UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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McKESSON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 2015 Annual
Meeting of Stockholders Meeting Date: July 29, 2015
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 2 2 Executive Summary We ask for your support at our 2015 Annual Meeting Strong Performance Delivered strong financial and operational performance in FY 2015 Increased Adjusted EPS by 29% year-over-year and achieved a three-year compound
annual growth rate of almost 21%
Generated $3.1 billion in operating cash flow
Delivered total shareholder return of 29%, adding $11.7 billion in market
value Expanded our scale and global reach with the acquisition of Celesio
AG Robust
Governance Practices We value shareholder feedback in the refinement of our governance practices Recently elected our Lead Independent Director to an additional two-year term
Delivering on our commitment, we are pleased to submit proxy access by-law
amendments to shareholders at the 2015 Annual Meeting
Improvements to the Compensation Program Engaged with over 62% of our shareholder base since the 2014 Annual Meeting Continued to enhance our compensation program in response to feedback: o Introduced new performance metrics o Performance or vesting periods for new long-term awards of at least three years
Independent and Experienced Board 10 of 11 director nominees are independent Our directors bring a balance of industry-specific and functional expertise
We are refreshing our Board – we added three new independent directors in FY 2015 and expect three of our current directors to retire over the next two years |
 3 3 A History of Strong, Sustained Performance Key Operational, Financial and Strategic Achievements Delivered significant, profitable growth on a top-line, bottom-line, and cash flow basis
Deepened relationships with customers and manufacturing partners while expanding
scale and global reach
Focused growth on emerging technology solutions and enhanced customer relationships in distribution solutions Continued execution of disciplined strategic transactions, most recently the $8 billion
acquisition of Celesio AG that expanded McKesson’s global platform
Balanced capital allocation policy with significant capital return to shareholders
through both stock repurchases and dividends
Our executive team and experienced Board
have driven tremendous long-term value for our shareholders
* Total shareholder return (“TSR”) is calculated as stock price
appreciation (or reduction) over the measurement period, including reinvestment of dividends when paid, divided by the stock price at the beginning of the period. |
 Responsive to
Shareholder Feedback 4
Ongoing Board Refreshment Substantive Compensation Program Changes In FY 2014, implemented changes to address concerns regarding the scale of our CEO’s pension and
the quantum of his pay:
o Reduced pension benefit to a fixed value almost 30% less than the amount he would have
received had he resigned at the end of FY 2013
o Eliminated volatility in pension due to changes in actuarial assumptions In FY 2015, continued to enhance our executive compensation program: o Introduced a new relative performance metric and strengthened pay for performance alignment
o Relative total shareholder return metric is part of a long-term incentive program that also uses
absolute financial performance metrics
o All executive officers receive long-term incentive awards with performance or vesting periods of
at least three years
In FY 2014, implemented a number of changes to our Board’s leadership
structure: o
Alton F. Irby III, former Chair of the Compensation Committee, stepped off that
Committee o
Jane E. Shaw, Ph.D., joined the Compensation Committee and then assumed the role of
Chair o
Wayne A. Budd was appointed Chair of the Governance Committee
In FY 2015, refreshed Board committees and Board composition:
o Appointed a new Chair of the Compensation Committee, Andy D. Bryant, upon retirement of the
former Chair o Three new members joined our Board of Directors - N. Anthony Coles, M.D., Donald R. Knauss and Susan R. Salka o In addition to a fresh perspective, Dr. Coles and Ms. Salka both bring years of leadership in the healthcare industry and Mr. Knauss brings unique branding and retailer knowledge We expect three of our current directors to retire over the next two years: Alton F. Irby III, David M. Lawrence, M.D. and Wayne A. Budd We regularly engage with our shareholders to understand their views and make meaningful changes in response to shareholder feedback |
 Total
Shareholder Return of 258%, CEO Direct Pay Down 21%
5 Total Shareholder Return (1) vs. CEO Total Direct Compensation (2) (1) Total shareholder return assumes $100 invested at the close of trading on March 31, 2010 and the reinvestment of dividends when paid.
Total direct compensation (“TDC”) refers to total compensation disclosed in
the Summary Compensation Table minus the amount displayed under the
“Change in Pension Value and Nonqualified Deferred Compensation Earnings” column. We exclude this amount because it does not reflect Compensation Committee decisions based on Company or individual performance.
(2) |
 Executive
Compensation Financial Targets Tied to Operating and Strategic
Plans 6
Key Considerations in Development of Annual and Long-Term Goals
Business Environment Competitive Factors McKesson Objectives International Trends Public Policy Analyst Expectations Market Outlook Tax Policy Industry Trends Competitor Performance Competitor Plans Competitive Landscape Market Growth Historical Trends Historical Performance Long Range Planning Capital Deployment Opportunities Recent Capital Deployment Decisions Long Range Corporate Strategy Financial targets for annual and long-term incentive plans tied to annual operating plan and rolling three-year
strategic plan This approach has been effective: o From FY 2013 to FY 2015, McKesson’s forward earnings guidance grew at its midpoint by more than 47%,
representing a compound annual growth rate of more than 21%
o For FY 2015, forward earnings guidance published on May 12, 2014 represented 25% to 30% growth year-
over-year on a constant currency basis
o The growth marked by our FY 2015 forward guidance was incorporated into each of the financial
performance targets approved by the Compensation Committee in May 2014 for use in
McKesson’s executive compensation program
Rigorous operational and strategic planning supports
the development of relevant and challenging incentive targets
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 What’s
New: Executive Compensation Incentive Plan Changes for FY 2015
7 Shareholder Feedback Impact on FY 2015 Incentive Plans Redundant use of earnings metrics Replaced Adjusted EBITDA with Adjusted OCF as secondary financial metric in the Management Incentive Plan (annual cash incentive) Replaced Cumulative Adjusted OCF with Adjusted ROIC as secondary metric in the Long-Term Incentive Plan (long-term cash incentive) Lack of shareholder return or relative measure Replaced Performance Restricted Stock Unit program (“PeRSU,” former long-term equity incentive) with a new Total Shareholder Return Unit program (“TSRU,” new long-term equity incentive) for executive
officers Adopted TSR relative to S&P 500 Health Care Index as sole performance metric in new TSRU program: o Target payout at 55 th percentile relative to index (above median performance) o Payout capped at target if McKesson TSR is negative Short performance period (one- year) in PeRSU program All long-term incentive plans for executive officers, including the new TSRU program, now have performance or vesting periods of at least three years |
 Vital Balance
of Industry and Functional Expertise 8
Experienced Leaders Global Leadership All 11 nominees are experienced business leaders, which equips them to provide constructive insight to our management team. 8 of the nominees have substantial international experience, which brings critical perspective to our Board with our expansion in the global marketplace. Healthcare Financial Expertise 5 of the nominees are experienced leaders in the healthcare industry, including leaders of pharmaceutical and medical device companies and organizations providing healthcare services. 10 of the nominees have valuable financial experience having spent a significant portion of their careers focused on finance or as chief executives, with 3 of them previously having served as Chief Financial Officers. Supply Chain Technology 8 of the nominees bring supply chain or manufacturing experience to our boardroom, which enhances the Board’s oversight of our Distribution Solutions businesses. 5 of the nominees are
experienced leaders in the technology industry,
which allows them to effectively
oversee the management of our
Technology Solutions businesses.
The Governance Committee has worked to build a vibrant Board
that blends the right expertise and perspectives to oversee McKesson
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 9 Independent, Experienced and Diverse Board McKesson’s Board, with its diverse perspectives, provides valuable guidance, consultation and oversight for management Actively Refreshing the Board with New Talent During FY 2015, three new members joined our Board of Directors: N. Anthony Coles, M.D., Donald R. Knauss and Susan R. Salka In addition to the fresh perspectives they provide the Board, Dr. Coles and Ms. Salka both bring years of leadership in the healthcare industry, and Mr. Knauss brings unique branding and retailer knowledge Jane E. Shaw, Ph.D., our longest-tenured director, retired from the Board at the 2014 Annual Meeting of
Stockholders, and we expect three additional directors to retire over the next two years: Alton F. Irby III, David M. Lawrence, M.D. and Wayne A. Budd The Governance Committee maintains a robust self-assessment and nomination process and will continue to
draw from a pool of highly qualified, diverse and independent director candidates for
nomination to the Board |
 What’s
New: Governance 10
In 2014, we announced plans to submit a proposal at the 2015 Annual Meeting to adopt
proxy access by-law amendments
Over the last 12 months, we continued to actively engage with shareholders to
understand their views on proxy access
On June 1 st , we announced that our Board adopted proxy access by-law amendments, subject to
shareholder approval at the 2015 Annual Meeting, with the following terms:
o 3% ownership with a three-year holding period o Shareholders may nominate directors for up to 20% of the available seats The by-law amendments will become effective immediately if approved by shareholders
Our Board remains committed to strong, shareholder-focused,
contemporary corporate governance practices consistent with our goal
of creating long-term, sustainable value for McKesson’s
shareholders Delivering on Proxy Access
Reelection of Lead Independent Director
In 2013, the Board created the role of Lead Independent Director and elected Edward A.
Mueller as McKesson’s first Lead Independent Director to serve a
two-year term In April 2015, the independent directors of the
Board elected Mr. Mueller to serve an additional two-year term as
Lead Independent Director, subject to his continuing reelection and status as an independent director |
 Board
Perspectives on Shareholder Proposals Disclosure of Political
Contributions 11
Given the limited nature of McKesson’s corporate political contributions, together
with recently enhanced transparency and Board oversight of our political
engagement, the Board believes this proposal is unnecessary and recommends
a vote “AGAINST” Decisions
made by policymakers have a profound impact on our industry, business and customers We primarily engage in the political process through the McKesson Corporation Employees Political
Fund (“PAC”)
Contributions are funded entirely by eligible McKesson employees on a voluntary basis;
such contributions are not made with corporate assets
Transparency and accountability with respect to political expenditures are
important All
corporate political contributions are subject to both internal procedures and strict laws regarding transparency www.mckessoncorporatecitizenship.com provides a detailed description of our approach and total
corporate political contributions (under “Our Company — Engagement and Collaboration”), and our PAC files monthly reports with the Federal Election Commission McKesson does not make “independent expenditures” or “super PAC” contributions McKesson makes a limited number of corporate political contributions at the state level
This includes corporate contributions to state candidates and political action
committees in areas where the Company has a significant employee or
facility presence Political
contributions are subject to Board oversight, and all contributions must be approved by the Senior Vice President of Public Affairs, with contributions greater than $1,000 subject to approval by
the Chairman of the Board and Chief Executive Officer
Participating in the Political Process Contributions Funded by Employees Transparency and Disclosure Limited Corporate Contributions |
 Board
Perspectives on Shareholder Proposals Accelerated Vesting of Equity
Awards 12
The Board believes that the current executive compensation structure, including
accelerated vesting of equity incentive awards, is appropriate and
effective at aligning the interests of executives and shareholders
– a vote “AGAINST” is recommended
The Board opposes this proposal because providing for accelerated vesting of equity awards in the event of a named executive officer’s termination following a change in control is in the best interests of
shareholders: o This “double trigger” for accelerated vesting is consistent with feedback from our shareholders
o Executives have employee benefits, including severance and change in control benefits, that the
Compensation Committee believes are competitively necessary
o Adopting this proposal would limit our ability to provide competitive compensation programs and
could disadvantage our ability to attract and retain highly qualified
employees The Board believes that the current structure of the
Company’s executive compensation program, including the provisions
related to accelerated vesting of equity incentive awards, is appropriate and effective, and aligns the interests of our executives with those of the Company’s shareholders
o These compensation programs are consistent with market practice and provide us with the ability to
compete for, attract and retain talented executives
Accelerated vesting can help to mitigate some of the uncertainty that will likely arise for executives from a change in control transaction, and reduce the risk of executive turnover during a pending transaction
where the risk of job loss is relatively high for senior executives
Accelerated Vesting Subject to a Double Trigger Benefits Shareholders Aligning Incentives Retaining Key Talent |
 13 2015 Annual Meeting of Stockholders This information is being provided to shareholders in addition to the proxy statement filed by
McKesson Corporation (the “Company”) with the Securities and Exchange
Commission (the “SEC”) on June 15, 2015. Please read the
complete proxy statement and accompanying materials carefully before you
make a voting decision. Even if voting instructions for your proxy have
already been given, you can change your vote at any time before the Annual
Meeting by giving new voting instructions as described in more detail in the proxy
statement. The proxy statement, and any other documents filed by the
Company with the SEC, may be obtained free of charge at www.sec.gov and from the Company’s website at www.mckesson.com.
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