DEF 14A of Cencora, Inc.
Filed Jan 23, 2025 · FY20240001140859-25-000017
Talent Management and Executive Compensation
Talent Management and Executive Compensation
Talent Management and Executive Compensation
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Talent Management and Executive Compensation
2025 Director Nominee Highlights
Talent Management and Executive Compensation
| Ornella Barra Chief Operating Officer, International WBA Age: 71 Director since: 2015 Committee membership: | Werner Baumann* IND Retired Chairman, CEO and Chief Sustainability Officer Bayer AG Age: 62 Director since: 2023 Committee membership: | Frank K. Clyburn IND Retired CEO International Flavors & Fragrances Inc. Age: 60 Director since: 2024 Committee membership: None | Steven H. Collis** Executive Chairman and retired President and CEO Cencora Age: 63 Director since: 2011 Committee membership: | | | | | | | D. Mark Durcan*** IND Retired CEO Micron Technology, Inc. Age: 63 Director since: 2015 Committee membership: | Lon R. Greenberg IND Retired CEO UGI Corporation Age: 74 Director since: 2013 Committee membership: | Lorence H. Kim, M.D. IND Venture Partner Ascenta Capital Age: 50 Director since: 2022 Committee membership: | Robert P. Mauch President and CEO Cencora Age: 58 Director since: 2024 Committee membership: | | | | | | | Redonda G. Miller, M.D.* IND President The Johns Hopkins Hospital Age: 58 Director since: 2023 Committee membership: | Dennis M. Nally IND Retired Chairman PricewaterhouseCoopers International Ltd. Age: 72 Director since: 2020 Committee membership: | Lauren M. Tyler* IND Retired EVP and Global Head of Human Resources JP Morgan Asset and Wealth Management Age: 63 Director since: 2023 Committee membership: | | | | | | |
Talent Management and Executive Compensation
| * Member of the Company’s Special Litigation Committee formed in January 2024. ** Mr. Collis was Chairman, President and CEO during fiscal 2024 and became the Executive Chairman of the Board at the start of fiscal 2025 on October 1, 2024. *** Lead Independent Director since March 2023. | | Audit | | Committee Chair | | Compensation and Succession Planning | | | | Finance | | Compliance and Risk | | Governance, Sustainability and Corporate Responsibility | | | | Executive | IND | Independent Director | | |
Talent Management and Executive Compensation
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Talent Management and Executive Compensation
Fiscal 2024 Executive Compensation Design Overview(1)
Talent Management and Executive Compensation
| CEO | Other NEOs | | | |
Talent Management and Executive Compensation
| | Performance shares | | Restricted stock units |
Talent Management and Executive Compensation
| | Element | Award Type | Metrics(2) | | Fixed | Base Salary | •Cash | •N/A | | At-Risk and/or Variable | | | | | | Short-term incentive | •Cash | •40% Adjusted Operating Income •25% Adjusted EPS •25% Adjusted Free Cash Flow •10% ESG | | | Long-term incentives | •Performance shares •Restricted stock units (“RSUs”) | •75% Adjusted EPS CAGR •25% Average Annual Adjusted ROIC •+/- 15% relative TSR modifier (target payout requires relative TSR performance at 55th percentile) |
Talent Management and Executive Compensation
(1)Long-term incentives reflect grant date value of the fiscal 2024 awards. Short-term incentives are shown at target. Percentages do not include the Leadership Awards (as defined on page 61 in the Compensation Discussion and Analysis section). (2)Adjusted Operating Income, Adjusted EPS, Adjusted Free Cash Flow and Average Annual Adjusted ROIC are non-GAAP financial measures. For the definition of Average Annual Adjusted ROIC, please see footnote 2 on page 59 of the Long-Term Incentive Equity Compensation section. See Appendix A on page 102 for additional information regarding non-GAAP financial measures, including other definitions and GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Director Nominee Independence
Director Nominee Independence
Director Nominee Independence
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Director Nominee Independence
The Board has adopted guidelines in our corporate governance principles to assist it in making independence determinations, which meet or exceed the independence requirements set forth in the New York Stock Exchange (“NYSE”) listing standards. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with Cencora. With the assistance of legal counsel, our Board reviewed the applicable legal standards for director and Board committee member independence. In undertaking its review, the Board considered that some of our directors serve on the board of directors or as executive officers of companies for which we perform (or may seek to perform) drug distribution and other services in the ordinary course of business. As a result of this review, the Board determined that each of the following current directors and director nominees is independent: Werner Baumann; Frank K. Clyburn; D. Mark Durcan; Richard W. Gochnauer; Lon R. Greenberg; Kathleen W. Hyle; Lorence H. Kim, M.D.; Redonda G. Miller, M.D.; Dennis M. Nally; and Lauren M. Tyler. Our Board determined that each of the members of the Board’s Audit Committee, Compensation and Succession Planning Committee (“Compensation Committee”) and Governance, Sustainability and Corporate Responsibility Committee (“Governance Committee”) are independent. The Board also determined that each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE listing standards and the applicable rules of the U.S. Securities and Exchange Commission (“SEC”) and considered the additional factors under the NYSE listing standards relating to members of the Compensation Committee before determining that each member of the Compensation Committee is independent. None of the members of these committees receives any consulting or advisory fee from us other than compensation as non-employee directors. Additionally, there are no family relationships among Cencora’s directors and executive officers.
Director Nominee Independence
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Director Nominee Independence
Identification and Evaluation of Director Nominees and Overboarding Policy Our Governance Committee seeks director nominees who possess qualifications, experience, attributes and skills that will enable them to contribute meaningfully to the leadership of our Board and to effectively guide and supervise management in driving Cencora’s growth and financial and operational performance. Each director nominee should: •possess the highest personal and professional ethics, integrity and values; •be committed to representing the long-term interests of our shareholders; and •have an inquisitive and objective perspective, practical wisdom and mature judgment. Each director nominee should also have sufficient time to effectively carry out his or her duties as a director. Pursuant to our corporate governance principles, our CEO may serve on no more than one other public company board and our other director nominees may serve on no more than three other public company boards. In addition, our Governance Committee has identified the following expertise, experience, attributes and skills that are particularly relevant to Cencora:
Director Nominee Independence
| •Corporate Governance | •Global Markets | •Risk Oversight | | •Distribution and Logistics | •Healthcare | •Sustainability and Corporate Responsibility | | •Executive leadership | •IT/Cybersecurity | •Talent Management and Executive Compensation | | •Financial Literacy | •Regulatory | |
Director Nominee Independence
Board Succession We are committed to Board succession planning and recognize the value in adding directors with new perspectives to our Board. The Board review process involves discussion and planning for both Board succession and committee rotation. To support this process, the Board maintains certain policies regarding director retirement. Pursuant to our corporate governance principles, a director will offer to resign at the annual meeting of shareholders following his or her 75th birthday, and a director will tender his or her resignation for consideration by the Governance Committee when his or her employment or principal business association changes materially. Additionally, a director who is an employee will resign when he or she retires or is no longer employed by us. The Board also rotates committee chairs on a regular basis.
Director Nominee Independence
| | 7 0-5 years | | | 2 6-10 years | | | 2 >10 years |
Director Nominee Independence
To further our commitment to ensuring meaningful Board refreshment, in 2022 the Board adopted a mandatory term limit, pursuant to which any director initially elected or appointed to the Board after August 18, 2022 will offer to resign at the annual meeting of shareholders following his or her 15th anniversary as a director.
Director Nominee Independence
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Director Nominee Independence
Diversity We seek individuals with diverse backgrounds, skills and expertise to serve on our Board. We believe that diversity is essential to encourage fresh perspectives, enrich the Board’s deliberations and avoid the dominance of a particular individual or group over the Board’s decisions. In accordance with our corporate governance principles and the Governance Committee charter, for any director search we strive to source a pool comprised of diverse individuals, including but not limited to gender, ethnically and racially diverse candidates. The Governance Committee evaluates all potential director nominees using the same criteria, regardless of the source of the nominee. Accordingly, all potential director nominees, including shareholder nominees, are assessed using the criteria outlined above. The Governance Committee may consider and evaluate director nominees identified by our shareholders as described in Shareholder Recommendations for Director Nominees on page 22. The information set forth in the diversity matrix below is based on self-identification information voluntarily provided by our director nominees, which they have consented to disclose in this proxy statement.
Director Nominee Independence
| | Gender | | Race/Ethnicity | | | Born Outside of the United States | | Director Nominee | Female | Male | African American/ Black | Asian | White | | | Ornella Barra | l | | | | l | l | | Werner Baumann | | l | | | l | l | | Frank K. Clyburn | | l | l | | | | | Steven H. Collis | | l | | | l | l | | D. Mark Durcan | | l | | | l | | | Lon R. Greenberg | | l | | | l | | | Lorence H. Kim, M.D. | | l | | l | | | | Robert P. Mauch | | l | | | l | | | Redonda G. Miller, M.D. | l | | | | l | | | Dennis M. Nally | | l | | | l | | | Lauren M. Tyler | l | | l | | | |
Director Nominee Independence
Audit Committee Financial Experts The Board determined that both Mr. Nally and Mr. Gochnauer are “audit committee financial experts” as defined in Item 407(d)(5) of Regulation S-K. Mr. Nally serves as chair of the Audit Committee. A description of the financial expertise of Mr. Nally accompanies his biography on page 21. The designation as an audit committee financial expert does not impose upon such designees any duties, obligations or liabilities that are greater than those of any other member of the Audit Committee and the Board.
Director Nominee Independence
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Director Nominee Independence
Biographies of Our Director Nominees Walgreens Boots Alliance, Inc.’s Designated Director Nominee Pursuant to the Amended and Restated Shareholders Agreement (as amended, the “Shareholders Agreement”) between Cencora and WBA, WBA has the right to designate a director to the Board once WBA and certain of its subsidiaries collectively own 5% or more of our common stock (“Common Stock”). On May 1, 2014, WBA notified us that it had acquired at least 5% of our Common Stock. Ms. Barra, Chief Operating Officer, International of WBA, has been designated by WBA to serve on our Board since, and was appointed to the Board on, January 16, 2015 and is a current nominee for election as director. In addition, under the Shareholders Agreement, if WBA and its subsidiaries acquire 19,859,795 or more shares of our Common Stock in the open market, WBA will be entitled to designate a second director to the Board. Per the terms of the Shareholders Agreement, for so long as WBA has a right to designate a director to the Board, subject to certain exceptions, including matters related to acquisition proposals, WBA and its subsidiaries will be obligated to vote their shares in accordance with our Board’s recommendations on all matters submitted to a vote of our shareholders.
Director Nominee Independence
| Ornella Barra Director since January 2015 Age: 71 Committees •Compliance and Risk •Finance Other current public company boards •None | Professional experience Ms. Barra has served on the Board since January 2015. She currently serves as Chief Operating Officer, International of WBA. Previously, she served as Co-Chief Operating Officer of WBA from June 2016 until April 2021 and as Executive Vice President of WBA and President and Chief Executive of Global Wholesale and International Retail from February 2015 until June 2016. Ms. Barra served as Chief Executive, Wholesale and Brands of Alliance Boots GmbH from September 2013 until January 2015 and as Chief Executive of the Pharmaceutical Wholesale Division of Alliance Boots GmbH from January 2009 until September 2013. Prior to her role as Chief Executive of the Pharmaceutical Wholesale Division, Ms. Barra was the Wholesale and Commercial Affairs Director and a Board member of Alliance Boots plc. Prior to the merger of Alliance UniChem Plc and Boots Group plc, Ms. Barra served on the Board of Alliance Participations Limited. Ms. Barra is an honorary Professor of the University of Nottingham’s School of Pharmacy and is a member of the Advisory Council of SDA School of Management, Bocconi University. Ms. Barra was formerly a member of the Board of Directors of Assicurazioni Generali S.p.A., one of the largest Italian insurance companies, from April 2013 to April 2019. Ms. Barra was a member of the Board of Directors of Alliance Boots GmbH between June 2007 and February 2015, and was Chair of its Corporate Social Responsibility Committee from 2009 to 2014. She currently serves as a member of the Board of International Federation of Pharmaceutical Wholesalers, Inc. | | | Qualifications and expertise •Global Markets. Demonstrates expertise and understanding of global markets by leading and expanding international wholesale and retail operations of multinational companies. •Healthcare and Distribution Expertise. Heads global wholesale and international retail operations for WBA. Acquired extensive experience in pharmaceutical wholesale distribution and pharmaceutical retail industries through a long career at Alliance Boots GmbH and predecessor companies, and trained as a pharmacist. •Risk Oversight. Serves as Chief Operating Officer, International of WBA and served as a director of one of the largest insurance companies in Italy. •Sustainability & Corporate Responsibility. Serves as Chair of ESG Committee of WBA Corporate Social Responsibility Committee. |
Director Nominee Independence
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Director Nominee Independence
| Werner Baumann Independent Director since: October 2023 Age: 62 Committees: •Audit •Compensation and Succession Planning •Special Litigation (Chair) Other current public company boards: •None | Professional experience Mr. Baumann has served on the Board since October 2023. He previously served as Chief Executive Officer and Chairman of the Board of Management of Bayer AG from May 2016 until his retirement in May 2023, and as Chief Sustainability Officer from January 2020 to May 2023. Mr. Baumann joined Bayer AG in 1988 and held numerous positions of increasing responsibility at the company, including positions on the Board of Management of Bayer AG as Chief Financial Officer from 2010 to 2014 and Chief Strategy and Portfolio Officer from 2014 to 2016. | | | Qualifications and expertise •Healthcare and Distribution Expertise. Has held various senior executive leadership positions and has extensive business and operating experience in and knowledge of the healthcare distribution and services market. •Global Markets. Extensive experience leading a multinational company with significant international operations. •Governance and Risk Oversight. Previously served as Chief Executive Officer, Chairman of the Board of Management, Chief Sustainability Officer, Chief Financial Officer and Chief Strategy and Portfolio Officer of Bayer AG. |
Director Nominee Independence
| Frank K. Clyburn Independent Director since: October 2024 Age: 60 Committees: •None Other current public company boards: •Revolution Medicines, Inc. (Nasdaq: RVMD) | Professional experience Mr. Clyburn has served on the Board since October 2024. He served as Executive Director and Chief Executive Officer of International Flavors & Fragrances Inc. from February 2022 to February 2024. Previously Mr. Clyburn served as Executive Vice President and President, Human Health of Merck & Co., Inc. (“Merck”) from March 2021 to January 2022. Mr. Clyburn held a variety of other leadership positions with Merck from 2008 to 2021 including leading the company’s oncology and market access business. Prior to Merck, Mr. Clyburn was Vice President, Oncology and Internal Medicine of Sanofi Aventis from 2004 to 2008, holding various positions of increasing responsibility for Sanofi Aventis and its predecessors since 1994. Mr. Clyburn has been a director of Revolution Medicines, Inc. since August 2024 and previously served on the Board of Directors of DuPont de Numours, Inc. from 2019 to 2022. | | | Qualifications and expertise •Executive Leadership. Brings valuable experience in finance, executive leadership and strategic planning drawing from his tenure as Chief Executive Officer of International Flavors & Fragrances Inc. •Global Markets. Has significant experience in expanding global markets, product development and franchise operations for a multinational healthcare organization. •Healthcare. Possesses in-depth expertise in the healthcare and pharmaceutical industries, with a focus on oncology, developed through extensive experience at leading pharmaceutical companies. •Governance and Risk Oversight. Serves as a member of the board of directors of Revolution Medicines, Inc. and previously served as a director at DuPont de Numours, Inc. |
Director Nominee Independence
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Director Nominee Independence
| Steven H. Collis Executive Chairman since October 2024 Director since: May 2011 Age: 63 Committees: •Executive (Chair) Other current public company boards: •None | Professional experience Mr. Collis is the Executive Chairman of the Board and the retired President and Chief Executive Officer of Cencora, positions that he held from July 2011 through September 2024. He has been a member of the Board since 2011 and served as the Board’s Chairman from March 2016 until he assumed the role of Executive Chairman on October 1, 2024. Since 1994, Mr. Collis has held a variety of positions with Cencora and its predecessors including, among others, President and Chief Operating Officer of AmerisourceBergen (from November 2010 to July 2011), Executive Vice President and President of AmerisourceBergen Drug Corporation (from September 2009 to November 2010), Executive Vice President and President of AmerisourceBergen Specialty Group (from September 2007 to September 2009) and Senior Vice President of AmerisourceBergen Corporation and President of AmerisourceBergen Specialty Group (from August 2001 to September 2007). Mr. Collis is a member of the American Red Cross Board of Governors and the Board of International Federation of Pharmaceutical Wholesalers, Inc. He served as a member of the Board of Directors of Thoratec Corporation from 2008 to 2015 and as a member of the Board of CEOs Against Cancer (PA Chapter) from 2014 to 2019. | | | Qualifications and expertise •Healthcare and Distribution Expertise. Has held various senior executive leadership positions with Cencora and its predecessors and has extensive business and operating experience in wholesale pharmaceutical distribution and knowledge of the healthcare distribution and services market. •Global Markets. Led a multinational company that significantly expanded international operations. •Governance and Risk Oversight. Serves as Executive Chairman of Cencora and previously served as a director of Thoratec Corporation. |
Director Nominee Independence
| D. Mark Durcan Lead Independent Director since 2023 Director since: September 2015 Age: 63 Committees: •Executive Other current public company boards: •ASML Holding NV. (Nasdaq: ASML) •Advanced Micro Devices, Inc. (Nasdaq: AMD) | Professional experience Mr. Durcan has served on the Board since September 2015 and as the Board’s Lead Independent Director since March 2023. From 1984 until his retirement in May 2017, Mr. Durcan held various leadership positions with Micron Technology, Inc., including Chief Executive Officer and director (from February 2012 until May 2017), President and Chief Operating Officer (from June 2007 to February 2012), Chief Operating Officer (from February 2006 to June 2007), and Chief Technology Officer (from June 1997 to February 2006). Mr. Durcan served as a director of MWI Veterinary Supply, Inc. from March 2014 until we acquired it in February 2015. Mr. Durcan has served as a director for Advanced Micro Devices since October 2017 and for ASML Holding NV since April 2020. He previously served as a director of Veoneer from April 2018 to April 2022 and Freescale Semiconductor, Inc. from 2014 through 2015. Mr. Durcan has been a director of St. Luke’s Health System of Idaho since February 2017 and has served on the Board of Trustees of Rice University since June 2020. He has also served on the Semiconductor Industry Association Board and the Technology CEO Council. | | | Qualifications and expertise •Financial Expertise. Brings substantial experience in the areas of finance, executive leadership and strategic planning from his former roles as Chief Executive Officer and Chief Operating Officer of Micron Technology, Inc. •Global Markets. Contributes deep understanding of global markets and extensive experience in managing global manufacturing, procurement, supply chain and quality control for a multinational corporation and, as former member of the Board of Directors of MWI Veterinary Supply, Inc., has important insight into wholesale distribution of animal health products. •Information Technology. Has unique and in-depth knowledge of technology and experience overseeing technological innovation. |
Director Nominee Independence
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Director Nominee Independence
| Lon R. Greenberg Independent Director since: May 2013 Age: 74 Committees: •Compliance and Risk •Executive •Governance, Sustainability and Corporate Responsibility (Chair) Other current public company boards: •None | Professional experience Mr. Greenberg has served on the Board since May 2013. He served as Chairman of UGI Corporation’s Board of Directors from 1996 until January 2016 and as director of UGI Utilities, Inc. and AmeriGas Propane, both UGI Corporation subsidiaries. Mr. Greenberg served in various leadership positions throughout his tenure with UGI Corporation, most recently serving as Chief Executive Officer from 1995 until his retirement in April 2013. Mr. Greenberg is a member of the Board of Trustees of Temple University and the Board of Directors of The Philadelphia Foundation. He also serves as Chairman of the Board of Directors of Temple University Health System. He previously served as a member of the Boards of Aqua America, Inc. (now known as Essential Utilities, Inc.), Ameriprise Financial, Inc., Fox Chase Cancer Center, and the United Way of Greater Philadelphia and Southern New Jersey. | | | Qualifications and expertise •Financial Expertise. Brings financial literacy and sophistication acquired through various executive, legal and corporate roles, as well as prior membership on the boards of other NYSE-listed companies. •Global Markets. Has valuable business and executive management experience in distribution and global operations as the former Chief Executive Officer of UGI Corporation. •Healthcare Expertise. Contributes experience and knowledge of the healthcare industry from his perspective as a former director of healthcare organizations. •Governance and Regulatory Experience. Served as Chief Executive Officer and Chairman of the Board of Directors of UGI Corporation, and as a director of Aqua America, Inc. (now known as Essential Utilities, Inc.) and Ameriprise Financial, Inc. |
Director Nominee Independence
| Lorence H. Kim, M.D. Independent Director since: October 2022 Age: 50 Committees: •Compensation and Succession Planning •Executive •Finance (Chair) Other current public company boards: •Revolution Medicines, Inc. (Nasdaq: RVMD) | Professional experience Dr. Kim has served on the Board since October 2022 and currently is a Venture Partner at Ascenta Capital. He served as a Venture Partner at Third Rock Ventures from September 2020 to December 2022. He served as Chief Financial Officer of Moderna, Inc. from April 2014 to June 2020. From July 2000 to April 2014, Dr. Kim held a number of positions at Goldman, Sachs & Co., most recently as Managing Director and Co-Head, Biotechnology Investment Banking. Dr. Kim has served as a director of Revolution Medicines, Inc., since July 2022, and has served as a director of TD Cowen (formerly known as Cowen, Inc. and now a subsidiary of TD Bank, N.A.) since February 2022. Dr. Kim is currently a member of the American Red Cross Board of Governors. He previously served as a member of the Board of Directors of Seres Therapeutics, Inc. from October 2014 to June 2020. | | | Qualifications and expertise •Financial Expertise. Has extensive experience in biotechnology finance, including his prior service as the Chief Financial Officer of Moderna, Inc. •Healthcare Expertise. Contributes experience and knowledge of the healthcare industry from his experience as a medical doctor, his background in healthcare investment banking at Goldman Sachs and as a member of the Board of Governors of the American Red Cross. •Governance and Risk Oversight. Serves as a member of the boards of TD Cowen and Revolution Medicines, Inc. and previously served as a director at Seres Therapeutics, Inc. and other biotech companies. •Risk Management. Brings extensive experience in management, operations, capital markets, international business, financial risk management and regulatory compliance. |
Director Nominee Independence
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Director Nominee Independence
| Robert P. Mauch Executive Director since October 2024 Director since: October 2024 Age: 58 Committees: •Executive Other current public company boards: •None | Professional experience Mr. Mauch has served as the President and Chief Executive Officer of Cencora and as a member of the Board since October 2024. From October 2022 through September 2024, Mr. Mauch was Executive Vice President and Chief Operating Officer of Cencora and previously served in a variety of other leadership positions at Cencora and its predecessor since 2007, including time leading Cencora’s distribution business. He is the founder of Xcenda, L.L.C., a life sciences commercialization and consulting firm to pharmaceutical companies, which was acquired by Cencora in 2007. Mr. Mauch is also a member of The Professional Society for Health Economics and Outcomes Research, American Society of Managed Care Pharmacy, and the American Pharmacists Association, and Chairman of the Board of Directors of the Covenant House of Philadelphia. | | | Qualifications and expertise •Healthcare and Distribution Expertise. Has held various senior executive leadership positions with Cencora and has extensive business and operating experience in wholesale pharmaceutical distribution and knowledge of the healthcare distribution and services market. •Global Markets. Leads a multinational company that has significantly expanded international operations. •Governance and Risk Oversight. Serves as a member of the Board and as President and Chief Executive Officer of Cencora and was the founder of Xcenda, which was acquired by Cencora in 2007. |
Director Nominee Independence
| Redonda G. Miller, M.D. Independent Director since: January 2023 Age: 58 Committees: •Compliance and Risk (Chair) •Executive •Governance, Sustainability and Corporate Responsibility •Special Litigation Other current public company boards: •None | Professional experience Dr. Miller has served on the Board since January 2023. She has served as the President of The Johns Hopkins Hospital since 2016. Previously, Dr. Miller was Chief Medical Officer and Senior Vice President of Medical Affairs of The Johns Hopkins Hospital and Health System from 2016 to 2017, and Chief Medical Officer and Vice President of Medical Affairs of The Johns Hopkins Hospital and Health System from 2009 to 2016. Dr. Miller has been an associate professor in the Department of Medicine at The Johns Hopkins University since 2006. From November 2021 to October 2022, she was a director at Invivyd, Inc. (formerly Adagio Therapeutics, Inc.). Dr. Miller is a member of the Board of Directors of Gilchrist Hospice Care, Inc. and Turnaround Tuesday Inc. | | | Qualifications and expertise •Healthcare Expertise. Brings substantial experience in healthcare as a physician and through various leadership roles at The Johns Hopkins Hospital and Health System. •Governance and Risk Oversight. Currently serves as the President of The Johns Hopkins Hospital, one of the top medical centers in the United States. |
Director Nominee Independence
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Director Nominee Independence
| Dennis M. Nally Independent Director since: January 2020 Age: 72 Committees: •Audit (Chair) •Compensation and Succession Planning •Executive Other current public company boards: •Morgan Stanley (NYSE: MS) | Professional experience Mr. Nally has served on the Board since January 2020. He served as Chairman of PricewaterhouseCoopers International Ltd., the coordinating and governance entity of the PwC network, from 2009 to 2016. From 2002 to 2009, he served as Chairman and Senior Partner of the U.S. firm PricewaterhouseCoopers LLP. He joined PricewaterhouseCoopers LLP in 1974 and became partner in 1985, serving in numerous leadership positions within the organization, including National Director of Strategic Planning, Audit and Business Advisory Services Leader and Managing Partner. Mr. Nally is a member of the Boards of Directors of Morgan Stanley and Globality, Inc., a privately-held company. | | | Qualifications and expertise •Financial Expertise. Has extensive knowledge of financial statements, accounting principles and practices, internal control over financial reporting and risk management processes. •Governance and Risk Oversight. Has expertise in highly regulated industries, including serving as a director at Morgan Stanley and as a senior executive at PricewaterhouseCoopers. |
Director Nominee Independence
| Lauren M. Tyler Independent Director since: October 2023 Age: 63 Committees: •Governance, Sustainability and Corporate Responsibility •Special Litigation Other current public company boards: •None | Professional experience Ms. Tyler has served on the Board since October 2023. From 2015 to 2024, Ms. Tyler served as Executive Vice President and Global Head of Human Resources at J.P. Morgan Asset & Wealth Management. Prior to this role, Ms. Tyler served in various leadership roles at JPMorgan Chase & Co., including as Global Chief Auditor and Global Head of Investor Relations. Ms. Tyler is a seasoned financial executive with 35 years of experience in private equity, investment banking and finance. Since May 2024, Ms. Tyler has served on the Board of Directors of Guardian Life Insurance, and previously served on the Board of Directors of Alleghany Corporation from January 2019 until its acquisition by Berkshire Hathaway in October 2022. | | | Qualifications and expertise •Financial Expertise. Extensive business experience in private equity, investment banking, finance, and accounting. •Talent Management and Executive Compensation. Several years of experience as the global human resources leader for J.P. Morgan Asset & Wealth Management and prior public company compensation committee service. •Risk Oversight. Served as a director of public and private companies and prior service as Global Chief Auditor for JPMorgan Chase & Co. |
Director Nominee Independence
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Director Nominee Independence
Director Elections Our bylaws and corporate governance principles provide for a majority vote standard for the election of directors. Under the majority vote standard, each director must be elected by a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote. A “majority of the votes cast” means that the number of votes cast “for” a candidate for director must exceed the number of votes cast “against” that candidate. A plurality voting standard will apply instead of a majority voting standard if there is a contested election. A “Contested Election” means any meeting of shareholders at which the number of nominees for election as directors exceeds the number of directors to be elected as of the tenth day preceding the date that we first mail our notice of meeting for such meeting to our shareholders. Under Delaware law, if an incumbent nominee for director in an uncontested election does not receive the required votes for re-election, the director remains in office until a successor is elected and qualified. Our bylaws and corporate governance principles require each director nominee to tender an irrevocable resignation prior to the applicable meeting of shareholders and include post-election procedures in the event an incumbent director does not receive the required votes for re-election, as follows: •The Governance Committee shall make a recommendation to the Board as to whether to accept the previously tendered resignation of the director; •The Board will act on the Governance Committee’s recommendation; and •The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. Shareholder Recommendations for Director Nominees The advance notice provisions for nomination of directors in our bylaws allow a shareholder to propose nominees for consideration by the Governance Committee. For more information regarding our director nomination advance notice provisions, including the informational requirements and deadlines for submitting a director nomination for our 2026 Annual Meeting of Shareholders, see Other Information - Shareholder Nominations for Director Election at the 2026 Annual Meeting of Shareholders on page 100. Furthermore, the proxy access provisions in our bylaws allow an eligible shareholder or group of no more than 20 eligible shareholders, that in either case has maintained continuous ownership of 3% or more of our Common Stock for at least three years, to include a number of director nominees up to the greater of two or 20% of the directors then in office in our proxy materials for an annual meeting of shareholders. For more information regarding our proxy access provisions, including the informational requirements and deadlines for submitting a proxy access notice for our 2026 Annual Meeting of Shareholders, see Other information - Proxy Access at the 2026 Annual Meeting of Shareholders on page 101.
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Director Nominee Independence
Corporate Governance Board and Governance Practices Our Board has adopted corporate governance principles that, together with the charters of the Board committees, provide the framework for the governance of Cencora. Our corporate governance principles clearly delineate the authority and roles of the Chairman of the Board and the Lead Independent Director in the leadership of the Board, mandate the independence of the committee chairs and all the members of our Audit, Compensation and Governance Committees, and affirm non-employee directors’ access to managers and team members outside the presence of our executives. The corporate governance principles address a variety of governance issues in addition to leadership structure, including those discussed under the headings Board Committees (page 26), Code of Ethics and Business Conduct (page 37) and Shareholder Recommendations for Director Nominees (page 22). The Board annually reviews the corporate governance principles and the committee charters and approves updates to reflect leading corporate governance practices, as appropriate. Our corporate governance principles and the charters of the Audit, Compensation, Compliance and Risk, Finance, and Governance Committees have been posted on our website at investor.cencora.com/governance/committees.
Director Nominee Independence
| Enabling Effective Oversight of Management | | | Majority of director nominees are independent (eight out of 11) All members of the Audit, Compensation, and Governance Committees are independent Lead Independent Director with clearly-defined responsibilities (see page 25) Thoughtful succession planning process in place for Board Full Board plays an active role in risk oversight and regularly receives reports on risk exposure from management | Board oversight of corporate responsibility reporting and disclosure practices Board oversight of enterprise risk management and legal and regulatory compliance Strict overboarding policy for our CEO and non-employee directors (see page 14) Director tenure policy and regular rotation of committee chairs and assignments (see page 14) Comprehensive annual review process for the Board and each of its committees (see page 37) Robust shareholder communication and engagement Director stock ownership guidelines |
Director Nominee Independence
| Enabling Accountability to Our Shareholders | | | Majority vote standard (for uncontested elections) Removal of directors with or without cause Right to call special meetings by shareholder(s) with net long beneficial ownership of 25% or more Proxy access | No supermajority requirement Declassified Board with annual election of all directors No cumulative voting |
Director Nominee Independence
Board Structure and Operations Our Board provides guidance and critical review of our governance, strategic initiatives, talent management, and risk management processes. Our Board also ensures that we have an effective management team in place to manage our day-to-day business and serves to protect and advance the long-term interests of our shareholders. The role of our senior executives is to develop and implement a strategic business plan for Cencora and to grow our business.
Director Nominee Independence
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Our employees conduct our business under the direction of our President and CEO and with the oversight of our Board, including our Executive Chairman and Lead Independent Director. To enhance its oversight function, our Board is composed of directors who are not employed by us, with the exception of Mr. Collis and Mr. Mauch. Leadership Succession Planning A key responsibility of the Board is to ensure the Company’s continued performance over the long-term through effective succession planning. In furtherance of this mission, over the last several years, the Board established and executed a rigorous succession planning process to identify, evaluate and select a lead candidate for the role of CEO. Leadership Transition This process culminated on October 1, 2024, when Cencora’s Executive Vice President and Chief Operating Officer, Robert P. Mauch, PharmD, PhD, became our President and CEO, succeeding Steven H. Collis, who transitioned to the role of Executive Chairman of the Board. Concurrent with his appointment as CEO, Mr. Mauch also was appointed to the Board. After considering multiple candidates and evaluating his performance and readiness for the role as described below, the Board determined that Mr. Mauch, who brings three decades of executive management experience in the pharmaceutical industry, was best suited to assume the CEO role and lead the Company. In making this determination, the Board considered a variety of factors, including Mr. Mauch’s institutional knowledge and performance as the Company’s Chief Operating Officer (“COO”). Mr. Mauch joined the Company in 2007 and has held roles of increasing responsibility across our business, including leading all of Cencora’s domestic and international business units as COO. Since joining the Company, Mr. Mauch has helped lead Cencora’s transformation into a united, global provider of pharmaceutical-centered healthcare solutions. Furthermore, he has a deep and thorough understanding of the evolving healthcare landscape, which will be invaluable to Cencora as we continue to create shareholder value and advance our purpose of creating healthier futures. Succession Planning Process The selection of Mr. Mauch as our new CEO was the culmination of the Board’s deliberate and thoughtful approach to succession planning over a multi-year period, led by our Lead Independent Director and our Compensation and Succession Planning Committee Chair, with input from our former CEO and current Executive Chairman. At the outset of the process, the Board engaged a global consulting firm that specializes in talent strategies for organizations. With input from each director, the Board developed a profile to identify a candidate capable of successfully managing Cencora’s global healthcare solutions businesses, driving innovation, and delivering long-term stakeholder value. Potential candidates were evaluated through an in-depth assessment process, and development plans were created for the top internal candidates. After considering and evaluating candidates with unique skills, experiences and capabilities, in March 2024 the Board selected Mr. Mauch as Cencora’s next CEO. To support the CEO transition and Board continuity, the Board determined that it was in the best interests of Cencora and its shareholders to have Mr. Collis assume the role of Executive Chairman on October 1, 2024 in order to benefit from Mr. Collis’ leadership and expertise in fiscal 2025. Board Leadership Our Board retains the flexibility to determine the optimal leadership structure for the Company and our shareholders because we believe that our shareholders benefit most when our Board has the freedom to make decisions that are in the best interests of the Company, rather than pursuant to a predetermined policy. Accordingly, our corporate governance principles do not require the Chairman to be independent or for the roles of Chairman and CEO to be separate; instead, our corporate governance principles enable our Board to determine the best leadership structure at a given point in time. Notwithstanding the foregoing, our corporate governance principles do provide that, if the Chairman is not an independent member of the Board, then a Lead Independent Director must be elected annually from among the independent directors by a majority vote of the independent directors. We believe that this leadership structure fosters innovative, responsive, and strong leadership for the Company as a whole and is best suited for the Company at this time. Furthermore, we believe that our governance structure establishes a dynamic leadership role for the Lead Independent Director that, together with independent committee leadership, provides a meaningful counterbalance to the Executive Chairman and maintains independent and effective oversight of management. In connection with the appointment of Mr. Collis as the Executive Chairman, the Board reviewed and refined certain responsibilities of the Lead Independent Director and the Executive Chairman to reflect their respective roles during the CEO transition as described below.
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Lead Independent Director Mr. Durcan began his service as our Lead Independent Director immediately following the 2023 Annual Meeting of Shareholders. The Board continues to believe that Mr. Durcan provides sound independent leadership in the boardroom. He brings important skills and qualifications to the role, including substantial experience in strategic planning, global markets and technological innovation gained through his experience as a chief executive officer and chief operating officer of a publicly traded company and his service on other public company boards. Mr. Durcan also has strong working relationships with his fellow directors. The Lead Independent Director’s authority and responsibilities include:
Director Nominee Independence
| preside at all meetings of the Board at which the Executive Chairman is not present call, set the agenda for and chair executive sessions of the non-employee directors has authority to call a Board meeting and/or a meeting of non-employee directors in collaboration with the CEO, set the Board meeting agendas and schedule to ensure that there is sufficient time for discussion of all agenda items serve as the Board contact for the CEO and management team advise the CEO regarding the quality, quantity and timeliness of information provided to the Board by management meet one-on-one with the Executive Chairman after each regularly scheduled Board meeting serve as a liaison between the Executive Chairman and the non-employee directors serve on the Executive Committee | advise the chairs of the Board committees and assist them in the management of their workloads with the chair of the Compensation Committee, take a leading role in succession planning for the CEO support the chair of the Governance Committee in overseeing the annual self-assessment process for the Board and each committee, interviewing and recommending candidates for the Board and recommending Board committee assignments is available for communication and consultation with major shareholders as appropriate perform such other functions and responsibilities as set forth in our corporate governance principles or as requested by the Board or the non-employee directors from time to time |
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The Board maintains processes that provide it with opportunities to examine and reassess the effectiveness of our leadership structure, including the performance of our Executive Chairman and our Lead Independent Director. These topics are reviewed through annual evaluations, under the oversight of our Governance Committee. The Compensation Committee, in accordance with its charter and under the oversight of the Lead Independent Director, also annually reviews the performance of, and the succession plan for, the CEO. Executive Chairman The Executive Chairman’s primary responsibilities are to support effective Board governance and the CEO during the transition period. Mr. Collis served as President and CEO of the Company from July 2011 through September 2024 and as Chairman of the Board from March 2016 through September 2024. Effective October 1, 2024, he assumed the role of Executive Chairman. As previously disclosed, the Board determined that it is in the best interests of the Company and its shareholders for Mr. Collis to serve as Executive Chairman until his retirement from the Board on September 30, 2025. As Executive Chairman, and in collaboration with the Lead Independent Director, Mr. Collis is responsible for leading productive Board meetings. In this role, he facilitates assimilation of new directors and assists the Board in its oversight responsibilities, including with respect to Company risks. At the request of Mr. Mauch as President and CEO, Mr. Collis also provides advice on key issues and support in select strategic projects to ensure continuity.
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Board Committees There are five standing committees of the Board that, together with the Executive Committee, are the primary committees with delegated oversight of the Company’s operations:
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| Standing Committees: | | | | | | Audit Committee | | Finance Committee | | | Compensation Committee | | Governance Committee | | | Compliance and Risk Committee | | |
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Our Audit, Compensation, and Governance Committees are each chaired by and composed solely of independent directors, and a majority of the directors serving on our Compliance and Risk Committee and Finance Committee are independent directors. Our non-employee directors are encouraged to, and often do, have direct contact with members of our senior management team outside the presence of our executive officers. Our Executive Committee is composed of our Executive Chairman, Lead Independent Director, CEO, and the chairs of the five standing committees, and has authority to act in between regularly scheduled meetings of the Board. The Executive Chairman serves as the chair of the Executive Committee. The Board believes that changing committee assignments from time to time strengthens our corporate governance practices and enhances each committee’s objective review of management.
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| Audit Committee |
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| | Key responsibilities •Appoints, and has authority to terminate, our independent registered public accounting firm. •Pre-approves all audits and permitted non-audit services provided by the Company’s independent registered public accounting firm. •Reviews and discusses the independence of our independent registered public accounting firm. •Reviews and discusses with management and our independent registered public accounting firm the Company’s audited financial statements and interim quarterly financial statements as well as management’s discussion and analysis of the statements as set forth in Forms 10-K and 10-Q filed with the SEC. •Approves the audit committee report as required by SEC rules. •Discusses with management and/or our independent registered public accounting firm significant financial reporting issues, judgments made in connection with the preparation of our financial statements, and the adequacy of our internal control over financial reporting. •Reviews the internal audit function, internal audit plans and internal audit reports and recommends changes, if necessary. •Reviews the appointment, performance and replacement of our chief audit executive. •Assists the Board with oversight of the Company’s compliance with legal and regulatory requirements, including, as appropriate, participating in oversight of enterprise risk management. •Discusses the Company’s guidelines, policies and practices with respect to the assessment, management and mitigation of risks. •Reviews and approves all related persons transactions in accordance with our Related Persons Transactions Policy. •Reviews, at least annually, our information technology security program and reviews and discusses the controls around cybersecurity, including the development of a cyber strategy and our business continuity and disaster recovery plans. •Establishes and oversees procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous submissions by Company employees regarding concerns of questionable accounting or auditing matters. | | Committee Members Dennis M. Nally (Chair) Werner Baumann Richard W. Gochnauer All members are independent Fiscal 2024 meetings: 9 Report The Report of the Audit Committee is on page 91 | |
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| Compensation and Succession Planning Committee |
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| | Key responsibilities •Reviews and approves our executive compensation strategy and the levels and mix of compensation elements of total compensation for the Executive Chairman, the President and CEO, and other members of executive management. •Evaluates performance of management annually. •Ensures our executive compensation strategy aligns with shareholder interests. •Considers and approves any compensation practices related to ESG and coordinates with the Governance Committee on these practices, as appropriate. •Administers, monitors, and reviews the Company’s clawback policies and the clawback, recoupment and forfeiture provisions contained in the Company’s equity and cash incentive compensation programs. •Reviews and discusses with management the Compensation Discussion and Analysis and other disclosures about executive compensation that are required to be included in our proxy statement and Annual Report on Form 10-K. •Prepares a compensation committee report as required by SEC rules. •Establishes guidelines for the administration of, and grants awards under, our incentive compensation plans, with discretion to adjust compensation upward or downward. •Has sole authority for retaining any consulting firm used to assist the committee in its evaluation of the compensation of the President and CEO or any other executive officer and for evaluating the independence of such consulting firm. •Monitors the activities of our internal Benefits Committee, including the Benefits Committee’s oversight of the administration and investment performance of our retirement plans. •Oversees the administration of our health and welfare plans. •Reviews with management and makes recommendations relating to succession planning and talent development. •Has authority to delegate any of its responsibilities to a subcommittee or internal committee as it deems appropriate in its sole discretion. | | Committee Members Kathleen W. Hyle (Chair) Werner Baumann Lorence H. Kim, M.D. Dennis M. Nally All members are independent Fiscal 2024 meetings: 7 Report The Report of the Compensation Committee is on page 67 | |
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| Compliance and Risk Committee |
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| | Key responsibilities •Oversees the implementation by management of an enterprise risk management program that is designed to assist the Company with monitoring and mitigating compliance, legal, regulatory, and operational risks related to the business, including emerging risks. •Assists the Board in its oversight of the Company’s compliance with legal and regulatory requirements and reviews all significant litigation and internal and government investigations with the appropriate members of management (other than matters reserved for oversight by the Audit Committee or the Special Litigation Committee). •Reviews and oversees the Company’s compliance program and meets regularly with the Company’s Chief Compliance Officer to discuss matters within the committee’s oversight responsibility. •Reports to the Board regarding the Company’s compliance functions and related risks. •Oversees compliance with our Code of Ethics and Business Conduct. •Assists the Board with overseeing the Company’s Controlled Substances Monitoring Program, including through quarterly reports from the Chief Diversion Control Officer. •Reviews the appointment and performance of the Company’s Chief Compliance Officer and Chief Diversion Control Officer. | | Committee Members Redonda G, Miller, M.D. (Chair) Ornella Barra Richard W. Gochnauer Lon R. Greenberg Fiscal 2024 meetings: 5 | |
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| Finance Committee |
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| | Key responsibilities •Provides oversight of our capital structure and other issues of financial significance to the Company. •Reviews the Company’s funding and capital needs and makes recommendations to the Board with respect thereto. •Reviews the adequacy of the Company’s liquidity, and proposed financing plans, credit facilities, and other financing transactions. •Reviews our dividend policy and tax planning strategies. •Reviews and proposes issuance or sale of our stock, stock repurchases, redemptions and splits. •Reviews financial strategies developed by management to meet changing economic and market conditions. •Reviews proposed major capital expenditures or commitments. •Reviews proposed material acquisitions, divestitures, joint ventures, and other transactions involving the Company and periodically reviews performance and progress of completed acquisitions and capital spending projects. | | Committee Members Lorence H. Kim, M.D. (Chair) Ornella Barra Kathleen W. Hyle Fiscal 2024 meetings: 5 | |
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| Governance, Sustainability and Corporate Responsibility Committee |
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| | Key responsibilities •Reviews and makes recommendations to the Board about corporate governance and the Company’s corporate governance principles. •Identifies and discusses with management the risks, if any, relating to the Company’s corporate governance structure and practices. •Oversees the Company’s sustainability and corporate responsibility strategy and practices, including the Company’s ESG reporting and disclosure practices. •Oversees the Company’s social strategy and practices, including with respect to DEI. •Receives regular reports from the Company’s Global ESG Impact Council and oversees the Company’s support for charitable organizations, including the Cencora Impact Foundation and the Cencora Team Assistance Fund. •Recommends selection and qualification criteria for directors and committee members and identifies and recommends qualified candidates to serve as directors of the Company, including those recommended by shareholders. •Reviews and makes recommendations relating to succession planning for our Board and Board committee leadership positions and prepares for Board vacancies. •Oversees orientation of directors and continuing education of directors in areas related to the work of our Board and the directors’ committee assignments. •Makes recommendations regarding the size and composition of our Board and the composition and responsibilities of Board committees. •Oversees the evaluation of our Board and the Board committees and reviews the committee assignments. •Reviews and makes recommendations to our Board regarding non-employee director compensation. •Has sole authority for retaining and terminating any third-party firm used to assist in the annual Board and Board committee evaluation and with evaluation of the compensation of directors, and for evaluating the independence of such firm. | | Committee Members Lon R. Greenberg (Chair) Redonda G. Miller, M.D. Lauren M. Tyler All members are independent Fiscal 2024 meetings: 4 | |
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The Board’s Role and Responsibilities Oversight of Risk Management Our Board considers specific risk topics throughout the year, including risks associated with government regulation as well as with our strategic objectives, business plan, operations, distribution of controlled substances, corporate responsibility, compensation, information technology (including cybersecurity), and capital structure, among many others. Each quarter, our Chief Financial Officer (“CFO”) reports to the Board on the Company’s financial performance and discusses actual performance as compared to our business plan. Our executive officers and the leaders of our principal business units report regularly to the Board about the risks and exposures related to their areas of responsibility. The Board is informed about and regularly discusses our risk profile, including legal, regulatory and operational risks to our business. We have a Chief Compliance Officer who oversees our corporate compliance program, including our: •Office of Compliance; •compliance audits; •compliance training; •compliance with our Code of Ethics and Business Conduct; and •reporting, investigation and corrective action program. We also have an internal Compliance Committee composed of senior management that supports the Chief Compliance Officer in fulfilling his or her responsibilities and driving corporate adherence to our compliance program, Code of Ethics and Business Conduct and related policies and procedures. Our Chief Legal Officer, Chief Compliance Officer and Chief Diversion Control Officer regularly report to the Compliance and Risk Committee and to the full Board on corporate compliance matters, the status of our compliance programs (including our diversion control program described below), calls to our hotline and any other material developments. Each Board committee reports to the Board at every regular Board meeting on the topics discussed and actions taken at the most recent committee meeting, including with respect to oversight of the risks that have been delegated to each such committee. The Board discusses the risks and exposures, if any, involved in the matters or recommendations of the committees, as necessary.
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Internal Controls and Anti-Diversion Practices
management of such risks, our data governance and usage, our technology infrastructure, our training and compliance efforts, and implications for our business strategy. In addition to the information provided in these meetings, members of our Board have access to continuing education, which includes topics relating to cybersecurity risks. Please refer to Item 1C. Cybersecurity in Part I of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 for additional information regarding cybersecurity matters. Oversight of Executive Compensation We conducted an internal risk assessment of our compensation policies and practices, including those relating to our named executive officers (“NEOs”). We concluded that our compensation policies and practices do not promote behaviors that could put the organization at legal, financial, or reputational risk. We have reviewed our risk analysis with the Compensation Committee. The risk assessment process included, among other things, a review of all key incentive compensation plans to ensure they are aligned with our pay-for-performance philosophy and include performance metrics that support corporate goals. The objective of this process was to identify any compensation plans and practices that may encourage unnecessary or excessive risk-taking that could have a material adverse effect on the Company. No such plans or practices were identified. Accordingly, no material adjustments were made to the Company’s compensation policies and practices as a result of its risk profile. Various factors mitigate the risk profile of our compensation programs, including, among others: •Performance targets under our cash incentive programs are tied to a number of different financial metrics to avoid placing undue emphasis on any particular metric at the expense of other aspects of our business; •Maximum caps on payouts have been established for our annual cash incentive programs, including under our cash bonus plan; •Equity awards under our performance plan have maximum caps and are forfeited entirely if the threshold performance metrics are not achieved; •The performance plan ties 60% of the annual equity award to performance shares that are dependent on financial metrics achieved over a three-year period to ensure executive officer accountability for our long-term measures of success; •The remaining 40% of the annual equity award is in RSUs and also vests over a multi-year period to encourage retention and to focus on long-term growth and creating value for shareholders; •Stock ownership requirements align the interests of our executive officers with those of our shareholders; •We have effective management processes for developing annual business plans and a strong system of internal financial controls; and •A broad-based group of functions - including human resources, finance, and legal - oversee aspects of our cash and equity incentive programs. We will continue to monitor our compensation policies and practices to determine whether our risk management objectives are being met. Director Engagement
Prohibition of Loans to Directors and Officers
Prohibition of Loans to Directors and Officers Our corporate governance principles prohibit the Company from making any loans or extensions of credit to our directors or executive officers. We do not have any programs under which we extend loans to either directors or executive officers.
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Overview Elements of Director Compensation Our director compensation program is designed to attract and retain qualified non-employee directors. Our program is intended to align with the director compensation of our peers (our fiscal 2024 peer companies are set forth on page 52). Our Governance Committee reviews non-employee director compensation regularly to confirm that it appropriately addresses time, effort, expertise, and accountability required of active Board membership. There were no changes to the Company’s non-employee director compensation program for fiscal 2024. The following table summarizes the compensation earned or paid for service as a director during fiscal 2024 to each non-employee director. Ms. Barra, the WBA designee, waived her right to receive compensation as a non-employee director. Directors who are employees of Cencora receive no compensation for their service as directors or as members of Board committees. Director Fees Our director compensation program provides for an annual cash retainer plus an annual equity award of RSUs. Consistent with our overall compensation philosophy, the compensation program for non-employee directors targets total direct compensation (cash retainer and equity award) aligned with the median of our peer group.
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| Fiscal 2024 Annual Compensation for Non-Employee Directors | Additional Fiscal 2024 Annual Retainers ($)(1)(2) | | | | Committee Chair Fee | | | | •Audit Committee | 25,000 | | | •Compensation and Succession Planning Committee | 20,000 | | | •Compliance and Risk Committee | 25,000 | | | •Finance Committee | 20,000 | | | •Governance, Sustainability and Corporate Responsibility Committee | 20,000 |
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| Lead Independent Director Compensation ($) | | | Annual retainer | 125,000 | | Annual equity award | 250,000 |
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(1)Mr. Nally also received an annual retainer of $50,000 as the sole member of the Special Litigation Committee formed in 2020 to review and evaluate a derivative complaint related to Medical Initiatives, Inc., a subsidiary that ceased operations in 2014. The Delaware Court of Chancery granted the Special Litigation Committee’s motion to dismiss in November 2023, the Delaware Supreme Court affirmed the judgment in September 2024, and the Special Litigation Committee was subsequently dissolved. (2)On January 12, 2024, a Special Litigation Committee was formed to review and evaluate a derivative complaint related to the distribution of controlled substances. During fiscal 2024, Mr. Baumann received $45,000 for serving as Chair of the Special Limitation Committee and Dr. Miller and Ms. Tyler each received $37,500 for serving as members. Annual Retainers A director may elect to have the annual retainer paid in cash, Common Stock or RSUs, or credited to a deferred compensation account. Payment of annual retainers in cash are made in equal quarterly installments.
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Annual Equity Awards On March 12, 2024, each of the non-employee directors (other than Ms. Barra, who waived compensation) received an annual grant of RSUs. The vesting period for these awards is one year from the date of grant, subject to continued service on the Board or following retirement by a director who, after reaching age 55, has an age plus years of continuous service with the Company that equals at least 65. These grants were made under the Company’s 2022 Omnibus Incentive Plan (“2022 Omnibus Incentive Plan”). A director may defer settlement of shares payable with respect to RSUs as described below. Deferral and Other Arrangements Directors have the option to defer all or any part of the annual retainer and to credit the deferred amount to an account under the Company’s Amended and Restated Deferred Compensation Plan (“Deferred Compensation Plan”). Payment of deferred amounts will be made or begin on the first day of the month after the non-employee director ceases to serve as a director. A director may elect to receive the deferred benefit (i) over annual periods ranging from three to 15 years and payable in quarterly installments or (ii) in a single distribution. We pay all costs and expenses incurred in the administration of the Deferred Compensation Plan. Directors also have the option to forgo 50% or more of their annual cash retainers and receive either Common Stock or RSUs covering shares having a fair market value on the quarterly grant date equal to the amount of the foregone compensation. In addition, directors may defer settlement of any shares payable with respect to any RSUs (and any dividend equivalents) received either in lieu of the annual retainer or as the annual equity award to a later date. Perquisites We also provide our directors with a prescription drug benefit and reimburse them for the cost of education programs, transportation, food and lodging related to their service as directors. Director Compensation Policies and Practices Stock Ownership Guidelines
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| Position | Stock Ownership Guidelines | | Compliance Period | Current Status | | Non-employee director | 5 times annual cash retainer | | 5 years from Board election | Met or in the process |
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We require our non-employee directors to own shares of our Common Stock to align their interests with those of our shareholders and to provide an incentive to foster our long-term success. From and after the fifth year following their Board election, non-employee directors must own stock equal in value to at least five times the annual cash retainer. We may take unusual market conditions into consideration when assessing compliance. We confirm compliance with guidelines annually at the end of each fiscal year and, as of September 30, 2024, all of our non-employee directors (except Ms. Barra, who is the WBA designee and does not receive compensation) were in compliance with the stock ownership guidelines or had not yet completed their fifth year as a director.
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Fiscal 2024 Director Compensation
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| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Total ($) | | Ornella Barra(3) | — | — | — | | Werner Baumann | 145,594 | 290,032 | 435,626 | | D. Mark Durcan | 125,000 | 250,024 | 375,024 | | Richard W. Gochnauer | 100,000 | 200,162 | 300,162 | | Lon R. Greenberg | 122,500 | 200,162 | 322,622 | | Kathleen W. Hyle | 120,000 | 200,162 | 320,162 | | Lorence H. Kim, M.D. | 120,000 | 200,162 | 320,162 | | Redonda G. Miller, M.D. | 151,302 | 200,162 | 351,464 | | Dennis M. Nally | 175,232 | 200,162 | 375,394 | | Lauren M. Tyler | 138,094 | 290,032 | 428,126 |
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(1)These include amounts earned for service as committee chairs and amounts deferred into our Deferred Compensation Plan. In fiscal 2024, Mr. Nally received 564 shares of Common Stock in lieu of a portion of his retainer, and Mr. Baumann and Ms. Tyler each received 453 RSUs in lieu of a portion of their respective retainers. (2)As of September 30, 2024, each of the non-employee directors held the following outstanding RSUs:
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| Name | Number of Outstanding RSUs (#) | | Ms. Barra | — | | Mr. Baumann | 1,776 | | Mr. Durcan | 2,251 | | Mr. Gochnauer | 3,401 | | Mr. Greenberg | 9,081 | | Ms. Hyle | 2,041 | | Dr. Kim | 2,735 | | Dr. Miller | 843 | | Mr. Nally | 2,041 | | Ms. Tyler | 1,776 |
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The amounts reported represent the grant date fair value for equity awards shown in accordance with Accounting Standards Codification (“ASC”) 718, disregarding the estimate of forfeitures related to service-based vesting conditions. There were no forfeitures by the directors in fiscal 2024. See Note 10 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 for assumptions used to estimate the fair values of RSUs granted during fiscal 2024. (3)Ms. Barra, the WBA designee, waived her right to receive compensation as a non-employee director.
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| ITEM 2 | Advisory Vote to Approve the Fiscal 2024 Compensation of Cencora’s Named Executive Officers |
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In accordance with the requirements of Section 14A of the Exchange Act, we are including this proposal, commonly known as a “say-on-pay” proposal, which gives our shareholders the opportunity to approve, on a non-binding advisory basis, the fiscal 2024 compensation paid to our NEOs through the following resolution: “Resolved, that the shareholders approve, on an advisory basis, the fiscal 2024 compensation paid to Cencora's named executive officers, as disclosed in Cencora's proxy statement for the 2025 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative discussion.” In deciding how to vote on this proposal, we encourage you to read the Compensation Discussion and Analysis section beginning on page 44 for a detailed description of our executive compensation philosophy and programs, the compensation decisions of the Compensation Committee under those programs and the factors considered in making those decisions. Cencora's executive compensation program is strongly focused on pay for performance principles. We emphasize a compensation philosophy that rewards our executive officers when they deliver targeted financial results and subjects a significant portion of their compensation to risk if they do not. The compensation of our NEOs varies depending upon the achievement of pre-established performance goals. Through stock ownership requirements and equity incentives, we also strive to align the interests of our executive officers with those of our shareholders and the long-term interests of Cencora. We believe that our executive compensation policies have enabled Cencora to attract and retain talented and experienced executives and have benefited Cencora over time. Accordingly, we believe that the fiscal 2024 compensation of our NEOs is reasonable and competitive, aligns with Cencora’s fiscal 2024 results and positions us for future growth. We are asking our shareholders to approve on a non-binding advisory basis the fiscal 2024 compensation of our NEOs as described in this proxy statement. Because your vote is advisory, it will not be binding upon the Board or the Compensation Committee; however, the Board and the Compensation Committee value shareholders’ opinions and, to the extent that any significant vote against the NEO compensation occurs, the Board will consider the shareholders’ concerns and the Compensation Committee will evaluate whether any actions are needed to address those concerns. The Board has adopted a policy providing for annual say-on-pay advisory votes. Unless the Board modifies the Company’s policy, the next say-on-pay advisory vote will be held at our 2026 Annual Meeting of Shareholders, and the next say-on-frequency advisory vote will be held at our 2029 Annual Meeting of Shareholders.
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| | The Board recommends that you vote FOR the advisory resolution approving the fiscal 2024 compensation of Cencora’s named executive officers as described in this proxy statement. |
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Compensation Discussion and Analysis This Compensation Discussion and Analysis (“CD&A”) describes the material elements of our executive compensation program during fiscal 2024, as well as how and why the Compensation Committee arrived at the specific compensation decisions for our NEOs for fiscal 2024. Our NEOs Our NEOs for fiscal 2024 are set forth in the following table.
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| Name | Title | | Steven H. Collis* | Chairman, President and Chief Executive Officer | | James F. Cleary | Executive Vice President and Chief Financial Officer | | Robert P. Mauch* | Executive Vice President and Chief Operating Officer | | Elizabeth S. Campbell | Executive Vice President and Chief Legal Officer | | Silvana Battaglia | Executive Vice President and Chief Human Resources Officer |
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* Effective with the start of fiscal 2025 on October 1, 2024, Mr. Mauch succeeded Mr. Collis as our President and CEO, and Mr. Collis became Executive Chairman of the Board. Executive Summary Our Company Cencora is a leading global pharmaceutical solutions organization centered on improving the lives of people and animals around the world. We partner with pharmaceutical innovators across the value chain to facilitate and optimize market access to therapies. Care providers depend on us for the secure, reliable delivery of pharmaceuticals, healthcare products, and solutions. Our more than 46,000 team members worldwide contribute to positive health outcomes through the power of our purpose: We are united in our responsibility to create healthier futures. Fiscal 2024 Performance
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| Total Shareholder Return | Revenue | Adjusted Operating Income(1 | | 26.2% | $294.0B up 12.1% | $3.6B up 10.9% |
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| Adjusted Diluted EPS(1) | Adjusted Free Cash Flow(1) | | $13.76 up 14.8% | $3.1B |
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(1)Adjusted Operating Income, Adjusted EPS and Adjusted Free Cash Flow are non-GAAP financial measures. See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
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Prohibition of Loans to Directors and Officers
Fiscal 2024 Business and Strategic Highlights Cencora delivered strong performance in fiscal 2024, as we executed on our pharmaceutical-centric strategy, deepening our position at the center of healthcare, strengthening our strategic customer and partner relationships, providing robust services and solutions, and leading in Specialty. Revenue and Adjusted EPS grew by 12.1% and 14.8%, respectively, as we continued to benefit from broad-based utilization trends, execution by our team members, and our value-creating approach to capital deployment. During fiscal 2024 we: •Announced our leadership succession plan, with Robert P. Mauch assuming the role of President and CEO and Steven H. Collis transitioning into the role of Executive Chairman of the Board, effective at the start of fiscal 2025 on October 1, 2024; •Grew consolidated Adjusted Operating Income by 10.9%, driven by (i) strength in our U.S. Healthcare Solutions segment, which benefited from solid utilization trends, including increased sales of Specialty products to health systems and physician practices, and the distribution of commercial COVID-19 vaccines, and (ii) growth in our International Healthcare Solutions segment, which was driven by increases in our Canadian business, our global specialty logistics business, and our less-than-wholly-owned Brazilian full-line distribution business; and •Returned $1.9 billion to our shareholders through a combination of dividends and share repurchases, opportunistically repurchasing $1.5 billion of shares during the fiscal year. We believe that Cencora is well-positioned to increase value for our stakeholders, now and in the future, through the strength of our well-defined strategy and purpose-driven culture. Elements of Compensation The Compensation Committee seeks to design an executive compensation program that incentivizes our management team to meet and exceed objectives that drive long-term value for all our stakeholders, while also promoting talent retention. Our NEOs’ total direct compensation consists of three main components:
Prohibition of Loans to Directors and Officers
| Base Salary | Short-Term Incentive Compensation | Long-Term Incentive Compensation |
Prohibition of Loans to Directors and Officers
The Compensation Committee considers a multitude of factors in determining executive compensation objectives and targets for our NEOs, which are described in detail in the following sections. A substantial majority of NEO compensation is at-risk and/or variable, as it is tied to the Company’s performance, including its share price. Base salary is the only form of NEO fixed compensation. Our compensation policies are designed to attract, incent, and retain talented executive officers. We believe that these policies have benefited Cencora over time and position us for continued growth in the future.
Fiscal 2024 Compensation Design: Target Pay Mix(1)
| | Performance shares | | Restricted stock units |
Fiscal 2024 Compensation Design: Target Pay Mix(1)
| | Element | Award Type | Metrics(2) | Purpose | How We Achieve This | | Fixed | Base Salary | •Cash | •N/A | •Provide a fixed and steady source of income. •Attract and retain top talent. | •Provide competitive salaries based on market data, qualifications, experience, role, responsibilities, performance, and internal pay equity. | | At-Risk and/or Variable | Short-Term Incentive | •Cash | •40% Adjusted Operating Income •25% Adjusted EPS •25% Adjusted Free Cash Flow •10% ESG | •Motivate NEOs to improve financial performance year-over-year. •Reward NEOs who deliver targeted financial results, as well as key business objectives. | •Base annual incentive compensation on key business performance measures and annual operating plan. •Set objective goals for our metrics | | | Long-Term Incentives | •Performance shares •RSUs | •75% Adjusted EPS CAGR •25% Average Annual Adjusted ROIC •+/- 15% relative TSR modifier (target payout requires relative TSR performance at the 55th percentile) | •Motivate NEOs to achieve superior business results over a three-year period. •Enhance alignment between NEOs’ and shareholders’ interests. •Support stock ownership requirements. | •Base long-term incentive compensation on key financial measures and our long-term operating plan. •A relative TSR modifier based on industry comparator group with target goal set at above median performance. •Require post-vest holding on 50% of earned performance shares for two years for the CEO and one year for the other NEOs. |
Fiscal 2024 Compensation Design: Target Pay Mix(1)
(1)Long-term incentives reflect grant date value of the fiscal 2024 awards. Short-term incentives are shown at target. Percentages do not include the Leadership Awards (as defined on page 61). (2)Adjusted Operating Income, Adjusted EPS, Adjusted Free Cash Flow and Average Annual Adjusted ROIC are non-GAAP financial measures. For the definition of Average Annual Adjusted ROIC, please see footnote 2 on page 59 of the Long-Term Incentive Equity Compensation section. See Appendix A for additional information regarding non-GAAP financial measures, including other definitions and GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Highlights of Our Executive Compensation Program — Linking Pay with Performance and Mitigating Risk
| What We Do | What We Do Not Do | | Use financial metrics to make a substantial portion of executive pay contingent on performance. Engage with shareholders on compensation. Conduct an annual say-on-pay vote. Cap payouts under our annual cash bonus plan and performance share plans. Require our CEO to hold stock equal in value to six times his base salary, and our CFO and other NEOs to own stock equal in value to three times their respective base salaries. Require executive officers to retain all equity awards until required ownership levels are met. Require our CEO to hold 50% of performance share awards for two years after vesting and other NEOs to hold 50% of performance share awards for one year after vesting. Incorporate into our performance share award payout Company performance against broader industry peers in the form of a relative TSR modifier. Review peer group data, as available, and compensation survey data in establishing executive officer compensation. Have our CFO and Chief Accounting Officer review adjustments reflected in our reported, non-GAAP financial results with the Compensation Committee on a quarterly basis. Have the Compensation Committee determine whether to exercise discretion to modify the calculated payouts and approve the final payouts for the prior fiscal year’s incentive plans following fiscal year end. Apply robust clawback obligations to annual cash bonus and equity awards for executive officers. Require forfeiture of awards upon violation of restrictive covenants. Require a double-trigger for change in control payments. Consider burn rate in equity grant decisions and manage use of equity awards conservatively. | Tie incentive compensation to specific product sales, including prescription opioid medication sales. Permit short sales, hedging, or pledging of our stock by our executive officers and directors. Backdate or retroactively grant RSUs. Pay dividends on unearned and unvested performance shares. Provide tax gross-ups in the event of a change in control. |
Highlights of Our Executive Compensation Program — Linking Pay with Performance and Mitigating Risk
| Aligns with long-term shareholder interests •A substantial majority of our NEO compensation is equity-based. •The majority of equity compensation has a three-year performance period and our performance shares have a post-vest holding period for our NEOs. •Our NEOs are subject to stock ownership guidelines (6x for CEO and 3x for other NEOs). •The Compensation Committee may exercise discretion. | | | Ensures a significant portion of compensation is at risk and/or variable •Approximately 91% of the CEO’s and approximately 84% of other NEOs' total direct compensation is at-risk and/or variable. •Outcomes are tied to the achievement of predetermined performance metrics. | | | | | | | | | | u | | | t | | | u | | | t | | Drives business goals and strategies that support long-term value and our purpose •We emphasize performance metrics that incentivize and reward business and strategic performance. •Incentive plan metrics measure financial and operational performance and are aligned with our purpose to create healthier futures. | | | Attracts and retains executive talent •Our executive compensation program design considers market and peer practices to attract top executives in a competitive talent marketplace. •A significant portion of our compensation is tied to long-term equity incentives to reward our NEOs for their performance and promote their retention. | |
Year-Round Compensation Planning
| Role of the Compensation Committee | | | •Responsible for the design of our executive compensation program, oversight of our incentive plans, and review of our executive talent development strategy and succession planning. •Facilitates the Board’s annual assessment of the CEO’s performance. •Reviews and approves the individual elements of compensation of our NEOs, including the awards made under our long-term incentive plan. •Reviews and approves executive benefit plans, programs, and perquisites. •Oversees our savings, retirement, health and welfare plans and has delegated the administration of our benefit plans to an internal Benefits Committee, composed of senior finance, human resources, and legal executives. •As needed, participates in engagements with the Company’s largest shareholders to gather feedback on the Company’s executive compensation program and inform its decision-making process. •Reviews and considers the voting results of the Company’s most recent say-on-pay vote. •Reviews the individual performance goals of the CEO at the beginning of the fiscal year. | | | | | | Role of Independent Compensation Consultant | Role of Management | | •The Compensation Committee’s independent compensation consultant advises the Compensation Committee on all aspects of executive compensation, including: comparative data; competitive positioning of executive pay; plan design; long-term incentive pay practices; and market trends. •As directed by the Compensation Committee, the compensation consultant prepares analyses and recommendations relating to the compensation of our NEOs, including pay recommendations for our CEO. •The compensation consultant attends Compensation Committee meetings and meets with the Compensation Committee and its individual members without management present, as needed. | •Our CEO gives the Compensation Committee a performance assessment and pay recommendation for senior management, including each of the other NEOs, and does not participate in discussions regarding his own performance or pay determinations. •Management, in consultation with the Compensation Committee’s independent compensation consultant, may also make recommendations on matters of compensation philosophy and plan design. •Management may attend the Compensation Committee meetings, but they are not present when the Compensation Committee meets in executive session and they do not make recommendations regarding their own pay. |
Year-Round Compensation Planning
Pearl Meyer & Partners (“Pearl Meyer”) served as the Compensation Committee’s compensation consultant during fiscal 2024. The Compensation Committee determined that Pearl Meyer and the individual Pearl Meyer consultants that work with the Compensation Committee are independent and do not have any economic interests in or other relationships with the Company or the Compensation Committee members that would conflict with their obligation to provide the Compensation Committee with impartial and objective advice. Pearl Meyer did not provide any services to our management in fiscal 2024 and, accordingly, no fees were paid for any additional services in fiscal 2024. Peer Group Each year, the Compensation Committee, in consultation with its independent compensation consultant, evaluates a peer group of companies that will serve as a reference for comparing the pay of our NEOs to the market. We assess companies that best reflect the complexity of our industry and competition for customers, shareholders, and talent to determine whether our level of executive pay is appropriate when compared to industry and market standards. We also conduct a detailed market review of executive pay to evaluate each element of pay and benefit competitiveness, review pay practices, and compare performance against our peer group consistent with our pay philosophy. Our peer group consists of companies with business models and operations comparable to our own, including our two largest direct competitors, and companies that we believe have a similar financial and operational profile. Financial metrics used to select our peer group include: revenue; market capitalization; number of employees; net income; operating income margin; and return on invested capital. Following review with Pearl Meyer, the Compensation Committee concluded that our fiscal 2023 peers remained appropriate and made no changes to the fiscal 2024 peer group, which included:
Year-Round Compensation Planning
2024 NEO Compensation Our executive compensation program consists of three core components: base pay, short-term incentives, and long-term incentives, with the majority of compensation being at-risk, variable, and/or performance based. The Compensation Committee’s decisions regarding the fiscal 2024 pay program for our NEOs are described in detail below. Base Salary Base salary is intended to provide a fixed and steady source of income and security. The Compensation Committee considers a variety of factors, including scope of role, duties and responsibilities, experience, expected future contributions, our pay philosophy, median pay of our designated peer group and other market data, and internal pay equity. In fiscal 2024, following an assessment considering the factors described above and in consultation with Pearl Meyer, the Compensation Committee adjusted our NEOs’ base salaries, effective November 19, 2023, to better align their base salaries with the market median of our peer group for each of their respective roles and, in the case of Mr. Cleary, to reflect the increase in his responsibilities related to the oversight of Cencora Business Services, our global shared service centers that support operations across the enterprise.
Quarterly Review of Adjustments and Final Determination of Executive Compensation Payouts
Quarterly Review of Adjustments and Final Determination of Executive Compensation Payouts Our CFO and Chief Accounting Officer present Cencora’s reported non-GAAP financial results and reconciliations to GAAP to the Compensation Committee on a quarterly basis. These results serve as the starting point for the Compensation Committee’s annual incentive compensation decisions. As part of its year-end approval of executive compensation, the Compensation Committee determines whether to exercise discretion to modify the payouts that are calculated under our incentive plans from the Company’s reported non-GAAP financial results.
Quarterly Review of Adjustments and Final Determination of Executive Compensation Payouts
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Quarterly Review of Adjustments and Final Determination of Executive Compensation Payouts
Short-Term Incentive Compensation Our short-term incentive plan is intended to both motivate our NEOs to improve financial performance year-over-year and reward our NEOs who deliver on targeted financial results and other objectives. Target short-term incentive amounts are expressed as a percentage of NEO base salary. After consulting with Pearl Meyer, the Compensation Committee maintained the following fiscal 2023 target cash bonus incentive levels for our NEOs for fiscal 2024, as set forth in the table below.
Quarterly Review of Adjustments and Final Determination of Executive Compensation Payouts
| NEO | Target Cash Bonus (as a % of Base Salary) | | Mr. Collis | 175% | | Mr. Cleary | 100% | | Mr. Mauch | 125% | | Ms. Campbell | 100% | | Ms. Battaglia | 100% |
Fiscal 2024 Cash Bonus Measures and Goals
Fiscal 2024 Cash Bonus Measures and Goals Each year, the Compensation Committee selects enterprise-level performance measures that it believes are the key metrics used for setting business goals and evaluating our financial results. The Compensation Committee also sets goals for these performance measures that it views to be challenging, yet attainable, and that do not encourage excessive risk-taking by management. These goals are based on the Company’s fiscal year plan, approved by the Board, and take into account various factors, including prior fiscal year results, internal operating plans for our business units, Company strategic initiatives, industry-specific external conditions, and the macroeconomic environment. For the fiscal 2024 NEO cash bonus plan design, the Compensation Committee approved the same financial measures used in fiscal 2023: Adjusted Operating Income (weighted 40%), Adjusted EPS (weighted 25%), and Adjusted Free Cash Flow (weighted 25%), as well as ESG objectives (weighted 10%). For fiscal 2024, the Compensation Committee set target goals as follows: •For Adjusted Operating Income and Adjusted EPS targets, to achieve approximately 5% and 7% growth, respectively, over fiscal 2023 results; •For Adjusted Free Cash Flow, $2.1 billion, which was higher than fiscal 2023’s target of $1.8 billion, but lower than fiscal 2023 results of $3.1 billion, due to (i) the acceleration of customer cash receipts experienced in the last month of fiscal 2023, and (ii) fiscal 2024 ending on a Monday (as customer cash receipts on Mondays are typically lower than other days of the week); and •For the ESG objectives, as with fiscal 2023, an objectively measurable target goal that aligned with the Company’s ESG pillars of purpose-driven team members, resilient and sustainable operations, and healthy communities for all, as further described on the following page.
Fiscal 2024 Cash Bonus Measures and Goals
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Fiscal 2024 Cash Bonus Measures and Goals
The fiscal 2024 cash bonus measures for our NEOs were as follows:
Fiscal 2024 Cash Bonus Measures and Goals
| Corporate Performance Measure | Weighting | Rationale | | Adjusted Operating Income(1) | | Rewards operational performance and growth of the Company’s profitability. | | Adjusted EPS(1) | | Rewards profitability and is an important driver of share price valuation and shareholder expectations. | | Adjusted Free Cash Flow(1) | | Rewards maintaining appropriate working capital and facilitates completing acquisitions and returning capital to shareholders through share repurchases and dividends. | | ESG Objectives | | Rewards our commitment to business resiliency planning and attracting and developing a diverse and inclusive workforce. |
Fiscal 2024 Cash Bonus Measures and Goals
(1)Adjusted Operating Income, Adjusted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures. See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations.
Fiscal 2024 Cash Bonus Goals and Outcomes
Fiscal 2024 Cash Bonus Goals and Outcomes The table on the following page provides the fiscal 2024 performance goals for each of the corporate performance measures, as approved by the Compensation Committee in November 2023, as well as the Company’s achievement of such goals and the resulting payout percentages based upon such achievement. For fiscal 2024, the payout curves for each of Adjusted Operating Income, Adjusted EPS, and Adjusted Free Cash Flow were revised from those of fiscal 2023 as follows: the maximum ranges from target for Adjusted Operating Income and Adjusted EPS were decreased and the minimum and maximum ranges from target for Adjusted Free Cash Flow were decreased and increased, respectively. After reviewing the payout curve designs of these measures with those of our peer group and following discussions with Pearl Meyer, the Compensation Committee determined to make these changes to better align our cash bonus incentive design with market practice.
Fiscal 2024 Cash Bonus Goals and Outcomes
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Fiscal 2024 Cash Bonus Goals and Outcomes
| Corporate Performance Measure | Weighting | Threshold (25% Payout)(1) ($) | Target (100% Payout)(1) ($) | Maximum (200% Payout)(1) ($) | Payout Result (%) | | Adjusted Operating Income(2) | | | | | 151.6 | | Adjusted EPS(2) | | | | | 175.0 | | Adjusted Free Cash Flow(2) | | | | | 200.0 | | ESG Objectives(3) | | Business Resiliency Planning (50% weight): achieved completion of 100% of business impact assessments of international commercial operations and IT units. | | | Exceeded | | | | Global Female Representation (25% weight): increased female representation in leadership roles across the global enterprise from the representation level as of fiscal 2023 year-end.(4) | | | Exceeded | | | | Global employee inclusion (25% weight): maintained global enterprise inclusion index score of “highly inclusive.”(5) | | | Met | | | | Total calculated payout (weighted): | | | 164.4* | | *As described on the next page, the Compensation Committee exercised discretion to reduce the final payout percentage for our NEOs to 160.0% of target. | | | | | |
Fiscal 2024 Cash Bonus Goals and Outcomes
(1)Actual results between threshold and target and between target and maximum were calculated based on linear interpolation. For the ESG metric, the Compensation Committee determined the final payout result based on performance against the target goal, up to a maximum of 200%. As a result, the maximum overall payout opportunity for fiscal 2024 was 200%. (2)Adjusted Operating Income, Adjusted EPS, and Adjusted Free Cash Flow are non-GAAP financial measures. See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. (3)For fiscal 2024, the ESG objectives consisted of specific, quantifiable target goals set and measured over the fiscal 2024 performance period, with the final payout result subject to the Compensation Committee’s assessment of overall performance on these objectives from 50% to 200% of target, unless the Compensation Committee determines that the objectives were not met at all. (4)A leadership role is defined as vice president or above. (5)Inclusion index score is based on a sub-section of an externally-developed employee engagement survey designed to assess the inclusivity of the Company’s work environment.
Fiscal 2024 Cash Bonus Goals and Outcomes
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Fiscal 2024 Cash Bonus Payouts
Fiscal 2024 Cash Bonus Payouts Cencora exceeded the target goals for the corporate performance measures and delivered strong business execution and performance for fiscal 2024, resulting in each of the NEOs earning a stretch bonus in accordance with the terms of our Annual Incentive Plan (“AIP”). Our strong growth was driven by broad-based performance across many of our businesses, strong pharmaceutical utilization trends, growth in specialty product sales to physician practices and health systems, and sales of COVID-19 vaccines. Adjusted Free Cash Flow benefited from better-than-expected growth in the U.S. distribution business, customer sales mix, the timing of receipts, and good working capital management. Following the conclusion of fiscal 2024, the Compensation Committee reviewed and discussed the Company’s achievement of its fiscal 2024 objectives and its publicly-reported, non-GAAP financial results. As shown in the table above, the Company’s performance would have resulted in a 164.4% payout. Following discussions with Pearl Meyer, the Compensation Committee exercised discretion and reduced the total payout percentage to 160% of target. In making this determination, the Compensation Committee considered a variety of factors and sought to balance the Company’s strong fiscal 2024 financial and non-financial performance, including the successful implementation of a CEO succession plan, with certain adjustments made to the Company’s non-GAAP financial results.
Fiscal 2024 Cash Bonus Payouts
| Base Salary | | AIP % | | AIP Target | | Payout Level % | | Calculated Payout |
Fiscal 2024 Cash Bonus Payouts
Target and actual fiscal 2024 cash bonuses for our NEOs were as follows:
Fiscal 2024 Cash Bonus Payouts
| NEO | Base Salary ($) | AIP (%) | | AIP Target ($) | Payout Level (%) | | Calculated Payout(1) ($) | | Mr. Collis | 1,464,959x | 175 | = | 2,563,678x | 160.0 | = | 4,101,886 | | Mr. Cleary | 885,943x | 100 | = | 885,943x | 160.0 | = | 1,417,509 | | Mr. Mauch | 1,039,959x | 125 | = | 1,299,949x | 160.0 | = | 2,079,919 | | Ms. Campbell | 721,967x | 100 | = | 721,967x | 160.0 | = | 1,155,148 | | Ms. Battaglia | 625,984x | 100 | = | 625,984x | 160.0 | = | 1,001,574 |
Fiscal 2024 Cash Bonus Payouts
(1)Calculated payout may vary from a straight calculation of AIP target dollars times the payout level as a result of rounding. Long-Term Equity Incentive Compensation
We use equity awards to motivate our NEOs to achieve superior business results
We use equity awards to motivate our NEOs to achieve superior business results and to retain our executive team over the long term. Equity awards support our stock ownership requirements and further enhance the alignment of NEO and shareholder interests. Consistent with prior years, for fiscal 2024, the annual equity awards for our NEOs were allocated as 60% performance shares and 40% time-based RSUs. RSUs vest ratably each year during the three-year vesting period, while performance shares have a three-year performance period. In addition, equity awards are subject to vesting, ownership, and retention requirements, as described in more detail below and in the sections following the Summary Compensation Table on page 68. In approving long-term equity incentive awards, the Compensation Committee considers several factors, including:
We use equity awards to motivate our NEOs to achieve superior business results
| •NEO’s skills, experience, and time in role •NEO’s expected future contributions •Company performance | •Market alignment •Designing the majority of NEO pay to be at-risk or variable •Average annual share burn |
We use equity awards to motivate our NEOs to achieve superior business results
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Fiscal 2024 Equity Incentives
Fiscal 2024 Equity Incentives Following its review of the median of our peer group market data for each pay component and total direct compensation, and after consultation with Pearl Meyer, the Compensation Committee approved the following long-term incentive target amounts for fiscal 2024 versus the prior year:
Fiscal 2024 Equity Incentives
| NEO | Fiscal 2023 Long-Term Incentive Targets ($) | Fiscal 2024 Long-Term Incentive Targets ($) | | Mr. Collis | 12,500,000 | 12,500,000 | | Mr. Cleary | 3,500,000 | 3,600,000 | | Mr. Mauch | 5,000,000 | 6,000,000 | | Ms. Campbell | 2,400,000 | 2,700,000 | | Ms. Battaglia | 1,500,000 | 1,600,000 |
Fiscal 2024 Equity Incentives
The Compensation Committee awarded the following fiscal 2024 annual grants to our NEOs, which represents a mix of 60% in performance share awards and 40% in RSUs:
Fiscal 2024 Equity Incentives
| Name | Performance Shares (at Target) (#) | Performance Shares Grant Value(1) ($) | RSUs(2) (#) | RSUs Grant Value(1)(2) ($) | | Mr. Collis | 38,112 | 7,500,060 | 25,408 | 5,000,040 | | Mr. Cleary | 10,977 | 2,160,164 | 7,318 | 1,440,109 | | Mr. Mauch | 18,294 | 3,600,076 | 12,196 | 2,400,051 | | Ms. Campbell | 8,233 | 1,620,172 | 5,489 | 1,080,180 | | Ms. Battaglia | 4,879 | 960,138 | 3,253 | 640,158 |
Fiscal 2024 Equity Incentives
(1)Amounts in this column represent the grant date fair values of performance shares and RSUs, respectively, shown in accordance with ASC 718, and do not correspond to the actual economic value that may be received by our NEOs upon vesting. For the performance shares, which are subject to performance conditions, we report the value at grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under ASC 718, excluding the effect of estimated forfeitures. For this purpose, the probable outcome of the performance shares is assumed to be at target-level attainment. See Note 10 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, relating to assumptions made in the valuations. (2)Amounts do not reflect the Leadership Award (as defined further below) for each of Mr. Cleary, Ms. Campbell, and Ms. Battaglia.
Fiscal 2024 Equity Incentives
| CEO Equity incentives at target represented approximately 76% of Mr. Collis’ total target direct compensation |
Fiscal 2024 Equity Incentives
| Other NEOs Equity incentives at target represented approximately 67%, on average, of the total target direct compensation of the other NEOs |
Fiscal 2024 Equity Incentives
We believe that it was appropriate to award this amount of equity incentives to our NEOs as they are in the best position to drive our future results and implement our long-term business strategy.
Fiscal 2024 Equity Incentives
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Performance Share Awards
Performance Share Awards Our performance plan is designed to encourage our NEOs to focus on initiatives that promote the achievement of our long-term goals. Performance share awards are granted annually in November and cover a three-year performance period. Performance shares are tied to the attainment of predetermined goals, approved by the Compensation Committee, which it believes are challenging yet attainable and do not encourage excessive risk-taking by management. Specific targets for these goals are disclosed retroactively to avoid the potential for competitive harm. Vesting (or payout of shares) is based on the achievement of specific performance targets at the end of the applicable three-year performance cycle. NEOs have the opportunity to earn a payout of between 0% and 230% of their target performance share award. Consistent with our design in the prior two years and in consideration of feedback received from our shareholders, the Compensation Committee included the following features in our fiscal 2024 performance share awards: 1.A relative TSR modifier with above median performance required for a target payout, as described in more detail below; and 2.A post-vest holding requirement of two years for the CEO, and one year for the other NEOs at the time of grant on 50% of earned performance shares.* * Based on the time of our annual grants being made in the first quarter of the fiscal year, this provision applies to our CFO and the NEOs identified from the prior fiscal year.
Fiscal 2024 Performance Share Awards Metrics
Fiscal 2024 Performance Share Awards Metrics Consistent with fiscal years 2022 and 2023, for the fiscal 2024 performance share awards, the Compensation Committee selected the following metrics for the three-year performance period beginning October 1, 2023 and ending September 30, 2026:
Fiscal 2024 Performance Share Awards Metrics
| Metric | Weighting | Rationale | | Compound Annual Adjusted EPS Growth Rate(1) | | Key metric used by management to set business goals and for shareholders to evaluate our financial results | | Average Annual Adjusted ROIC(2) | | Defined as Adjusted Operating Income/Invested Capital over time; this measure encourages our NEOs to improve shareholder returns by making prudent investments | | relative TSR Modifier with Above-Median Target (55th Percentile)(3) | +/- 15% | Stock performance relative to companies in the S&P 500 Health Care Providers & Services Industry Index.(4) This measure further aligns NEO incentives with shareholder interests. In the event that Cencora has a negative absolute TSR for the three-year performance period, payout is capped at 100% of target, regardless of whether actual performance is above target for the underlying metrics. |
Fiscal 2024 Performance Share Awards Metrics
(1)Compound Annual Adjusted EPS Growth Rate is the mean annual growth rate of Adjusted EPS from the baseline over the three-year performance period. (2)Average Annual Adjusted Return on Invested Capital (“ROIC”) is calculated by taking the average of the Company’s Annual Adjusted ROIC during the three-year performance period. Annual Adjusted ROIC is calculated by dividing after-tax Adjusted Operating Income by invested capital, where invested capital is the 12-month average of accounts receivable, inventories, accounts payable, property and equipment, goodwill, intangible assets, and right of use assets (“Invested Capital”). (3)Total Shareholder Return (“TSR”) is calculated as share price appreciation (or reduction) over the performance period, including reinvestment of dividends when paid, divided by the share price at the beginning of the period. The value of performance shares awarded will be decreased or increased by up to 15% based on this relative TSR measure. In the event that Cencora has a negative absolute TSR for the three-year performance period, payout is capped at 100% of target, regardless of whether actual performance is above target for Compound Annual Adjusted EPS Growth Rate or Average Annual Adjusted ROIC.
Fiscal 2024 Performance Share Awards Metrics
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Fiscal 2024 Performance Share Awards Metrics
(4)As of September 30, 2024, the S&P 500 Health Care Providers & Services Industry Index included:
Fiscal 2024 Performance Share Awards Metrics
| Cardinal Health, Inc. | Elevance Health, Inc. | McKesson Corporation | | Centene Corporation | HCA Healthcare, Inc. | Molina Healthcare, Inc. | | The Cigna Group | Henry Schein, Inc. | Quest Diagnostics Incorporated | | CVS Health Corporation | Humana Inc. | UnitedHealth Group Incorporated | | DaVita, Inc. | Labcorp Holdings Inc. | Universal Health Services, Inc. |
Fiscal 2024 Performance Share Awards Metrics
The Compensation Committee sets the goals for these metrics in consideration of several factors, including the Company’s long-range plan, as approved by the Board, which considers, among other things: the Company’s multi-year operating plans and strategic initiatives; projected business conditions; macroeconomic conditions; and anticipated capital deployment. The Compensation Committee believes that the goals set for the fiscal 2024 performance share awards are challenging but attainable and consistent with our long-range plan. The specific goals for all of our outstanding performance share awards are confidential, competitively sensitive information and are disclosed after the performance period ends.
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period) In November 2021, each of our NEOs was granted a performance share award for the three-year performance period beginning on October 1, 2021 and ending September 30, 2024. In November 2024, the Compensation Committee approved the vesting and payout of the fiscal 2022 performance share awards based on the Company’s achievement of a Compound Annual Adjusted EPS Growth Rate of 14.11%, an Average Annual Adjusted ROIC of 19.73%, and a relative TSR performance at the 86th percentile against the S&P Health Care Providers & Services Industry Index. As shown in the table below, these performance results aggregated to a maximum performance payout of 230% of target. Financial results were positively impacted by broad-based performance across multiple business units, strong pharmaceutical utilization trends, growth in specialty product sales to physician practices and health systems and sales of COVID treatments.
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
| Metric | Weighting | Baseline ($) | Threshold (50% Payout Ratio) | Target (100% Payout Ratio) | Maximum (200% Payout Ratio) | Payout Result (%) | | Compound Annual Adjusted EPS Growth Rate(1) | | 9.26 | | | | 200.0 | | Average Annual Adjusted ROIC(2) | | — | | | | 200.0 | | relative TSR Modifier(3) | +/- 15% | | | | | 115.0 | | | | | Total calculated payout (weighted and modified) | | | 230.0 |
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
(1)Compound Annual Adjusted EPS Growth Rate is the mean annual growth rate of Adjusted EPS from the baseline over the three-year performance period. (2)Average Annual Adjusted ROIC is calculated by taking the average of the Company’s Annual Adjusted ROIC during the three-year performance period. Annual Adjusted ROIC was calculated by dividing after-tax Adjusted Operating Income by Invested Capital, where invested capital was the 12-month average of accounts receivable, inventories, accounts payable, property and equipment, goodwill, intangible assets, and right of use assets.
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
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Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
(3)A relative TSR modifier was added to our performance share award design beginning with the fiscal 2022 performance share awards. TSR was calculated as share price appreciation (or reduction) over the performance period, including reinvestment of dividends when paid, divided by the share price at the beginning of the period, and measured relative to the TSR of the companies in the S&P 500 Health Care Providers & Services Industry Index during the same period. The value of performance shares awarded was increased by 15% based on the relative TSR measure. Based on our performance, and the respective weighting of each performance metric, the number of shares earned by our NEOs for the fiscal 2022 through fiscal 2024 performance period was calculated as follows:
Fiscal 2022 Performance Share Award Payouts (2022-2024 Performance Period)
| Weight of compound Annual Adjusted EPS growth metric | | Target share amount | | Metric payout result | | relative TSR modifier result | | Shares earned based on compound Annual Adjusted EPS growth | | Weight of average Annual Adjusted ROIC metric | | Target share amount | | Metric payout result | | relative TSR modifier result | | Shares earned based on average Annual Adjusted ROIC | | | | | | | | | | Total performance shares earned |
Fiscal 2022 Performance Shares Earned
Fiscal 2022 Performance Shares Earned
Fiscal 2022 Performance Shares Earned
| NEO | Target Performance Shares (#) | Total Payout Result (%) | | Shares Earned(1) (#) | | Mr. Collis | 53,708x | 230.0 | = | 123,528 | | Mr. Cleary | 15,277x | 230.0 | = | 35,137 | | Mr. Mauch | 16,710x | 230.0 | = | 38,433 | | Ms. Campbell | 5,729x | 230.0 | = | 13,177 | | Ms. Battaglia | 6,207x | 230.0 | = | 14,276 |
Fiscal 2022 Performance Shares Earned
(1)As a result of rounding, the total shares earned may vary from a straight calculation of the target number of performance shares times the payout result.
Leadership Awards
Leadership Awards In order to ensure continuity of key members of the leadership team during the CEO transition, the Compensation Committee approved one-time RSU awards to Mr. Cleary and Ms. Campbell with a target value of $3,000,000 and to Ms. Battaglia with a target value of $2,000,000 (each, a “Leadership Award” and, together, the “Leadership Awards”). In determining the amount of the Leadership Award for each NEO, the Compensation Committee, with input from Pearl Meyer, considered the NEO’s expanded roles and responsibilities, the performance of the NEO, and the desire to promote leadership stability during this transitional period. The Leadership Awards will cliff vest on the second anniversary of the grant date and do not contain retirement vesting terms. The Leadership Awards are not routine and are not part of the NEOs’ annual compensation. The Committee designed these awards to recognize the unique considerations that arise in the context of a CEO transition.
Employment Agreements
Employment Agreements Employment agreements in effect during fiscal 2024 for our NEOs are described in Executive Compensation — Employment Agreements on page 75. Our standard NEO employment agreements cover termination (including in the event of a change in control) and severance benefits and include non-competition, confidentiality, and related provisions. The employment agreements do not include specified amounts of salary, bonus opportunities, or equity-based compensation for future years.
Employment Agreements
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Severance Benefits
Severance Benefits We provide severance benefits under specified circumstances to give NEOs a measure of financial security following the loss of employment, to protect the Company from competitive activities after the departure of a NEO, and because we believe that these benefits are important to attract and retain talent in a competitive industry. We will provide severance benefits if we terminate a NEO’s employment without cause or if a NEO leaves the Company with good reason, each as defined in the applicable employment agreement. We do not provide severance benefits if a NEO is terminated for cause or leaves without good reason, in which case, we would only pay the amount of accrued obligations. In fiscal 2023, the Compensation Committee adopted an executive severance policy that applies to any employment or severance agreement that is amended or entered into with a NEO beginning on or after November 9, 2022. Under the terms of the policy, cash-based severance benefits for involuntary terminations must be limited to an amount equal to 2.99 times the NEO’s base salary, plus the NEO’s target annual bonus, unless the employment or severance agreement receives shareholder approval. The Compensation Committee believes that this policy effectively balances the interests of shareholders with the Company’s need to remain competitive in the talent market. The terms of the severance benefits for our NEOs are set out in employment agreements and various plans, which are described in Potential Payments Upon Termination of Employment or Change in Control on page 76. Our equity awards have a “double-trigger” change in control feature, whereby the vesting of equity awards will be accelerated if a NEO’s employment is involuntarily terminated upon or within two years after a change in control (as defined in the applicable equity plan). In the event of a change in control, a shortened performance period, which extends only through the end of the fiscal quarter preceding the change in control, will be used to determine the payout under awards of performance shares. We provide these benefits to offer some financial protection to NEOs following an involuntary loss of employment in connection with a change in control and to enable our NEOs to focus on important business decisions should we be acquired without regard to how the transaction may affect them personally. We believe that this structure provides NEOs with an appropriate incentive to cooperate in completing a change in control transaction. The Board and the Compensation Committee also have discretion under our equity plans to take certain actions in the event of a change in control. These actions include: canceling options that are not exercised within a specified period; cashing out outstanding options; canceling any RSU awards in exchange for the payment of cash, property, or a combination of cash and property equal to the award’s value; or substituting other property (including securities of another entity) for awards granted under our equity plans. In addition, the Compensation Committee has discretion under the AIP to pay the annual cash incentive awards during any fiscal year in which a change in control occurs. If this discretion is exercised, bonus payments would be paid out at target level and/or based on performance for the portion of the fiscal year prior to the change in control event and paid within 75 days of the change in control. Under the employment agreements for our NEOs, if amounts otherwise payable to an NEO in connection with a change in control would constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (“Code”), the Company will reduce such payments to an amount that would avoid any excise taxes under Section 4999 of the Code, but only if such reduction would provide the NEO with a greater net after-tax benefit than would no reduction. Additionally, a NEO may receive additional severance if their employment is involuntarily terminated without cause or such NEO leaves the Company with good reason upon or within two years following a change in control. See Potential Payments Upon Termination of Employment or Change in Control on page 76.
Severance Benefits
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Severance Benefits
Other Compensation Policies and Practices Stock Ownership Guidelines Our NEOs must own shares of our Common Stock and/or hold RSUs in an amount equal to a multiple of their base salary. Stock ownership aligns NEOs’ interests with those of our shareholders and provides a continuing incentive for management to focus on long-term growth.
Severance Benefits
| Position | Stock Ownership Guidelines | | Compliance Period | Status at Fiscal 2024 Year End | | CEO | 6 times base salary | | 5 years from date of hire or change in status | Met | | Other NEOs | 3 times base salary | | | |
Severance Benefits
| Equity we consider for purposes of meeting our stock ownership guidelines | Yes | Directly-held shares of our stock and shares held indirectly through a trust Shares held in our Employee Stock Purchase Plan Outstanding time-vested RSUs | No | Stock options Unvested performance shares |
Severance Benefits
Under our executive stock ownership guidelines, our CEO must own shares worth six times his base salary and the other NEOs must own shares worth three times their respective base salaries. NEOs who become subject to the guidelines have five years from the date of hire or change in status, whichever is later, to comply with the ownership requirements, but must retain all options and equity grants until required ownership levels are met. Following its annual review, the Compensation Committee determined that each of the NEOs is in compliance with the guidelines. We have a policy against the hedging and pledging of our securities that is applicable to our executive officers and directors. See page 38 for more information.
Severance Benefits
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Severance Benefits
Compensation Forfeiture and Recoupment (“Clawback”) Policies
Clawback Disclosure Policy
Clawback Disclosure Policy The Company also has a clawback disclosure policy that applies to all incentive compensation made to any officer (as such term is defined under Section 16 of the Exchange Act) under the Company’s Omnibus Incentive Plan and AIP. Under the policy, if incentive compensation is ever forfeited or required to be repaid by an officer and the underlying event has been publicly disclosed, then we will disclose the aggregate amount forfeited or to be repaid. The disclosure will include a general description of the circumstances giving rise to the clawback and will be made in a document filed publicly with the SEC or posted to a clearly identifiable location on our investor website at investor.cencora.com. The disclosure policy is subject to certain exceptions if such disclosure: (i)would violate an individual’s privacy rights; (ii)would result in or exacerbate existing or threatened litigation; or (iii)is contrary to law or regulation. The policy is administered by the Board, which has exclusive authority to interpret and carry out the policy. Equity Award Grant Practices We have a written policy on equity grants designed to formalize our equity grant practices and ensure that equity awards will generally be made at specified times. Our equity award policy is designed to encourage consistency in practice, but is not intended to and does not limit the authority of the Compensation Committee under our equity incentive plans, including the 2022 Omnibus Incentive Plan. The Compensation Committee generally will review and approve annual equity awards to NEOs and other eligible employees in November of each year, which is near the beginning of our fiscal year. This allows the Compensation Committee to make annual equity awards at the beginning of the relevant performance cycle with the benefit of reviewing results from the immediately preceding performance cycle. We also may make equity awards at other times during the year for new hires or for other reasons, including, for example, a job promotion, because of an acquisition or for retention purposes. In accordance with our policy on equity grants and our 2022 Omnibus Incentive Plan, the Compensation Committee has delegated limited authority to our CEO to approve grants to employees that are not designated as Section 16 officers. Such awards may only be made on the first business day of a month. The Compensation Committee must approve any equity awards to our Section 16 officers, including the NEOs. We do not backdate or retroactively grant RSUs. We generally schedule Board and Compensation Committee meetings at least one year in advance and, as noted above, generally make annual equity awards to our NEOs at approximately the same time each year. We do not time our equity awards to take advantage of the release of earnings or other major announcements by us or market conditions. The Company does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments. Tax Considerations When setting executive compensation, we consider many factors, such as attracting and retaining executives and providing appropriate performance incentives. We also consider the after-tax cost to the Company in establishing executive compensation programs, both individually and in the aggregate, but tax deductibility is not our sole consideration. Section 162(m) of the Code generally disallows a federal income tax deduction to public companies for annual compensation over $1 million (per individual) paid to their chief executive officer, chief financial officer, the next three most highly compensated executive officers as well as certain other officers who were in those positions in years after 2016. As a result, most of the compensation payable to our NEOs in excess of $1 million per person in a year will not be fully deductible.
Compensation and Succession Planning Committee
| Name and Principal Position | Fiscal Year | Salary ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation(3) ($) | Total ($) | | Steven H. Collis(4) Chairman, President and Chief Executive Officer | 2024 | 1,464,959 | 12,500,101 | 4,101,886 | 408,225 | 18,475,171 | | | 2023 | 1,400,000 | 12,500,174 | 3,231,550 | 379,516 | 17,511,240 | | | 2022 | 1,400,000 | 11,250,120 | 3,215,332 | 870,300 | 16,735,752 | | James F. Cleary Executive Vice President and Chief Financial Officer | 2024 | 885,943 | 6,600,508 | 1,417,509 | 100,000 | 9,003,960 | | | 2023 | 795,000 | 3,500,270 | 1,048,605 | 105,498 | 5,449,373 | | | 2022 | 770,000 | 3,200,064 | 1,071,777 | 279,860 | 5,321,701 | | Robert P. Mauch(4) Executive Vice President and Chief Operating Officer | 2024 | 1,039,959 | 6,000,127 | 2,079,919 | 133,187 | 9,253,192 | | | 2023 | 975,000 | 5,000,227 | 1,607,531 | 115,092 | 7,697,850 | | | 2022 | 850,000 | 3,500,188 | 1,183,131 | 285,423 | 5,818,742 | | Elizabeth S. Campbell Executive Vice President and Chief Legal Officer | 2024 | 721,967 | 5,700,587 | 1,155,148 | 91,362 | 7,669,064 | | | 2023 | 670,000 | 2,400,059 | 883,730 | 73,443 | 4,027,232 | | Silvana Battaglia Executive Vice President and Chief Human Resources Officer | 2024 | 625,984 | 3,600,373 | 1,001,574 | 92,281 | 5,320,212 | | | 2023 | 600,000 | 1,500,116 | 791,400 | 84,790 | 2,976,306 | | | 2022 | 580,000 | 1,900,156 | 807,313 | 192,287 | 3,479,756 |
Equity Awards
| Year | Summary Compensation Table Total for PEO(1,2) ($) | Compensation Actually Paid to PEO(1,3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1,2) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1,3) ($) | Value of Initial Fixed $100 Investment Based on:(4) | | Net Income ($ millions) | Adjusted EPS ($)(5) | | | | | | | Company Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(4) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | Fiscal 2024 | 18,475,171 | 61,395,926 | 7,811,607 | 17,289,060 | 244.03 | 155.91 | 1,519 | 13.76 | | Fiscal 2023 | 17,511,240 | 33,835,589 | 5,086,164 | 8,310,891 | 193.34 | 128.13 | 1,733 | 11.99 | | Fiscal 2022 | 16,735,752 | 26,067,277 | 4,449,340 | 6,444,163 | 143.70 | 118.43 | 1,667 | 11.03 | | Fiscal 2021 | 14,873,815 | 39,787,688 | 4,602,193 | 10,407,833 | 125.20 | 122.56 | 1,545 | 9.26 |
Will the director nominees be in attendance at the meeting?
Will the director nominees be in attendance at the meeting? We currently expect all of our director nominees to virtually attend the 2025 Annual Meeting.
Will the director nominees be in attendance at the meeting?
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Will the director nominees be in attendance at the meeting?
Other Information Availability of the Annual Report on Form 10-K
Will the director nominees be in attendance at the meeting?
| Copies of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (without exhibits or documents incorporated by reference therein) are available without charge to shareholders by contacting us at: | | Cencora, Inc. Attention: Corporate and Investor Relations Department 1 West First Avenue Conshohocken, Pennsylvania 19428 | | | | 610.727.7000 | | | | investor.cencora.com |
Will the director nominees be in attendance at the meeting?
Requirements for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders Shareholder Proposals for Inclusion in the 2026 Proxy Statement Shareholder proposals submitted for inclusion in the proxy statement for the 2026 Annual Meeting of Shareholders pursuant to Rule 14a-8 of the Exchange Act must be received in writing at Cencora’s principal executive offices on or before September 25, 2025. All proposals should be submitted, along with proof of ownership of Cencora, Inc. Common Stock in accordance with SEC Rule 14a-8(e)(2), to: Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. Shareholder proposals must comply with SEC Rule 14a-8, Delaware law and our bylaws. Failure to deliver a proposal by these means may result in it not being deemed timely received. Other Shareholder Proposals for Presentation at the 2026 Annual Meeting of Shareholders Shareholders of record who do not submit a proposal for inclusion in Cencora’s proxy materials under SEC Rule 14a-8, but who instead intend to introduce an item of business at the 2026 Annual Meeting of Shareholders must provide advance written notice to us in accordance with our bylaws, which set forth the procedures that must be followed and the information that must be provided in order for a shareholder to introduce an item of business at the 2026 Annual Meeting of Shareholders. We must receive written notice of such proposal at our principal executive offices no earlier than November 6, 2025 and no later than December 6, 2025. Such notice should be addressed to Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428, and must include the information set forth in our bylaws. You may obtain a copy of our bylaws upon request by writing to the Corporate Secretary at our principal executive offices. Shareholder Nominations for Director Election at the 2026 Annual Meeting of Shareholders The advance notice provisions for nomination of directors in our bylaws allows a shareholder to propose nominees for consideration by the Governance Committee by submitting specified information regarding the proposing shareholder and the proposed nominee, including, without limitation, the name, appropriate biographical information and qualifications of the proposed nominee. To be considered for the 2026 Annual Meeting of Shareholders, the information required under the advance notice provisions of our bylaws must be delivered to us in writing to:
Will the director nominees be in attendance at the meeting?
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Will the director nominees be in attendance at the meeting?
Other Information Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428, no earlier than November 6, 2025 and no later than December 6, 2025. You may obtain a copy of our bylaws upon request by writing to the Corporate Secretary at our principal executive offices. Proxy Access for the 2026 Annual Meeting of Shareholders The proxy access provisions in our bylaws allow an eligible shareholder, or group of no more than 20 eligible shareholders, that has maintained continuous ownership of 3% or more of our Common Stock for at least three years to include in our proxy materials for an annual meeting of shareholders a number of director nominees up to the greater of two or 20% of the directors then in office. Our bylaws set forth such shareholder eligibility requirements, as well as the other procedures that must be followed and the information that must be provided to us. We must receive the required notice and information specified in our bylaws no earlier than August 26, 2025 and no later than September 25, 2025. Such notice must be addressed to: Corporate Secretary, Cencora, Inc., 1 West First Avenue, Conshohocken, PA 19428. You may obtain a copy of our bylaws upon request by writing to the Corporate Secretary at our principal executive offices. Householding As permitted by the rules of the SEC, we have adopted the procedure of “householding,” whereby we deliver a single set of proxy materials to one address shared by two or more of our registered shareholders. This procedure can result in significant cost savings. We have delivered only one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted registered shareholders prior to the mailing date. We will promptly deliver, upon written or oral request, a separate copy of the proxy materials to any registered shareholder at the shared address to which a single copy of these documents was delivered.
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| To make such a request, please contact Broadridge Financial Solutions, Inc. at: | | Broadridge Financial Solutions, Inc. Attention: Householding Department 51 Mercedes Way Edgewood, New York 11717 | | 1.866.540.7095 |
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If you are a registered shareholder currently sharing an address with another of our registered shareholders and wish to have your future proxy materials householded, or your materials are currently householded and you would prefer to receive separate materials in the future, please make a request to change your householding status, as indicated above. If you hold shares of Common Stock in “street name,” you may revoke your consent to householding by notifying your broker.
Will the director nominees be in attendance at the meeting?
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Will the director nominees be in attendance at the meeting?
Appendix A Supplemental Information: GAAP to Non-GAAP Reconciliation To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we have presented the following non-GAAP financial measures elsewhere in this proxy statement: (i)adjusted operating income; (ii)adjusted diluted earnings per share (“Adjusted EPS”); and (iii)adjusted free cash flow. The non-GAAP financial measures should be viewed in addition to, and not in lieu of, financial measures calculated in accordance with GAAP. These supplemental measures may vary from, and may not be comparable to, similarly titled measures by other companies. The following is a reconciliation of the identified GAAP financial measures to their most directly comparable non-GAAP financial measures:
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| | Fiscal Year Ended September 30, 2024 | | | (In Thousands, Except Per Share Data) | Operating Income ($) | Diluted Earnings Per Share ($) | | GAAP | 2,175,249 | 7.53 | | Gains from antitrust litigation settlements | (170,904) | (0.66) | | LIFO credit | (52,168) | (0.20) | | Turkey highly inflationary impact | 54,087 | 0.28 | | Acquisition-related intangibles amortization | 660,292 | 2.56 | | Litigation and opioid-related expenses, net | 227,070 | 0.90 | | Acquisition-related deal and integration expenses | 103,001 | 0.40 | | Restructuring and other expenses | 233,629 | 0.92 | | Goodwill impairment | 418,000 | 2.07 | | Loss on remeasurement of equity investment | — | 0.08 | | Other, net | — | 0.07 | | Tax reform and discrete tax items(1) | — | (0.18) | | Adjusted non-GAAP | 3,648,256 | 13.76(2) |
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(1)Includes a tax benefit attributable to an adjustment of the Swiss valuation allowance (due to an increase in projected Swiss income and DTA utilization), tax expense relating to 2020 Swiss tax reform, and the currency remeasurement of the related deferred tax assets, the latter of which is recorded within Other Loss (Income), Net in our Consolidated Statement of Operations. (2)The sum of the components does not equal the total due to rounding. In addition, for the fiscal year ended September 30, 2024, adjusted free cash flow of $3,064.3 million consisted of net cash provided by operating activities of $3,484.7 million, plus $237.7 million for the prepayment of a future obligation as permitted under our opioid settlement agreements, minus capital expenditures of $487.2 million and the gains from antitrust litigation settlements of $170.9 million. The non-GAAP financial measures are presented because management uses non-GAAP financial measures to: •evaluate the Company’s operating performance; •perform financial planning; and •determine incentive compensation.
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Will the director nominees be in attendance at the meeting?
Appendix A Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. Any adjustments to arrive at our non-GAAP financial results, including for litigation costs, are made based on pre-determined criteria and principles. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are outside the control of the Company or are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. Adjustments are reviewed by the Audit Committee of the Board of Directors prior to disclosure in a quarterly earnings release. We have included the following non-GAAP earnings-related financial measures in this proxy statement: Adjusted Operating Income Adjusted Operating Income is a non-GAAP financial measure that excludes: •gains from antitrust litigation settlements; •LIFO credit; •Turkey highly inflationary impact; •acquisition-related intangibles amortization; •litigation and opioid-related expenses, net; •acquisition-related deal and integration expenses; •restructuring and other expenses; and •goodwill impairment. Gains from antitrust litigation settlements, LIFO credit, and Turkey highly inflationary impact are excluded because the Company cannot control the amounts recognized or timing of these items. Acquisition-related intangibles amortization is excluded because it is a non-cash item and does not reflect the operating performance of the acquired companies. We exclude acquisition-related deal and integration expenses and restructuring and other expenses that relate to unpredictable and/or non-recurring business activities. We exclude the amount of litigation and opioid-related expenses, net and the impairment of goodwill that are unusual, non-operating, unpredictable, non-recurring or non-cash in nature because we believe these exclusions facilitate the analysis of our ongoing operational performance. Adjusted EPS Adjusted EPS excludes (in each case net of the tax effect calculated using the applicable effective tax rate for those items): •the per share impact of adjustments, including gains from antitrust litigation settlements; •LIFO credit; •Turkey highly inflationary impact; •acquisition-related intangibles amortization; •litigation and opioid-related expenses, net; •acquisition-related deal and integration expenses; •restructuring and other expenses; •goodwill impairment; •loss on remeasurement of equity investment; •other, net; and •tax reform and discrete tax items. Management believes that this non-GAAP financial measure is useful to investors because it eliminates the per-share impact of the items that are outside the control of the Company or that we consider to not be indicative of our ongoing operating performance due to their inherent unusual, non-operating, unpredictable, non-recurring, or non-cash nature. Adjusted Free Cash Flow Adjusted Free Cash Flow is a non-GAAP financial measure defined as net cash provided by operating activities, excluding significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures. Adjusted Free Cash Flow is used internally by management for measuring operating cash flow generation and setting performance targets and has historically been used as one of the means of providing guidance on future cash flows.
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