8-KEarnings & ResultsLeadership ChangesRegulation FD+1

CARDINAL HEALTH INC 8-K Report, Financial Results (Aug 4, 2011)

Filed August 4, 2011For Securities:CAH

Summary

Cardinal Health, Inc. (CAH) filed an 8-K on August 3, 2011, primarily to report on its financial results for the quarter and fiscal year ended June 30, 2011, and to announce changes in its board and executive compensation programs. The company released its earnings on August 4, 2011, through a press release, details of which are included as exhibits. The filing also disclosed the election of David P. King to the Board of Directors, effective September 1, 2011, who is also Chairman, President, and CEO of Laboratory Corporation of America Holdings. A significant portion of the filing details the approval of a new Performance Share Unit (PSU) program for executive compensation. This program aims to better align executive interests with shareholders by incorporating three-year PSUs into the long-term incentive mix, alongside stock options and Restricted Share Units (RSUs). The PSUs will be tied to key performance metrics such as non-GAAP earnings per share growth and dividend yield, with payout potential ranging from 50% to 200% of target based on performance.

Key Highlights

  • 1Cardinal Health announced its financial results for the quarter and fiscal year ended June 30, 2011, via a press release filed on August 4, 2011.
  • 2David P. King was elected to the Board of Directors, effective September 1, 2011. He currently serves as Chairman, President, and CEO of Laboratory Corporation of America Holdings.
  • 3A new Performance Share Unit (PSU) program was approved by the Human Resources and Compensation Committee to enhance executive compensation, effective for fiscal year 2012.
  • 4The long-term incentive compensation mix for senior executives will shift to one-third stock options, one-third RSUs, and one-third PSUs for fiscal year 2012.
  • 5PSU performance goals are based on compound annual growth rate in non-GAAP earnings per share and dividend yield.
  • 6PSU payouts can range from 50% to 200% of target, contingent upon achieving specified performance thresholds.
  • 7The PSU program incorporates provisions for vesting upon death, disability, retirement, and change of control, as well as clawback provisions under the Dodd-Frank Act.

Frequently Asked Questions

The 8-K filing indicates that Cardinal Health announced its financial results for the quarter and fiscal year ended June 30, 2011, on August 4, 2011, through a press release. The details of these results are available in Exhibit 99.1 attached to the filing.

David P. King has been elected to Cardinal Health's Board of Directors, effective September 1, 2011. His significance lies in his current role as Chairman, President, and Chief Executive Officer of Laboratory Corporation of America Holdings, bringing substantial leadership experience from another major company in a related sector.

Cardinal Health is introducing a Performance Share Unit (PSU) program as part of its long-term incentive compensation for executives, starting in fiscal year 2012. This change aims to better align executive interests with shareholders by linking a portion of compensation to specific performance metrics like non-GAAP EPS growth and dividend yield, and also responds to shareholder feedback and comparator company practices.

For fiscal year 2012, one-third of senior executives' long-term incentive awards will be in PSUs, with the remainder in stock options and RSUs. These PSUs will vest based on the achievement of three-year performance goals related to non-GAAP earnings per share growth and dividend yield. Payouts can range from 50% to 200% of the target award, with no payout if threshold performance is not met. The program also includes provisions for various employment events and potential clawbacks.