A majority of McKesson Corp. shareholders, including a number of large pension funds, rejected the company's executive compensation program Wednesday, preliminary results from the pharmaceutical distributor's annual shareholder meeting show.
Exact vote tallies for the non-binding proposal were not immediately available.
The $330.3 billion California Public Employees' Retirement System, Sacramento; $139.7 billion Texas Teacher Retirement System, Austin; C$175.6 billion ($140 billion) Ontario Teachers' Pension Plan; the $208.7 billion California State Teachers' Retirement System, West Sacramento; and $189.4 billion Florida State Board of Administration, Tallahassee, all voted against ratifying the compensation of John Hammergren, McKesson's president, CEO and chairman, and the four other named executives, according to their proxy-voting disclosures.
The C$287.3 billion Canada Pension Plan Investment Board, Toronto, supported the executives' compensation.
"Aligning pay with performance is the cornerstone of McKesson's executive compensation program," the company said in a Wednesday news release. "Following today's vote, the compensation committee will conduct a thorough review of the current executive compensation plan and consider implementing changes that further drive alignment between incentives and shareholder value."
According to McKesson's 2017 proxy statement, the total compensation for Mr. Hammergren was $20.1 million in fiscal year 2017. The compensation for the four other named executives ranged from $4 million to $12.1 million that year.
A McKesson spokeswoman added in an emailed statement: "Since the start of 2013, CEO total direct compensation declined by 27% while the company delivered total shareholder return of 75%."
In a July report, proxy advisory firm Institutional Shareholder Services recommended shareholders vote against the executives' compensation.
"The compensation committee awarded (the named executive officers) above-target bonuses boosted by qualitative assessments of individual performance, despite the company's entanglement in controversy and significant share price underperformance," ISS stated in the report. "The CEO's long-term incentives also remained sizable, and the board awarded him a much larger number of shares in FY2017, effectively insulating the grant value from the impact of negative stock movement."
Also at Wednesday's meeting, a shareholder proposal calling for an independent board chair was defeated; CalPERS, CalSTRS, Ontario Teachers, Texas Teachers, the CPPIB and the Florida State Board all supported that proposal. An exact vote tally was not available. ISS had recommended investors support the independent chairman proposal.