Philly’s shareholder proposal on AmerisourceBergen executive comp and opioids fails to win majority vote

A shareholder proposal by Philadelphia’s pension board to link AmerisourceBergen’s executive pay to legal costs from the opioid epidemic failed to win majority support from investors at the company’s annual meeting Thursday.

The Chesterbrook-based drug distributor did not give a specific vote tally at the meeting, said Maureen O’Brien, a governance consultant to the city’s pension system.

In the proposal, the city said senior executives and their compensation should not be insulated from legal risks, especially given the possible reputational and legal ramifications from the opioid crisis. AmerisourceBergen is one of the largest wholesale drug distributors in the country, and along with other distributors and manufacturers, the company is fighting hundreds of lawsuits about its role in the epidemic.

CEO Steve Collis earned $11.5 million last year, a $1.6 million raise from 2017.

AmerisourceBergen had recommended that shareholders vote against the measure. The company said its board of directors should maintain flexibility in compensating senior leaders. The company also said it did not believe the proposal was an “appropriate response” to the epidemic.

The pension board was disappointed with the outcome, said chief investment officer Christopher DiFusco, but will keep working with companies “to ensure executive pay incentives are not at odds with long-term shareholder value.”

In a statement Friday, AmerisourceBergen said the proposal “was overly prescriptive” and that the company “has an excellent track record on aligning executive compensation with company performance.” The company files voting results with securities regulators within four business days of the shareholder meeting, according to a spokesperson.

AmerisourceBergen would not allow a reporter from the Inquirer to attend the shareholder meeting on Thursday in Center City. “The meeting is not open to members of the press, and attendance is reserved specifically for investors,” a spokesperson said before the event.

A similar shareholder proposal at opioid maker Teva Pharmaceuticals led the company to agree not to exclude legal settlements from executive pay calculations.

AmerisourceBergen has made other corporate governance changes after discussions with members of Investors for Opioid Accountability, a coalition of 54 groups that collectively manage more than $3.5 trillion in assets. Members of the coalition include the Teamsters, the Sisters of St. Francis of Philadelphia, the city’s public employees’ retirement system, and the Pennsylvania treasurer’s office.

“I am encouraged that we are seeing acknowledgement from the industry that changes need to be made to save lives," state Treasurer Joe Torsella said this week.

In January, AmerisourceBergen said in its proxy statement that once current CEO and board chair Collis retires, the company will split the CEO and board chair roles. The Teamsters and Torsella’s office had advocated for that change – a step that distributors McKesson and Cardinal Health had already agreed to take.

The company also committed to publishing a report by Sept. 30 on how its board monitors the company’s opioid-related risks.

The Sisters of St. Francis first proposed such a report at last year’s shareholder meeting, where it received more than 40 percent of the vote. The order withdrew a second proposal for this year’s meeting when it saw the company making progress toward producing a report.

This story has been updated with comment from the company on the vote.