What is the purpose of the 2005 Long-Term Incentive Plan?

The 2005 Long-Term Incentive Plan is designed to attract, retain, and motivate key employees by providing them with equity-based and cash-based awards. It allows the company to grant stock options, stock appreciation rights, stock awards, other stock-based awards, and cash awards, with a total of 18,000,000 common shares reserved for issuance.

How does the amended retention agreement affect David L. Schlotterbeck's compensation?

The amendment to Mr. Schlotterbeck's retention agreement adjusts the timing of his retention bonus payout. It will now be paid as soon as practicable after his death or within 15 days after June 30, 2008, if certain tax deductibility conditions related to Section 162(m) of the IRS code are met. The amendment also extends the period during which certain termination events can trigger non-cash severance benefits.

What were the key terms of the equity grants to non-management directors?

Each non-management director received an annual equity award consisting of stock options to purchase 3,398 common shares at an exercise price of $61.79 per share (the closing price on Nov 2, 2005) and 485 restricted share units (RSUs). Both the options and RSUs have a one-year vesting period.

Who is Calvin Darden and why was he elected to the Board?

Calvin Darden was elected to the Board of Directors on November 2, 2005. He is a retired Senior Vice President of U.S. Operations from United Parcel Service (UPS) and currently serves on the boards of Target Corporation and Coca-Cola Enterprises, Inc. His election brings valuable experience to the company and he was appointed to the Compensation Committee.

CAH 8-K: Leadership Changes, Material Agreements & More

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on November 7, 2005, reporting on several key events from their annual shareholder meeting on November 2, 2005. The most significant information for investors pertains to the approval of the 2005 Long-Term Incentive Plan, which reserves 18,000,000 common shares for various equity-based awards, including stock options and restricted share units, with specific limits per employee and award type. This plan, effective for ten years, aims to incentivize employees through stock-based compensation and a long-term incentive cash plan tied to return on equity. Additionally, the filing details an amendment to a retention agreement with David L. Schlotterbeck, an executive officer, modifying the payment terms of his retention bonus and extending certain severance benefits. The company also granted annual equity awards to non-management directors and elected Calvin Darden to the Board of Directors. These actions reflect the company's ongoing strategies for executive compensation, talent retention, and board governance.

Key Highlights

1Shareholder approval of the 2005 Long-Term Incentive Plan, authorizing up to 18,000,000 common shares for stock options, stock appreciation rights, stock awards, and cash awards.
2Establishment of a Long-Term Incentive Cash Plan tied to return on equity performance over a three-year period (July 1, 2005 - June 30, 2008) for executive officers and managers.
3Amendment to David L. Schlotterbeck's (an executive officer) retention agreement, adjusting the payment terms for his retention bonus and extending certain termination-triggered severance benefits.
4Annual equity awards granted to non-management directors, including stock options (exercise price $61.79) and restricted share units (RSUs), with one-year vesting periods.
5Election of Calvin Darden to the Board of Directors, effective November 2, 2005, who previously held senior positions at UPS and serves on other corporate boards.
6The 2005 Long-Term Incentive Plan is effective for 10 years, terminating on November 2, 2015, unless terminated earlier by the administrator.

CARDINAL HEALTH INC 8-K Report, Material Agreement (Nov 7, 2005)

Summary

Key Highlights

Frequently Asked Questions