McKesson CEO's compensation drops by half, still tops $25 million

McKesson Corp. Chairman and CEO John Hammergren earned $25.9 million in the company's fiscal 2014—a 50% drop from when he took home a highly criticized $51.7 million compensation package in 2013.

McKesson, a healthcare supply-chain catchall involved with technology and pharmaceutical services, filed its annual proxy disclosure Thursday with the Securities and Exchange Commission. Hammergren's salary, stock options and incentives were mostly unchanged year over year. The biggest difference involved his pension, where he accrued no new benefits. Hammergren, 55, still accrued $887,107 in deferred earnings and dividends, but that pales in comparison to the $24.2 million he earned in 2013 from his pension and other future pay.

Shareholders ripped into Hammergren's retirement package last year, arguing it was excessive. The criticism ultimately forced McKesson's board to reduce its contribution to Hammergren's pension fund by $45 million, a move the board said will “better align the interests of the corporation and its investors.”

CtW Investment Group, a firm that works with union pension funds, was one of the lead shareholders condemning the high pay. CtW Investment Group and others also said they wanted McKesson's chairman and CEO positions to be separate. But McKesson's most recent filing indicates that is not likely to change.

“Although the company has in the past separated the roles of chairman and CEO, the board believes that having Mr. Hammergren serve as both chairman and CEO, coupled with strong independent director leadership, which has been enhanced by establishing a lead independent director with robust powers and duties, is the most appropriate and effective board leadership structure for the company at this time,” the filing reads.

Shareholders will cast their nonbinding votes on the compensation packages, commonly called “say-on-pay” votes, at McKesson's annual meeting July 30. The San Francisco-based conglomerate posted $1.3 billion in net income on $137.6 billion of revenue in the year ended March 31, 2014. Hammergren has led McKesson as CEO since April 2001.

Follow Bob Herman on Twitter: @MHbherman