Cardinal Health Inc. shareholders will vote at the firm's Nov. 8 annual meeting on separate compensation-related proposals by CalPERS, the New York City Retirement Systems, and the AFSCME pension plan.
The $220.1 billion California Public Employees' Retirement System, Sacramento, wants executive severance agreements that provide benefits, including equity, with a present value that exceeds 2.99 times the sum of the executive's base salary and bonus. Christianna Wood, CalPERS senior investment officer-global equity, wrote a letter to shareholders asking them to vote in favor of its proposal.
"Since the company's severance policy does not include the granting of equity, shareowners would not have the ability to approve potentially egregious payouts," Ms. Wood wrote.
The New York City funds, with total assets of $88.6 billion, want the Cardinal board to adopt a policy basing senior executive stock options on corporate performance to better align the interest of executives with shareholders.
The board opposes the proposal, believing "there is no evidence that the types of stock option grants proposed ... are the best or only way to create appropriate alignment with shareholders' interests," according to its statement.
The $800 million American Federation of State, County and Municipal Employees Pension Plan, Washington, is calling for an annual shareholder advisory vote on the company's compensation report. "Such a vote isn't binding, but allows stockholders a clear voice which could help reduce excessive pay," the proposal noted.
In opposing the AFSCME proposal, the board in its statement said its process for determining executive compensation "would not benefit from the unnecessary uncertainty associated with a shareholder advisory vote."
CalPERS owns 2.8 million Cardinal shares valued at $180.5 million, according to a system statement. Together, the five New York City pension funds own 1.4 million shares of the company, and the AFSCME plan owns 4,623 shares, according to each plan's proposals.