8-KEarnings & ResultsMaterial AgreementsExhibits & Filings

CARDINAL HEALTH INC 8-K Report, Material Agreement (Sep 21, 2005)

Filed September 21, 2005For Securities:CAH

Summary

This 8-K filing by Cardinal Health Inc. (CAH) on September 20, 2005, primarily details significant changes in executive compensation and organizational structure. A key development is the amendment to the employment agreement for Ronald K. Labrum, who has been promoted to Chairman and CEO of Healthcare Supply Chain Services. This amendment includes a substantial increase in his base salary and bonus target, along with significant stock option and restricted stock unit grants as "pull-forward" awards for future fiscal years. The filing also touches upon the establishment of performance criteria for the company's Management Incentive Plan for fiscal year 2006, focusing on return on equity. Investors should note that this report also references a press release issued on September 15, 2005, announcing organizational changes and referencing financial information for fiscal year 2005. While this information is furnished and not deemed "filed," it signals a period of strategic restructuring within the company. The executive compensation adjustments for Mr. Labrum, a key leader, indicate confidence in his new role and align his incentives with company performance, particularly in the newly consolidated supply chain services segment.

Key Highlights

  • 1Amendment to employment agreement for Ronald K. Labrum upon his promotion to Chairman and CEO of Healthcare Supply Chain Services.
  • 2Increase in Mr. Labrum's annual base salary to not less than $650,000.
  • 3Increase in Mr. Labrum's annual bonus target to not less than 115% of his base salary.
  • 4Grant of stock options for 84,288 common shares and 12,041 restricted share units (RSUs) to Mr. Labrum as 'pull-forward' awards.
  • 5Stock option terms: $62.38 exercise price, seven-year term, exercisable in four equal annual installments starting September 15, 2006.
  • 6RSU vesting schedule: lapse in three equal annual installments starting September 15, 2006.
  • 7Establishment of fiscal 2006 performance criteria for the Management Incentive Plan, based on return on equity.

Frequently Asked Questions

Ronald K. Labrum's compensation has been significantly enhanced following his promotion. His annual base salary has been increased to at least $650,000, and his annual bonus target is now set at a minimum of 115% of his base salary. Additionally, he received substantial equity awards, including stock options and restricted stock units, intended as 'pull-forward' grants for future fiscal years.

The 'pull-forward' equity awards mean that Mr. Labrum received grants on September 15, 2005, that would typically be awarded in fiscal year 2007. These awards are designed to incentivize him in his new role and align his long-term interests with the company, while he will not be eligible for the standard annual equity grant in fiscal year 2007 unless specifically authorized by the Compensation Committee. He becomes eligible again for standard grants starting in fiscal year 2008.

For the fiscal year ending June 30, 2006, the performance criteria for annual cash incentive awards under the Management Incentive Plan are based on achieving a specified level of the Company's return on equity. The Compensation Committee retains discretion to adjust awards downward from amounts earned based on these objective criteria.

This 8-K filing does not provide updated financial results. It references a press release issued on September 15, 2005, which contained financial information for the fiscal year ended June 30, 2005, in conjunction with announcing organizational changes. However, the information regarding the press release is furnished and not considered 'filed' for SEC purposes.