UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 13, 2005
CARDINAL HEALTH, INC.
(Exact Name of Registrant as Specified in its Charter)
OHIO
(State or Other Jurisdiction of Incorporation)
1-11373 31-0958666
(Commission File Number) (IRS Employer Identification Number)
7000 CARDINAL PLACE, DUBLIN, OHIO 43017
(Address of Principal Executive Offices, Including Zip Code)
(614) 757-5000
(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On April 13, 2005, the Executive Committee of the Board of Directors of
Cardinal Health, Inc. (the "Company"), acting on behalf of the Board of
Directors, appointed Jeffrey W. Henderson as the Company's Executive Vice
President and, effective May 15, 2005, the Company's Chief Financial Officer.
The offer letter setting forth Mr. Henderson's compensatory arrangements is
filed with this report as Exhibit 10.01. The material terms of Mr. Henderson's
compensatory arrangements are summarized in Item 5.02(c) below.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS
(c)
On April 13, 2005, the Executive Committee of the Board of Directors of
the Company, acting on behalf of the Board of Directors, appointed Jeffrey W.
Henderson as the Company's Executive Vice President and, effective May 15, 2005,
the Company's Chief Financial Officer. Mr. Henderson will join the Company on
April 18, 2005 as Executive Vice President, and will assume the duties of, and
will be designated as, the Chief Financial Officer effective as of May 15, 2005.
The Company's current Chief Financial Officer on an interim basis, J. Michael
Losh, will continue to serve as Chief Financial Officer through May 15th after
which date, Mr. Losh will no longer be an executive officer of the Company but
will continue to serve as a director of the Company.
Mr. Henderson, age 40, previously was employed by Eli Lilly and Company
since October 1998. From July 2003 until leaving Eli Lilly, Mr. Henderson served
as President and General Manager of the company's subsidiary, Eli Lilly Canada,
Inc. From January 2000 to July 2003, Mr. Henderson served as Vice President and
Corporate Controller of Eli Lilly. From October 1998 to January 2000, Mr.
Henderson served as Vice President and Corporate Treasurer of Eli Lilly. Eli
Lilly is a pharmaceutical company that has a business relationship with the
Company.
The material terms of Mr. Henderson's compensatory arrangements with
the Company are summarized below, which description is qualified by reference to
the offer letter filed with this report as Exhibit 10.01.
Mr. Henderson will receive an annual base salary of $550,000, which
will be reviewed annually with the Human Resources and Compensation Committee of
the Company's Board of Directors. Mr. Henderson also will receive a cash sign-on
bonus equal to the value of 3,000 common shares as of his start date, which must
be repaid if he voluntarily resigns from his employment with the Company within
one year after his start date. Mr. Henderson will be eligible to participate in
the Company's Management Incentive Program at an incentive target of 100% of his
base salary. Mr. Henderson's bonus for fiscal year 2005 will be guaranteed at
his incentive target, pro-rated based on his start date. Mr. Henderson's bonus
for fiscal year 2006 will be guaranteed at 50% of his incentive target.
Mr. Henderson also will receive the following equity award grants,
effective as of his start date with the Company, under the Company's Amended and
Restated Equity Incentive Plan, as amended (the "Equity Incentive Plan"):
o A stock option to purchase 60,000 common shares representing
both a prorated grant award for fiscal year 2005 and the award
Mr. Henderson would have been eligible to receive in the
Company's fiscal year 2006 annual grant. The option will
become exercisable in four equal annual installments beginning
on the first anniversary of the grant date and will have a
term
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of seven years. The option will have an exercise price equal
to the market price of the Company's common shares on the date
of grant.
o An award of 9,000 Restricted Share Units ("RSUs") representing
both a prorated grant award for fiscal year 2005 and the award
Mr. Henderson would have been eligible to receive in the
Company's fiscal year 2006 annual grant. The restrictions on
the RSUs will lapse in three equal annual installments
beginning on the first anniversary of the grant date. The RSUs
will be payable solely in common shares on a date at least six
months following Mr. Henderson's separation from the Company.
o An additional award of 12,000 RSUs. The restrictions on the
RSUs will lapse in full on the third anniversary of the grant
date. The RSUs will be payable solely in common shares on a
date at least six months following Mr. Henderson's separation
from the Company.
o An additional stock option to purchase a number of common
shares equal to the Black-Scholes present value of $1.8
million less the value of the 12,000 RSUs described above and
the value of his sign-on bonus described above. The option
will become exercisable in full on the third anniversary of
the grant date and will have a term of ten years. The option
will have an exercise price equal to the market price of the
Company's common shares on the date of grant.
If Mr. Henderson's employment is involuntarily terminated without cause
within the first three years of his start date, the Company will provide him
with severance benefits equal to 12 months of his starting base salary.
Additionally, if within 60 days following the 18-month anniversary of Mr.
Henderson's start date, he provides 60 days notice of his voluntary resignation
from employment with the Company, and so long as at the time the Company
receives such notice and for the 60-day period thereafter, the Company does not
have grounds to terminate Mr. Henderson's employment for gross misconduct, then
he will be entitled to receive the following:
o A cash payment equal to two times the sum of his starting base
salary and incentive target, which will be paid to Mr.
Henderson in equal monthly installments over a period of 12
months; provided, however, that if Mr. Henderson discloses or
uses in any capacity other than as necessary in the
performance of the duties assigned to him by the Company any
confidential information, trade secrets or other business
sensitive information or material concerning the Company or
its subsidiaries at any time during this 12-month payout
period, any installment of this cash payment already paid out
to Mr. Henderson would be repayable by him to the Company and
he will forfeit any future installments due him under this
provision;
o An additional cash payment equal to 50% of his starting
incentive target, which will be paid to Mr. Henderson in full
upon his resignation date; and
o 100% vesting of the RSU grants described above to occur upon
his resignation date. The RSU grants will be payable per their
terms at least six months after Mr. Henderson's separation
from the Company.
If the severance payments above are ever deemed to be covered by the recently
adopted deferred compensation tax rules (as provided for under Section 409A of
the Internal Revenue Code, as amended), the offer letter states that it may be
necessary for the Company to delay commencing Mr. Henderson's severance payments
until after the six month anniversary of termination of his employment.
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Mr. Henderson will be eligible to participate in the Company's 401(k)
Savings Plan and Deferred Compensation Plan on the same terms offered to all
plan participants, including Company match and profit share contribution. He
also will be eligible for health, welfare and stock purchase plan benefits on
the same terms generally available to Company employees.
Mr. Henderson will be eligible for the Company's executive relocation
program, and may receive additional compensation in connection with his
transition to the Company, including tax equalization benefits, repatriation
commitments and lease and commuting expenses, including use of company aircraft.
ITEM 7.01 REGULATION FD DISCLOSURE
In connection with the appointment of a new principal officer, the
Company issued a press release on April 14, 2005, which is being furnished as
Exhibit 99.01 to this report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.01 Letter providing terms of offer of employment, executed by the
Company on April 13, 2005, and confirmed by Jeffrey W. Henderson
on April 13, 2005.
99.01 Press release issued by the Company on April 14, 2005, and
furnished with this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cardinal Health, Inc.
(Registrant)
Date: April 15, 2005 By: /s/ Paul S. Williams
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Name: Paul S. Williams
Title: Executive Vice President,
Chief Legal Officer
and Secretary
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EXHIBIT INDEX
10.01 Letter providing terms of offer of employment, executed by the
Company on April 13, 2005, and confirmed by Jeffrey W.
Henderson on April 13, 2005.
99.01 Press release issued by the Company on April 14, 2005, and
furnished with this report.
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