* McKesson has been criticized for excessive CEO pay
* ISS recommends vote against 4 directors but not CEO
* McKesson has agreed to install a lead independent director
NEW YORK, July 14 Proxy advisory firm
Institutional Shareholder Services (ISS) is urging shareholders
of McKesson Corp to vote against the re-election of four
directors, citing the firm's persistent problems in addressing
shareholders' concerns about executive compensation.
Chief among the concerns was "the sizable and growing"
lump-sum pension payment due to Chairman and CEO John Hammergren
had he retired, which was worth some $159 million, ISS said.
The ISS recommendation follows criticism of the San
Francisco-based healthcare technologies and drug distribution
firm by CtW Investment Group. CtW Investment is part of the
Change to Win labor federation, whose members include pensions
funds that are McKesson shareholders.
McKesson said its governance and executive compensation
structure helped drive its strong performance.
"Our board continues to listen and be responsive to
shareholder input, and we have made a number of significant
governance and compensation changes in direct response to input
from our shareholders," McKesson said in a statement.
In a July 1 letter to McKesson shareholders, CtW said
McKesson's board is "entrenched and insular" and noted a "string
of multi-billion dollar compliance and internal control failures
under the watch of the audit committee".
CtW Investment Group also urged McKesson shareholders to
vote against the re-election of directors Jane Shaw, a 21-year
veteran of the board; Alton Irby, a 14-year veteran of the
compensation committee as well as Hammergren.
In its recommendation, ISS said shareholders should vote
against Irby and three other members of the compensation
committee - Edward Mueller, Christine Jacobs and David Lawrence
- for failing to address the compensation issues.
"The fact is the CEO's lump sum pension balance represents
substantial lifetime costs to shareholders and does not
incentivize the CEO's retention," ISS said.
ISS did not recommend the removal of Shaw. It also did not
recommend voting against Hammergren because the company has
agreed to name a lead independent director.
ISS representatives did not return requests for comment
The ISS recommendations were first reported by The Wall
McKesson's shareholders are scheduled to vote at the
company's July 31 annual shareholder meeting.