Drug distributor McKesson Corporation (NYSE:MCK)’s chairman and CEO John Hammergren received a record pension benefit of $159 million. Hammergren would have received that hefty pension package had he voluntarily retired on March 31 at the age of just 54. But he decided to continue in his current position. Mark Maremont of the Wall Street Journal says that it’s by far the biggest pension in the history of corporate America. After McKesson disclosed his pension in an annual proxy filing, experts immediately branded the package “excessive.”
Hammergren’s Pension a Result of Outstanding Performance
Hammergren’s pension package is more than double the value of his pension six years ago. Over the past few years, Mr. Hammergren has been among the highest paid CEO’s in the United States, earning more than $50 million a year. A McKesson Corporation (NYSE:MCK) spokesperson said that the CEO’s pension went so high because of certain terms of the employment contract that were put in place almost 14 years ago. Of course, another reason was McKesson’s outstanding performance under John Hammergren’s tenure.
Hammergren joined the company in 1996 in a senior position. In 1999, he was promoted to co-CEO after an accounting scandal forced the company to oust its top executives. Hammergren became the sole CEO of the company in 2001. Under his leadership, the company stock has grown from about $19 to $111 now. McKesson Corporation (NYSE:MCK) reported a net profit of $1.34 billion with $123 billion in revenues for the year ending March 31.
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McKesson’s Unusual Way of Saying Thank You
According to The Wall Street Journal analysis, several unusual factors contributed to Mr. Hammergren’s hefty pension. The pension package is usually based on the employee’s final pay package and length of service. According to the proxy filing, the drug distributor gave Hammergren credit for extra years of service.
McKesson Corporation (NYSE:MCK) imposes a penalty if an executive retires before 62. But the company has waived the penalty in Mr. Hammergren’s case. Without the added advantages, Mr. John Hammergren would have received no more than $36 million in pension package as of March 31.
McKesson Corporation (NYSE:MCK) shares were up 0.51 percent to $111.27 at 10:06 AM EDT.