PGGM to monitor McKesson on pay as clawback proposal gets AGM nod

Dutch pension investment giant PGGM says it has communicated its concerns about pay to US drug distribution firm McKesson and that it will “stay in contact” with the company and monitor its progress.

PGGM, which manages around €140bn of pension assets for more than 2.5m beneficiaries, said it voted against ratifying executive pay at the company’s annual meeting yesterday “due to persistent pay for performance misalignment” stemming from the $159m pension balance for Chairman and CEO John Hammergren.

It said: “We have communicated our additional concerns, and will stay in contact with the company to monitor their progress against our concerns going forward.”

It added that although shareholders have benefitted through stock price appreciation and steady dividend payments, Hammergren’s pension has grown disproportionately large due to the “multiple exceptions made to incentivize him to stay with the company”.

The exceptions, PGGM argues, represent “substantial lifetime costs to shareholders” and insulate Hammergren.

Despite this, PGGM voted in favour of the four compensation committee members: Alton Irby, Christine Jacobs, David Lawrence and Edward Mueller.It says it recognises the efforts they are making to reduce pay and make structural changes.

But PGGM voted against the re-election of Hammergren as his combined role is “obviously compromised”.

“We will stay in contact with the company to monitor their progress”

The proposal on executive pay clawbacks filed by the Amalgamated Bank’s LongView Funds and the UAW Retiree Medical Benefits Trust reportedly won majority shareholder support at the meeting, although voting numbers weren’t disclosed.

Investors known to have backed this measure include PGGM, California’s giant CalPERS and CalSTRS funds, the AFSCME Employees Pension Plan, Christian Brothers Investment Services, the Florida State Board of Administration and the Calvert Funds. McKesson said it would “carefully consider what we have heard from shareholders”.

CalPERS withheld its vote from pay committee chair Irby and governance committee head Jane Shaw – the latter for “failing to address shareowners’ request for an independent board chairman”.