def14a
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
AmerisourceBergen Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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January 14, 2011
Dear Stockholder:
I am pleased to invite you to attend our 2011 Annual Meeting of
Stockholders on Thursday, February 17, 2011, at
2:00 p.m., Eastern Time. The meeting will be held at the
Four Seasons Hotel Philadelphia, One Logan Square, Philadelphia,
Pennsylvania.
The Notice of the 2011 Annual Meeting of Stockholders and the
Proxy Statement describe the items of business for the meeting.
At the meeting we will also report on AmerisourceBergens
performance and operations during fiscal year 2010 and respond
to stockholder questions.
Your vote is very important. Whether or not you plan to attend
the 2011 Annual Meeting of Stockholders, we urge you to vote and
to submit your proxy over the Internet, by telephone or by mail.
If you are a registered stockholder and attend the meeting, you
may revoke the proxy and vote your shares in person. If you hold
your shares through a bank or broker and want to vote your
shares in person at the meeting, please contact your bank or
broker to obtain a legal proxy.
Thank you for your support.
Sincerely,
RICHARD C. GOZON
Chairman of the Board
Notice of
2011 Annual Meeting of Stockholders
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TIME AND DATE: |
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2:00 p.m., Eastern Time, on Thursday, February 17, 2011 |
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PLACE: |
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Four Seasons Hotel Philadelphia,
One Logan Square,
Philadelphia, Pennsylvania |
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ITEMS OF BUSINESS: |
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(1) To elect each of the three nominees named in the
accompanying Proxy Statement (or, if necessary, any substitute
nominees selected by the Board of Directors) as a director, each
to serve until the 2014 Annual Meeting of Stockholders and until
his or her successor is duly elected and qualified;
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(2) To ratify the appointment of Ernst &
Young LLP as our independent registered public accounting firm
for fiscal year 2011;
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(3) To conduct an advisory vote on the compensation
of our named executive officers;
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(4) To conduct an advisory vote on the frequency of a
stockholder vote on the compensation of our named executive
officers;
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(5) To approve an amendment of our Amended and
Restated Certificate of Incorporation to provide for the annual
election of directors;
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(6) To approve the AmerisourceBergen Corporation 2011
Employee Stock Purchase Plan; and
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(7) To transact any other business properly coming
before the meeting.
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WHO MAY VOTE: |
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Stockholders of record on December 20, 2010. |
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IMPORTANT NOTICE REGARDING THE DATE OF AVAILABILITY
OF PROXY MATERIALS FOR THE STOCKHOLDER
MEETING TO BE HELD ON FEBRUARY 17, 2011: |
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This Notice and Proxy Statement, together with our Annual Report
on
Form 10-K
for the fiscal year ended September 30, 2010, are being
mailed to stockholders on or about January 14, 2011.
We are also providing access to this Notice and Proxy Statement,
together with our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010, over the
Internet. You may access our proxy materials at
www.amerisourcebergen.com. |
By order of the Board of Directors,
JOHN G. CHOU
Senior Vice President, General Counsel and Secretary
January 14,
2011
AmerisourceBergen Corporation
1300
Morris Drive
Chesterbrook, PA 19087
PROXY
STATEMENT
TABLE OF
CONTENTS
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A-1
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B-1
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ABOUT THE
2011 ANNUAL MEETING OF STOCKHOLDERS AND VOTING AT THE
MEETING
Why am I
being furnished this Proxy Statement?
This Proxy Statement is furnished by our Board of Directors in
connection with its solicitation of proxies for use at the 2011
Annual Meeting of Stockholders to be held February 17,
2011, and at any adjournments thereof. Our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010 accompanies
this Notice and Proxy Statement, but is not incorporated as a
part of the Proxy Statement and is not to be regarded as part of
the proxy solicitation material.
What are
the items of business for the meeting?
The items of business for the meeting are as follows:
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To elect each of the three nominees named in the accompanying
Proxy Statement (or, if necessary, any substitute nominees
selected by the Board of Directors) as a director, each to serve
until the 2014 Annual Meeting of Stockholders and until his or
her successor is duly elected and qualified;
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To ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for fiscal year
2011;
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To conduct an advisory vote on the compensation of our named
executive officers;
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To conduct an advisory vote on the frequency of a stockholder
vote on the compensation of our named executive officers;
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To approve the amendment of our Amended and Restated Certificate
of Incorporation to provide for the annual election of directors;
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To approve the AmerisourceBergen Corporation 2011 Employee Stock
Purchase Plan; and
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To transact any other business properly coming before the
meeting.
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Who is
soliciting my proxy?
The Board of Directors is soliciting your proxy in order to
provide you with an opportunity to vote on all matters scheduled
to come before the meeting whether or not you attend the meeting
in person.
May I
view the proxy materials online?
We are providing access to our proxy materials over the
Internet. You may access our proxy materials at
www.amerisourcebergen.com.
Who is
entitled to vote?
You may vote if you owned shares of our common stock as of the
close of business on December 20, 2010, which is the record
date. You are entitled to one vote for each share of common
stock that you own. As of December 20, 2010, we had
275,327,449 shares of common stock outstanding.
What
shares can I vote?
You may vote all shares owned by you as of the close of business
on December 20, 2010, the record date. These shares include:
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Shares held directly in your name as the stockholder of record.
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Shares of which you are the beneficial owner but not the
stockholder of record. These are shares that are held for you
through a broker, trustee or other nominee such as a bank,
including shares purchased through any 401(k) plan as well as
the AmerisourceBergen Corporation 2002 Employee Stock Purchase
Plan.
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How do I
vote before the meeting?
If you hold your shares in your own name as the stockholder of
record, you have three options for voting and submitting your
proxy before the meeting:
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By Internet We encourage you to vote and submit your
proxy over the Internet at www.proxyvoting.com/abc.
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By telephone You may vote and submit your proxy by
calling 1-866-540-5760.
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By mail If you received your proxy materials by
mail, you may vote by completing, signing and returning the
enclosed proxy card.
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If you hold your shares through an account with a bank or
broker, your ability to vote over the Internet or by telephone
depends on the voting procedures of the bank or broker. Please
follow the directions provided to you by your bank or broker.
May I
vote at the meeting?
You may vote your shares at the meeting if you attend in person.
If you hold your shares through an account with a bank or
broker, you must obtain a legal proxy from the bank or broker in
order to vote at the meeting.
Even if you plan to attend the meeting, we encourage you to vote
your shares by proxy. You may vote by proxy over the Internet,
by telephone or by mail.
How do I
revoke my proxy?
If you are the stockholder of record, you may revoke your proxy
at any time before the polls close at the meeting. You may
revoke your proxy by:
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Changing your vote in the manner described below.
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Notifying John G. Chou, Secretary, AmerisourceBergen
Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087
in writing that you are revoking your proxy before it is voted
at the meeting.
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If you hold your shares through an account with a bank or
broker, your ability to revoke your proxy depends on the voting
procedures of the bank or broker. Please follow the directions
provided to you by your bank or broker.
May I
change my vote?
You may change your vote at any time before the polls close at
the meeting. You may change your vote by:
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Signing another proxy card with a later date and returning it to
us prior to the meeting.
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Voting again over the Internet or by telephone prior to
2:00 p.m., Eastern Time, on February 17, 2011.
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Voting at the meeting if you are the stockholder of record.
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Voting at the meeting if you are the beneficial owner and have
obtained a legal proxy from your bank or broker.
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What if I
return my proxy card but do not provide voting
instructions?
Proxy cards that are signed and returned but do not contain
instructions will be voted as follows:
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For the election of the nominees for director named on
page 5 of this Proxy Statement;
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For the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for fiscal year 2011;
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For the approval, on an advisory basis, of the
compensation of our named executive officers as described in
this Proxy Statement;
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For the approval, on an advisory basis, of conducting an
advisory vote on the compensation of our named executive
officers every three (3) years;
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For the approval of the amendment of our Amended and
Restated Certificate of Incorporation to provide for the annual
election of directors;
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For the approval of the AmerisourceBergen Corporation
2011 Employee Stock Purchase Plan; and
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In accordance with the best judgment of the individuals named as
proxies on the proxy card on any other matters properly brought
before the meeting.
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What does
it mean if I receive more than one proxy card or instruction
form?
It means that you have multiple accounts with our transfer agent
and/or banks
or brokers. Please vote all of your shares.
We recommend that you consolidate as many accounts as possible
under the same name and address. For assistance consolidating
accounts where you are the stockholder of record, you may
contact our transfer agent, BNY Mellon,
at 1-866-233-1957.
Will my
shares be voted if I do not provide my proxy?
If you are a registered stockholder and do not provide a proxy,
you must attend the meeting in order to vote your shares.
If you hold shares through an account with a bank or broker,
your shares may be voted on certain matters even if you do not
provide voting instructions to your bank or broker. Banks and
brokers have the authority under the rules of the New York
Stock Exchange, or NYSE, to vote shares for which their
customers do not provide voting instructions on certain routine
matters. The ratification of the appointment of our independent
registered public accounting firm (Item 2 on the Proxy
Card) and the amendment of our Amended and Restated
Certification of Incorporation to provide for the annual
election of directors (Item 5 on the Proxy Card) are
considered routine matters for which banks and brokers may vote
without specific voting instructions from their customers.
May
stockholders ask questions at the meeting?
Yes. Representatives of AmerisourceBergen will answer
stockholders questions of general interest at the end of
the meeting. In order to be eligible to ask questions at the
meeting, you must be able to establish that you are a
stockholder either as of December 20, 2010 or as of the
date of the meeting.
How many
votes must be present to hold the meeting?
In order for us to conduct our meeting, a majority of the shares
of our common stock outstanding as of December 20, 2010
must be present in person or by proxy at the meeting. This is
referred to as a quorum. Your shares are counted as present at
the meeting if you attend the meeting and vote in person or if
you properly return a proxy over the Internet, by telephone or
by mail. Shares voted by banks or brokers on behalf of
beneficial owners also are counted as present at the meeting. In
addition, abstentions and broker non-votes will be counted for
purposes of establishing a quorum with respect to any matter
properly brought before the meeting. Broker non-votes occur on a
matter when a bank or broker is not permitted under applicable
rules and regulations to vote on a matter without instruction
from the beneficial owner of the underlying shares and no
instruction has been given.
How many
votes are needed for each proposal and how are the votes
counted?
The favorable vote of a majority of the votes cast will be
required for the election of each director (Item 1 on
the Proxy Card).
A majority of the votes cast means that the votes cast
for a director exceed the number of votes cast
against that director. Abstentions and broker
non-votes are disregarded when determining if a majority of the
votes have been cast in favor of a director.
3
The favorable vote of a majority of the shares of our common
stock outstanding will be required for the approval of the
amendment of our Amended and Restated Certificate of
Incorporation to provide for the annual election of directors
(Item 5 on the Proxy Card).
The favorable vote of a majority of the shares present in person
or by proxy and entitled to vote will be required for:
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the ratification of the appointment of Ernst & Young
LLP as our independent registered public accounting firm for the
current fiscal year (Item 2 on the Proxy Card);
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the approval, on an advisory basis, of the compensation of our
named executive officers as described in this Proxy Statement
(Item 3 on the Proxy Card);
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the approval, on an advisory basis, of a particular frequency
(which may be every year, two years or three years) for a
stockholder vote on the compensation of our named executive
officers (Item 4 on the Proxy Card);
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the approval of the AmerisourceBergen Corporation 2011 Employee
Stock Purchase Plan (Item 6 on the Proxy Card); and
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any other proposal that might properly come before the meeting.
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Abstentions will be counted toward the tabulation of votes cast
on Items 2, 3, 4, 5 and 6 and will have the effect of
negative votes. Under NYSE rules, Items 2 and 5 are
considered routine matters on which brokers will be permitted to
vote in their discretion even if the beneficial owners do not
provide voting instructions. However, Items 3, 4 and 6 are
not considered routine matters under NYSE rules, and brokers
will not be permitted to vote on Items 3, 4 or 6 if the
beneficial owners fail to provide voting instructions. Broker
non-votes will have the effect of negative votes.
How will
proxies be voted on other items or matters that properly come
before the meeting?
If any other items or matters properly come before the meeting,
the proxies received will be voted on those items or matters in
accordance with the discretion of the proxy holders.
Is
AmerisourceBergen aware of any other item of business that will
be presented at the meeting?
We are not aware of any other business to be presented at the
2011 Annual Meeting of Stockholders. However, if any other
matter should properly come before the 2011 Annual Meeting of
Stockholders, the enclosed proxy confers discretionary authority
with respect to such matter.
Will
there be any further solicitation of proxies for the
meeting?
Our directors, officers and employees may solicit proxies by
telephone or in person. In addition, we have hired
Morrow & Co., LLC to assist us in soliciting proxies,
if necessary. Morrow may solicit proxies by telephone or in
person. We will pay Morrow a fee of $10,000, plus expenses, for
providing such services. All costs and expenses of any
solicitation, including the cost of preparing and mailing this
Proxy Statement and posting it on the Internet, will be borne by
AmerisourceBergen.
Will
AmerisourceBergen reimburse any expenses of banks, brokers,
nominees and fiduciaries?
We will reimburse the expenses of banks, brokers, nominees and
fiduciaries that send notices, proxies and proxy materials to
our stockholders.
Will the
directors be in attendance at the meeting?
We currently expect all of our directors to be in attendance at
the 2011 Annual Meeting of Stockholders. It has been customary
for our directors to attend our annual meetings of stockholders.
All of our directors attended the 2010 Annual Meeting of
Stockholders.
4
ELECTION
OF DIRECTORS
(Item 1 on the Proxy Card)
How often
are directors elected?
AmerisourceBergens directors are currently divided into
three classes of three directors each Class I,
Class II and Class III. The directors of each class
serve for a term of three years. The terms of office of the
classes are currently staggered so that only one class of
directors is elected at each annual meeting of stockholders.
We are proposing an amendment to our Amended and Restated
Certificate of Incorporation to be voted on by our stockholders
at the 2011 Annual Meeting of Stockholders that would, if
adopted, eliminate the classification of our Board. Any
directors who have already been elected to serve three-year
terms, including the Class I directors (if they are all
elected at this meeting), will serve until the earlier of their
resignation or expiration of their terms. Directors whose terms
expire in 2012 and beyond will be nominated for election to a
term of one year.
How many
directors are to be elected at the meeting?
The term of office of the current Class I directors will
expire at the 2011 Annual Meeting of Stockholders. There
currently are three Class I directors, all of whom have
been nominated for election at the 2011 Annual Meeting of
Stockholders.
What is
the size of the Board of Directors?
The current size of the Board of Directors is nine.
Who are
the current Class I directors?
The current Class I directors are Charles H. Cotros, Jane
E. Henney, M.D. and R. David Yost.
Who are
this years nominees?
Mr. Cotros, Dr. Henney and Mr. Yost will stand
for re-election as Class I directors.
Which of
this years nominees are independent?
Mr. Cotros and Dr. Henney are independent (as
independence is defined in Section 303A of the NYSE Listed
Company Manual and in our corporate governance principles).
What is
the term of office for which this years nominees are to be
elected?
The nominees are to be elected for a three-year term and are
expected to hold office until the 2014 Annual Meeting of
Stockholders and until their successors are elected and
qualified.
What if a
nominee is unwilling or unable to serve?
Each nominee for director has consented to his nomination and,
so far as the Board of Directors and management are aware,
intends to serve a full term as a director if elected. However,
if any of the nominees should become unavailable or unable to
stand for election prior to the election, the shares represented
by proxies may be voted for the election of substitute nominees
selected by the Board of Directors.
5
Biographical
information about this years nominees:
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Name
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Position, Principal Occupation, Business Experience and
Directorships
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Charles H. Cotros
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73
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Mr. Cotros joined Sysco Corporation, a food service marketing
and distribution organization, when his business merged with
Sysco Corporation in 1974. He served as Chairman and Chief
Executive Officer of Sysco Corporation from January 2000 until
his retirement in December 2002, having served in those and
other executive capacities, including President from 1999 until
July 2000 and Chief Operating Officer from 1995 until January
2000. Mr. Cotros was Interim Chairman and Chief Executive
Officer of Allied Waste Industries, Inc., a waste management
services organization, from October 2004 to May 2005.
Mr. Cotros is a former director of Allied Waste Industries,
Inc. and Sysco Corporation. Mr. Cotros has been a director
of AmerisourceBergen since January 2002. Mr. Cotros is
Chairman of our Compensation and Succession Planning Committee
and a member of our Audit and Corporate Responsibility Committee
and our Executive and Finance Committee.
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Key Attributes, Experience and Skills:
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Mr. Cotross long-tenured career with Sysco Corporation and
Allied Waste Industries provides valuable business, leadership
and management experience, including expertise leading a large
organization with global operations. Through his service on
other public company Boards, Mr. Cotros brings extensive
financial, business, corporate governance and executive
compensation experience to our Board.
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Name
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Position, Principal Occupation, Business Experience and
Directorships
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Jane E. Henney, M.D.
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63
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Dr. Henney has held the position of Professor, Internal
Medicine and Public Health Service, College of Medicine at the
University of Cincinnati since January 2008. From July 2003 to
January 2008, she served as Senior Vice President and Provost
for Health Affairs at the University of Cincinnati.
Dr. Henney was Senior Scholar in Residence at the
Association of Academic Health Centers in Washington, D.C.
from 2001 to 2003 and Commissioner of Food and Drugs at the
United States Food and Drug Administration from 1998 to 2001.
Prior to that, Dr. Henney held the position of Vice
President for Health Sciences at the University of New Mexico
from 1994 to 1998 and Deputy Commissioner of Operations at the
United States Food and Drug Administration from 1992 to 1994.
Dr. Henney is a medical oncologist and has held several
posts at the National Cancer Institute, including Deputy
Director from 1980 to 1985. Dr. Henney has been a director
of AmerisourceBergen since January 2002. Dr. Henney has
been a director of CIGNA Corporation since 2004 and AstraZeneca
PLC since 2001. Dr. Henney is Chair of our Governance and
Nominating Committee and a member of our Audit and Corporate
Responsibility Committee.
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Key Attributes, Experience and Skills:
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Dr. Henneys healthcare policy and regulatory
expertise provide industry-specific perspective on the Board.
She offers innovative ideas and exposure to diverse, global
points of view. Through both position and education, she has a
wealth of public policy, leadership, management and financial
experience. Dr. Henney also brings deep understanding of
the role of the Board of Directors and corporate governance
matters through her service on other company boards, including
service on the boards of companies within the healthcare and
pharmaceutical industries.
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Name
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Position, Principal Occupation, Business Experience and
Directorships
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R. David Yost
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63
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Mr. Yost has been the Chief Executive Officer of
AmerisourceBergen Corporation since August 2001. He also served
as President of AmerisourceBergen from September 2007 to
November 2010 and from August 2001 to October 2002. He held the
positions of Chairman and Chief Executive Officer of AmeriSource
Health Corporation from December 2000 to August 2001 and
President and Chief Executive Officer of AmeriSource Health
Corporation from May 1997 to December 2000. Mr. Yost has
held variety of other positions with AmeriSource Health
Corporation and its predecessors since 1974, including Executive
Vice President Operations of AmeriSource Health
Corporation from 1995 to 1997. Mr. Yost has been a director of
Tyco International Ltd. since March 2009. Mr. Yost also serves
on the board of directors of the International Federation of
Pharmaceutical Wholesalers and the Board of Trustees of Penn
Medicine. He is a former director of AmeriSource Health
Corporation, PharMerica Corporation, Electronic Data Systems
Corporation and Aetna Inc.. Mr. Yost has been a director of
AmerisourceBergen since August 2001. Mr. Yost is Chairman of our
Executive and Finance Committee.
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Key Attributes, Experience and Skills:
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As the longstanding Chief Executive Officer of
AmerisourceBergen, Mr. Yost brings extensive leadership,
business and operating experience to the Board, as well as
tremendous knowledge of all aspects of AmerisourceBergen and the
wholesale pharmaceutical distribution industry. Mr. Yost
understands the competitive nature of the business and
healthcare distribution and services market, has an in-depth
knowledge of AmerisourceBergen, strong management skills and
broad executive experience. In addition, Mr. Yost brings his
broad strategic vision for the future growth of
AmerisourceBergen to the Board.
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How does
the Board of Directors recommend that I vote?
We recommend that you vote For the election of each of
the three nominees named in this Proxy Statement to the Board of
Directors.
ADDITIONAL
INFORMATION ABOUT THE DIRECTORS, THE BOARD
AND THE BOARD COMMITTEES
Who are
the Class II directors?
The Class II directors are Richard C. Gozon, Kathleen W.
Hyle and Michael J. Long.
When does
the term of the Class II directors expire?
The term of office of the Class II directors will expire at
the 2012 Annual Meeting of Stockholders.
Biographical
information about Class II directors:
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Richard C. Gozon
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72
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Mr. Gozon served as Executive Vice President of Weyerhaeuser
Company, an international forest products company, and Chairman
of North Pacific Paper Company, a joint venture between
Weyerhaeuser Company and Nippon Paper Industries, from June 1994
until his retirement in 2002. He was responsible for
Weyerhaeusers Pulp, Paper, Containerboard Packaging,
Newsprint, Recycling and Ocean Transportation businesses. Mr.
Gozon was formerly President and Chief Operating Officer of Alco
Standard Corporation, a provider of paper and office products,
from 1988 to 1993. He served as Executive Vice President and
Chief Operating Officer in 1988 and President from 1985 to 1987
of Paper Corporation of America. Mr. Gozon is currently a
director of AmeriGas Partners, L.P., Triumph Group, Inc. and UGI
Corporation. He formerly served as a director of Alco Standard
Corporation and AmeriSource Health Corporation from 1994 to
August 2001. Mr. Gozon has been Chairman of the Board of
Directors of AmerisourceBergen since February 2006 and a
director of AmerisourceBergen since August 2001. Mr. Gozon
is a member of our Compensation and Succession Planning
Committee and our Executive and Finance Committee.
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7
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Position, Principal Occupation, Business Experience and
Directorships
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Key Attributes, Experience and Skills:
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Mr. Gozons longstanding service on our Board provides him
with a deep familiarity with AmerisourceBergens business
and industry. Through his service as a senior executive of other
public companies, Mr. Gozon brings extensive operations,
productivity, supply chain, marketing, international business,
mergers and acquisitions and financial experience to our Board.
This management experience enables Mr. Gozon to contribute
substantially to the oversight of all aspects of our operations,
including service as our Chairman of the Board. We also benefit
from Mr. Gozons insights and governance acumen drawn
from his long experience as a director of several other public
companies.
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Kathleen W. Hyle
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52
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Ms. Hyle is Senior Vice President of Constellation Energy and
Chief Operating Officer of Constellation Energy Resources, a
position to which she was appointed in November 2008. From June
2007 to November 2008, Ms. Hyle served as Chief Financial
Officer for Constellation Energy Nuclear Group and for UniStar
Nuclear Energy, LLC, a strategic joint venture between
Constellation Energy and EDF. Ms. Hyle held the position
of Senior Vice President of Finance for Constellation Energy
from 2005 to 2007 and Senior Vice President of Finance,
Information Technology, Risk and Operations for Constellation
New Energy from January to October 2005. Prior to joining
Constellation Energy, Ms. Hyle served as the Chief Financial
Officer of ANC Rental Corp., the parent company of Alamo
Rent-A-Car and National Rent-A-Car; Vice President and Treasurer
of Auto-Nation, Inc.; and Vice President and Treasurer of Black
and Decker Corporation. Ms. Hyle is currently a director of
Constellation Energy Nuclear Group, a joint venture between
Constellation Energy and EDF, and serves on the Board of
Trustees of Center Stage in Baltimore, MD. She formerly served
as a director of Unistar, JV and as a member of the Board of
Trustees of the National Aquarium in Baltimore, MD and of the
University of Baltimore. Ms. Hyle has been a director of
AmerisourceBergen since May 2010. She is a member of our Audit
and Corporate Responsibility Committee.
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Key Attributes, Experience and Skills:
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Ms. Hyle brings to our Board extensive financial experience
gained through her career with Constellation Energy and other
public companies. This experience also enables Ms. Hyle to
provide critical insight into, among other things, the
Companys financial statements, accounting principles and
practices, internal control over financial reporting, and risk
management processes. In addition, Ms. Hyle brings extensive
management, operations, mergers and acquisitions and regulatory
experience to our Board.
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Michael J. Long
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52
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Mr. Long is Chairman of the Board, President and Chief Executive
Officer of Arrow Electronics, Inc., a global distributor of
electronic components and computer products. Mr. Long was
appointed Chairman of the Board of Arrow effective January 2010
and Chief Executive Officer of Arrow in May 2009. He served
Arrow as President and Chief Operating Officer from February
2008 until May 2009, as Senior Vice President from January 2006
to February 2008, and, previously, as Vice President for more
than five years. Mr. Long was appointed President, Arrow Global
Components, in September 2006. He served as President, North
America and Asia/Pacific Components, from January 2006 until
September 2006; President, North America, from May 2005 to
December 2005; and President and Chief Operating Officer of
Arrow Enterprise Computing Solutions from July 1999 to April
2005. Mr. Long currently serves on the Board of Trustees of the
Denver Zoo. He has been a director of AmerisourceBergen since
May 2006. Mr. Long is a member of our Compensation and
Succession Planning Committee and our Governance and Nominating
Committee.
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8
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Position, Principal Occupation, Business Experience and
Directorships
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Key Attributes, Experience and Skills:
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Through his current and prior leadership positions at Arrow, Mr.
Long brings to the Board relevant experience in the areas of
finance, operations, management, leadership, strategic planning,
executive compensation and global competition. As a result of
his numerous years in the distribution industry, Mr. Long
understands the competitive nature of the industry, provides
critical insight into international markets, and has an in-depth
knowledge of business and strategic opportunities for wholesale
distribution.
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Who are
the Class III directors?
The Class III directors are Richard W. Gochnauer, Edward E.
Hagenlocker and Henry W. McGee.
When does
the term of the Class III directors expire?
The term of office of the Class III directors will expire
at the 2013 Annual Meeting of Stockholders.
Biographical
information about Class III directors:
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Richard W. Gochnauer
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61
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Mr. Gochnauer has been Chief Executive Officer of United
Stationers Inc., a wholesale distributor of business products,
since December 2002. He joined United Stationers as its Chief
Operating Officer and a director in July 2002. From 1994 until
July 2002, Mr. Gochnauer served as Vice Chairman and President,
International, and President and Chief Operating Officer of
Golden State Foods Corporation, a privately-held food company
that manufactures and distributes food and paper products. Prior
to that, he served as Executive Vice President of the Dial
Corporation, with responsibility for its household and laundry
consumer products businesses. Mr. Gochnauer is currently a
director of Golden State Foods and Rush University Medical
Center. He is a former director of Fieldstone Communities,
Inc.. He has been a director of AmerisourceBergen since
September 2008. Mr. Gochnauer is a member of our Compensation
and Succession Planning Committee and our Governance and
Nominating Committee.
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Key Attributes, Experience and Skills:
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As a result of his tenure at United Stationers, Mr. Gochnauer
offers us business, leadership and management experience. He
provides valuable perspective on measures to drive operating
growth and compete effectively in the distribution business. He
provides insight into strategic direction, global competition
and international markets. Through his service on other boards
of directors, he also brings extensive corporate governance and
executive compensation experience to our Board.
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Edward E. Hagenlocker
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71
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Mr. Hagenlocker joined Ford Motor Company 1964. He was elected
Vice President and named General Manager of Truck Operations in
1986, appointed Vice President of General Operations for Ford
North American Automotive Operations in 1992, and appointed
Executive Vice President in 1993. He was elected President of
Ford Automotive Operations in 1994 and Chairman, Ford of Europe
in 1996. He served as Vice Chairman of Ford Motor Company in
1996 and Chairman of Visteon Automotive Systems from 1997 until
his retirement in 1999. Mr. Hagenlocker is currently a director
of Air Products and Chemicals, Inc. and Ingersoll-Rand Company
Limited. He is a former director of AmeriSource Health
Corporation, Trane, Inc., Alcatel-Lucent, Lucent Technologies,
Inc., OfficeMax Incorporated, American Standard Companies Inc.
and Boise Cascade Corporation. He has been a director of
AmerisourceBergen since August 2001. Mr. Hagenlocker is Chairman
of our Audit and Corporate Responsibility Committee and a member
of our Executive and Finance Committee and our Governance and
Nominating Committee.
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9
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Position, Principal Occupation, Business Experience and
Directorships
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Key Attributes, Experience and Skills:
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During his distinguished career at Ford Motor Company, Mr.
Hagenlocker gained extensive experience in operations,
manufacturing, productivity, supply chain, marketing,
international business, public relations and talent management.
His tenure on our Board has contributed to his deep
understanding of our business operations. We benefit from his
leadership and the valuable insight he provides to guide our
strategic direction. Through both position and education, he has
a wealth of technology and financial experience. Through his
service on other boards, he also brings extensive corporate
governance and mergers and acquisitions experience to our Board.
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Name
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Age
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Position, Principal Occupation, Business Experience and
Directorships
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Henry W. McGee
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57
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Mr. McGee has been President of HBO Home Entertainment, the DVD
and digital program distribution division of Home Box Office,
Inc., since 1995. He joined HBO in July 1979 as manager of Film
Acquisitions. In 1980, he served as director to HBOs
sister division, Time-Life Television, and was placed in charge
of acquiring foreign and domestic television distribution rights
to theatrical features, series and movies-of-the-week. In 1981,
he returned to HBO to oversee program budgeting and planning for
the companys newly-launched Cinemax service, and in 1982,
was given the additional assignment of managing HBOs
Family Programming department. In October 1983, he became
director, HBO Enterprises, responsible for international
co-productions and new business planning and was involved in the
start-up of Thorn EMI/HBO Video (now HBO Home Entertainment).
Mr. McGee was named Vice President of the home video division in
July 1985 and was promoted to Senior Vice President,
Programming, HBO Video in March 1988. He is President of the
Alvin Ailey Dance Theater Foundation and serves on the boards of
the Film Society of Lincoln Center and the Black Filmmaker
Foundation. He has been a director of AmerisourceBergen since
November 2004. Mr. McGee is a member of our Audit and Corporate
Responsibility Committee and our Compensation and Succession
Planning Committee.
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Key Attributes, Experience and Skills:
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As a result of his tenure as President of HBO Home
Entertainment, Mr. McGee has significant operational, marketing
and wholesale distribution expertise. In addition, he brings
valuable business, leadership and management experience to our
Board. Mr. McGee has a deep understanding of the use of
technology and all aspects of wholesale distribution and
international markets. In addition, he offers innovative ideas,
critical insight into strategic decision-making and exposure to
diverse, global points of view.
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Are there
any family relationships among AmerisourceBergens
directors and executive officers?
No.
What are
the committees of the Board of Directors?
The Board of Directors has the following standing committees:
Executive and Finance; Audit and Corporate Responsibility;
Compensation and Succession Planning; and Governance and
Nominating.
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Name of Committee
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and Members
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Duties and Responsibilities of Committee
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Executive and Finance
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R. David Yost, Chair
Charles H. Cotros
Richard C. Gozon
Edward E. Hagenlocker
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Exercises the authority of the Board between the
meetings of the Board on matters that cannot be delayed, except
as limited by Delaware law and our bylaws.
Reviews the asset and liability structure of the
company and considers its funding and capital needs.
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Reviews our dividend policy.
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Reviews strategies developed by management to meet
changing economic and market conditions.
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At the request of the Board, reviews proposed
capital expenditures and proposed acquisitions and divestitures.
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Name of Committee
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and Members
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Duties and Responsibilities of Committee
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Audit and Corporate Responsibility
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Edward E. Hagenlocker, Chair
Charles H. Cotros
Jane E. Henney, M.D.
Kathleen W. Hyle
Henry W. McGee
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Appoints, and has authority to terminate, the
companys independent registered public accounting firm.
Pre-approves all audit and permitted non-audit
services provided by the companys independent registered
public accounting firm, including the scope of the audit and
audit procedures.
Reviews and discusses the independence of the
companys independent registered public accounting firm.
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Reviews and discusses with management and the
companys independent registered public accounting firm the
companys audited financial statements and interim
quarterly financial statements as well as managements
discussion and analysis of the statements as set forth in Forms
10-K and 10-Q filed with the SEC.
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Prepares the Audit Committee report as required by
SEC rules.
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Discusses with management and/or the companys
independent registered public accounting firm significant
financial reporting issues and accounting issues and the
effectiveness of our system of internal controls over financial
reporting.
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Inquires of management, the internal auditor and the
companys independent registered public accounting firm
about significant risks or exposures (whether financial,
operational or otherwise) and assesses the steps management has
taken to control such risks or exposures, including policies
implemented for such purposes.
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Reviews internal audit function, internal audit
plans, internal audit reports and managements response to
such reports.
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Reviews the appointment, performance and replacement
of our chief audit executive.
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Reviews and approves all related persons
transactions in accordance with our Related Persons Transactions
Policy.
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Oversees compliance with our Code of Ethics and
Business Conduct.
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Compensation and Succession Planning
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Charles H. Cotros, Chair
Richard W. Gochnauer
Richard C. Gozon
Michael J. Long
Henry W. McGee
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Reviews and approves AmerisourceBergens
executive compensation strategy and the individual elements of
total compensation for the Chief Executive Officer and other
members of senior management, including any other executive
officers.
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Evaluates the performance of management annually.
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Ensures that our executive compensation strategy
supports stockholder interests.
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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.
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11
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Name of Committee
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and Members
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Duties and Responsibilities of Committee
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Prepares a Compensation Committee report as required
by SEC rules.
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Administers and makes awards under our incentive
compensation plans, including stock option plans.
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Has sole authority for retaining and terminating any
consulting firm used to assist in the evaluation of the
compensation of the Chief Executive Officer or any other
executive officer and ensuring the independence of such
consulting firm.
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Monitors the activities of our internal Benefits
Committee, including the Benefits Committees
oversight of the administration and investment performance of
our pension and retirement plans.
Oversees the administration of our health and
welfare benefit plans.
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Reviews with management and makes recommendations
relating to succession planning and management development.
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Governance and Nominating
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Jane E. Henney, M.D., Chair
Edward E. Hagenlocker
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Recommends selection and qualification criteria for
directors and for committee members.
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Richard W. Gochnauer
Michael J. Long
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Identifies and recommends qualified candidates to
serve as directors of the company.
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Considers nominees for director recommended by
stockholders.
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Reviews and makes recommendations relating to
succession planning for Board and Board committee leadership
positions and prepares for Board vacancies.
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Makes recommendations regarding the size and
composition of the Board and the composition and
responsibilities of Board committees.
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Oversees the evaluation of the Board and the Board
Committees.
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Reviews and makes recommendations to the Board
regarding director compensation.
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Has sole authority for retaining and terminating any
consulting firm used to assist in the evaluation of the
compensation of directors and ensuring the independence of such
consulting firm.
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Reviews and makes recommendations to the Board about
the companys corporate governance.
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How often
did the Board and the committees meet in fiscal year
2010?
During fiscal year 2010, the Board of Directors met five times;
the Executive and Finance Committee met three times; the Audit
and Corporate Responsibility Committee met twelve times; the
Compensation and Succession Planning Committee met five times;
and the Governance and Nominating Committee met five times.
Did each
director attend at least 75% of the meetings of the Board of
Directors and of the committees on which he or she
served?
Yes.
12
Do the
non-management directors meet regularly?
The non-management directors meet at or near the end of each
regularly scheduled meeting of the Board of Directors. The
Chairman of the Board of Directors presides at such meetings. If
the Chairman is not present, the committee chairs preside on a
rotating basis.
How do
interested parties make their concerns known to the
non-management directors?
Interested parties who wish to make any concerns known to the
non-management directors may submit communications at any time
in writing to: John G. Chou, Secretary, AmerisourceBergen
Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania
19087. AmerisourceBergens Secretary will determine, in his
good faith judgment, which communications will be relayed to the
non-management directors.
How are
directors compensated?
The following table summarizes the total compensation earned by
directors who were not employees of AmerisourceBergen during
fiscal year 2010. Directors who are employees of
AmerisourceBergen receive no compensation for their service as
directors or as members of Board committees.
Non-Employee
Director Compensation at 2010 Fiscal Year End
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Fees Earned
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or Paid in
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Stock
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Option
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All Other
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Cash
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Awards
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Awards
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Compensation
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Name
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(1)
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(2)(3)
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(2)(4)
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(5)
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Total
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Charles H. Cotros
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$100,500
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$18,751
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$100,000
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$1,591
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$220,842
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Richard W. Gochnauer
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$24,750
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$74,992
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$100,000
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$199,742
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Richard C. Gozon
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$140,250
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$100,000
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$240,250
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Edward E. Hagenlocker
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$127,750
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$100,000
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$227,750
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Jane E. Henney, M.D.
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$40,500
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$74,992
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$100,000
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$215,492
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Kathleen W. Hyle
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$12,000
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$85,042
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$76,717
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$173,759
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Michael J. Long
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$28,500
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$74,992
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$100,000
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$1,301
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$204,793
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Henry W. McGee
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$33,750
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$74,992
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$100,000
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$6,863
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$215,605
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(1)
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These amounts represent annual
retainer and meeting fees earned by directors in cash for Board
and committee service in fiscal year 2010, including amounts
deferred into our deferred compensation plan.
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(2)
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The amounts reported represent the
grant date fair value of the award for fiscal year 2010 computed
in accordance with Accounting Standards Codification 718 (ASC
718), disregarding the estimate of forfeitures related to
service-based vesting conditions. There were no forfeitures by
the directors in fiscal year 2010. See Note 9 to the
consolidated financial statements contained in our Annual Report
on
Form 10-K
for the fiscal year ended September 30, 2010 for
assumptions used to estimate the fair values of restricted stock
and option awards granted during fiscal year 2010. The grant
date fair value of restricted stock is based on the closing
price of our common stock on the date of grant.
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(3)
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Restricted stock awards are payable
in connection with a directors initial election to the
Board and, at the directors election, in lieu of a
directors annual retainer. Such awards are made in
quarterly increments generally on November 1,
February 1, May 1 and August 1 of each fiscal year. As of
September 30, 2010, each of the non-employee directors held
the following shares of outstanding restricted stock:
Mr. Cotros 8,511;
Mr. Gochnauer 9,345; Mr. Gozon
0; Mr. Hagenlocker 0;
Dr. Henney 10,399; Ms. Hyle
2,711; Mr. Long 10,399; and
Mr. McGee 6,603.
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(4)
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On March 5, 2010, each
non-employee director, except Kathleen Hyle, received a grant of
non-qualified stock options to purchase 13,756 shares of
our common stock with an exercise price of $27.99 per share. The
option award had a grant date fair value of $100,000. On
May 13, 2010, in connection with her initial election to
the Board, Ms. Hyle received a grant of non-qualified stock
options to purchase 9,347 shares of our common stock with
an exercise price of $31.60 per share and a grant date fair
value of $76,717. Grant date fair values were determined based
on a binomial method of valuation. As of September 30,
2010, each non-employee director held the following outstanding
stock options: Mr. Cotros 85,428;
Mr. Gochnauer 41,956;
Mr. Gozon 162,994;
Mr. Hagenlocker 123,732;
Dr. Henney 65,982; Ms. Hyle
9,347; Mr. Long 80,382; and
Mr. McGee 111,128.
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(5)
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Amounts shown are the dividends
accrued and paid on restricted stock that vested in fiscal year
2010.
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Director Fees. We pay our non-employee
directors an annual retainer and meeting attendance fees in
quarterly increments during the course of each year. During
fiscal year 2010, the Chairman of the Board received an annual
retainer of $90,000 and each other non-employee director
received an annual retainer of $60,000. Ms. Hyle received a
pro-rated portion of the annual retainer and fee for fiscal year
2010, the year in which she joined the Board. As explained
below, a
13
director may elect to have the annual retainer paid in cash,
restricted common stock or options exercisable for common stock
or credited to a deferred compensation account. For attending a
Board meeting in person, the Chairman of the Board receives
$7,500 and each other non-employee director receives $3,000. For
attending a committee meeting in person, the Chairs of the Audit
and Corporate Responsibility Committee and the Compensation and
Succession Planning Committee receive $5,000, the Chair of the
Governance and Nominating Committee receives $3,000 and other
committee members receive $1,500. Telephonic meeting fees are
50% of the in-person meeting fee. A director may elect to have
the meeting fees paid in cash or credited to a deferred
compensation account. In addition, we provide our directors with
a prescription drug benefit. We also reimburse our directors for
the cost of transportation, food and lodging in connection with
their service as directors.
Restricted Stock Awards. Our non-employee
directors receive a grant of restricted stock having a fair
value of $50,000 in connection with their initial election to
the Board. In most cases, the restrictions on the stock lapse
three years after the grant date. A director who retires before
the restrictions lapse may, in the Boards discretion,
receive a partial or full distribution of such stock.
Option Awards. Our non-employee directors also
receive an annual grant of non-qualified options to purchase our
common stock having a grant date fair value of $100,000 (or a
pro rata portion of the annual stock option grant in the year of
their initial election to the Board). The exercise price of all
options granted is the closing price of a share of our common
stock on the date of grant. Options vest in equal installments
over three years beginning on the first anniversary of the grant
date. Vested options may be exercised at any time prior to the
tenth anniversary of the grant date unless a director ceases to
be a member of the Board. Generally, the options that have been
granted will expire one or three years after the director ceases
to be a member of the Board, depending on the reason for
termination.
Deferral and Other Arrangements. Directors may
elect to defer all or any part of the annual retainer and
meeting fees and credit the deferred amount to an account under
the AmerisourceBergen Corporation 2001 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 fifteen 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 may also elect to forego 50% or
more of their annual cash retainer and receive an enhanced
amount of restricted stock or stock options for the cash
compensation foregone. If they choose to receive restricted
stock, they will receive restricted stock having a value equal
to 125% of the cash compensation foregone. If they choose to
receive options, they will receive non-qualified stock options
having a fair value equal to 150% of the cash compensation
foregone.
Stock Ownership Guidelines. We require our
non-employee directors to own shares of our common stock to
align their interests with those of the stockholders and to
provide an incentive to foster our long-term success. In the
first and second years after their election to the Board,
non-employee directors must own stock equal in value to one or
two times the annual retainer, respectively. From and after the
third year following their Board election, non-employee
directors must own stock equal in value to at least three times
the annual retainer. We may take unusual market conditions into
consideration when assessing compliance.
CODES OF
ETHICS
Has
AmerisourceBergen adopted a code of ethics and business conduct
that applies to directors, officers and employees?
The Board of Directors adopted the AmerisourceBergen Corporation
Code of Ethics and Business Conduct, in its current form, in May
2004. It applies to directors and employees, including officers,
and is intended to comply with the requirements of
Section 303A.10 of the NYSE Listed Company Manual.
Any waivers of the application of the AmerisourceBergen
Corporation Code of Ethics and Business Conduct to directors or
executive officers must be made either by the Board of Directors
or the Audit and Corporate Responsibility Committee. We will
disclose any such waiver or amendment of the Code of Ethics and
Business Conduct promptly on our website.
14
Has
AmerisourceBergen adopted a code of ethics for the principal
executive officer and principal financial and accounting
officers of AmerisourceBergen as required by SEC
regulations?
We have adopted the AmerisourceBergen Corporation Code of Ethics
for Designated Senior Officers in accordance with Item 406
of the SECs
Regulation S-K.
It applies to our Chief Executive Officer, Chief Financial
Officer and Corporate Controller. Any waiver or amendment of the
AmerisourceBergen Corporation Code of Ethics for Designated
Senior Officers will be disclosed promptly on our website.
Where can
stockholders obtain copies of the codes of ethics?
We have posted both the AmerisourceBergen Corporation Code of
Ethics and Business Conduct and the AmerisourceBergen
Corporation Code of Ethics for Designated Senior Officers under
the Investors section of our Internet website at
www.amerisourcebergen.com. A copy of the
AmerisourceBergen Corporation Code of Ethics for Designated
Senior Officers has also been filed with the SEC as an exhibit
to our periodic reports under the Securities Exchange Act of
1934, as amended.
CORPORATE
GOVERNANCE
What is
our leadership structure?
Our executive officers, managers and employees conduct our
business under the direction of our Chief Executive Officer and
with the independent oversight of our Board. To enhance its
independent oversight function, our Board is composed of
directors who are not employed by us, with the exception of
Mr. Yost. A non-executive director serves as Chairman of
the Board. At each regularly scheduled Board meeting, our
non-employee directors meet in executive session without
management present. Our Board provides guidance, critical review
of our strategic initiatives, business plan and risk management
processes. Our Board also ensures that we have an effective
management team in place to run the company and serves to
protect and advance the long-term interests of our stockholders.
The role of our senior executives is to develop and implement a
strategic business plan for AmerisourceBergen and to grow our
business.
Why have
we chosen to have an independent director serve as Chairman of
the Board?
We believe that having a non-executive Chairman of the Board
emphasizes the importance of the Boards objectivity and
independence from management and best promotes the effective
functioning of the Boards oversight role. Our
Chairmans responsibility is to ensure that our Board
functions properly and to work with our Chief Executive Officer
to set its agenda. We expect our Chairman to facilitate
communications among our directors and between the Board and
senior management. While our Chairman provides independent
leadership, he also works closely with our Chief Executive
Officer to ensure that our directors receive the information
that they need to execute their responsibilities, including
discussing and providing critical review of the matters that
come before the Board and assessing managements
performance.
Why is
the composition of our Board appropriate for
AmerisourceBergen?
We are one of the worlds largest pharmaceutical services
companies, with operations primarily in the United States,
Canada and the United Kingdom. Our Board is called upon to
address matters of considerable complexity. These issues range
from evaluating long-range strategic initiatives to responding
to changing market conditions
and/or
government regulations. To enhance the Boards
decision-making process, we seek individuals with diverse
backgrounds, skills and expertise to serve on our Board. Our
Board is composed of directors with a mix of industry,
operational, healthcare, government, business development,
marketing, and global expertise. We have directors who are
current or former executive officers of public companies or
wholesale distribution companies. Many of our directors serve or
have served on the board of directors of other public companies.
We have directors with significant public policy experience and
knowledge of the healthcare and pharmaceutical industries. We
believe that this mix encourages fresh perspectives, enriches
the Boards deliberations and avoids the dominance of
particular individual or group over the Boards decisions.
15
Has
AmerisourceBergen adopted corporate governance principles for
the Board of Directors?
Our Board has adopted the AmerisourceBergen Corporation
Corporate Governance Principles. The corporate governance
principles, together with the charters of the Board committees,
provide the framework for the governance of AmerisourceBergen.
The Board reviews and updates the corporate governance
principles and the committee charters from time to time to
reflect corporate governance best practices. The corporate
governance principles address a variety of governance issues,
including those discussed under this heading and the headings
Additional Information about the Directors, the Board and the
Board Committees, Code of Ethics, and Process for
Identifying and Evaluating Director Nominees and for Submitting
Recommendations
Where can
stockholders find our corporate governance documents?
Our corporate governance principles and the charters of the
Executive and Finance, Audit and Corporate Responsibility,
Compensation and Succession Planning and Governance and
Nominating Committees have been posted under the Investors
section of our website at www.amerisourcebergen.com.
Do we
have a majority vote standard for director elections and a
director resignation policy?
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 director. A plurality
voting standard will apply instead of a majority voting standard
if:
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A stockholder has provided us with notice of a nominee for
director in accordance with our bylaws; and
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That nomination has not been withdrawn on or prior to the day
next preceding the date the company first provides its notice of
meeting for such meeting to stockholders.
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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
stockholders and include post-election procedures in the event
an incumbent director does not receive the required votes for
re-election, as follows:
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The Governance and Nominating Committee shall make a
recommendation to the Board as to whether to accept the
previously tendered resignation of the director.
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The Board will act on the Governance and Nominating
Committees recommendation.
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The Board expects the director whose resignation is under
consideration to abstain from participating in any decision
regarding that resignation.
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Has the
Board determined which of the directors are
independent?
The Board has determined that, except for Mr. Yost, all of
the directors and director nominees are independent. Our
corporate governance principles require us to maintain a minimum
of 70% independent directors on our Board. If the three director
nominees are elected at the 2011 Annual Meeting of Stockholders,
eight out of nine directors then serving, or approximately 90%
of the Board, will be independent.
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 NYSE listing standards. These guidelines are contained in
Section 5 of our corporate governance principles, which are
available to stockholders under the Investors section of our
website at www.amerisourcebergen.com. For a director to
be considered independent, the Board must determine that the
director does not have any direct or indirect material
relationship with AmerisourceBergen.
With the assistance of legal counsel to the company, the Board
reviewed the applicable legal standards for director and Board
committee member independence and our corporate governance
standards. As a result of this review, the Board has determined
that each of the following directors is independent: Charles H.
Cotros, Richard W. Gochnauer, Richard C.
16
Gozon, Edward E. Hagenlocker, Jane E. Henney, M.D.,
Kathleen W. Hyle, Michael J. Long and Henry W. McGee. The Board
has also determined that, as required by their charters, all
members of the Audit and Corporate Responsibility, Compensation
and Succession Planning and Governance and Nominating Committees
are independent. In addition to the independence standards in
our corporate governance principles, members of the Audit and
Corporate Responsibility Committee may not accept directly or
indirectly any consulting, advisory or other compensatory fee
from us other than their directors compensation. All
members of the Audit and Corporate Responsibility Committee
satisfy this additional SEC and NYSE independence requirement
for audit committee members. We also apply this additional
independence standard to the Compensation and Succession
Planning Committee and the Governance and Nominating Committee
and their members satisfy this standard. In undertaking its
review, the Board considered that some of our directors serve on
the board of directors of companies for which we perform (or may
seek to perform) drug distribution and other services in the
ordinary course of business and on competitive terms.
How does
the Board oversee our risk management process?
The Board executes its oversight responsibility for risk
management directly and through its committees, as follows:
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The Audit and Corporate Responsibility Committee (the
Audit Committee) has primary responsibility for
monitoring our internal audit, corporate, financial and
regulatory risk assessment and risk management processes and
overseeing our system of internal controls and financial
reporting. The Audit Committee discusses specific risk areas
throughout the year, including those that may arise in various
business units from time to time, and the measures taken by
management to monitor and limit risk.
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The Audit Committee receives regular reports throughout the year
on matters related to risk management. At each regularly
scheduled meeting, the Audit Committee receives reports from our
(i) external auditor on the status of audit activities and
findings; and (ii) chief audit executive (who reports
directly to the Audit Committee) on the status of the internal
audit plan, audit results and any corrective action taken in
response to audit findings.
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We have a Chief Compliance Officer who is in charge of our
corporate compliance program and training and monitoring
compliance with our Code of Ethics and Business Conduct. In
addition, we have an internal Compliance Committee composed of
senior executives that administers our compliance program. Our
Chief Compliance Officer
and/or
Senior Vice President, General Counsel and Secretary report to
the Audit Committee throughout the year on the status of our
compliance program, calls to our hotline and any changes or
developments.
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The Boards other committees oversee risks associated with
their respective areas of responsibility. For example, the
Compensation and Succession Planning Committee assesses risks
associated with our compensation policies and programs for
executives as well as employees generally. Our Executive and
Finance Committee discusses risks relating to our capital
structure, financing activities, dividend and tax policy and
share repurchase activities.
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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. The Board discusses the risks and
exposures, if any, involved in the matters or recommendations of
the committees, as necessary.
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The Board considers specific risk topics throughout the year,
including risks associated with our business plan, operational
efficiency, strategic objectives, government regulation,
investment opportunities, physical facilities, information
technology infrastructure and capital structure, among many
others. Each fiscal quarter, our Chief Financial Officer reports
to the Board on AmerisourceBergens financial performance
and discusses how actual performance compares to our business
plan. Our corporate officers and the heads of our principal
business units report regularly to the Board about the risks and
exposures related to the business they lead. The Board is
informed about and regularly discusses our risk profile,
including legal, regulatory and operational risks to our
business.
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Has
management conducted a risk assessment of
AmerisourceBergens employee compensation policies and
practices?
We have conducted an internal risk assessment of our employee
compensation policies and practices, including those relating to
our executives. We have concluded that our compensation policies
and practices do not create risks that are reasonably likely to
have a material adverse effect on AmerisourceBergen. We have
reviewed our risk analysis with the Compensation and Succession
Planning Committee. The risk assessment process included, among
other things, a review
17
of all key incentive compensation plans to ensure that they are
aligned with our
pay-for-performance
philosophy and include performance metrics that meet and support
corporate goals. The objective of the process was to identify
any compensation plans and practices that may encourage
employees to take unnecessary risks that could threaten the
company. No such plans or practices were identified. In
particular, there are various factors that mitigate the risk
profile of our compensation programs, including, among other
things:
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Performance targets under our cash incentive programs are tied
to a number of different financial metrics so employees will not
place undue emphasis on any particular metric at the expense of
other aspects of our business;
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Maximum caps on payouts have been established for our annual
cash incentive programs, including under our Annual Incentive
Plan, the cash bonus plan used for senior management;
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Equity incentives vest over a number of years and therefore
encourage a long-term perspective;
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Stock ownership requirements align the interests of our senior
management with those of our stockholders;
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We have effective management processes for developing annual
business plans and a strong system of internal financial
controls; and
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A broad-based group of functions within the organization,
including human resources, finance and legal, oversee aspects of
our cash and equity incentive programs.
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PROCESS
FOR IDENTIFYING AND EVALUATING DIRECTOR NOMINEES AND FOR
SUBMITTING RECOMMENDATIONS
How does
the Governance and Nominating Committee identify and evaluate
director nominees?
Director nominees should:
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possess the highest personal and professional ethics, integrity
and values;
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be committed to representing the long-term interests of the
stockholders; and
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have an inquisitive and objective perspective, practical wisdom
and mature judgment.
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The Governance and Nominating Committee seeks to identify
candidates who bring diverse experience at policymaking levels
in business, management, marketing, finance, technology, human
resources, communications, education, government, healthcare and
in other areas that are relevant to our activities. While the
committee values and considers the diversity of skills and
experience of prospective nominees, the committee does not have
a formal policy by which the committee assigns specific weights
to particular skills or experiences of prospective nominees.
Additionally, director nominees should have sufficient time to
effectively carry out their duties. The Chief Executive Officer
of AmerisourceBergen may serve on the board of no more than one
other public company. Other director nominees may serve on the
boards of no more than four other public companies.
What
process should a stockholder follow to propose nominees for
consideration by the Governance and Nominating
Committee?
Stockholders may propose nominees for consideration by the
Governance and Nominating Committee by submitting the names,
appropriate biographical information and qualifications in
writing to: John G. Chou, Secretary, AmerisourceBergen
Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087.
In considering any nominee proposed by a stockholder, the
Governance and Nominating Committee will reach a conclusion
based on the criteria described above. After full consideration,
the stockholder proponent will be notified of the decision of
the committee.
In order to be considered by the Governance and Nominating
Committee for the Annual Meeting of Stockholders to be held in
2012, the name of the proposed nominee and supporting
biographical information and description of the qualifications
of the proposed nominee must be received by us no later than
September 16, 2011.
18
AUDIT
MATTERS
Audit
Committee Financial Expert
The Board of Directors has determined that Mr. Hagenlocker
is an audit committee financial expert as defined in
Item 407(d)(5) of
Regulation S-K.
Mr. Hagenlocker serves as Chairman of the Audit and
Corporate Responsibility Committee.
Report of
the Audit and Corporate Responsibility Committee
The Audit and Corporate Responsibility Committee consists of the
five directors named below. All of the committee members are
independent (as independence is defined in Section 303A of
the NYSE Listed Company Manual and our corporate governance
principles) and all of the members are financially literate.
The committee reviewed and discussed with
AmerisourceBergens management and its independent
registered public accounting firm (i) the audited financial
statements contained in the companys Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010 and
(ii) the companys internal control over financial
reporting. AmerisourceBergens management has the primary
responsibility for the companys financial statements and
its financial reporting and control processes and procedures,
including its internal control over financial reporting and its
disclosure controls and procedures. AmerisourceBergens
management has represented to the Audit and Corporate
Responsibility Committee that the financial statements contained
in the companys fiscal year 2010 Annual Report on
Form 10-K
were prepared in accordance with U.S. generally accepted
accounting principles and that the companys internal
control over financial reporting was effective as of
September 30, 2010 (based on the criteria set forth in
Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission).
The committee discussed with the companys independent
registered public accounting firm, which is responsible for
expressing an opinion on the conformity of the audited financial
statements with U.S. generally accepted accounting
principles, the firms judgments as to the quality, not
just the acceptability, of the companys accounting
principles, the reasonableness of significant judgments
reflected in the financial statements and the clarity of
disclosures in the financial statements as well as such other
matters as are required to be discussed with the committee under
the standards of the Public Company Accounting Oversight Board
(United States).
The committee discussed with the companys independent
registered public accounting firm the matters required to be
discussed by the Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition,
the committee discussed with the independent registered public
accounting firm the firms independence from the company
and its management, including the matters in the written
disclosures and letter which were received by the committee from
the independent registered public accounting firm as required by
applicable requirements of the Public Company Accounting
Oversight Board regarding the independent registered public
accounting firms communications with the audit committee
concerning independence.
The committee also discussed with the companys independent
registered public accounting firm, the firms audit of the
effectiveness of the companys internal control over
financial reporting, as of September 30, 2010.
Based on the reviews and discussions referred to above, the
Audit and Corporate Responsibility Committee recommended to the
Board of Directors that the audited financial statements be
included in AmerisourceBergens Annual Report on
Form 10-K
for fiscal year 2010.
AUDIT AND CORPORATE RESPONSIBILITY
COMMITTEE
Edward E. Hagenlocker, Chairman
Charles H. Cotros
Jane E. Henney, M.D.
Kathleen W. Hyle
Henry W. McGee
19
Policy
for Pre-Approval of Audit and Non-Audit Services
The Audit and Corporate Responsibility Committees policy
is to pre-approve all audit services and all non-audit services
that the companys independent registered public accounting
firm is permitted to perform for the company under applicable
federal securities regulations. As permitted by the applicable
regulations, the committees policy utilizes a combination
of specific pre-approval on a
case-by-case
basis of individual engagements of the independent registered
public accounting firm and general pre-approval of certain
categories of engagements up to predetermined dollar thresholds
that are reviewed annually by the committee. Specific
pre-approval is mandatory for the annual financial statement
audit engagement, among others.
Independent
Registered Public Accounting Firms Fees
During the fiscal years ended September 30, 2010 and 2009,
Ernst & Young LLP, AmerisourceBergens
independent registered public accounting firm, billed the
company the fees set forth below in connection with services
rendered by the independent registered public accounting firm to
the company:
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Fee Category
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Fiscal Year 2010
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Fiscal Year 2009
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Audit Fees
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$
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3,568,500
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$
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3,197,412
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Audit-Related Fees
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260,000
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217,800
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Tax Fees
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552,520
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672,552
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All Other Fees
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2,000
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1,995
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TOTAL
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$
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4,383,020
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$
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4,089,759
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Audit fees consisted of fees for the audit of
AmerisourceBergens annual financial statements,
consultation concerning financial accounting and reporting
standards and consultation concerning matters relating to
Section 404 of the Sarbanes-Oxley Act of 2002, review of
quarterly financial statements as well as services normally
provided in connection with statutory and regulatory filings or
engagements, comfort letters, consents and assistance with and
review of company documents filed with the SEC. Audit fees also
included the fees for the audit of the effectiveness of the
companys internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-related fees consisted of fees for assurance and related
services, including employee benefit plan audits and due
diligence related to acquisitions.
Tax fees consisted primarily of fees for tax compliance, tax
advice and tax planning services.
Other fees consisted of subscription fees for Internet-based
professional literature.
Our Audit and Corporate Responsibility Committee reviewed and
approved all fees charged by Ernst & Young LLP in
accordance with the pre-approval policy described above and
monitored the relationship between audit and permissible
non-audit services provided. The policy is intended to ensure
that the fees earned by Ernst & Young are consistent
with the maintenance of the independent registered public
accounting firms independence in the conduct of its
auditing functions.
RATIFICATION
OF APPOINTMENT OF ERNST & YOUNG LLP AS
AMERISOURCEBERGENS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
FOR FISCAL YEAR 2011
(Item 2 on the Proxy Card)
What am I
voting on?
You are voting on the ratification of the appointment of
Ernst & Young LLP as AmerisourceBergens
independent registered public accounting firm for the fiscal
year ending September 30, 2011. The Audit and Corporate
Responsibility Committee has appointed Ernst & Young
LLP to serve as our independent registered public accounting
firm for fiscal year 2011. Although our governing documents do
not require the submission of the appointment of
AmerisourceBergens independent registered public
accounting firm to the stockholders for approval, the Board
considers it desirable that the stockholders ratify the
appointment of Ernst & Young LLP. Should the
stockholders not ratify the appointment of Ernst &
Young LLP as AmerisourceBergens independent registered
public accounting firm for the fiscal year ending
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September 30, 2011, the Audit and Corporate Responsibility
Committee will investigate the reasons for the rejection by the
stockholders and will reconsider the appointment of
Ernst & Young LLP.
What
services will the independent registered public accounting firm
provide?
Audit services provided by Ernst & Young LLP for
fiscal year 2011 will include the examination of the
consolidated financial statements of AmerisourceBergen and
services related to periodic filings made with the SEC. Audit
services for fiscal year 2011 also will include the audit of the
effectiveness of our internal control over financial reporting
as required by Section 404 of the Sarbanes-Oxley Act of
2002. Additionally, Ernst & Young LLP may provide
audit-related, tax and other services comparable in nature to
the services performed in fiscal years 2009 and 2010, as
described above under the heading Independent Registered
Public Accounting Firms Fees.
Will
representatives of the independent registered public accounting
firm be present at the 2011 Annual Meeting of
Stockholders?
Representatives of Ernst & Young LLP are expected to
be present at the 2011 Annual Meeting of Stockholders. Such
representatives will have an opportunity to make a statement, if
they desire to do so, and will be available to respond to
appropriate questions.
How does
the Board of Directors recommend that I vote?
We recommend that you vote For the ratification of the
appointment of Ernst & Young LLP as
AmerisourceBergens independent registered public
accounting firm for fiscal year 2011.
COMPENSATION
COMMITTEE MATTERS
General
Our Compensation and Succession Planning Committee, or the
Committee, is composed entirely of independent directors. It is
responsible for the design of our executive compensation program
and review of succession planning. The Committee reviews and
approves the compensation for our executives, including our
named executive officers. The Committee also oversees our
employee pension, long-term incentive, savings, health and
welfare plans. The Committee has delegated the administration of
our pension and benefit plans to an internal benefits committee,
composed of senior finance, human resources and legal
executives. The internal benefits committee is also responsible
for oversight of the investment management of the assets of our
pension plans and the investment options under our savings plans
as well as the performance of the investment advisers and plan
administrators.
Processes
and Procedures
Meetings. The Committee met five times in
2010. The Chairman, in consultation with the other Committee
members and our management, prepares agendas, which address an
annual calendar of topics and other matters requiring the
attention of the Committee. The Committee meets without
management present, whenever necessary, to discuss matters it
deems appropriate.
Role of External Compensation Consultant. The
Committee has sole authority to engage an executive compensation
consultant and to terminate the engagement of any such
consultant. The Committees consultant must be independent
and objective. No firm will be disqualified solely on the basis
of fees, provided it has not received more than $100,000 in the
aggregate for the performance of any other services for
AmerisourceBergen during the fiscal year. In 2010, the Committee
engaged Towers Watson (formerly Towers Perrin) to serve as its
compensation consultant until July 2010 when Pay Governance LLC,
including the consultants that serve the Committee, spun off
from Towers Watson to form an independent executive compensation
advisory firm. The Committee decided to engage Pay Governance to
serve as its compensation consultant due to Pay
Governances independence, familiarity with our executive
compensation program and the involvement of its consultants in
ongoing projects during the fiscal year 2010 compensation cycle.
Pay Governance provides its services to the Committee pursuant
to a written consulting agreement, subject to annual review.
During 2010, our external compensation consultants advised us on
executive compensation matters, plan design and industry trends
and practices. As directed by the Committee, the consultants
prepared analyses and recommendations for the
21
Committee and the Board relating to all aspects of the
compensation of our executives, including pay recommendations
for Mr. Yost. They advised the Committee on market
practices regarding executive compensation, including long-term
incentive pay, and reviewed our peer group, benchmarking
methodology and market positioning of the compensation provided
to our named executive officers and other senior management. The
consultants meet privately with the Committee and individual
Committee members from time to time to plan for Committee
meetings and discuss executive compensation matters.
Role of Executive Officers and
Management. Mr. Yost gives the Committee a
performance assessment and pay recommendation for senior
management, including each of the other named executive
officers. Management, in consultation with the external
compensation consultant, may also make recommendations to the
Committee on matters of compensation philosophy and plan design.
Executives may attend the Committee meetings, but they are not
present when the Committee meets in executive session and they
do not make recommendations regarding their own compensation.
The Board of Directors establishes the compensation of directors
based upon the recommendation of the Governance and Nominating
Committee.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
Overview
AmerisourceBergen is one of the largest pharmaceutical services
companies in the world. We operate in a highly competitive
environment. The purpose of our executive compensation program
is to attract, motivate and retain the executives who lead our
business and align their interests with the long-term interests
of our stockholders. Our fiscal year 2010 named executive
officers are: R. David Yost, Chief Executive Officer; Steven H.
Collis, President and Chief Operating Officer; Michael D.
DiCandilo, Executive Vice President and Chief Financial Officer;
John G. Chou, Senior Vice President, General Counsel and
Secretary; and James D. Frary, Senior Vice President and
President, AmerisourceBergen Specialty Distribution and
Services. For purposes of this Proxy Statement, we use our named
executive officers current titles. However, in fiscal year
2010, Mr. Collis served as Executive Vice President and
President of AmerisourceBergen Drug Corporation and
Mr. Yost served as President and Chief Executive Officer.
Mr. Collis was named President and Chief Operating Officer
on November 11, 2010.
The main elements of our compensation program are base salary,
annual cash bonus and long-term equity incentive awards. We
benchmark the compensation of our named executive officers using
published compensation survey data and, for the top three
executives, against a peer group composed of 15 companies
that are similar in size and revenues to AmerisourceBergen. For
our named executive officers, we target base salary in the
35th
percentile for comparable positions at companies in our peer
group. When we deliver targeted financial results, we aim to
provide total cash compensation (base salary and cash bonus) in
the 50th percentile of our peer group and total direct
compensation (base salary, cash bonus and equity awards) in the
50th
75th
percentile of our peer group. We seek to pay our executives
fairly and link pay with performance. In fiscal year 2010,
incentive compensation (annual cash bonus and equity awards)
accounted for approximately 81% of the total direct compensation
of Mr. Yost and 79% of the average total direct
compensation of our other named executive officers.
We believe our executive pay is reasonable and provides
appropriate incentives to our executives to achieve our
financial and strategic goals without encouraging them to take
excessive risks in their business decisions. We regularly
evaluate the major risks to our business, including how risks
taken by management could impact the value of executive
compensation. To this end, we note the following:
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Our annual bonus plan does not provide payment for poor
performance, regardless of whether the failure to achieve target
was outside of managements control.
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There is a cap on the annual bonus opportunity, even for
spectacular performance.
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Executives must own our stock and the amount of their stock
ownership increases with their level of responsibility.
Mr. Yost owns 1% of our outstanding common stock.
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22
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Beginning in 2009, forfeiture and repayment obligations attach
to equity awards so that if any holder is terminated for cause,
breaches non-compete obligations or otherwise engages in conduct
that is detrimental to AmerisourceBergen (including misconduct
leading to the restatement of our financial statements), he or
she will be required to forfeit outstanding awards and pay back
the economic benefits realized from vested awards.
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We prohibit our executives and non-executive directors from
engaging in any speculative transactions in our securities and
from hedging the economic risk of ownership of our stock.
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2010
Fiscal Year Financial and Business Performance
AmerisourceBergen performed very well in fiscal year 2010. Our
results from continuing operations in fiscal year 2010 reflected
exceptional resiliency in our business. We grew our revenue by
9% to $78 billion. We generated free cash flow of
$924 million and net income of $637 million. We
achieved a return on invested capital (ROIC) of 17.4%, which
exceeded our weighted average cost of capital. Fiscal year 2010
diluted earnings per share from continuing operations (EPS)
increased by approximately 31% to $2.22 per share. Overall, our
drug distribution business and our specialty drug distribution
business both demonstrated solid growth this past year. We
returned a substantial amount of cash to our stockholders in
fiscal year 2010 through $90.6 million in dividends and
$470.4 million in stock repurchases. Our total stockholder
returns (TSR), including reinvestment of gross dividends, for
the fiscal years ended September 30, 2010, 2009 and 2008
were 40.8%, 23.1% and (-15.6%), respectively. This compares to
TSR of the S&P 500 Index of 13.1%, (-6.5%) and (-23%) over
the same periods.
The leadership and discipline of our management team heavily
contributed to our performance over the last several years.
Among other achievements, Mr. Yost and the other named
executive officers demonstrated solid execution of our business
plan and the promotion of our strategic objectives. They
continued to position us appropriately for growth, including by
increasing revenues, expanding operating income as a percentage
of revenue, and promoting a diverse customer and product mix in
our businesses. Their focus on expense and working capital
management increased our efficiency and improved our results. In
addition, our managers promoted a philosophy of continuous
improvement, leadership development among our senior managers
and the ongoing importance of diversity and inclusion among our
employee population.
2010
Fiscal Year Executive Compensation Actions
Our Compensation and Succession Planning Committee (referred to
as the Committee) took into account a number of factors in
determining fiscal year 2010 compensation, including our
financial and business results, individual performance and
competitive data. In light of these considerations, the
Committee made the following executive compensation decisions in
fiscal year 2010:
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In November 2009, established fiscal year 2010 performance goals
for our annual cash bonus plan, including target EPS of $1.84
per share and ROIC of 14.1% at the corporate level, consistent
with our Board-approved business plan.
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Set target incentives for fiscal year 2010 cash bonuses ranging
from 100% to 120% of base salary for Mr. Yost and the other
named executive officers.
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Awarded merit pay increases to our named executive officers that
reflected strong satisfaction with individual performance and,
in some cases, increased responsibilities associated with job
promotions or a desire to bring the officers salary more
in line with our compensation philosophy.
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Approved fiscal year 2010 cash bonus payouts that were paid at
141.4% of target for corporate level metrics. We exceeded target
on all financial performance metrics under our bonus plan.
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Granted annual equity incentives to our named executive officers
that were consistent with our compensation philosophy and the
Committees assessment of individual performance and
expected future contributions, including awards to Mr. Yost
in March 2010 that were roughly equal in number of stock options
and restricted stock to the equity incentive awards granted to
him in fiscal year 2009.
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Certified that Mr. Yost earned $1,350,000 in fiscal year
2010 under his long-term incentive award (granted in
2007) because our performance exceeded pre-established
fiscal year 2010 EPS and TSR goals.
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We believe that our executive compensation program is
reasonable, competitive and strongly focused on pay for
performance principles. We emphasize compensation opportunities
that reward our executives when they deliver targeted
23
financial results. The compensation of our named executive
officers varies depending upon the achievement of
pre-established performance goals, both individual and
corporate. Through stock ownership requirements and equity
incentives, we also align the interests of our executives with
those of our stockholders and the long-term interests of
AmerisourceBergen. Our executive compensation policies have
enabled AmerisourceBergen to attract and retain talented and
experienced senior executives and have benefited
AmerisourceBergen over time. We believe that the fiscal year
2010 compensation of our named executive officers was
appropriate and aligned with AmerisourceBergens fiscal
year 2010 results and position for growth in future years.
Role of
the Compensation and Succession Planning Committee
The Committee reviews and makes decisions about executive
compensation policies and plans, including the amount of base
salary, cash bonus and long-term incentive awarded to our named
executive officers. Mr. Yost and other executives may
assist the Committee from time to time in its evaluation of
compensation elements or program design or by providing
mathematical calculations, historical information,
year-over-year
comparisons and clarification regarding job duties and
performance. The Committee also considers the recommendations
and competitive data provided by the compensation consultant and
makes decisions, as it deems appropriate, on executive
compensation based on its assessment of individual performance
and achievement of goals both by the individual and the company.
Executive
Compensation Policy
The Committee considers the following objectives in setting
executive compensation:
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Attract and retain knowledgeable and experienced senior
executives.
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Align individual objectives and performance with company
objectives and performance.
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Motivate our employees to work for and achieve superior results
from
year-to-year
and in the long-term.
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Reward performance that exceeds established performance goals.
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Align the long-term financial interests of our executives with
those of our stockholders.
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Benchmarking
Process
We consider market pay practices when setting executive
compensation. Benchmarking helps the Committee assess whether
our level of executive pay is appropriate when compared to
industry standards. We generally conduct a detailed market
review of executive pay annually to evaluate each element of pay
and benefit competitiveness, review pay practices and compare
performance against our peer group.
In fiscal year 2010, the Committee reviewed peer group proxy
statement data for similar positions when considering
compensation for Messrs. Yost, Collis and DiCandilo and
published compensation survey data when considering compensation
for all of our named executive officers. When assessing pay
levels, the Committee also reviews the relative positioning of
our named executive officers with each other. In 2010, the
Committees consultant concluded that our overall
competitive posture for executive pay remained similar to our
positioning in the 2009 assessment of executive pay in that the
total direct compensation of our named executive officers fell
below, and in some cases substantially below, the median total
direct compensation of our peer group.
Our peer group is composed of companies with business models and
operations comparable to our own, including our two largest
direct competitors. It includes companies with revenues that
fall within a range of approximately 50% to 150% of our expected
revenue. In fiscal year 2010, we ranked above the median for
revenues of companies in our peer group. We believe our peer
group reflects the type and complexity of business risks managed
by our executives and that we compete with many of these
companies for executive talent. The Committee reviewed the
composition of the peer group in
24
fiscal year 2010 with the assistance of its compensation
consultant, and determined that no changes were necessary. The
2010 peer group was comprised of the following 15 companies:
2010 Peer
Group
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Cardinal Health, Inc.
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Ingram Micro Inc.
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Supervalu Inc.
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Costco Wholesale Corporation
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The Kroger Co.
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Sysco Corporation
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CVS Caremark Corporation
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McKesson Corporation
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Target Corporation
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Federal Express Corporation
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Medco Health Solutions, Inc.
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United Parcel Service, Inc.
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The Home Depot, Inc.
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Safeway Inc.
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Walgreen Co.
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Our compensation program targets various levels relative to our
peer group for each element of executive pay as follows:
Target
Percentile Compensation for Fiscal Year 2010
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Total Cash Compensation
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Total Direct Compensation
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Base Salary
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(Salary + Bonus)
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(Salary + Bonus + Long-Term
Incentive)
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35th
percentile of
peer group
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50th
percentile of
peer group
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50th
75th
percentile of
peer group
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Fiscal year 2010 base salaries and total cash compensation for
our named executive officers were generally within the range of
our target or below. However, total direct compensation for each
of our named executive officers fell below and, in some cases,
substantially below our
50th
75th
percentile target. This shortfall in total direct compensation
as compared to our target pay philosophy is due, in part, to the
fact that the target opportunity of our annual and long-term
incentive awards is generally lower than that of our peers and,
historically, because the base salaries of some of our named
executive officers fell substantially below target. In recent
years, we have taken some action to address the difference
between our compensation philosophy and actual pay for the most
affected executives by increasing base salaries and annual
target bonus opportunities. In 2007, we also implemented a
performance-based long-term incentive award for Mr. Yost,
in part, to provide him with the opportunity to bring his total
direct compensation closer to the median for chief executive
officers in our peer group.
Components
of the Executive Compensation Program
Our executive compensation program consists of three main
components base salary, cash bonus and long-term
incentive. This represents a mix of fixed pay and annual and
long-term incentives.
Base Salary. For our named executive officers,
we target base salary in the 35th percentile for similar
positions in our peer group. Base pay provides a regular stream
of income and financial security. By positioning base salary
below our peer median, we place greater emphasis on incentive
compensation. In fiscal year 2010, the Committee approved the
following salary increases for our named executive officers:
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Fiscal Year 2010
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Named Executive Officer
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Salary Increase
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R. David Yost
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2.9%
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Steven H. Collis
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21.2%
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Michael D. DiCandilo
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6.7%
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John G. Chou
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15.4%
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James D. Frary
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21.5%
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Our executives are evaluated based on their job performance,
changes in duties and scope of responsibilities, and expected
future contributions. These salary increases reflected a
positive performance review for all of the named executive
officers and, in some cases, measures to bring the
individuals salary more in line with our target. Despite
the difficult economy, we delivered outstanding financial
results for fiscal year 2010. These results were, in part,
attributable to the sound leadership and performance of each of
our named executive officers, including Mr. Yost.
Mr. Yost, however, decided to accept a lower pay increase
in fiscal year 2010 than his performance would otherwise have
warranted. Pay
25
raises for Messrs. Collis and Frary also reflect the
increased operational responsibilities associated with new
management roles. In August 2009, Mr. Collis was named
Executive Vice President and President of AmerisourceBergen Drug
Corporation (which we refer to as ABDC) and, in April 2010,
Mr. Frary was appointed Senior Vice President and
President, AmerisourceBergen Specialty Distribution and
Services. Mr. Frary is the executive in charge of
AmerisourceBergen Specialty Group (which we refer to as ABSG).
Cash Bonus. We use annual cash bonuses to
motivate executives to improve financial performance
year-over-year
and to reward executives who deliver targeted financial results.
Cash bonuses are paid under our Annual Incentive Plan, or AIP.
The Committee establishes the performance goals and incentive
levels under the AIP for each of our named executive officers,
and assigns a relative weighting to each performance measure.
For each financial performance measure, there is a threshold and
a target. Threshold refers to the minimum acceptable level of
performance. We do not pay a bonus if our performance is at or
below threshold. Target is the expected level of performance.
Executives may receive an amount in excess of their target bonus
(up to a maximum cap of an additional 50% of the target
incentive) if we exceed target on the key performance metric
established for them. Therefore, an individuals actual
bonus consists of the amount determined for exceeding the
thresholds and, if applicable, an amount (which we refer to as a
stretch bonus) for exceeding target on the key
performance metric established for them EPS for
Messrs. Yost, DiCandilo and Chou; ABDC pre-tax profit for
Mr. Collis and ABSG earnings before interest and taxes
(EBIT) for Mr. Frary. The stretch portion of the bonus is
calculated by increasing the target bonus by an additional 2%
for every 1% that actual performance exceeds target on the key
performance metric. For example, because actual EPS exceeded
target EPS by 20.7% in fiscal year 2010, the stretch portion of
Messrs. Yost, DiCandilo and Chous annual bonus was
calculated by multiplying their target incentive by
41.4 percent.
In November 2009, the Committee approved the following corporate
performance measures under the AIP for fiscal year 2010:
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Corporate Performance Metric
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Threshold
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Target (100% payout)
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Actual Performance
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EPS
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$1.66
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$1
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.84
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$2
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.22
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ROIC
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12%
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14
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.1%
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17
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.4%
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The Committee chose EPS and ROIC because they are the key
metrics used by management to set business goals and evaluate
our financial results. 2010 AIP financial performance measures
were based on our Board-approved business plan for fiscal year
2010. In addition, we communicate our expectations about future
business performance to investors by using an EPS range for each
fiscal year. We generally set EPS targets to reflect our
long-term business goal of growing EPS as close to 15% as is
realistic annually, while allowing for reasonable flexibility to
adjust our targets each year based on the impact of industry
trends, other market factors and special items from year to
year. ROIC equals after tax operating income divided by invested
capital. ROIC measures how well we generate cash flow relative
to the capital we invest in our business, including not only the
cost of the assets employed but also the cost to acquire those
assets. We exceeded target on both EPS and corporate ROIC for
fiscal year 2010.
26
Target and actual fiscal year 2010 cash bonuses for our named
executive officers were as follows:
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Actual
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Target Incentive
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Percentage
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Maximum
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Payout vs.
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2010 Base
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Percent of
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Bonus
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Target
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Actual Bonus
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Name
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Salary
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Base Salary
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Amount
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Potential
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Incentive
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Payout
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R. David Yost
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$1,278,000
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120
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%
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$1,533,600
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$2,300,400
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141.4
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%
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$2,168,510
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Steven H. Collis
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$700,000
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105
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%
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$735,000
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$1,102,500
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146.6
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%
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$1,077,510
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Michael D. DiCandilo
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$700,000
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105
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%
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$735,000
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$1,102,500
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141.4
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%
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$1,039,290
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John G. Chou
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$360,000
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100
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%
|
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$360,000
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$540,000
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141.4
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%
|
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$509,040
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James D. Frary(1)
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$273,446
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100
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%
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$273,446
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$410,169
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149.3
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%
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$408,317
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(1)
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Mr. Frarys fiscal year
2010 AIP bonus includes an amount earned ($183,317) based on the
achievement of pre-established performance goals for the period
from October 1, 2009 to April 1, 2010 when he served
as a regional vice president of ABDC and prior to his becoming
an executive officer of AmerisourceBergen.
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The fiscal 2010 cash bonuses of Messrs. Yost, DiCandilo and
Chou were based on the achievement of corporate financial
performance metrics and corporate leadership goals so that their
bonus payments would reflect our overall financial results for
the year. Accordingly, over 80% of the bonus payments to
Messrs. Yost and DiCandilo depended upon the achievement of
corporate performance goals, with EPS weighted at 50% and 49%
and ROIC weighted at 33% and 32% of the total target incentive
for Mr. Yost and Mr. DiCandilo, respectively. The
remaining portions of their bonus, 17% for Mr. Yost and 19%
for Mr. DiCandilo, were tied to individual leadership
goals. Mr. Chous cash bonus was based 70% on
corporate performance measures (with EPS weighted at 42% and
ROIC at 28% of the total target incentive) and 30% on individual
leadership goals. The Committee believes that leadership goals
are important component of the annual bonus plan for the named
executive officers. The Committee uses leadership goals to
emphasize business and strategic priorities that could
significantly impact financial results and that are within an
individuals area of responsibility. For example, a
material regulatory violation or loss of an investment grade
rating has the potential to undermine EPS growth.
Mr. Yosts leadership goals were to avoid regulatory
failure and implement a comprehensive succession plan.
Mr. DiCandilos leadership goals were to avoid
regulatory failure, maintain our investment grade rating,
implement our Business Transformation project and continue to
develop effective and collaborative working relationships among
senior management. Mr. Chous leadership goals were to
avoid regulatory violations, manage labor relations effectively
and promote collaborative relationships with other members of
senior management. The Committee determined that each of
Messrs. Yost, DiCandilo and Chou met their leadership goals
for fiscal year 2010.
For named executive officers who lead a business unit, a
majority of their bonus is tied to business unit performance.
Mr. Collis was the executive in charge of ABDC for fiscal
year 2010. Mr. Colliss fiscal year 2010 cash bonus
was based 30% on EPS, 40% on ABDC pre-tax profit, 10% on
ABDCs gross profit and 20% on leadership goals related to
ABDCs business operations. We believe this mix, which
emphasizes ABDCs performance, appropriately links pay to
Mr. Colliss operating responsibility. For this
reason, ABDC pre-tax profit is the most heavily weighted
performance metric for Mr. Collis and his stretch bonus is
based on the extent to which ABDCs actual fiscal year 2010
pre-tax profit exceeded target. Pre-tax profit under the AIP is
measured by determining a business units EBIT minus an
intercompany charge based on the business units committed
capital. We select business unit performance goals that are
designed to help us achieve our corporate EPS and ROIC goals for
the fiscal year. For fiscal year 2010, target ABDC pre-tax
profit was intended to achieve, at a minimum, a 1% increase over
fiscal year 2009 ABDC pre-tax profit, reflecting the difficult
economic environment and our expectations regarding the
potential impact on ABDCs business of the re-pricing of a
significant customer contract and costs associated with the
implementation of our Business Transformation project. The
Committee intends that business unit performance goals should be
challenging. Once in the last five fiscal years, ABDC has not
achieved target on one or more AIP financial performance
measures applicable to any named executive officer.
Mr. Colliss leadership goals were to avoid regulatory
failure for ABDC, promote collaborative relationships with other
members of senior management, facilitate integration of business
units, where appropriate, and facilitate the implementation of
our Business Transformation project. The Committee determined
that Mr. Collis met his leadership goals for fiscal year
2010.
27
In April 2010, Mr. Frary was appointed Senior Vice
President and President, AmerisourceBergen Specialty
Distribution and Services. In this capacity as the executive in
charge of ABSG, Mr. Frarys fiscal year 2010 cash
bonus was based on the following: 20% on EPS, 60% on ABSG
performance measures (such as EBIT and ROIC ) and 20% on
leadership goals. With ABSG as his primary area of
responsibility, Mr. Frarys stretch bonus was
calculated based on ABSGs EBIT performance, which was the
key performance metric for ABSG under our AIP. As noted above,
the Committee selects business unit performance goals which are
designed to help us achieve our corporate EPS and ROIC goals for
the fiscal year. Twice in the last five fiscal years, ABSG has
not achieved target on one or more AIP financial performance
measures applicable to any named executive officer. For fiscal
year 2010, target ABSG EBIT was intended to achieve, at a
minimum, a 6.4% increase over fiscal year 2009 ABSG EBIT. In
fiscal year 2010, ABSG exceeded its EBIT and ROIC targets. The
Committee determined that Mr. Frary met his leadership
goals, which included identifying and executing synergistic
opportunities among ABDC and ABSG, facilitating leadership
development within ABSG and executing the long-range growth
strategy of certain ABSG subsidiaries. Mr. Frarys
fiscal year 2010 cash bonus also included an amount earned under
our AIP for the period October 2009 April 2010 when
Mr. Frary served as a regional vice president of ABDC. The
portion of his cash bonus relating to the time prior to his
becoming an executive officer was based largely on a mixture of
pre-established ABDC regional performance goals as well as
leadership goals related to ABDC, all of which regional
performance targets and goals were substantially met or exceeded.
Although the Committee has discretion to give a bonus even
though the pre-established performance goals have not been met
or otherwise adjust a bonus payout up or down, it has rarely
exercised this discretion. The Committee did not award any
discretionary bonus to any named executive officers for fiscal
year 2010.
In November 2010, the Committee set fiscal year 2011 performance
measures under the AIP, consistent with our Board-approved
business plan. These measures include EPS and ROIC at the
corporate level and ABDC pre-tax profit, ABDC gross profit, ABSG
pre-tax profit and ABSG revenue at the business unit level. ABSG
pre-tax profit and ABSG revenue replace ABSG EBIT and ABSG ROIC
as the ABSG financial performance measures for fiscal year 2011.
The Committee determined that ABSG pre-tax profit is a more
comprehensive measure than either ABSG EBIT or ABSG ROIC alone
since pre-tax profit takes into account an intercompany capital
charge when assessing EBIT performance. The Committee also
determined that ABSG revenue is an appropriate financial
performance measure because we want to incentivize executives to
increase ABSG revenue and focus on ABSG market growth. The
Committee also established leadership goals for each of the
named executive officers, which included avoiding regulatory or
legal failure within the executives area of organizational
responsibility, executing specified business plans, facilitating
organizational integration, promoting collaborative business
relationships, developing succession plans
and/or
implementing corporate programs to address matters such as
diversity, leadership development or employee satisfaction.
Fiscal year 2011 target incentive levels for the named executive
officers range from 100% to 120% of base salary, with the
opportunity for each named executive officer to earn an
additional 50% of his target incentive level (or a maximum
bonus, depending on the target incentive level, ranging from
150% to 180% of base salary) if we exceed our financial
performance goals.
Long-Term Incentive. We use annual equity
incentive awards to align our managements interests with
those of our stockholders and to motivate continued efforts to
achieve favorable financial results over the long-term. The use
of equity incentives also supports our stock ownership
requirements.
The Committee determines the number of equity incentives to
award our named executive officers with reference to our target
compensation philosophy and an assessment of individual
performance. The Committee also takes into account the average
annual burn rate for total equity incentives granted to
employees so as to provide stock options and restricted stock to
eligible employees (including the named executive officers) at a
reasonable rate and cost to the company. The Committee considers
Mr. Yosts recommendations as well as individual
performance and expected future contributions. Each award is
then divided approximately 75% in the form of stock options and
25% in the form of restricted stock (or restricted stock units).
We believe that this mix provides an incentive to achieve
favorable long-term results at a reasonable cost to the company.
Because of the tax treatment of restricted stock for federal
income tax purposes that results when an individual has attained
retirement age, but continues to work for us, Mr. Yost
received restricted stock units in lieu of restricted stock in
his award (as do similarly situated employees).
In the aggregate, our named executive officers received options
to purchase 660,000 shares of our common stock and were
awarded 73,333 restricted shares (or restricted stock units) of
our common stock. These awards represented
28
approximately 19% of the total equity incentives granted to
management and other employees in fiscal year 2010. We believe
that it was appropriate to award approximately 19% of the annual
equity incentives to our executive officers because they are in
the best position to drive our future results and implement our
long-term business strategy. Moreover, equity awards directly
link the long-term wealth accumulation opportunity we provide
our executives with our stockholders long-term interests.
The number of equity awards granted to Mr. Yost in fiscal
year 2010 is roughly the same as the number of equity awards
granted to him in 2009. Equity awards granted to the other named
executive officers increased somewhat from fiscal year 2009
equity awards either due to job promotions or to bring the
executives total direct compensation more in line with the
Companys target pay philosophy. Equity incentives
represented approximately 26% of Mr. Yosts and
between 40% 47% of the other named executive
officers total direct compensation in fiscal year 2010.
Stock options and restricted stock are subject to vesting and
forfeiture provisions, described on page 43. In 2008, we
amended our AmerisourceBergen Corporation Equity Incentive Plan
(formerly called the AmerisourceBergen Corporation Management
Incentive Plan) or EIP, to change the treatment of awards in
retirement. As a result of the changes, for equity awards made
in 2009 and beyond, when an executive retires, unvested awards
will continue to vest according to their schedule and vested
options will remain exercisable for the length of their original
term (which is currently expected to be seven years). Equity
awards made in 2009 and beyond that are held by current or
former employees are subject to forfeiture and re-payment
provisions for misconduct (including misconduct that leads to
the restatement of our financial statements) or competitive
behavior that is detrimental to the company. Retirement is
defined as a voluntary termination of employment after
age 62 with at least 60 months of continuous service.
We believe that these requirements support our goal of retaining
executives and aligning individual performance with our
long-term growth. In addition, we believe that the
post-retirement provisions provide an additional incentive for
our executives, particularly those near retirement, to continue
to focus on our long-term performance and, with the forfeiture
and payment provisions, an added measure of protection against
detrimental behavior by former employees.
In November 2007, the Committee approved a performance-based
long-term incentive award for Mr. Yost under our EIP.
Payment of the cash incentive depended upon the achievement of
the following EPS and total stockholder return (TSR) goals over
three one-year periods, beginning October 1, 2007 and
ending September 30, 2010:
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Performance Metric
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Threshold
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Target
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Maximum
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Annual EPS Growth
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9%
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12%
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15% or Greater
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AmerisourceBergen TSR Relative
to S&P 500 TSR
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40th
Percentile
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50th
Percentile
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75th
Percentile or Greater
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We performed well in fiscal years 2008, 2009 and 2010 and met or
exceeded the maximum EPS and TSR goals for each fiscal year. As
a result, Mr. Yost became entitled to receive the maximum
amount of $1,350,000 each fiscal year ($4,050,000 in the
aggregate) under the award. This award was designed to bring
Mr. Yosts total direct compensation in line with our
target, if our financial goals were attained and in accordance
with our stated objective of linking the compensation of
executives who drive corporate financial results to the
achievement of those results. Mr. Yost may not receive
distribution of the award until at least 13 months after he
terminates employment with us (other than as a result of his
death), and may elect to defer receipt of the award for a longer
period.
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 be
made on specified dates. The Committee reviews and approves
annual stock option and restricted stock awards to executives
and other eligible employees in the first calendar quarter of
each year (around the time of our annual meeting of
stockholders). We may make equity awards at other times during
the year for new hires or other reasons, such as a job promotion
or as a result of an acquisition. In accordance with our policy
and our EIP, the Committee has delegated limited authority to
the chief executive officer to approve special grants to
non-executive officers. These special awards may only be made on
the 1st day of a month (or the next trading day, if the
first day of the month is not a trading day). The Committee or
the Board must approve any equity awards to the named executive
officers.
The exercise price of any stock option award is the closing
price of our common stock on the date of grant. We do not
backdate or grant options or restricted stock retroactively. We
generally schedule board and Committee meetings at least
29
one year in advance and, as noted above, make annual equity
awards to our named executive officers at around the same time
every 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.
Other
Compensation
Our named executive officers receive a limited amount of other
benefits as part of a competitive compensation package. These
benefits include a company matching contribution under our
401(k) plan, which is provided to all employee participants. We
pay for tax and financial planning services for our executives
to give them the opportunity to maximize the benefits from the
compensation and benefits programs offered to them. We pay a car
allowance for Mr. Yost, which we view as reasonable in
consideration of the substantial time and effort we expect him
to devote to business travel, employee recruitment and
developing customer relationships. In the aggregate, these other
benefits constitute only a small percentage of each named
executive officers total compensation. In fiscal year
2010, we provided Mr. Collis with $1,199,862 in moving and
other expenses associated with his relocation from Dallas, Texas
to our corporate headquarters in Valley Forge, Pennsylvania. The
Committee approved the payment of additional relocation expenses
to Mr. Collis under our executive relocation program to
mitigate, in part, some of the loss that Mr. Collis would
incur as a result of his relocation and sale of his home in
Texas at time when housing prices had declined significantly. In
fiscal year 2010, we provided Mr. Frary with $237,973 in
moving and other expenses associated with his relocation to
ABSGs headquarters in Frisco, Texas. The executives have
signed written agreements obligating them to repay the amounts
paid to them for executive relocation benefits under certain
circumstances. If either executive voluntarily terminates his
employment with us or his employment is terminated by us for
cause within two years of the date on which he accepted his new
position with AmerisourceBergen, he will be required to repay
all or a portion of the amounts paid to him for relocation
benefits, based on a sliding scale depending on the date of
termination of his employment. The Committee believes that the
payment of relocation expenses to our executives is appropriate
and in the best interest of its stockholders in seeking to
mitigate any personal loss and distraction when we ask our
executives to move with their families to a new location for the
purpose of leading and promoting the continued success of
AmerisourceBergen
and/or our
business units. These benefits appear in the All Other
Compensation column in the Summary Compensation Table on
page 33.
Deferred
Compensation
Executives may defer receipt of part or all of their cash
compensation under our deferred compensation plan. The plan is
intended to promote retention of executives by providing a
long-term, tax efficient savings opportunity at low cost to us.
Amounts deferred under the plan are allocated to the plan
investment options chosen by the executive. The executive
receives a quarterly adjustment in his or her account for any
gains and losses on the amounts deferred under the plan.
Employee
and Retirement Benefits
Core employee benefits are available to the named executive
officers on the same basis as all domestic employees generally.
These benefits include medical and dental coverage, disability
insurance, life insurance and a 401(k) plan.
We offer a supplemental 401(k) plan to selected key management,
including the named executive officers. We implemented this plan
to address the absence of any non-legacy executive retirement
plan following the 2001 merger to form the company and to permit
executives to receive the full amount of the company match
available for other employees generally under the 401(k) plan.
This plan provides an annual contribution amount equal to 4% of
a participants salary and bonus to the extent that his or
her compensation exceeds IRS limits applicable to our 401(k)
plan.
Mr. Yost and Mr. DiCandilo are the only named
executive officers who participate in any of the pension plans
that we maintain. These pension plans were in existence prior to
the 2001 merger that formed our company, and both of them are
now frozen with respect to participation and benefit accruals.
These legacy plans are more fully described on pages 37-38.
Severance
and Change in Control Benefits
Severance Benefits. We provide severance
benefits under specified circumstances to give executives a
measure of financial security following the loss of employment,
to protect the company from competitive activities after the
departure of certain executives, and because we believe that
these benefits are important to attract and retain our
executives in a competitive industry. We will provide severance
benefits if we discharge a named executive officer without cause
or he
30
leaves the company for good reason. Good reason means a
reduction in base salary or our failure to comply with our
obligations (including by diminishing the executives
authority, duties and responsibilities) under his employment
agreement. The terms of these benefits are set out in employment
agreements and various plans, which are described on
pages 39-41.
We do not provide severance benefits if a named executive
officer is terminated for cause or leaves without good reason.
In that case, we would only pay the amount of accrued
obligations.
Change in Control. We do not provide enhanced
cash compensation in connection with a change in control of the
company. We will accelerate the vesting of equity awards if a
named executive officers employment is involuntarily
terminated by us within two years after a change in control. We
provide these benefits to provide financial protection to
employees following an involuntary loss of employment in
connection with a change in control and to enable our executives
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 executives
with an appropriate incentive to cooperate in completing a
change in control transaction. The Board and the Committee also
have discretion under our EIP to take certain actions in the
event of a change in control. These actions include cancelling
options that are not exercised within 30 days after a
change in control; cashing out outstanding options; cancelling
any restricted stock awards in exchange for the payment of cash,
property or a combination of cash and property equal to the
awards value; or substituting other property (including
securities of another entity) for awards granted under our EIP.
In addition, there is discretion under the AIP to pay cash
bonuses during any year in which a change in control occurs. If
this discretion is exercised, bonus payments would be based on
performance for the portion of the fiscal year until the change
in control event and paid within 75 days of the change in
control.
Any payments that are made to the named executive officer as a
result of termination are not intended to constitute excess
parachute payments within the meaning of Section 280G of
the Internal Revenue Code. The employment agreements of the
named executive officers require us to reduce these payments, if
necessary, to ensure that they do not constitute excess
parachute payments.
Executive
Stock Ownership
Our executives must own shares of our common stock in an amount
equal to a multiple of their base salary. Stock ownership aligns
managements interests with those of our stockholders and
provides a continuing incentive for management to focus on
long-term growth. Under our executive stock ownership
guidelines, Mr. Yost must own shares worth five times his
base salary and the other named executive officers must own
shares worth three times their base salaries. Executives who
become subject to the guidelines have three years from the date
of hire or change in status, whichever is later, to comply with
the ownership requirements. Following its annual review, the
Committee determined that each of the named executive officers
is in compliance with the guidelines.
Derivatives
Trading and Hedging Prohibition
No director, officer or employee may buy or sell options on our
common stock or engage in short sales of our common stock. We
also prohibit hedging the economic risk of ownership of our
common stock. We discourage our employees from holding our stock
in a margin account or pledging our stock as collateral for a
loan. We have a written policy for our employees on these
matters.
Tax and
Accounting Considerations
In 2010, we paid cash compensation in the amount of $2,579,488
to Mr. Yost and $2,010,841 to Mr. Collis that was not
deductible under Internal Revenue Code Section 162(m),
which prohibits us from deducting compensation in excess of
$1 million paid to the named executive officers (other
than, under current rules, the chief financial officer). We have
not taken action to date to structure the elements of cash
compensation payable to our executive officers so as to comply
specifically with federal tax law regarding the deductibility of
compensation in excess of $1 million. We will continue to
consider and evaluate all of our compensation programs in light
of federal tax law and regulations.
31
Compensation
Committee Report
The Compensation and Succession Planning Committee has reviewed
and discussed with management the Compensation Discussion and
Analysis contained in the 2011 Proxy Statement. Based on this
review and discussion, we recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
2011 Proxy Statement and incorporated by reference into the
companys Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010.
COMPENSATION AND SUCCESSION PLANNING COMMITTEE
Charles H. Cotros, Chairman
Richard W. Gochnauer
Richard C. Gozon
Michael J. Long
Henry W. McGee
32
Executive
Compensation Tables
Summary
Compensation Table
The following table sets forth the compensation paid to or
earned by our Chief Executive Officer, Executive Vice President
and Chief Financial Officer and the three other most highly
compensated executive officers during fiscal year 2010, who we
refer to in this Proxy Statement as the named executive officers.
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(G)
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Change in
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Pension Value
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and
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(F)
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Nonqualified
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(D)
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(E)
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Non-Equity
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Deferred
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(H)
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(A)
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(B)
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(C)
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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(I)
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Name and Principal Position
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Year
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Salary
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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R. David Yost
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2010
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$1,255,514
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$583,324
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$1,078,125
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$3,518,510
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$837,887
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$155,464
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$7,428,824
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Chief Executive Officer
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2009
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$1,233,235
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$370,324
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$778,125
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$3,027,461
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$1,311,501
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$133,659
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$6,854,305
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2008
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$1,182,060
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$447,098
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$918,750
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$2,719,537
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$83,451
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$129,355
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$5,480,251
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Steven H. Collis
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2010
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$652,027
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$536,676
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$991,875
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$1,077,510
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$122,334
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$1,281,303
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$4,661,725
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President and Chief Operating
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2009
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$572,669
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$311,063
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$653,625
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$720,097
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$43,706
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$75,536
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$2,376,696
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Officer
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2008
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$539,807
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$357,652
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$735,000
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$540,095
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$50,009
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$2,222,563
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Michael D. DiCandilo
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2010
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$673,077
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$536,676
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$991,875
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$1,039,290
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$145,748
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$81,668
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$3,468,334
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Executive Vice President and
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2009
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$651,442
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$325,887
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$684,750
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$775,884
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$213,246
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$70,203
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$2,721,412
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Chief Financial Officer
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2008
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$619,231
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$375,550
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$771,750
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$632,572
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$63,645
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$2,462,748
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John G. Chou
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2010
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$330,456
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$198,324
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$366,563
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$509,040
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$6,635
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$41,214
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$1,452,232
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Senior Vice President, General
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2009
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$310,160
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$94,812
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$199,200
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$298,615
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$3,318
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$34,759
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$940,864
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Counsel and Secretary
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2008
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$294,866
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$89,402
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$183,750
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$189,867
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$30,964
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$788,849
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James D. Frary
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2010
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$269,360
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$203,198
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$375,563
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$408,317
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$22,880
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$259,898
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$1,539,216
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Senior Vice President,
AmerisourceBergen Corporation,
and President,
AmerisourceBergen Specialty
Distribution and Services
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Salary
(Column C)
The amounts reported as salary represent the base salaries paid
to each of the named executive officers for each fiscal year
shown. Amounts shown for Mr. Collis include $73,981,
$111,402 and $90,600 deferred into our deferred compensation
plan for fiscal years 2008, 2009 and 2010, respectively.
Stock
Awards and Option Awards (Columns D and E)
The amounts reported in Columns D and E represent the grant date
fair value for equity awards shown in accordance with
ASC 718, disregarding the estimate of forfeitures related
to service-based vesting conditions. There were no forfeitures
by the named executive officers in fiscal years 2008, 2009 or
2010. See Note 9 to the consolidated financial statements
contained in our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010 relating to
assumptions made in the valuation.
Long-term equity incentive awards are made pursuant to our EIP.
The value of annual equity awards generally consist of 25%
restricted stock (or restricted stock units) and 75% stock
options. Restricted stock and restricted stock units vest on the
third anniversary of the grant date. Unvested restricted stock
or restricted stock units are forfeited if the executive leaves
the company prior to vesting, except by reason of death,
disability, voluntary retirement or an involuntary termination
of employment within two years after a change in control. In
accordance with the dividend rate applicable to the declaration
of dividends on our common stock from time to time, dividends on
unvested restricted stock and dividend equivalents on unvested
restricted stock units are accrued and paid upon vesting. The
dividend rate is not preferential. A restricted stock unit is a
grant of shares of our common stock that is delivered at the
time and to the extent that the shares vest. Because of the
different treatment between restricted stock and restricted
stock units for federal income tax purposes that results when an
individual has attained retirement age but continues to work for
us, we awarded Mr. Yost restricted stock units in lieu of
restricted stock in fiscal years 2009 and 2010.
33
Stock options have an exercise price equal to the closing price
of our common stock on the date of grant. Stock options vest 25%
per year beginning on the first anniversary of the grant date
and may be exercised over a term of seven (7) years from
the date of grant for those stock options granted on or after
February 27, 2008. Unvested options granted before 2009
normally cease to vest upon any termination of employment other
than involuntary termination of employment within two years
after a change in control. If we terminate a named executive
officer for cause, all outstanding options (vested and unvested)
are immediately cancelled. (See page 43 for a description
of the impact of termination of employment on vesting and
exercisability of restricted stock and stock options.)
Non-Equity
Incentive Plan Compensation (Column F)
The amounts reported in Column F represent the annual cash
bonuses awarded to the named executive officers under our AIP
plan for the fiscal year shown. Cash bonuses were calculated
based on the degree to which the named executive officer
achieved the performance criteria established for him by the
Compensation and Succession Planning Committee in the preceding
November and approved by the committee and paid in the November
following the close of the applicable fiscal year. The amounts
shown for Mr. Yost for fiscal years 2008, 2009 and 2010
also include $1,350,000 accrued each year as a result of the
satisfaction of the performance criteria established under his
three-year long-term incentive award. This amount will not be
paid to Mr. Yost until at least 13 months after he
terminates employment with us (other than as a result of his
death), and may be deferred for a longer period of time.
Under the AIP, payment of cash bonus depends upon the
achievement of pre-established performance goals for the fiscal
year. Cash bonus payments depend primarily on the achievement of
financial performance goals and secondarily on individual
leadership goals. We use a mix of financial performance goals at
the corporate and, depending on the named executive officer,
business unit level. In fiscal year 2010, corporate level
financial performance measures were EPS and ROIC, and business
unit level financial performance measures were ABDC pre-tax
profit and gross profit and ABSG EBIT and ROIC. (See cash bonus
discussion on pages 26-28 under Compensation
Discussion and Analysis.)
Change in
Pension Value and Non-Qualified Deferred Compensation Earnings
(Column G)
The amounts reported in Column G include the aggregate
year-to-year
change in the actuarial present value of the accumulated benefit
under the AmerisourceBergen Corporation Participating Companies
Pension Plan, the AmerisourceBergen Corporation 2001 Deferred
Compensation Plan and the AmerisourceBergen Drug Corporation
Supplemental Retirement Plan.
All Other
Compensation (Column H)
The following table shows the specific components of the amounts
shown for fiscal year 2010 in Column H of the Summary
Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
|
|
|
|
|
Upon
|
|
|
|
|
|
Airline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Supplemental
|
|
|
|
|
|
Vesting of
|
|
|
Country
|
|
|
Club and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
401(k) Plan
|
|
|
Financial
|
|
|
Restricted
|
|
|
Club
|
|
|
Other
|
|
|
Car
|
|
|
Spouse
|
|
|
Relocation
|
|
|
|
|
Name
|
|
Year
|
|
|
(1)
|
|
|
(2)
|
|
|
Planning
|
|
|
Stock
|
|
|
Dues
|
|
|
Dues
|
|
|
Allowance
|
|
|
Travel
|
|
|
(3)
|
|
|
Total
|
|
|
R. David Yost
|
|
|
2010
|
|
|
|
$13,050
|
|
|
|
$106,957
|
|
|
|
$11,658
|
|
|
|
$13,884
|
|
|
|
|
|
|
|
$315
|
|
|
|
$9,600
|
|
|
|
|
|
|
|
|
|
|
|
$155,464
|
|
Steven H. Collis
|
|
|
2010
|
|
|
|
$12,250
|
|
|
|
$42,548
|
|
|
|
$11,380
|
|
|
|
$9,916
|
|
|
|
$4,430
|
|
|
|
$275
|
|
|
|
|
|
|
|
$642
|
|
|
|
$1,199,862
|
|
|
|
$1,281,303
|
|
Michael D. DiCandilo
|
|
|
2010
|
|
|
|
$12,250
|
|
|
|
$47,485
|
|
|
|
$11,520
|
|
|
|
$10,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$81,668
|
|
John G. Chou
|
|
|
2010
|
|
|
|
$12,652
|
|
|
|
$15,105
|
|
|
|
$11,473
|
|
|
|
$1,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$41,214
|
|
James D. Frary
|
|
|
2010
|
|
|
|
$12,250
|
|
|
|
|
|
|
|
$9,525
|
|
|
|
|
|
|
|
|
|
|
|
$150
|
|
|
|
|
|
|
|
|
|
|
|
$237,973
|
|
|
|
$259,898
|
|
|
|
|
(1)
|
|
These amounts represent company
contributions under the AmerisourceBergen Employee Investment
Plan, our 401(k) plan, which were posted to the executives
accounts during fiscal year 2010.
|
|
(2)
|
|
These amounts represent company
contributions to the AmerisourceBergen Corporation Supplemental
401(k) Plan, which were posted to the executives accounts
during fiscal year 2010.
|
|
(3)
|
|
These amounts include tax gross ups
of $66,034 for Mr. Collis and $13,219 for Mr. Frary
for federal and state taxes on amounts paid to them under our
executive relocation program.
|
34
Grants of
Plan-Based Awards in Fiscal Year 2010
The following table sets forth certain information regarding
grants of plan-based awards to each of our named executive
officers during fiscal year 2010.
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|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
or Base
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
|
Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
Name
|
|
|
Type
|
|
|
Date
|
|
|
($) (1)
|
|
|
($) (1)
|
|
|
($) (1)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/ Sh)
|
|
|
($) (2)
|
R. David Yost
|
|
|
Restricted Stock Units
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$583,324
|
|
|
|
|
Nonqualified Stock Option
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
|
$28.00
|
|
|
|
|
$1,078,125
|
|
|
|
|
Annual Cash Bonus
|
|
|
n/a
|
|
|
|
$256,759
|
|
|
|
|
$1,533,600
|
|
|
|
|
$2,300,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Collis
|
|
|
Restricted Stock
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$536,676
|
|
|
|
|
Nonqualified Stock Option
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,500
|
|
|
|
|
$28.00
|
|
|
|
|
$991,875
|
|
|
|
|
Annual Cash Bonus
|
|
|
n/a
|
|
|
|
$147,564
|
|
|
|
|
$735,000
|
|
|
|
|
$1,102,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. DiCandilo
|
|
|
Restricted Stock
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$536,676
|
|
|
|
|
Nonqualified Stock Option
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,500
|
|
|
|
|
$28.00
|
|
|
|
|
$991,875
|
|
|
|
|
Annual Cash Bonus
|
|
|
n/a
|
|
|
|
$140,167
|
|
|
|
|
$735,000
|
|
|
|
|
$1,102,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Chou
|
|
|
Restricted Stock
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$198,324
|
|
|
|
|
Nonqualified Stock Option
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,750
|
|
|
|
|
$28.00
|
|
|
|
|
$366,563
|
|
|
|
|
Annual Cash Bonus
|
|
|
n/a
|
|
|
|
$108,218
|
|
|
|
|
$360,000
|
|
|
|
|
$540,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Frary
|
|
|
Restricted Stock
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$140,000
|
|
|
|
|
Nonqualified Stock Option
|
|
|
3/3/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
$28.00
|
|
|
|
|
$258,750
|
|
|
|
|
Restricted Stock
|
|
|
9/23/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$63,198
|
|
|
|
|
Nonqualified Stock Option
|
|
|
9/23/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
$30.34
|
|
|
|
|
$116,813
|
|
|
|
|
Annual Cash Bonus
|
|
|
n/a
|
|
|
|
$42,104
|
|
|
|
|
$273,446
|
|
|
|
|
$410,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These amounts represent possible
payouts of fiscal year 2010 cash bonuses under the AIP. The
amounts shown in the Threshold column represent the
minimum amount payable under the AIP based on the assumption
that corporate and business unit performance exceeded the
thresholds established for the financial performance goals and
individual leadership goals are met. We do not pay bonus for
performance that is at or below the threshold established for
the financial performance goals. For performance that exceeds
threshold but does not meet target, bonus payments are based on
the level of performance and are increased ratably until target
is reached. The actual payouts under the AIP to our named
executive officers for fiscal year 2010 are shown in the
Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table.
|
|
(2)
|
|
Amounts in this column represent
the grant date fair value of restricted stock, restricted stock
units and stock options. For the grant date March 3, 2010,
the dollar value shown for restricted stock and restricted stock
units is based on the closing price of our common stock of
$28.00 per share on March 3, 2010. For the grant date
September 23, 2010, the dollar value shown for restricted
stock is based on the closing price of our common stock of
$30.34 per share on September 23, 2010. The dollar value
shown for nonqualified stock options was determined on the basis
of a binomial method of valuation.
|
35
Outstanding
Equity Awards at 2010 Fiscal Year End
The following table provides information on the current holdings
of stock options and restricted stock (or restricted stock unit)
awards by our named executive officers as of September 30,
2010. The market value of the shares set forth under the
Stock Awards column was determined by multiplying
the number of unvested shares by the closing price of our common
stock of $30.66 per share on September 30, 2010, the last
trading day of fiscal year 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock that
|
|
|
Stock that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
Name
|
|
|
Grant Date
|
|
|
(#)
|
|
|
(#) (1)
|
|
|
($)
|
|
|
Date
|
|
|
(#) (2)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. David Yost
|
|
|
|
04/23/2002
|
|
|
|
|
408,762
|
|
|
|
|
|
|
|
|
$
|
17.25
|
|
|
|
|
04/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2003
|
|
|
|
|
408,762
|
|
|
|
|
|
|
|
|
$
|
13.54
|
|
|
|
|
02/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/2004
|
|
|
|
|
347,448
|
|
|
|
|
|
|
|
|
$
|
14.06
|
|
|
|
|
03/08/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/2005
|
|
|
|
|
347,448
|
|
|
|
|
|
|
|
|
$
|
15.20
|
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/08/2006
|
|
|
|
|
199,272
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
|
02/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/15/2007
|
|
|
|
|
160,950
|
|
|
|
|
53,650
|
|
|
|
$
|
27.07
|
|
|
|
|
02/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2008
|
|
|
|
|
93,750
|
|
|
|
|
93,750
|
|
|
|
$
|
21.46
|
|
|
|
|
02/27/2015
|
|
|
|
|
20,834
|
|
|
|
$
|
638,770
|
|
|
|
|
|
02/19/2009
|
|
|
|
|
46,875
|
|
|
|
|
140,625
|
|
|
|
$
|
17.78
|
|
|
|
|
02/19/2016
|
|
|
|
|
20,834
|
|
|
|
$
|
638,770
|
|
|
|
|
|
03/03/2010
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
$
|
28.00
|
|
|
|
|
03/03/2017
|
|
|
|
|
20,833
|
|
|
|
$
|
638,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,013,267
|
|
|
|
|
475,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,501
|
|
|
|
$
|
1,916,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Collis
|
|
|
|
03/08/2004
|
|
|
|
|
245,258
|
|
|
|
|
|
|
|
|
$
|
14.06
|
|
|
|
|
03/08/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/2005
|
|
|
|
|
245,258
|
|
|
|
|
|
|
|
|
$
|
15.20
|
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/08/2006
|
|
|
|
|
145,622
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
|
02/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/15/2007
|
|
|
|
|
114,964
|
|
|
|
|
38,322
|
|
|
|
$
|
27.07
|
|
|
|
|
02/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2008
|
|
|
|
|
75,000
|
|
|
|
|
75,000
|
|
|
|
$
|
21.46
|
|
|
|
|
02/27/2015
|
|
|
|
|
16,666
|
|
|
|
$
|
510,980
|
|
|
|
|
|
02/19/2009
|
|
|
|
|
39,375
|
|
|
|
|
118,125
|
|
|
|
$
|
17.78
|
|
|
|
|
02/19/2016
|
|
|
|
|
17,500
|
|
|
|
$
|
536,550
|
|
|
|
|
|
03/03/2010
|
|
|
|
|
|
|
|
|
|
172,500
|
|
|
|
$
|
28.00
|
|
|
|
|
03/03/2017
|
|
|
|
|
19,167
|
|
|
|
$
|
587,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
865,477
|
|
|
|
|
403,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,333
|
|
|
|
$
|
1,635,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. DiCandilo
|
|
|
|
02/27/2003
|
|
|
|
|
99,818
|
|
|
|
|
|
|
|
|
$
|
13.54
|
|
|
|
|
02/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/2004
|
|
|
|
|
245,258
|
|
|
|
|
|
|
|
|
$
|
14.06
|
|
|
|
|
03/08/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/2005
|
|
|
|
|
245,258
|
|
|
|
|
|
|
|
|
$
|
15.20
|
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/08/2006
|
|
|
|
|
153,286
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
|
02/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/15/2007
|
|
|
|
|
120,712
|
|
|
|
|
40,238
|
|
|
|
$
|
27.07
|
|
|
|
|
02/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2008
|
|
|
|
|
78,750
|
|
|
|
|
78,750
|
|
|
|
$
|
21.46
|
|
|
|
|
02/27/2015
|
|
|
|
|
17,500
|
|
|
|
$
|
536,550
|
|
|
|
|
|
02/19/2009
|
|
|
|
|
41,250
|
|
|
|
|
123,750
|
|
|
|
$
|
17.78
|
|
|
|
|
02/19/2016
|
|
|
|
|
18,334
|
|
|
|
$
|
562,120
|
|
|
|
|
|
03/03/2010
|
|
|
|
|
|
|
|
|
|
172,500
|
|
|
|
$
|
28.00
|
|
|
|
|
03/03/2017
|
|
|
|
|
19,167
|
|
|
|
$
|
587,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
984,332
|
|
|
|
|
415,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,001
|
|
|
|
$
|
1,686,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Chou
|
|
|
|
02/27/2003
|
|
|
|
|
30,656
|
|
|
|
|
|
|
|
|
$
|
13.54
|
|
|
|
|
02/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/2004
|
|
|
|
|
32,700
|
|
|
|
|
|
|
|
|
$
|
14.06
|
|
|
|
|
03/08/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/03/2005
|
|
|
|
|
33,518
|
|
|
|
|
|
|
|
|
$
|
15.20
|
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/08/2006
|
|
|
|
|
21,460
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
|
02/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/15/2007
|
|
|
|
|
22,992
|
|
|
|
|
7,664
|
|
|
|
$
|
27.07
|
|
|
|
|
02/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2008
|
|
|
|
|
18,750
|
|
|
|
|
18,750
|
|
|
|
$
|
21.46
|
|
|
|
|
02/27/2015
|
|
|
|
|
4,166
|
|
|
|
$
|
127,730
|
|
|
|
|
|
02/19/2009
|
|
|
|
|
12,000
|
|
|
|
|
36,000
|
|
|
|
$
|
17.78
|
|
|
|
|
02/19/2016
|
|
|
|
|
5,334
|
|
|
|
$
|
163,540
|
|
|
|
|
|
03/03/2010
|
|
|
|
|
|
|
|
|
|
63,750
|
|
|
|
$
|
28.00
|
|
|
|
|
03/03/2017
|
|
|
|
|
7,083
|
|
|
|
$
|
217,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,076
|
|
|
|
|
126,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,583
|
|
|
|
$
|
508,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Frary
|
|
|
|
08/01/2007
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
$
|
23.08
|
|
|
|
|
08/01/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/2008
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
$
|
21.46
|
|
|
|
|
02/27/2015
|
|
|
|
|
3,334
|
|
|
|
$
|
102,220
|
|
|
|
|
|
02/19/2009
|
|
|
|
|
|
|
|
|
|
28,125
|
|
|
|
$
|
17.78
|
|
|
|
|
02/19/2016
|
|
|
|
|
4,166
|
|
|
|
$
|
127,730
|
|
|
|
|
|
03/03/2010
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
$
|
28.00
|
|
|
|
|
03/03/2017
|
|
|
|
|
5,000
|
|
|
|
$
|
153,300
|
|
|
|
|
|
09/23/2010
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
$
|
30.34
|
|
|
|
|
09/23/2017
|
|
|
|
|
2,083
|
|
|
|
$
|
63,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,583
|
|
|
|
$
|
447,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The options shown in this column
have not vested and will vest at a rate of 25% per year over
four years from the date of grant, subject to the named
executive officers continued employment.
|
|
(2)
|
|
These restricted stock (or
restricted stock unit) awards will vest 100% on the third
anniversary of the date of grant.
|
36
Option
Exercises and Stock Vested in Fiscal Year 2010
The following table sets forth the number of shares acquired and
the value realized upon exercise of stock options and vesting of
restricted stock during fiscal year 2010 by each of the named
executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Shares Acquired
|
|
Value Realized
|
|
|
on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($) (1)
|
|
(#)
|
|
($) (2)
|
|
R. David Yost
|
|
|
735,772
|
|
|
$
|
10,800,938
|
|
|
|
23,334
|
|
|
$
|
638,185
|
|
Steven H. Collis
|
|
|
289,134
|
|
|
$
|
4,022,587
|
|
|
|
16,666
|
|
|
$
|
455,815
|
|
Michael D. DiCandilo
|
|
|
431,570
|
|
|
$
|
4,457,395
|
|
|
|
17,500
|
|
|
$
|
478,625
|
|
John G. Chou
|
|
|
|
|
|
|
|
|
|
|
3,334
|
|
|
$
|
91,185
|
|
James D. Frary
|
|
|
39,375
|
|
|
$
|
366,709
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Value realized on exercise is based
on the fair market value of our common stock on the date of
exercise minus the exercise price and does not necessarily
reflect proceeds actually received by the named executive
officer.
|
|
(2)
|
|
Value realized on vesting is based
on the fair market value of our common stock on the date of
vesting before tax withholding and does not necessarily reflect
proceeds actually received by the named executive officer.
|
Pension
Benefits
The following table provides information concerning pension
benefits for Messrs. Yost and DiCandilo. None of the other
named executive officers participate in any pension or
supplemental pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value of
|
|
|
|
|
|
|
of Credited
|
|
Accumulated
|
|
Payments During
|
|
|
|
|
Service
|
|
Benefit
|
|
Last Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
(1)
|
|
($)
|
|
R. David Yost
|
|
Pension Plan
|
|
|
32.8
|
|
|
|
$931,170
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
32.8
|
|
|
|
$6,102,242
|
|
|
|
|
|
Michael D. DiCandilo
|
|
Pension Plan
|
|
|
16.8
|
|
|
|
$188,298
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
16.8
|
|
|
|
$560,874
|
|
|
|
|
|
|
|
|
(1)
|
|
The present value of the
accumulated benefit is calculated as of the September 30,
2010 pension plan measurement date using the RP-2000 Mortality
Table for Males and Females, projected to 2016, and using a
discount rate of 5.0%. See Note 8 to the consolidated
financial statements contained in our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010 for
assumptions used to estimate the benefit obligation.
|
AmerisourceBergen Corporation Participating Companies Pension
Plan. We maintain a qualified defined benefit
pension plan for employees who meet the plans eligibility
requirements. This pension plan was frozen as to new
participants shortly after the August 2001 merger that formed
AmerisourceBergen. Employees first hired after
September 14, 2001 are not eligible to participate in the
pension plan unless they are subject to the terms of a
collective bargaining agreement that provides for such
participation. Effective August 1, 2004, no collective
bargaining agreements allow new participants to participate in
the pension plan. In addition, the pension plan has been amended
so that participants have ceased to earn any additional benefits
under the plan for any compensation paid or services performed
after June 30, 2007. Accordingly, the maximum benefits
payable to participants were frozen as of June 30, 2007.
Executive officers and other participants are entitled to annual
pension benefits upon retirement at age 65 with at least
five years of service. The benefit is equal to the number of
years of credited service multiplied by 1% of the average annual
compensation earned during the three consecutive years within
the last ten years of participation in the pension plan that
yield the highest average. The pension plan provides for early
retirement at age 55 with at least 5 years of service.
If an executive retires early, benefits will be reduced by 3.33%
for each year between ages 55 and 60 and by 6.67% for each
year between ages 60 and 65. Mr. Yost is the only
named executive officer eligible for early retirement under the
pension plan. All pension plan costs are paid by us and the plan
and benefits are funded on an actuarial basis. Compensation
earned by executive officers for purposes of the pension plan
includes salaries and bonuses paid prior to July 1, 2007,
subject to limitations under the Employee Retirement Income
Security Act of 1974, as amended, and the Internal Revenue Code
as in effect during the year the wages were paid. As required by
federal law, the pension plan limits the maximum annual
37
benefits payable at Social Security retirement age as a single
life annuity to the lesser of $180,000 or 100% of a plan
participants average total taxable earnings during his or
her highest three consecutive calendar years of participation,
subject to certain exceptions for benefits which accrued prior
to September 30, 1988.
AmerisourceBergen Drug Corporation Supplemental Retirement
Plan. We also maintain a supplemental retirement
plan. Benefits under the supplemental retirement plan were
frozen as of June 30, 2007. Coverage under the supplemental
retirement plan is limited to certain participants in the
pension plan whose benefits under the pension plan are limited
due to (i) restrictions imposed by the Internal Revenue
Code on the amount of benefits to be paid from a tax-qualified
plan, (ii) restrictions imposed by the Internal Revenue
Code on the amount of an employees compensation that may
be taken into account in calculating benefits to be paid from a
tax-qualified plan, or (iii) any reductions in the amount
of compensation taken into account under the pension plan due to
an employees participation in certain deferred
compensation plans sponsored by AmerisourceBergen or one of its
subsidiaries. The supplemental plan provides for a supplement to
the annual pension benefit paid under the pension plan to
certain individuals who are pension participants and who have
been employed by AmerisourceBergen or one of its subsidiaries
for five continuous years or who suffer a total and permanent
disability while employed by AmerisourceBergen or one of its
subsidiaries, and to the pre-retirement death benefits payable
under the pension plan on behalf of such participants who die
with a vested interest in the pension plan. The amount of the
supplement will be the difference, if any, between the pension
or pre-retirement death benefit paid under the pension plan and
that which would otherwise have been payable but for the
restrictions imposed by the Internal Revenue Code and any
reduction in the participants compensation for purposes of
the pension plan due to his or her participation in certain
deferred compensation plans of AmerisourceBergen or one of its
subsidiaries. The supplemental retirement benefit is payable in
a lump sum upon termination, subject to any restrictions imposed
under regulations under Section 409A of the Internal
Revenue Code governing deferred compensation.
Non-Qualified
Defined Contribution and Other Deferred Compensation in Fiscal
Year 2010
The following table sets forth information regarding
participation by the named executive officers in
AmerisourceBergens deferred compensation plan and
supplemental 401(k) plan during fiscal year 2010 and at fiscal
year end.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
AmerisourceBergen
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
Contributions in
|
|
Earnings in
|
|
|
|
|
|
Balance at
|
|
|
|
|
in Last Fiscal
|
|
Last Fiscal Year to
|
|
Last
|
|
Earnings in
|
|
|
|
Last Fiscal
|
|
Balance at
|
|
|
Year to
|
|
AmerisourceBergen
|
|
Fiscal Year
|
|
Last Fiscal Year
|
|
|
|
Year End in
|
|
Last Fiscal
|
|
|
Deferred
|
|
Corporation
|
|
in Deferred
|
|
in Supplemental
|
|
Aggregate
|
|
Deferred
|
|
Year End in
|
|
|
Compensation
|
|
Supplemental
|
|
Compensation
|
|
401(k)
|
|
Withdrawals /
|
|
Compensation
|
|
Supplemental
|
|
|
Plan
|
|
401(k) Plan
|
|
Plan
|
|
Plan
|
|
Distributions
|
|
Plan
|
|
401(k) Plan
|
Name
|
|
($) (1)
|
|
($) (1)
|
|
($) (2)
|
|
($) (2)
|
|
($)
|
|
($)
|
|
($)
|
|
R. David Yost
|
|
|
|
|
|
|
$106,957
|
|
|
|
|
|
|
|
$34,026
|
|
|
|
|
|
|
|
|
|
|
|
$434,721
|
|
Steven H. Collis
|
|
|
$90,600
|
|
|
|
$42,549
|
|
|
|
$110,599
|
|
|
|
$11,735
|
|
|
|
|
|
|
|
$1,030,109
|
|
|
|
$140,728
|
|
Michael D. DiCandilo
|
|
|
|
|
|
|
$47,485
|
|
|
|
$1,974
|
|
|
|
$15,507
|
|
|
|
|
|
|
|
$23,093
|
|
|
|
$184,741
|
|
John G. Chou
|
|
|
|
|
|
|
$15,105
|
|
|
|
|
|
|
|
$6,635
|
|
|
|
|
|
|
|
|
|
|
|
$79,594
|
|
James D. Frary
|
|
|
|
|
|
|
|
|
|
|
$22,880
|
|
|
|
|
|
|
|
|
|
|
|
$249,717
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts shown as contributions
to the deferred compensation plan and the supplemental 401(k)
plan are also reported as compensation to the named executive
officer in the Summary Compensation Table.
|
|
(2)
|
|
Amounts shown represent the net
change to the named executive officers account in fiscal
year 2010 for the aggregate gains and losses on the plan
investments under the supplemental 401(k) plan and the deferred
compensation plan. The amounts shown are not considered above
market or preferential earnings and are not reported as
compensation in the Summary Compensation Table.
|
Deferred Compensation Plan. Eligible executive
officers may elect to defer up to 50% of their annual cash
compensation and have the deferred amount credited in an account
under the deferred compensation plan. Deferral elections are
made in December for compensation to be earned in the next year.
Election forms must be filed for each year an executive officer
wishes to defer compensation and each form shall specify the
method of payment of benefits and the time such payment is to
commence. Participants select the investment options under the
plan and may change their election at any time by contacting the
plan administrator. Aggregate earnings and losses on plan
investments are credited to participants accounts on a
quarterly basis. The deferred benefits will be distributed by us
in accordance with the terms of the plan and payment will be
made at the times elected by the executive officer in accordance
with the election form. An executive officer must specify
whether he wishes to receive payment starting in the year of
retirement or in the year after retirement and may elect to
receive the deferred benefits (i) over annual periods
ranging from three to fifteen years and
38
payable in quarterly installments or (ii) in a single
distribution. We pay all costs and expenses incurred in the
administration of the plan.
AmerisourceBergen Corporation Supplemental 401(k)
Plan. Selected key executives, including all of
the named executive officers, participate in the supplemental
401(k) plan. The supplemental 401(k) plan credits the account of
each eligible participant with an annual amount equal to four
percent (4%) of the participants base salary and bonus
incentive to the extent that his or her compensation exceeds the
annual compensation limit established for our 401(k) plan by the
Internal Revenue Code. The compensation limit is $245,000 for
2010. Annual accruals under the executive plan commenced
effective as of January 1, 2006. In addition to annual
accruals, certain eligible participants were credited with an
initial amount based on his or her service after the 2001 merger
to form AmerisourceBergen. Fidelity Investments administers
the supplemental 401(k) plan. Participants will be permitted to
allocate the amounts in their accounts among investment options
specified by the supplemental 401(k) plan administrator from
time to time. Such allocation will only be for the purpose of
determining gains and losses based on the performance of the
underlying investments. Fidelity will credit participant
accounts with plan benefits following the close of each calendar
year. Account balances under the supplemental 401(k) plan do not
vest in full until an employee reaches age 62 (or
age 55 with more than 15 years of service), except
that vesting is accelerated for disability, death and a change
in control (as long as the participant is employed by the
company on the date of the change in control). If a participant
is terminated for cause, he or she forfeits all vested and
unvested account balances under the supplemental 401(k) plan.
Employment
Agreements
We have employment agreements with each of our named executive
officers. The employment agreements provide that the named
executive officers shall be employed in the positions (or in
positions that are substantially equivalent) set forth opposite
their names below:
|
|
|
|
Named Executive Officer
|
|
|
Title
|
R. David Yost
|
|
|
Chief Executive Officer
|
Steven H. Collis
|
|
|
President and Chief Operating Officer
|
Michael D. DiCandilo
|
|
|
Executive Vice President and Chief Financial Officer
|
John G. Chou
|
|
|
Senior Vice President, General Counsel and Secretary
|
James D. Frary
|
|
|
Senior Vice President and President, AmerisourceBergen Specialty
Distribution and Services
|
|
|
|
|
Except as noted, the employment agreements are substantially
similar in form and substance. Each employment agreement
provides the following:
|
|
|
|
|
Continuation of base salary in effect for the named executive
officer, subject to increase in accordance with our prevailing
practice from time to time.
|
|
|
|
Incentive compensation, bonus and benefits in accordance with
our prevailing practice from time to time.
|
|
|
|
Rights on our part to terminate the executive for cause or
without cause.
|
|
|
|
Rights on the executives part to terminate for good reason
(upon at least 60 days prior written notice and
opportunity for the company to cure) or without good reason
(upon at least 30 days prior written notice).
|
|
|
|
During, and for a period of two years following termination of
employment, each of the named executive officers has agreed not
to (i) compete, directly or indirectly, with any business
(including the wholesale distribution of pharmaceuticals) in
which we or our subsidiaries engage or are considering for
development or investment or (ii) solicit any of our
employees for employment. The non-compete obligation of our
named executive officers also includes the obligation to abide
by non-compete obligations to which we are subject as a result
of a divestiture or other contractual restrictions.
|
39
Potential
Payments upon Termination of Employment or Change in
Control
Termination of Employment without Cause or Resignation with
Good Reason. Our named executive officers
employment agreements provide for severance payments in the
event that we terminate their employment without cause or they
leave the company for good reason. The table below identifies
what would constitute cause or good reason to terminate
employment under the agreements:
|
|
|
|
Cause for termination means:
|
|
|
Good reason for termination means:
|
Continued failure to substantially perform job duties
|
|
|
Reduction in base salary
|
Willful misconduct
|
|
|
Diminution of authority, duties or responsibilities
|
Conviction of a felony
|
|
|
Failure to provide agreed position or pay
|
Conviction of a misdemeanor involving moral turpitude that
materially harms the company
|
|
|
In the case of Mr. Yost, the failure to be elected to the Board
|
|
|
|
|
In order to receive severance payments, the named executive
officer must sign a release of any and all claims relating to
his employment with us. These benefits, which are generally
payable for a period of two years following the loss of
employment unless otherwise noted, include:
|
|
|
|
|
payment of base salary and bonus (based on the average annual
bonuses paid in the preceding 3 years), except for
Mr. Frary whose employment agreement does not provide for
the continuation of bonus payments beyond the year of
termination;
|
|
|
|
reimbursement of costs incurred by the executive to continue
health coverage after the termination of employment;
|
|
|
|
executive outplacement assistance;
|
|
|
|
if the termination occurs after bonuses for the preceding fiscal
year are paid to employees generally, a pro rata target bonus
for the year of termination of employment (paid when bonuses are
paid to employees generally); and
|
|
|
|
accrued but unpaid cash compensation, such as unpaid base
salary, vacation pay and business expenses (paid in a lump sum
within 30 days of termination of employment).
|
To the extent compliance with Section 409A of the Internal
Revenue Code is necessary to avoid the application of an excise
tax to any of the foregoing payments and benefits, the
employment agreements provide for deferral (without interest) of
any affected amounts due in the six months following the
termination of employment.
Termination of Employment with Cause or Resignation without
Good Reason. If we fire an executive for cause or
he resigns without good reason, we will not pay the executive
any cash severance. We will, however, pay him accrued but unpaid
cash compensation through the date of termination. These amounts
will include base salary through the date of termination,
declared but unpaid bonus, accrued vacation pay and outstanding
employee business expenses.
Disability or Death. If a named executive
officer becomes disabled or dies, we will pay the executive, or
his estate, the executives pro rata target bonus and an
amount equal to his accrued but unpaid cash compensation
(including base salary, vacation pay and outstanding business
expenses). We will pay this amount in a lump sum in cash within
30 days from the date of disability or death, except for
the portion attributable to the cash bonus. That amount will be
paid when the annual bonuses are paid to all employees generally.
Retirement and Deferred Compensation
Benefits. Following retirement or termination of
employment, our named executive officers will receive payment of
retirement benefits and deferred compensation benefits under
various plans in which they participate. The value of those
benefits as of September 30, 2010 is set forth on
pages 37 and 38 in the tables entitled Pension
Benefits and Nonqualified Defined Contribution and
Other Deferred Compensation. There are no special or
enhanced benefits under those plans for our named executive
officers except that any account balances under the supplemental
401(k) plan would vest upon an executives disability or
death or as a result of a change in control of the company as
long as the executive is employed by us on the date of the
change in control. Mr. Yost is the only named executive
officer currently eligible for early retirement under the
pension plan and supplemental executive retirement plan.
40
Change in
Control.
We do not provide cash severance or enhanced benefits under the
employment agreements with our named executive officers solely
in connection with a change in control of the company. Certain
of our benefit plans provide for accelerated vesting in
connection with a change in control as follows:
|
|
|
|
|
account balances under the supplemental 401(k) plan would
immediately vest upon a change in control as long as the
executive is still employed by us; and
|
|
|
|
unvested stock options will vest and restrictions on stock
awards will lapse if the executive is involuntarily terminated
by us, whether or not for cause, within two years after a change
in control.
|
In addition, there are some circumstances where an award of
benefits in connection with a change in control of the company
is discretionary. Our internal benefits committee has discretion
under our AIP to pay bonuses to eligible employees during any
year in which a change in control occurs. If this discretion is
exercised, bonus payments would be based on performance for the
portion of the fiscal year until the change in control event and
paid within 75 days of the change in control. In the event
of a change in control, the Board may, in its discretion, cancel
outstanding options that are not exercised within 30 days
of the change in control, cash out the value of outstanding
options or restricted stock or make any other adjustments it
deems appropriate under the EIP. The Board may also cancel any
award made under the EIP in exchange for payment of an equal
value in cash or stock.
No payments made to a named executive officer as a result of
termination may constitute excess parachute payments within the
meaning of Section 280G of the Internal Revenue Code. The
employment agreements require us to reduce, if necessary, the
amount of severance due to the named executive officers in
connection with a termination of employment to ensure that such
payments do not constitute excess parachute payments.
41
Potential
Payments upon Termination of Employment or Change in
Control
The table below quantifies the potential payments that would be
owed to each named executive officer under various scenarios
involving the termination of employment or change in control of
the company as of September 30, 2010, the last business day
of fiscal year 2010. The amounts presented are in addition to
accumulated pension benefits and the balances under our deferred
compensation plan (set forth on pages 37 and 38):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
with or without
|
|
|
|
|
|
|
Death and
|
|
|
Termination
|
|
|
without
|
|
|
Termination
|
|
|
|
|
|
Cause within
|
|
|
|
|
|
|
Termination
|
|
|
by Executive
|
|
|
Cause or by
|
|
|
by
|
|
|
Change
|
|
|
Two Years of
|
|
|
|
|
|
|
with
|
|
|
without Good
|
|
|
Executive for
|
|
|
Company
|
|
|
in
|
|
|
Change in
|
Name
|
|
|
Benefit
|
|
|
Disability
|
|
|
Reason
|
|
|
Good Reason
|
|
|
for Cause
|
|
|
Control
|
|
|
Control (1)
|
R. David Yost (2)
|
|
|
Accrued Unpaid Salary
|
|
|
|
$24,145
|
|
|
|
|
$24,145
|
|
|
|
|
$24,145
|
|
|
|
|
$24,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Bonus
|
|
|
|
$1,533,600
|
|
|
|
|
|
|
|
|
|
$1,533,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$2,511,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$2,964,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$23,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Equity (3)
|
|
|
|
$5,282,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$5,282,248
|
|
|
|
|
Incremental Pension Benefits (4)
|
|
|
|
$1,000,715
|
|
|
|
|
$1,000,715
|
|
|
|
|
$1,000,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 401(k) plan (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$7,840,708
|
|
|
|
|
$1,024,860
|
|
|
|
|
$8,102,524
|
|
|
|
|
$24,145
|
|
|
|
|
|
|
|
|
|
$5,282,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Collis
|
|
|
Accrued Unpaid Salary
|
|
|
|
$12,539
|
|
|
|
|
$12,539
|
|
|
|
|
$12,539
|
|
|
|
|
$12,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Bonus
|
|
|
|
$735,000
|
|
|
|
|
|
|
|
|
|
$735,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,304,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$985,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$33,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Equity (3)
|
|
|
|
$4,443,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$4,443,771
|
|
|
|
|
Incremental Pension Benefits (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 401(k) plan (5)
|
|
|
|
$140,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$140,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$5,332,038
|
|
|
|
|
$12,539
|
|
|
|
|
$3,116,271
|
|
|
|
|
$12,539
|
|
|
|
|
$140,728
|
|
|
|
|
$4,443,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. DiCandilo
|
|
|
Accrued Unpaid Salary
|
|
|
|
$12,944
|
|
|
|
|
$12,944
|
|
|
|
|
$12,944
|
|
|
|
|
$12,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Bonus
|
|
|
|
$735,000
|
|
|
|
|
|
|
|
|
|
$735,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,346,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,387,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$34,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Equity (3)
|
|
|
|
$4,608,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$4,608,774
|
|
|
|
|
Incremental Pension Benefits (4)
|
|
|
|
$173,020
|
|
|
|
|
$173,020
|
|
|
|
|
$173,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 401(k) plan (5)
|
|
|
|
$184,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$184,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$5,714,479
|
|
|
|
|
$185,964
|
|
|
|
|
$3,733,763
|
|
|
|
|
$12,944
|
|
|
|
|
$184,741
|
|
|
|
|
$4,608,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Chou
|
|
|
Accrued Unpaid Salary
|
|
|
|
$6,355
|
|
|
|
|
$6,355
|
|
|
|
|
$6,355
|
|
|
|
|
$6,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Bonus
|
|
|
|
$360,000
|
|
|
|
|
|
|
|
|
|
$360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$660,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$434,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$30,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Equity (3)
|
|
|
|
$1,341,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,341,906
|
|
|
|
|
Incremental Pension Benefits (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 401(k) plan (5)
|
|
|
|
$79,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$79,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$1,787,855
|
|
|
|
|
$6,355
|
|
|
|
|
$1,537,598
|
|
|
|
|
$6,355
|
|
|
|
|
$79,594
|
|
|
|
|
$1,341,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Frary
|
|
|
Accrued Unpaid Salary
|
|
|
|
$5,180
|
|
|
|
|
$5,180
|
|
|
|
|
$5,180
|
|
|
|
|
$5,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Bonus
|
|
|
|
$273,446
|
|
|
|
|
|
|
|
|
|
$273,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$538,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$33,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of Equity (3)
|
|
|
|
$1,111,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,111,130
|
|
|
|
|
Incremental Pension Benefits (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 401(k) plan (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$1,389,756
|
|
|
|
|
$5,180
|
|
|
|
|
$895,415
|
|
|
|
|
$5,180
|
|
|
|
|
|
|
|
|
|
$1,111,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The benefits shown are in addition
to any amounts that the executive would receive (i) as a
result of the accelerated vesting of account balances under the
supplemental 401(k) plan upon a change in control, as shown in
the column Change in Control, or (ii) if the
termination of his employment was without cause, as shown in the
column Termination by Company without Cause or by
Executive for Good Reason. Assuming a change in control
and an involuntary termination of employment as of
September 30, 2010, no amount otherwise payable to
Mr. Yost would constitute an excess parachute payment and,
therefore, the amounts shown do not reflect any reduction in
benefits for him. Applying the Section 280G analysis to
benefits otherwise payable to Messrs. Collis, DiCandilo,
Chou and Frary in the event of a change in control and an
involuntary termination of employment as of September 30,
2010, would result in a reduction in benefits in the amount of
$2,894,282, $978,065, $1,705,753 and $1,363,294, respectively.
|
42
|
|
|
(2)
|
|
Mr. Yost is the only named
executive officer currently eligible to retire under our
qualified pension plan, assuming retirement on
September 30, 2010. If he were to have retired as of
September 30, 2010, he would have received the accumulated
retirement benefits shown for him in the tables on pages 37
and 38, except that the difference between the actual benefit
payable as a lump sum on September 30, 2010 and the present
value of the accumulated benefit shown in the Pension Benefits
table is $324,227. In addition to the amounts shown in the table
above, if Mr. Yosts employment with AmerisourceBergen
had been terminated for any reason on September 30, 2010,
Mr. Yost or his heirs would receive a distribution of the
$4,050,000 accrued for him under his long-term incentive award
for the three-year performance period ended September 30,
2010. Distributions will be made within 30 days of the date
of death or at least 13 months after the date of
termination from employment for any other reason.
|
|
(3)
|
|
The value of the accelerated
vesting of unvested restricted stock is calculated by
multiplying the number of shares of unvested restricted stock
held by the named executive officer as of September 30,
2010 by $30.66, the closing price of our common stock on that
date. The value of the accelerated vesting of unvested options
is calculated by multiplying the number of unvested options held
by the named executive officer on September 30, 2010 by the
difference between the exercise price of the options and $30.66,
the closing price of a share of our common stock on that date.
Unvested restricted stock vests in the case of disability, death
or an involuntary termination of employment within two years of
a change in control of the company. Unvested stock options vest
upon an involuntary termination of employment within two years
of a change in control of the company.
|
|
(4)
|
|
The amounts shown as payable under
our supplemental retirement plan upon the termination of
employment is the difference between the present value of the
accumulated benefit shown in the Pension Benefits table and the
actual benefit, payable as a lump sum, the named executive
officer would receive had his or her employment been terminated
on September 30, 2010. The lump sum amounts were calculated
using the RP2000 Mortality table, with life expectancy projected
in accordance with IRS rules and the applicable minimum present
value segment interest rates. Benefits under the supplemental
retirement plan may be forfeited if a participant is terminated
for cause or engages in conduct that is detrimental to
AmerisourceBergen, such as joining a competitor.
|
|
(5)
|
|
The amounts shown represent the
value of unvested account balances under the supplemental 401(k)
plan for events that would result in the accelerated vesting and
payment of those benefits. Account balances under the
supplemental 401(k) plan do not vest in full until an employee
reaches age 62 (or age 55 with more than 15 years
of service), except that vesting is accelerated upon disability,
death and change in control of the company (so long as the
participant is employed by the company on the date of the change
in control). Unvested account balances are forfeited if the
participant is terminated for any reason other than death or
disability. If a participant is terminated for cause, he or she
forfeits all vested and unvested account balances under the
supplemental 401(k) plan. Distribution of account balances upon
termination of employment, death, disability or change in
control are made in a lump sum. Mr. Yost is fully vested in
his supplemental 401(k) plan account balances. Therefore, the
amount of Mr. Yosts vested balance (shown in the
Non-Qualified Defined Contribution and Other Deferred
Compensation table) is not included here. Mr. Yost would
forfeit his vested benefit if we terminated his employment for
cause.
|
Stock Awards and Option Awards. Our restricted
stock, restricted stock unit and stock option awards include
provisions that result in the vesting or forfeiture of awards
depending on the reason for termination of employment. These
provisions are as follows:
|
|
|
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Reason for Termination
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Unvested Awards
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Impact on Expiration Date of Vested Options
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Termination for Cause
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Forfeit
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Immediately upon termination
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Voluntary Termination by Executive
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Forfeit
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3 months from date of termination
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Termination without Cause
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Forfeit
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1 year from date of termination (or 90 days for
certain options granted prior to 2002)
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Involuntary Termination by AmerisourceBergen within 2 Years
of Change in Control
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Restrictions Lapse on Stock/Options Vest
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1 year from date of termination
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Death
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Restrictions Lapse on Stock/Forfeit Options
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1 year from date of termination
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Disability
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Restrictions Lapse on Stock/Forfeit Options
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1 year from date of termination
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Retirement (for awards granted prior to August 10, 2004)
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Forfeit
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3 months from date of termination
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Voluntary Retirement (for awards granted on or after
August 10, 2004 but prior to February 19, 2009)
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Forfeit
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3 years from date of termination
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Voluntary Retirement (for awards granted on or after
February 19, 2009)
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Restricted Stock, Restricted Stock Units and Options continue to
vest to the extent and according to the schedule set forth in
the applicable award agreement
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Expires at the end of the stated term in the applicable award
agreement
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43
CERTAIN
TRANSACTIONS
What is
our policy with respect to transactions with related
persons?
We have a written Related Persons Transactions Policy. The Audit
and Corporate Responsibility Committee must approve or ratify
any transaction, arrangement or relationship exceeding $120,000
in which the company and any related person has a direct or
indirect material interest. This policy includes any series of
transactions that exceeds $120,000 in the aggregate in any
calendar year. Related persons include:
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directors and nominees;
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executive officers;
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persons controlling more than 5% of our common stock;
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the immediate family members of each of these
individuals; and
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a firm, corporation or other entity in which any of these
individuals is employed or is a partner or principal or in which
any of these individuals has more than 5% ownership interest.
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Related persons must notify the General Counsel in advance of
any proposed transaction with us. They must explain principal
features of the proposed transaction, including its potential
value and benefit to us. The General Counsel will refer all
proposed related person transactions exceeding $120,000 to the
Audit and Corporate Responsibility Committee for review.
The Audit and Corporate Responsibility Committee will consider
the proposed transaction at its next regularly scheduled
meeting. In reviewing the proposed transaction, the committee
will take into account those factors it considers appropriate,
including the business reasons for the transaction and whether
the terms of the transaction are fair to the company and no less
favorable than would be provided by an unaffiliated third party.
The committee will also consider, if applicable, whether the
proposed transaction would impair the independence of a director
or present an improper conflict of interest for directors,
nominees or executive officers. Directors with an interest in
any proposed transaction will not vote on the proposed
transaction. The committee will review and approve annually any
ongoing related person transactions.
In fiscal year 2010, AmerisourceBergen was not a party to any
related person transaction as described in Item 404 of SEC
Regulation S-K
or that required approval under our Related Persons Transactions
Policy.
What is
our policy with regard to loans to directors or
officers?
Our corporate governance principles prohibit us from making any
personal loans or extensions of credit to directors or executive
officers. We do not have any programs under which we extend
loans to either directors or officers.
Transactions
with Management
The stepfather of Mr. Colliss wife is employed as an
information technology manager for the AmerisourceBergen
Specialty Group. He received approximately $108,000 in
compensation in fiscal year 2010.
44
ADVISORY
VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
(Item 3 on the Proxy Card)
What am I
voting on?
You are voting on a proposal, commonly known as a
say-on-pay
proposal, which gives our stockholders the opportunity to
endorse or not endorse our executive officer pay program and
policies through the following resolution:
RESOLVED, that the stockholders approve the compensation
of AmerisourceBergens named executive officers, as
disclosed pursuant to the compensation disclosure rules of the
Securities and Exchange Commission in the Companys Proxy
Statement for the 2011 Annual Meeting of Stockholders (which
disclosure includes the Compensation Discussion and Analysis,
the Executive Compensation Tables and any related
material).
What
factors should I consider in voting on this proposal?
We urge you to consider the various factors regarding
compensation matters as discussed in the Compensation Discussion
and Analysis, beginning on page 22.
As discussed at length in the Compensation Discussion and
Analysis, we believe that our executive compensation program is
reasonable, competitive and strongly focused on pay for
performance principles. We emphasize compensation opportunities
that reward our executives when they deliver targeted financial
results. The compensation of our named executive officers varies
depending upon the achievement of pre-established performance
goals, both individual and corporate. Through stock ownership
requirements and equity incentives, we also align the interests
of our executives with those of our stockholders and the
long-term interests of AmerisourceBergen. Our executive
compensation policies have enabled AmerisourceBergen to attract
and retain talented and experienced senior executives and have
benefited AmerisourceBergen over time. We believe that the
fiscal year 2010 compensation of our named executive officers
was appropriate and aligned with AmerisourceBergens fiscal
year 2010 results and position for growth in future years.
Why is
the proposal being submitted to the stockholders?
Recent legislation, known as the Dodd-Frank Wall Street Reform
and Consumer Protection Act, or simply the Dodd-Frank Act,
requires that public companies give their stockholders the
opportunity to vote on
say-on-pay
proposals at the first annual meeting of stockholders held after
January 21, 2011. The Securities and Exchange Commission,
or SEC, has proposed rules to implement the provisions of the
Dodd-Frank Act relating to stockholder votes on executive
compensation (including
say-on-pay
and say-when-on-pay proposals) and expects to adopt final rules
sometime between January and March 2011. We will closely monitor
the SECs rulemaking process in this area, and any future
advisory votes will comply with any requirements that are
subsequently adopted by the SEC.
Is this
vote binding on the Board of Directors?
Because your vote is advisory, it will not be binding upon the
Board of Directors. However, our Board of Directors values the
opinions that our stockholders express in their votes and will
take into account the outcome of the vote when considering
future executive compensation arrangements as it deems
appropriate.
How does
the Board of Directors recommend that I vote?
We recommend that you vote For the advisory resolution
approving the compensation of AmerisourceBergens named
executive officers as described in this Proxy Statement.
45
ADVISORY
VOTE ON THE FREQUENCY OF A
STOCKHOLDER VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
(Item 4 on the Proxy Card)
What am I
voting on?
You are voting on a proposal, commonly known as a
say-when-on-pay proposal, which gives our
stockholders the opportunity to advise our Board how often we
should conduct an advisory stockholder vote on the compensation
of our named executive officers through the following resolution:
RESOLVED, that a non-binding advisory vote of
AmerisourceBergens stockholders to approve the
compensation of AmerisourceBergens named executive
officers, as disclosed pursuant to the compensation disclosure
rules of the Securities and Exchange Commission (which
disclosure includes the Compensation Discussion and Analysis,
the Executive Compensation Tables and any related material)
shall be held at an annual meeting of stockholders, beginning
with the 2011 Annual Meeting of Stockholders, (i) every
year, (ii) every 2 years, or (iii) every
3 years.
The enclosed proxy card gives you four choices for voting on
this item. You can choose whether the
say-on-pay
vote should be conducted every year, every 2 years or every
3 years. You may also abstain from voting on this item. You
are not voting to approve or disapprove the Boards
recommendation on this item.
What
factors should I consider in voting on this proposal?
Our Board recommends that the stockholders vote in favor of
conducting the
say-on-pay
vote every 3 years. Our Board has reviewed the evolution of
say-on-pay
and say-when-on-pay proposals and has carefully studied the
alternatives to determine the approach that will best serve
AmerisourceBergen and our stockholders. Our Board has determined
that an advisory vote on executive compensation held every three
years would be the best approach for AmerisourceBergen based on
a number of considerations, including, among other things, the
following:
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Our compensation program ties a substantial portion of the
compensation provided to our named executive officers to our
long-term corporate performance and stockholder returns. We
believe that a triennial vote will give our stockholders the
opportunity to more fully assess the success or failure of our
long-term compensation strategies and the related business
outcomes with the hindsight of three years of corporate
performance; and
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A three-year vote cycle allows sufficient time for our Board to
review and respond to stockholders views on executive
compensation and to implement changes, if necessary, to our
executive compensation program.
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Is this
vote binding on the Board of Directors?
Because your vote is advisory, it will not be binding upon the
Board of Directors. However, our Board values the opinions that
our stockholders express in their votes and will take into
account the outcome of the vote when considering how frequently
we should conduct an advisory vote on the compensation of our
named executive officers as it deems appropriate.
How does
the Board of Directors recommend that I vote?
We recommend that you vote for conducting an advisory vote on
the compensation of our named executive officers every
3 years, beginning with the 2011 Annual Meeting of
Stockholders.
46
APPROVAL
OF THE AMENDMENT OF AMERISOURCEBERGENS
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS
(Item 5 on the Proxy Card)
What am I
voting on?
You are voting on a proposal to amend our Amended and Restated
Certificate of Incorporation (our certificate of
incorporation) to phase out the classification of our
Board of Directors and provide for the annual election of
directors, as well as make such other conforming or technical
changes to the certificate of incorporation as may be necessary
or appropriate.
Our Board of Directors has unanimously approved an amendment to
our certificate of incorporation to provide for the annual
election of directors beginning with the 2012 Annual Meeting of
Stockholders, and recommends that the stockholders vote in favor
of the amendment. In deliberating on the amendment, our Board of
Directors considered the evolving standards of corporate
governance and the concerns of our stockholders.
Classified boards have a long history in corporate law of
providing effective protection against coercive
and/or
inadequate takeovers and proxy contests that are not in the best
interests of stockholders because they make it difficult for a
substantial stockholder to gain control of a board without the
cooperation or approval of incumbent directors. Classified
boards also foster continuity and stability, not only on the
board but also in the overall business of a company, since a
majority of directors will always have prior experience as
directors of the company.
The Companys stockholders originally approved the current
classified structure because they believed such a structure
would promote superior corporate governance. In recent years,
however, there has been a growing sentiment among investors in
favor of annual elections. This trend is based in part on the
belief that classified boards may also reduce the accountability
of directors to stockholders since stockholders are only able to
evaluate and elect each director every three years. Moreover,
many investors believe that the election of directors is the
primary means for stockholders to influence corporate governance
policies and to hold management accountable for implementing
those policies.
In deciding to recommend declassification of the Board of
Directors, the Board of Directors, assisted by the Governance
and Nominating Committee, considered the arguments in favor of
and against continuation of the classified Board of Directors
and determined that it is in the Companys best interests
to eliminate its classified Board of Directors as proposed.
The full text of the proposed amendment is attached to this
Proxy Statement as Appendix A, and is incorporated herein
by reference. You are encouraged to read the entire text of our
certificate of incorporation, which was filed as
Exhibit 3.1 to our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010.
What
provisions of our certificate of incorporation will be
amended?
Section 5.03 of our certificate of incorporation currently
divides our Board of Directors into three classes of
approximately equal size, composed of directors each serving
terms of office of three years. Section 5.03 would be
amended to phase out the classification of the Board of
Directors and to provide for the annual election of directors,
beginning with the 2012 Annual Meeting of Stockholders. In
addition, certain conforming or technical changes to the
certificate of incorporation would be made to remove reference
to a classified Board of Directors.
How will
our certificate of incorporation be changed?
If the stockholders approve the amendment, those directors
previously elected for three-year terms of office by our
stockholders, including those directors elected at the 2011
Annual Meeting of Stockholders, will complete their three-year
terms and thereafter would be eligible for re-election for
one-year terms at each annual meeting of stockholders. Directors
elected at or after the 2012 Annual Meeting of Stockholders to
fill newly created directorships resulting from an increase in
the number of directors or any vacancies on the Board of
Directors will serve until the next annual meeting of
stockholders. Beginning with the 2014 Annual Meeting of
Stockholders, the declassification of the Board of Directors
would be complete and all directors would be subject to annual
election to one-year terms.
47
When will
the amendment be effective?
If approved by the stockholders at the 2011 Annual Meeting of
Stockholders, the amendment to our certificate of incorporation
will become effective upon the filing of the certificate of
amendment with the Secretary of State of the State of Delaware.
We intend to file the certificate of amendment to our
certificate of incorporation as soon as practicable after the
2011 Annual Meeting of Stockholders.
Will the
Board of Directors amend the amended and restated bylaws in a
manner consistent with the amendment to our certificate of
incorporation?
Yes. If the amendment to our certificate of incorporation is
approved by our stockholders, immediately following the 2011
Annual Meeting of Stockholders, our Board of Directors intends
to approve an amendment to our amended and restated bylaws in
order to provide for the annual election of directors and to
phase out the classification of directors consistent with the
amendment to our certificate of incorporation
How many
votes are needed for this proposal and how are the votes
counted?
Approval of the proposed amendment to our certificate of
incorporation will require the affirmative vote of the holders
of a majority of the shares of our common stock outstanding.
Abstentions will be counted toward the tabulation of votes cast
on this matter and will have the effect of negative votes.
Broker non-votes also will have the effect of negative votes.
There is no appraisal or similar rights of dissenters under
Delaware law with respect to the amendment to our certificate of
incorporation.
How does
the Board of Directors recommend that I vote?
We recommend that you vote For the amendment to our
certificate of incorporation to provide for the annual election
of directors.
APPROVAL
OF THE AMERISOURCEBERGEN CORPORATION
2011 EMPLOYEE STOCK PURCHASE PLAN
(Item 6 on the Proxy Card)
What am I
voting on?
You are voting on a proposal to approve our AmerisourceBergen
Corporation 2011 Employee Stock Purchase Plan, or the 2011 Plan.
If approved, the 2011 Plan will become effective July 1,
2011 and will replace the existing AmerisourceBergen Corporation
2002 Employee Stock Purchase Plan, which will expire on
June 30, 2011. The terms of the 2011 Plan are largely
identical to the terms of the 2002 Plan.
Has the
Board of Directors approved the 2011 Plan?
Yes. On November 11, 2010, the Board of Directors, upon the
recommendation of the Compensation and Succession Planning
Committee, unanimously approved the adoption of the 2011 Plan,
subject to stockholder approval. A copy of the 2011 Plan is
attached as Appendix B to this Proxy Statement.
So that participants may enjoy certain tax advantages, the 2011
Plan is intended to meet the requirements of Section 423 of
the Internal Revenue Code. Approval of the 2011 Plan by our
stockholders is a condition to favorable tax treatment under
Section 423.
What is
the purpose of the 2011 Plan?
The purpose of the 2011 Plan is to encourage the purchase of
common stock by eligible employees and provide them with a
proprietary stake in AmerisourceBergen. We also expect that the
2011 Plan will assist with employee recruitment and retention.
48
Who is
eligible to participate in the 2011 Plan?
Our employees and the employees of the subsidiaries that we have
approved for participation in the 2011 Plan. The list of
subsidiaries whose employees are currently eligible to
participate in the 2011 Plan are listed on a schedule at the end
of the 2011 Plan. There are approximately 600 of our employees
and 6,400 employees of our subsidiaries who would be
eligible to participate in the 2011 Plan.
Generally, an employee of a participating company is eligible to
participate in the 2011 Plan if he or she has completed 30 or
more days of service as of the start date of an offering period.
In addition, there are certain other limitations on purchases
under the 2011 Plan. Employees who, after purchasing shares of
common stock under the 2011 Plan, would own 5% or more of our
common stock are not eligible to purchase additional shares
under the 2011 Plan. Employees may not purchase more than
$25,000 of common stock (as determined by the fair market value
on the first day of the purchase period) in any calendar year or
more than 2,000 shares in any particular offering period.
What are
the material features of the 2011 Plan?
The 2011 Plan provides employees with the right to purchase
shares of our common stock through payroll deduction. A total of
4,000,000 shares of common stock will be available for
purchase under the 2011 Plan, subject to adjustment in the
number and price of shares available for purchase if the number
of outstanding shares of common stock are increased or decreased
through stock dividends, recapitalizations, stock splits,
reorganizations or similar changes.
Provided that our stockholders approve the adoption of the 2011
Plan, we anticipate that the first offering period under the
2011 Plan will commence on July 1, 2011, or on such later
date as determined by the Compensation and Succession Planning
Committee, which will also serve as the plan administrator.
Shares of common stock will be available under the 2011 Plan
during each offering period. The offering periods will be
semi-annual periods commencing on dates determined from time to
time by the Compensation and Succession Planning Committee.
Shares of common stock will be deemed to have been purchased on
the last business day of the offering period. The purchase price
per share will be 95% of the fair market value per share of
common stock on the last business day of the offering period.
To participate in the 2011 Plan, an eligible employee must file
an election form with the plan administrator or its designee at
least 30 days before the beginning of an offering period.
The election form will authorize us to make payroll deductions
of up to 25% from the participants salary on each regular
payday for as long as he or she participates in the 2011 Plan.
We will credit these payroll deductions to the
participants account under the 2011 Plan.
Unless otherwise provided by the plan administrator,
participants must hold shares of common stock purchased under
the 2011 Plan for at least six months from the date of purchase.
A participant may reduce his or her contribution percentage or
discontinue participation in the 2011 Plan at any time, but no
other change can be made during an offering period. If a
participants employment terminates for any reason, all
amounts credited to his or her account will be returned, or at
his or her election, used to purchase shares on the next
purchase date.
What
benefits will be received by our directors, officers and
employees under the 2011 Plan?
Our non-employee directors are not eligible to participate in
the 2011 Plan. Our officers and employees may participate in the
2011 Plan as described above. Except as described above, they do
not receive any special benefits under the 2011 Plan.
How will
the funds received from the 2011 Plan be used and who will pay
the costs associated with the 2011 Plan?
All funds held or received by AmerisourceBergen under the 2011
Plan may be used for any corporate purpose until applied to the
purchase of common stock or refunded to employees and shall not
be segregated from our general assets. To deliver shares of
common stock purchased by employees under the 2011 Plan, we will
either purchase shares of common stock in the open market or
issue shares of common stock from treasury shares or authorized
but unissued shares. We will pay all administrative fees and
expenses incurred in connection with the 2011 Plan.
49
May the
2011 Plan be amended or terminated?
Our Board of Directors has the right to amend, modify or
terminate the 2011 Plan at any time without notice. However, the
Board generally may not, without stockholder approval,
(i) increase the number of shares of common stock issuable
under the 2011 Plan, (ii) increase the maximum number of
shares that may be purchased by each participant (except for
permissible adjustments in the event of certain changes in our
capitalization), (iii) alter the purchase price formula so
as to reduce the purchase price payable for the shares of common
stock purchased under the 2011 Plan, (iv) materially
increase the benefits accruing to participants under the 2011
Plan or (v) materially modify the requirements for
eligibility to participate in the 2011 Plan.
How many
votes are needed for this proposal and how are the votes
counted?
Approval of the 2011 Plan will require the affirmative vote of
the holders of a majority of the shares of our common stock
present in person or by proxy and entitled to vote on this
matter. Abstentions will be counted toward the tabulation of
votes cast on this matter and will have the effect of negative
votes. Broker non-votes also will have the effect of negative
votes.
How does
the Board of Directors recommend that I vote?
We recommend that you vote For the approval of the
AmerisourceBergen Corporation 2011 Employee Stock Purchase Plan.
BENEFICIAL
OWNERSHIP OF COMMON STOCK
This table shows how much of our outstanding common stock is
beneficially owned by each of the named executive officers, each
of the directors, and all directors and executive officers as a
group as of November 30, 2010. The table also shows how
much of our outstanding common stock is beneficially owned by
owners of more than 5% of our outstanding common stock.
According to the rules adopted by the SEC, a person
beneficially owns securities if the person has or
shares the power to vote them or to direct their investment or
has the right to acquire beneficial ownership of such securities
within 60 days through the exercise of an option, warrant,
right of conversion of a security or otherwise. Except as
otherwise noted, the beneficial owners listed have sole voting
and investment power with respect to the shares shown. An
asterisk in the Percent of Class column indicates beneficial
ownership of less than 1%, based on 275,327,449 shares of
common stock outstanding as of the close of regular trading on
the NYSE on November 30, 2010.
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Aggregate Number
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of Shares
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Beneficially
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Name and Address of Beneficial Owner
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Title of
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Owned
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Percent of
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(1)
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Beneficial Owner
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(2)
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Class
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R. David Yost(3)
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Chief Executive Officer and Director
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2,732,251
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1
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%
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Steven H. Collis(3)
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President and Chief Operating Officer
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919,610
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*
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Michael D. DiCandilo(3)
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Executive Vice President and Chief Financial Officer
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1,079,210
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*
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John G. Chou(3)
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Senior Vice President, General Counsel and Secretary
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191,193
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*
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James D. Frary(3)
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Senior Vice President, AmerisourceBergen Corporation, and
President, AmerisourceBergen Specialty Distribution and Services
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14,583
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*
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Charles H. Cotros(4)
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Director
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78,488
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*
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Richard W. Gochnauer(4)
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Director
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22,077
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*
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Richard C. Gozon(4)
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Director
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172,885
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*
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Edward E. Hagenlocker(4)
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Director
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79,567
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*
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Jane E. Henney, M.D.(4)
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Director
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58,010
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*
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Kathleen W. Hyle(4)
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Director
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3,283
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*
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Michael J. Long(4)
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Director
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63,642
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*
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Henry W. McGee(4)
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Director
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98,912
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*
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All directors and executive
officers as a group (14 people)(5)
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5,514,961
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2
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%
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Vanguard Group Inc.
P.O. Box 2600 V26
Valley Forge, PA
19482-2600
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15,457,877
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5.6
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%
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50
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(1)
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The address for each named
executive officer and director is: AmerisourceBergen
Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087.
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(2)
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Based on information furnished to
the company by the respective stockholders or obtained by the
company from sources we believe are reliable. The company
believes that, unless otherwise indicated, the beneficial owners
have sole voting and investment power over the shares shown
opposite their names.
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(3)
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Common stock and the percent of
class listed as being beneficially owned by our named executive
officers include outstanding options to purchase common stock
which are exercisable within 60 days of November 30,
2010, as follows: Mr. Yost
1,195,743 shares; Mr. Collis
865,477 shares; Mr. DiCandilo
984,332 shares; Mr. Chou
172,076 shares; and Mr. Frary 0.
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(4)
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Common stock and the percent of
class listed as being beneficially owned by our non-employee
directors include outstanding options to purchase common stock
which are exercisable within 60 days of November 30,
2010, as follows: Mr. Cotros
52,235 shares; Mr. Gochnauer
12,160 shares; Mr. Gozon
129,801 shares; Mr. Hagenlocker 70,755;
Dr. Henney 32,789 shares;
Ms. Hyle 0; Mr. Long
47,189 shares; and Mr. McGee
77,935 shares.
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(5)
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Includes all directors and
executive officers, including the named executive officers.
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EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth information as of
September 30, 2010 regarding all of our existing
compensation plans pursuant to which equity securities are
authorized for issuance to employees and non-employee directors.
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(a)
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(b)
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(c)
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Number of securities
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Number of securities
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remaining available for
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to be issued
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Weighted-average
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|
|
future issuance under
|
|
|
|
upon exercise of
|
|
|
exercise price of
|
|
|
equity compensation
|
|
|
|
outstanding
|
|
|
outstanding
|
|
|
plans (excluding
|
|
|
|
options, warrants
|
|
|
options, warrants
|
|
|
securities reflected in
|
|
Plan Category
|
|
and rights
|
|
|
and rights
|
|
|
column(a))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
22,279,702
|
|
|
|
$19
|
|
|
|
26,867,045
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
22,279,702
|
|
|
|
$19
|
|
|
|
26,867,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes 26,719,031 shares
available for future issuances of stock and option awards under
the AmerisourceBergen Corporation Equity Incentive Plan,
64,337 shares available for future issuance of options
under the non-employee directors stock option plan and
83,677 shares available for future issuance of restricted
common stock under the non-employee directors restricted
stock plan.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors and executive officers as well
as persons who beneficially own more than 10 percent of our
common stock to file with the SEC reports of ownership and
changes in beneficial ownership of our common stock. Directors,
executive officers and greater than 10 percent stockholders
are required to furnish us with copies of all Section 16(a)
forms they file. We believe that during fiscal year 2010 all of
our directors and executive officers complied with these
requirements.
AVAILABILITY
OF
FORM 10-K
Copies of our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2010 (without
exhibits or documents incorporated by reference therein), are
available without charge to stockholders upon written request to
the Corporate and Investor Relations Department,
AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook,
Pennsylvania 19087, by calling
(610) 727-7000
or via the Internet at www.amerisourcebergen.com.
REQUIREMENTS
FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF
STOCKHOLDERS
Stockholder Proposals for Inclusion in the 2012 Proxy
Statement. Any proposal of a stockholder that
is intended to be presented by such stockholder at
AmerisourceBergens 2012 Annual Meeting of Stockholders
must be submitted in writing by September 16, 2011 in order
to be considered for inclusion in the 2012 Proxy Statement and
the form of proxy relating to the 2012 meeting. All proposals
should be submitted to: John G. Chou, Secretary,
AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook,
Pennsylvania 19087. Stockholder proposals must comply with SEC
Rule 14a-8,
Delaware law and our bylaws.
51
Other Stockholder Proposals for Presentation at the 2012
Annual Meeting of Stockholders. Stockholders
of record who do not submit a proposal for inclusion in
AmerisourceBergens proxy materials under SEC
Rule 14a-8,
but who instead intend to nominate a person for election as
director or to introduce an item of business at the 2012 Annual
Meeting of Stockholders must provide advance written notice to
us in accordance with our bylaws. Our bylaws set forth the
procedures that must be followed and the information that must
be provided in order for a stockholder to nominate a person for
election as director or to introduce an item of business at the
2012 Annual Meeting of Stockholders. We must receive notice of
your intention to introduce a nomination or other item of
business at the 2012 Annual Meeting of Stockholders no earlier
than October 20, 2011 and no later than November 19,
2011. Such notice should be addressed to John G. Chou,
Secretary, AmerisourceBergen Corporation, 1300 Morris Drive,
Chesterbrook, Pennsylvania 19087 and must include the
information set forth in our bylaws. You may obtain a copy of
our bylaws upon request by writing to the Secretary at our
principal executive offices. The proxy solicited by our Board of
Directors for the 2012 Annual Meeting of Stockholders will
confer discretionary authority with respect to any such proposal.
The Chairman of the 2012 Annual Meeting of Stockholders may
refuse to allow the transaction of any business, or to
acknowledge the nomination of any person, not made in compliance
with the procedures set forth for such matters in our bylaws.
Other Stockholder
Communications. Stockholder communications
may be submitted at any time in writing to: John G. Chou,
Secretary, AmerisourceBergen Corporation, 1300 Morris Drive,
Chesterbrook, Pennsylvania 19087. Stockholder communications are
communications from any stockholder to the Board of Directors,
any committee or any director on matters that relate reasonably
to their respective duties and responsibilities. Stockholder
communications do not include stockholder proposals (discussed
above) and stockholder recommendations for director nominee
candidates (discussed under Process for Identifying and
Evaluating Director Nominees and for Submitting Recommendations
at page 18). AmerisourceBergens Secretary will
determine, in his good faith judgment, which stockholder
communications will be relayed to the Board of Directors, any
committee or any director.
52
Appendix A
FORM OF
CERTIFICATE OF AMENDMENT
OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF AMERISOURCEBERGEN CORPORATION
AmerisourceBergen Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware (the DGCL),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of
AmerisourceBergen Corporation (the Corporation), at
a meeting held on November 11, 2010, duly adopted
resolutions setting forth a proposed amendment of the Amended
and Restated Certificate of Incorporation of the Corporation
(the Certificate), declaring the amendment to be
advisable, and directing that the amendment be submitted to the
stockholders of the Corporation for consideration at the 2011
Annual Meeting of Stockholders. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Amended and Restated Certificate of
Incorporation of the Corporation be amended by changing
Sections 5.03, 5.05, and 5.06 so that, as amended, these
sections will read as follows:
Section 5.03. Annual
Election of Directors. Commencing with the 2012
annual meeting of the stockholders of the Corporation, the
directors of the Corporation shall be elected annually for terms
expiring at the next annual meeting of stockholders. Directors
elected at the 2010 annual meeting of stockholders to a
three-year term shall hold office until the 2013 annual meeting
of stockholders and directors elected at the 2011 annual meeting
of stockholders to a three-year term shall hold office until the
2014 annual meeting of stockholders. Each director shall serve
until his or her successor is duly elected and qualified or
until his or her earlier death, resignation or removal.
Section 5.05. Removal. No
director may be removed except both for cause and by the
affirmative vote of the holders of a majority of the votes cast
for and against the removal by the holders of shares of stock of
the Corporation present in person or represented by proxy at the
meeting and entitled to vote generally in the election of
directors, considered for this purpose as a single class. In the
event of any increase or decrease in the authorized number of
directors, each director then serving as such shall nevertheless
continue as a director until the expiration of his or her
current term, or his earlier death, resignation or removal.
Section 5.06. Vacancies. Subject
to the rights of the holders of any series of Preferred Stock or
any other class of stock of the Corporation (other than the
Common Stock) then outstanding, any vacancies in the Board for
any reason, including by reason of any increase in the number of
directors, shall be filled only by the Board, acting by the
affirmative vote of a majority of the remaining directors then
in office, although less than a quorum, and any directors so
elected shall hold office until the next election of directors
and until their successors are duly elected and qualified.
SECOND: That the amendment was duly adopted in
accordance with the provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, AmerisourceBergen Corporation has
caused this certificate to be signed by R. David Yost, its
Chief Executive Officer, this day of February,
2011.
AMERISOURCEBERGEN CORPORATION
R. David Yost
Chief Executive Officer
A-1
Appendix B
AMERISOURCEBERGEN
CORPORATION
2011 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 2011 Employee Stock Purchase Plan is intended to promote
the interests of AmerisourceBergen Corporation (the
Company) by providing eligible employees with the
opportunity to acquire a proprietary interest in the Company
through participation in a payroll-deduction based employee
stock purchase plan intended to meet the requirements of
section 423 of the Code.
This Plan will be effective July 1, 2011 and will apply to
any purchase right granted, or stock transferred pursuant to any
purchase right granted, on or after July 1, 2011. Any
purchase right granted, or stock transferred pursuant to any
purchase right granted, prior to July 1, 2011 will be
governed by the terms and conditions of the AmerisourceBergen
Corporation 2002 Employee Stock Purchase Plan as in effect at
the time such purchase right was granted.
Capitalized terms herein shall have the meanings assigned to
such terms in Article XII.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret
and construe any provision of the Plan and to adopt such rules
and regulations for administering the Plan as it may deem
necessary or appropriate in order to implement the Plan or to
comply with the requirements of section 423 of the Code.
Decisions of the Plan Administrator shall be final and binding
on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the
Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares of Common Stock purchased on the
open market. The maximum number of shares of Common Stock which
may be issued over the term of the Plan shall not exceed
4,000,000 shares as of the effective date of the Plan.
B. Should any change be made to the
Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class
without the Companys receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and
class of securities issuable under the Plan, (ii) the
maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number
and class of securities and the price per share in effect under
each outstanding purchase right in order to prevent the dilution
or enlargement of benefits thereunder.
IV. PURCHASE/HOLDING PERIODS
A. Shares of Common Stock shall be
offered for purchase under the Plan through a series of
successive purchase periods until such time as (i) the
maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan
shall have been sooner terminated.
B. Except as otherwise provided in
Section X or as otherwise provided by the Plan
Administrator, each purchase period shall have a duration of six
(6) months. The start date and end date for each purchase
period shall be established by the Plan Administrator from time
to time.
C. Except as otherwise provided by
the Plan Administrator, a Participant may not dispose of any
share of Common Stock purchased under the Plan prior to six
months after the transfer of the share to the Participant.
V. ELIGIBILITY
A. Each individual who (i) is
an Eligible Employee on the start date of any purchase period
and (ii) has completed thirty (30) days of service
with the Company or any Corporate Affiliate prior to such start
date shall be eligible to participate in the Plan for that
purchase period on such start date.
B-1
B. To participate in the Plan for a
particular purchase period, the Eligible Employee must complete
the enrollment forms prescribed by the Plan Administrator
(including a stock purchase agreement and a payroll deduction
authorization form) and file such forms with the Plan
Administrator (or its designate) on or before the 30th day
preceding the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized
by the Participant for purposes of acquiring shares of Common
Stock under the Plan may be any multiple of one percent (1%) of
the Base Salary paid to the Participant during each purchase
period, up to a maximum of twenty-five percent (25%). The
deduction rate so authorized shall continue in effect for the
entire purchase period. However, the Participant may, at any
time during the purchase period, reduce his or her rate of
payroll deduction to become effective as soon as possible after
filing the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one such
reduction per purchase period.
B. Payroll deductions shall begin
on the first pay day following the start date of the purchase
period and shall (unless sooner terminated by the Participant)
continue through the pay day ending with or immediately prior to
the last day of the purchase period. The amounts so collected
shall be credited to the Participants book account under
the Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected from
the Participant shall not be held in any segregated account or
trust fund and may be commingled with the general assets of the
Company and used for general corporate purposes.
C. Payroll deductions shall
automatically cease upon the termination of the
Participants purchase right in accordance with the
provisions of the Plan.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A
Participant shall be granted a separate purchase right on the
start date of each purchase period in which he or she
participates. The purchase right shall provide the Participant
with the right to purchase shares of Common Stock on the
Purchase Date upon the terms set forth below. The Participant
shall execute a stock purchase agreement embodying such terms
and such other provisions (not inconsistent with the Plan) as
the Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would,
immediately after the grant, own (within the meaning of
section 424(d) of the Code) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or
more of the total combined voting power or value of all classes
of stock of the Company or any Corporate Affiliate.
B. Exercise of the Purchase Right.
Each purchase right shall be automatically exercised on the
Purchase Date, and shares of Common Stock shall accordingly be
purchased on behalf of each Participant (other than any
Participant whose payroll deductions have previously been
refunded in accordance with the Termination of Purchase Right
provisions below) on such date. The purchase shall be affected
by applying the Participants payroll deductions for the
purchase period ending on such Purchase Date to the purchase of
shares of Common Stock (subject to the limitation on the maximum
number of shares purchasable per Participant on any one Purchase
Date) at the purchase price in effect for that purchase period.
C. Purchase Price. The purchase
price per share at which Common Stock will be purchased on the
Participants behalf on each Purchase Date shall be equal
to ninety-five percent (95%) of the Fair Market Value per share
of Common Stock on that Purchase Date.
D. Number of Purchasable Shares.
The number of shares of Common Stock purchasable by a
Participant on each Purchase Date shall be the number of shares
obtained by dividing the amount collected from the Participant
through payroll deductions during the purchase period ending
with that Purchase Date by the purchase price in effect for that
Purchase Date. In no event shall fractional shares be purchased
under the Plan. Notwithstanding the foregoing and subject to the
limitations described in Article VIII, no participant may
purchase more than 2,000 shares of Common Stock on a
Purchase Date.
B-2
E. Excess Payroll Deductions. Any
payroll deductions not applied to the purchase of Common Stock
by reason of any limitation on the maximum number of shares
purchasable by the Participant on the Purchase Date (whether
such limitation is pursuant to
Section VII-D,
Article VIII or otherwise) shall be promptly refunded.
F. Termination of Purchase Right.
The following provisions shall govern the termination of
outstanding purchase rights:
(i) A Participant may, at any time
prior to the last day of the purchase period, terminate his or
her outstanding purchase right by filing the appropriate form
with the Plan Administrator (or its designate), and no further
payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions
collected during the purchase period in which such termination
occurs shall, at the Participants election, be immediately
refunded or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time such purchase
right is terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as soon as
possible.
(ii) The termination of such
purchase right shall be irrevocable, and the Participant may not
subsequently rejoin the purchase period for which the terminated
purchase right was granted. In order to resume participation in
any subsequent purchase period, such individual must re-enroll
in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new
purchase period.
(iii) Should the Participant cease
to remain an Eligible Employee for any reason (including death,
disability or change in status) while his or her purchase right
remains outstanding, then that purchase right shall immediately
terminate, and all of the Participants payroll deductions
for the purchase period in which the purchase right so
terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall
have the election, exercisable up until the last business day of
the purchase period in which such leave commences, to
(a) withdraw all the funds in the Participants
payroll account at the time of the commencement of such leave or
(b) have such funds held for the purchase of shares at the
end of such purchase period. In no event, however, shall any
further payment deductions be added to the Participants
account during such leave. Upon the Participants return to
active service, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the
leave began, provided the Participant returns to service prior
to the expiration date of the purchase period in which such
leave began.
G. Proration of Purchase Rights.
Should the total number of shares of Common Stock which are to
be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for
issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and
nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase
price payable for the Common Stock pro-rated to such individual,
shall be refunded.
H. Assignability. During the
Participants lifetime, the purchase right shall be
exercisable only by the Participant and shall not be assignable
or transferable by the Participant (other than by will or the
laws of descent).
I. Stockholder Rights. A
Participant shall have no stockholder rights with respect to the
shares subject to his or her outstanding purchase right until
the shares are purchased on the Participants behalf in
accordance with the provisions of the Plan and the Participant
has become a holder of record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No participant shall be entitled
to accrue rights to acquire Common Stock pursuant to any
purchase right outstanding under this Plan if and to the extent
such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted
under this Plan and (ii) similar rights accrued under other
employee stock purchase plans (within the meaning of
section 423 of the Code) of the Company or any Corporate
Affiliate, would otherwise permit such Participant to purchase
more than $25,000 worth of stock of the Company or any Corporate
Affiliate (determined on the basis of the Fair Market Value of
such stock on the date or dates such rights are granted) for
each calendar year such rights are at any time outstanding.
B-3
B. For purposes of applying such
accrual limitations, the following provisions shall be in effect:
(i) The right to acquire Common
Stock under each outstanding purchase right shall accrue on the
Purchase Date in effect for the purchase period for which such
right is granted.
(ii) No right to acquire Common
Stock under any outstanding purchase right shall accrue to the
extent the Participant has already accrued in the same calendar
year the right to acquire Common Stock under one (1) or
more other purchase rights at a rate equal to $25,000 worth of
Common Stock (determined on the basis of the Fair Market Value
of such stock on the date or dates of grant) for each calendar
year such rights were at any time outstanding.