This Drug Company CEO's Fortune Is Under Attack

By on August 2, 2017 in ArticlesHow Much Does

John Hammergren has earned $692 million in the past 10 years as chairman and CEO of the Fortune 100 pharmaceutical company McKesson since 2002. The company distributes health care systems, medical supplies, and pharmaceutical products, and is the 5th highest revenue generating company in the United States.

The Teamsters union is arguing that McKesson has played a role in the U.S. opioid epidemic through the distribution of oxycodone and hydrocodone pills. They currently hold more than $30 million in McKesson shares and have filed a proposal to install an independent board chairman from outside the company. McKesson is asking other shareholders to approve Hammergren's compensation and oppose the proposal. They say they're working hard to address the opioid crisis through strong programs and supply chain management.

State treasurers from West Virginia, Illinois, and Pennsylvania wrote letters to McKesson supporting the idea of an independent chairman and called for a compensation metric related to progress in the fight against the epidemic. All of the McKesson shareholders, including the Teamsters, worry about the company's financial exposure. The union cites the reputational, legal, and regulatory risks that McKesson faces.

Last January, McKesson paid a $150 million settlement and suspended sales of controlled substances from distribution centers in Colorado, Ohio, Michigan, and Florida. The government concluded the company had not properly identified pharmacy orders. Back in 2008, McKesson was fined $13.25 million for a similar problem.

For many of the Teamsters, the opioid epidemic is a personal issue as well. In 2016, Travis Bornstein, president of the local 24 group in Akron, Ohio, spoke about his son Tyler, who died of an opioid overdose in 2014 at the age of 23. The Teamsters raised more than $1.4 million to fight addiction immediately after the event.

Hammergren's 10-year payout of $692 million includes salary and bonuses as well as vested shares and exercised options. Much of it comes from the company's inflated stock prices, which have nearly tripled since mid-2007. McKesson says the board has appointed an independent committee to review the company's distribution of controlled substances, and that they have invested millions to revamping their monitoring system. They claim the Teamsters efforts do little to address the root causes of the epidemic and believe they are more closely related to labor disputes.

Did we make a mistake?
Submit a correction suggestion and help us fix it!
Submit a Correction