What is the significance of the termination of the Rights Agreement?

The termination of the Rights Agreement, effective January 31, 2007, suggests McKesson may be reducing certain defensive measures against potential hostile takeovers or changing its approach to shareholder rights and governance. Investors should monitor any subsequent strategies related to capital structure or corporate control.

What does the adoption of a majority vote standard for director elections mean for shareholders?

Under the new majority vote standard for uncontested elections, a director nominee must receive more than 50% of the votes cast 'for' their election, rather than just more votes than any other candidate (plurality). This increases accountability, as directors who fail to garner majority support may need to resign, subject to board decision.

What are the proposed changes to declassify the Board of Directors?

McKesson's Board has approved amendments to its Restated Certificate of Incorporation to declassify the Board. This means that instead of staggered, multi-year terms, directors would stand for election annually, starting with the 2008 annual meeting. This change, along with the removal of the 'for cause' removal provision, requires stockholder approval and is intended to enhance director accountability and responsiveness to shareholders.

Are these changes effective immediately for all aspects?

Most By-Law amendments, including the majority vote standard and the director resignation policy, were effective upon Board approval on January 4, 2007. However, the declassification of the Board and the elimination of the 'for cause' removal provision are subject to stockholder approval at the July 25, 2007 annual meeting and will only become effective upon stockholder approval and subsequent filings.

MCK 8-K: Material Agreements, Shareholder Matters & More

Summary

McKesson Corporation (MCK) filed an 8-K on January 8, 2007, reporting key corporate governance changes approved by its Board of Directors on January 4, 2007. The most significant development is the termination of the company's Rights Agreement, originally dated October 22, 2004, effective January 31, 2007. This action signals a shift in the company's approach to shareholder rights and potential takeover defenses. Furthermore, the company's By-Laws were amended to implement a majority vote standard for uncontested director elections, replacing the previous plurality standard. This change means directors will need more than 50% of the votes cast to be elected. Alongside this, a director resignation policy was adopted, requiring nominees to submit irrevocable resignations contingent on failing to receive the required vote and board acceptance, aiming to enhance accountability. These governance enhancements are subject to further stockholder approval for certain aspects, particularly the declassification of the Board.

Key Highlights

1Termination of McKesson's Rights Agreement, previously dated October 22, 2004, effective January 31, 2007.
2Implementation of a majority vote standard for uncontested director elections, replacing the plurality vote standard.
3Adoption of a director resignation policy requiring irrevocable resignations from nominees who fail to achieve the required majority vote in uncontested elections, subject to board acceptance.
4Amendments to By-Laws to allow for electronic transmission of notices and consents for meetings and board actions.
5Proposed amendments to the Restated Certificate of Incorporation to declassify the Board, moving towards annual director elections, subject to stockholder approval.
6Elimination of the provision requiring 'cause' for the removal of directors, pending stockholder approval.

MCKESSON CORP 8-K Report, Material Agreement (Jan 8, 2007)

Summary

Key Highlights

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