DEF 14A 1 tm2133602-1_def14a.htm DEF 14A tm2133602-1_def14a - none - 44.6630687s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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AmerisourceBergen Corporation
(Name of Registrant as Specified In Its Charter)
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January 27, 2022
Dear Shareholder:
In a year of unprecedented and ongoing challenges, AmerisourceBergen remained guided by its purpose of being united in our responsibility to create healthier futures. The Company’s alignment around this purpose drove exceptional outcomes across its businesses, and AB ended fiscal year 2021 stronger as a result. AmerisourceBergen took meaningful action to protect its team members and ensure that crucial medications continued to efficiently, reliably, and securely reach their destinations worldwide, all while making progress on key strategic initiatives.
Delivering Financial Performance Through Responsible Operations
In an operating environment challenged by the COVID-19 pandemic, AmerisourceBergen delivered outstanding performance for its stakeholders. The Company exceeded its financial plan on all metrics and had a 1-year total stock return of 27.2%. This growth was driven by the excellence of the Company’s 42,000 team members in executing on AB’s pharmaceutical-centric strategy, which included: expanding its presence in Europe through the acquisition of Alliance Healthcare; furthering its position as a global leader in pharmaceutical innovation; extending and expanding its strategic partnership with Walgreens Boots Alliance, Inc.; and continuing its leadership in specialty pharmaceuticals.
AmerisourceBergen plays a critical part in the ongoing response to the COVID-19 pandemic. The Board receives regular updates from management on the Company’s efforts to protect the health of its team members and carry out its crucial role in the pharmaceutical supply chain in support of the global pandemic response. In addition to enhanced physical safety precautions, the Company continued to provide expanded benefits to protect the wellbeing of its team members, including additional paid time off for COVID-19 related leave. AmerisourceBergen team members whose lives were adversely impacted by the pandemic and other extenuating factors were also offered financial assistance through the AmerisourceBergen Associate Assistance Fund, a non-profit organization created by the Company and supported primarily by contributions from the Company’s team members. These measures helped sustain AB’s business continuity and enabled its team members to support the secure delivery of critical medications, including COVID-19 vaccines, across the United States and over 30 countries worldwide.
Working Towards a Global Settlement
As part of AmerisourceBergen’s commitment to healthy communities and secure pharmaceutical supply chains, the Board remains focused on oversight of the Company’s risks, including the distribution of opioid medications. AmerisourceBergen has a sophisticated diversion control program, and the Board and its Compliance & Risk Committee receive regular updates from senior management on its operation. In July 2021, the Company announced that it, along with other participating distributors, had negotiated a settlement that would resolve the substantial majority of opioid lawsuits filed by states and local subdivisions. The Board believes that the proposed settlement is in the best interests of AB’s shareholders, and will bring meaningful relief to affected communities while allowing the management team to focus on key strategic and operational initiatives.
Responding to Shareholders
The Board values feedback from shareholders, whose perspectives inform our decision-making process across a range of topics, including executive compensation. After historically strong shareholder support, AmerisourceBergen’s say-on-pay vote passed with a disappointing level of approval at the 2021 annual meeting. The new Chair of the Compensation & Succession Planning Committee and members of the management team engaged with a significant percentage of the Company’s shareholder base to better understand their views and concerns. Shareholders were largely supportive of the Company’s executive compensation program and the alignment of pay and performance. However, shareholders believed that the impact of the opioid litigation settlement should be considered in fiscal year 2021 executive compensation decisions.
 

The Board appreciated the feedback and, after an extensive and thoughtful deliberation process, the Compensation & Succession Planning Committee took decisive action to respond. Additional information on the Compensation & Succession Planning Committee’s considerations and responsive actions may be found beginning on page 41 in this proxy statement.
Overseeing a Global Company
AmerisourceBergen is committed to active refreshment of the Board and its committees. After welcoming a new director in fiscal year 2020, in fiscal year 2021 the Board rotated committee members and appointed new chairs of the Audit, Compensation & Succession Planning and Finance Committees. In addition, in fiscal year 2021 the Board formed an ad hoc Merger Integration Committee comprised of directors with significant international business experience to advise and counsel management on the integration and risk management of Alliance Healthcare. The Board evaluation process for fiscal year 2022 will also inform recommendations from the Governance, Sustainability & Corporate Responsibility Committee on a variety of important topics, including Board composition and refreshment.
Driving a Sustainable and Equitable Future
AmerisourceBergen is committed to advancing initiatives that create healthier futures around the world. The Board and its committees oversee the Company’s ESG initiatives, including through quarterly updates provided by the Company’s cross-functional ESG Council to the Board’s Governance, Sustainability & Corporate Responsibility Committee.
The Company realized significant achievements across an ambitious set of ESG initiatives. In fiscal year 2020, AB reduced Scope 1 and 2 emissions by 10.5% and, in fiscal year 2021, it committed to further reductions through the establishment of a science-based emissions target. The Company’s Global Diversity, Equity & Inclusion (DE&I) Council increased membership in its Employee Resource Groups and advanced programs focused on addressing social and economic considerations in promoting health equity. The Company became a member of the United Nations Global Compact and continued to provide transparent reporting of its ESG activities aligned with global standards. The Company further enhanced its transparency and DE&I strategy through the disclosure of EEO-1 data in December 2021. The AmerisourceBergen Foundation, a separate non-profit organization established by the Company, also continued grants to support communities, individuals and non-profits impacted by COVID-19, including through vaccine education and awareness.
Our 2022 Annual Meeting
The Board is grateful to all of the Company’s shareholders for their continued investment in AmerisourceBergen. Along with our shareholder engagement efforts, your vote is an important source of feedback as we guide the continued success of the Company in delivering growth and value to all stakeholders. We encourage you to read the information within both our proxy statement and annual report in its entirety, and we respectfully request your support for our voting recommendations at the Company’s 2022 annual meeting, to be held virtually on Thursday, March 10, 2022.
Sincerely,
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Jane E. Henney, M.D.
Lead Independent Director
 

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Notice of 2022 Annual Meeting of Shareholders
Time and Date:
3:30 p.m., Eastern Time
Thursday, March 10, 2022
Held virtually online via live webcast at
www.virtualshareholdermeeting.com/ABC2022
Items of Business:
1.
Elect the ten directors named in this proxy statement.
2.
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2022.
3.
Conduct an advisory vote to approve the compensation of our named executive officers.
4.
Vote to approve the AmerisourceBergen Corporation 2022 Omnibus Incentive Plan.
5.
Vote on the shareholder proposals set forth in this proxy statement, if properly presented at the 2022 Annual Meeting.
6.
Transact any other business properly coming before the meeting.
Who May Vote:
Shareholders of record on January 10, 2022.
Date of Availability:
This notice and proxy statement, together with our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, are being made available to shareholders on or about January 27, 2022.
By order of the Board of Directors,
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KOUROSH Q. PIROUZ
Vice President, Associate General Counsel and Secretary
How to vote
It is important that your shares be represented and voted at the Annual Meeting. We urge you to vote by using any of the below methods.
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Vote via the Internet
Visit www.proxyvote.com and
follow the instructions.
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Vote by phone
Call Toll-Free 1-800-690-6903
inside the United States or
Puerto Rico and follow the
instructions.
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Vote by mail
If you received a proxy/voting instruction card by mail, you
can mark, date, sign and return
it in the postage-paid envelope furnished for that purpose.
Important Notice Regarding
Availability of Proxy Materials for AmerisourceBergen's Annual Meeting of Shareholders to be held on
March 10, 2022
The Proxy Statement and Annual Report
on Form 10-K are available at investor.amerisourcebergen.com and www.proxyvote.com.

Table of Contents
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A-1
B-1
 

2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
PROXY STATEMENT HIGHLIGHTS
This summary provides highlights of selected information about AmerisourceBergen Corporation (the “Company,” “AmerisourceBergen,” “we,” “our” or “us”) from this proxy statement. Please review the entire document before voting.
All of our 2022 Annual Meeting materials are available at investor.amerisourcebergen.com. Website addresses referenced in this proxy statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this proxy statement.
Voting Items
Board
Recommendation
Further
Information
For
For
For
For
90
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our environmental and social goals, commitments, and strategies. These statements involve risks and uncertainties. Actual results could differ materially from any future results expressed or implied by the forward-looking statements for a variety of reasons, including due to the risks and uncertainties that are discussed in our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates.
 
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Fiscal Year 2021 Business & Strategic Highlights
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1.
See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
Employee Engagement & Support Related to COVID-19
Throughout the COVID-19 pandemic, AmerisourceBergen has been guided by its purpose of being united in its responsibility to create healthier futures. We implemented measures to both protect the welfare of our team members and enable our businesses to continue to play their crucial role in supporting the sustainability of the pharmaceutical supply chain and enabling patient access. Since March 2020, our Board has received regular updates from management on the Company’s COVID-19 response and has been aligned in support of initiatives undertaken to protect team members and to augment business operations.
To continue to protect the health of our team members, we implemented numerous safety precautions in response to the ongoing COVID-19 pandemic, such as mandatory health and temperature monitoring, face coverings and social distancing requirements. We also supplied our team members with personal protective equipment, enhanced facility cleaning and access to sanitizing supplies, and supported remote work options where available. In addition to utilizing a peer-to-peer safety program, we regularly convene our company leaders to review and evaluate safety data and issue operational excellence scorecards. Distribution center team members receive training on proper safety procedures and incentive opportunities, with safety performance tracked and shared across the organization. As the COVID-19 pandemic evolves, we plan to continue to monitor and look for ways to further enhance our safety protocols.
To support the wellbeing of our team members during the COVID-19 pandemic, we enhanced our benefit offerings to provide greater access to mental health telemedicine, additional paid time off for those needing
 
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2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
to self-quarantine or care for a family member, and access to mindfulness videos and other wellness resources. Additionally, team members whose household income was impacted, such as by a spouse experiencing job loss, were offered financial support through the AmerisourceBergen Associate Assistance Fund.
Positive Impact on Global Health
We work to maintain a safe and secure pharmaceutical supply chain to ensure the health of the people and communities we serve. Given AmerisourceBergen’s vital role in the supply chain, in addition to focusing on our normal supplier processes, our teams worked throughout the COVID-19 pandemic to ensure that critical medications were allocated to our customers fairly to facilitate optimal patient access. We employ real-time data and analytics to facilitate actionable channel solutions and awareness for commercial and government stakeholders. We continue to support equitable access to COVID-19 vaccines through our Good Neighbor Pharmacy partners, including our partnership with the Federal Retail Pharmacy program, to support vaccination efforts across the U.S. We also delivered COVID-19 vaccines to more than 30 countries around the world. Through the work of the AmerisourceBergen Foundation we are supporting underrepresented communities through non-profit partners to enhance equitable education and access to COVID-19 vaccines.
Through our long-term strategic ESG priorities, we seek to make a positive impact on the planet and communities we serve. This includes setting clear emissions targets to reduce our impact on the environment and developing Diversity, Equity and Inclusion (DE&I) strategies to promote healthcare equity and a diverse supplier base. Our ESG initiatives and their focus on creating healthier futures globally are discussed in more detail in the following section, beginning on page 4 of this proxy statement.
 
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Our ESG Priorities and Selected Activities & Accomplishments
At AmerisourceBergen, we are committed to advancing our ESG initiatives to create healthier futures around the world. We strive to foster a positive impact on the planet and people — centered on improving access and equity in healthcare. Our Global ESG Council serves as an internal steering committee focused on our long-term ESG strategy and disclosure approach. Our Governance, Sustainability and Corporate Responsibility Committee receives ESG updates on a quarterly basis, giving the Board explicit oversight of our ESG activities. In fiscal year 2021, our notable ESG highlights included:
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2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
Oversight of Controlled Substances
AmerisourceBergen has a longstanding commitment to ensuring a safe and efficient pharmaceutical supply chain. Our wholesale pharmaceutical distribution business plays a key, but specific, role of providing safe access to thousands of important medications to enable healthcare providers to serve patients with a wide array of clinical needs across the healthcare spectrum. We have taken substantial steps to help prevent the diversion of controlled substances and are committed to joining other healthcare stakeholders, government entities, civic organizations, law enforcement agencies and individuals to help address the opioid epidemic.
Board Oversight of Risks
Our Board oversees risk management and considers specific risk topics on an ongoing basis, including risks associated with the Company’s distribution of opioid medications. Our Compliance and Risk Committee provides further oversight on these matters and expertise at the Board level. The Board (and/or the Compliance and Risk Committee) receive at least quarterly updates on our anti-diversion program, the status of pending litigation related to the distribution of opioids, legislative and regulatory developments related to controlled substances, and shareholder feedback. For additional information on the Board’s oversight of risks, see “Corporate Governance and Related Matters — Corporate Governance — Risk Oversight and Management” beginning on page 25 of this proxy statement.
Global Settlement Status
The Company has continued to move forward with discussions regarding a comprehensive proposed settlement agreement that, if all conditions are satisfied, would resolve a substantial majority of opioid lawsuits filed by state and local governmental entities. As of mid-January 2022, 45 states and a significant number of subdivisions have expressed their consent to the proposed settlement. AmerisourceBergen, as well as other participating distributors, are scheduled to decide by late February 2022 whether to move forward with executing the settlement agreement along with the consenting States and subdivisions. If the companies decide to move forward, the settlement agreement is expected to become effective in early April 2022. Under the proposed settlement, the Company would pay up to approximately $6.4 billion over 18 years. The proposed settlement would also establish a clearinghouse that consolidates data from all three distributors, which will be available to the settling states to use as part of their anti-diversion efforts.
Our Role in the Supply Chain
Our wholesale distribution business manages the secure transportation of Food and Drug Administration (FDA) approved medications, a small part of which includes opioids and other controlled substances, from manufacturers to neighborhood pharmacies and pharmacy chains as well as hospitals, nursing homes, hospices, and other clinical settings. Distributors do not manufacture or create supply or demand for opioids. The distribution of opioid medicines represents less than two percent of our annual revenue, and we do not offer our sales team members incentives based on opioid sales.
In fulfilling our Company’s purpose to create healthier futures, AmerisourceBergen is dedicated to providing efficient and safe access to all FDA-approved medications through our wholesale distribution business. Wholesale distribution serves as a physical link between manufacturers and the healthcare providers that ultimately serve patients.
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Internal Controls and Anti-Diversion Practices
Our report titled Safe and Secure Distribution of Controlled Substances describes in detail our role in the pharmaceutical supply chain, our Board’s oversight of management’s efforts to develop meaningful solutions to the opioid epidemic, our management team’s thoughtful approach to enterprise risk management, our commitment to operational integrity and diversion control, and our community and team member outreach efforts. A copy of this report can be found on our website at investor.amerisourcebergen.com.
 
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2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
Shareholder Engagement and Responsive Actions
Shareholder Engagement Program
Maintaining regular dialogue with our shareholders is critically important to AmerisourceBergen’s Board and management team. As part of our ongoing engagement program, we meet with shareholders throughout the year to discuss a range of topics, including strategic priorities and performance, risk management practices, corporate governance and executive compensation practices, and ESG initiatives. Members of our Board and management team participate in these engagements and incorporate feedback from shareholders into their decision-making processes.
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Board Responsiveness to Say-on-Pay Vote and Shareholder Feedback
Our say-on-pay proposal received approximately 52% support at our 2021 Annual Meeting. In response, during the fall of 2021, we expanded our engagement efforts:
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Our new Compensation and Succession Planning Committee (the “Compensation Committee”) Chair, Kathleen Hyle, along with senior members of our management team, participated in these engagements to better understand the concerns that drove this result and how we could best respond. The broad scope of our outreach provided our Compensation Committee with feedback from shareholders who both supported and voted against the proposal. A range of topics of importance to both AmerisourceBergen and our shareholders were discussed during these engagements, including:

Executive compensation and the 2021 say-on-pay vote

Proposed opioid litigation settlement

Board and Committee composition and refreshment

Board oversight of ESG and risk management

ESG initiatives, including DE&I, and governance oversight

Human capital disclosure
Shareholders were generally supportive of the overall structure of our executive compensation program. However, they believed the magnitude of the opioid litigation settlement accrual should be considered in the Compensation Committee’s fiscal year 2021 executive payout decisions, along with more detailed disclosure on our decision-making process.
 
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Our Compensation Committee undertook extensive and thoughtful deliberation in determining our compensation actions for fiscal year 2021 in response to shareholder feedback. The Compensation Committee carefully considered a range of factors, which can be found in full on page 41 of the Compensation, Discussion and Analysis (CD&A), and the Board took the following actions in response:
Shareholder Feedback and Responsiveness
What We Heard From Shareholders
Action We Took in Response
Compensation-Related Themes
Reflect in the Compensation Committee’s decisions for fiscal year 2021 the magnitude of the opioid settlement accrual recorded in fiscal year 2020
Exercised negative discretion on short-term incentive payouts for our CEO and other NEOs to reflect shareholder experience related to the magnitude of the litigation accrual recorded in fiscal year 2020

Reduced CEO fiscal year 2021 incentive payout by 45% to below target. While the calculated payout based on financial performance was 177% of target, the Compensation Committee reduced our CEO’s payout to 97% of target, representing a $1.8 million reduction

Reduced other NEOs fiscal year 2021 short term incentive payout by 10%
Enhanced disclosure of Compensation Committee decision process regarding its use of discretion to address the impact from the opioid litigation accrual, including:

Compensation Committee Letter to Shareholders (see page 37)

Key Factors Considered by the Compensation Committee (see page 43)
Provide clarity on how the Compensation Committee considers discretion for significant, non-recurring financial events
Commitment to disclose the Compensation Committee’s decision process for any potential use of discretion for adjustments related to significant, non-recurring financial events on a go-forward basis, as appropriate
Enhanced transparency of Compensation Committee decision-making process for executive compensation more broadly
Compensation Committee to review any potential adjustments to reported financial results on a quarterly basis, and determine final approval of adjustments at year end
Increase alignment of long-term incentives to shareholder value creation
Added a relative TSR modifier to the performance share awards under the long-term incentive plan, which requires above median performance at the 55th percentile for target payout (see page 49)
Beginning with fiscal year 2022 grants, implemented a post-vesting holding requirement on 50% of earned performance shares of two years for our CEO and one year for other NEOs
Enhance clawback provision and disclosure
Created a single compensation recoupment policy that applies to all incentive compensation and formally expands the list of actions that could result in a clawback
Support the incorporation of measurable, ESG-related metric(s) into compensation program
Committed to review and evaluate the best approach to inclusion of an ESG-related measure or measures in the compensation program by fiscal year 2023
Board and ESG-Related Themes
Provide additional transparency on human capital disclosure
Enhanced human capital disclosure in 10-K and disclosed EEO-1 report (available at investor.amerisourcebergen.com/governance/policies)
Enhance focus on future Board refreshment
Board evaluation process for fiscal year 2022 will consider, among other topics, Board composition and refreshment (see page 27)
Additional information on the Compensation Committee’s considerations and actions taken can be found within the Compensation Discussion and Analysis, starting on page 37.
 
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2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
Director Nominee Summary
Age
Director
Since
Committee Membership
Name
Executive
AC
CSPC
CRC
FC
GSCRC
MIC
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Ornella Barra
Chief Operating Officer, International of Walgreens Boots Alliance, Inc.
68
2015
X
X
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Steven H. Collis
President, CEO and Chairman of AmerisourceBergen Corporation
60
2011
Chair
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D. Mark Durcan
Retired CEO of Micron Technology, Inc.
60
2015
X
X
Chair
X
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Richard W. Gochnauer
Retired CEO of United Stationers Inc.
72
2008
X
X
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Lon R. Greenberg
Retired CEO of UGI Corporation
71
2013
X
Chair
X
X
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Jane E. Henney, M.D.
Lead Independent Director
Retired Professor, Internal Medicine and Public Health Service, College of Medicine at the University of Cincinnati
74
2002
X
EO
EO
EO
EO
EO
EO
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Kathleen W. Hyle
Retired Senior Vice President and Chief Operating Officer of Constellation Energy
63
2010
X
Chair
X
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Michael J. Long
Chairman, President and CEO of Arrow Electronics, Inc.
63
2006
X
X
Chair
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Henry W. McGee
Senior Lecturer at Harvard Business School and Retired President of HBO Home Entertainment
68
2004
X
X
Chair
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Dennis M. Nally*
Retired Chairman of Pricewaterhouse Coopers International Ltd.
69
2020
X
Chair
X
Number of Meetings in FY2021:
9
4
4
7
5
4
Board Snapshot
Board Independence: 80%
Average Age: 67
Average Tenure: 11 Years
Committee Key
X = Member
EO = Ex Officio Member
AC = Audit Committee; CSPC = Compensation and Succession Planning Committee; CRC = Compliance and Risk Committee; FC = Finance Committee; GSCRC = Governance, Sustainability and Corporate Responsibility Committee; MIC = Merger Integration Committee
* = Mr. Nally is also the sole member of the Company’s Special Litigation Committee. See page 31.
 
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Our Board’s Skills and Experience
Our director nominees are a diverse group of skilled leaders who bring relevant experience and qualifications that enable the Board to effectively provide oversight to our management team and our long-term strategy and execution.
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Board Diversity Highlights
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Ornella
Barra
Steven H.
Collis
D. Mark
Durcan
Richard W.
Gochnauer
Lon R.
Greenberg
Jane E.
Henney, M.D.
Kathleen W.
Hyle
Michael J.
Long
Henry W.
McGee
Dennis M.
Nally
Gender
Male
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Female
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Race/ Ethnicity
African American / Black
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American Indian/ Alaska Native
Asian
Caucasian/​White
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Hispanic/ Latino
Pacific Islander
 
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2022 AmerisourceBergen Proxy | PROXY STATEMENT HIGHLIGHTS
Sound Governance and Compensation Practices
Board and Governance Practices — Enabling Effective Oversight of Management
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Majority of director nominees are independent (eight out of ten)
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All members of the Audit, Compensation and Succession Planning, Governance, Sustainability and Corporate Responsibility, and Merger Integration Committees are independent
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Lead Independent Director with clearly-defined responsibilities (see pages 22-23)
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Thoughtful succession planning process in place; committed to splitting the roles of Chairman of the Board and Chief Executive Officer, commencing with the next Chief Executive Officer. At that time, the Chairman role will be assumed by an independent director
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Full Board plays an active role in risk oversight and regularly receives reports on risk exposure from management
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Board oversight of ESG reporting and disclosure practices
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Board oversight of enterprise risk management and legal and regulatory compliance
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Strong commitment to transparency: published a report on the safe and secure distribution of controlled substances
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Strict overboarding policy for our CEO and non-employee directors (see page 13)
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Tenure policy and regular refreshment of the Board and its committee Chairs (see page 27)
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Comprehensive annual evaluation process for the Board and each of its committees (see page 27)
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Robust shareholder communication and engagement
Shareholder Rights — Ensuring Accountability to our Shareholders
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Majority vote standard
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Removal of directors with or without cause
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Right to call special meetings at 25%
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Proxy access
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No supermajority requirement
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Declassified Board
 
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PROXY STATEMENT HIGHLIGHTS | 2022 AmerisourceBergen Proxy
Executive Compensation Practices — Linking Pay with Performance and Mitigating Risk
What We Do
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Use financial metrics to make a substantial portion of executive pay contingent on performance
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Engage with shareholders on compensation and governance
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Cap payouts under our annual cash bonus plan and performance share plans
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Apply robust clawback obligations to annual cash bonus and equity awards for executive officers
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Require our CEO to own stock equal in value to six times his base salary, and our CFO and other executive officers to own stock equal in value to three times their respective base salaries
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Require executive officers to retain all equity awards until required ownership levels are met
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Require two-year post vesting holding requirement for our CEO and one-year holding period for NEOs on 50% of PSU awards (beginning in fiscal year 2022)
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Consider a peer group in establishing named executive officer compensation and published compensation survey data for all other executive officers
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Require forfeiture of awards upon violation of restrictive covenants
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Require a double-trigger for change in control payments
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Consider burn rate in equity grant decisions and manage use of equity awards conservatively
What We Do
Not Do
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Tie incentive compensation to specific product sales, including prescription opioid medication sales
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No short-sales, hedging or pledging of our stock permitted by our executive officers and directors
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Backdate or retroactively grant restricted stock units
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Pay dividends on unearned and unvested performance shares
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Provide tax gross-ups in the event of a change in control
 
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2022 AmerisourceBergen Proxy | Corporate Governance and Related Matters
Corporate Governance and Related Matters
Item 1—Election of Directors
Annual Election of Directors
Directors are elected annually. Any nominee who is elected to serve as a director at our 2022 Annual Meeting of Shareholders will be elected to serve a term of one year and is expected to hold office until the 2023 Annual Meeting of Shareholders and until their successors are elected and qualified. Similarly, any director who is appointed to fill a vacancy on the Board will serve until the next annual meeting of shareholders after his or her appointment and until his or her successor is elected and qualified.
Each nominee for director has consented to his or her nomination and, so far as the Board of Directors and management are aware, intends to serve a full term as a director if elected. However, if any of the nominees should become unavailable or unable to stand for election prior to the election, the shares represented by proxies may be voted for the election of substitute nominees selected by the Board of Directors.
Board Size, Nominees and Independence
The size of the Board of Directors is ten. The director nominees are Ornella Barra, Steven H. Collis, D. Mark Durcan, Richard W. Gochnauer, Lon R. Greenberg, Jane E. Henney, M.D., Kathleen W. Hyle, Michael J. Long, Henry W. McGee and Dennis M. Nally.
Messrs. Durcan, Gochnauer, Greenberg, Long, McGee, and Nally, Dr. Henney and Ms. Hyle are independent (as defined in Section 303A of the NYSE Listed Company Manual and in our corporate governance principles).
Additionally, there are no family relationships among AmerisourceBergen’s directors and executive officers.
Walgreens Boots Alliance’s Designated Director Nominee
Pursuant to the Amended and Restated Shareholders Agreement between AmerisourceBergen and Walgreens Boots Alliance, Inc. (as successor in interest to Walgreen Co. and Alliance Boots GmbH), Walgreens Boots Alliance has the right to designate a director to our Board once Walgreens Boots Alliance and certain of its subsidiaries collectively own five percent or more of our Common Stock. On May 1, 2014, Walgreens Boots Alliance notified us that they had acquired at least five percent of our Common Stock. Ms. Barra, Chief Operating Officer, International of Walgreens Boots Alliance, has been designated by Walgreens Boots Alliance to serve on our Board. She was appointed to the Board on January 16, 2015 and is a current nominee for election as director. In addition, upon the acquisition in full by Walgreens Boots Alliance and its subsidiaries of 19,859,795 shares of our Common Stock in the open market, Walgreens Boots Alliance will be entitled to designate a second director to the Board of Directors. For so long as Walgreens Boots Alliance has a right to designate a director to the Board, subject to certain exceptions, including matters related to acquisition proposals, Walgreens Boots Alliance and its subsidiaries will be obligated to vote their shares in accordance with our Board on all matters submitted to a vote of our shareholders. Please refer to “Related Person Transactions” beginning on page 83 of this proxy statement and our Current Reports on Form 8-K filed on March 20, 2013, January 8, 2021 and June 2, 2021 for more detailed information regarding the Amended and Restated Shareholders Agreement and related agreements and arrangements.
Identification and Evaluation of Director Nominees and Overboarding Policy
Our Governance, Sustainability and Corporate Responsibility Committee seeks director nominees who possess qualifications, experience, attributes and skills that will enable them to contribute meaningfully to the leadership of our Board and to effectively guide and supervise management in driving AmerisourceBergen’s growth and financial and operational performance. Each director nominee should:

possess the highest personal and professional ethics, integrity and values;

be committed to representing the long-term interests of our shareholders; and

have an inquisitive and objective perspective, practical wisdom and mature judgment.
Each nominee should also have sufficient time to effectively carry out his or her duties as a director. Except for the Chief Executive Officer of AmerisourceBergen, who may serve on no more than one other public company board, director nominees may serve on no more than three other public company boards.
 
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Corporate Governance and Related Matters | 2022 AmerisourceBergen Proxy
In addition, our Governance, Sustainability and Corporate Responsibility Committee has identified the following expertise, experience, attributes and skills that are particularly relevant to AmerisourceBergen:

Corporate Governance

Information Technology

Distribution and Logistics

Regulatory

Executive Leadership

Risk Oversight

Financial Literacy

Sustainability and Corporate Responsibility

Global Markets

Talent Management and Executive Compensation

Healthcare
We seek individuals with diverse backgrounds, skills and expertise to serve on our Board. We believe that diversity is essential to encourage fresh perspectives, enrich the Board’s deliberations and avoid the dominance of a particular individual or group over the Board’s decisions. In accordance with our corporate governance principles and the Governance, Sustainability and Corporate Responsibility Committee charter, the Governance, Sustainability and Corporate Responsibility Committee has formalized its diversity focus to include, and have any search firm that it engages include, women and ethnically and racially diverse candidates in the pool from which the committee selects new director candidates. The Governance, Sustainability and Corporate Responsibility Committee evaluates all potential director nominees using the same criteria, regardless of the source of the nominee. Accordingly, all potential director nominees, including shareholder nominees, are assessed using the criteria outlined above. The Governance, Sustainability and Corporate Responsibility Committee may consider and evaluate director nominees identified by our shareholders as described below in the section titled “Shareholder Engagement—Shareholder Recommendations for Director Nominees.”
Below are each nominee’s biography and an assessment of the above-mentioned expertise, experience, attributes and skills that the nominee possesses.
 
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2022 AmerisourceBergen Proxy | Corporate Governance and Related Matters
Biographical information about our nominees
Ornella Barra
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Age: 68
Director since January 2015
Committees:

Compliance and Risk

Finance
Background and Experience
Ms. Barra has served on our Board since January 2015 and currently serves as Chief Operating Officer, International of Walgreens Boots Alliance, Inc. Previously, she served as Co-Chief Operating Officer of Walgreens Boots Alliance, Inc. from June 2016 until April 2021. Ms. Barra served as Executive Vice President of Walgreens Boots Alliance, Inc. and President and Chief Executive of Global Wholesale and International Retail from February 2015 until June 2016. Ms. Barra served as Chief Executive, Wholesale and Brands of Alliance Boots GmbH from September 2013 until January 2015 and as Chief Executive of the Pharmaceutical Wholesale Division of Alliance Boots GmbH from January 2009 until September 2013. Prior to her role as Chief Executive of the Pharmaceutical Wholesale Division, Ms. Barra was the Wholesale and Commercial Affairs Director and a Board member of Alliance Boots plc. Prior to the merger of Alliance UniChem Plc and Boots Group plc, Ms. Barra served on the Board of Alliance Participations Limited. Ms. Barra is an honorary Professor of the University of Nottingham’s School of Pharmacy and is a member of the International Advisory Council of Bocconi University. Ms. Barra was formerly a member of the board of Directors of Assicurazioni Generali S.p.A., one of the largest Italian insurance companies, from April 2013 to April 2019. Ms. Barra was a member of the Board of Directors of Alliance Boots GmbH between June 2007 and February 2015, and was Chairman of its Corporate Social Responsibility Committee from 2009 to 2014. She serves as Chair of the Board of International Federation of Pharmaceutical Wholesalers, Inc.
Qualifications and Expertise

Other Public Company Boards:   None.

Global Markets:   Demonstrates expertise and understanding of global markets by leading and expanding international wholesale and retail operations of multinational company.

Healthcare and Distribution Expertise:   Heads global wholesale and international retail operations for Walgreens Boots Alliance, Inc. Acquired extensive experience in pharmaceutical wholesale distribution and pharmaceutical retail industries through long career at Alliance Boots GmbH and predecessor companies, and trained as a pharmacist.

Risk Oversight:   Serves as Chief Operating Officer, International of Walgreens Boots Alliance, Inc. and served as a director of one of the largest insurance companies in Italy.

Sustainability & Corporate Responsibility:   Serves as Chair of the Walgreens Boots Alliance, Inc. Corporate Social Responsibility Committee and served as Chairman of the Corporate Social Responsibility Committee for Alliance Boots GmbH.

Compensation/Benefits Oversight:   Served as Chair of Appointments and Remuneration Committee at Assicurazioni Generali.

Academic Credentials:   Honorary Professor of the University of Nottingham’s School of Pharmacy and a member of the International Advisory Council of Bocconi University.
Steven H. Collis
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Age: 60
Chairman of the Board since March 2016
Director since May 2011
Committees:

Executive (Chair)
Background and Experience
Mr. Collis is the President and Chief Executive Officer of AmerisourceBergen Corporation and has served in this position since July 2011. He has been a member of our Board since 2011 and has served as our Board’s Chairman since March 2016. From November 2010 to July 2011, Mr. Collis served as President and Chief Operating Officer of AmerisourceBergen Corporation. He served as Executive Vice President and President of AmerisourceBergen Drug Corporation from September 2009 to November 2010, as Executive Vice President and President of AmerisourceBergen Specialty Group from September 2007 to September 2009 and as Senior Vice President of AmerisourceBergen Corporation and President of AmerisourceBergen Specialty Group from August 2001 to September 2007. Mr. Collis has held a variety of other positions with AmerisourceBergen Corporation and its predecessors since 1994. Mr. Collis is a member of the American Red Cross Board of Governors, and the Board of International Federation of Pharmaceutical Wholesalers, Inc. He served as a member of the board of Thoratec Corporation from 2008 to 2015 and as a member of the board of CEOs Against Cancer (PA Chapter) from 2014 to 2019.
Qualifications and Expertise

Other Public Company Boards:   None.

Healthcare and Distribution Expertise:   Has held various senior executive leadership positions with AmerisourceBergen Corporation and has extensive business and operating experience in wholesale pharmaceutical distribution and in-depth knowledge of the healthcare distribution and services market.

Global Markets:   Leads a multinational company that has significantly expanded international operations.

Governance and Risk Oversight:   Serves as Chairman, President and Chief Executive Officer of AmerisourceBergen and previously served as director of Thoratec Corporation.
 
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Corporate Governance and Related Matters | 2022 AmerisourceBergen Proxy
D. Mark Durcan
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Age: 60
Director since September 2015
Committees:

Audit

Executive

Finance (Chair)

Merger Integration
Background and Experience
Mr. Durcan has served on our Board since September 2015. He served as Chief Executive Officer and Director of Micron Technology, Inc. from February 2012 until his retirement in May 2017. Mr. Durcan served as President and Chief Operating Officer of Micron Technology, Inc. from June 2007 to February 2012, as Chief Operating Officer from February 2006 to June 2007, and as Chief Technology Officer from June 1997 to February 2006. Between 1984 and February 2006, Mr. Durcan held various other positions with Micron Technology, Inc. and its subsidiaries and served as an officer from 1996 through his retirement. Mr. Durcan served as a director of MWI Veterinary Supply, Inc. from March 2014 until its acquisition by AmerisourceBergen in February 2015. Mr. Durcan has served as a director for Advanced Micro Devices since October 2017, for Veoneer since April 2018, and for ASML Holding NV since April 2020. He served as a director at Freescale Semiconductor, Inc. from 2014 through 2015. Mr. Durcan has been a director for St. Luke’s Health System of Idaho since February 2017 and has served on the board of Trustees of Rice University since June 2020. He has also served on the Semiconductor Industry Association Board and the Technology CEO Council.
Qualifications and Expertise

Other Public Company Boards:   Advanced Micro Devices, Veoneer, ASML Holding NV.

Financial Expertise:   Brings substantial experience in the areas of finance, executive leadership and strategic planning in his former roles as Chief Executive Officer and Chief Operating Officer of Micron Technology, Inc.

Global Markets:   Contributes deep understanding of global markets and extensive experience in managing global manufacturing, procurement, supply chain and quality control for a multinational corporation and, as former member of the board of MWI Veterinary Supply, Inc., has important insight into wholesale distribution of animal health products.

Information Technology:   Has unique and in-depth knowledge of technology and capability to drive technological innovation.
Richard W. Gochnauer
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Age: 72
Director since September 2008
Committees:

Compensation and Succession Planning

Compliance and Risk
Background and Experience
Mr. Gochnauer has served on our Board since September 2008. He served as Chief Executive Officer of United Stationers Inc. from December 2002 until his retirement in May 2011 and as Chief Operating Officer of United Stationers Inc. from July 2002 to December 2002. Mr. Gochnauer served as Vice Chairman and President, International, and President and Chief Operating Officer of Golden State Foods Corporation from 1994 to 2002. He currently serves as a member of the Boards of Golden State Foods Corporation, Vodori Inc., and Rush University Medical Center and previously served as a director of UGI Corporation from 2011 until 2020, Fieldstone Communities, Inc. from 2000 to 2008 and United Stationers Inc. from July 2002 to May 2011. Mr. Gochnauer is also a member of the Center for Higher Ambition Leadership and Lead Director for SC Master Fund.
Qualifications and Expertise

Other Public Company Boards:   None.

Distribution and Logistics:   Provides strategic direction and valuable perspective on measures to drive operating growth and compete effectively in the distribution business gained through his management of diverse distribution businesses.

Governance Experience:   Serves as director of Golden State Foods Corporation and held senior executive leadership roles at United Stationers Inc. and Golden State Foods Corporation.

Risk Oversight:   Extensive experience overseeing the management of risk on an enterprise-wide basis.
 
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2022 AmerisourceBergen Proxy | Corporate Governance and Related Matters
Lon R. Greenberg
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Age: 71
Director since May 2013
Committees:

Compliance and Risk (Chair)

Executive

Governance, Sustainability and Corporate Responsibility

Merger Integration
Background and Experience
Mr. Greenberg has served on our Board since May 2013. He served as Chairman of UGI Corporation’s Board of Directors from 1996 until January 2016 and as director of UGI Utilities, Inc. and AmeriGas Propane, both UGI Corporation subsidiaries. Mr. Greenberg served as Chief Executive Officer of UGI Corporation from 1995 until his retirement in April 2013. Mr. Greenberg served in various leadership positions throughout his tenure with UGI Corporation. He is a member of the Board of Directors of Ameriprise Financial, Inc. Mr. Greenberg is a member of the Board of Trustees of Temple University and the Board of The Philadelphia Foundation. He previously served as Chairman of the Board of Directors of Temple University Health System, as a member of the Board of Directors of Fox Chase Cancer Center, as a member of the Board of Directors of the United Way of Greater Philadelphia and Southern New Jersey, and as a member of the Board of Aqua America, Inc.
Qualifications and Expertise

Other Public Company Boards:   Ameriprise Financial, Inc.

Financial Expertise:   Brings financial literacy and sophistication acquired through various executive, legal and corporate roles, as well as membership on the boards of other NYSE listed companies.

Global Markets:   Has valuable business and executive management experience in distribution and global operations acquired as Chief Executive Officer of UGI Corporation.

Healthcare Expertise:   Contributes experience and knowledge of the healthcare industry from his perspective as a former director of healthcare organizations.

Governance and Regulatory Experience:   Served as Chief Executive Officer and Chairman of the Board of UGI Corporation, as a director of subsidiaries of UGI Corporation, and as a director of Aqua America, Inc. Mr. Greenberg also currently serves as a director of Ameriprise Financial, Inc.
Jane E. Henney, M.D.
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Age: 74
Lead Independent Director
since March 2016
Director since January 2002
Committees:

Executive

Serves ex officio on each of the Board’s other committees (other than Special Litigation)
Background and Experience
Dr. Henney has served as our Board’s Lead Independent Director since March 2016 and as director since January 2002. She served as Home Secretary for the National Academy of Medicine from April 2014 to June 2020. Dr. Henney was a Professor of Medicine at the College of Medicine at the University of Cincinnati from January 2008 until December 2012. She served as Senior Vice President and Provost for Health Affairs at the University of Cincinnati from July 2003 to January 2008 and was the Commissioner of Food and Drugs at the United States Food and Drug Administration from 1998 to 2001. Dr. Henney served as Vice President for Health Sciences at the University of New Mexico from 1994 to 1998. Dr. Henney previously served as a director on the boards of CIGNA Corporation from April 2004 until April 2018, AstraZeneca PLC from September 2001 to April 2011, Cubist Pharmaceuticals, Inc. from March 2012 to January 2014 and The China Medical Board from July 2004 until June 2019. Dr. Henney is a former member of the Board of The Commonwealth Fund and The Monnell Center for the Chemical Senses.
Qualifications and Expertise

Other Public Company Boards:   None.

Governance and Risk Oversight:   Former director of CIGNA Corporation, AstraZeneca PLC and Cubist Pharmaceuticals, Inc., and is a NACD Board Leadership Fellow.

Healthcare Expertise:   Provides in-depth knowledge and industry-specific perspective acquired through her experience as a medical oncologist, prominent government and academic posts, and tenure as director of pharmaceutical and insurance companies.

Regulatory:   As a former Commissioner of Food and Drugs for the United States Food and Drug Administration, Dr. Henney has extensive insight into federal regulatory matters.
 
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Corporate Governance and Related Matters | 2022 AmerisourceBergen Proxy
Kathleen W. Hyle
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Age: 63
Director since May 2010
Committees:

Compensation and Succession Planning (Chair)

Executive

Finance
Background and Experience
Ms. Hyle has served on our Board since May 2010. She served as Senior Vice President of Constellation Energy and Chief Operating Officer of Constellation Energy Resources from November 2008 until March 2012. Ms. Hyle served as Chief Financial Officer for Constellation Energy Nuclear Group and for UniStar Nuclear Energy, LLC from June 2007 to November 2008. Prior to joining Constellation Energy in 2003, Ms. Hyle served as the Chief Financial Officer of ANC Rental Corp., Vice President and Treasurer of Auto-Nation, Inc., and Vice President and Treasurer of Black & Decker Corporation. She is the Chair of the Board of Bunge Limited and a member in WKW LLC, a limited liability company. Ms. Hyle is a former member of the Board of Sponsors for the Loyola University Maryland Sellinger School of Business and Management and a former member of the Board of Trustees of CenterStage, a non-profit theatre in Baltimore, MD.
Qualifications and Expertise

Other Public Company Boards:   Bunge Limited.

Financial Expertise:   Provides critical insight into, among other things, financial statements, accounting principles and practices, internal control over financial reporting and risk management processes.

Governance and Risk Oversight:   Current Chair of Bunge Limited and former director of The ADT Corporation.

Risk Management:   Held senior management positions at Constellation Energy, ANC Rental Corp., and Black & Decker Corporation and brings extensive experience in management, operations, capital markets, international business, financial risk management and regulatory compliance.
Michael J. Long
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Age: 63
Director since May 2006
Committees:

Executive

Governance, Sustainability and Corporate Responsibility

Merger Integration (Chair)
Background and Experience
Mr. Long has served on our Board since May 2006. He has served as the Chief Executive Officer of Arrow Electronics, Inc. since May 2009 and as Chairman of the Board since 2010. Previously, he served as President and Chief Operating Officer of Arrow Electronics, Inc. from February 2008 until May 2009 and as a Senior Vice President of Arrow Electronics, Inc. from January 2006 to February 2008. He currently serves as a member of the Board of Directors of UCHealth and National Western Stock Show since 2018. He served as a member of the Board of Directors of the Denver Zoo from 2010 until 2017.
Qualifications and Expertise

Other Public Company Boards:   None.

Financial Expertise:   Brings relevant experience in the areas of finance, operations, management, leadership, strategic planning, executive compensation and global competition drawn from his current and prior leadership positions at Arrow Electronics, Inc.

Global Markets and Distribution Expertise:   Contributes critical insight into international markets and has an in-depth knowledge of business and strategic opportunities for wholesale distribution.

Governance and Risk Oversight:   Serves as Chairman, President and Chief Executive Officer of Arrow Electronics, Inc.

Information Technology:   Familiarity with technology solutions and IT services through experience in electronic components industry.
 
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2022 AmerisourceBergen Proxy | Corporate Governance and Related Matters
Henry W. McGee
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Age: 68
Director since November 2004
Committees:

Audit

Executive

Governance, Sustainability and Corporate Responsibility (Chair)
Background and Experience
Mr. McGee has served on our Board since November 2004. He is a Senior Lecturer at Harvard Business School, a position he has held since July 2013. From April 2013 to August 2013, Mr. McGee served as a Consultant at HBO Home Entertainment. Previously, Mr. McGee served as President of HBO Home Entertainment from 1995 until his retirement in March 2013. He served as Senior Vice President, Programming, HBO Video, from 1988 to 1995 and prior to that, Mr. McGee served in leadership positions in various divisions of HBO. Mr. McGee is the former President of the Alvin Ailey Dance Theater Foundation and the Film Society of Lincoln Center. He has served on the Boards of the Sundance Institute, the Public Theater, Save the Children and the Time Warner Foundation. He is currently a member of the Board of Tegna Inc., the Pew Research Center and the Black Filmmaker Foundation. He was recognized by Savoy Magazine in 2016 and 2017 as a member of the Power 300 list of the Most Influential Black Corporate Directors. In 2018, the National Association of Corporate Directors named Mr. McGee to the Directorship 100, the organization’s annual recognition of the country’s most influential boardroom members.
Qualifications and Expertise

Other Public Company Boards:   Tegna, Inc.

Global Markets and Distribution Expertise:   Contributes significant operational, marketing and wholesale distribution expertise and knowledge of international markets acquired in senior management and leadership roles during his long career with HBO.

Information Technology:   Has a deep understanding of the uses of technology and application to marketing and media. Teaches courses on digital transformation.

Governance and Risk Oversight:   Current director of Tegna Inc. and Pew Research Center. Has taught MBA courses on leadership and corporate accountability. Served as President of HBO Home Entertainment and in other leadership positions within HBO.
Dennis M. Nally
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Age: 69
Director since January 2020
Committees:

Audit (Chair)

Compensation & Succession Planning

Executive

Special Litigation
Background and Experience
Mr. Nally has served on our Board since January 2020. He served as Chairman of PricewaterhouseCoopers International Ltd., the coordinating and governance entity of the PwC network, from 2009 to 2016. From 2002 to 2009, he served as Chairman and Senior Partner of the U.S. firm PricewaterhouseCoopers LLP. He joined PricewaterhouseCoopers LLP in 1974 and became partner in 1985, serving in numerous leadership positions within the organization, including National Director of Strategic Planning, Audit and Business Advisory Services Leader and Managing Partner. Mr. Nally is a member of the boards of Morgan Stanley and Globality, Inc.
Qualifications and Expertise

Other Public Company Boards:   Morgan Stanley.

Financial Expertise:   Has extensive knowledge of financial statements, accounting principles and practices, internal control over financial reporting and risk management processes.

Governance and Risk Oversight:   Experience as a director at Morgan Stanley and as senior executive at PricewaterhouseCoopers provides Mr. Nally with expertise in highly regulated industries.
Board of Directors Vote Recommendation
We recommend that you vote For the election of each of the ten nominees named in this proxy statement to the Board of Directors.
 
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Corporate Governance and Related Matters | 2022 AmerisourceBergen Proxy
Non-Employee Director Compensation at 2021 Fiscal Year End
Our director compensation program is designed to attract and retain qualified non-employee directors. Our program aligns director compensation with the compensation of our peers (our peer companies are identified on page 49). Our Governance, Sustainability and Corporate Responsibility Committee reviews non-employee director compensation regularly to confirm that it appropriately addresses time, effort, expertise, and accountability required of active board membership.
The following table summarizes the total compensation earned by directors who were not employees of AmerisourceBergen during fiscal year 2021. Ms. Barra waived her right to receive compensation as a non-employee director. Directors who are employees of AmerisourceBergen receive no compensation for their service as directors or as members of Board committees.
Name
Retainer/​
Fees
Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
All Other
Compensation
($)(4)
Total
($)
Ornella Barra(5)
D. Mark Durcan 135,459 175,007 6,566 317,032
Richard W. Gochnauer 107,500 175,007 35,072 317,579
Lon R. Greenberg 133,750 175,007 10,396 319,153
Jane E. Henney, M.D. 125,000 200,055 7,879 332,934
Kathleen W. Hyle 110,000 175,007 6,566 291,573
Michael J. Long 124,583 175,007 6,566 306,156
Henry W. McGee 115,000 175,007 18,521 308,528
Dennis M. Nally 160,842 175,007 335,849
(1)
These amounts include amounts earned for service as Committee Chairs and amounts deferred into our deferred compensation plan. In fiscal year 2021, Mr. Durcan received 1,163 shares of Common Stock, in lieu of the retainer. Mr. Nally received 879 shares of Common Stock, in lieu of 50% of his retainer.
(2)
As of September 30, 2021, each of the non-employee directors held the following shares of outstanding restricted stock units: Ms. Barra—0; Mr. Durcan—5,706 ; Mr. Gochnauer—7,066; Mr. Greenberg—9,823; Dr. Henney—6,522; Ms. Hyle—5,706; Mr. Long—5,706; Mr. McGee—7,046; and Mr. Nally—3,605.
The amounts reported represent the grant date fair value for equity awards shown in accordance with Accounting Standards Codification 718, disregarding the estimate of forfeitures related to service-based vesting conditions. There were no forfeitures by the directors in fiscal year 2021. See Note 11 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 for assumptions used to estimate the fair values of restricted stock units granted during fiscal 2021.
(3)
No stock options were granted to directors in fiscal year 2021.
(4)
These amounts represent the dividends accrued and paid on restricted stock units that vested in fiscal year 2021.
(5)
Ms. Barra waived her right to receive compensation as a non-employee director. Consequently, our Board has waived the stock ownership requirements for Ms. Barra.
 
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Director Fees.   Our director compensation program provides for an annual cash retainer plus an annual equity award of restricted stock units. Consistent with our overall compensation philosophy, the compensation program for non-employee directors provides total direct compensation (cash retainer and equity award) in the 50th percentile of our peer group. (See page 49 for a description of our peer group.)
Compensation Element
2021 Compensation Program
Annual Retainer $100,000 Non-Employee Director
$125,000 Lead Independent Director
Annual Equity Award $175,000 Non-Employee Director
$200,000 Lead Independent Director
Committee Chair Fee $25,000 Audit Committee
$20,000 Compensation and Succession Planning    Committee
$25,000 Compliance and Risk Committee
$15,000 Finance Committee
$15,000 Governance, Sustainability and Corporate    Responsibility Committee
Merger Integration and Special Litigation Committee Compensation $25,000 Merger Integration Committee (Chair)
$15,000 Merger Integration Committee (Member)
$50,000 Special Litigation Committee
Annual Retainers.   A director may elect to have the annual retainer paid in cash, Common Stock or restricted stock units, or credited to a deferred compensation account. Payment of annual retainers in cash will be made in equal quarterly installments.
Annual Equity Awards.   On March 11, 2021, each of the non-employee directors (other than Ms. Barra, who waived compensation) received an annual grant of restricted stock units. The vesting period for these awards is three years from the date of grant, subject to continued service on the Board or following retirement by a director (i) aged 62 with five years of continuous service on the Board or (ii) who, after reaching age 55, has an age plus years of continuous service with the Company that equals at least 70. These grants were made under the AmerisourceBergen Corporation Omnibus Incentive Plan, originally approved by shareholders at the 2014 annual meeting (the “Omnibus Incentive Plan”). A director may defer settlement of shares payable with respect to restricted stock units as described below.
Deferral and Other Arrangements.   Directors have the option to defer all or any part of the annual retainer and to credit the deferred amount to an account under the AmerisourceBergen Corporation Deferred Compensation Plan. Payment of deferred amounts will be made or begin on the first day of the month after the non-employee director ceases to serve as a director. A director may elect to receive the deferred benefit (i) over annual periods ranging from three to fifteen years and payable in quarterly installments or (ii) in a single distribution. We pay all costs and expenses incurred in the administration of the Deferred Compensation Plan. Directors also have the option to forgo 50% or more of their annual cash retainers and receive either Common Stock or restricted stock units covering shares having a fair market value on the quarterly grant date equal to the amount of the foregone compensation. In addition, directors may defer settlement of any shares payable with respect to any restricted stock units (and any dividend equivalents) received either in lieu of the annual retainer or as the annual equity award to a later date. We also provide our directors with a prescription drug benefit and reimburse them for the cost of education programs, transportation, food and lodging in connection with their service as directors.
Stock Ownership Guidelines.   We require our non-employee directors to own shares of our Common Stock to align their interests with those of the shareholders and to provide an incentive to foster our long-term success. From and after the fifth year following their Board election, non-employee directors must own stock equal in value to at least five times the annual cash retainer. We may take unusual market conditions into consideration when assessing compliance. We confirm compliance with guidelines annually at the end of each fiscal year and, as of September 30, 2021, all of our non-employee directors were in compliance with the stock ownership guidelines or had not yet completed their fifth year as a director.
 
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Corporate Governance
Board Structure
Our Board provides guidance and critical review of our governance, strategic initiatives, talent management and risk management processes. Our Board also ensures that we have an effective management team in place to run our business and serves to protect and advance the long-term interests of our shareholders. The role of our senior executives is to develop and implement a strategic business plan for AmerisourceBergen and to grow our business.
Our employees conduct our business under the direction of our Chairman, President and Chief Executive Officer and with the independent oversight of our Board, including our Lead Independent Director, Dr. Jane E. Henney. To enhance its oversight function, our Board is composed of directors who are not employed by us, with the exception of Mr. Collis.
Role of the Chairman and Lead Independent Chair
We believe that our current leadership structure is in the best interests of AmerisourceBergen and its shareholders and that it fosters innovative, responsive and strong leadership for the Company as a whole. Our Board has determined that the election of an executive Chairman must be accompanied by the election of a strong Lead Independent Director with a clearly defined and dynamic leadership role in the governance of the Board. In March 2021, the Board determined that re-appointing Steven H. Collis as Chairman of the Board and Dr. Jane E. Henney as Lead Independent Director would result in the governance structure best suited to enable our Board and management to carry out their responsibilities to our shareholders and promote the growth of AmerisourceBergen. We believe the structure promotes, through the clearly articulated roles and responsibilities of the Lead Independent Director and Board committees, the objective and effective oversight of management.
Serving as both Chairman and Chief Executive Officer enables Mr. Collis to effectively and efficiently execute our strategic initiatives. In fiscal year 2021, those initiatives included acquiring the majority of the Alliance Healthcare businesses from Walgreens Boots Alliance, Inc. (“WBA”), strengthening the ongoing strategic relationship with WBA, and ensuring business continuity throughout the COVID-19 pandemic. Mr. Collis is uniquely suited to serve in these two roles due to his knowledge of the Company and his experience in the industry. As Lead Independent Director, Dr. Henney provides assertive, independent leadership in the boardroom. In addition to her extensive knowledge of the healthcare industry and regulatory environment, Dr. Henney has substantial corporate governance experience and a strong working relationship with her fellow directors.
The Chairman’s primary responsibility is to set the agenda for the Board and to facilitate communications among our directors and between the Board and senior management. As Chairman, President and Chief Executive Officer, Mr. Collis ensures that the Board’s agenda and discussions address strategic planning as well as key business issues and risks that he encounters in daily operations.
Our governance structure establishes a dynamic leadership role for the Lead Independent Director, which, together with independent committee leadership, provides a meaningful counterbalance to the executive Chairman and maintains independent and effective oversight of management.
Key aspects of this structure include: if the Chairman is not an independent member of the Board, a majority of the independent directors shall elect a Lead Independent Director annually, subject to his or her continuing reelection and status as an independent director; the Lead Independent Director has clearly articulated and extensive authority and responsibilities in the Board’s governance and functions; our Audit Committee, the Compensation and Succession Planning Committee, the Governance, Sustainability and Corporate Responsibility Committee, and Merger Integration Committee are each chaired by and comprised solely of independent directors; a majority of the directors serving on our Compliance and Risk Committee and Finance Committee are independent directors; and our non-employee directors are encouraged to, and often do, have direct contact with our senior managers outside the presence of our executive officers.
The Lead Independent Director’s robust and comprehensive authority is as follows:

presides at all meetings of the Board at which the Chairman is not present;

calls, sets the agenda for and chairs executive sessions of the non-employee directors;

has authority to call a Board meeting and/or a meeting of non-employee directors;
 
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approves Board meeting agendas and schedules to ensure that there is sufficient time for discussion of all agenda items;

meets one-on-one with the Chairman after each regularly scheduled Board meeting;

serves as a liaison between the Chairman and the non-employee directors;

serves on the Executive Committee;

advises the Chairs of the Board committees and assists them in the management of their workloads;

with the Chair of the Compensation and Succession Planning Committee, takes a leading role in succession planning for the Chief Executive Officer;

supports the Chair of the Governance, Sustainability and Corporate Responsibility Committee in overseeing the annual self-assessment process for the Board and each committee, interviewing and recommending candidates for the Board and recommending Board committee assignments;

is available for communication and consultation with major shareholders upon request on appropriate topics; and

performs such other functions and responsibilities as set forth in our corporate governance principles or as requested by the Board or the non-executive directors from time to time.
Our Board conducts annual evaluations, under the oversight of our Governance, Sustainability and Corporate Responsibility Committee. The Compensation and Succession Planning Committee, in accordance with its charter and under the oversight of the Lead Independent Director, will annually review the performance of, and succession plan for, the Chief Executive Officer. These processes provide our Board with opportunities to examine and reassess the effectiveness of our leadership structure, including the performance of our Chairman and Lead Independent Director.
Succession Plan for Chairman of the Board
Our Board has always retained the flexibility to determine the optimal leadership structure for the Company and its shareholders because our shareholders benefit most when our Board has the freedom to make decisions that are in the best interests of the Company rather than pursuant to a predetermined policy. Mr. Collis has served as President and Chief Executive Officer since July 2011 and as Chairman since March 2016.
In November 2018, the Board determined that it was in the best interests of the Company to split the role of Chairman of the Board and Chief Executive Officer in the future, commencing with the Company’s next Chief Executive Officer. At that time, the Chairman role will be assumed by an independent director.
Board Corporate Governance
Our Board has adopted AmerisourceBergen’s corporate governance principles. Together with the charters of the Board committees, they provide the framework for the governance of AmerisourceBergen. Our corporate governance principles clearly delineate the authority and roles of the Chairman of the Board and the Lead Independent Director in the leadership of the Board, mandate the independence of the committee Chairs and all the members of our Audit Committee, Compensation and Succession Planning Committee and Governance, Sustainability and Corporate Responsibility Committee, and affirm non-employee directors’ access to managers and team members outside the presence of our executives. The corporate governance principles address a variety of governance issues in addition to the leadership structure, including those discussed under the headings “Information on Board Committees,” “Code of Ethics” and “Shareholder Engagement.” The Board reviews and updates the corporate governance principles and the committee charters from time to time to reflect leading corporate governance practices.
There are eight committees of the Board: the Audit Committee, the Compensation and Succession Planning Committee, the Compliance and Risk Committee, the Executive Committee, the Finance Committee, the Governance, Sustainability and Corporate Responsibility Committee, the Merger Integration Committee, and the Special Litigation Committee. The Merger Integration Committee was formed in March 2021 to advise and counsel management on the integration and risk management of Alliance Healthcare. In addition, a Special Litigation Committee was created in September 2020 to review and evaluate a derivative complaint related to Medical Initiatives, Inc., a subsidiary that ceased operations in 2014. Our Executive Committee, which is composed of our Chairman of the Board, the Lead Independent Director and the Chairs of the other committees
 
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(other than the Special Litigation Committee), has the authority to act between regularly scheduled meetings of the Board. The Chairman of the Board serves as the Chair of the Executive Committee. The Board believes that changing committee assignments from time to time strengthens our corporate governance practices and enhances each committee’s objective review of management.
Our corporate governance principles and the charters of the Audit Committee, the Compensation and Succession Planning Committee, the Compliance and Risk Committee, the Finance Committee and the Governance, Sustainability and Corporate Responsibility Committee have been posted on our website at investor.amerisourcebergen.com.
Board Independence
The Board has determined that, except for Ms. Barra and Mr. Collis, all of the directors are independent. Our corporate governance principles require us to maintain a minimum of 70% independent directors on our Board. If the ten director nominees are elected at the 2022 Annual Meeting of Shareholders, eight out of ten directors then serving will be independent.
The Board has adopted guidelines in our corporate governance principles to assist it in making independence determinations, which meet or exceed the independence requirements set forth in the NYSE listing standards. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with AmerisourceBergen.
With the assistance of legal counsel, our Board reviewed the applicable legal standards for director and Board committee member independence. In undertaking its review, the Board considered that some of our directors serve on the board of directors or as executive officers of companies for which we perform (or may seek to perform) drug distribution and other services in the ordinary course of business. As a result of this review, the Board has determined that each of the following current directors is independent: D. Mark Durcan, Richard W. Gochnauer, Lon R. Greenberg, Jane E. Henney, M.D., Kathleen W. Hyle, Michael J. Long, Henry W. McGee and Dennis M. Nally.
Our Board has also determined that each of the members of our Audit Committee, Compensation and Succession Planning Committee and Governance, Sustainability and Corporate Responsibility Committee are independent, in accordance with the independence requirements set forth in their charters and, as applicable, SEC rules and NYSE listing standards. None of the members of these committees receives any consulting or advisory fee from us other than compensation as non-employee directors.
 
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Risk Oversight and Management
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The Board executes its oversight responsibility for risk management directly and through its committees, as follows:

Our Board considers specific risk topics throughout the year, including risks associated with government regulation as well as with our strategic objectives, business plan, operations, distribution of controlled substances, information technology (including cybersecurity) and capital structure, among many others. Each quarter, our Chief Financial Officer reports to the Board on AmerisourceBergen’s financial performance and explains how actual performance compares to our business plan. Our corporate officers and the leaders of our principal business units report regularly to the Board about the risks and exposures related to their areas of responsibility. The Board is informed about and regularly discusses our risk profile, including legal, regulatory and operational risks to our business. The Board also oversees our compliance policies and practices, including our sophisticated diversion control program through which the Company provides daily reports directly to the Drug Enforcement Administration about the quantity, type, and receiving pharmacy of every order of controlled substances we distribute. Additionally, the Board periodically visits Company facilities, which provides the directors with an opportunity to observe the Company’s operations and to interact with employees outside of the boardroom.

Each Board committee reports to the Board at every regular Board meeting on the topics discussed and actions taken at the most recent committee meeting. The Board discusses the risks and exposures, if any, involved in the matters or recommendations of the committees, as necessary.

Our Compliance and Risk Committee assists the Board in its oversight of the Company’s (i) enterprise risk management program, (ii) compliance program, which includes the Office of Compliance led by the Company’s Chief Compliance Officer, (iii) legal and regulatory compliance, and (iv) Code of Ethics and Business Conduct.
 
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Our Audit Committee has primary responsibility for monitoring our internal audit and financial risk assessment and overseeing our system of internal controls and financial reporting. At each regularly scheduled meeting, the Audit Committee receives reports from our (i) external auditor on the status of audit activities and findings; and (ii) chief audit executive (who reports directly to the Audit Committee) on the status of the internal audit plan, audit results and any corrective action taken in response to audit findings. The Audit Committee is also responsible for periodically reviewing cybersecurity issues and the Company’s business continuity and disaster recovery plans as they relate to IT security.

The Board’s other committees oversee risks associated with their respective areas of responsibility. For example, the Governance, Sustainability and Corporate Responsibility Committee oversees our sustainability strategy and practices, including the Company’s ESG reporting and disclosure practices. The Governance, Sustainability and Corporate Responsibility Committee also oversees the Company’s Diversity, Equity & Inclusion practices. Additionally, the Compensation and Succession Planning Committee assesses risks associated with our compensation policies and programs for executives as well as employees generally. Our Finance Committee discusses risks relating to our capital structure, financing activities, dividend and tax policy and stock repurchase activities. Our Merger Integration Committee oversees risks associated with integrating the Alliance Healthcare business into our company.

We have a Chief Compliance Officer who oversees our corporate compliance program, including our Office of Compliance, compliance audits, compliance training, and compliance with our Code of Ethics and Business Conduct and the Company’s reporting, investigation and corrective action program. We also have an internal Compliance Committee composed of senior executives that supports the Chief Compliance Officer in fulfilling her responsibilities and driving corporate adherence to our compliance program, Code of Ethics and Business Conduct and related policies and procedures. Our Chief Compliance Officer and Chief Legal Officer report to the Compliance and Risk Committee and to the full Board throughout the year on corporate compliance matters, the status of our compliance programs (including our diversion control program described above), calls to our hotline and any other material developments.
Oversight of Employee Compensation
We have conducted an internal risk assessment of our employee compensation policies and practices, including those relating to our executives. We have concluded that our compensation policies and practices do not promote behaviors that could put the organization at legal, financial or reputational risk. We have reviewed our risk analysis with the Compensation and Succession Planning Committee. The risk assessment process included, among other things, a review of all key incentive compensation plans to ensure that they are aligned with our pay-for-performance philosophy and include performance metrics that support corporate goals. The objective of the process was to identify any compensation plans and practices that may encourage employees to take unnecessary risks that could threaten the Company. No such plans or practices were identified. Moreover, various factors mitigate the risk profile of our compensation programs, including, among others:

Performance targets under our cash incentive programs are tied to a number of different financial metrics so employees will not place undue emphasis on any particular metric at the expense of other aspects of our business;

Maximum caps on payouts have been established for our annual cash incentive programs, including under our cash bonus plan used for senior management;

Equity awards under our performance plan for senior executives have maximum caps and are forfeited entirely if the threshold performance metrics are not achieved;

For fiscal year 2021, the performance plan ties 60% of an executive officer’s annual equity award to performance shares that are dependent on financial metrics achieved over a three-year period to ensure that our executive officers are accountable for long-term measures of success;

The remaining 40% of an executive officer’s annual equity award is in restricted stock units and also vests over a multi-year period to encourage executive officers to focus on long-term growth and creating value for shareholders;

Stock ownership requirements align the interests of our senior management with those of our shareholders;
 
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We have effective management processes for developing annual business plans and a strong system of internal financial controls; and

A broad-based group of functions, including human resources, finance and legal, oversees aspects of our cash and equity incentive programs.
We will continue to monitor our compensation policies and practices to determine whether our risk management objectives are being met with respect to incentivizing our employees.
Board Orientation and Education
We provide our directors with comprehensive orientation and continuing education, as needed, which is overseen by the Governance, Sustainability and Corporate Responsibility Committee. Director orientation familiarizes the directors with our business and strategic plans, significant financial, accounting and risk management issues, compliance programs and other controls, policies, principal officers and internal auditors, and our independent registered public accounting firm. The orientation also addresses Board procedures, our corporate governance principles and our Board committee charters. We offer continuing education programs and provide opportunities to attend commercial director education seminars to assist our directors in maintaining their expertise in areas related to the work of the Board and the directors’ committee assignments. Ongoing education includes two hours of annual compliance training for each director. We also provide our directors with full membership to the National Association of Corporate Directors to provide a forum for them to maintain their insight into leading governance practices and exchange ideas with peers. Dr. Henney in 2011 and 2012, Ms. Hyle in 2015 and Mr. McGee in 2018 were named to the “NACD Directorship 100,” an annual honor sponsored by the National Association of Corporate Directors to recognize influential directors and others who impact corporate governance.
Board Evaluations
We have a comprehensive annual evaluation policy and process in place for the Board and each of its committees, which is led by the Chair of our Governance, Sustainability and Corporate Responsibility Committee and our Lead Independent Director. As required by our corporate governance principles, the evaluation occurs annually. The evaluation process involves discussion and planning for both Board and committee refreshment, including with regard to the skills needed to continue to represent the long-term interests of shareholders.
Either the Chair of our Governance, Sustainability and Corporate Responsibility Committee, the Lead Independent Director, or an independent, third-party governance expert interviews each director to obtain his or her assessment of the effectiveness of the Board and the committees on which he or she serves, as well as director performance and Board dynamics. In fiscal 2021, the evaluation process was led by the Lead Independent Director. In advance of the interview, each member of a committee receives a questionnaire soliciting feedback regarding the committee’s performance. During the interview, each member is asked to provide an assessment of the Board’s and the relevant committee’s performance. We also solicit suggestions for improving the Board’s and the committee’s performance, dynamics, time-management, and functioning, as well as proposed topics of focus for the Board and the committee in the upcoming year. The results of the individual interviews and assessments are aggregated in a report, which the Lead Independent Director presents to the full Board for review, discussion and determination of action items.
The annual review by the Board of the corporate governance principles and by each committee of its charter is a further step in the evaluation process through which the directors consider leading corporate governance practices for the Board as a whole and identify new areas of focus for the different committees. The full Board reviews and discusses recommended revisions to the corporate governance principles and committee charters prior to voting on their approval.
Director Elections and Tenure Policy
Our bylaws and corporate governance principles provide for a majority vote standard for the election of directors. Under the majority vote standard, each director must be elected by a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote. A “majority of the votes cast” means that the number of votes cast “for” a candidate for director must exceed the number of votes cast “against” that director. A plurality voting standard will apply instead of a majority voting standard if:

A shareholder has provided us with notice of a nominee for director in accordance with our bylaws; and
 
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That nomination has not been withdrawn on or prior to the day next preceding the date the Company first provides its notice of meeting for such meeting to shareholders.
Under Delaware law, if an incumbent nominee for director in an uncontested election does not receive the required votes for re-election, the director remains in office until a successor is elected and qualified. Our bylaws and corporate governance principles require each director nominee to tender an irrevocable resignation prior to the applicable meeting of shareholders and include post-election procedures in the event an incumbent director does not receive the required votes for re-election, as follows:

The Governance, Sustainability and Corporate Responsibility Committee shall make a recommendation to the Board as to whether to accept the previously tendered resignation of the director;

The Board will act on the Governance, Sustainability and Corporate Responsibility Committee’s recommendation; and

The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation.
Additionally, pursuant to our governance principles, a director will offer to resign at the annual meeting of shareholders following his or her 75th birthday and a director will tender his or her resignation for consideration by the Governance, Sustainability and Corporate Responsibility Committee when his or her employment or principal business association changes materially. A director who is an employee will resign when he or she retires or is no longer employed by us. We also encourage our Board to rotate committee Chairs on a regular basis.
Information on Board Committees
Audit Committee

Appoints, and has authority to terminate, our independent registered public accounting firm.

Pre-approves all audits and permitted non-audit services provided by the Company’s independent registered public accounting firm, including the scope of the audit and audit procedures.

Reviews and discusses the independence of our independent registered public accounting firm.

Reviews and discusses with management and our independent registered public accounting firm the Company’s audited financial statements and interim quarterly financial statements as well as management’s discussion and analysis of the statements as set forth in Forms 10-K and 10-Q filed with the Securities and Exchange Commission (SEC).

Prepares the audit committee report as required by SEC rules.

Discusses with management and/or our independent registered public accounting firm significant financial reporting and accounting issues and the adequacy of our internal control over financial reporting.

Inquires of management (including the internal audit function) and our independent registered public accounting firm about significant risks or exposures (whether financial, operational, or otherwise) and assesses the steps management has taken to control such risks or exposures, including policies implemented for such purposes.

Reviews the internal audit function, internal audit plans, internal audit reports, and management’s response to such reports.

Reviews the appointment, performance, and replacement of our chief audit executive.

Assists the Board with oversight of the Company’s compliance with legal and regulatory requirements, including, as appropriate, participating in oversight of enterprise risk management.

Discusses the Company’s guidelines, policies and practices with respect to the assessment, management and mitigation of risks.

Reviews and approves all related persons transactions in accordance with our Related Persons Transactions Policy.

Reviews our information technology security program and reviews and discusses the controls around cybersecurity, including the development of business continuity and disaster recovery plans.
 
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Compensation and Succession Planning Committee

Reviews and approves our executive compensation strategy and the individual elements of total compensation for the President and Chief Executive Officer and executive management.

Evaluates performance of management annually.

Ensures that our executive compensation strategy supports shareholder interests.

Considers and approves any compensation practices related to ESG, including diversity, equity and inclusion, and coordinates with the Governance, Sustainability and Corporate Responsibility Committee on these practices, as appropriate.

Monitors and reviews the Company’s clawback policies and the clawback, recoupment and forfeiture provisions contained in the Company’s equity and cash incentive compensation programs.

Reviews and discusses with management the Compensation Discussion and Analysis and other disclosures about executive compensation that are required to be included in our proxy statement and Annual Report on Form 10-K.

Prepares a compensation committee report as required by SEC rules.

Administers and makes awards under our incentive compensation plans, including equity incentive plans, with discretion to adjust compensation upward or downward.

Has sole authority for retaining and terminating any consulting firm used to assist the committee in its evaluation of the compensation of the President and Chief Executive Officer or any other executive officer and for evaluating the independence of such consulting firm.

Monitors the activities of our internal Benefits Committee, including the Benefits Committee’s oversight of the administration and investment performance of our retirement plans.

Oversees the administration of our health and welfare plans.

Reviews with management and makes recommendations relating to succession planning and talent development.
Compliance and Risk Committee

Oversees the implementation by management of an enterprise risk management program that is designed to assist the Company with monitoring and mitigating compliance, legal, regulatory, and operational risks related to the business, including emerging risks.

Assists the Board in its oversight of the Company’s compliance with legal and regulatory requirements and reviews all significant litigation and internal and government investigations, other than those matters reserved for the Audit Committee’s review and oversight, with the appropriate members of management.

Provides review and oversight of the Company’s compliance program and meets regularly with the Company’s Chief Compliance Officer to discuss matters within the committee’s oversight responsibility.

Reports to the Board regarding the Company’s compliance functions and related risks.

Oversees compliance with our Code of Ethics and Business Conduct.
Executive Committee

Exercises the authority of the Board of Directors between regularly scheduled meetings of our Board on matters that cannot be delayed, except as limited by Delaware law and our bylaws.
 
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Finance Committee

Provides oversight of our capital structure and other issues of financial significance to AmerisourceBergen.

Reviews the asset and liability structure of the Company and considers its funding and capital needs.

Reviews proposed financing plans, credit facilities, and other financing transactions.

Reviews our dividend policy.

Reviews and proposes issuance or sale of our stock, stock repurchases, redemptions and splits.

Reviews financial strategies developed by management to meet changing economic and market conditions.

Reviews proposed major capital expenditures or commitments.

Reviews proposed material acquisitions, divestitures, joint ventures, and other transactions involving AmerisourceBergen and periodically reviews performance and progress of completed acquisitions and capital spending projects.
Governance, Sustainability and Corporate Responsibility Committee

Reviews and makes recommendations to the Board about corporate governance and the Company’s corporate governance principles.

Identifies and discusses with management the risks, if any, relating to the Company’s corporate governance structure and practices.

Oversees the Company’s sustainability and corporate responsibility strategy and practices, including the Company’s ESG reporting and disclosure practices.

Oversees the Company’s diversity, equity and inclusion strategy and practices and the Company’s performance in the areas of diversity, equity and inclusion in the workforce, in communities and across the healthcare supply chain.

Receives regular reports from the Company’s Global ESG Council and oversees the Company’s support for charitable, educational and business organizations, including the AmerisourceBergen Foundation and the AmerisourceBergen Associate Assistance Fund.

Recommends selection and qualification criteria for directors and committee members and identifies and recommends qualified candidates to serve as directors of AmerisourceBergen, including those recommended by shareholders. The Committee includes, and has any search firm that it engages include, women and ethnically and racially diverse candidates in the pool from which the Committee selects director candidates.

Reviews and makes recommendations relating to succession planning for our Board and Board committee leadership positions and prepares for Board vacancies.

Oversees orientation of directors and continuing education of directors in areas related to the work of our Board and the directors’ committee assignments.

Makes recommendations regarding the size and composition of our Board and the composition and responsibilities of Board committees.

Oversees the evaluation of our Board and the Board committees and reviews the committee assignments.

Reviews and makes recommendations to our Board regarding non-employee director compensation.

Has sole authority for retaining and terminating any third-party firm used to assist in the annual Board and Board committee evaluation and with evaluation of the compensation of directors, and for evaluating the independence of such firm.

Oversees the Company’s social strategy and practices, including with respect to diversity, equity and inclusion.
 
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Merger Integration Committee

Provides advice and counsel to management and senior leadership on the integration of Alliance Healthcare.

Monitors the performance of Alliance Healthcare and oversees management’s development of a structure that supports the realization of financial, operational and cultural synergies.

Supports management in identifying and mitigating the risks associated with expansion and the operation of a global company.

Reviews and discusses with management plans to develop and strengthen talent across the Company and Alliance Healthcare.

Reviews and discusses with management the environmental, social and governance practices of Alliance Healthcare.

Identifies acquisition and integration issues to be addressed by the appropriate committees of the Board.
Special Litigation Committee

Established to review and evaluate a derivative complaint related to Medical Initiatives, Inc., a subsidiary that ceased operations in 2014.

Filed its recommendations with the Delaware Court of Chancery in September 2021.
Director Attendance
Each director attended at least 75% of the aggregate of  (i) the total number of meetings of the Board of Directors held during fiscal 2021 and (ii) the total number of meetings held by each committee of the Board on which such person served during fiscal 2021. There were 11 meetings of the full Board of Directors during fiscal 2021 and the number of committee meetings held during fiscal 2021 is provided in the chart on page 9 of this proxy statement.
We currently expect all of our director nominees to be in attendance at the 2022 Annual Meeting of Shareholders and all directors are expected to attend our annual meetings pursuant to our governance principles. All of our directors attended the 2021 Annual Meeting of Shareholders.
Meetings of the Independent Directors
The independent directors meet prior to the commencement of each of the regularly scheduled Committee meetings. Additionally, the independent directors, together with our one additional non-management director, meet following each regularly scheduled meeting of the full Board of Directors. The Lead Independent Director presides at such meetings and, if the Lead Independent Director is not present, the committee Chairs preside on a rotating basis.
Communications with Non-Management Directors
Interested parties who wish to make any concerns known to the non-management directors may submit communications at any time in writing to: Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 West First Avenue, Conshohocken, PA 19428. AmerisourceBergen’s Secretary will determine, in his good faith judgment, which communications will be relayed to the Lead Independent Director and other non-management directors.
Code of Ethics
The Board of Directors adopted our Code of Ethics and Business Conduct in May 2004. We review and revise the Code of Ethics and Business Conduct from time to time, most recently in August 2021. It applies to directors and employees, including officers, and is intended to comply with the requirements of Section 303A.10 of the NYSE Listed Company Manual. Any waivers of the application of the Code of Ethics and Business Conduct to directors or executive officers must be approved by either the Board of Directors or the Compliance and Risk Committee.
 
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Corporate Governance and Related Matters | 2022 AmerisourceBergen Proxy
We have also adopted our Code of Ethics for Designated Senior Officers in accordance with Item 406 of the SEC’s Regulation S-K. It applies to our President and Chief Executive Officer, our Executive Vice President and Chief Financial Officer and our Senior Vice President and Chief Accounting Officer.
Our Code of Ethics and Business Conduct and our Code of Ethics for Designated Senior Officers are posted on our website at investor.amerisourcebergen.com. Additionally, any waiver or amendment to either code will be disclosed promptly on our website at investor.amerisourcebergen.com.
Shareholder Engagement
We value open communications with our shareholders. The goal of our engagement and outreach efforts is to ensure that we work collaboratively to educate our investors about our business and governance practices as well as to identify issues of importance to our shareholders and our business. Our investor relations team regularly shares with our Board and senior executives the feedback that they have received from our shareholders.
On an ongoing basis, we proactively communicate with the investment community and shareholders about AmerisourceBergen’s financial performance, operations and strategic developments through the following:

Quarterly earnings releases and quarterly earnings release conference calls, investor presentations and webcasts;

Regular reports filed with the SEC, including annual and quarterly reports;

Conference calls, presentations and webcasts related to specific developments;

Participation in numerous healthcare investor conferences with webcasted presentations;

In-person and telephonic meetings with investors and stakeholders;

Proactive outreach to institutional investors, pension funds and governance professionals from our largest shareholders; and

Our annual shareholders meeting.
Specifically, following a disappointing say-on-pay vote outcome at our 2021 Annual Meeting, we proactively engaged with a substantial portion of our investor base to better understand the views of our shareholders. This included an expanded outreach led by the Chair of our Compensation and Succession Planning Committee, who participated in dialogue with a broadly representative group of our shareholders along with members of our management team. These conversations helped inform and guide the Compensation and Succession Planning Committee’s decisions on executive compensation for this year and enhancements to the program going forward.
Our corporate governance principles, which were most recently revised in November 2021, describe the procedures through which shareholders may seek direct engagement with Board members. While management, through our President and Chief Executive Officer, our investor relations team, and our Corporate Secretary, ordinarily engages with shareholders, the Chairman of the Board, in consultation with the Lead Independent Director, will review and consider, on a case-by-case basis, shareholder requests for meetings with the Board of Directors related to key areas of Board oversight and determine whether such meetings would be appropriate and beneficial. Shareholders may communicate their views directly to the Board by writing to Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 West First Avenue, Conshohocken, Pennsylvania 19428.
Shareholder Recommendations for Director Nominees
The advance notice provision for nomination of directors in our bylaws allows a shareholder to propose nominees for consideration by the Governance, Sustainability and Corporate Responsibility Committee by submitting specified information concerning itself and the proposed nominee, including the name, appropriate biographical information and qualifications of the proposed nominee. This and other information required under the advance notice provision must be provided to us in writing to: Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 West First Avenue, Conshohocken, PA 19428, no earlier than November 9, 2022 and no later than December 9, 2022 to be considered for the 2023 Annual Meeting of Shareholders.
 
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2022 AmerisourceBergen Proxy | Corporate Governance and Related Matters
The proxy access provision in our bylaws allows an eligible shareholder or group of no more than 20 eligible shareholders that has maintained continuous ownership of 3% or more of our Common Stock for at least three years to include in our proxy materials for an annual meeting of shareholders a number of director nominees up to the greater of two or 20% of the directors then in office. Loaned stock that can be recalled within three days may count towards an eligible shareholder’s 3% beneficial ownership requirement, which must be maintained at least until the annual meeting at which the proponent’s nominee will be considered. Proxy access nominees who do not receive at least a 25% vote in favor of election will be ineligible as a nominee for the following two years. Provisions in the Shareholders Agreement with Walgreens Boots Alliance would not permit Walgreens Boots Alliance to use proxy access. If any shareholder proposes a director nominee under our advance notice provision, we are not required to include any proxy access nominee in our proxy statement for the annual meeting. Information required under the proxy access provision must be provided to us in writing to: Kourosh Q. Pirouz, Vice President, Associate General Counsel and Secretary, AmerisourceBergen Corporation, 1 West First Avenue, Conshohocken, PA 19428, no earlier than August 31, 2022 and no later than September 30, 2022 to be considered for the 2023 Annual Meeting of Shareholders. In considering any nominee proposed by a shareholder in accordance with the requirements set forth in our bylaws, the Governance, Sustainability and Corporate Responsibility Committee will reach a conclusion based on the nominee evaluation criteria described under “Identification and Evaluation of Director Nominees and Overboarding Policy” beginning on page 13 of this proxy statement. After full consideration, the shareholder proponent will be notified of the decision of the committee.
 
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Audit Committee Matters | 2022 AmerisourceBergen Proxy
Audit Committee Matters
Item 2—Ratification of Appointment of Ernst & Young LLP as
AmerisourceBergen’s Independent Registered Public Accounting
Firm For Fiscal Year 2022
Ratification of the Appointment of Ernst & Young LLP
You are voting on the ratification of the appointment of Ernst & Young LLP (EY) as AmerisourceBergen’s independent registered public accounting firm for the fiscal year ending September 30, 2022. The Audit Committee of the Board of Directors has appointed EY to serve as our independent registered public accounting firm for fiscal year 2022. Although our governing documents do not require the submission of the appointment of AmerisourceBergen’s independent registered public accounting firm to the shareholders for approval, the Board considers it desirable that the shareholders ratify the appointment of EY. Should the shareholders not ratify the appointment of EY as AmerisourceBergen’s independent registered public accounting firm for the fiscal year ending September 30, 2022, the Audit Committee will investigate the reasons and will reconsider the appointment of EY.
Oversight Relationship Between the Audit Committee and Our External Auditor
Under its charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of AmerisourceBergen’s external auditor. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the external auditor’s qualifications, performance and independence. In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to AmerisourceBergen. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The Audit Committee reviews the process that we and EY undertake to ensure the rotation of the audit partner responsible for reviewing the audit, and evaluates the qualifications and experience of the individual selected to serve as lead partner for our audit. EY has been retained as the external auditor of AmerisourceBergen since 2001 and of its predecessor entity AmeriSource Health Corporation since 1985. The members of the Audit Committee believe that the continued retention of EY to serve as our external auditor is in the best interests of AmerisourceBergen and its shareholders.
Independent Registered Public Accounting Firm Services
Audit services provided by EY for fiscal year 2022 will include examination of the consolidated financial statements of AmerisourceBergen and services related to periodic SEC filings. Audit services for fiscal year 2021 also will include the audit of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Additionally, EY may provide audit-related, tax and other services comparable in nature to the services performed in fiscal years 2020 and 2021, as described under the heading Independent Registered Public Accounting Firm’s Fees.
Representatives of the Independent Registered Public Accounting Firm at the 2022 Annual Meeting of Shareholders
Representatives of EY are expected to participate at the 2022 Annual Meeting of Shareholders. Such representatives will have an opportunity to make a statement and will be available to respond to appropriate questions.
Board of Directors Vote Recommendation
We recommend that you vote For the ratification of the appointment of EY as AmerisourceBergen’s independent registered public accounting firm for fiscal year 2022.
 
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2022 AmerisourceBergen Proxy | Audit Committee Matters
Audit Committee Financial Experts
The Board of Directors has determined that each of Mr. Nally and Mr. Durcan is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K. Mr. Nally serves as Chair of the Audit Committee. A description of the financial expertise of Mr. Nally and Mr. Durcan accompanies their biographies on pages 19 and 16, respectively.
Policy for Pre-Approval of Audit and Non-Audit Services
The Audit Committee’s policy is to pre-approve all audit services and all non-audit services that the Company’s independent registered public accounting firm is permitted to perform for the Company under applicable federal securities regulations. As permitted by the applicable regulations, the committee’s policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent registered public accounting firm and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the committee. Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.
Independent Registered Public Accounting Firm’s Fees
During the fiscal years ended September 30, 2021 and 2020, EY, AmerisourceBergen’s independent registered public accounting firm, billed the Company the fees set forth below in connection with services rendered by the independent registered public accounting firm to the Company:
Fee Category
Fiscal Year 2021
Fiscal Year 2020
Audit Fees $ 10,112,000 $ 8,743,000
Audit-Related Fees $ 4,569,000 $ 4,543,000
Tax Fees $ 4,388,000 $ 2,752,000
All Other Fees $ 8,000 $ 8,000
TOTAL $ 19,077,000 $ 16,046,000
Audit fees consisted of fees for the audit of AmerisourceBergen’s annual financial statements, consultation concerning financial accounting and reporting standards and consultation concerning matters relating to Section 404 of the Sarbanes-Oxley Act of 2002, reviews of quarterly financial statements as well as services normally provided in connection with statutory and regulatory filings or engagements, comfort letters, consents and assistance with and review of Company documents filed with the SEC. Audit fees also included fees for the audit of the effectiveness of the Company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-related fees consisted of fees for assurance and related services, including employee benefit plan audits. Audit-related fees in both fiscal year 2020 and 2021 included due diligence fees related to the previously announced agreement to acquire the majority of the Alliance Healthcare businesses from Walgreens Boots Alliance and other corporate development activity.
Tax fees consisted of fees for services related to tax compliance, tax advice and tax planning services.
Other fees consisted of subscription fees for Internet-based professional literature.
Our Audit Committee reviewed and approved all fees charged by EY in accordance with the policy described above and monitored the relationship between audit and permissible non-audit services provided. The policy is intended to ensure that the fees earned by EY are consistent with the maintenance of the independent registered public accounting firm’s independence in the conduct of its auditing functions.
 
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Report of the Audit Committee | 2022 AmerisourceBergen Proxy
Report of the Audit Committee
The Audit Committee consists of the three directors named at the end of this report. All of the Audit Committee members are independent under SEC and NYSE rules and our corporate governance principles. The Board of Directors has concluded that each member is financially literate and that two of the members qualify as audit committee financial experts. The key responsibilities of the Audit Committee are set forth in its charter, which was most recently revised by the Board of Directors in November 2021 and is available on our website at investor.amerisourcebergen.com. The Audit Committee is responsible for, among other matters, the appointment, retention, and compensation of the independent auditor and in connection therewith annually considers the performance of Ernst & Young LLP (EY).
AmerisourceBergen’s management has the primary responsibility for the Company’s financial statements and its internal control over financial reporting. AmerisourceBergen’s independent registered public accounting firm, EY, is responsible for performing an independent audit of AmerisourceBergen’s consolidated financial statements and for issuing a report on the effectiveness of AmerisourceBergen’s internal control over financial reporting. The Audit Committee meets regularly with EY, with and without management present, to review the overall scope and plans for EY’s audit work and to discuss the results of its examinations, the evaluation of AmerisourceBergen’s internal control over financial reporting and the overall quality of AmerisourceBergen’s accounting and financial reporting. AmerisourceBergen’s management has represented to the Audit Committee that the financial statements contained in our Annual Report on Form 10-K for fiscal year 2021 were prepared in accordance with U.S. generally accepted accounting principles and that our internal control over financial reporting was effective as of September 30, 2021.
The Audit Committee reviewed and discussed with AmerisourceBergen’s management and EY the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 and our internal control over financial reporting. The Audit Committee discussed with EY, which is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles, the firm’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles, the reasonableness of significant judgments reflected in the financial statements and the clarity of disclosures in the financial statements. The Audit Committee also discussed with EY the matters related to the conduct of the audit that are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (PCAOB), including the matters required to be discussed by the PCAOB Auditing Standard No. 1301, “Communications with Audit Committees.” In addition, the Audit Committee discussed with EY the firm’s independence from the Company and its management, including the matters in the written disclosures and letter that were received by the Audit Committee from EY as required by applicable requirements of the PCAOB regarding EY’s communications with the Audit Committee concerning independence. The Audit Committee further considered whether the provision of non-audited related services by EY to the Company is compatible with maintaining the independence of that firm from the Company. The Audit Committee also discussed with EY the firm’s audit of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2021.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in AmerisourceBergen’s Annual Report on Form 10-K for fiscal year 2021.
AUDIT COMMITTEE
Dennis M. Nally, Chair
D. Mark Durcan
Henry W. McGee
The foregoing Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the report by reference therein.
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Executive Compensation and Related Matters
Letter from the Compensation and Succession Planning Committee
Dear AmerisourceBergen Shareholders,
As members of AmerisourceBergen’s Compensation and Succession Planning Committee (the “Compensation Committee”), we support a compensation philosophy for our named executive officers that:

Aligns with the interests of our shareholders;

Puts a significant portion of compensation at risk;

Drives business goals and strategies that support our purpose to create healthier futures for all our stakeholders; and

Attracts and retains talented and experienced senior executives.
Outstanding Performance in a Challenging Environment:   In making compensation decisions for fiscal year 2021, the Compensation Committee considered AmerisourceBergen’s strong financial performance and strategic accomplishments in an operating environment challenged by the ongoing and unprecedented effects of the COVID-19 pandemic. Against this backdrop, our management team executed on our differentiated strategy and exceeded the 2021 financial plan while also supporting, protecting and investing in our team members, including through financial incentives and enhanced time off benefits for frontline workers. The management team successfully completed the largest acquisition in AmerisourceBergen’s history and continued to drive growth as the leading distributor of specialty pharmaceuticals. True to its purpose, AmerisourceBergen played a critical role in the national response to the COVID-19 pandemic and delivered vaccines to more than 30 countries worldwide.
Proposed Opioid Litigation Settlement:   As discussed on page 5, the July 2021 proposed national settlement would resolve a substantial majority of opioid lawsuits currently filed and that could be filed by states, counties, municipalities, and other government entities. The decision to enter into this settlement involved significant consideration from AmerisourceBergen’s Board and leadership team. Ultimately, the Board determined that the proposed settlement is in the best interests of shareholders and will allow our management team to focus on the strategic and operational initiatives that drive long-term value. Importantly, AmerisourceBergen strongly disputes the allegations, but has been consistent in stating our desire to help address the enormity of the opioid challenge by bringing solutions to the table. The proposed settlement allows AmerisourceBergen, and its leadership, to focus on advancing its role as a global healthcare company, and will also bring meaningful financial relief to affected communities.
Shareholder Engagement and Feedback:   The Compensation Committee values the input of shareholders on our compensation program. Following a disappointing say-on-pay vote outcome at our 2021 Annual Meeting, we proactively engaged with a substantial portion of our investor base to better understand the views of our shareholders. This included an expanded outreach led by the new Chair of our Compensation Committee, Kathleen Hyle, who participated in dialogue with a broadly representative group of our shareholders along with members of our management team. These conversations helped inform and guide the Compensation Committee’s decisions on executive compensation for this year and enhancements to the program going forward.
Our conversations with shareholders focused on the use of non-GAAP metrics in our compensation program, the impact from the opioid litigation settlement accrual, and the need to align our compensation outcomes to the shareholder experience. Through this dialogue, we heard that shareholders were generally supportive of the overall structure of our executive compensation program; however, they believed the magnitude of the opioid litigation settlement accrual should be considered in the Compensation Committee’s fiscal year 2021 executive payout decisions, along with more detailed disclosure on our decision-making process. Separately, as we look ahead, we are committed to holding our management team accountable for events within their control.
Compensation Committee Actions:   The Compensation Committee took action to address the feedback raised by shareholders. We applied negative discretion to the short-term incentive payouts for fiscal year 2021 to reflect the shareholder experience related to the magnitude of the opioid litigation settlement accrual recorded in fiscal year 2020, and we approved several enhancements to create further alignment between our executives and shareholders. In summary, the Compensation Committee took the following actions in response to shareholder feedback:
 
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Reduced by 45% the short-term incentive payout for our CEO to below target for fiscal year 2021; while the calculated payout based on financial performance was 177% of target, the Compensation Committee reduced CEO payout to 97% of target, representing a $1.8 million total reduction;

Reduced by 10% the short-term incentive payouts for other NEOs for fiscal year 2021;

Enhanced disclosure of Compensation Committee decision process, including application of discretion;

Added a relative TSR modifier to the performance share component of our long-term incentive plan, effective for fiscal year 2022, with above median performance required for a target payout;

Implemented a two-year post-vesting holding requirement on 50% of earned performance shares for CEO, and one-year for other NEOs; and

Enhanced incentive compensation clawback provision and disclosure.
Details on all of the actions taken, along with the key factors that the Compensation Committee considered in determining compensation for fiscal year 2021, are included within the Compensation Discussion and Analysis (CD&A), starting on page 39.
The Compensation Committee appreciates the opportunity to hear from our shareholders and looks forward to continued dialogue. We believe that the actions being taken are responsive to the feedback provided and enhance our commitment to our long-standing practice of aligning pay and performance.
Kathleen W. Hyle, Chair
Richard W. Gochnauer
Dennis M. Nally
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Compensation Discussion and Analysis
This CD&A describes the material elements of our executive compensation program during fiscal year 2021. It also provides an overview of how and why the Compensation Committee arrived at the specific compensation decisions for our named executive officers for fiscal year 2021, including the key factors that the Compensation Committee considered in determining their compensation.
Our Named Executive Officers
Our fiscal year 2021 named executive officers were:
Name
Titles
Steven H. Collis
Chairman, President and Chief Executive Officer (“CEO”)
James F. Cleary
Executive Vice President and Chief Financial Officer (“CFO”)
John G. Chou Executive Vice President and Special Advisor to the Chairman & CEO (formerly the Chief Legal Officer)1
Gina K. Clark Executive Vice President and Chief Communications & Administration Officer
Robert P. Mauch
Executive Vice President and Group President
1
On August 18, 2021, Mr. Chou announced his plans to retire in fiscal year 2022.
The CD&A is structured as follows:
40
47
54
58
 
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Executive Compensation and Related Matters | 2022 AmerisourceBergen Proxy
Executive Summary
Our Company
AmerisourceBergen fosters a positive impact on the health of people and communities around the world by advancing the development and delivery of pharmaceuticals and healthcare products. As a leading global healthcare company, with a foundation in pharmaceutical distribution and solutions for manufacturers, pharmacies and providers, we create unparalleled access, efficiency and reliability for human and animal health. Our 42,000 global team members power our purpose: We are united in our responsibility to create healthier futures.
Fiscal Year 2021 Business and Strategic Highlights
AmerisourceBergen delivered solid performance in fiscal year 2021. We had strong revenue and adjusted diluted earnings per share (“adjusted EPS”) growth driven by our acquisition of Alliance Healthcare, increased volume associated with growth of some of our largest customers, and continued robust specialty product sales, including COVID-19 therapies. The following fiscal year 2021 highlights include non-GAAP financial measures. Appendix A to this proxy statement presents reconciliations to the most comparable GAAP financial measures and information about the reasons such non-GAAP financial measures are disclosed.
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1
See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
Throughout the COVID-19 pandemic, AmerisourceBergen has lived its purpose of being united in our responsibility to create healthier futures with our partners, customers, and team members. Commercially, we
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
enabled the distribution of COVID-19 therapies to hospitals across the United States, and supported the distribution of more than 75 million vaccines to patients in over 30 countries through our expanded global footprint. AmerisourceBergen continued to apply measures to protect the welfare of our team members, invested in enhanced continuity pay for frontline workers as well as additional time off, allowed remote work, mandated vaccines, and enabled our businesses to continue to play a crucial role in supporting the sustainability of the pharmaceutical supply chain and enabling patient access (see page 2 of the Proxy Statement Highlights for more detail).
Shareholder Engagement and Our 2021 Say-on-Pay Vote
Regular shareholder outreach and engagement are critical inputs to our Board and management’s decision-making process. We engage with shareholders throughout the year to seek their feedback on our governance and executive compensation practices, in addition to other topics important to our long-term growth and value creation.
After multiple years of strong support, our say-on-pay proposal received approximately 52% support at our 2021 Annual Meeting. Our new Compensation Committee Chair Kathleen Hyle, along with senior members of our management team, conducted an expansive outreach effort to better understand the concerns that drove this result and how we could best respond to our shareholders moving forward. The broad scope of our outreach provided for feedback from shareholders who both supported and voted against the proposal.
Beginning in the fall of 2021, we contacted 34 shareholders representing approximately 43% of our shareholder base (60% excluding Walgreens Boots Alliance, Inc.), and ultimately engaged with 21 shareholders representing approximately 32% of our shareholder base (45% excluding Walgreens Boots Alliance, Inc.), as well as members of the Investors for Opioid and Pharmaceutical Accountability (“IOPA”), and the proxy advisory firms. Our Compensation Committee Chair participated in engagements with shareholders representing 25% of shares outstanding (35% excluding Walgreens Boots Alliance, Inc.) as well as meetings with IOPA and the proxy advisory firms. Our objective was to understand shareholder perspectives on our executive compensation program and gather feedback to guide our response to their concerns given the low support received for our say-on-pay proposal in 2021. We additionally sought their input on a range of other important topics, including our Board composition, ESG initiatives, and DE&I strategy (see below).
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Engagement Topics
Executive compensation and the 2021 say-on-pay vote
Board oversight of ESG and risk management
Proposed opioid litigation settlement ESG initiatives, including Diversity, Equity and Inclusion, and governance oversight
Board and Committee composition and refreshment Human capital disclosure
Shareholder Feedback Themes and Responsive Actions
Our Compensation Committee closely evaluated the feedback received from shareholders on executive compensation and other topics. While shareholders voiced general support for the overall structure of our
 
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Executive Compensation and Related Matters | 2022 AmerisourceBergen Proxy
compensation program, many shareholders who voted against our say-on-pay proposal in 2021 indicated they did so because they felt that the Compensation Committee should have taken action to reflect the magnitude of the impact from the opioid litigation settlement accrual recorded in fiscal year 2020. Separately, they shared a view that management should be held accountable for events within its control and that compensation outcomes should more fully reflect the financial experience of shareholders.
The Compensation Committee took the following actions in response to the feedback from shareholders:
Shareholder Feedback and Responsiveness
What We Heard From Shareholders
Action We Took in Response
Reflect in the Compensation Committee’s decisions for fiscal year 2021 the magnitude of the opioid settlement accrual recorded in fiscal year 2020
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Exercised negative discretion on short-term incentive payouts for our CEO and other NEOs to reflect shareholder experience related to the magnitude of the litigation accrual recorded in fiscal year 2020

Reduced CEO fiscal year 2021 incentive payout by 45% to below target. While the calculated payout based on financial performance was 177% of target, the Compensation Committee reduced our CEO’s payout to 97% of target, representing a $1.8 million reduction

Reduced other NEOs fiscal year 2021 short term incentive payout by 10%
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Enhanced disclosure of Compensation Committee decision process in its use of discretion to address the impact from the opioid litigation accrual, including:

Compensation Committee Letter to Shareholders (see page 37)

Key Factors Considered by the Compensation Committee (see page 43)
Provide clarity for how the Compensation Committee considers discretion for significant, non-recurring financial events
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Commitment to disclose the Compensation Committee’s decision process for any potential use of discretion for adjustments related to significant, non-recurring financial events on a go-forward basis, as appropriate
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Enhanced transparency of Compensation Committee decision-making process for executive compensation more broadly
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Compensation Committee to review any potential adjustments to reported financial results on a quarterly basis, and determine final approval of adjustments at year end
Increase alignment of long-term incentives to shareholder value creation
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Added a relative TSR modifier to the performance share awards under the long term incentive plan, which requires above median performance at the 55th percentile for target payout
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Beginning with fiscal year 2022 grants, implemented a post-vesting holding requirement on 50% of earned performance shares of two years for our CEO and one year for other NEOs
Enhance clawback provision and disclosure
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Created a single compensation recoupment policy that applies to all incentive compensation and formally expands the list of actions that could result in a clawback
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Shareholder Feedback and Responsiveness
What We Heard From Shareholders
Action We Took in Response
Support the incorporation of measurable, ESG-related metric(s) into compensation program
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Commitment to review and evaluate best approach to inclusion of an ESG-related measure or measures in compensation program by fiscal year 2023
Key Factors Considered by the Compensation Committee
Our Compensation Committee carefully considered the feedback it received from shareholders, in combination with Company-specific circumstances, to determine compensation actions for fiscal year 2021. The performance-based components of our executive compensation program are based on non-GAAP metrics, which we believe most effectively measure and reward operational performance and provide consistency and transparency between our financial reporting and compensation outcomes. However, the Compensation Committee also recognizes that certain events, such as the impact from the opioid litigation settlement accrual, should be reflected in final compensation decisions, and is committed to ensuring the financial outcomes of our business and shareholders remain in alignment.
As part of its decision-making process for fiscal year 2021, the Compensation Committee engaged in discussions and considered a range of factors, including:
Fiscal Year 2021 Compensation Decisions — Summary of Key Factors
Key Factor
Compensation Committee Consideration
Investor Feedback
Shareholders believe that the impact of the magnitude of the opioid litigation settlement accrual should be considered in the Compensation Committee’s fiscal year 2021 executive payout decisions, along with more detailed disclosure on our decision-making process
Impact of opioid litigation settlement accrual
The Compensation Committee considered the magnitude of the opioid litigation settlement accrual
Litigation and related facts and circumstances
The Company has had a sophisticated diversion control program in place for decades and the proposed settlement is not a penalty or admission of fault or wrongdoing. The payments to be made pursuant to the settlement are not penalties or fines, and the majority of funds will be spent on efforts to address opioid misuse and abuse in communities
Decision to enter into the settlement
The decision represents the most effective path to allow our management team to focus on the strategic and operational initiatives that drive value for our shareholders while allowing the Company to be part of the solution by providing meaningful financial relief to impacted communities
Company performance
AmerisourceBergen delivered strong performance for shareholders in fiscal year 2021 amidst ongoing economic challenges due in part to the COVID-19 pandemic, exceeding financial expectations and successfully completing the strategically important Alliance Healthcare acquisition, and has outperformed core peers on a TSR basis over the last five years. The Company also played a key role as a critical and, at times, sole distributor of essential COVID therapies and other related treatments in support of the national COVID-19 pandemic response efforts
Executive compensation program design
Overall, our executive compensation program effectively aligns pay and performance, and is closely tied with our strategy to appropriately incentivize management to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions
Long-standing commitment to compliance
Extensive previous action has been taken to continuously strengthen policies, procedures and transparency associated with the distribution of controlled substances and related anti-diversion programs, as detailed in our “Safe and Secure Distribution of Controlled Substances” report and through the creation of the Compliance and Risk Committee of the Board
 
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Fiscal Year 2021 Compensation Decisions — Summary of Key Factors
Key Factor
Compensation Committee Consideration
Executive tenure and experience
The time in current positions among our named executive officers, including several who are new to the Company or their roles
Talent retention
Prolonging a resolution to the consideration or application of any discretionary adjustments to compensation related to the opioid litigation accrual would introduce uncertainty that could be detrimental to the Company’s ability to attract and retain top talent
Based on the above considerations, the Compensation Committee reduced fiscal year 2021 pay outcomes for our CEO and other NEOs through the use of negative discretion on short term incentive payouts to recognize the impact of the opioid litigation settlement accrual. In making the determination to not reduce the payouts of FY19 – FY21 PSUs, the Compensation Committee considered the fact that equity awards are inextricably linked to stock price. While the Compensation Committee will retain the ability to exercise discretion and continue its established practice of considering regulatory, compliance and legal issues in evaluating executive compensation, absent a material change to the factors considered, it does not intend to take future discretionary action related to the resolution of opioid-related litigation.
The following shows the payouts earned by our CEO under plan performance metrics and the actual payouts following the Compensation Committee’s application of negative discretion:
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Fiscal Year 2021 Compensation Program Structure and Outcomes
We seek to pay our executive officers fairly and competitively and to link pay with performance. The main elements of our compensation program are base salary, a short-term incentive in the form of an annual cash bonus, and long-term equity incentive awards. We emphasize compensation opportunities that reward our executive officers when they deliver targeted financial results. A significant portion of our executive officers’ compensation is incentive-based. In fiscal year 2021, incentive compensation (annual cash bonus and equity incentive awards) accounted for approximately 90% of our CEO’s total direct compensation (base salary, annual cash bonus and equity incentive awards) and approximately 83% of the average total direct compensation of the other named executive officers.
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The following table provides a summary of the compensation program and performance outcomes for our named executive officers in fiscal 2021:
Component & Structure
CEO
NEOs
Metrics & Features
Fiscal Year 2021 Performance
Targets
Base Salary
10%
17%

Fixed compensation

Not applicable
Short-Term Incentive
Performance based cash incentive (100%)
16%
26%
Metrics & Weightings:

30% Adj. EPS

40% Adj. Op. Income

30% Adj. Free Cash Flow
Features:

Rigorous pre-set goals

Bonus capped at 200% of target

All metrics achieved above target

Earned at 177% of target

Discretion applied to reduce payouts to 97% of target for CEO and 159% of target for other NEOs
Long-Term Incentive
Performance Shares (60%)
Restricted Stock Units (40%)
74%
57%
Metrics & Weightings (PSUs):

75% Compound Annual Adj. EPS Growth

25% Average Annual Adj. ROIC
Features:

3-year performance period for performance shares

Rigorous pre-set goals
Performance Awards Granted in Fiscal Year 2019:

Compound Annual Adjusted EPS Growth earned at maximum

Average Annual Adjusted ROIC earned maximum

Performance awards earned at 200% of target
As noted above, the Compensation Committee determined to reduce fiscal year 2021 executive pay outcomes through the use of negative discretion in consideration of the shareholder experience related to the magnitude of the litigation accrual recorded in fiscal year 2020. Please refer to pages 42-44 of the Executive Summary for more information on payouts earned under plan performance metrics and actual payouts following the Compensation Committee’s application of negative discretion.
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
Fiscal Year 2021 Compensation Practices and Policies
We believe our executive pay is reasonable and provides appropriate incentives to our executive officers to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. The Board and its committees regularly evaluate major risks to our business, including how risks taken by management could affect the value of executive compensation. To this end, our compensation program encompasses the following:
Highlights of Our Executive Compensation Program — Linking Pay with Performance and Mitigating Risk
What We Do
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Use financial metrics to make a substantial portion of executive pay contingent on performance
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Engage with shareholders on compensation and governance
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Cap payouts under our annual cash bonus plan and performance share plans
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Apply robust clawback obligations to annual cash bonus and equity awards for executive officers
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Require our CEO to own stock equal in value to six times his base salary, and our CFO and other executive officers to own stock equal in value to three times their respective base salaries
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Require executive officers to retain all equity awards until required ownership levels are met
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Two-year post-vesting holding requirement for our CEO and one-year holding period for named executive officers on 50% of PSU awards
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Consider a peer group in establishing named executive officer compensation and published compensation survey data for all other executive officers
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Require forfeiture of awards upon violation of restrictive covenants
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Require a double-trigger for change in control payments
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Consider burn rate in equity grant decisions and manage use of equity awards conservatively
What We Do
Not Do
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Tie incentive compensation to specific product sales, including prescription opioid medication sales
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No short sales, hedging or pledging of our stock by our executive officers and directors
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Backdate or retroactively grant options or restricted stock units
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Pay dividends on unearned and unvested performance shares
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Provide tax gross-ups in the event of a change in control
Compensation Details
The Compensation Committee seeks to design an executive compensation program that incentivizes our management team to meet and exceed rigorous objectives that drive long-term value for all our stakeholders while promoting talent retention. Our named executive officers’ total direct compensation consists of three components: base salary, short-term incentive, and long-term incentive. A substantial majority of this compensation is at-risk and tied to the performance of the Company and its share price. Base salary is the only fixed compensation. The Compensation Committee considers a multitude of factors in determining executive compensation objectives and targets for our named executive officers, which are described in detail in the following sections.
Compensation Philosophy
The Compensation Committee supports a compensation philosophy for our named executive officers that:

Aligns with long-term shareholder interests:   A substantial majority of our named executive officer compensation is equity-based with a performance period covering three fiscal years. In combination with our executive stock ownership guidelines, this aligns our management team with the creation of sustainable long-term value for our shareholders. The Compensation Committee retains and will exercise discretion to ensure compensation outcomes reflect stakeholder interests and align with our values.

Puts significant portion of compensation at-risk:   90% of CEO and over 80% of NEO total direct compensation is at-risk. Compensation outcomes are tied to the achievement of rigorous pre-set metrics which measure financial and operational performance.
 
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Drives business goals and strategies that support long-term value and our purpose for all stakeholders:   We emphasize performance metrics which incentivize and reward business and strategic performance aligned with our purpose to create healthier futures for all our stakeholders.

Attracts and retains senior executive talent:   Our executive compensation program design considers market and peer practice to attract top executives in a competitive talent marketplace. A significant portion of our compensation is tied to long-term equity incentives to reward our talent for performance and promote their retention.
Fiscal Year 2021 Executive Compensation Objectives and Actions
The Compensation Committee reviews and determines executive officer compensation, including the amount of base salary, short-term incentive awards and long-term incentive awards made to our named executive officers. In making these decisions, the Compensation Committee takes into account our financial and business results, individual performance, market data, and shareholder feedback. In light of these considerations, the Compensation Committee made the following executive compensation decisions in fiscal year 2021:
Fiscal Year 2021 Executive Compensation Decisions
Established fiscal year 2021 performance goals for our annual cash bonus plan, including a target adjusted EPS of  $8.29 per share, a target adjusted operating income of  $2.31 billion, and a target adjusted free cash flow of  $1.50 billion. These performance goals were calculated consistently with the way in which our publicly disclosed non-GAAP financial measures were calculated.1
Approved fiscal year 2021 cash bonus payouts that were paid at 97% of target for CEO and 159% of target for other NEOs, which includes the application of negative discretion to account for the impact of the opioid litigation settlement accrual.
Granted annual equity incentive awards to our named executive officers after considering our compensation philosophy and the Compensation Committee’s assessment of the executive officer’s expected future contributions. In fiscal year 2021, the grant value of each annual equity award was divided among performance shares (60%) and restricted stock units (40%).
Approved performance metrics of compound annual adjusted EPS (“Compound Annual Adjusted EPS”) and adjusted average annual return on invested capital (“Average Annual Adjusted ROIC”) for the performance shares granted to our named executive officers in fiscal year 2021 (covering the three-year performance period ending September 30, 2023).2
Continued to emphasize performance-based equity incentives under which executive officers earn amounts only when AmerisourceBergen’s performance is strong and our shareholders have benefited, with addition of a relative TSR modifier requiring above median performance for target payout to the long-term plan beginning in fiscal year 2022.
Reviewed and recommended for approval by shareholders at the 2022 Annual Meeting a new Omnibus Plan in order for the Company to continue its practice of awarding equity compensation across a broad group of employees.
(1)
See Appendix A for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations. For a comprehensive discussion of our GAAP financial results beyond those discussed in Appendix A, please refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
(2)
See “Performance Share Awards — Payout of FY19-FY21 Performance Shares” below for more information about Average Annual Adjusted ROIC.
We believe that the fiscal year 2021 compensation of our executive officers was aligned with AmerisourceBergen’s fiscal year 2021 adjusted results and met our compensation objectives. Our compensation policies have enabled us to attract and retain talented and experienced executive officers. We believe that these policies have benefited AmerisourceBergen over time and will position us for growth in future years.
Setting Executive Compensation
Each year, the Compensation Committee, in consultation with its independent compensation consultant, evaluates a peer group of companies that will serve as a reference for comparing the pay of our named executive officers to the market. We assess companies that best reflect the complexity of our industry and competition for customers, shareholders and talent to determine whether our level of executive pay is appropriate when compared to industry and market standards. We also conduct a detailed market review of
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
executive pay to evaluate each element of pay and benefit competitiveness, review pay practices and compare performance against our peer group.
Our peer group consists of companies with business models and operations comparable to our own, including our two largest direct competitors, and companies that we believe have a similar financial and operational profile. Metrics used to select our peer group include: revenue; market capitalization; number of employees; net income; operating income margin; and return on invested capital. We believe that the companies included in our peer group reflect the type and complexity of business risks managed by our named executive officers and are the companies that we compete with for executive talent.
In fiscal year 2021, the Compensation Committee, in consultation with its independent compensation consultant, evaluated our peer group to ensure that our peer group companies remained appropriate. Following its review, the Compensation Committee concluded that our current peers remained reasonable. As determined by the Compensation Committee, our peer group for fiscal year 2021 included:
Peer Group
Abbott Laboratories
Henry Schein, Inc.
Quest Diagnostics Incorporated
Cardinal Health, Inc.
Humana Inc.
Sysco Corporation
Cigna Corporation
IQVIA Holdings Inc.
Target Corporation
CVS Health Corporation
The Kroger Co.
United Parcel Service, Inc.
Eli Lilly and Company
Laboratory Corporation of America
Walgreens Boots Alliance, Inc.
FedEx Corporation
McKesson Corporation
HCA Healthcare, Inc.
Mylan N.V.
Mylan N.V. was removed as a peer for fiscal year 2022 due to its merger with Upjohn, to form Viatris Inc.
The Compensation Committee reviews peer group proxy statement data in evaluating our named executive officers’ pay and published compensation survey data in evaluating our other executive officers’ pay. When assessing pay levels, the Compensation Committee also reviews our executive officers’ compensation in relation to each other. The Compensation Committee’s consultant concluded that our overall competitive posture for executive pay in fiscal 2021 remained aligned with our pay for performance compensation philosophy.
Components of the Executive Compensation Program
Pay Element
Award Type
Purpose
Fixed vs. Variable
Performance Measure
Base Salary Cash

Provide a regular stream of income and security
Fixed The Compensation Committee takes into account job performance, scope of role, duties and responsibilities, expected future contributions, peer group and other market pay data
Short-Term Incentive Cash

Motivate executives to improve financial performance year-over-year

Reward executive officers who deliver targeted financial results
Variable Actual payout based on Company performance
Long-Term Incentives Performance Shares, Restricted Stock Units and Stock Options

Motivate executive officers to achieve superior business results over long-term

Enhance alignment between management and shareholder interests

Support stock ownership requirements
Variable Actual value is determined by Company performance over a three-year time frame and/or linked to stock price
 
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Base Salary
In fiscal 2021, we made adjustments to base salaries to reflect executives’ individual performance and to better align them with the market. Following four years without a base salary increase (fiscal years 2016-2019), the Compensation Committee approved base salary increases in fiscal year 2020 and 2021 for Mr. Collis of 6.9% and 5.7%, respectively, in order to better align his base salary with the median of the peer group. In fiscal year 2021, Messrs. Cleary, Chou and Mauch and Ms. Clark received increases of 7.1%, 2.2%, 14.3%, and 4.3%, respectively.
Fiscal Year 2021 Short-Term Cash Incentive
The Compensation Committee approves the performance goals and incentive levels for each of our executive officers, and assigns a relative weighting to each performance measure under our cash incentive plan. For each performance measure, there is a threshold and a target. Threshold refers to the minimum acceptable level of performance and target is the desired level of performance. We do not pay a bonus for performance that is below the threshold established for financial performance goals and we pay a bonus of 25% of the target amount if performance is at the threshold. For performance that exceeds the threshold but does not meet the target, bonus payments are based on the level of performance and are increased ratably until the target is reached. All cash incentive awards are issued to the executive officers pursuant to our Annual Incentive Plan.
In November 2020, the Compensation Committee increased the CEO’s target incentive level by 15% from 150% to 165% to better align with the median target incentive level of the Company’s peer group. For fiscal year 2021, target incentive levels were 165% of base salary for the CEO and 100% of base salary for the other NEOs. Executive officers may also receive an amount in excess of their target bonus (up to a maximum of 200% of the target amount) if we exceed target amounts with respect to key performance metrics. Therefore, an individual’s actual bonus consists of  (i) an amount that is based upon having met or exceeded the thresholds (which we refer to as the “earned” bonus) and (ii) if applicable, an amount that is based upon the extent to which actual performance exceeded target amount (which we refer to as a “stretch” bonus). In fiscal year 2021, the key performance metrics for all of the named executive officers were the Company’s adjusted EPS, adjusted operating income, and adjusted free cash flow. Executive officers were only eligible to receive a “stretch” bonus to the extent any such metric exceeded its target range. The stretch portion is calculated by increasing the earned bonus by an additional 5% for every 1% that actual performance exceeds target on the key performance metric.
Each year, the Compensation Committee sets targets that it views to be rigorous but attainable and, in most cases, those targets reflect growth over prior year results and targets. In November 2020, the Compensation Committee approved corporate-level performance goals for our fiscal year 2021 cash incentive plan. The Compensation Committee chose adjusted EPS, adjusted operating income and adjusted free cash flow as corporate-level performance goals because they are the key metrics used by management to set business goals and evaluate our financial results. Our fiscal year 2021 adjusted free cash flow projections were lower versus the prior year results, primarily due to the favorable timing of customer and supplier payments realized in the fourth quarter of fiscal 2020. Target and actual achievement of our corporate-level performance goals were as follows:
Corporate Performance Measure(1)
Weighting
Threshold
Target
Maximum
Actual
% Exceeded
Target
Adjusted EPS
30%
$7.46
$8.29
$9.95
$9.26
12%
Adjusted Operating Income
40%
$2.08 billion
$2.31 billion
$2.77 billion
$2.65 billion
15%
Adjusted Free Cash Flow
30%
$1.35 billion
$1.50 billion
$1.80 billion
$2.09 billion
39%
(1)
See Appendix A to this proxy statement for additional information regarding non-GAAP financial measures, including GAAP to non-GAAP reconciliations.
The Compensation Committee chose adjusted EPS, adjusted operating income and adjusted free cash flow as corporate-level performance goals because they are the key metrics used by management to set business goals and evaluate our financial results. In addition, we communicate our expectations about future business performance to investors by providing an adjusted EPS guidance range each fiscal year. We generally set adjusted EPS targets to reflect our business goal of long-term growth, while allowing for reasonable flexibility to set our annual targets based on the impact of industry trends, other market factors and special items from year to year.
 
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2022 AmerisourceBergen Proxy | Executive Compensation and Related Matters
The Compensation Committee chose adjusted operating income to encourage our executive officers to grow our Company’s profitability. We use adjusted free cash flow as a corporate-level financial metric because the amount of free cash flow that we generate each year is essential for us to maintain appropriate working capital, complete acquisitions, and return capital to shareholders through dividends. We define the non-GAAP financial measure of adjusted free cash flow as net cash provided by operating activities excluding other significant unpredictable or non-recurring cash payments or receipts relating to legal settlements, minus capital expenditures.
The fiscal year 2021 cash bonuses for the named executive officers were designed to reflect enterprise-wide performance. In fiscal year 2021, our named executive officers exceeded target performance thresholds for all corporate level performance goals. Because AmerisourceBergen exceeded the target amounts for all of the performance metrics, each of the named executive officers earned a stretch bonus, prior to any discretionary adjustments.
After reviewing the Company’s strong performance and in consideration of the factors outlined on page 43 (“Fiscal Year 2021 Compensation Decisions — Summary of Key Factors”), the Compensation Committee applied discretion to the final bonus payouts for fiscal year 2021 to reflect the impact to shareholders of the opioid litigation settlement accrual. The downward adjustment made to the CEO’s annual cash bonus award was greater than the downward adjustment made to the other NEOs due to a variety of factors, including shareholder feedback.
Target and actual fiscal year 2021 cash bonuses for our named executive officers were as follows:
Name
Base Salary
x
AIP %
=
AIP Target
x
Payout
Level %
=
Calculated
Payout
Adjusted
Fiscal Year
2021 AIP
Payout
Adjusted
Payout as %
of Target
Steven H. Collis $ 1,400,000 165% $ 2,310,000 177% $ 4,089,220 $ 2,249,017 97%
James F. Cleary $ 750,000 100% $ 750,000 177% $ 1,327,669 $ 1,194,902 159%
John G. Chou $ 690,000 100% $ 690,000 177% $ 1,221,455 $ 1,099,310 159%
Gina K. Clark $ 600,000 100% $ 600,000 177% $ 1,062,135 $ 955,922 159%
Robert P. Mauch $ 800,000 100% $ 800,000 177% $ 1,416,180 $ 1,274,562 159%
Looking Ahead: Fiscal Year 2022 Cash Bonus
In November 2021, the Compensation Committee approved performance measures for our fiscal year 2022 annual cash incentive plan. In 2022, the fiscal year cash bonus will continue to be paid upon the attainment of financial performance metrics, subject to the Compensation Committee’s continued discretion to adjust any portion of a calculated award. In fiscal 2022, all named executive officers’ cash bonus opportunities will continue to be based on the Company’s adjusted EPS, adjusted operating income and adjusted free cash flow.
Long-Term Equity Incentives
We use equity awards to motivate our executive officers to achieve superior business results over the long term. Equity awards support our stock ownership requirements and further enhance the alignment between management and shareholder interests. For fiscal year 2021, the allocation of the annual equity award for our executive officers is 60% in performance shares and 40% in restricted stock units. Beginning in fiscal year 2021, restricted stock units vest ratably each year during the three-year vesting period. This change was applied to awards for all employees who receive restricted stock units and aligns the vesting of restricted stock units to our NEOs to the vesting provisions for our broad employee population. All long-term equity incentives are awarded under our Omnibus Incentive Plan (or our 2022 Omnibus Incentive Plan subject to shareholder approval at the 2022 Annual Meeting).
In fiscal year 2021, we awarded our named executive officers 125,366 target performance shares and 83,580 restricted stock units of our Common Stock. These awards represented approximately 28% of the total equity incentives granted to management and other employees in fiscal year 2021. We believe that it was appropriate to award approximately 28% of total annual equity incentives to our named executive officers because they are in the best position to drive our future results and implement our long-term business strategy. Equity incentives represented approximately 74% of Mr. Collis’s total direct compensation and approximately 57%, on average, of the total direct compensation of the other named executive officers in fiscal year 2021.
 
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In approving fiscal year 2021 long-term equity incentive awards, the Compensation Committee considered a number of factors:

Skills, experience, time in role and expected future contributions.   The size of an equity award depends, in part, on the scope of an executive officer’s job responsibilities and the impact he or she can be expected to have on our future operating results.