What is the new Long-Term Incentive Cash Program?

The Long-Term Incentive Cash Program for Fiscal Years 2006-2008 is a written plan approved by the Compensation Committee and Board of Directors. It is designed for key executive employees, including named executive officers, and allows for cash awards based on performance over a three-year period. The plan includes provisions for award determination, payment, and how awards are affected by events such as a change in control or termination of employment.

Are there any changes to the CFO's compensation?

Yes, Jeffrey W. Henderson, the CFO, received an increase in his annual base salary from $550,000 to $675,000. He was also granted 8,000 restricted share units that vest over three years. Additionally, his severance compensation terms were amended, with specific provisions related to termination without cause between August 30, 2007, and April 17, 2008, and voluntary termination within 10 days following June 30, 2007.

What is the new policy regarding severance agreements?

Cardinal Health's Board of Directors adopted a policy requiring shareholder approval for severance agreements with covered executives that exceed 2.99 times their base salary and bonus. If obtaining prior shareholder approval is impractical, the Board may seek approval retroactively. This policy applies to new severance agreements and material modifications of existing ones.

What is the significance of the amendment to Robert D. Walter's employment agreement?

The amendment to Robert D. Walter's employment agreement removes the company's commitment to accelerate the vesting of his existing and future equity awards in certain termination scenarios. Specifically, it removes accelerated vesting if the company terminates his employment for cause or if he terminates his services without good reason prior to the awards becoming vested.

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

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on August 6, 2006, detailing several executive compensation and corporate governance updates. Key among these is the formal approval of the Long-Term Incentive Cash Program for fiscal years 2006-2008, which includes provisions for performance periods, award determination, and treatment of awards in the event of a change in control or termination of employment. The company also established a performance goal for fiscal year 2007 under its Management Incentive Plan, focusing on return on equity. Furthermore, the filing outlines approved cash incentive awards for fiscal year 2006 for named executive officers, with significant awards noted for Robert D. Walter and R. Kerry Clark, the latter reflecting his recent joining of the company. The report also details adjustments to CFO Jeffrey W. Henderson's compensation, including a base salary increase, restricted share unit grants, and revised severance provisions contingent on specific termination events and timing. These actions indicate a focus on executive retention and performance alignment.

Key Highlights

1Formalization of the Long-Term Incentive Cash Program for FY2006-2008, outlining terms for key executives, including provisions for change of control and employment termination.
2Establishment of a fiscal year 2007 performance goal for the Management Incentive Plan, centered on achieving a specified level of return on equity.
3Approval of fiscal year 2006 cash incentive awards for named executive officers, with substantial awards granted to Robert D. Walter ($2,911,527) and R. Kerry Clark ($460,274).
4Jeffery W. Henderson, CFO, received a base salary increase to $675,000, a grant of 8,000 restricted share units, and amended severance terms tied to termination timing and cause.
5Board adopted a policy requiring shareholder approval for severance agreements exceeding 2.99 times base salary and bonus for covered executives.
6Director John F. Havens will not seek re-election at the 2006 annual meeting.
7The annual shareholder meeting is scheduled for November 8, 2006, with Ernst & Young LLP nominated for ratification as independent accountants.

CARDINAL HEALTH INC 8-K Report, Material Agreement (Aug 7, 2006)

Summary

Key Highlights

Frequently Asked Questions