UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant | | Filed by a party other than the Registrant |
| Check the appropriate box: | |
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material Pursuant to |
CARDINAL HEALTH, INC.
(Name of Registrant as Specified In Itsin its Charter)
N/A
(NamesName of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of Filing Fee (Check the appropriate | ||
| No fee required. | |
| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
| (1) | Title of each class of securities to which transaction applies: | |
| (2) | Aggregate number of securities to which transaction applies: | |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
| (4) | Proposed maximum aggregate value of transaction: | |
| (5) | Total fee paid: | |
| Fee paid previously with preliminary materials. | |
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
| (1) | Amount | |
| (2) | Form, Schedule or Registration Statement No.: | |
| (3) | Filing Party: | |
| (4) | Date Filed: | |
Letter to Cardinal Health Shareholders
Gregory B. Kenny
Independent Lead Director andincoming Chairman of the Board
September 26, 2018[ ], 2020
Your
Overthepastyear,itismoreapparentthaneverthatCardinalHealthplaysacriticalroleinthehealthcaresupplychain.I,alongwiththerestoftheCardinalHealthBoardofDirectors, is firmly committedhavebeenactivelyengagedaswenavigatetheseunprecedentedtimes,andweremainfocusedonbothstronggovernanceandlong-termvaluecreation.IwillsharetheBoard’sperspectiveontheyearandtheinitiativesunderwaytocreatevaluenowandinthefuture.
Our Fiscal 2020 Performance
In fiscal 2020, the company grew non-GAAP operating earnings and exceeded our non-GAAP diluted earnings per share guidance range. We also surpassed our enterprise cost savings target and furthered initiatives that will optimize our operations, drive sustained savings, and enable value creation for years to high standards of governancecome. At the same time, we increased investments and oversight to assurepartnerships in our Specialty pharmaceutical and Cardinal Health remains focused on building and delivering long-term shareholder value. One of my responsibilities as independent Lead Director is facilitating close coordination and communication betweenat-Home businesses, among other areas.
Additionally, the Board continued to evaluate the company’s portfolio and take a balanced and disciplined capital approach that prioritizes reinvesting in the business, maintaining a strong balance sheet and returning cash to shareholders through dividends. In fiscal 2020, we paid down $1.4 billion of debt, increased the dividend by 1%, and sold the remainder of our equity interest in naviHealth.
Our COVID-19 Response
As the global pandemic continues to unfold, we continue to be fully dedicated to the health and safety of our employees so we can fulfill our mission of delivering critical products and solutions to frontline healthcare workers around the world. We have implemented additional safety and cleaning measures in all locations, and we have maintained operations in all our distribution facilities, nuclear pharmacies, and global manufacturing plants. The Board, as well as the management team.team, are humbled by the efforts of our employees. We also have established a practice of shareholder engagement that providesprovided additional compensation to our frontline teams to demonstrate our gratitude for good communication betweentheir unwavering commitment to our customers and to public health.
As the company responded to the challenges presented by the pandemic, the Board also transitioned to a remote work model. We are holding virtual Board meetings and shareholders, and I look forward to continuing that practice as non-executive Chairman of the Board of Directors.
We have made important progress in a number of areas over the past year, and I want to share the Board’s perspective on some of the changes now underway.
Successful Leadership Transition
Last fall, the Board implemented an orderly leadership transition, which will be completed at thethis year’s Annual Meeting of Shareholders will be virtual as well.
Our Commitment to Diversity and positions the company well for the future. On January 1, 2018, Mike Kaufmann, previously our Chief Financial Officer, becameInclusion
Our Chief Executive Officer, Mike Kaufmann, and joinedour management team remain deeply committed to fostering a culture where every employee brings 100% of themselves to work every day and this includes actively facilitating conversations regarding diversity and inclusion. In the fall of 2019, management began these discussions through an all employee meeting focused specifically on this topic, and in the winter, the team organized a group tour of the National Memorial for Peace and Justice and Legacy Museum in Montgomery, Alabama. Upon their return, Mike shared his reflections on this deeply moving experience in a message to all employees.
Following this experience, and in the aftermath of events in the U.S. throughout this spring and summer, the management team has elevated attention to racial equity and social injustice. In May, they engaged 400 vice presidents and above across the company in a frank discussion on this topic and encouraged these leaders to do the same with their teams. Mike also formed a Diversity and Inclusion Steering Council of senior leaders throughout the company to identify and discuss diversity and inclusion barriers, opportunities, and successes.
Corporate culture has been, and remains, important to the Board. Mike is a 28-year veteran of Cardinal HealthTo further reinforce this commitment, we embedded culture and has held senior leadership positionsdiversity and inclusion metrics in both the Pharmaceutical and Medical segments, in addition to serving as Chief Financial Officer. Mike has brought broad knowledge of the company’s operationsincentive plan goals for fiscal 2020, and deepwe are following the progress of these initiatives with regular management reports and a scorecard. The scorecard included the most recent employee engagement survey results, which showed significant improvements.
Our Board Membership
In addition, the Board itself cultivates a culture of open, direct, and respectful dialogue among our members, who bring an array of skills, backgrounds, and expertise. Mike supports this culture with his open and direct engagement, including executive sessions at the beginning and end of each Board meeting. Over the years, our Board evaluation process, which includes individual director evaluations, has made important contributions to Board culture and this year, to continuously evolve this process, we used a new facilitator to gain additional insights regarding our strengths and improvement opportunities.
We also continue to evolve this culture as we refresh our Board membership. This year, we added two new directors to further diversify our expertise and perspectives. Our most recent addition was Sheri Edison, who joins with extensive global experience to his new role. We are very pleased withboth as a senior legal executive in the initial progress the company is making under his leadership.
Jorge Gomez succeeded Mikemedical device and global packaging industries and as Chief Financial Officer. Jorge was Chief Financial Officer of the Medical segmenta board member for large for-profit and previouslynon-profit organizations. Earlier this summer, we also welcomed Dave Evans, who served as Chief Financial Officer of the Pharmaceutical segment, in addition to roles as both the company’s Treasurer and Corporate Controller. His extensive experience and familiarity with our businesses gave him a strong head start in his new role.
George Barrett, who had served as our Chairman and Chief Executive Officer since 2009, has continued as Executive Chairman of the Board and will do so until the Annual Meeting. George also has actively and effectively represented Cardinal Health in the healthcare public policy arena this past year. We are grateful to GeorgeScotts Miracle-Gro for his strong leadership and commitment to Cardinal Health during his tenure.
Effective at the Annual Meeting, I will assume the role of non-executive Chairman of the Board, having served as Lead Director for the past fourmany years and as a director since 2007. I look forward to continuing to work closely with the full Board and our leadership team to assure that our corporate governance practices continue to be aligned with the best interestsbrings decades of shareholders.financial experience.
In my current role as Lead Director, I work closely with management in developing Board agendas, schedules and topics, including discussions regarding long-term strategies and capital deployment. I also have devoted significant time during my tenure to engagement with our large investors, have been active in overseeing our senior leadership transition and am leading our Board refreshment process described below. As Chairman, I will continue to carry out these responsibilities, working closely with Mike and your Board.
Comprehensive Review of the Business
To establish a foundation for future growth, the Board and management have initiated a comprehensive review of our business focused on our portfolio, cost structure and capital deployment. This review will allow us to more sharply focus on our business and strategy in order to deliver value to our stakeholders. The Boardaddition, Colleen Arnold is actively engaged in this process. Three of our directors have been meeting regularly with senior management to discuss the progress of this review. The full Board receives regular updates, and we have extensive discussions about it.
One of the outcomes of this review was the creation of a valuable partnership with Clayton, Dubilier & Rice to jointly invest in our naviHealth business and accelerate its growth. Earlier in the fiscal year, we exited distribution operations in China, which were management and capital intensive. We also have begun significant cost reduction initiatives and will continue to be disciplined and thoughtful in our capital deployment approach.
Board Refreshment
As noted above, George Barrett will step down from the Board as part of our succession plan. Dave Anderson, Clay Jones and Dave King also are leaving the Board after many years of valuable service. On behalf of the full Board, I wantwould like to thank themher for theirher many contributions, including her leadership regarding the company’s strategic use of information and significant contributions. Wetechnology, and we wish themher well.
Our Nominating and Governance Committee is responsible for identifying and recommending director candidates toThese changes will bring the Board, consistent with criteria that assure a balanced mixtotal number of relevant skills, tenure and diversity of experience and perspective. Earlier in the year, the committee identified, and the Board elected, Akhil Johri as a new director. Akhil has brought additional deep financial expertise and a broad global business background to our Board. The Nominating and Governance Committee has been actively engaged in a search to identify additional directors to complement the expertise and experience13, 12 of our current directors.whom are independent.
| Cardinal Health | 2020 Proxy Statement 1 |
Board Oversight andOur Ongoing Response to the Opioid Epidemic
I will briefly address our ongoing work regarding the opioid epidemic. The Board is deeply concerned by and attentive to the devastating impact on our communities of the over-prescribing of opioid pain medications and the abusecompany continue to recognize the significant challenges that opioid misuse presents to our society, and the company remains vigilant in our work to detect and deter diversion of pain medicationscontrolled substances. The Board and our Ad Hoc Committee on opioids is active in overseeing the company’s anti-diversion work as well as illegal “street” narcotics. The Board has soughtthe company’s efforts to position Cardinal Health asdefend and resolve opioid litigation.
Last October, the company agreed in principle to a leader in helpingglobal settlement framework with a group of state attorneys general that aims to solve this complex national public health crisis, including through our long-standing Generation Rx programresolve all pending and more recent initiatives, such as those aimed at educating patientsfuture opioid lawsuits by states and prescribers regarding these medications. While we do not prescribe medications, we understand and take seriously our responsibility as a pharmaceutical distributor to maintain a rigorous anti-diversion program and ensure that medications are available for patients who need them.
The Board has been and remains active in overseeing Cardinal Health’s responsepolitical subdivisions. This settlement framework would deliver important resources to the nationwide opioid epidemic, includingcommunities that need them most. The company, with oversight of our opioid anti-diversion program. In February 2018, the Board formed an Ad Hoc Committee and the Board, continues to be active in settlement discussions.
Looking Forward
In fiscal 2020, we demonstrated our adaptability in the face of independent directorsunprecedented change. Going forward, our engaged Board, our strong management team, and our dedicated employees are well-positioned to build upon the Board’s earlier work in this area and further assist the Board in its oversight of opioid-related issues. The Ad Hoc Committee, which consists of myself and three other independent directors, meets regularly and reports at every Board meeting.
Looking Ahead
Cardinal Health has made significant progress in many areas in fiscal 2018, and the Board is committed to building on this progress in fiscal 2019. We are well underway implementing initiatives to position the company for the future, and we are confident about Cardinal Health’s prospects to create value for our shareholders and our other important stakeholders.
operational momentum. On behalf of our Board, of Directors, weI thank you for your share ownership in Cardinal Health and for your continued support of the company. I look forwardTogether, we will enable Cardinal Health to continuingperform our ongoingessential role in healthcare now and active dialogue.into the future.
Sincerely,
Gregory B. KennyIndependentLeadDirectorandincomingChairman of the Board
www.cardinalhealth.com | Cardinal Health| |
Notice of Annual Meeting of Shareholders
Wednesday, November 7, 2018
8:00a.m.EasternTime
CardinalHealth,Inc.7000 Cardinal Place
Dublin, Ohio 43017
Important notice regardingDue to the availabilitypublic health impact of proxy materials for the coronavirus (“COVID-19”) pandemic and to support the health and well-being of our employees and shareholders, this year’s Annual Meeting of Shareholders (“Annual Meeting”) will be conducted exclusively online without an option for physical attendance. You will be able to be held on November 7, 2018:participate in the virtual meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CAH2020.
Date | Wednesday, November 4, 2020 | |
Time | 10:00 a.m. Eastern Time | |
VirtualMeeting | This year’s meeting is a virtual shareholder meeting at www.virtualshareholdermeeting.com/CAH2020. | |
RecordDate | September 8, 2020. Only shareholders of record at the close of business on the record date are entitled to receive notice of, and to vote at, the Annual Meeting. | |
ProxyVoting | Makeyourvotecount. Please vote your shares promptly to ensure the presence of a quorum during the Annual Meeting. Voting your shares now via the Internet, by telephone, or by signing, dating, and returning the enclosed proxy card or voting instruction form will save the expense of additional solicitation. If you wish to vote by mail, we have enclosed an addressed envelope with postage prepaid if mailed in the United States. Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option. We are requesting your vote to: | |
Items of Business | (1) Elect the 13 director nominees named in the proxy statement; (2) Ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending June 30, 2021; (3) Approve, on a non-binding advisory basis, the compensation of our named executive officers; (4) Approve an amendment to our Restated Code of Regulations to reduce the share ownership threshold for calling a special meeting of shareholders; (5) Vote on two shareholder proposals described in the accompanying proxy statement, if properly presented at the meeting; and (6) Transact such other business as may properly come before the meeting or any adjournment or postponement. | |
MeetingDetails | See “Proxy Summary” and “Other Matters” for details. |
ImportantnoticeregardingtheavailabilityofproxymaterialsfortheAnnualMeetingtobeheldonNovember4,2020: The Notice of Annual Meeting of Shareholders, the accompanying proxy statement and our fiscal 20182020 Annual Report to Shareholders are available at www.edocumentview.com/cah.www.proxyvote.com. These proxy materials are first being sent or made available to shareholders commencing on September 26, 2018.
To vote on the following proposals:
To elect the nine director nominees named in the proxy statement;[ ], 2020.
To ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending June 30, 2019;
To approve, on a non-binding advisory basis, the compensation of our named executive officers;
To vote on two shareholder proposals described in the accompanying proxy statement, if properly presented at the meeting; and
To transact such other business as may properly come before the meeting or any adjournment or postponement.
Shareholders of record at the close of business on September 10, 2018 are entitled to notice of, and to vote at, the meeting or any adjournment or postponement.
By Order of the Board of Directors.
September 26, 2018
JessicaL.MayerJohn M. Adams, Jr.ExecutiveSenior Vice President, Associate General Counsel and SecretarVicePresident,DeputyGeneralCounselyandCorporateSecretarySeptember [ ], 2020
Cardinal Health|2018 Proxy Statement
Cardinal Health | 2020 Proxy Statement 3 |
This summary highlights certain information contained elsewhere in our proxy statement. This summary does not contain all the information that you should consider, and you should carefully read the entire proxy statement and our fiscal 20182020 Annual Report to Shareholders before voting. References to our fiscal years in the proxy statement mean the fiscal year ended or ending on June 30 of such year. For example, “fiscal 2018”2020” refers to the fiscal year ended June 30, 2018.2020.
Headquartered in Dublin, Ohio, we are a global integrated healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices and patients in the home. We distribute pharmaceuticals and medical products and provide cost-effective solutions that enhance supply chain efficiency. We connect patients, providers, payers, pharmacists and manufacturers for integrated care coordination and better patient management. We manage our business and report our financial results in two segments: Pharmaceutical and Medical.
InDuring fiscal 2018,2020, we positioned the company for future growth, making a number of changes. In November 2017, we announced our succession plans for Chief Executive Officer and Chief Financial Officer, followed by other senior leadership changes later in the fiscal year. These transitions have gone very well.
In January 2018, Michael C. Kaufmann became our Chief Executive Officer, succeeding George S. Barrett, who had served as Chairman and Chief Executive Officer for nine years. Mr. Kaufmann is a 28-year veteran of Cardinal Health who has held a range of senior leadership roles in both segments. He was most recently Chief Financial Officer and also oversaw Global Sourcing.
Mr. Barrett became Executive Chairman of the Board in January 2018 and will retire from the Board at the 2018 Annual Meeting of Shareholders. Following Mr. Barrett’s retirement, Mr. Kenny, the Board’s independent Lead Director, will become the non-executive Chairman of the Board.
Jorge M. Gomez succeeded Mr. Kaufmann as Chief Financial Officer. Over his 12-year career with Cardinal Health, Mr. Gomez has served as Chief Financial Officer for both segments, as well as Treasurer and Corporate Controller.
In February 2018, Jon L. Giacomin transitioned to Chief Executive Officer — Medical Segment from Chief Executive Officer — Pharmaceutical Segment. During his nearly 17 years at Cardinal Health, Mr. Giacomin has served in a variety of operational leadership positions.
The following are fiscal 2018 performance highlights:
Revenue increased 5% to $136.8 billion, in line with the Board-approved budget.
GAAPgrew non-GAAP operating earnings, were $126 million, reflecting a non-cash Medical segment goodwill impairment charge. Non-GAAP operating earnings of $2.6 billion would have been in line with budget, except for disappointing performance byexceeded our Cordis business and an incremental 401(k) plan contribution for all U.S. employees.
GAAPnon-GAAP diluted earnings per share (“EPS”) guidance range, surpassed our enterprise cost savings target, and strengthened our balance sheet, all while continuing to execute on our long-term strategic priorities in a rapidly changing environment.
We achieved fiscal 2020 results as we adapted our operations to address the unique challenges presented by COVID-19. In response to the pandemic, we continued to maintain operations in all our distribution facilities, nuclear pharmacies and global manufacturing plants and successfully transitioned our office employees to a remote work model. Through all of this, our focus remained on delivering critical products and services to our customers, while protecting the health and safety of our employees.
Fiscal 2020 highlights include:
Revenue was $0.81. Non-GAAP EPS$152.9 billion, up 5% from the prior year.
GAAP operating loss was $5.00, in line with budget.$(4.1) billion due to an opioid litigation charge and non-GAAP operating earnings were $2.4 billion, a 1% increase over the prior year. Non-GAAP operating earnings underperformance wasgrew despite an estimated net negative impact of approximately $100 million from COVID-19.
We returned over $900 million to shareholders in dividends ($569 million) and share repurchases ($350 million) and repaid $1.4 billion of long-term debt.
Our Pharmaceutical segment’s performance exceeded our expectations. Revenue grew 6% to $137.5 billion. Segment profit decreased 4% to $1.8 billion, reflecting the expected adverse impact of Pharmaceutical Distribution customer contract renewals.
Our Medical segment’s revenue decreased 1% percent to $15.4 billion due to the adverse impact from COVID-19. Segment profit increased 15% to $663 million largely due to cost savings and the favorable year-over-year impact of a supplier charge taken last year, partially offset by the benefitsnegative impact of U.S. tax reform that arose after we had set our budget.COVID-19.
Operating cash flow was $2.8 billion due to working capital changes.We surpassed our enterprise cost savings target, with significant savings contributions from the Medical segment’s global manufacturing and supply chain organization.
To establish a foundation for future growth, we initiated a comprehensive reviewWe completed the divestiture of our business focused on our portfolio, cost structure and capital deployment. Fiscal 2018 accomplishments and future areas of focus include:successful investment in naviHealth.
We divested our China distribution businessagreed in principle to a global settlement framework designed to resolve all opioid lawsuits and createdclaims by states and political subdivisions and continue to work with state attorneys general and representatives of political subdivisions to achieve a partnership with Clayton, Dubilier & Rice to jointly invest in naviHealth and accelerate its growth. These moves allow us to more sharply focus on our other businesses and strategy.global settlement.
Our generic pharmaceuticals program performed better than expected with a slight favorable impact on Pharmaceutical segment profit after several years of a negative impact.
We achievedlaunched “Our Path Forward” outlining the plans and initiatives underway to advance our fiscal 2018 goal of at least $0.21 accretion in non-GAAP EPS from the Patient Recovery businesscorporate culture objectives. We added new culture goals to our annual cash incentive and are focused on successfully integrating and operating the business.
We installed a new management team in the Cordis business that is addressing operational issues, while maintaining sales momentum.
Using new tools and analytics, we have launched significant cost reduction initiatives.
We returned $1.1 billion to shareholders, including $581 million in dividends and $550 million inperformance share repurchases, and we will continue to be disciplined and thoughtful in our capital deployment approach.unit (“PSU”) programs.
See Annex A for reconciliations to the comparable financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the reasons why we use non-GAAP financial measures and reconciliations to the comparable GAAP financial measures.
Governance and Board Highlights
www.cardinalhealth.com | Cardinal Health| |
 |  |  | |
|
|
| |
|
|
| |
 |  |  | |
|
|
| |
|
|
| |
 |  |  | |
|
|
| |
|
|
| |
| |||
Cardinal Health|2018 Proxy Statement5
BackResponse to ContentsCOVID-19
AddressingAs a global manufacturer and distributor of medical and laboratory supplies and a distributor of pharmaceutical products, we are an essential and critical link in the Opioid Crisishealthcare supply chain. During the COVID-19 pandemic, our mission has been more important than ever as we have worked to quickly get critical medicines and medical supplies into the hands of our healthcare provider customers who need them.
Given the unprecedented surge in demand for certain personal protective equipment (“PPE”), supporting delivery of these critical products has been a priority, and we continue to work to address the increased demand. In furtherance of this goal, we worked with U.S. and foreign trade authorities to speed shipments of product, we acquired additional equipment to expand our own production of PPE, and we evaluated additional suppliers to expand and diversify critical product options.
Protecting the health and safety of our employees and their families throughout this pandemic has been vital. Because we are part of a critical infrastructure industry, our employees have continued their important work in our distribution centers, manufacturing sites, pharmacies and other clinical sites. Their efforts have been essential to the healthcare system.
To prevent the spread of COVID-19 and protect the safety of our critical frontline employees, all facilities are thoroughly cleaned regularly, and we have implemented worksite hygiene practices in accordance with the Centers for Disease Control and Prevention and World Health Organization guidelines. And to recognize the important contributions made by our frontline employees, we provided them additional compensation.
All employees who have been able to work remotely have been working from home. We expanded our technology infrastructure to help our employees around the globe perform their duties and continue to support customers, patients and our frontline associates. We also put policies in place to allow employees who are sick with or who have been exposed to COVID-19 to take time off without impacting their paid-time-off days.
Our Board of Directors (“Board”) has been highly engaged with management about the impact of COVID-19 and the entire Cardinal Health team care deeplycompany’s response and plans. The Board has held regular informational calls with management about the devastatingCOVID-19, covering employees and operations, financial impact, onproduct supply, media engagement, and related legal and regulatory matters.
Governance and Board Highlights
12 of our communities13 director nominees are independent Independent, non-executive Chairman of the over-prescribingBoard Ongoing Board refreshment: four new experienced directors added in the last 12 months Six of opioid pain medicationsour director nominees are gender or ethnically diverse Director nominees with diverse business experiences, backgrounds and expertise in a wide range of fields, including nine with significant healthcare experience Significant Board engagement on strategy and capital deployment (page 21) Board oversight and engagement relating to the abusecompany’s work during the COVID-19 pandemic (page 21) Board monitors corporate culture through annual review of pain medicationscross-functional culture scorecard (page 23) Directors interact with key talent through Board discussions, informal events and illegal “street” narcotics. We are working to help solve this complex national public health crisis. Like so many others across this nation, we have family members, friends and colleagues who have been impacted byplanned one-on-one sessions (page 21) Ad Hoc Committee assists the devastating consequencesBoard in its oversight of opioid overuse and abuse. We also have family members, friends and colleagues who rely on these medications to address suffering associated with terminal illnesses, painful neurological conditions, severe injuries and recovery from surgeries.
Oneopioid-related issues (page 20) Surgical Gown Recall Oversight Committee assists the Board in its oversight of the keysurgical gown recall announced in January 2020 (page 20) Long-standing, proactive shareholder engagement program (page 25) Well-developed Board and individual director evaluation process (page 24) Annual election of directors with majority voting Director service on other public policy issues that must be solved in addressing the opioid epidemiccompany boards is the challenge posed by the over-prescribinglimited to three or just their own board if a director is an executive of opioids. As a pharmaceutical wholesale distributor, we do not control either the supply of, or the demand for, opioids, since we do not manufacture medications or write prescriptions. We understand and take seriously our responsibility to maintain a rigorous anti-diversion program, while ensuring that medications are available for patients who need them. And, of course, we do not have any involvement with the serious problem of dangerous illegal street drugs.another public company
Role in Pharmaceutical Supply Chain and Supply Chain Integrity
We distribute all types of medications, including those used to treat high blood pressure, diabetes and cancer, as well as those used to treat acute and chronic pain. With respect to opioid pain medications, we are industry leaders in implementing state-of-the-art controls to combat the diversion of these medications from legitimate uses. Our program includes advanced analytics, technology and on-the-ground deployment of investigators to evaluate our pharmacy customers, scrutinize their orders and block and report orders that do not meet our strict anti-diversion criteria. We continuously improve our program, while remaining committed to our critical role in supplying pharmacies the medications that they need for their patients.
 |  |  |
|
| |
|
| |
 | |  |
|
| |
|
|
Cardinal Health| |
 |  |  |  |
| Carrie S. Cox | Calvin Darden | Bruce L. Downey | Sheri H. Edison |
| Retired EVP and President, Global Pharmaceuticals, Schering-Plough and retired Chairman and CEO, Humacyte, Inc. Age: 62 Director since 2009 Independent Committees: H, AH | Retired SVP of U.S. Operations, UPS Age: 70 Director since 2005 Independent Committees: H, AH | Retired Chairman and CEO, Barr Pharmaceuticals and Partner, NewSpring Health Capital II, L.P. Age: 72 Director since 2009 Independent Committees: N, AH | EVP and General Counsel, Amcor Age: 63 Director since 2020 Independent |
 |  |  | |
| David C. Evans | Patricia A. Hemingway Hall | Akhil Johri | |
| Retired CFO, Scotts Miracle-Gro and Battelle Memorial Institute Age: 57 Director since 2020 Independent | Retired President and CEO, Health Care Service Corp. Age: 67 Director since 2013 Independent Committees: H, N | Retired EVP and CFO, United Technologies Age: 59 Director since 2018 Independent Committees: A, S | |
 |  |  | |
| Michael C. Kaufmann | Gregory B. Kenny | Nancy Killefer | |
| CEO, Cardinal Health Age: 57 Director since 2018 | Retired President and CEO, General Cable Age: 67 Director since 2007 Independent Chairman of the Board Committees: N, AH, S | Retired Senior Partner, Public Sector Practice, McKinsey Age: 66 Director since 2015 Independent Committees: H, S | |
 |  |  | |
| J. Michael Losh | Dean A. Scarborough | John H. Weiland | |
| Retired EVP and CFO, General Motors Age: 74 Director since 2018 Independent Committees: A | Retired Chairman and CEO, Avery Dennison Age: 64 Director since 2019 Independent Committees: A | Retired President and Chief Operating Officer, C. R. Bard Age: 64 Director since 2019 Independent Committees: A, S |
A: Audit AH: Ad Hoc H: Human Resources and Compensation N: Nominating and Governance S: Surgical Gown Recall Oversight
www.cardinalhealth.com | Cardinal Health | 2020 Proxy Statement 6 |
Addressing the Opioid Epidemic
We care deeply about the opioid epidemic and take seriously our commitment, in cooperation with other participants in the prescription drug supply chain, to find and support solutions to this national challenge.
As a distributor and an intermediary in the supply chain, we provide a secure channel to deliver all kinds of medications from the hundreds of manufacturers that make them to the thousands of our hospital and pharmacy customers licensed to dispense them to their patients, and we work diligently to identify, stop and report to regulators any suspicious orders of controlled substances. As threats evolve, we constantly adapt our system to prevent the diversion and misuse of medications.
In October 2019, following review and extensive engagement with both the Ad Hoc Committee and the Board, we agreed in principle with a leadership group of state attorneys general to a global settlement framework designed to resolve all pending and future opioid lawsuits and claims by states and political subdivisions.
We remain committed to being part of the solution to this epidemic, and we continue to actively work with the state attorneys general and representatives of political subdivisions to achieve a global settlement.
Board Engagement and GovernanceOversight
The Board is committedremains active in overseeing our response to ensuring that Cardinal Health is a positive force in solving the opioid epidemic. The Board and its committees regularly review our anti-diversion and controlled substance monitoring systems and our ethics and compliance program with members of management who are responsible for the day-to-day operation of these systems and program. The Board also has supported the company’s Opioid Action Program and its initiatives aimed at addressing the crisis.
In 2012, the Board appointed a special committeeBoard’s Ad Hoc Committee comprised of independent directors to conduct a review, utilizing independent counsel, of our anti-diversion program. The committee produced reports in 2013Cox, Darden, Downey and 2014 that found that we had implemented and maintained a robust system of controls to detect and report suspicious orders and that our Board was well-informed about those controls. More details about this special committee and its reports are found on our website at www.cardinalhealth.com under “About Us — Corporate Citizenship — Addressing the Opioid Crisis: Board Engagement and Governance.”
In February 2018, the Board formed an Ad Hoc Committee of independent directors to assistKenny assists the Board in its oversight of opioid-related issues. The Ad Hoc Committee, is responsible for assistingwhich was formed in February 2018, continues to meet twice per quarter and engage with the other directors on opioid-related issues at every Board in overseeing the company’s multifaceted response to the opioid epidemic and providing advice, regular reports and recommendations to the Board on these issues. The members of the Ad Hoc Committee are:meeting.
| | | |
|
|
|
|
|
|
|
|
The Ad Hoc Committee met seven times from February 2018 through September 2018is receiving regular updates on progress toward a global settlement as well as updates on the status of litigation and will continue to meet regularly. During its meetings, the Ad Hoc Committee receivesgovernment investigations, our anti-diversion program, legislative and discusses reports from managementregulatory developments, and the company’s external advisors (as appropriate) and provides input and direction. For example, the Ad Hoc Committee receives updates regarding:shareholder engagement.
anti-diversion and controlled substance monitoring programs;
potential solutions to alleviate the opioid epidemic;
risks posed by the opioid epidemic to Cardinal Health from a legal, financial and reputational perspective;
litigation, including the Multi-District Litigation before Judge Polster in Ohio and related settlement discussions;
the investigations and negotiations led by the State Attorneys General “Multistate” Group;
changes in the regulatory and legislative environment;
Cardinal Health’s Opioid Action Program; and
corporate governance and engagement with key stakeholder groups, including shareholders, customers, employees and others.
Generation Rx and Opioid ActionAnti-Diversion Program
Cardinal Health has beenWe are always vigilant in combating the diversion of controlled substances for improper use. We have continually upgraded our program to make sure it is robust and effective in a leader for nearlycontext of evolving risks. Our team includes investigators, data analysts, former law enforcement officers, pharmacists, and compliance officers.
We carefully evaluate pharmacies before they become customers, including taking steps to understand their business and historical prescription drug ordering patterns. We use this information, along with statistical models and other criteria, to establish pharmaceutical distribution thresholds specific to each customer. When a decade in pioneeringcustomer’s order exceeds an established threshold, the order is held, reviewed further, and supporting impactful prevention and education programs to combat opioid abuse and diversion under the umbrella of Generation Rx. In November 2017, we began our Opioid Action Program with four elements, each cited by leading experts as criticaltypically canceled. Canceled orders are reported to the fightU.S. Drug Enforcement Administration and any required state regulators. We also have a team of experienced investigators who conduct regular site visits to reduce opioid abuse and casualties:
With our support, more than 90 medical school faculty members from 30 schools recently gathered to begin work on a curriculum for medical schoolscustomers across the country to teach future physicians better prescribing practiceslook for any visible signs of diversion.
Prevention education and better prescribing practicesFight Prescription Opioid Misuse
We have awarded over 70 grants, includinginvested millions of dollars in fighting prescription opioid misuse. This work began with Generation Rx, an evidence-informed prevention education grants, prescriber grants and communityawareness program designed for anyone to use to educate people of all ages about safe medication practices and the potential dangers of misusing prescription medications. Generation Rx was founded at The Ohio State University College of Pharmacy and has partnered with the Cardinal Health Foundation since 2009. To date, its medication safety messages have reached more than two million people across the country.
In the last three years, we have awarded grants to non-profitmore than 70 organizations fighting opioid abuseto build awareness, expand drug takeback initiatives, and misuse and providing education, advocacy and support.
support healthcare systems as they work to reduce the number of opioids their providers prescribe. We have provided more than 75,000 dosage units of overdose-reversing Narcan free of charge for use by first responders and law enforcement.
In partnershippartnered with a customer, we supportedKroger to host biannual drug take-back events at over 100 locations in 26 states during 2018, with more than 100 Cardinal Health employee volunteers200 pharmacy locations across the country. And we launched an online training for all U.S. employees to help them better understand the epidemic, our commitment to fighting it, and local law enforcement and DEA officials providing safe, secure disposal of medications.how they can support the work.
|
Attending theVirtual Annual Meeting of Shareholders
See page 55
Time and Date Wednesday, November 4, 2020 10:00 a.m. Eastern Time Place Virtual Meeting www.virtualshareholdermeeting.com/CAH2020 Record Date September 8, 2020
Due to COVID-19, this year’s Annual Meeting will be conducted exclusively online without an option for instructionsphysical attendance. You will be able to participate in the virtual Annual Meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CAH2020 and entering the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, voting instruction form or proxy card that was sent to you with this proxy statement.
If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please visit www.virtualshareholdermeeting.com/CAH2020 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to vote or ask questions during the meeting if you participate as a guest.
For further information on how to gain admission to Cardinal Health’s 2018attend and participate in the virtual Annual Meeting, of Shareholders (the “Annual Meeting”).please see “Other Information” on page 58 in this proxy statement.
Shareholders will be asked to vote on the following proposals at the Annual Meeting:
Proposal | Board Recommendation | Page Reference |
Proposal 1: to elect the | FOR each director nominee | 9 |
Proposal 2: to ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending June 30, | FOR |
|
Proposal 3: to approve, on a non-binding advisory basis, the compensation of our named executive officers | FOR |
|
Proposal 4: |
|
|
Proposal | AGAINST |
|
Proposal6:shareholder proposal to adopt a policy that the chairman of the board be an independent director | AGAINST | 54 |
How to Vote in Advance of the Annual Meeting
You can return voting instructions in advance of the Annual Meeting by any of the means set forth below. Internet or telephone voting is available until Wednesday, November 3, 2020 at 11:59 p.m. Eastern Time.
Internet Visit 24/7 www.proxyvote.com Telephone Call the toll-free number 1-800-690-6903 within the United States, U.S. territories or Canada and follow the instructions provided by the recorded message Mail Mark, sign and date your proxy card and return it by mail in the enclosed postage-paid envelope
www.cardinalhealth.com | Cardinal Health| |
Election of Directors
Our Board of Directors currently has 1214 members. NineThirteen of our directors are standing for election at the Annual Meeting to serve until the next Annual Meeting of Shareholders and until their successor is duly elected and qualified. Other than Messrs. Kaufmann and Johri, who joined the Board in January and February 2018, respectively, all nominees were elected at last year’s Annual Meeting of Shareholders. Given his retirement at the Annual Meeting, Executive Chairman of the Board Barrett is not standing for re-election. In addition, Clayton M. Jones and David P. King, directorsqualified or until their earlier resignation, removal from office or death. Colleen F. Arnold, a director since 2012 and 2011, respectively, have2007, has decided not to stand for re-election at the Annual Meeting. The size of the Board will be reduced to nine13 at that time.
David J. Anderson, a director since 2014, resigned from the Board in September 2018 in light of his new responsibilities as Chief Financial Officer of Nielsen Holdings plc.
Each director nominee agreed to be named in this proxy statement and to serve if elected. If, due to death or other unexpected occurrence, one or more of the director nominees is not available for election, proxies will be voted for the election of all remaining nominees and any substitute nominee the Board selects.
 | The Board recommends that you vote FOR the election of the nominees listed on pages 10 |
Board Membership Criteria: What we look for
The Nominating and Governance Committee considers and reviews with the Board the appropriate skills and characteristics for Board members in the context of the Board’s current composition and objectives. Criteria for identifying and evaluating candidates for the Board include:
business experience, qualifications, attributes and skills, such as relevant industry knowledge (including pharmaceutical, medical device and other healthcare supply chain and logistics)industry knowledge), operations, management, information technology, accounting and finance, strategic planningoperations, technology and international markets;
leadership experience as a chief executive officer, senior executive or leader of a significant business operation or function;
financial and accounting experience as a chief financial officer;
independence (including independence from the interests of a particularany single group of shareholders);
judgment and integrity;
ability to commit sufficient time and attention to the activities of the Board;
diversity of age, gender and ethnicity; and
absence of potential conflicts with our interests; andinterests.
such other criteria as the Board may determine relevant.
The Board seeks members that possess the experience, skills and diverse backgrounds to perform effectively in overseeing the company’sour current and evolving business and strategic direction and to properly perform the Board’s oversight responsibilities. All of our director nominees bring to the Board a wealth of executive leadership experience derived from their diverse professional backgrounds and areas of expertise. As a group, they have business acumen, healthcare and global business experience and financial expertise, as well as public company board experience. EachIn addition, six of ourthe thirteen director nominees are gender or ethnically diverse. Each director nominee has sound judgment and integrity and is able to commit sufficient time and attention to the activities of the Board. All director nominees other than our Chief Executive Officer are independent.
|
 |
Age 62 Director since 2009 Board Committees: Human Resources and | ||
|
| ||
Independent Director |
| ||
 | Executive Vice President and President of Global Pharmaceuticals, Schering-Plough Corporation (retired); Chairman and Chief Executive Officer of Humacyte, Inc. (retired) | |||
|
| |||
|
Ms. Cox | |||
Qualifications
| ||||
Through her roles as an executive of Schering-Plough, President of Pharmacia’s Global Prescription business and Chief Executive Officer of Humacyte and as a licensed pharmacist, Ms. Cox brings to the Board substantial expertise in healthcare, particularly the branded pharmaceutical and international aspects. She draws on this experience in discussions relating to Pharmaceutical segment strategy, healthcare compliance and the opioid epidemic, including in meetings of the Board’s Ad Hoc Committee. Ms. Cox worked in the global branded pharmaceutical industry for over 30 years, giving her relevant experience with large, multinational healthcare companies in the areas of regulatory compliance, global markets and manufacturing operations. She also brings to the Board and to her role chairing our Human Resources and Compensation Committee, valuable perspectives and insights from her service on the boards of directors of Selecta Biosciences and Texas Instruments and prior service on the Array BioPharma, Celgene | ||||
Other public company boards | ||||
Current Selecta Biosciences, Inc. Texas Instruments | Withinlastfiveyears Array BioPharma Inc. Celgene Corporation electroCore, Inc. | |||
Our director nominees possess relevant
Our Board’s Composition and Structure Our Board Leadership Structure
In
● setting the agenda for Board meetings in consultation with the other directors, the Chief Executive Officer, ● reviewing Board meeting schedules to ensure that there is sufficient time for discussion of all agenda items; ● reviewing and approving Board meeting materials ● chairing Board meetings,
● conferring with
The Board considered a wide range of factors in determining that its current leadership structure is the most appropriate arrangement at the present time, including current market practice and
Our Corporate Governance Guidelines provide that the Board should be diverse, engaged and independent. In identifying and evaluating candidates for the Board, the Nominating and Governance Committee considers the diversity of the Board, including diversity of skills, experience and backgrounds, as well as ethnic and gender diversity. We believe that our Board nominees 
 * Does not include Mr. Losh’s prior service on our Board from 1996 to 2009.
Cardinal Health | 2020 Proxy Statement 17 How We Identify, Add and On-Board New Directors The Nominating and Governance Committee is responsible for identifying, reviewing and recommending director candidates,
Ms. Hemingway Hall and Mr. Kenny recommended 
New directors typically participate in a comprehensive, full-day director orientation program, which The Board held nine meetings during fiscal
The Board has an Audit Committee, a Nominating and Governance Committee and a Human Resources and Compensation Committee (the “Compensation Committee”). Each member of these committees is independent under our Corporate Governance Guidelines and under applicable committee independence rules. The charter for each of these committees is available on our website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Corporate Governance — Board Committees and Charters.” This information also is available in print (free of charge) to any shareholder who requests it from our Investor Relations department.
(1) Ms. Arnold has decided not to stand for re-election at the Annual Meeting and her term will expire at that time. (2) Messrs. Scarborough and Weiland became members of the Audit Committee in September 2019.
Nominating and Governance Committee
Human Resources and Compensation Committee
Surgical Gown Recall Oversight Committee
(1)
Our Board’s Primary Role and Responsibilities and Processes Our Board’s Primary Role and Responsibilities Our Corporate Governance Guidelines provide that our Board serves as the representative of, and acts on behalf of, all the shareholders of Cardinal Health. In that regard, some primary functions of the Board include: reviewing, evaluating and, where appropriate, approving planning for and approving management succession; and overseeing How The Board receives At least annually, the Board conducts a dedicated strategy session with in-depth discussions of The
During fiscal 2020, the Board was highly engaged with How The Compensation Committee and the Board The full Board holds a formal succession planning and talent review session annually, which includes succession planning for the Chief Executive Officer and other senior executives. These sessions include identification Directors interact with our leaders through Board presentations and discussions, as well as through informal events and
The Board maintains an emergency succession plan, as well as a long-term succession plan for the position of Chief Executive Officer. During fiscal 2020, our succession planning process helped Mr. Kaufmann complete his executive leadership team with Jason Hollar, an experienced new hire for the Chief Financial Officer role. Mr. Hollar joined us from automotive products company Tenneco Inc. and his experience spans multiple industries and geographies. In addition to serving as Chief Financial Officer of Tenneco and Sears Holding Corporation before that, Mr. Hollar has held senior finance roles at other large multinational companies.
How A summary of the allocation of general risk oversight functions among management, the Board and its Committees is as follows:  Management has day-to-day responsibility for assessing and managing risks, and the Board is responsible for risk oversight. Management has developed and administers an enterprise risk management The Audit Committee is responsible for discussing with management major financial risk exposures, our ethics and compliance program and compliance with legal and quality and regulatory requirements. The Board and Audit Committee receive regular updates on our ethics and compliance and cybersecurity programs. In connection with its risk oversight role, the Audit Committee meets regularly with representatives from our independent auditor and with our Chief Financial Officer, Chief Legal and Compliance Officer and the head of our internal audit function. The Ad Hoc Committee assists the Board in its oversight of our response to the opioid The Surgical Gown Recall Oversight Committee assists the Board in its oversight of the company’s surgical gown recall announced in January 2020 and related activities and risks. Since the beginning of the COVID-19 pandemic, management has kept the Board apprised of its efforts to assess strategic risks and opportunities arising from structural shifts in the industry resulting from COVID-19. Management has developed and is implementing plans in connection with this assessment and regularly updates the Board on their progress. Our Ethics and Compliance Program Our Board has adopted written Standards of Business Conduct that outline our corporate values and standards of integrity and behavior. The Standards of Business Conduct are designed to foster a culture of integrity, drive compliance with legal and regulatory requirements, and protect and promote the reputation of our company. The full text of the Standards of Business Our Chief Legal and Compliance Officer has the responsibility to implement and maintain an effective ethics and compliance program. The Board’s Role in Oversight of Corporate Citizenship The Nominating and Governance Committee is charged with overseeing our environmental sustainability and other corporate citizenship activities, including our policies and practices regarding political and lobbying activities and expenditures. Our corporate citizenship reports are available on our website at www.cardinalhealth.com under “About Us — Corporate Citizenship.”
Corporate Citizenship during Fiscal 2020 In the past year, management formally chartered a cross-functional ESG Steering Committee to meet regularly to consider environmental, social and governance (“ESG”) issues. We also worked with an external partner to help us identify ESG priorities that are most relevant to our company and our stakeholders and identified the following seven ESG priorities: response to the opioid crisis; ethics and compliance; product quality and safety; human capital management; data privacy and security; environmental emissions and impact; and supply chain management. Each is discussed in our 2019 Corporate Citizenship Report. Focus on Diversity and Inclusion As we emphasized in the 2019 Corporate Citizenship Report, diversity and inclusion — in our workplaces and in our communities — is an important priority to us. By respecting and appreciating diversity of thought, experience and background, we are becoming more innovative, increasing employee engagement and improving customer and shareholder value. Managers are required to seek out a slate of candidates that includes women and minorities for any job or promotion. Four of eight leaders reporting to our Chief Executive Officer are women and one is an African American male. Women comprise 41% of our executive management and ethnically diverse persons comprise 18%. We required unconscious bias training of every incentive eligible leader during fiscal 2020 and, as discussed in Compensation Discussion and Analysis on page 34, we introduced a corporate culture goal for our fiscal 2020 annual cash incentive program for completion of unconscious bias training. We have an internal D&I Steering Council of senior business leaders charged with helping to lead internal conversations about diversity and inclusion. And last year, our Chief Executive Officer held our first ever D&I Town Hall with a panel of senior leaders. More recently, our Chief Executive Officer formed a cabinet of African American and Black leaders within the company to help educate our senior leaders on racial equity issues and advise on actions we can take. The Board’s Role in Oversight of Corporate Culture The Board continues to assess and monitor corporate culture at Cardinal Health and how it fosters our business strategies. To inform the Board about human capital and cultural health, we have developed and annually share with the Board a cross-functional culture scorecard that includes employee engagement survey data, employee retention and turnover data, diverse employee and management representation, audit and accounting findings, employee cybersecurity awareness results and employee health and safety data. As part of our broader strategic and financial plans, we began fiscal 2020 by launching “Our Path Forward” (see graphic below), which outlines both the plans and initiatives we have underway to advance our objectives and the key competitive advantages and values that will be vital to our success. As discussed in Compensation Discussion and Analysis beginning on page 34, the Compensation Committee added new culture goals to our annual cash incentive and PSU grants during fiscal 2020 to align with these important strategic initiatives. The culture goals for the annual incentive program focused on performance management, change management and diversity and inclusion, while the culture goal for the PSUs focused on leadership score improvement from our employee engagement survey. We plan to continue to develop these culture goals. For the fiscal 2020 performance management process, we introduced new management “behaviors” in line with Our Path Forward. They are: ● invites curiosity (explores possibilities for the future); ● inspires commitment (pursues results with passion); ● builds partnerships (seeks connections for the greater good); and ● develops self and others (inspires others to grow to our full potential).
 Each year, our Board conducts a rigorous self-evaluation process, which includes individual director evaluations. This process is overseen by the Nominating and Governance Committee, led by our The Board evaluation process includes an assessment of both Board process and substance, including: the Board’s effectiveness, structure, composition, succession and culture; the quality of Board discussions; the Board’s performance in oversight of business performance, strategy, succession planning, risk management, ethics and compliance and other key areas; and agenda topics for future meetings. The outside facilitator also In addition to the full Board’s evaluation process, each of the Audit, Compensation and Nominating and Governance Committees annually review their charters and conduct their own Committee self-evaluation. The Board has established director independence standards based on the New York Stock Exchange (“NYSE”) rules. These standards can be found in our Corporate Governance Guidelines on our website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Corporate Governance — Corporate Governance Documents.” These standards address, among other things, employment and compensation relationships, relationships with our auditor and customer and business relationships. The Board assesses director independence at least annually, based on the recommendations of the Nominating and Governance Committee. The Board has determined that each of Messrs. Darden, Downey,
Kenny, Losh, Scarborough and Weiland, and each of Mses. Arnold, Cox, Edison, Hemingway Hall and Killefer, is independent. In reaching the determination that Mr. Evans is independent, the Board considered that, following the unexpected departure of our Chief Financial Officer early in fiscal 2020, Mr. Evans was hired to serve as interim Chief Financial Officer for less than a year while we conducted a search for a permanent Chief Financial Officer, and he received fixed cash compensation in that interim role. It has been our long-standing practice to actively engage with our shareholders throughout the year so that management and the Board can better understand shareholder perspectives on governance, executive compensation and other topics. We strive for a collaborative approach to During
 After considering feedback from shareholders in recent years, we limited director service on other public company boards to three or just their own board if the director is an executive of another public company; ● expanded the Compensation Committee’s responsibilities to oversee and advise the Board about human capital management strategies and policies; ● adopted a expanded the Nominating and Governance Committee’s oversight to include environmental sustainability and other corporate citizenship activities as well as lobbying activities and expenditures; ● changed the long-term incentive compensation mix for executives, increasing the proportion of PSUs to 60% and eliminating stock options; ● enhanced our ● added a chairman’s letter to our proxy statement; ● increased our communications about the Ad Hoc Committee and the Board’s oversight of
Cardinal Health | 2020 Proxy Statement 25
Following the Compensation Committee’s The table below shows the elements and amount of compensation that we
Directors may receive additional compensation for performing duties assigned by the Board or its committees that are considered beyond the scope of the ordinary responsibilities of directors or committee members. Directors may elect to defer payment of their cash retainers into the Cardinal Health Deferred Compensation Plan (“DCP”). For directors, deferred balances under the DCP are paid in cash upon termination from Board service, death or disability in a single lump sum or annual installment payments over a period of five or ten years. A director also may defer receipt of common shares that otherwise would be issued on the date that RSUs vest until termination from Board service. Our directors may participate in our matching gift program. Under this program and subject to certain restrictions, the Cardinal Health Foundation (our philanthropic affiliate) will match contributions for eligible non-profit organizations.
Director Compensation for Fiscal The non-management directors received the following compensation during fiscal
Related Person Transactions Policy and Process Related Person Transactions Policy
Once a related person transaction is identified, the Audit Committee will review all the relevant facts and circumstances and determine whether to approve the transaction. The Audit Committee will take into account such factors as it considers appropriate, including the material terms of the transaction, the nature of the related person’s interest in the transaction, the significance of the transaction to the related person and us, the nature of the related person’s relationship with us and whether the transaction would be likely to impair the judgment of a director or executive officer to act in our best interest. If advance approval of a transaction is not feasible, the Audit Committee will consider the transaction for ratification at its next regularly scheduled meeting. The Audit Committee Chairman may pre-approve or ratify any related person transactions in which the aggregate amount is expected to be less than $1 million. Since July 1,
Cardinal Health | 2020 Proxy Statement 27 Ratification of Appointment of Ernst & Young LLP as Independent Auditor The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent auditor and approves the audit engagement While not required by law, we are asking our shareholders to ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal We expect representatives of Ernst & Young LLP to
The Audit Committee is responsible for overseeing: the integrity of Cardinal Health’s financialstatements; the independent auditor’s qualifications, independence and performance; Cardinal Health’s internal audit function; Cardinal Health’s ethics and compliance program and its compliance with legal and regulatory requirements; and Cardinal Health’s processes for assessing and managing risk. Management has primary responsibility for the financial statements and for establishing and maintaining the system of internal control over financial reporting. Management also is responsible for reporting on the effectiveness of Cardinal Health’s internal control over financial reporting. Cardinal Health’s independent auditor, Ernst & Young LLP, is responsible for performing an independent audit of Cardinal Health’s consolidated financial statements and for issuing a report on the financial statements and a report on the effectiveness of Cardinal Health’s internal control over financial reporting based on its audit. The Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended June 30,
The Audit Committee meets regularly with Ernst & Young LLP, with and without management present, to review the overall scope and plans for Ernst & Young LLP’s audit work and to discuss the results of its examinations, the evaluation of Cardinal Health’s internal control over financial reporting, and the overall quality of Cardinal Health’s accounting and financial reporting. In addition, the Audit Committee annually considers the performance of Ernst & Young LLP.
In reliance on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the fiscal year ended June 30, Submitted by the Audit Committee of the Board of Directors on August
Fees Paid to Ernst & Young LLP The following table sets forth the fees billed to us by Ernst & Young LLP for services in fiscal
Policy on Pre-Approval of Services Provided by Ernst & Young LLP The Audit Committee must pre-approve the audit and permissible non-audit services performed by our independent accountants in order to help ensure that the accountants remain independent Under the policy, the Audit Committee annually pre-approves certain services and assigns specific dollar thresholds for these types of services. If a proposed service is not included in the annual pre-approval, the Audit Committee must separately pre-approve the service before the engagement begins. The Audit Committee has delegated pre-approval authority to the Audit Committee Chairman for proposed services up to $500,000. Proposed services exceeding $500,000 require full Audit Committee approval. All audit and non-audit services provided for us by Ernst & Young LLP for fiscal
Cardinal Health | 2020 Proxy Statement 29 Advisory Vote to Approve the Compensation of Our Named Executive Officers In accordance with Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”), we are asking our shareholders to approve, on a non-binding advisory basis, the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in this proxy statement. We urge shareholders to read the Compensation Discussion and Analysis beginning on the next page of this proxy statement, which describes in more detail how our executive compensation program operates and is designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables, notes and narrative appearing on pages Although this advisory vote is not binding on the Board, the Board and the Compensation Committee will review and consider the voting results when evaluating our executive compensation program. The Board has adopted a policy providing for annual say-on-pay advisory votes. Accordingly, the next say-on-pay advisory vote will be held at our
Compensation Discussion and Analysis This Compensation Discussion and Analysis focuses on the fiscal 2020 compensation of the following current and former executive officers (the “named executive officers” or “named executives”)
During fiscal 2020, we grew non-GAAP operating earnings, exceeded our non-GAAP EPS guidance range, surpassed our enterprise cost savings target, and strengthened our balance sheet, all while continuing to execute on our long-term strategic priorities in a rapidly-changing environment. We achieved fiscal 2020 results as we adapted our operations to address the unique challenges presented by COVID-19. In response to the pandemic, we continued to maintain operations in all our distribution facilities, nuclear pharmacies and global manufacturing plants and successfully transitioned our office employees to a remote work model. Through all of this, our focus remained on delivering critical products and services to our customers, while protecting the health and safety of our employees. Fiscal 2020 highlights include: ● Revenue was $152.9 billion, up 5% from the prior year. ● GAAP operating loss was $(4.1) billion due to an opioid litigation charge and non-GAAP operating earnings were $2.4 billion, a 1% increase over the prior year. Non-GAAP operating earnings grew despite an estimated net negative impact of approximately $100 million from COVID-19. ● GAAP diluted loss per share was $(12.61) due to the opioid litigation charge and non-GAAP EPS was $5.45, a 3% increase over the prior year. ● We returned over $900 million to shareholders in dividends ($569 million) and share repurchases ($350 million) and repaid $1.4 billion of long-term debt. ● Our Pharmaceutical segment performance exceeded our expectations. Revenue grew 6% to $137.5 billion. Segment profit decreased 4% to $1.8 billion, reflecting the expected adverse impact of Pharmaceutical Distribution customer contract renewals. ● Our Medical segment revenue decreased 1% percent to $15.4 billion due to the adverse impact from COVID-19. Segment profit increased 15% to $663 million largely due to cost savings and the favorable year-over-year impact of a supplier charge taken last year, partially offset by the negative impact of COVID-19. ● We surpassed our enterprise cost savings target, with significant savings contributions from Medical global manufacturing and supply chain. ● We completed the divestiture of our successful investment in naviHealth. ● We agreed in principle to a global settlement framework designed to resolve all opioid lawsuits and claims by states and political subdivisions and continue to work with state attorneys general and representatives of political subdivisions to achieve a global settlement. ● Our generic pharmaceuticals program performed better than expected with a slight favorable impact on Pharmaceutical segment profit after several years of a negative impact. ● Our Medical segment managed a voluntary recall for surgical gowns and three voluntary field actions for Presource surgical procedure packs containing affected surgical gowns. ● We launched “Our Path Forward” outlining the plans and initiatives underway to advance our corporate culture objectives. We added new culture goals (including a diversity and inclusion goal) to our annual cash incentive and PSU programs. ● Non-GAAP operating earnings growth and strong performance against new strategic measures for cost savings and culture drove a fiscal 2020 annual cash incentive funding of 120% at the enterprise level. ● Our non-GAAP EPS performance over the past three years has negatively impacted our named executives’ long-term incentive pay. We had a 19% payout for the PSUs that vested in fiscal 2020 and no PSU payouts in fiscal 2018 and 2019. See Annex A for reconciliations to the comparable GAAP financial measures and the reasons why we Compensation and Benefit Actions in Response to COVID-19 During the
to employees of the variety of well-being resources available to them, with an emphasis on mental health. We also provided additional compensation to frontline employees who continued to work during the pandemic, keeping our distribution centers, manufacturing plants and other sites running and supporting our healthcare provider customers. For fiscal 2021, considering the performance uncertainties related to COVID-19, we Even with the unexpected negative impact of COVID-19 (approximately $100 million), we did not adjust either our annual incentive or PSU performance goals or results to remove this impact. Jason Hollar became Chief Financial Officer
Stephen Mason was promoted to Chief Executive Officer — Medical Segment Shareholder Engagement and Consideration of
At the It has been our long-standing practice to Compensation Philosophy and Practices Our compensation program is designed to support our long-term growth, with accountability for key annual results. It has the following key objectives: Reward performance. We tie our executive pay to financial, operational and individual performance.
Emphasize long-term,stock-based incentive compensation. We emphasize performance and retention Maintain a competitive program that will attract and retain critical talent.We have designed our compensation program to be competitive in the marketplace and to invest in and reward talent, driving Executive Compensation Governance Features
Elements of
 
The Compensation Committee set Mr. Hollar’s base salary at $700,000 when he joined us as Chief Financial Officer and set Mr. Later in the
Cardinal Health | 2020 Proxy Statement 33 Fiscal
Operatingearningsgoal. The Compensation Committee set the adjusted non-GAAP operating earnings target at the beginning of fiscal The earnings Strategicgoals. The Compensation Committee set the target for cost savings to align with our publicly announced fiscal 2020 cost savings goal. The Committee set targets for corporate culture goals to advance the “Our Path Forward” initiatives discussed beginning on page 23. The culture goals, which were measured quantitatively on an enterprise-wide basis, focused on performance management (employees entering goals and performance conversation acknowledgments into our internal tracking system), change management (designated leaders completing change management playbooks), and diversity and inclusion (employees completing unconscious bias training). We describe how we calculate these measures under The Compensation Committee decided that the annual incentive performance funding results in the table below were appropriate with no adjustment for the positives and negatives for fiscal 2020. These included strong management performance through the COVID-19 pandemic and organizational accountability for the surgical gown recall.
Fiscal The Compensation Committee annually reviews our named executives’ annual incentive targets as a percentage of base salary. The Compensation Committee awarded each eligible named executive his or her fiscal 2020 annual incentive award based on the 120% enterprise funding percentage and an individual performance factor.
Back to
Mr. Kaufmann’s annual incentive was based on strong enterprise performance, including growing non-GAAP operating earnings despite the negative impact of COVID-19, and his Mr. Mr.
Mr. Ms. Mayer’s annual incentive was based on enterprise performance, her performance leading our legal and compliance functions, and her assuming responsibility mid-year for our quality function. Ms. Mayer also managed her functions through the challenges of COVID-19 and the surgical gown recall and was instrumental in the progress her functions made in Our Path Forward culture initiatives. Long-Term Incentive Compensation For fiscal 2020, long-term incentive awards were delivered 60% in PSUs and 40% in RSUs. As noted earlier, even with the unexpected negative impact of COVID-19 (approximately $100 million), we did not Fiscal 2020 Long-Term Incentive Grants The Compensation Committee annually reviews our named executives’ long-term incentive targets. At the beginning of fiscal 2020, based primarily on market data, the Committee increased Mr. Kaufmann’s target to $10.0 million (from $9.0 million) and Ms. Mayer’s target to $1.75 million. The Compensation Committee set Mr. Hollar’s target at $2.5 million when he joined us and Mr. Mason’s target at $2.25 million when he was promoted. The following table shows the long-term incentive awards made in the fiscal 2020 annual grant to the named executives at the time.
In May 2020, when he joined us as Chief Financial Officer, we provided Mr. Hollar with initial long-term incentive
Fiscal
The following table shows the target and earned Fiscal 18-20 PSUs for those named executives who had received this grant.
When granting PSUs for the fiscal 2020 through fiscal 2022 performance cycle (the “Fiscal 20-22 PSUs”), the Compensation Committee
EPSgoal.Adjusted non-GAAP EPS
The Compensation Committee changed its EPS goal-setting approach to address significant healthcare industry uncertainties that the company has been facing. These uncertainties have made setting appropriate three-year goals very challenging. The Compensation Committee will continue to evaluate its goal-setting approach, especially in light of the COVID-19 pandemic; when it made the change, Strategicgoals.The Compensation Committee added a three-year cost savings measure based on an annual run rate in cost savings projects implemented before the end of fiscal 2022. The Compensation Committee set the three-year cost savings target to align with our internal and publicly announced five-year goal of more than $500 million. The Committee also added an Our Path Forward — Culture measure (see pages 23 and 24 for a discussion of Our Path Forward) focused on a leadership score improvement from our employee engagement surveys. TSRmodifier.A relative TSR modifier
We describe how we calculate these measures
 Other Elements of Compensation 401(k) Savings and Deferred Compensation Plans Our 401(k) Savings Plan and DCP allow most of our U.S.-based employees
Other Benefits and Perquisites The Compensation Committee encourages use of our corporate aircraft for the personal travel of our Chief Executive Officer Relocation assistance is an important tool for us to recruit talent. We provided Mr. Hollar a $200,000 lump sum payment for relocation. Our offer letter agreement with Mr. Hollar allows us to recover the full relocation payment if he voluntarily leaves the company during the first year following his start date and 50% of it if he leaves during the second year following his start date. Severance and Change of Control Benefits
during the two-year period commencing upon a change of control (the “change of control period”), we terminate a named executive without then, the named executive will receive: in the case of the Chief Executive Officer, cash severance equal to 2.0 times (or 2.5 times, if the termination occurs during the change of control period) the sum of annual base salary and target bonus; in the case of other named executives, cash severance equal to 1.5 times (or 2.0 times, if the termination occurs during the change of control period) the sum of annual base salary and target bonus; and a prorated annual bonus for the year of termination based on actual performance (or the greater of target performance and actual performance if the termination occurs during the change of control period) and up to 18 months of health insurance premiums. Receipt of these amounts is conditioned upon execution of a general release and compliance with certain restrictive covenants. During fiscal 2020, the Compensation Committee amended the definition of “Termination for Cause” under the Severance Plan to include committing fraud or theft or violating theStandardsofBusinessConduct or any other written company policy. We believe that the Severance Plan is competitive with market practices and provides appropriate levels of compensation
Our Policies, Guidelines and Practices Related to Executive Compensation Role of Compensation Committee’s Compensation Consultant The Compensation Committee The nature and scope of the consultant’s engagement consists primarily of: participating in meetings of the Compensation Committee; providing compensation data on the Comparator Group; and providing advice and recommendations related to compensation for our executive officers, the design of our executive compensation program, the composition of our Comparator Group and director compensation.
Our Chief Executive Officer and Chief Human Resources Officer participate in Compensation Committee meetings to make recommendations regarding program design and compensation amounts, Our Chief Executive Officer reviews performance objectives with the Compensation Committee at the beginning of the fiscal year. At the end of the fiscal year, the Compensation Committee reviews and discusses the performance and compensation of the Chief Executive Officer in executive session and with the The Compensation Committee establishes target compensation levels based on a variety of factors, including data from a “Comparator Group” of similarly situated public companies, which helps the Compensation Committee to assess whether our executive pay remains reasonable and competitive in the marketplace. Developed with the assistance of the Compensation Committee’s compensation consultant, our Comparator Group reflects the industry in which we primarily compete for executive talent and includes direct competitors and other companies in the healthcare field. Our Comparator Group also includes air/freight and logistics companies and retailers and because of their similar size and business models. The following companies comprised the Comparator Group for fiscal
The Compensation Committee, working with its compensation consultant, periodically reviews the group’s composition to ensure that the companies remain relevant for comparison purposes. The Compensation Committee
● business model; and
Our Compensation Committee compares total direct compensation (base salary plus annual and long-term
Risk Assessment of Compensation Programs Management has assessed our compensation programs and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on Cardinal Health. This risk assessment included reviewing the design and operation of our compensation programs, identifying and evaluating situations or compensation elements that could raise more significant risks and evaluating other controls and processes designed to identify and manage risk. The Compensation Committee Jason Hollar joined us as in April 2020 and became Chief Financial Officer on May 26, 2020. Mr. Hollar’s offer letter set his initial base salary and annual and long-term incentive targets. To address compensation forfeited at his former employer, the offer letter provided for Mr. Hollar to receive initial long-term incentive grants of $1.0 million in PSUs and $1.0 million in RSUs and a $1.55 million cash sign-on bonus. The offer letter also provided for a $200,000 lump sum payment for relocation. Under the terms of the offer letter, Mr. Hollar must repay 100% of the sign-on bonus and the relocation payment if he voluntarily leaves the company during the first year following his start date and 50% of it if he leaves during the second year following his start date. David Evans served as our interim Chief Financial Officer from September 1, 2019 until May 25, 2020. Mr. Evans’ offer letter provided him with monthly cash compensation during his time of employment with a minimum duration of five months. In his interim role, he did not participate in our annual or long-term incentive award programs or our Severance Plan. We discuss the terms of Messrs. Hollar’s and Evans’ offer letters in more detail under “CFO Offer Letters” on page 41. We have stock ownership guidelines to align the interests of executive officers and directors with the interests of our shareholders. The guidelines specify a dollar value (expressed as a multiple of salary or cash retainer) of shares that executive officers and directors must accumulate and hold while serving in these positions.
We count common shares, RSUs and phantom shares held through the DCP under the stock ownership guidelines. Executive officers and directors must retain 100% of the net after-tax shares received under any equity awards until they satisfy the required ownership levels. Our primary annual incentive and PSU performance measures are based on the same non-GAAP financial measures that we use internally for planning and evaluating our performance and present externally in our earnings materials and SEC reports. We adjust these non-GAAP financial measures to exclude some items that are included in our GAAP measures, such as restructuring and employee severance costs, amortization and other acquisition-related costs, impairments and gain or loss on disposal of assets and net litigation recoveries or charges. We make these adjustments primarily because they are not part of our ongoing operations or included in our financial planning, or they relate to events that may have occurred in prior or multiple periods or their timing or amount is inherently unpredictable. We excluded the following charges and gains, among others, from our non-GAAP financial measures during relevant periods:
● pre-tax charge of $5.63 billion ($5.14 billion after tax or $17.54 per share) during fiscal 2020 related to opioid litigation(1); our long-standing practice has been to exclude litigation charges like this from our non-GAAP financial measures; ● pre-tax gain of $579 million ($493 million after tax or $1.68 per share) during fiscal 2020 related to completion of the divestiture of our remaining equity interest in naviHealth; and ● transitional tax benefits of U.S. tax reform during fiscal 2018, 2019 and 2020, including a $936 million ($2.97 per share) benefit in fiscal 2018. We explain the adjustments to our non-GAAP financial measures and provide a reconciliation to GAAP measures in Annex A. When determining the payout level for the Fiscal 18-20 PSUs, we removed the positive impact of a benefit from a change in U.S. federal rate of $135 million ($0.43 per share) that was reflected in our fiscal 2018 non-GAAP financial measures. In addition, the negative impact of COVID-19, which we estimate had a net negative impact on operating earnings of approximately $100 million, was reflected in our fiscal 2020 non-GAAP financial measures and, as noted earlier, we did not adjust either our annual incentive or PSU performance goals or results to remove this impact. Potential Impact on Compensation from Executive Misconduct (“Clawbacks”) Our We will disclose publicly the incentive compensation forfeitures or repayments from our executive officers if required by law or if we have already disclosed publicly the underlying event triggering the forfeiture or repayment and the disclosure would not violate any individual’s privacy rights, is not likely to result in or exacerbate any existing or threatened employee, shareholder or other litigation, arbitration, investigation or proceeding against us, and is not otherwise prohibited. These clawback provisions support our compliance and risk management programs. We discuss Our Board has adopted a policy prohibiting all employees and directors from entering into short sales, publicly traded options, puts and calls, forward sale contracts and other swap, hedging or derivative transactions relating to our securities. The Board also has adopted a policy prohibiting our executive officers and directors from holding our securities in margin accounts or pledging our securities as collateral for a loan. The Compensation Committee typically approves the annual equity grant in August of each year and sets August 15 as the grant date. The Compensation Committee expects the annual grant date to follow the release of earnings for the prior fiscal year in early August, without regard to whether we are aware of material nonpublic information. Our fiscal
Human Resources and Compensation Committee Report We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on that review and discussion, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, Submitted by the Human Resources and Compensation Committee of the Board.
(1) As disclosed in our fiscal 2020 Form 10-K, pharmaceutical wholesale distributors, including us, have been named as defendants in over 3,000 lawsuits relating to the distribution of prescription opioid pain medications. These lawsuits also name pharmaceutical manufacturers, retail pharmacy chains and other entities as defendants. Approximately 2,800 of these lawsuits have been filed by counties, municipalities, cities and political subdivisions in various federal, state, and other courts. In October 2019, we agreed in principle to a global settlement framework with a leadership group of state attorneys general that is designed to resolve all pending and future opioid lawsuits and claims by states and political subdivisions and includes, among other things, a cash component, under which we would pay up to $5.56 billion over 18 years. In connection with this and with an October 2019 settlement with two Ohio counties, we recorded a total pre-tax charge of $5.63 billion ($5.14 billion after tax or $17.54 per share) during fiscal 2020. Because loss contingencies are inherently unpredictable and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about future events. We regularly review these opioid litigation matters to determine whether our accrual is adequate. The amount of ultimate loss may differ materially from this accrual. We continue to strongly dispute the allegations made in these lawsuits and reaching an agreement in principle on a global settlement framework is not an admission of liability or wrongdoing.
The table below summarizes fiscal
● our current and former Chief Financial
www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 40 The amounts shown for “All Other Compensation” for fiscal Name Company 401(k) Savings Plan Contributions ($) Company Deferred Compensation Plan Contributions ($) Perquisites ($)(a) Total ($) Kaufmann 24,723 10,500 65,181 100,404 Barrett 24,723 10,500 154,499 189,722 Gomez 27,527 10,000 – 37,527 Giacomin 24,723 11,408 – 36,131 Morford 24,723 6,791 – 31,514 Morrison 24,705 6,000 – 30,705 Casey 3,051 – – 3,051 The amounts shown include the value of perquisites and other personal benefits if the aggregate value exceeded $10,000. Where we report perquisites and other personal benefits, we quantify each perquisite or personal benefit if it exceeds $25,000. The amount reported for Mr. Kaufmann included the incremental cost to us of his personal use of corporate aircraft ($64,313) and home security system monitoring fees. The amount reported for Mr. Barrett included the incremental cost to us of his personal use of corporate aircraft ($149,756), fees paid for services provided to him for legal review of his employment agreement modification and home security system monitoring fees. We own corporate aircraft and lease other aircraft as needed. We calculate the incremental cost of personal use of corporate aircraft based on the average cost of fuel, average trip-related maintenance costs, crew travel expenses, per flight landing fees, hangar and parking costs and smaller variable costs. Since we use our aircraft primarily for business travel, we do not include fixed costs, such as depreciation, pilot salaries and certain maintenance costs. Messrs. Kaufmann and Barrett each receive up to $150,000 per fiscal year in personal use of corporate aircraft. Neither receives tax reimbursement for any imputed income associated with personal travel. Both Messrs. Kaufmann and Barrett have an aircraft time-sharing agreement, under which they may reimburse us for incremental costs when they use the aircraft for personal travel consistent with Federal Aviation Administration regulations. Reimbursed travel does not count against their personal use allowances. Name Company 401(k) Savings Plan Contributions ($) Company Deferred Compensation Plan Contributions ($) Perquisites ($) (1) Total ($) Kaufmann 14,250 5,000 123,783 (2) 143,033 Hollar 12,825 0 200,312 (3) 213,137 Crawford 14,250 0 — 14,250 Mason 16,850 4,500 — 21,350 Mayer 15,859 0 — 15,859 Evans 26,850 0 — 26,850 Gomez 0 2,951 — 2,951 The amounts shown include the value of perquisites and other personal benefits if the aggregate value exceeded $10,000. We quantify each reported perquisite or personal benefit if it exceeds $25,000. The amount reported for Mr. Kaufmann includes the incremental cost to us of his personal use of corporate aircraft ($121,718), home security system monitoring fees and personal liability insurance coverage. We calculate the incremental cost of personal use of corporate aircraft based on the average cost of fuel, average trip-related maintenance costs, crew travel expenses, per flight landing fees, hangar and parking costs and smaller variable costs. Since we use our aircraft primarily for business travel, we do not include fixed costs, such as depreciation, pilot salaries and certain maintenance costs. For fiscal 2020, Mr. Kaufmann received up to $150,000 in personal use of corporate aircraft. He does not receive tax reimbursement for any imputed income associated with personal travel. He has an aircraft time-sharing agreement, under which he may reimburse us for incremental costs when he uses the aircraft for additional personal travel consistent with Federal Aviation Administration regulations. Reimbursed travel does not count against his personal use allowance. The amount reported for Mr. Hollar includes the incremental cost to us of a lump sum payment for relocation ($200,000) and home security system monitoring fees. He must repay 100% of this relocation assistance if he voluntarily leaves the company during the first year following his start date and 50% of it if he leaves during the second year following his start date. Mr. an annual base salary of $700,000; a target annual bonus of 100% of his annual base salary prorated from his start date to the target long-term incentive awards of $2,500,000 for the fiscal 2021 annual grant. To address compensation forfeited at his former employer, the offer letter provided that Mr. Hollar receive initial long-term incentive grants of $1.0 million in PSUs and Mr. Evans served as our interim Chief Financial Officer from September 1, 2019 until May 25, 2020. Mr. Evans’ offer letter provided him with monthly cash compensation of $220,000 during his time of employment with a minimum duration of five months. He did not participate in our annual or long-term incentive Cardinal Health| Grants of Plan-Based Awards for Fiscal The table below supplements our Summary Compensation Table by providing additional information about our plan-based compensation for fiscal Name/ Award Type Grant Date Approval Date Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Potential Payouts Under Equity Incentive Plan Awards(2) All Other Stock Awards: Number of Shares of Stock or Units (#)(3) All Other Option Awards: Number of Securities Underlying Options (#)(4) Exercise or Base Price of Option Awards ($/Sh)(5) Grant Date Fair Value of Stock and Option Awards ($)(6) Grant Date Approval Date Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Potential Payouts Under Equity Incentive Plan Awards(2) All Other Stock Awards: Number of Shares of Stock or Units (#)(3) Grant Date Fair Value of Stock Awards ($)(4) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Kaufmann Annual Incentive 496,334 1,240,834 2,481,668 771,967 1,929,918 3,859,836 PSUs 8/15/2017 7,151 14,301 28,602 950,015 8/15/2019 8/6/2019 71,429 142,857 342,857 6,239,994 Option 8/15/2017 8/8/2017 70,102 66.43 948,690 RSUs 8/15/2017 8/8/2017 14,301 950,015 8/15/2019 8/6/2019 95,238 3,999,996 RSUs(7) 11/8/2017 11/5/2017 49,188 2,999,976 Barrett Hollar Annual Incentive(5) 49,727 124,317 248,634 PSUs(6) 5/15/2020 3/12/2020 10,215 20,429 49,030 1,067,620 RSUs(6) 5/15/2020 3/12/2020 20,429 1,000,000 Crawford Annual Incentive 812,624 2,031,559 4,063,118 288,661 721,653 1,443,306 PSUs 8/15/2017 23,835 47,669 95,338 3,166,652 8/15/2019 8/6/2019 19,643 39,286 94,286 1,716,012 Option 8/15/2017 8/8/2017 233,673 66.43 3,162,297 RSUs 8/15/2017 8/8/2017 47,669 3,166,652 8/15/2019 8/6/2019 26,190 1,099,980 Gomez Mason Annual Incentive 146,070 365,174 730,348 196,656 491,639 983,279 PSUs 8/15/2017 986 1,972 3,944 131,000 8/15/2019 8/6/2019 16,072 32,143 77,143 1,404,006 Option 8/15/2017 8/8/2017 12,083 66.43 163,519 RSUs 8/15/2017 8/8/2017 2,465 163,750 8/15/2019 8/6/2019 21,429 900,018 RSUs(8) 11/8/2017 11/5/2017 16,396 999,992 Giacomin Mayer Annual Incentive 278,822 697,055 1,394,110 186,354 465,885 931,769 PSUs 8/15/2017 7,151 14,301 28,602 950,015 8/15/2019 8/6/2019 12,500 25,000 60,000 1,092,000 Option 8/15/2017 8/8/2017 70,102 66.43 948,690 RSUs 8/15/2017 8/8/2017 14,301 950,015 8/15/2019 8/6/2019 16,667 700,014 RSUs(9) 2/15/2018 1/19/2018 14,684 999,980 Morford Annual Incentive 198,970 497,425 994,850 PSUs 8/15/2017 3,889 7,778 15,556 516,693 Option 8/15/2017 8/8/2017 43,844 66.43 593,341 RSUs 8/15/2017 8/8/2017 8,944 594,150 Morrison Annual Incentive 169,714 424,285 848,570 PSUs 8/15/2017 3,011 6,021 12,042 399,975 Option 8/15/2017 8/8/2017 29,517 66.43 399,454 RSUs 8/15/2017 8/8/2017 6,021 399,975 PSUs(10) 6/29/2018 1,738 3,476 6,952 (11) PSUs(10) 6/29/2018 1,171 2,342 4,684 (11) Option(10) 6/29/2018 34,158 51.49 61,151 Option(10) 6/29/2018 24,611 71.43 56,778 Option(10) 6/29/2018 21,965 84.27 51,108 Evans — Gomez — This information relates to annual cash incentive award opportunities with respect to fiscal 2020 performance. Amounts actually earned under the annual cash incentive awards are reported in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. “Equity Incentive Plan Awards” are PSUs granted during the fiscal year under our 2011 LTIP. PSUs are eligible to vest based on achieving goals for cumulative adjusted non-GAAP EPS over three annual periods, three-year cost savings and a culture measure over the performance period, with a modifier based on TSR relative to the S&P 500 Health Care Index. A cashflow threshold must be achieved to receive any payout under the PSUs. “All Other Stock Awards” are RSUs granted during the fiscal year under our 2011 LTIP that vest ratably over three years and accrue cash dividend equivalents that are payable when, and only to the extent that, the RSUs vest. We valued PSUs using a Monte Carlo simulation valuation model, which applies a risk-free interest rate and expected volatility assumptions. The risk-free interest rate is assumed to equal the yield on U.S. Treasury bonds on the grant date with remaining terms consistent with the remaining performance measurement period. Expected volatility is based on the average of historical volatility over a look-back period commensurate with the remaining performance measurement period ending on the grant date and the implied volatility from exchange-traded options as of the grant date. The assumed per-share value was $43.68 for the PSUs granted on August 15, 2019, using a risk-free rate of 1.44% and expected volatility of 31.59%, and $52.26 for the PSUs granted on May 15, 2020, using a risk-free rate of 0.16% and expected volatility of 38.75%. These accounting values differ from the compensation values of PSU awards discussed in Compensation Discussion and Analysis and under “CFO Offer Letters” above. Mr. Hollar’s award opportunity was prorated from his start date to the end of the fiscal year. Mr. Hollar received these PSUs and RSUs when he joined us as Chief Financial Officer. His sign-on bonus and initial long-term incentive awards were intended to address compensation forfeited at his former employer. This information relates to annual cash incentive award opportunities with respect to fiscal 2020 performance. Amounts actually earned under the annual cash incentive awards are reported in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. “Equity Incentive Plan Awards” are PSUs granted during the fiscal year under our 2011 LTIP. PSUs are eligible to vest based on achieving goals for cumulative adjusted non-GAAP EPS over three annual periods, three-year cost savings and a culture measure over the performance period, with a modifier based on TSR relative to the S&P 500 Health Care Index. A cashflow threshold must be achieved to receive any payout under the PSUs. “All Other Stock Awards” are RSUs granted during the fiscal year under our 2011 LTIP that vest ratably over three years and accrue cash dividend equivalents that are payable when, and only to the extent that, the RSUs vest. We valued PSUs using a Monte Carlo simulation valuation model, which applies a risk-free interest rate and expected volatility assumptions. The risk-free interest rate is assumed to equal the yield on U.S. Treasury bonds on the grant date with remaining terms consistent with the remaining performance measurement period. Expected volatility is based on the average of historical volatility over a look-back period commensurate with the remaining performance measurement period ending on the grant date and the implied volatility from exchange-traded options as of the grant date. The assumed per-share value was $43.68 for the PSUs granted on August 15, 2019, using a risk-free rate of 1.44% and expected volatility of 31.59%, and $52.26 for the PSUs granted on May 15, 2020, using a risk-free rate of 0.16% and expected volatility of 38.75%. These accounting values differ from the compensation values of PSU awards discussed in Compensation Discussion and Analysis and under “CFO Offer Letters” above. Mr. Hollar’s award opportunity was prorated from his start date to the end of the fiscal year. Mr. Hollar received these PSUs and RSUs when he joined us as Chief Financial Officer. His sign-on bonus and initial long-term incentive awards were intended to address compensation forfeited at his former employer. Name/ Award Type Grant Date Approval Date Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Potential Payouts Under Equity Incentive Plan Awards(2) All Other Stock Awards: Number of Shares of Stock or Units (#)(3) All Other Option Awards: Number of Securities Underlying Options (#)(4) Exercise or Base Price of Option Awards ($/Sh)(5) Grant Date Fair Value of Stock and Option Awards ($)(6) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Option(10) 6/29/2018 6/29/2018 21,381 83.19 55,364 Option(10) 6/29/2018 6/29/2018 18,394 66.43 110,984 RSUs(10) 6/29/2018 6/29/2018 3,222 157,330 RSUs(10) 6/29/2018 6/29/2018 1,092 53,322 RSUs(10) 6/29/2018 6/29/2018 1,745 85,208 Casey Annual Incentive(12) 297,808 744,521 1,489,041 PSUs(12) 8/15/2017 8/15/2017 7,151 14,301 28,602 950,015 Option(12) 8/15/2017 8/8/2017 70,102 66.43 948,690 RSUs(12) 8/15/2017 8/8/2017 14,301 950,015 This information relates to annual cash incentive award opportunities with respect to fiscal 2018 performance. Amounts actually earned under the annual cash incentive awards are reported in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. “Equity Incentive Plan Awards” are PSUs granted during the fiscal year under our 2011 LTIP. The August 2017 grants and one of Ms. Morrison’s June 2018 modified awards are eligible to vest based on payout levels of non-GAAP EPS in each of three annual periods, with a modifier based on TSR relative to the S&P 500 Healthcare Index. Ms. Morrison’s other June 2018 modified award is eligible to vest after a three-year performance period based on the sum of non-GAAP EPS CAGR and average annual dividend yield. We accrue cash dividend equivalents that are payable when, and only to the extent that, the PSUs vest. “All Other Stock Awards” are RSUs granted during the fiscal year under our 2011 LTIP that, unless otherwise noted, vest ratably over three years and accrue cash dividend equivalents that are payable when, and only to the extent that, the RSUs vest. “All Other Option Awards” are nonqualified stock options granted during the fiscal year under our 2011 LTIP that, unless otherwise noted, vest ratably over three years and have a term of 10 years. The stock options have an exercise price equal to the closing price of our common shares on the NYSE on the grant date (or the original grant date in the case of Ms. Morrison’s modified awards). We valued the PSUs and RSUs by multiplying the closing price of our common shares on the NYSE on the grant date by the number of PSUs (at target) and RSUs awarded. We valued the stock options granted on August 15, 2017 utilizing a lattice model with the following assumptions: expected stock option life: 6.94 years; dividend yield: 2.78%; risk-free interest rate: 2.13%; and expected volatility: 24.95%. We valued the stock options granted on June 29, 2018 utilizing a Black-Scholes model with the following assumptions: expected stock option life: between 5.04 and 9.04 years; dividend yield: 3.90%; risk-free interest rate: between 2.74% and 2.85%; and expected volatility: between 24.23% and 30.94%. The amounts reported represent the grant date or incremental fair value and do not represent amounts paid to or realized by the named executives. The named executives may never realize any value from the PSUs or stock options. To the extent they realize value from PSUs or stock options, the amounts realized may be more or less than the amounts reported above. These RSUs were granted to Mr. Kaufmann in connection with his appointment to Chief Executive Officer. These RSUs were granted to Mr. Gomez in connection with his appointment to Chief Financial Officer. These RSUs were granted to Mr. Giacomin in connection with his appointment to Chief Executive Officer — Medical Segment. They vest in full on the first anniversary of the grant date. Reflects previously granted long-term incentive awards that were modified in connection with Ms. Morrison’s retirement in August 2018. These modifications provided for prorated vesting of awards upon Ms. Morrison’s retirement and continued exercisability of vested stock options for their full term, in both cases consistent with the benefits that would be provided to retirees under the 2011 LTIP. The amounts shown in the “Grant Date Fair Value of Stock and Option Awards” column reflect the incremental fair value of these modified awards. There was no incremental fair value with respect to these modified awards. Mr. Casey forfeited these grants following his departure from the company in February 2018. www.cardinalhealth.com Cardinal Health| Our key executive employees, including our named executives, are eligible to receive annual cash As discussed in the Compensation Discussion and Analysis, for 70% of the fiscal 2020 annual incentive award payout, the Compensation Committee The 2011 LTIP provides that the timing of payment of any cash award will occur on or before the 15th day of the third month after the end of the applicable performance period, unless the Compensation Committee exercises its discretion to specify another payment date or to defer payments. The 2011 LTIP also grants the Compensation Committee broad discretion to assess and determine the amounts payable, including how performance was achieved and whether there were inappropriate risks undertaken or conduct by individual participants. In practice, the Compensation Committee has deferred decisions on payment of awards under the annual cash incentive program until fiscal year-end audited financial statements are substantially complete to support its assessment of the company’s and named executives’ performance. The Compensation Committee retains discretion to adjust upward or downward the amount payable under a cash award, including, if appropriate, to support the company’s clawback policy. It also may make annual incentive awards to named executives even if we do not achieve the Under our 2011 LTIP, we also may grant stock options, stock appreciation rights, stock awards and other stock-based awards to employees. During fiscal PSUs granted under the 2011 LTIP settle after a performance period by the issuance of shares, which may be a fraction or multiple of the target number of PSUs subject to an award. Issuance of the shares is subject to both continued employment and the achievement of performance goals established by the Compensation Committee (which As discussed in the Compensation Discussion and Analysis, the Compensation Committee We describe how we calculate the measures referred to in this section under Performance Measure Calculations Cardinal Health | 2020 Proxy Statement 43 Award Performance Measure Calculation Annual Cash Incentive Adjusted non-GAAP operating earnings Tangible capital 12-month average of total assets, less total liabilities (other than interest-bearing long-term obligations), goodwill and other intangibles, net, and cash and equivalents.(2) Our Path Forward — Culture Fiscal Sum of TSR Cumulative TSR for the performance period assuming dividend reinvestment and determined based on the average daily closing stock prices for the 20 trading days ending immediately prior to the first day and last day of the three-year performance period, respectively. TSR percentile rank references companies in the S&P 500 Health Care Index on both the first and the last day of the performance period and any company that filed for bankruptcy during the performance period is assigned a -100% TSR. Fiscal20-22PSUs Adjusted non-GAAP EPS payout level Level of achievement of cumulative adjusted non-GAAP EPS goal, which is the sum of the annual adjusted non-GAAP EPS goals established at the beginning of each of the three fiscal years during the performance period. Cost savings Attaining a specified annual run rate in the aggregate in cost savings projects implemented before the completion of the performance period. Our Path Forward — Culture Maintaining or increasing a leadership score in the final employee engagement pulse survey completed during the performance period from the baseline score from the company’s most recent bi-annual full engagement survey. TSR modifier Same calculation as used for Fiscal 18-20 PSUs. Cash flow threshold Operating cash flow(4) exceeding net earnings(5) for the first two years of the performance period. Non-GAAP operating earnings is operating Operating cash flow is net cash provided by operating activities as shown on the Net earnings is GAAP net earnings/(loss) attributable to Cardinal Health, Inc. www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 44 Potential Impact on Compensation from Executive Misconduct (“Clawbacks”) The 2011 LTIP authorizes us to seek repayment of incentive awards Under our 2011 LTIP and stock option, PSU and RSU agreements, unpaid annual cash incentive awards, unexercised stock options, unvested PSUs and RSUs and certain vested PSUs and RSUs are forfeited if Outstanding Equity Awards at Fiscal Year-End for Fiscal The table below shows the number of shares underlying exercisable and unexercisable stock options and unvested PSUs and RSUs held by our named executives on June 30, Name Option Awards Stock Awards Option Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable(1) Option Exercise Price ($/Sh) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)(2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)(3) Kaufmann 8/15/2011 76,909 – 41.60 8/15/2021 8/15/2012 96,291 – 39.81 8/15/2022 8/15/2013 68,316 – 51.49 8/15/2023 8/15/2014 53,698 – 71.43 8/15/2024 8/15/2015 31,378 15,689 84.27 8/15/2025 8/15/2016 19,885 39,770 83.19 8/15/2026 8/15/2017 – 70,102 66.43 8/15/2027 74,196 (4) 3,622,991 12,861 (5) 628,003 Barrett 8/15/2011 308,302 – 41.60 8/15/2021 8/15/2012 330,738 – 39.81 8/15/2022 8/15/2013 279,770 – 51.49 8/15/2023 8/15/2014 212,020 – 71.43 8/15/2024 8/15/2015 126,463 63,232 84.27 8/15/2025 8/15/2016 63,126 (6) 126,254 (6) 83.19 8/15/2026 8/15/2017 – (6) 233,673 (6) 66.43 8/15/2027 86,199 (7) 4,209,097 42,868 (8) 2,093,244 Gomez 8/15/2014 5,862 – 71.43 8/15/2024 8/15/2015 5,730 2,865 84.27 8/15/2025 8/15/2016 2,872 5,746 83.19 8/15/2026 8/15/2017 – 12,083 66.43 8/15/2027 20,612 (9) 1,006,484 1,774 (10) 86,624 Giacomin 8/15/2012 26,166 – 39.81 8/15/2022 8/15/2013 21,349 – 51.49 8/15/2023 8/15/2014 14,650 – 71.43 8/15/2024 9/15/2014 24,037 – 74.96 9/15/2024 8/15/2015 26,624 13,312 84.27 8/15/2025 8/15/2016 18,938 37,876 83.19 8/15/2026 8/15/2017 – 70,102 66.43 8/15/2027 39,368 (11) 1,922,339 12,861 (12) 628,003 Morford 8/15/2011 12,795 – 41.60 8/15/2021 8/15/2012 37,444 – 39.81 8/15/2022 8/15/2013 39,038 – 51.49 8/15/2023 8/15/2014 25,570 – 71.43 8/15/2024 8/15/2015 15,974 7,987 84.27 8/15/2025 8/15/2016 10,299 20,600 83.19 8/15/2026 8/15/2017 – 43,844 66.43 8/15/2027 19,426 (13) 948,572 6,995 (14) 341,566 Name Option Awards Stock Awards Option Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable (1) Option Exercise Price ($/Sh) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) (2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) Kaufmann 8/15/2011 76,909 0 41.60 8/15/2021 8/15/2012 96,291 0 39.81 8/15/2022 8/15/2013 68,316 0 51.49 8/15/2023 8/15/2014 53,698 0 71.43 8/15/2024 8/15/2015 47,067 0 84.27 8/15/2025 8/15/2016 59,655 0 83.19 8/15/2026 8/15/2017 46,734 23,368 66.43 8/15/2027 203,521 (4) 10,621,761 503,357 (5) 26,270,202 Hollar 20,429 (6) 1,066,190 40,858 (7) 2,132,379 Crawford 43,542 (8) 2,272,457 130,628 (9) 6,817,475 Mason 8/15/2014 4,688 0 71.43 8/15/2024 8/15/2015 5,990 0 84.27 8/15/2025 8/15/2016 8,971 0 83.19 8/15/2026 8/15/2017 8,117 4,059 66.43 8/15/2027 27,481 (10) 1,434,233 80,387 (11) 4,195,398 Mayer 8/15/2012 884 0 39.81 8/15/2022 8/15/2013 1,627 0 51.49 8/15/2023 8/15/2014 2,285 0 71.43 8/15/2024 8/15/2015 1,947 0 84.27 8/15/2025 8/15/2016 6,279 0 83.19 8/15/2026 8/15/2017 7,379 3,690 66.43 8/15/2027 31,596 (12) 1,648,995 89,973 (13) 4,695,691 Name Option Awards Stock Awards Option Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable(1) Option Exercise Price ($/Sh) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)(2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)(3) Morrison 8/15/2013 34,158 – 51.49 8/15/2023 8/15/2014 24,611 – 71.43 8/15/2024 8/15/2015 14,643 7,322 84.27 8/15/2025 8/15/2016 7,974 (15) 15,948 (15) 83.19 8/15/2026 8/15/2017 – (15) 29,517 (15) 66.43 8/15/2027 14,555 (16) 710,721 5,415 (17) 264,414 Unless otherwise indicated, these stock options vest 33% on the first, second and third anniversaries of the grant date. The market value is the product of $48.83, the closing price of our common shares on the NYSE on June 29, 2018, and the number of unvested stock awards. Based on current performance in accordance with the SEC rules, PSUs for the fiscal 2017 through fiscal 2019 performance cycle (“Fiscal 17-19 PSUs”) and Fiscal 18-20 PSUs assume payout at threshold. There was no payout of Fiscal 16-18 PSUs because performance fell below threshold, so no Fiscal 16-18 PSUs are reflected in the table. Reflects RSUs that vest as follows: 11,618 shares on August 15, 2018; 16,396 shares on November 8, 2018; 8,623 shares on August 15, 2019; 16,396 on November 8, 2019; 4,767 shares on August 15, 2020; and 16,396 shares on November 8, 2020. Reflects 5,710 Fiscal 17-19 PSUs and 7,151 Fiscal 18-20 PSUs. A prorated portion of these stock options will vest when Mr. Barrett retires after the Annual Meeting and he will forfeit the remainder. Reflects RSUs that vest as follows: 41,730 shares on August 15, 2018; 28,579 shares on August 15, 2019; and 15,890 shares on August 15, 2020. A prorated portion of these RSUs will vest when Mr. Barrett retires at the Annual Meeting and he will forfeit the remainder. Reflects 19,033 Fiscal 17-19 PSUs and 23,835 Fiscal 18-20 PSUs. In connection with his retirement, Mr. Barrett will receive a prorated portion of these PSUs if and when they pay out and will forfeit the remainder. Reflects RSUs that vest as follows: 1,994 shares on August 15, 2018; 5,465 shares on November 8, 2018; 1,400 shares on August 15, 2019; 5,465 on November 8, 2019; 822 shares on August 15, 2020; and 5,466 shares on November 8, 2020. Reflects 788 Fiscal 17-19 PSUs and 986 Fiscal 18-20 PSUs. Reflects RSUs that vest as follows: 11,343 shares on August 15, 2018; 14,684 shares on February 15, 2019; 8,574 shares on August 15, 2019; and 4,767 shares on August 15, 2020. Reflects 5,710 Fiscal 17-19 PSUs and 7,151 Fiscal 18-20 PSUs. Reflects RSUs that vest as follows: 6,713 shares on August 15, 2018; 4,679 shares on November 15, 2018; 5,052 shares on August 15, 2019; and 2,982 shares on August 15, 2020. Reflects 3,106 Fiscal 17-19 PSUs and 3,889 Fiscal 18-20 PSUs. A prorated portion of these stock options vested when Ms. Morrison retired in August 2018 and she forfeited the remainder. Reflects RSUs that vest as follows: 5,133 shares on August 15, 2018; 3,805 shares on February 15, 2019; 3,610 shares on August 15, 2019; and 2,007 shares on August 15, 2020. A prorated portion of these RSUs vested when Ms. Morrison retired in August 2018 and she forfeited the remainder. Reflects 2,404 Fiscal 17-19 PSUs and 3,011 Fiscal 18-20 PSUs. In connection with her retirement, Ms. Morrison will receive a prorated portion of these PSUs if and when they pay out and will forfeit the remainder. Cardinal Health| Name Option Awards Stock Awards Option Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable (1) Option Exercise Price ($/Sh) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) (2) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) Evans — — — — Gomez — — — — These stock options vest 33% on the first, second and third anniversaries of the grant date. The market value is the product of $52.19, the closing price of our common shares on the NYSE on June 30, 2020, and the number of unvested stock awards. Fiscal 18-20 PSUs are actual amounts that vested based on our performance over the performance period. Based on current performance in accordance with the SEC rules, PSUs for the fiscal 2019 through fiscal 2021 performance cycle (“Fiscal 19-21 PSUs”) and Fiscal 20-22 PSUs assume payout at maximum. Reflects RSUs that vest as follows: 58,925 shares on August 15, 2020; 15,562 shares on November 8, 2020; 21,231 shares on June 28, 2021; 54,825 shares on August 15, 2021; 21,232 shares on June 28, 2022; and 31,746 shares on August 15, 2022. Reflects 2,717 Fiscal 18-20 PSUs, 214,926 Fiscal 19-21 PSUs and 285,714 Fiscal 20-22 PSUs. Reflects RSUs that vest as follows: 6,809 shares on May 15, 2021; 6,810 shares on May 15, 2022; and 6,810 shares on May 15, 2023. Reflects 40,858 Fiscal 20-22 PSUs. Reflects RSUs that vest as follows: 8,730 shares on August 15, 2020; 8,676 shares on November 15, 2020; 8,730 shares on August 15, 2021; 8,676 shares on November 15, 2021; and 8,730 shares on August 15, 2022. Reflects 52,056 Fiscal 19-21 PSUs and 78,572 Fiscal 20-22 PSUs. Reflects RSUs that vest as follows: 10,583 shares on August 15, 2020; 9,755 shares on August 15, 2021; and 7,143 shares on August 15, 2022. Reflects 429 Fiscal 18-20 PSUs, 15,672 Fiscal 19-21 PSUs and 64,286 Fiscal 20-22 PSUs. Reflects RSUs that vest as follows: 8,920 shares on August 15, 2020; 2,984 shares on March 15, 2021; 8,168 shares on August 15, 2021; 2,984 shares on March 15, 2022; 5,556 shares on August 15, 2022; and 2,984 shares on March 15, 2023. Reflects 429 Fiscal 18-20 PSUs, 39,544 Fiscal 19-21 PSUs and 50,000 Fiscal 20-22 PSUs. Option Exercises and Stock Vested for Fiscal The table below shows stock options that were exercised, and PSUs and RSUs that vested, during fiscal Name Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) Number of Shares Acquired on Vesting (#)(1) Value Realized on Vesting ($) Kaufmann – – 38,106 2,549,124 Barrett – – 90,971 6,073,224 Gomez 4,475 72,782 6,159 405,485 Giacomin – – 20,400 1,363,149 Morford – – 17,724 1,137,924 Morrison – – 15,553 1,040,525 Casey 158,879 3,882,442 33,978 2,275,375 This column represents the vesting during fiscal 2018 of PSUs granted during fiscal 2015 for the fiscal 2015 through fiscal 2017 performance cycle and RSUs granted during fiscal 2015, 2016 and 2017. The number of shares acquired on vesting includes the following PSUs and RSUs deferred at the election of the named executive, net of required withholding: Mr. Morford — 6,995 PSUs and 7,705 RSUs; and Mr. Casey — 6,742 RSUs. See “Deferred Compensation” below for a discussion of deferral terms. Name Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) Number of Shares Acquired on Vesting (#) (1) Value Realized on Vesting ($) Kaufmann — — 71,559 3,404,699 Hollar — — — — Crawford — — 8,676 487,938 Mason — — 10,763 452,046 Mayer — — 10,132 442,314 Evans — — — — Gomez — — — — This column represents the vesting during fiscal 2020 of PSUs granted during fiscal 2018 to Mr. Mason and Ms. Mayer before they were named executives and RSUs granted to named executives during fiscal 2017, 2018 and 2019. Our DCP permits certain management employees, including the named executives, to defer between 1% and 50% of base salary and between 1% and 80% of incentive compensation. In addition, we may make additional matching and non-matching contributions to the deferred balances of participants. We make matching contributions on amounts deferred under the DCP from compensation in excess of www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 46 Each participant may direct the investment of his or her DCP account by selecting notional investment options that generally track publicly available mutual funds and investments and by periodically changing investment elections as the participant deems appropriate. We pay participants’ deferred balances in cash upon retirement, termination from employment, death or total disability in a single lump sum or annual installment payments over a period of five or ten years. The DCP does not qualify under Section 401(a) of the U.S. Internal Revenue Code (the “Code”) and is exempt from many of the provisions of the Employee Retirement Income Security Act of 1974 as a “top hat” plan for a select group of management or highly compensated employees. Apart from the DCP, a named executive also may defer receipt of shares that otherwise would be issued on the date that PSUs and RSUs vest until after the named executive is no longer employed by Cardinal Health or until a fixed future date. Nonqualified Deferred Compensation in Fiscal The table below provides information regarding the named executives’ accounts under our DCP and deferred share arrangements. Name/Award Type Executive Contributions in Last FY ($)(1)(2) Cardinal Health Contributions in Last FY ($)(2) Aggregate Earnings in Last FY ($)(3) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($)(4) Kaufmann DCP 118,554 4,954 269,660 – 3,643,214 Deferred shares – – (652,518) – 1,095,306 Barrett DCP 140,447 4,000 164,280 – 2,697,035 Deferred shares – – – – – Gomez DCP 171,045 4,000 70,605 – 1,542,129 Deferred shares – – – – – Giacomin DCP 97,217 8,000 208,611 – 2,096,609 Deferred shares – – – – – Morford DCP 226,427 800 197,471 – 1,860,815 Deferred shares 934,348 – (2,082,467) – 3,849,904 Morrison DCP 16,505 3,000 31,830 – 514,214 Deferred shares – – – – – Casey DCP 150,591 – 8,388 – 593,123 Deferred shares 447,871 – (2,063,849) – 3,594,376 The DCP amounts shown include salary and fiscal 2017 cash incentive awards deferred during fiscal 2018. DCP amounts do not include the following amounts deferred from the fiscal 2018 cash incentive awards that were paid in fiscal 2019: Mr. Kaufmann — $91,127; Mr. Gomez — $96,839; and Mr. Giacomin — $127,979. DCP amounts included as contributions in the table and also reported as fiscal 2018 compensation in the Summary Compensation Table of this proxy statement are as follows: Mr. Kaufmann — $63,611; Mr. Barrett — $144,447; Mr. Gomez — $175,045; Mr. Giacomin — $91,038; Mr. Morford — $15,550; and Ms. Morrison — $19,505. We calculate the aggregate DCP earnings based upon the change in value of the investment options selected by the named executive during the year. Aggregate deferred shares earnings are calculated based upon the change in their total value from the first day of the fiscal year (or the vesting date, if later) to the last day of the fiscal year. DCP amounts included in the aggregate balance at June 30, 2018 in the table and also reported as fiscal 2017 and 2016 compensation in the Summary Compensation Table of this proxy statement are as follows: Mr. Kaufmann — $96,510; Mr. Barrett — $272,000; Mr. Giacomin — $160,827; and Mr. Morford — $39,639. Name/Award Type Executive Contributions in Last FY ($) (1)(2) Cardinal Health Contributions in Last FY ($) (2) Aggregate Earnings in Last FY ($) (3) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($) (4) Kaufmann DCP 222,516 8,000 1,487 — 4,297,270 Deferred shares — — 114,174 — 1,170,674 Hollar — — — — — Crawford DCP — 3,000 166 — 3,166 Deferred shares — — — — — Mason DCP 43,443 3,000 20,502 — 278,659 Deferred shares — — — — — Mayer DCP — 3,000 3,452 — 236,688 Deferred shares — — — — — Evans — — — — — Gomez DCP 10,385 7,500 86,194 — 1,909,739 Deferred shares — — — — — DCP amounts included as contributions in the table and also reported as fiscal 2020 compensation in the Summary Compensation Table of this proxy statement are as follows: Mr. Kaufmann — $78,346; Mr. Mason — $43,443; and Mr. Gomez — $14,885. We calculate the aggregate DCP earnings based upon the change in value of the investment options selected by the named executive during the year. Aggregate deferred share earnings are calculated based upon the change in their total value from the first day of the fiscal year (or the vesting date, if later) to the last day of the fiscal year. DCP amounts included in the aggregate balance at June 30, 2020 in the table and also reported as fiscal 2019 and 2018 Potential Payments on Termination of Employment or Change of Control The table below presents the potential payments and benefits in the event of termination of employment or a change of control for each of the current named The table does not include benefits that are available to all of our salaried employees upon retirement, death or disability, including 401(k) Savings Plan distributions, group and supplemental life insurance benefits and short-term and long-term disability benefits. The amounts reported in the table below are hypothetical amounts. Actual payments will depend on the circumstances and timing of any termination of employment or change of control. The paragraphs following the table Cardinal Health | 2020 Proxy Statement 47 Messrs. Evans and Gomez are not Retirement or Voluntary Termination ($)(1) Involuntary Termination Without Cause ($)(1) Death or Disability ($) Termination Following Change of Control ($)(1) Voluntary Termination ($) (1) Involuntary Termination Without Cause ($) (1) Death or Disability ($) Termination Following Change of Control ($) (1) Kaufmann Cash severance – – – – 0 6,500,000 0 8,125,000 Annual cash incentive(2) 1,240,834 1,240,834 1,240,834 1,240,834 Annual cash incentive award(2) 1,929,918 1,929,918 1,929,918 1,929,918 Long-term incentive awards (accelerated vesting)(3) 2,049,786 (4) 2,049,786 (4) 4,250,969 (5) 4,250,969 (5) 18,049,912 (4) 18,979,781 (5) 36,891,963 (6) 36,891,963 (6) Medical benefits 0 20,201 0 20,201 Interest on deferred payments 0 7,687 0 9,169 TOTAL 3,290,620 3,290,620 5,491,803 5,491,803 19,979,830 27,437,587 38,821,881 46,976,251 Barrett Hollar Cash severance – 6,800,000 – 6,800,000 0 2,100,000 0 2,800,000 Annual cash incentive(2) 2,031,559 2,031,559 2,031,559 2,031,559 0 124,317 124,317 124,317 Long-term incentive awards (accelerated vesting)(3) 3,832,032 (4) 3,832,032 (4) 6,302,293 (5) 6,302,293 (5) 0 0 0 3,198,569 (6) Medical and dental benefits – 26,845 26,845 (6) 26,845 Medical benefits 0 12,915 0 12,915 Interest on deferred payments – 102,701 23,625 102,701 0 2,028 0 2,667 TOTAL 5,863,591 12,793,137 8,384,322 15,263,398 0 2,239,260 124,317 6,138,468 Gomez Crawford Cash severance – – – — 0 2,175,000 0 2,900,000 Annual cash incentive(2) – 352,142 352,142 352,142 0 721,653 721,653 721,653 Long-term incentive awards (accelerated vesting)(3) – – 1,093,084 (5) 1,093,084 (5) 0 0 9,089,932 (6) 9,089,932 (6) Medical benefits 0 19,484 0 19,484 Interest on deferred payments 0 2,642 0 3,303 TOTAL – 352,142 1,445,226 1,445,226 0 2,918,779 9,811,585 12,734,372 Mason Cash severance 0 1,875,000 0 2,500,000 Annual cash incentive(2) 0 491,639 491,639 491,639 Long-term incentive awards (accelerated vesting)(3) 0 0 5,629,631 (6) 5,629,631 (6) Medical benefits 0 20,211 0 20,211 Interest on deferred payments 0 2,158 0 2,728 TOTAL 0 2,389,008 6,121,270 8,644,209 Mayer Cash severance 0 1,638,750 0 2,185,000 Annual cash incentive(2) 0 465,885 465,885 465,885 Long-term incentive awards (accelerated vesting)(3) 0 0 6,344,686 (6) 6,344,686 (6) Medical benefits 0 20,208 0 20,208 Interest on deferred payments 0 1,919 0 2,417 TOTAL 0 2,126,762 6,810,571 9,018,196 www.cardinalhealth.com Cardinal Health| Retirement or Voluntary Termination ($)(1) Involuntary Termination Without Cause ($)(1) Death or Disability ($) Termination Following Change of Control ($)(1) Giacomin Cash severance – – – – Annual cash incentive(2) – 697,055 697,055 697,055 Long-term incentive awards (accelerated vesting)(3) – 488,935 (4) 1,833,298 (5) 2,550,317 (5) TOTAL – 1,185,990 2,530,353 3,247,372 Morford Cash severance – – – – Annual cash incentive(2) 497,425 497,425 497,425 497,425 Long-term incentive awards (accelerated vesting)(3) 832,795 (4) 832,795 (4) 1,290,113 (5) 1,290,113 (5) TOTAL 1,330,220 1,330,220 1,787,538 1,787,538 Morrison Cash severance – – – – Annual cash incentive(2) – 424,285 424,285 424,285 Long-term incentive awards (accelerated vesting)(3) – 205,867 (4) 975,111 (5) 975,111 (5) TOTAL – 630,152 1,399,396 1,399,396 Messrs. Kaufmann, Barrett and Morford satisfied the age and service requirements to qualify for retirement under our 2011 LTIP in the event of either a voluntary termination or an involuntary termination without cause. Mr. Giacomin and Ms. Morrison satisfied the age and service requirements to qualify for retirement under our 2011 LTIP with respect to awards granted to them after July 1, 2017 in the event of an involuntary termination without cause. Under the November 2017 modification to Mr. Barrett’s employment agreement, he will receive two years of medical and dental benefits for him and his dependents. If prior to his retirement, his employment is terminated without cause or, following a change of control, he terminates his employment for good reason, he would receive, among other things, two times the sum of his annual base salary and target bonus (payable in equal monthly installments over 24 months). Assumes that the annual cash incentive payouts were at the following fiscal 2018 target amounts: Mr. Kaufmann — $1,240,834 (actual payout was $1,518,780); Mr. Barrett — $2,031,559 (actual payout was $2,072,190); Mr. Gomez — $352,142 (actual payout was $387,356); Mr. Giacomin — $697,055 (actual payout was $853,195); Mr. Morford — $497,425 (actual payout was $608,848); and Ms. Morrison — $424,285 (actual payout was $432,771). We valued the accelerated vesting of PSUs and RSUs by multiplying the closing price of our common shares on June 29, 2018 by the number of PSUs and RSUs. We valued the accelerated vesting of stock options as the difference between the closing price of our common shares on June 29, 2018 and the exercise price for each stock option. PSUs are presented in the table using the same payout assumptions as noted in footnote 3 to the Outstanding Equity Awards at Fiscal Year-End for Fiscal 2018 table on pages 41 and 42. Assumes the prorated accelerated vesting of long-term incentive awards, as follows: Mr. Kaufmann — 6,182 PSUs, 83,518 stock options and 35,796 RSUs; Mr. Barrett — 20,606 PSUs, 283,943 stock options and 57,871 RSUs; Mr. Giacomin — 2,377 PSUs, 37,434 stock options and 7,636 RSUs; Mr. Morford — 3,363 PSUs, 47,150 stock options and 13,692 RSUs; and Ms. Morrison — 1,001 PSUs, 15,763 stock options and 3,215 RSUs. Assumes the full accelerated vesting of long-term incentive awards, as follows: Mr. Kaufmann — 12,861 PSUs, 125,561 stock options and 74,196 RSUs; Mr. Barrett — 42,867 PSUs, 423,159 stock options and 86,199 RSUs; Mr. Gomez — 1,774 PSUs, 20,694 stock options and 20,612 RSUs; Mr. Giacomin — 12,861 PSUs, 121,290 stock options and 24,684 RSUs; Mr. Morford — 6,995 PSUs, 72,431 stock options and 19,426 RSUs; and Ms. Morrison — 5,415 PSUs, 52,787 stock options and 14,555 RSUs. In the event of termination of employment due to death, Mr. Barrett’s medical and dental benefits would be reduced to $16,788. Mr. Kaufmann satisfied the age and service requirements to qualify for retirement under our 2011 LTIP in the event of either a voluntary termination or an involuntary termination without cause. Assumes that the annual cash incentive payouts were at the following fiscal 2020 target amounts: Mr. Kaufmann — 1,929,918 (actual payout was $2,547,492); Mr. Hollar — $124,317 (actual payout was $149,180); Mr. Crawford — $721,653 (actual payout was $909,283); Mr. Mason — $491,639 (actual payout was $586,348); and Ms. Mayer — $465,885 (actual payout was $559,061). We valued the accelerated vesting of PSUs and RSUs by multiplying the closing price of our common shares on June 30, 2020 by the number of PSUs and RSUs. We valued the accelerated vesting of stock options as the difference between the closing price of our common shares on June 30, 2020 and the exercise price for each stock option. PSUs are presented in the table using the same payout assumptions as noted in footnote 3 to the Outstanding Equity Awards at Fiscal Year-End for Fiscal 2020 table on page 45. Assumes the prorated accelerated vesting of Mr. Kaufmann’s long-term incentive awards, as follows: 241,239 PSUs, 22,387 stock options and 104,611 RSUs. These awards do not include 17,817 RSUs from a grant made in June 2019 which did not include retirement provisions for a voluntary termination. Assumes the prorated accelerated vesting of Mr. Kaufmann’s long-term incentive awards, as follows: 241,239 PSUs, 22,387 stock options and 122,428 RSUs. Assumes the full accelerated vesting of long-term incentive awards, as follows: Mr. Kaufmann — 503,357 PSUs, 23,368 stock options and 203,521 RSUs; Mr. Hollar — 40,858 PSUs and 20,429 RSUs; Mr. Crawford — 130,628 PSUs and 43,542 RSUs; Mr. Mason — 80,387 PSUs, 4,059 stock options and 27,481 RSUs; and Ms. Mayer — 89,973 PSUs, 3,690 stock options and 31,596 RSUs. If a named executive voluntarily terminates, and he or she qualifies for retirement under our 2011 LTIP, he or she generally receives: a prorated annual cash incentive award based on actual performance; accelerated prorated vesting of stock options and RSUs held for at least six months and outstanding stock options remain exercisable until the expiration of the option term; and a prorated number of PSUs held for at least six months that vest on the original vesting date based on actual performance. Named executives qualify for retirement upon a voluntary termination if they are age 55 or greater and have at least 10 years of service, or they are age 60 or greater and have at least five years of service. If a named executive voluntarily terminates and does not qualify for retirement, he or she is not eligible for any of the post-termination benefits described in this section. Involuntary Termination Without Cause If a named executive is involuntarily terminated without cause prior to a change of control or following the second anniversary of a change of control, he or she generally receives under our Severance Plan: cash severance equal to 2.0 times in the case of Mr. Kaufmann, and 1.5 times in the case of the other named executives, the sum of annual base salary and target annual cash incentive payable in equal installments over 18 to 24 months; a prorated annual cash incentive award based on actual performance; and up to 18 months of health insurance premiums. In addition, if the named executive qualifies for retirement under our 2011 LTIP, he or she receives the same post-termination benefits with respect to equity awards as in a voluntary termination. Retirement qualification is the same as in a voluntary termination, except that named executives can also qualify for retirement upon an involuntary termination if they are age 53 or greater and have at least eight years of service or age 59 or greater and have at least four years of service. If a named executive is involuntarily terminated without cause and does not qualify for retirement, a named executive will only receive equity awards that vest before termination; otherwise unvested equity awards are forfeited, and the named executive must exercise vested stock options within 90 days. Involuntary Termination for Cause If a named executive is involuntarily terminated for cause, he or she is not eligible for any of the post-termination benefits described in this section. In addition, we may require repayment of an annual cash incentive award if the named executive commits misconduct, including a breach of our StandardsofBusinessConduct, and we may cancel unexercised stock options and unvested stock awards and require repayment of proceeds realized from vested awards for a specified period. “Cause” under the 2011 LTIP generally means termination of employment for fraud or intentional misrepresentation, embezzlement, misappropriation, conversion of assets or the intentional violation of our written policies or procedures. “Cause” under the Severance Plan generally means termination of employment for the following: willful failure to perform substantially the named executive’s duties; the willful engaging in illegal conduct or gross misconduct that is materially and demonstrably injurious to us; conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving dishonesty or moral turpitude; committing or engaging in fraud, embezzlement or theft against us; the material breach of any restrictive covenant in favor of the company; or willfully and materially violating our StandardsofBusinessConductor any other written company policy. If a named executive dies or is disabled while employed, the post-termination benefits generally consist of: a prorated annual cash incentive award based on actual performance; accelerated vesting of stock options and RSUs held for at least six months and outstanding stock options remain exercisable until the expiration of the option term; and PSUs held for at least six months vest on the original vesting date based on actual performance. “Disability” under the 2011 LTIP generally means when a named executive who is under the regular care of a physician is continuously unable to substantially perform his or her job or to be employed in any occupation for which the named executive is qualified by education, training or experience. The following discussion describes the benefits that are triggered by the occurrence of a change of control that is followed, within two years after a change of control, by the named executive’s employment terminating involuntarily without cause or voluntarily with good reason. The discussion assumes that the surviving entity provides qualifying replacement equity Cardinal Health | 2020 Proxy Statement 49 awards. If it does not, named executives would receive accelerated vesting of equity awards immediately upon a change of control. In general terms, we will experience a “change of control,” as defined in our compensation plans, if any of the following events occur: a person or group acquires 30% or more of Cardinal Health’s outstanding common shares or voting securities, subject to limited exceptions; during any two-year period, individuals who as of the beginning of such two-year period constituted the Board cease for any reason to constitute at least a majority of the Board, unless the replacement directors are approved as described in the compensation plans; there is a consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of Cardinal Health’s assets or another business combination unless: after the transaction all or substantially all the owners of Cardinal Health’s outstanding common shares or voting securities prior to the transaction own more than 50% of such securities after the transaction in substantially the same proportions; no person, subject to certain exclusions, owns 30% or more of the outstanding common shares or voting securities of the resulting entity (unless such ownership level existed before the transaction); and a majority of the directors of the resulting entity were members of Cardinal Health’s Board (including applicable replacements as described above) when the transaction was approved or the transaction agreement was executed; or our shareholders approve a complete liquidation or dissolution of Cardinal Health. A termination is for “good reason” if we materially reduce the named executive’s total compensation, annual or long-term incentive opportunities, or duties, responsibilities or authority, or we require the named executive to relocate more than 50 miles from his or her office or location. If a named executive is involuntarily terminated without cause, or he or she voluntarily terminates employment with good reason within two years after a change of control, he or she receives under our Severance Plan: cash severance equal to 2.5 times in the case of Mr. Kaufmann, and 2.0 times in the case of the other named executives, the sum of annual base salary and target annual cash incentive payable in equal installments over 24 to 30 months; a prorated annual cash incentive award based on the greater of target performance and actual performance; and up to 18 months of health insurance premiums. Under our 2011 LTIP, a named executive receives accelerated vesting of equity awards and stock options remain exercisable until the earlier of three years from termination or expiration of the option term. The number of PSUs received is based on the actual performance before the change of control and expected performance for the remainder of the performance period. The actual payments made under the Severance Plan will be reduced to the extent necessary to eliminate any “golden parachute” excise tax under the Code provided that the value of the adjusted payments and benefits is not less than the amount the named executive otherwise would have received on an after-tax basis. Our plans do not provide for any tax gross-ups for taxes due on any payments described in this section. Conditions Applicable to Receipt of Payments Our named executives are subject to certain conditions and obligations applicable to the receipt of payments or benefits upon a termination of employment. Our Severance Plan conditions the payment of severance benefits upon continued compliance with restrictive covenants that, among other things, prohibit named executives for a period of two years after termination of employment from being employed by certain entities that compete with us and from soliciting on behalf of a competitor the business of any customer or any known potential customer of Cardinal Health. These covenants also prohibit disclosure of confidential information, disparagement and recruitment or employment of our employees. Named executives are also subject to certain restrictive covenants under the 2011 LTIP which are discussed under “Potential Impact on Compensation from Executive Misconduct (“Clawbacks”)” at page 45. The Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules require us to provide the ratio of the annual total compensation of Mr. Kaufmann, our Chief Executive Officer, For fiscal The annual total compensation was calculated for both Mr. Kaufmann and the median employee in accordance with the SEC rules applicable to the Summary Compensation Table and also includes the company-paid portion of health insurance premiums, which The pay ratio disclosure presented above is a reasonable estimate calculated in a manner consistent with SEC rules. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exclusions, estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio disclosure of other companies may not be comparable to the pay ratio reported by us. www.cardinalhealth.com Cardinal Health| EquityCompensationPlanInformation The table below summarizes information relating to our equity compensation plans at June 30, 2020. Plan Category Common Shares to be Issued Upon Exercise of Outstanding Options and Rights (#) Weighted Average Exercise Price of Outstanding Options ($) Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (#) (a) (b) (c) Equity compensation plans approved by shareholders 10,582,779 (1) $ 65.15 (1) 11,580,762 (2) Equity compensation plans not approved by shareholders 4,203 (3) — (3) — TOTAL AT JUNE 30, 2020 10,586,982 11,580,762 In addition to stock options outstanding under the 2011 LTIP and the Cardinal Health, Inc. 2005 Long-Term Incentive Plan (the “2005 LTIP”), also includes 1,961,573 PSUs and 3,188,677 RSUs outstanding under the 2011 LTIP, 22,431 RSUs outstanding under the 2005 LTIP, and 130,591 RSUs outstanding under the 2007 Nonemployee Directors Equity Incentive Plan that are payable solely in common shares. PSUs and RSUs do not have an exercise price, and therefore were not included for purposes of computing the weighted-average exercise price. PSUs that vested after June 30, 2020 are reported at the actual amount that vested. All other PSUs are reported at the maximum payout level in accordance with SEC rules. Reflects common shares available under the 2011 LTIP in the form of stock options and other stock-based awards. Under the 2011 LTIP’s fungible share counting provisions, stock options are counted against the plan as one share for every common share issued; awards other than stock options are counted against the plan as two and one-half shares for every common share issued. This means that only 4,632,305 shares could be issued under awards other than stock options while 11,580,762 shares could be issued under stock options. RSUs outstanding under the Cardinal Health, Inc. Amended and Restated Outside Directors Equity Incentive Plan that are payable solely in common shares. RSUs do not have an exercise price, and therefore were not included for purposes of computing the weighted-average exercise price. Cardinal Health | 2020 Proxy Statement 51 Amendment to Restated Code of Regulations Proposal to Approve an Amendment to Our Restated Code of Regulations to Reduce the Share Ownership Threshold for Calling a Special Meeting of Shareholders We are asking shareholders to approve an amendment to Section 1.2(b) of our Restated Code of Regulations (the “Proposed Code Amendment”) to lower the share ownership threshold for shareholders to request that the company call a special meeting to 15% from 25% and extend by 15 days the time allowed for providing notice of the special meeting (to 20 days from 5 days) and the latest date that can be set for holding the special meeting (to 80 days from 65 days). The actual text of the Proposed Code Amendment, marked with deletions indicated by strikeouts and additions indicated by underlining to reflect the Proposed Code Amendment, is set forth below. (b) A special meeting of shareholders shall be called by the Company upon the request of the holders of shares entitling them to exercise 2515 percent of the voting power of the Company entitled to be voted at the meeting. Upon delivery to the chairman, president or secretary of a proper request in writing for a shareholders’ meeting, which request must specify the purposes of the meeting and include the information that would be required to be set forth in a shareholder’s notice with respect to an Annual Meeting pursuant to Section 1.5(c) of these regulations, the Company shall give notice to the shareholders. Any such meeting shall be held on a date and at a time and location fixed by the board of directors, the chairman, the president or the secretary, which date shall not be less than 14 days nor more than 6580 days after deliveryreceipt of a proper request. If this notice is not given within 520 days after receiptof a proper request by shareholders entitled to call a meeting, the persons making the request may fix the time of the meeting by giving notice in the manner provided in Section 1.4 of these regulations or cause such notice to be given by their designated representative. Shareholder Special Meeting Threshold In light of the company’s receipt of a shareholder proposal requesting that the Board take the steps to lower its special meeting threshold, the Board carefully evaluated our corporate governance practices, shareholder feedback, previous shareholder votes, and actions taken by other companies. Based on this evaluation and recent shareholder engagement, the Board believes that the current ownership threshold of 25% for shareholders to request that the company call a special meeting of shareholders should be lowered. The Board further believes that the ownership threshold must strike a balance between empowering the shareholders’ ability to call a special meeting in appropriate circumstances and mitigating the risk that shareholders representing a minority position would seek to disrupt the company with a special meeting. After careful evaluation, the Board believes that a 15% threshold strikes the right balance between enhancing our shareholders’ ability to act on important matters and protecting the company and other shareholders by allowing only a meaningful group of shareholders to exercise this right, thereby minimizing the potential harms associated with allowing a few shareholders to call special meetings. Date of Meeting and Meeting Notice In connection with considering the ownership threshold for calling a special meeting, the Board also considered the practical implications of calling and soliciting proxies for a special meeting. The Board concluded that it is advisable and in the best interest of the company and its shareholders to extend by 15 days the time periods allowed for implementing a proper request to call a special shareholder meeting. Specifically, the Proposed Code Amendment would allow the company up to 20 days after receiving a proper request (instead of the current 5-day time frame) to provide notice of the date, time, and location of the special shareholders meeting. The Board believes the 20-day provision is advisable and in the best interest of the company and its shareholders because it will allow the company additional time for matters such as determining and securing the most appropriate date, time and venue for the meeting, assessing the appropriateness of the request to call the special meeting, and evaluating whether the matters proposed to be considered at a special meeting can more effectively be addressed in a manner that avoids holding a special meeting, which could entail discussions with the shareholders requesting the special meeting. The Proposed Code Amendment also allows the date set for the special meeting of shareholders to be up to 80 days after the company’s receipt of a proper request (instead of the current 65-day time frame). The Board believes the 80-day provision is advisable and in the best interest of the company and its shareholders because it will allow additional time for necessary actions such as having the Board consider and develop recommendations on the matters proposed to be considered at the meeting, allowing the company sufficient time to prepare, clear with the SEC, print and distribute a proxy statement for any such meeting, and providing shareholders additional time to consider and discuss the matters to be voted on at the meeting, in order to promote more informed decision-making. The Proposed Code Amendment is binding. If the Proposed Code Amendment is approved, it will be effective at the time of the shareholder vote. If the Proposed Code Amendment is not approved by the required vote, then the Restated Code of Regulations will not be amended. The Board recommends that you vote FOR the proposal to approve an amendment to our Restated Code of Regulations to reduce the share ownership threshold for calling a special meeting of shareholders. www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 52 Shareholder Proposal We received notice that The shareholder proposal and supporting statement read as follows: Proposal5 Resolved, Shareowners ask our board Cardinal Health shareholders permanently lack the right to act by written consent – which makes this proposal all the more important since scores of major companies give shareholders the right to call a special meeting and the right to act by written consent. Special shareholder meetings allow shareholders to vote on important matters, such as electing new directors that can arise between annual meetings. This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison. This proposal topic, sponsored by William Steiner, also won 78% support at a Sprint annual meeting with 1.7 Billion yes-votes. Nuance Communications It Patricia Hemingway Hall, who chaired the director nomination committee, was rejected by Please vote yes: The Board of Directors’ Statement in Opposition to Proposal 5 The Board recommends a vote AGAINSTProposal 5 The Board recognizes that shareholders Our shareholders have expressed disparate views on our threshold. Many shareholders remain supportive of our existing 25% threshold, but some have expressed the view that, given our market capitalization, 25% of outstanding shares could represent an unattainably high hurdle. At the same time, many shareholders The calling of a special meeting should not be an ordinary In reaching this determination, we also concluded that the Cardinal Health | 2020 Proxy Statement 53 For these reasons, the Board recommends that shareholders vote AGAINST this shareholder proposal and in favor of Proposal 4 put forth by the company to amend the Restated Code of Regulations. The Board recommends a vote AGAINST this shareholder proposal. Shareholder Proposal to Adopt a Policy that the Chairman of the Board Be an Independent Director We received notice that Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, a shareholder owning at least $2,000 in market value of our The shareholder proposal and supporting statement read as follows: Proposal6—IndependentBoardChairman Shareholders request our Board of Directors adopt as policy, and amend our governing documents to require that the Chairman of the Board be an independent member of the Board whenever possible. Although it would be better to have an immediate transition to an independent Board Chairman, the Board would have the discretion to phase in this policy for the next Chief Executive Officer transition. Currently Cardinal Health directors can name one person to have the Chairman and CEO job at the same time at any time they want to. This proposal topic won 52% support at Boeing in April 2020. This proposal topic also won 50%-plus support at 5 major U.S. companies in one year including 73%-support at Netflix. This proposal topic won 36%-support from Cardinal Health shareholders in 2017. There have been setbacks at Cardinal Health since 2017. Cardinal Health and 2 other large opioid distributors and 2 opioid manufacturers were in talks to settle the more than 2,000 lawsuits against them over their role in the opioid epidemic for $50 billion. The possible settlement would include $22 billion in cash and $29 billion in drugs and distribution. Cardinal Health, McKesson and AmerisourceBergen Corporation would give $18 billion to be used for treatment and prevention over 18 years. Meanwhile, our Directors were busy making it more difficult to hold them responsible. In late 2019 Cardinal Health directors adopted a formal amendment to require that the United States District Court for the Southern District of Ohio will be the exclusive forum for derivative lawsuits and other lawsuits. There are indications that shareholders are growing impatient with the directors. Bruce Downey, Gregory Kenny, John Losh and Patricia Hall each received from 7-times to 12-times as many negative votes from shareholders as each of 5 other Cardinal Health directors at the 2019 annual meeting. An independent Chairman is best positioned to build up the oversight capabilities of our directors while our CEO addresses the challenging day-to-day issues facing the company. The roles of Chairman of the Board and CEO are fundamentally different and should not be held by the same person. There should be a clear division of responsibilities between these positions to insure a balance of power and authority on the Board. Please vote yes: IndependentBoardChairman-Proposal6 The Board of Directors’ Statement in Opposition to Proposal 6 The Board recommends a vote AGAINSTProposal 6. Cardinal Health has had an independent Chairman of the Board since November 2018, when the Board adopted the current board leadership structure. As outlined in our Corporate Governance Guidelines, we believe that it is a key responsibility of the Board to thoughtfully consider its leadership structure based upon the circumstances, as opposed to adopting the inflexible structure advocated by the proponent. Accordingly, the Nominating and Governance Committee periodically reviews, assesses, and makes recommendations to the Board regarding its leadership structure. While the Nominating and Governance Committee and the Board have determined that it currently is appropriate to separate the roles and have an independent director serve as Chairman, our Corporate Governance Guidelines already provide that if the Board in the future determines to appoint a non-independent Chairman, the independent directors will elect an independent director to serve as Lead Director. In that situation, the independent Lead Director would have many of the same duties and responsibilities that our independent Chairman currently holds. Since November 2018, Gregory Kenny has served as the independent Chairman of our Board. Prior to that, Mr. Kenny served as our independent Lead Director for four years. Both in his current role as Chairman of the Board and in his prior role as independent Lead Director, Mr. Kenny has promoted strong independent Board leadership and a robust, deliberative decision-making process among our independent directors. He has devoted significant time and thought to call on and employ the many talents and experience of the Board as it engages on a variety of critical issues, including strategic priorities, capital deployment, operational efficiencies, the opioid epidemic and risk mitigation. He has personally and actively participated in our proactive shareholder engagement program, meeting with many of our shareholders and During Mr. Kenny’s tenure as Lead Director, the Board formalized its oversight of opioid-related issues by forming an Ad Hoc Committee of independent directors in February 2018 dedicated to these issues. The Ad www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 54 Hoc Committee has been actively involved to assist the Board in overseeing the company’s response to the opioid epidemic, meeting twice per quarter. The Board believes that The Board recommends a vote AGAINST this shareholder proposal. Cardinal Health | 2020 Proxy Statement 55 The table below sets forth certain information regarding the beneficial ownership of our common shares by, and the percentage of our outstanding common shares represented by such ownership for: each person known by us to own beneficially more than 5% of our outstanding common shares; our directors; our current and former named executive all current executive officers and directors as a group. A person has beneficial ownership of shares if the person has voting or investment power over the shares or the right to acquire such power in 60 days. Investment power means the power to direct the sale or other disposition of the shares. Except as otherwise described in the footnotes below the table, information on the number of shares beneficially owned is as of Name of Beneficial Owner Common Shares Additional RSUs and PSUs(13) Number Beneficially Owned Percent of Class BlackRock, Inc.(1) 24,845,043 8.3 – The Vanguard Group(2) 24,237,953 8.1 – Wellington Management Group LLP(3) 18,967,126 6.3 – Barrow, Hanley, Mewhinney & Strauss, LLC(4) 17,876,233 6.0 – State Street Corporation(5) 16,982,390 5.7 – David J. Anderson(6)(7) 7,458 * – Colleen F. Arnold(7) 10,142 * 19,569 George S. Barrett(8) 2,109,575 * 44,469 Donald M. Casey Jr.(9) 91,206 * – Carrie S. Cox(7) 9,381 * 16,306 Calvin Darden(7) 15,975 * 19,608 Bruce L. Downey(7) 19,598 * 18,387 Jon L. Giacomin(8) 208,127 * 51,906 Jorge M. Gomez(8) 32,390 * 33,053 Patricia A. Hemingway Hall(7) 8,946 * 2,612 Akhil Johri – * – Clayton M. Jones(7) 8,946 * 6,018 Michael C. Kaufmann(8)(10) 584,287 * 140,255 Gregory B. Kenny(7) 15,483 * 19,584 Nancy Killefer(7) 6,918 * – David P. King(7) 11,598 * 9,446 Craig S. Morford(8) 199,582 * 124,050 Patricia B. Morrison(8)(11) 145,416 * 5,818 All Executive Officers and Directors as a Group (17 Persons)(12) 3,282,020 1.1 537,898 Indicates beneficial ownership of less than 1% of the outstanding shares. Name of Beneficial Owner Common Shares Additional RSUs and PSUs (14) Number Beneficially Owned Percent of Class The Vanguard Group(1) 35,627,228 12.1 — BlackRock, Inc.(2) 22,328,512 7.6 — State Street Corporation(3) 21,590,256 7.4 — Macquarie Group Limited(4) 17,277,503 5.9 — Colleen F. Arnold(5) 13,324 * 22,993 Carrie S. Cox(5) 12,545 * 19,730 Victor L. Crawford 10,182 * 55,304 Calvin Darden(5) 19,933 * 23,032 Bruce L. Downey(5) 22,762 * 21,811 Sheri H. Edison(6) 0 * 0 David C. Evans(7) 0 * 1,255 Jorge M. Gomez(8) 6,529 * 0 Patricia A. Hemingway Hall(5) 12,110 * 6,036 Jason M. Hollar(9) 0 * 39,058 Akhil Johri(5) 5,326 * 3,424 Michael C. Kaufmann(10)(11) 684,725 * 241,543 Gregory B. Kenny(5) 30,976 * 25,322 Nancy Killefer(5) 10,082 * 3,424 J. Michael Losh(5) 7,523 * 3,424 Stephen M. Mason(10) 47,095 * 35,527 Jessica L. Mayer(10) 47,060 * 36,461 Dean A. Scarborough(5)(12) 2,512 * 3,424 John H. Weiland(5)(12) 666 * 3,424 All Executive Officers and Directors as a Group (21 Persons)(13) 1,004,506 * 605,788 Indicates beneficial ownership of less than 1% of the outstanding shares. Based on information obtained from a Schedule 13G/A filed with the SEC on February 11, 2020 by The Vanguard Group (“Vanguard”). The address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard reported that, as of December 31, 2019, it had sole voting power with respect to 434,550 shares, shared voting power with respect to 84,703 shares, sole dispositive power with respect to 35,131,871 shares and shared dispositive power with respect to 495,357 shares. The number and percentage of shares held by Vanguard may have changed since the filing of the Schedule 13G/A. Based on information obtained from a Schedule 13G/A filed with the SEC on February 5, 2020 by BlackRock, Inc. (“BlackRock”). The address of BlackRock is 55 East 52nd Street, New York, New York 10055. BlackRock reported that, as of December 31, 2019, it had sole voting power with respect to 18,693,969 shares and sole dispositive power with respect to all shares shown in the table. The number and percentage of shares held by BlackRock may have changed since the filing of the Schedule 13G/A. www.cardinalhealth.com Cardinal Health| Based on information obtained from a Schedule 13G filed with the SEC on February 13, 2020 by State Street Corporation (“State Street”). The address of State Street is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111. State Street reported that, as of December 31, 2019, it had shared voting power with respect to 19,691,185 shares and shared dispositive power with respect to 21,587,288 shares. The number and percentage of shares held by State Street may have changed since the filing of the Schedule 13G. Based on information obtained from a Schedule 13G filed with the SEC on February 13, 2020 by Macquarie Group Limited, Macquarie Bank Limited, Macquarie Investment Management Holdings Inc., Macquarie Investment Management Business Trust, Macquarie Investment Management Australia Limited, Macquarie Capital (USA) Inc. and Macquarie Investment Management Austria Kapitalanlage AG. The address of Macquarie Group Limited, Macquarie Bank Limited and Macquarie Investment Management Australia Limited is 50 Martin Place, Sydney, New South Wales, Australia. The address of Macquarie Capital (USA) Inc. is 125 W 55th Street, New York, New York 10019. The address of Macquarie Investment Management Holdings Inc. and Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, Pennsylvania 19103. The address of Macquarie Investment Management Austria Kapitalanlage AG is L3, Kaerntner Strasse 28, Vienna C4 1010. These entities reported that, as of December 31, 2019, Macquarie Group Limited and Macquarie Bank Limited each had no sole or shared voting or dispositive power over any shares, Macquarie Investment Management Holdings Inc. and Macquarie Investment Management Business Trust each had sole voting and dispositive power with respect to 16,792,240 shares, Macquarie Investment Management Australia Limited had sole voting and dispositive power with respect to 13,100 shares, Macquarie Capital (USA) Inc. had sole voting and dispositive power with respect to 6,743 shares and Macquarie Investment Management Austria Kapitalanlage AG had sole voting and dispositive power with respect to 13,700 shares. The number and percentage of shares held by these entities may have changed since the filing of the Schedule 13G. Common shares listed as being beneficially owned by our non-management directors include: outstanding RSUs that may be settled within 60 days, as follows: Ms. Arnold — 8,946 shares; Ms. Cox — 12,110 shares; Mr. Darden — 8,946 shares; Mr. Downey — 12,110 shares; Ms. Hemingway Hall — 4,651 shares; Mr. Johri — 5,326 shares; Mr. Kenny — 21,226 shares; Ms. Killefer — 10,082 shares; Mr. Losh — 3,225 shares; Mr. Scarborough — 666 shares; and Mr. Weiland — 666 shares; and phantom stock over which the participants have sole voting rights under our DCP, as follows: Ms. Arnold — 1,214 shares; Mr. Darden — 6,688 shares; Mr. Kenny — 15,488 shares; Mr. Losh — 4,298 shares; and Mr. Scarborough — 1,846 shares. Ms. Edison joined the Board on September 1, 2020. Mr. Evans joined the company in an interim executive role on July 29, 2019 and completed that service on May 25, 2020. He joined the Board on July 1, 2020. Mr. Gomez left the company on August 9, 2019. Information on the number of shares beneficially owned by Mr. Gomez is as of his departure date, except for outstanding equity awards. Mr. Hollar joined the company on April 27, 2020. Common shares listed as being beneficially owned by our named executives include outstanding stock options that are currently exercisable or will be exercisable within 60 days, as follows: Mr. Kaufmann — 472,038 shares; Mr. Mason — 31,825 shares; and Ms. Mayer — 24,091 shares. Includes 10 common shares held by Mr. Kaufmann’s spouse. Messrs. Scarborough and Weiland joined the Board on September 1, 2019. Common shares listed as being beneficially owned by all executive officers and directors as a group include: 570,436 outstanding stock options that are currently exercisable or will be exercisable within 60 days; 89,571 RSUs that may or will be settled in common shares within 60 days; and 29,650 shares of phantom stock over which the participants have sole voting rights under our DCP. “Additional RSUs and PSUs” include vested and unvested RSUs and vested PSUs that will not be settled in common shares within 60 days. RSUs and PSUs do not confer voting rights and generally are not considered “beneficially owned” shares under the SEC rules. Section 16(a) of the Based solely Cardinal Health | 2020 Proxy Statement 57 General Information About the Annual Meeting of Shareholders Date: Wednesday, November 4, 2020 Time: 10:00 a.m. Eastern Time VirtualMeetingAccess:www.virtualshareholdermeeting.com/CAH2020 This proxy Shareholders who execute proxies retain the right to revoke them at any time before the shares are voted by proxy during the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary at or prior to the Annual Meeting or by timely executing and delivering, by Internet, telephone or mail, another proxy Proxy Materials are Available on We are furnishing proxy materials Participating in the Annual Meeting The Annual Meeting will be conducted exclusively online without an option for physical attendance in light of the COVID-19 pandemic. We aim to offer shareholders rights and participation opportunities during our virtual meeting that are comparable to those that have been provided at our past in-person annual meetings. Shareholders of record as of the record date will be able to participate in the virtual meeting online, vote shares electronically, and submit questions during the meeting by The live webcast of We will make an audio replay of the Annual Meeting available and post questions and answers received at the Annual Meeting that were not addressed (if applicable to Cardinal Health’s business and otherwise appropriate under the Annual Meeting rules) on the Cardinal Health Investor Relations website shortly after the meeting. Even if you plan to attend the Annual Meeting online, we encourage you to vote in advance of the Annual Meeting as described in this proxy statement, so that your vote will be counted if you later decide not to attend the Annual Meeting or you encounter technical difficulties. If you wish to submit your votes before the virtual Annual Meeting, then you do not have Attending the Annual Meeting as a Guest If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please visit www.virtualshareholdermeeting.com/CAH2020 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to vote or ask questions during the meeting if you participate as a guest. The Board of Directors is soliciting the proxy accompanying this proxy statement. Proxies may be solicited by officers, directors and employees of Cardinal Health, none of whom will receive any additional compensation for their services. Alliance Advisors may solicit proxies at a cost we anticipate will not exceed $17,000. These solicitations may be made personally or by mail, facsimile, telephone, messenger, email or the Internet. Cardinal Health will pay persons holding common shares in their names or in the names of nominees, but not owning shares beneficially, such as brokerage houses, banks and other fiduciaries, for the expense of forwarding solicitation materials to their principals. Cardinal Health will pay all proxy solicitation costs. Shareholders of record at the close of business on September www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 58 Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to We will have a quorum to conduct business at the Annual Meeting if the holders of a majority of our common shares entitled to vote at the Annual Meeting are present By telephone. You may vote your shares 24 hours a day by calling the ByInternet. You may vote your shares 24 hours a day by logging on to a secure website, By mail. If you received Telephone and Internet voting is available through Voting Shares Held Through If you hold shares through our 401(k) Savings Plans or DCP, you will receive voting instructions from If you are a beneficial owner whose shares are held by a broker To elect directors under Proposal 1, our governing documents require that a director nominee be elected by a majority of votes cast in an uncontested election. If an incumbent director nominee receives a greater number of votes “against” than votes “for” his or her election, our Corporate Governance Guidelines require the director to promptly tender a resignation to the Chairman of the Board. Within 90 days following the certification of the shareholder vote, the Nominating and Governance Committee will recommend to the Board whether to accept the resignation. Thereafter, the Board will promptly act and publicly disclose its decision and the rationale behind the decision. Vote Required; Effect of Abstentions and Broker Non-Votes You may either vote FOR, AGAINSTor ABSTAIN on each of the proposals. Votes will be tabulated by or under the direction of inspectors of election, who will certify the results following the Annual Meeting. Proposal 4 requires the affirmative vote of the holders of a majority of the issued and outstanding common shares. Abstentions and broker non-votes will have the same effect as votes against this proposal. The shares represented by all valid proxies received by telephone, by Internet or by mail will be voted in the manner specified. For shareholders of record who do not specify a choice for a proposal, proxies that are signed and returned will be voted FOR the election of all Cardinal Health | 2020 Proxy Statement 59 nominees, FOR the ratification of the appointment of Ernst & Young LLP as independent auditor, FOR approval of the compensation of our named executive officers, FOR approval of the proposed amendment to our Restated Code of Regulations to reduce the share ownership threshold for calling a special meeting of shareholders andAGAINSTthe shareholder Shareholders and other interested parties may communicate with the Board, any committee of the Board, any individual director or the independent directors as a group, by writing to Shareholder Recommendations for Director Nominees The Nominating and Governance Committee will consider candidates recommended by shareholders for election as director. Shareholder recommendations will be evaluated against the same criteria used to evaluate other director nominees, which criteria are discussed under “Board Membership Criteria: What we look for” on page 9. Shareholders who wish to recommend a candidate may do so by writing to the Nominating and Governance Committee in care of Recommendations must include, at a minimum, the following information: the name and address of the shareholder making the recommendation; the name and address of the person recommended for nomination; if the shareholder is not a shareholder of record, a representation and satisfactory proof of share ownership; a statement in support of the shareholder’s recommendation, including sufficient information to permit the Nominating and Governance Committee to evaluate the candidate’s qualifications, skills and experience; a description of all direct or indirect arrangements or understandings between the shareholder and the candidate recommended by the shareholder; information regarding the candidate as would be required to be included in a proxy statement filed in accordance with SEC rules; and the candidate’s written, signed consent to serve if elected. Shareholders who wish to nominate directors directly for election at an Annual Meeting of Shareholders in accordance with the procedures in our Restated Code of Regulations, including under our proxy access provision, should follow the instructions under “Submitting Proxy Proposals and Director Nominations for the Next Annual Meeting of Shareholders” below and the details contained in our Code of Regulations. Submitting Proxy Proposals and Director Nominations for the Next Annual Meeting of Shareholders If you intend to present a proposal to be included in the proxy statement and form of proxy relating to our If you intend to present a proposal for other business or a nomination for election to the Board at our www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 60 delivered after the close of business on the 120th day prior to the meeting, but before the close of business on the later of the 90th day prior to the meeting or the 10th day after we first publicly announce the date of the meeting. Our Restated Code of Regulations includes a proxy access provision, under which a shareholder, or a group of up to 20 shareholders, owning at least If you intend to request that director nominees be included in our proxy materials under our proxy access provision, you must comply with the notice and other requirements set forth in our Restated Code of Regulations. Among other requirements, you must deliver proper written notice to our more than 60 days after, November Corporate Governance You can find the full text of our Amended and Restated Articles of Incorporation, Restated Code of Regulations and Corporate Governance Guidelines on our website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Corporate Governance — Corporate Governance Documents.” This information also is available in print (free of charge) to any shareholder who requests it from our Investor Relations department. Shareholders of record should direct communications regarding change of address, transfer of share ownership, lost share certificates and other matters regarding their share ownership to Computershare Trust Company, N.A., P.O. Box 505000, Louisville, KY 40233. Our transfer agent may also be contacted via the Internet at www.computershare.com/investor or by telephone at (877) 498-8861 or (781) 575-2879. Cardinal Health | 2020 Proxy Statement 61 Use of Non-GAAP Financial Measures This proxy statement contains financial measures that are not calculated in accordance with Exclusions from Non-GAAP Financial Measures Management believes it is useful to exclude the following items from the non-GAAP financial measures presented in this report for its own and for investors’ assessment of the business for the reasons identified below: LIFOchargesandcredits are excluded because the factors that influence last-in, first-out (“LIFO”) inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately predicted. The exclusion of LIFO charges and credits from non-GAAP financial measures facilitates comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. We did not recognize any LIFO charges or credits during the periods presented. Surgicalgownrecallcosts includes inventory write-offs and certain remediation and supply disruption costs arising from the January 2020 recall of select Association for the Advancement of Medical Instrumentation (“AAMI”) Level 3 surgical gowns and voluntary field actions (a recall of some packs and a corrective action allowing overlabeling of other packs) for Presource Procedure Packs containing affected gowns. We have excluded these costs from our non-GAAP metrics to allow investors to better understand the underlying operating results of the business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. Stateopioidassessmentsrelatedtopriorfiscalyears is the portion of state assessments for prescription opioid medications that were sold or distributed in periods prior to the fiscal year of the initial assessment. This portion is excluded from non-GAAP financial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of the current fiscal year results of our underlying, ongoing business. Additionally, while states’ laws may require us to make payments on an ongoing basis, the portion of the assessment related to sales in prior periods is contemplated to consist of one-time, nonrecurring items. Reversals of these accruals have occurred when certain assessments were found by a court to be unconstitutional. Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business. Amortization and other acquisition-related costs, which include transaction costs, integration costs and changes in the fair value of contingent consideration obligations, are excluded Impairments and gain or loss on disposal of assets are excluded because they do not occur in, or reflect the ordinary course of, our ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-cash amounts, so their exclusion facilitates comparison of historical, current and forecasted financial results. Litigation recoveries or charges, net, which include loss contingencies Loss onearly extinguishment of debt is excluded because it does not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions. GainonsaleofequityinterestinnaviHealth was incurred in connection with the sale of our remaining equity interest in naviHealth in www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 62 fiscal 2020. The equity interest was retained in connection with the initial sale of our majority interest in naviHealth during fiscal 2019. We exclude this significant gain because gains or losses on investments of this magnitude do not typically occur in the normal course of business and are similar in nature to a gain or loss from a divestiture of a majority interest, which we exclude from non-GAAP results. The gain on the initial sale of our majority interest in naviHealth in fiscal 2019 was also excluded from our non-GAAP financial measures. Transitional tax benefit, net related to the U.S. Tax Cuts and Jobs Act of 2017 is excluded because it results from the one-time impact The tax effect for each of the items listed above, other than the transitional tax benefit item, is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded. The gross, tax and net impact of each item are presented with our GAAP to non-GAAP reconciliations. Fiscal 2020 GAAP to Non-GAAP Reconciliations (in millions, except for per share amounts) Operating Earnings/(Loss) ($) Operating Earnings/(Loss) Growth Rate (%) Earnings/(Loss) Before Income Taxes ($) Provision For/ (Benefit From) Income Taxes ($) Net Earnings/ (Loss) Attributable to Cardinal Health, Inc. ($) Diluted Earnings/(Loss) Per Share Attributable to Cardinal Health, Inc. ($)(1) Diluted Earnings/(Loss) Per Share Attributable to Cardinal Health, Inc. Growth Rate (%) GAAP (4,098) N.M. (3,772) (79) (3,696) (12.61) N.M. Surgical gown recall costs 85 85 22 63 0.22 State opioid assessment related to prior fiscal years 3 3 1 2 0.01 Restructuring and employee severance 122 122 29 93 0.31 Amortization and other acquisition-related costs 524 524 130 394 1.34 Impairments and (gain)/loss on disposal of assets 7 7 2 5 0.02 Litigation (recoveries)/charges, net(2) 5,741 5,741 514 5,227 17.84 Loss on early extinguishment of debt – 16 4 12 0.04 Gain on sale of equity interest in naviHealth – (579) (86) (493) (1.68) Transitional tax benefit, net – – 2 (2) (0.01) NON-GAAP 2,384 1 2,147 539 1,605 5.45 3 The sum of the components and certain computations may reflect rounding adjustments. GAAP diluted loss per share attributable to Cardinal Health, Inc. and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated using a weighted average of 293 million common shares, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from our GAAP net loss for the period. Non-GAAP diluted EPS is calculated using a weighted average of 295 million common shares, which includes potentially dilutive shares. Pharmaceutical wholesale distributors, including us, have been named as defendants in over 3,000 lawsuits relating to the distribution of prescription opioid pain medications. These lawsuits also name pharmaceutical manufacturers, retail pharmacy chains and other entities as defendants. Approximately 2,800 of these lawsuits have been filed by counties, municipalities, cities and political subdivisions in various federal, state, and other courts. In October 2019, we agreed in principle to a global settlement framework with a leadership group of state attorneys general that is designed to resolve all pending and future opioid lawsuits and claims by states and political subdivisions and includes, among other things, a cash component, under which we would pay up to $5.56 billion over 18 years. In connection with this and with an October 2019 settlement with two Ohio counties, we recorded a total pre-tax charge of $5.63 billion ($5.14 billion after tax or $17.54 per share) during fiscal 2020 in litigation (recoveries)/charges, net, in the condensed consolidated statement of earnings, which was excluded from our fiscal 2020 non-GAAP financial measures. Our long-standing practice has been to exclude litigation charges like this from our non-GAAP financial measures because they often relate to events that may have occurred in prior or multiple periods, do not occur in or reflect the ordinary course of our business and are inherently unpredictable in timing and amount. We did not adjust our fiscal 2020 non-GAAP financial measures to exclude opioid-related litigation defense costs, which adversely impacted our fiscal 2020 non-GAAP operating earnings by approximately $103 million. We also did not adjust for opioid-related compliance costs. Accordingly, our non-GAAP financial measures included opioid-related litigation defense and compliance costs. Cardinal Health| Non-GAAPoperatingearnings is operating earnings/(loss) excluding LIFO charges/(credits), surgical gown recall costs, state opioid assessment related to prior fiscal years, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, and litigation (recoveries)/charges, net. Non-GAAP (in millions, except for per share amounts) Operating Earnings ($) Earnings/(Loss) Before Income Taxes ($) Provision For Income Taxes ($) Net Earnings Attributable to Cardinal Health, Inc. ($) Diluted EPS Attributable to Cardinal Health, Inc. ($) GAAP 126 (228) (487) 259 0.81 Restructuring and employee severance 176 176 25 151 0.48 Amortization and other acquisition-related costs 707 707 176 531 1.69 Impairments and loss on disposal of assets(1) 1,417 1,417 (44) 1,461 4.64 Litigation (recoveries)/charges, net 159 159 48 111 0.35 Loss on extinguishment of debt – 2 1 1 – Transitional tax benefit, net(2) – – 936 (936) (2.97) NON-GAAP(3) 2,585 2,233 655 1,578 5.00 Includes a non-cash goodwill impairment charge of $1.4 billion related to our Medical segment. There was no tax benefit related to this goodwill impairment charge. Reflects the estimated net transitional benefit from the re-measurement of our deferred tax assets and liabilities partially offset by the repatriation tax on cash and earnings of foreign subsidiaries. We have not yet completed our analysis of the impact of the U.S. Tax Cuts and Jobs Act of 2017 and, as such, these amounts are provisional estimates and we may record additional provisional amounts or adjustments to the provisional amounts in future periods. Non-GAAP operating earnings is operating earnings excluding LIFO charges/(credits), restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets and litigation (recoveries)/charges. Non-GAAP diluted EPS attributable to Cardinal Health, Inc. is non-GAAP net earnings attributable to Cardinal Health, Inc. divided by diluted weighted average shares outstanding. Non-GAAP net earnings attributable to Cardinal Health, Inc. is net earnings attributable to Cardinal Health, Inc. excluding LIFO charges/(credits), restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net, and loss on extinguishment of debt, each net of tax, and transitional tax benefit, net, related to the U.S. Tax Cuts and Jobs Act of 2017. Non-GAAPdilutedearningspershareattributabletoCardinalHealth,Inc.is non-GAAP net earnings/(loss) attributable to Cardinal Health, Inc. divided by diluted weighted average shares outstanding. www.cardinalhealth.com Cardinal Health | 2020 Proxy Statement 64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
