AmerisourceBergen
Annual Meeting: March 11
AmerisourceBergen CEO Steven Collis’s total compensation for 2020 was $14,295,140. This represents an increase of 26 percent from the prior year, and comes despite the company’s worsened financial condition as it faces a $6.6 billion global settlement related to its distribution of opioids. That massive cost was excluded from performance calculations. As noted in the Washington Post article “The $14 million CEO: Drug distributor boosts executive’s pay despite historic opioid settlement”: “By removing the settlement, AmerisourceBergen was able to turn its $3.4 billion loss from last year — the worst annual loss in the company’s 20-year history — into a $1.6 billion ‘adjusted’ profit.”
In February, Connecticut State Treasurer Shawn Wooden and Rhode Island Treasurer Seth Magaziner issued a filing with the U.S. Securities and Exchange Commission, urging shareholders of AmerisourceBergen to vote against pay at the March 11 meeting. Wooden and Magaziner are part of the broad coalition Investors for Opioid and Pharmaceutical Accountability (IOPA) -- representing more than $4.2 trillion in combined assets under management – that focuses on engagement with manufacturers and distributors of opioids and other pharmaceuticals.
In a February 10 press release, Wooden noted, “The companies that played a role in the unchecked proliferation of these drugs should be held accountable, and the executives of those companies shouldn't profit from their work. AmerisourceBergen’s approach to paying its executives misses the mark and is disconnected from the historic payment to settle opioid-related claims. With the company and its shareholders taking a hit for the worst write-off in the company’s history, the compensation for their top executives should reflect that.”
Rhode Island General Treasurer Seth Magaziner added, "The tragedy of opioid addiction, overdose and death has reached every community in the Rhode Island. Now, AmerisourceBergen is actively insulating its executives from taking any financial responsibility for the company's opioid practices.”
AmerisourceBergen filed additional outreach to shareholders to try to gain support for its pay practices. They note that the company has historically used non-GAAP (Generally Accepted Accounting Principles) because, “We believe this approach removes the impact of events that are unusual, unpredictable, non-operating, non-recurring, or non-cash.” Yet shareholders, customers and even front-line employees experience the impact of these events. The broader cost to society from over-prescriptions of opioids had been devastating and well documented. Certainly those who were in the position to limit that destruction, should face an impact.
The company also cites past shareholder votes as justification for recent actions. “Over the history of our ten say-on-pay votes – since the beginning of the say-on-pay vote requirement in 2011 – we have averaged more than 95% stockholder support, and have never had a vote result below 90%. I would contend that no investor would say prior votes offer carte blanche for future actions. As You Sow has been looking at votes on pay over the same time period “The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel”. We have seen the adoption of more rigorous guidelines and voting practices. We believe that high votes supporting pay do not signal approval of the compensation system but weaknesses of the system. AmerisourceBergman is explicitly using the casually offered support for pay as an excuse. It is another reminder that these votes are important.
The CEO to worker pay ratio at AmerisourceBergen is 240:1. The company reports that the median employee made $59,388. However, the company also adds that this figure includes “the value of employer provided medical, dental and disability contributions . . . , as such benefits represent a significant portion of our employees’ total compensation.”