceding the applicable RSU grant. If a non-employee director has not met the stock ownership guidelines as of the last day of such deferral election period, then the shares underlying the RSU grant will be automatically deferred until after the director’s separation from service.
 
Recipients of RSUs are entitled to dividend equivalents at the same dividend rate applicable to the Company’s common stockholders, which is currently set at $0.12 per share each quarter. For our directors, dividend equivalents on the RSUs are credited quarterly to an interest bearing cash account and are not distributed until the shares underlying the RSU award are released to the director. Interest accrues on directors’ credited dividend equivalents at the same rate used for the Company’s DCAP III, which for calendar year 2009 was set at 8.0% per annum.
 
All Other Compensation and Benefits
 
Non-employee directors are eligible to participate in the McKesson Foundation’s Matching Gifts Program. Under this program, directors’ gifts to schools, educational associations or funds, and other public charitable organizations are eligible for a match by the Foundation up to $5,000 per director for each fiscal year.


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This excerpt taken from the MCK DEF 14A filed Jun 23, 2008.
Director Compensation
 
The Company believes that compensation for non-employee directors should be competitive and should encourage increased ownership of the Company’s stock. The compensation for each non-employee director of the Company includes an annual cash retainer, an annual restricted stock unit (“RSU”) award and per-meeting fees. The committee chairs also receive an additional annual retainer, and as of July 2007, the Presiding Director also receives an additional annual retainer. Non-employee directors are also paid their reasonable expenses for attending Board and committee meetings. Directors who are employees of the Company or its subsidiaries do not receive any compensation for service on the Board.
 
Cash Compensation
 
Directors may receive their annual retainers and meeting fees in cash, or defer their cash compensation into the Company’s Deferred Compensation Administration Plan III (“DCAP III”). Directors may elect in advance to defer up to 100% of their annual retainer (including any committee chair or Presiding Director retainer) and all of their meeting fees earned during any calendar year into the Company’s DCAP III. The minimum deferral period for any amounts deferred is five years, and if a director ceases to be a director of the Company for any reason other than death, disability or retirement, the account balance will be paid in the January following his or her separation. In the event of death, disability or retirement, the account balance will be paid in accordance with the director’s distribution election. To attain retirement, a director must have served on the Board for at least six successive years. The Compensation Committee approves the interest rate to be credited each year to amounts deferred into the DCAP III, and the interest rate for calendar years 2007 and 2008 was set at 8.0% per annum.
 
Following a comprehensive review of compensation practices and levels for non-employee directors, on October 27, 2006, the Board increased the annual retainer for non-employee directors from $50,000 to $75,000 and increased by $5,000 the annual retainer for each committee chair (except for Chair of the Compensation Committee), which resulted in a $20,000 annual retainer for the Chair of the Audit Committee and $10,000 for each of the Chairs of the Finance Committee and the Committee on Directors and Corporate Governance. The annual retainer for the Chair of the Compensation Committee was increased to $20,000 from $5,000. These changes became effective on October 1, 2006. Also, at the October 2006 Board meeting, an annual retainer of $10,000 was established for the Presiding Director effective July 25, 2007. In addition to payment of an annual retainer, Board members are entitled to meeting fees of $1,500 for each Board, Finance Committee, Compensation Committee or Committee on Directors and Corporate Governance meeting attended, and $2,000 for each Audit Committee meeting attended.
 
The following table summarizes the cash compensation provided to non-employee directors for the fiscal years ended March 31, 2008 and 2007:
 
                 
Non-Employee Director Cash Compensation
  2008     2007(1)  
 
Annual cash retainer
  $ 75,000     $ 50,000  
Additional retainer for Presiding Director
  $ 10,000        
Additional retainer for Chairperson of the Audit Committee
  $ 20,000     $ 15,000  
Additional retainer for Chairperson of the Compensation Committee
  $ 20,000     $ 5,000  
Additional retainer for Chairperson of all other committees
  $ 10,000     $ 5,000  
Meeting fee for each Audit Committee meeting attended
  $ 2,000     $ 2,000  
Meeting fee for each Board or other committee meeting attended
  $ 1,500     $ 1,500  
 
 
(1) Non-employee director compensation was amended as of October 1, 2006.
 
Equity Compensation
 
Each July, beginning in 2007, non-employee directors receive an automatic annual grant of RSUs with an approximate value as of the grant date equal to $150,000. The actual number of RSUs under the grant is determined


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by dividing $150,000 by the closing price of the Company’s common stock on the grant date (with any fractional unit rounded up to the nearest whole unit). For annual RSU awards made prior to July 2007, non-employee directors received 2,500 units.
 
The RSUs granted to non-employee directors vest immediately. For annual RSU grants made prior to the July 2008 Annual Meeting of Stockholders, receipt of the underlying stock is deferred until such time as the director leaves the Board. At its meeting in July 2007, the Board determined that if a director meets the director stock ownership guidelines (currently $300,000 in shares and share equivalents), the director will, on the grant date, receive the shares underlying the RSU grant unless the director elects to defer receipt of the shares.
 
Recipients of RSUs are entitled to dividend equivalents at the same dividend rate applicable to the Company’s common stockholders. For our directors, dividend equivalents on the RSUs are credited quarterly to an interest bearing cash account and are not distributed until the director leaves the Board. Interest accrues on directors’ credited dividend equivalents at the same rate used for the Company’s DCAP III, which for calendar years 2007 and 2008 was set at 8.0% per annum.
 
All Other Compensation and Benefits
 
Alton F. Irby III is also a director of McKesson Information Solutions UK Limited, an indirect wholly-owned subsidiary of the Company, and he currently receives meeting fees of $1,500 for each board meeting attended. For the fiscal year ended March 31, 2008, Mr. Irby was paid $1,500 for his service as a board member of McKesson Information Solutions UK Limited.
 
Non-employee directors are eligible to participate in the McKesson Foundation’s Educational Matching Gifts Program. Under this program, directors’ gifts to schools and educational associations or funds will be matched by the foundation up to $5,000 per director for each fiscal year.
 
This excerpt taken from the MCK DEF 14A filed Jun 13, 2007.
Director Compensation
 
The Company believes that compensation for non-employee directors should be competitive and should encourage increased ownership of the Company’s stock. The compensation for each non-employee director of the Company includes an annual cash retainer, an annual restricted stock unit award and per-meeting fees. The committee chairs also receive an additional annual retainer, and beginning July 2007, the Presiding Director will similarly receive an additional annual retainer.
 
Directors are also paid their reasonable expenses for attending Board and committee meetings. Directors may receive their annual retainers and meeting fees in cash, or defer their cash compensation into the Company’s Deferred Compensation Administration Plan III (“DCAP III”).
 
Directors may elect in advance to defer up to 100% of their annual retainer and all of their meeting fees earned during any calendar year into the Company’s DCAP III. The minimum deferral period for any amounts deferred is five years, and if a director ceases to be a director of the Company for any reason other than death, the account balance will be paid in the form elected by the director. In the event of death, the account balance will be paid to the director’s designated beneficiary. The Compensation Committee approves the interest rate to be credited each year to amounts deferred into the DCAP III, and the interest rate for calendar years 2006 and 2007 was 8.0%.
 
Following a comprehensive review of compensation practices and levels for non-employee directors, on October 27, 2006, the Board increased the annual retainer for non-employee directors from $50,000 to $75,000 and increased the annual retainer for each committee chair by $5,000, which resulted in a $20,000 annual retainer for the Chair of the Audit Committee and $10,000 for each of the Chairs of the Finance Committee and the Committee on Directors and Corporate Governance. The annual retainer for the Chair of the Compensation Committee was increased to $20,000 from $5,000. These changes became effective on October 1, 2006. Also, at the October 2006 Board meeting, an annual retainer of $10,000 was established for the Presiding Director effective July 25, 2007.
 
In addition to payment of an annual retainer, Board members are also entitled to meeting fees of $1,500 for each Board, Finance Committee, Compensation Committee or Committee on Directors and Corporate Governance meeting attended, and $2,000 for each Audit Committee meeting attended.
 
Each July directors receive an automatic annual grant of restricted stock units (“RSUs”) in an amount not to exceed 5,000 units, which is currently set at 2,500 RSUs. The RSUs vest immediately; however, under the terms of our 2005 Stock Plan, receipt of the underlying stock is deferred until such time as the director leaves the Board. Dividend equivalents on the RSUs are credited to an interest bearing cash account in the Company’s DCAP III and are not distributed until the director leaves the Board.


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Directors who are employees of the Company or its subsidiaries do not receive any compensation for service on the Board. Alton F. Irby III is also a director of McKesson Information Solutions UK Limited, an indirect wholly-owned subsidiary of the Company, and currently receives meeting fees of $1,500 for each board meeting attended for his service as a Board member of that company. For the fiscal year ended March 31, 2007, Mr. Irby earned $1,500 in meeting attendance fees for his service as a board member of McKesson Information Solutions UK Limited.
 
Non-employee directors are eligible to participate in the McKesson Corporation Foundation’s Educational Matching Gifts Program. Under this program, directors’ gifts to schools and educational associations or funds will be matched by the foundation up to $5,000 per director for each fiscal year.
 
The following table sets forth information concerning the compensation earned during the last fiscal year by each individual who served as a director at any time during the last fiscal year:
 
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