What was the issue with Robert D. Walter's stock options, and how was it resolved?

In 1999, Robert D. Walter was granted an option to purchase 1,425,000 common shares. It was later discovered that a portion of this grant exceeded the limit allowed under the company's Equity Incentive Plan for a single individual. To resolve this, on August 3, 2005, the company issued a deferred payment stock appreciation right (SAR) for 862,500 shares to Mr. Walter. This SAR effectively replaces the excess portion of the original option award.

What are the key financial implications of the 'One Cardinal Health' restructuring program's Phase II?

Phase II of the 'One Cardinal Health' restructuring program is estimated to cost between $80 million and $100 million. These costs are primarily related to shared service initiatives and global staffing functions. Approximately $79 million to $99 million of these costs are expected to result in future cash expenditures, with completion targeted by the end of fiscal year 2008.

When did Cardinal Health announce its latest financial results, and what is significant about their presentation?

Cardinal Health announced its results for the quarter and fiscal year ended June 30, 2005, in a press release issued on August 5, 2005. The company provided a discussion explaining why management believes presenting results that exclude the impact of special charges offers a useful representation of the company's current performance and trends.

How will the SAR granted to CEO Robert D. Walter be paid, and what are the compliance considerations?

The SAR, covering 862,500 shares, allows Mr. Walter to receive cash equal to the fair market value per share on the exercise date minus $31.167 (the original exercise price), multiplied by the number of shares. However, to comply with Section 409A of the Internal Revenue Code, any payment will be deferred until six months following Mr. Walter's termination of employment. The deferred amount will also be credited with interest at the Prime Rate from the date of exercise until payment.

CAH 8-K: Earnings & Results, Material Agreements & More

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on August 4, 2005, detailing several key corporate actions. The company addressed a previously disclosed over-grant of stock options to its CEO, Robert D. Walter, by issuing a deferred payment stock appreciation right (SAR) valued at 862,500 shares. This SAR replaces the excess portion of the original option award and includes terms for deferred payment and interest, aiming to comply with tax regulations. Additionally, the company provided an update on its global restructuring program, outlining estimated costs for Phase II of the 'One Cardinal Health' initiative, expected to be between $80 million and $100 million. This phase involves shared service and global staffing adjustments and is anticipated to be substantially completed by the end of fiscal year 2008. The filing also includes information furnished regarding the company's financial results for the quarter and fiscal year ended June 30, 2005, as announced in a press release on August 5, 2005. The company presented results excluding special charges to offer a clearer view of ongoing performance. Finally, the Board of Directors revised the compensation for non-management directors.

Key Highlights

1CEO stock option issue resolved: Cardinal Health issued a deferred payment stock appreciation right (SAR) for 862,500 shares to CEO Robert D. Walter to rectify an over-grant in a 1999 option award.
2SAR terms: The SAR is valued based on the difference between the exercise date's fair market value and the original $31.167 exercise price, with payment deferred for six months post-termination to comply with Section 409A of the IRS Code.
3Restructuring Phase II costs: The 'One Cardinal Health' global restructuring initiative enters Phase II, with estimated costs ranging from $80 million to $100 million, primarily for shared services and global staffing changes.
4Phase II timeline: Phase II of the restructuring program is expected to be substantially completed by the end of fiscal year 2008.
5Financial results announcement: The company announced its fiscal year and quarterly results for the period ended June 30, 2005, via a press release on August 5, 2005.
6Exclusion of special charges: Financial results presented exclude the impact of special charges, with a separate discussion provided on the rationale for this presentation.
7Director compensation revised: The Board of Directors approved revisions to the compensation and benefits for non-management directors.

CARDINAL HEALTH INC 8-K Report, Material Agreement (Aug 5, 2005)

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