8-KLeadership ChangesExhibits & Filings

Cencora, Inc. 8-K Report, Executive Changes (Jan 11, 2019)

Filed January 11, 2019For Securities:COR

Summary

Cencora, Inc. (formerly AmerisourceBergen Corporation) filed an 8-K on January 11, 2019, to report significant changes in its Board of Directors and executive compensation arrangements. Notably, Director Douglas R. Conant will not seek re-election at the upcoming 2019 Annual Meeting, leading to a reduction in the Board's size. This event is presented as amicable and not due to any disagreements. The primary focus for investors lies in the material amendments to the employment agreements for key named executive officers, including CEO Steven H. Collis, CFO James F. Cleary, Jr., and EVP Robert P. Mauch. These amendments primarily adjust severance and change-in-control benefits to better align with market practices and peer group benchmarking. The changes enhance potential payouts for executives in specific termination scenarios, particularly those occurring around a change in control, and clarify terms related to pro-rata bonuses, 'cause' definitions, and compliance with corporate integrity programs.

Key Highlights

  • 1Director Douglas R. Conant will not stand for re-election at the February 28, 2019 Annual Meeting; his departure is amicable.
  • 2The Board of Directors' size will be reduced from ten to nine members effective after the 2019 Annual Meeting.
  • 3Amended and restated employment agreements have been entered into with key named executive officers, including the CEO, CFO, and other senior roles.
  • 4Severance and change-in-control benefits for key executives have been updated to align with general market practices and peer benchmarking.
  • 5CEO Steven H. Collis will receive continued base salary for three years and three times his average annual bonus if terminated without cause or for good reason within 24 months following a change in control.
  • 6CFO James F. Cleary, Jr. and EVP Robert P. Mauch will receive their standard severance plus two times their average annual bonuses if terminated without cause or for good reason within 24 months following a change in control.
  • 7Employment agreements now include provisions for pro-rata bonuses upon termination for cause or good reason, with specific details on performance basis for CEO/EVP Chou versus other executives.
  • 8Changes were made to the definition of 'cause' to include material failure to comply with the company's code of conduct or employment policies.

Frequently Asked Questions

This 8-K filing is primarily to announce the departure of a director who will not seek re-election and, more significantly, to detail amendments to the employment agreements of key named executive officers concerning their severance and change-in-control benefits.

The amendments generally enhance the severance packages for executives, particularly in scenarios involving termination without cause or for good reason, especially when occurring within 24 months after a change in control of the company. This includes extended base salary continuation and higher bonus payouts in specific change-in-control termination events for the CEO and other senior officers.

While the changes aim to align with market practices, investors should note that enhanced change-in-control provisions can potentially increase the cost to the company in such events. The inclusion of 'material failure to comply with the Company's code of conduct or employment policies' as a cause for termination is a clarification that could impact severance eligibility under specific circumstances.

Director Douglas R. Conant, who has served since 2013, will not stand for re-election. His decision is stated to be voluntary and without disagreement with the company. His departure will result in a reduction of the Board size from ten to nine members.