McKesson Q1 profit falls as shareholder protest upends executive compensation vote

Protestors outside McKesson's annual meeting near Dallas.

Drug wholesaling giant McKesson reported lower first-quarter earnings a day after shareholders rejected an executive compensation plan at the company’s annual meeting held near Dallas.

The San Francisco-based company said quarterly earnings declined to $523 million, or $2.46 per share, from $716 million, or $3.15 per share, compared to the same period last year. Analysts had forecast McKesson to earn $2.83 per share, according to Thomson Reuters.

Revenues rose 2.7% to $51.05 billion, up from $49.73 billion the same time last year.

The lower bottom line comes amid the rejection Wednesday by investors of the company’s executive compensation plan after a public “vote-no” campaign was spearheaded by the International Brotherhood of Teamsters. The union accuses McKesson of aggravating the national opioid epidemic.

In a letter sent to the board by the Teamsters last November, the union demanded an overhaul of incentive awards for McKesson’s senior executives, clawbacks from its beleaguered CEO John Hammergren’s past compensation, and that the company end its practice of linking incentive pay to the sale of controlled substances. 

“The opioid epidemic is a national public health crisis, and McKesson takes its responsibility to help manage the safety and integrity of the pharmaceutical supply chain extremely seriously,” the company said in a statement issued Wednesday. “While McKesson doesn’t manufacture, prescribe or dispense opioids, the company is doing everything it can to help address this crisis in close partnership with the U.S. Drug Enforcement Administration (DEA) and other organizations across the supply chain.”

In the same release, the company said the board’s Compensation Committee will conduct a thorough review of the current executive compensation plan and consider implementing changes, and that while the board remains behind Hammergren, it has decided to split the role of chairman and CEO when the company next names a new CEO.

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