WASHINGTON, July 15, 2014 /PRNewswire-USNewswire/ -- ISS, the country's largest proxy advisor, announced its recommendation that McKesson [NYSE: MCK] shareholders vote 'FOR' Item #6 on the company proxy to support a Teamster-sponsored proposal that urges the company to address the automatic accelerated vesting of equity awards in the event of a change of control and termination. The proposal will be voted on at the July 30 shareholder meeting.
The value of these equity awards, according to McKesson's proxy, could total more than $283 million in unearned compensation to top executives on their way out the door, with CEO John Hammergren positioned to receive $140.5 million.
"McKesson shareholders voted by 78 percent to reject the company's executive pay plan last year," said Ken Hall, General Secretary-Treasurer of the Teamsters Union, "And still this board refuses to address what could amount to more than a quarter billion dollar executive pay give-away. It's a disgrace."
ISS noted that waiving the vesting requirements on equity awards designed to promote retention or motivate achievement of specific performance goals could create perverse windfall opportunities and that adopting a pro-rata vesting provision upon a change in control would be a meaningful response to shareholders' expressed concerns over McKesson's high executive compensation practices.
In a letter to investors urging support for the proposal, Hall stated that similar proposals received majority support this year at Boston Properties, Dean Foods, Gannett and Valero Energy. In fact, 44 percent of McKesson shareholders supported this proposed reform in 2012.
Other major corporations including Apple, Chevron, ExxonMobil, IBM, Intel, Microsoft, and Occidental Petroleum, have already implemented limitations on accelerating vesting of unearned equity such as providing pro rata awards or simply forfeiting unearned awards.
Research from James Reda & Associates found that over one-third of the largest 200 companies now pro-rate, forfeit, or only partially vest performance shareholders upon a change of control.
Founded in 1903, the International Brotherhood of Teamsters represents more than 1.4 million hardworking men and women throughout the United States, Canada and Puerto. Follow us on Twitter @Teamsters and "Like" us on Facebook at www.facebook.com/teamsters.
SOURCE International Brotherhood of Teamsters