UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under §240.14a-12

CARDINAL HEALTH, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):
	No fee required.
	Fee paid previously with preliminary materials.
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

	LETTER TO CARDINAL HEALTH SHAREHOLDERS	2
	NOTICE	4
	PROXY SUMMARY	5
	About Us	5
	Fiscal 2023 Performance	5
	Our 2023 Board Nominees	7
	Governance and Board Highlights	8
	Shareholder Engagement	8
	Agreement with Elliott	8
	Approach to ESG Topics	10
	Virtual Annual Meeting	11
	Roadmap to Voting Matters	11
	How to Vote in Advance of the Annual Meeting	11
	Forward-Looking Statements	12
	CORPORATE GOVERNANCE	13
	PROPOSAL 1 — Election of Directors	13
	Board Membership Criteria: What We Look For	13
	Our Director Nominees	14
	Our Board’s Composition and Structure	21
	Our Board’s Primary Role and Responsibilities and Processes	26
	Shareholder Engagement	32
	Standards of Business Conduct	33
	Related Person Transactions Policy and Process	33
	Director Compensation	34
	AUDIT COMMITTEE MATTERS	36
	PROPOSAL 2 — Ratification of Appointment of Ernst & Young LLP as Independent Auditor	36
	Audit Committee Report	36
	Fees Paid to Ernst & Young LLP	37
	Policy on Pre-Approval of Services Provided by Ernst & Young LLP	37
	EXECUTIVE COMPENSATION	38
	PROPOSAL 3 — Advisory Vote to Approve the Compensation of Our Named Executive Officers	39
	PROPOSAL 4 — Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation of Our Named Executive Officers	39
	Compensation Discussion and Analysis	40
	Human Resources and Compensation Committee Report	54
	Executive Compensation Tables	55
	Pay Ratio Disclosure	67
	Pay Versus Performance	68
	Equity Compensation Plan Information	71
	SHAREHOLDER PROPOSALS	72
	Proposal 5 — Executives to Retain Significant Stock	72
	Proposal 6 — Shareholder Ratification of Excessive Termination Pay	74
	SHARE OWNERSHIP INFORMATION	76
	Beneficial Ownership	76
	Delinquent Section 16(a) Reports	77
	OTHER MATTERS	78
	General Information About the Annual Meeting	78
	Communicating with the Board	80
	Shareholder Recommendations for Director Nominees	80
	Submitting Proxy Proposals and Director Nominations for the Next Annual Meeting of Shareholders	81
	Corporate Governance Documents	81
	Transfer Agent	81
	ANNEX A: USE OF NON-GAAP FINANCIAL MEASURES	82
	Exclusions from Non-GAAP Financial Measures	82
	Fiscal 2023 GAAP to Non-GAAP Reconciliations	83
	Definitions	83

CARDINALHEALTH   2023 Proxy Statement  |  2

As noted in the proxy statement, Carrie Cox and Bruce Downey will be departing the Board when their terms expire this year. Both Carrie and Bruce have provided indispensable guidance over the past 14 years, helping to position Cardinal Health well for the future. On behalf of the Board, I would like to thank Carrie and Bruce for their many years of service and valuable contributions.

Following Carrie’s and Bruce’s departures, the total number of directors will be reduced to eleven, ten of whom are independent and seven of whom are gender or racially or ethnically diverse.

OPERATING SUSTAINABLY

The Board is highly engaged on our environmental, social, and governance, or ESG, priorities and provides oversight of the company’s overall efforts through our Governance and Sustainability Committee. As detailed in our robust ESG report released this past January, we remain steadfast in our strategic approach to deliver a sustainable future. We believe that our existing ESG initiatives align well with, and can help drive, our existing business strategies. Our ESG priorities are organized into four broad categories focused on empowering our people, creating value for our customers and communities, operating sustainably and responsibly, and having strong governance, ethics, and compliance. These priorities inform our ESG strategies, goals, and disclosure. Details on progress against key goals are available in our ESG reports and on our website.

SHAREHOLDER ENGAGEMENT

This past summer, the company contacted shareholders representing 52% of our outstanding shares and met with shareholders representing 37% of our outstanding shares. Another independent director and I participated in select meetings with shareholders. In these discussions, we provided updates on our strategy and ongoing business review process, Board composition and refreshment, senior leadership transitions, executive compensation, and sustainability topics. These are important conversations, and we greatly value the insights that our shareholders provide.

LOOKING FORWARD

Our success would not be possible without the commitment of our employees, who remain focused on our mission to improve the lives of people every day. They continue to deliver for our customers and are foundational to our success.

On behalf of our Board, I thank you for your share ownership and continued support of Cardinal Health. Following a strong first year under Jason Hollar’s leadership, the Board is excited to oversee execution of the company’s strategic priorities designed to achieve our targeted growth for fiscal 2024 and beyond. We look forward to working with you and all our partners to ensure that Cardinal Health continues its essential role in healthcare.

Sincerely,

Gregory B. Kenny

Chairman of the Board

CARDINALHEALTH   2023 Proxy Statement  |  3

 

NOTICE

of Annual Meeting of Shareholders

 

September 27, 2023

 

The 2023 annual meeting of shareholders (the “Annual Meeting”) will be conducted virtually. You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CAH2023.  

 

VIRTUAL MEETING 

 

The Annual Meeting is a virtual shareholder meeting at www.virtualshareholdermeeting.com/CAH2023. 

 

RECORD DATE 

 

Shareholders of record as of September 18, 2023 are entitled to vote at the Annual Meeting. 

 

PROXY VOTING 

 

Please vote your shares promptly to ensure the presence of a quorum during the Annual Meeting. Voting your shares now via the Internet, by telephone, or by signing, dating, and returning the enclosed proxy card or voting instruction form will save the expense of additional solicitation. Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option. 

 

 

WEDNESDAY, NOVEMBER 15, 2023

8:00 a.m. Eastern Time

 

Virtual Meeting
www.virtualshareholdermeeting.com/CAH2023

 

 

	VOTE IN ADVANCE OF THE MEETING IN ONE OF FOUR WAYS:
		INTERNET Visit 24/7 www.proxyvote.com
		BY TELEPHONE Call the toll-free number 1-800-690-6903 within the United States, U.S. territories, or Canada
		BY MAIL Mark, sign, and date proxy card and return by mail in enclosed postage-paid envelope
		VIRTUAL MEETING See page 78 for instructions on how to attend and vote your shares
	Please refer to the enclosed proxy materials or the information forwarded by your bank, broker, or other holder of record to see which voting methods are available to you.

 

We are requesting your vote to:

 

ITEMS OF BUSINESS 

 

	Elect the 11 director nominees named in the proxy statement;
	Ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending June 30, 2024;
	Approve, on a non-binding advisory basis, the compensation of our named executive officers;
	To vote, on a non-binding advisory basis, on the frequency of future advisory votes to approve the compensation of our named executive officers;
	Vote on two shareholder proposals described in the proxy statement, if properly presented at the Annual Meeting; and
	Transact such other business as may properly come before the meeting or any adjournment or postponement.

 

MEETING DETAILS

 

See “Proxy Summary” and “Other Matters” for details. 

 

By Order of the Board of Directors.

Patrick C. Pope

Executive Vice President, General Counsel, and Secretary

September 27, 2023

 

 

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on November 15, 2023: The notice of annual meeting of shareholders, the accompanying proxy statement, and our 2023 annual report to shareholders are available at www.proxyvote.com. These proxy materials are first being sent or made available to shareholders commencing on September 27, 2023.

 

CARDINALHEALTH   2023 Proxy Statement  |  4

PROXY SUMMARY

This summary highlights certain information contained elsewhere in our proxy statement. This summary does not contain all the information that you should consider, and you should carefully read the entire proxy statement and our 2023 annual report to shareholders before voting. References to our fiscal years in the proxy statement mean the fiscal year ended or ending on June 30 of such year. For example, “fiscal 2023” refers to the fiscal year ended June 30, 2023.

About Us

Headquartered in Dublin, Ohio, Cardinal Health, Inc. is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. We distribute pharmaceuticals and medical products and provide cost-effective solutions that enhance supply chain efficiency. We connect patients, providers, payers, pharmacists, and manufacturers for integrated care coordination and better patient management. We manage our business and report our financial results in two segments: Pharmaceutical and Medical.

Fiscal 2023 Performance

Fiscal 2023 was an inflection point for Cardinal Health, with improved performance, strong execution, and notable progress made against both short and long-term plans in new CEO Jason Hollar’s first year in the role. We finished the fiscal year well, with continued strong growth in the Pharmaceutical segment, robust cash flow generation, and improvement in the Medical segment, driven by execution of our Medical Improvement Plan.

CARDINALHEALTH   2023 Proxy Statement  |  5

that began early in fiscal 2023. We announced at our Investor Day held on June 8, 2023, that we had completed the business and portfolio review of the Pharmaceutical segment, which included the launch of the new Navista^TM Network supporting community oncologists, the announcement that we would retain and invest in the segment’s Nuclear and Precision Health Solutions business, and the merger of the segment’s Outcomes^TM business into Transaction Data Systems. Prior to our Investor Day, we announced that the term of the Business Review Committee had been extended until July 15, 2024.

See Annex A for reconciliations to the comparable financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the reasons why we use non-GAAP financial measures.

CARDINALHEALTH   2023 Proxy Statement  |  6

Our 2023 Board Nominees

Director

Committees

Nominee

Age

Occupation

Since

Independent

A

B(1)

G(2)

H(2)

R(2)

Steven K. Barg

61

Global Head of Engagement, Elliott Management Corporation

2022

Michelle M. Brennan

58

Retired Value Creation Leader, Johnson & Johnson

2022

Sujatha Chandrasekaran

56

Retired Senior EVP and Chief Digital and Information Officer, CommonSpirit Health

2022

Sheri H. Edison

66

Retired EVP and General Counsel, Amcor plc

2020

David C. Evans

60

Retired EVP and CFO, Scotts Miracle-Gro Company and Battelle Memorial Institute

2020

Patricia A. Hemingway Hall

70

Retired President and CEO, Health Care Service Corporation

2013

Jason M. Hollar

50

CEO, Cardinal Health, Inc.

2022

Akhil Johri

62

Operating Advisor to Clayton, Dubilier & Rice; Retired EVP and CFO, United Technologies Corporation

2018

Gregory B. Kenny

70

Retired President and CEO, General Cable Corporation

2007

Nancy Killefer

69

Retired Senior Partner, Public Sector Practice, McKinsey & Company, Inc.

2015

Christine A. Mundkur

54

Retired CEO, Impopharma Inc.

2022

Key:			Chairman of the Board
			Chair	A: Audit	B: Business Review	H: Human Resources and Compensation
			Member	G: Governance and Sustainability	R: Risk Oversight

CARDINALHEALTH   2023 Proxy Statement  |  7

Governance and Board Highlights

	10 of our 11 director nominees are independent		Audit Committee assists the Board in monitoring financial and cybersecurity risks and enterprise risk management		Business Review Committee is conducting a review of the company’s strategy, portfolio, capital allocation framework, and operations
	Independent, non-executive Chairman of the Board		Human Resources and Compensation Committee assists the Board in monitoring human capital and cultural health		Long-standing, proactive shareholder engagement program with director participation
	7 of our 11 director nominees are gender or racially/ethnically diverse		Governance and Sustainability Committee assists the Board in overseeing ESG matters		Robust Board evaluation process facilitated by an independent third party
	Diverse candidates are included in new director searches		Risk Oversight Committee assists the Board in monitoring ethical, quality, and legal and regulatory compliance risks		Annual review of director commitments

Shareholder Engagement

It has been our longstanding practice to meet with shareholders throughout the year so that management and the Board can better understand shareholder perspectives on governance, executive compensation, sustainability, and other topics.

Typically, our shareholder engagement process begins in the summer by soliciting feedback from institutional investors on governance practices and other topics, which feedback is shared with the Board. In the fall, we file our proxy statement and discuss proxy topics with institutional investors before the Annual Meeting. In the winter, we review voting results from the Annual Meeting.

Our independent Board Chairman, another independent director, and members of management engaged with shareholders during the summer of 2023 to provide updates on our strategy and ongoing business review process, Board composition and refreshment, senior leadership transitions, executive compensation, and ESG topics.

For more information on our approach to shareholder engagement and actions we have taken in response to shareholder feedback, see pages 32 and 33. For more information on our shareholder engagement efforts with respect to executive compensation and consideration of last year’s say-on-pay vote, see pages 41 and 42 of the Compensation Discussion and Analysis (“CD&A”).

Agreement with Elliott

On September 5, 2022, we entered into a cooperation agreement (the “Cooperation Agreement”) with Elliott Associates, L.P. and Elliott International, L.P. (together, “Elliott”). On May 3, 2023, we amended the Cooperation Agreement to extend its term until the later of (i) July 15, 2024 and (ii) five days following the date on which Mr. Barg, Elliott’s investor designee to the Board, or his successor ceases to serve on, or resigns from, the Board. Under the Cooperation Agreement, we agreed to appoint Mses. Brennan, Chandrasekaran, and Mundkur and Mr. Barg as new independent members of the Board effective September 6, 2022. Ms. Mundkur was initially identified by the Board’s Governance and Sustainability Committee.

CARDINALHEALTH   2023 Proxy Statement  |  8

We also agreed under the Cooperation Agreement to establish an advisory Business Review Committee to conduct a comprehensive review of the company’s strategy, portfolio, capital allocation framework, and operations. In connection with the extension of the Cooperation Agreement’s term, the Board extended the term of the Business Review Committee until July 15, 2024.

The amendment to the Cooperation Agreement extended Elliott’s agreement to abide by certain standstill restrictions and voting commitments.

Summaries of the Cooperation Agreement and the First Amendment to the Cooperation Agreement are included in Form 8-Ks filed with the U.S. Securities and Exchange Commission (“SEC”) on September 6, 2022 and May 4, 2023, respectively. The full Cooperation Agreement and First Amendment to the Cooperation Agreement are filed as exhibits to the Form 8-Ks.

CARDINALHEALTH   2023 Proxy Statement  |  9

Approach to ESG Topics

Our Priorities

Our ESG priorities below, which we had refreshed with the assistance of an ESG consultant in fiscal 2022 through a series of internal and external surveys and interviews, inform our ESG strategy, goals, and disclosures. We manage these issues through dedicated teams throughout the company with oversight from the Board’s Governance and Sustainability Committee and management’s ESG Governance Committee, who ensure that ESG matters are aligned with and support our business strategy. 

Highlights

We continue to advance ESG efforts across the company, working together with colleagues across the business on our priorities and transparently reporting on our progress. Here are a few of our fiscal 2023 ESG highlights:

Empowering our People

We focused in fiscal 2023 on advancing a workplace culture where every employee is invited and encouraged to be their authentic selves, through our ongoing focus on diversity, equity, and inclusion (“DE&I”) initiatives and providing mental health resources for employees and their families. A variety of learning and development programs supported career advancement, and a robust employee assistance program helped promote employees’ well-being.

Establishing a Scope 3 Emissions Target

This past year, we baselined our Scope 3 greenhouse gas (“GHG”) emissions and submitted a near-term science-based target to the Science Based Targets initiative (SBTi) for validation that combines our existing public Scope 1 and Scope 2 emission reduction goal of 50% by fiscal 2030 with a new Scope 3 target. In fiscal 2023, we also signed on to the White House and Health and Human Services Health Sector Climate Pledge. We believe that these initiatives align well with, and can help drive, our existing business strategies. And while we continue to make progress on achieving our GHG reduction goals, we believe that collaborating with our customers and others across the healthcare industry will be essential to addressing the impacts of climate change.

Reporting and Transparency

In our fiscal 2022 ESG report issued in January 2023, we provided extensive information on different ESG matters and included appendices that organized and reported the information according to the most widely used reporting standards and frameworks, including those of the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate-related Financial Disclosures (TCFD). We expect to issue our fiscal 2023 ESG report in January 2024.

Impacting our Communities

In fiscal 2023, the Cardinal Health Foundation and the company donated $8.4 million to charitable causes. Cardinal Health employees donated an additional $1.0 million to charitable causes representing more than 1,300 organizations across the globe and gave more than 54,600 hours of volunteer service. 

Where to Find More Information

More information about our ESG efforts can be found in our ESG reports and on our website at www.cardinalhealth.com under “About Us — Environmental, Social and Governance (ESG).”  The information in our ESG reports and on our website is not incorporated by reference into, and does not form any part of, this proxy statement. Any targets or goals discussed in this proxy statement and our ESG reports may be aspirational, and as such, no guarantees or promises are made that these goals will be met. Furthermore, statistics and metrics disclosed in this proxy statement and in our ESG reports are estimates and may be based on assumptions that turn out to be incorrect. We do not undertake or assume any obligation to update or revise any of this information. 

CARDINALHEALTH   2023 Proxy Statement  |  10

Virtual Annual Meeting

TIME AND DATE	PLACE	RECORD DATE
Wednesday, November 15, 2023 8:00 a.m. Eastern Time	Virtual Meeting www.virtualshareholdermeeting.com/CAH2023	September 18, 2023

This year’s Annual Meeting will be conducted virtually. You will be able to participate in the virtual Annual Meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CAH2023 and entering the 16-digit control number included in the notice of internet availability of proxy materials, voting instruction form, or proxy card that was sent to you with this proxy statement.

If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please visit www.virtualshareholdermeeting.com/CAH2023 and enter the information requested on the screen to register as a guest. Note that you will not have the ability to vote or ask questions during the meeting if you participate as a guest.

For further information on how to attend and participate in the virtual Annual Meeting, please see “Other Matters” beginning on page 78 in this proxy statement.

Roadmap to Voting Matters

Shareholders will be asked to vote on the following proposals at the Annual Meeting:

How to Vote in Advance of the Annual Meeting

You can return voting instructions in advance of the Annual Meeting by any of the means set forth below. Internet or telephone voting is available until Tuesday, November 14, 2023 at 11:59 p.m. Eastern Time. 

INTERNET	TELEPHONE	MAIL
Visit 24/7 www.proxyvote.com	Call the toll-free number 1-800-690-6903 within the United States, U.S. territories, or Canada and follow the instructions provided by the recorded message	Mark, sign, and date your proxy card and return it by mail in the enclosed postage-paid envelope

CARDINALHEALTH   2023 Proxy Statement  |  11

Forward-Looking Statements

Certain statements in this proxy statement may be considered “forward-looking” statements within the meaning of the applicable securities laws. Forward-looking statements include those preceded by, followed by, or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “forecasts,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends,” or similar expressions. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the factors that can be found in our news releases and our filings with the SEC, including our Annual Report on Form 10-K for fiscal 2023. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 

CARDINALHEALTH   2023 Proxy Statement  |  12

CORPORATE GOVERNANCE

PROPOSAL 1 — Election of Directors

Our Board currently has 13 members. Eleven of our directors are standing for election at the Annual Meeting to serve until the next annual meeting of shareholders and until their successor is elected and qualified or until their earlier resignation, removal from office, or death. Each of the nominees is a current director who was elected at last year’s annual meeting of shareholders. 

Carrie S. Cox, a director since 2009, has decided not to stand for re-election at the Annual Meeting. Bruce L. Downey, a director since 2009, was not nominated for re-election because he has reached the director retirement age of 75 set forth in our Corporate Governance Guidelines. The size of the Board will be reduced to 11 at the time of the Annual Meeting.

Each director nominee agreed to be named in this proxy statement and to serve if elected. If, due to death or other unexpected occurrence, one or more of the director nominees is not available for election, proxies will be voted for the election of any substitute nominee the Board selects.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES LISTED ON PAGES 14 THROUGH 19.

Board Membership Criteria: What We Look For

The Board’s Governance and Sustainability Committee considers and reviews with the Board the appropriate skills and characteristics for directors in the context of the Board’s current composition and objectives. Criteria for identifying and evaluating director candidates include, among other things:

Our Corporate Governance Guidelines provide that, as part of the search process for each new director, the Governance and Sustainability Committee includes, and instructs any search firm to include, women and racially and ethnically diverse candidates in the pool from which candidates are selected.

CARDINALHEALTH   2023 Proxy Statement  |  13

Our Director Nominees

The Board seeks members that possess the experience, skills, and diverse backgrounds to perform effectively in overseeing our current and evolving business and strategic direction. All director nominees bring to the Board a wealth of executive leadership experience derived from their diverse professional backgrounds and areas of expertise. As a group, they have business acumen, healthcare, global business, and technology experience, and operations and financial expertise. In addition, seven of the 11 director nominees are gender or racially or ethnically diverse.

Each director nominee has sound judgment and integrity and is able to commit sufficient time and attention to the activities of the Board. All director nominees other than our CEO are independent.

STEVEN K. BARG   Age 61 Director since: 2022 Independent Director Board Committees: •  Business Review •  Governance and Sustainability		Global Head of Engagement at Elliott Management Corporation
		Other Public Company Boards:
		Current	Within Last Five Years
		•  Catalent, Inc.	•  None
		Background Mr. Barg has served as Global Head of Engagement at Elliott Management Corporation (“EMC”), an investment management firm and affiliate of Elliott Investment Management L.P. (“EIM”), since February 2020. Mr. Barg served as CFO of Elliott Opportunity II Corp., a special purpose acquisition company sponsored by an affiliate of EIM, from February 2021 to July 2023. Prior to joining EMC, Mr. Barg was a Participating Managing Director at The Goldman Sachs Group, Inc., an investment bank and financial services company, from 2010 until November 2019. Earlier in his career, Mr. Barg ran the Asian equity and integrated capital markets businesses for UBS Group AG and served as a Managing Director in Equity Capital Markets at Credit Suisse Group AG.
		Qualifications: Mr. Barg brings to the Board financial expertise and extensive investment banking, capital markets, international markets, and corporate governance experience. Mr. Barg established and led what became Goldman Sachs’ Activism and Shareholder Advisory practice, founded and led Goldman Sachs’ M&A Capital Markets practice, and served as Co-head of Asian Equity Capital Markets in Hong Kong at Goldman Sachs.

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SUJATHA CHANDRASEKARAN   Age 56 Director since: 2022 Independent Director Board Committees: •  Audit •  Risk Oversight		Senior Executive Vice President and Chief Digital and Information Officer of CommonSpirit Health (retired)
		Other public company boards:
		Current	Within last five years
		•  American Eagle Outfitters, Inc.	•  Barry Callebaut (SIX: BARN)
		•  Brenntag SE (FRA: BNR)
		Background Ms. Chandrasekaran has been an advisor and independent consultant in the technology and consulting sectors since July 2022. Previously, she served as Senior Executive Vice President and Chief Digital and Information Officer for CommonSpirit Health, a non-profit health system, from 2019 to 2022. Prior to that, she was Global Chief Information Officer for Kimberly-Clark Corporation, a multinational personal care corporation focused on consumer products, from 2016 to 2019 and Senior Vice President, Global Chief Technology and Data Officer for Walmart Inc. from 2011 to 2016. Before joining Walmart, Ms. Chandrasekaran held senior technology, digital, and e-commerce roles at The Timberland Company and leadership roles at Nestlé S.A.
		Qualifications Ms. Chandrasekaran brings to the Board substantial business operations, technology, artificial intelligence, and digital experience in a global context, spanning customer engagement, marketing, supply chain, healthcare operations, industrial manufacturing, and cybersecurity. Her deep technical and operational expertise contributes to the Board’s discussions regarding the technology, information security, and operational aspects of our business and strategy. She also brings to the Board valuable perspectives and insights from her service on the board of directors of American Eagle Outfitters (including service on its Audit, Compensation, and Nominating Committees) and on the supervisory board of Frankfurt Stock Exchange-listed Brenntag SE (including service on its Audit and Compliance Committee) and her prior service on the board of directors of Barry Callebaut AG, which is listed on the SIX Swiss Exchange.

SHERI H. EDISON   Age 66 Director since: 2020 Independent Director Board Committees: •  Audit •  Risk Oversight (Chair)		Executive Vice President and General Counsel of Amcor plc (retired)
		Other Public Company Boards:
		Current	Within Last Five Years
		•  Union Pacific Corporation	•  AK Steel Holding Corporation
		Background Ms. Edison served as Executive Vice President and General Counsel of Amcor plc, a global packaging company, from 2019 through June 2021. Prior to that, she served as Senior Vice President, Chief Legal Officer, and Secretary of Bemis Company, Inc., also a global packaging company, from 2017 until Bemis was acquired by Amcor in 2019. Ms. Edison also served as Vice President, General Counsel, and Secretary of Bemis from 2010 to 2016. She came to Bemis from Hill-Rom Holdings Inc., a global medical device company, where she had served as Senior Vice President and Chief Administrative Officer from 2007 to 2010 and Vice President, General Counsel, and Secretary from 2004 to 2007. Ms. Edison began her career in private legal practice.
		Qualifications: Having served in general counsel and other functional leadership roles at publicly traded manufacturing companies in industries such as medical devices and packaging, Ms. Edison brings to the Board substantial experience in the areas of healthcare, legal, regulatory compliance, corporate governance, strategy, and international markets. She also brings prior private legal practice experience as well as broad business experience, which further bolsters her understanding of a dynamic commercial, legal, compliance, and regulatory environment. Ms. Edison draws on her extensive legal, regulatory, and leadership experience in chairing the Risk Oversight Committee. She also brings to the Board valuable perspectives and insights from her service on the board of directors of Union Pacific (where she chairs the Corporate Governance, Nominating, and Sustainability Committee and serves on the Compensation and Benefits Committee) and from her prior service on the board of directors of AK Steel.

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DAVID C. EVANS   Age 60 Director since: 2020 Independent Director Board Committees: •  Audit •  Risk Oversight		Executive Vice President and CFO of The Scotts Miracle-Gro Company and Battelle Memorial Institute (retired)
		Other Public Company Boards:
		Current	Within Last Five Years
		•  The Scotts Miracle-Gro Company	•  None
		Background   Most recently, Mr. Evans served as interim CFO of Scotts Miracle-Gro Company, a consumer lawn and garden products company, from August 2022 until December 2022, and he also served as Cardinal Health’s interim CFO from September 2019 through May 2020. Mr. Evans was Executive Vice President and CFO of Battelle Memorial Institute, a private research and development organization, from 2013 to 2018. Prior to that, he was CFO of The Scotts Miracle-Gro from 2006 until 2013 and Executive Vice President, Strategy and Business Development of Scotts from 2011 until 2013. In all, he spent 20 years in managerial roles at Scotts Miracle-Gro.
		Qualifications:   Mr. Evans has a deep financial background as the former CFO at Scotts Miracle-Gro and Battelle. Having spent 25 years in financial leadership positions with these organizations, Mr. Evans brings to the Board substantial experience in the areas of finance and accounting, investor relations, capital markets, strategy, tax, and information technology. He also provides valuable insights in the areas of financial reporting and internal controls. Through his experience with Scotts Miracle-Gro, he provides a deep understanding of the financial aspects of, and capital deployment for, a publicly traded company. His service in an interim executive role at Cardinal Health brings company and industry knowledge to the Board. Mr. Evans also brings valuable perspectives and insights from his service on the board of directors of Scotts Miracle-Gro, where he chairs the Audit Committee.

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AKHIL JOHRI   Age 62 Director since: 2018 Independent Director Board Committees: •  Audit (Chair) •  Business Review		Operating Advisor to Clayton, Dubilier & Rice; Executive Vice President and CFO of United Technologies Corporation (retired)
		Other Public Company Boards:
		Current	Within Last Five Years
		•  The Boeing Company	•  None
		Background Mr. Johri has served as an Operating Advisor to Clayton, Dubilier & Rice, a global private equity manager, since 2021. Mr. Johri served as Executive Vice President and CFO of United Technologies Corporation (“UTC”), a provider of high technology products and services to the building systems and aerospace industries, from 2015 to November 2019 and retired from UTC in April 2020. From 2013 to 2014, he served as CFO and Chief Accounting Officer of Pall Corporation, a global supplier of filtration, separations, and purifications products, and from 2011 to 2013, he was Vice President of Finance and CFO of UTC Propulsion & Aerospace Systems, which included Pratt & Whitney and UTC Aerospace Systems. Mr. Johri’s prior roles with UTC include leading investor relations as well as holding senior financial roles with global business units, including 12 years in the Asia Pacific Region.
		Qualifications: Having spent more than 25 years in financial leadership positions with UTC and Pall Corporation, Mr. Johri brings to the Board substantial experience in the areas of global finance and accounting, investor relations, capital markets, mergers and acquisitions, tax, information technology, and international markets. He also provides valuable insights in the areas of financial reporting and internal controls. Through his experience in senior leadership roles with UTC’s businesses, he provides a deep understanding of the financial aspects of, and capital deployment for, a publicly traded multinational company. Mr. Johri also brings to the Board valuable perspectives and insights from his service on Boeing’s board of directors, including chairing its Audit Committee.

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Director Skills Matrix

Our director nominees possess relevant skills and experience that contribute to a well-functioning Board that effectively oversees our strategy and management.

Director Nominee Skills and Experience
Board leadership as a board chair, lead director, or committee chair equips directors to lead our Board and its committees
Financial expertise as a finance executive or CEO brings valuable experience to the Board and our management team
Healthcare expertise as a leader of a healthcare company or a consulting firm with a healthcare practice provides industry experience
Operations experience increases the Board’s understanding of our distribution and manufacturing operations
Regulatory/legal/public policy experience helps the Board assess and respond to an evolving business and healthcare regulatory environment
International experience brings critical insights into the opportunities and risks of our international businesses
Information technology/cybersecurity experience contributes to the Board’s understanding of the information technology aspects of our business as well as cybersecurity policy
Demographic Background
African American/Black
Asian
White
Gender
Female
Male

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Our Board’s Composition and Structure

Our Board Leadership Structure

The Board has an independent, non-executive chair leadership structure. Mr. Kenny has served as Chairman of the Board since we first implemented this structure in 2018.

In addition to serving as a liaison between the Board and management, key responsibilities of the Chairman include:

Mr. Kenny’s prior experience serving as our independent Lead Director and chairing our Governance and Sustainability and Compensation Committees, as well as his experience chairing other public company boards and board committees, positions him to effectively lead the Board. Our CEO, Mr. Hollar, draws on his knowledge of our daily operations and of our industry, customers, suppliers, employees, and shareholders to provide the Board with a unique and important perspective on our business. The Board believes the current leadership structure of an independent Chairman of the Board and a separate CEO best serves the company and its shareholders. The structure facilitates robust communications between management and the Board and provides effective oversight by independent directors.

Our Corporate Governance Guidelines provide that, whenever possible, the Chairman of the Board shall be an independent director. The Guidelines further provide that if the Chairman is not independent, the independent directors will elect an independent director to serve as Lead Director. The Governance and Sustainability Committee and the Board periodically evaluate succession plans for the Board chair role.

Board Diversity

Our Corporate Governance Guidelines provide that the Board seeks to achieve diversity of occupational and personal backgrounds on the Board, including race and gender diversity. We believe that our Board nominees reflect an appropriate mix of skills, experience, and backgrounds and strike the right balance of longer serving and newer directors.

Our Corporate Governance Guidelines provide that, as part of the search process for each new director, the Governance and Sustainability Committee includes, and instructs any search firm to include, women and racially and ethnically diverse candidates in the pool from which candidates are selected. See the director skills matrix on page 20 for the self-identified gender and race/ethnicity of our director nominees.

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Identifying and Onboarding Directors

The Governance and Sustainability Committee is responsible for identifying, reviewing, and recommending director candidates, and our Board is responsible for selecting candidates for election as directors based on the Governance and Sustainability Committee’s recommendations.

Considering the impending director departures at the Annual Meeting, the Governance and Sustainability Committee is assessing the composition of the board to ensure that it has the right mix of experience, skills, and diverse backgrounds to effectively oversee the company. The Governance and Sustainability Committee has engaged a search firm to assist with identifying and evaluating potential Board candidates. 

New directors typically participate in a comprehensive director orientation program, which includes meetings with senior management. This orientation program helps new directors become familiar with our business and strategy, significant financial matters, information technology and security matters, our legal, governance, quality, and compliance programs, and our approach to human resources management.

Director Education

We encourage our directors to attend outside director and other continuing education programs and make available to directors information on director education programs that might be of interest on developments in our industry, corporate governance, regulatory requirements and expectations, the economic environment, and other matters relevant to their duties as directors. In the past year, our directors have attended programs sponsored by the National Association of Corporate Directors, among others.

We also provide additional director educational opportunities internally through presentations on topics such as healthcare industry trends, ESG developments, regulatory compliance, cybersecurity, and directors’ legal duties. During fiscal 2023, directors held one of their quarterly meetings off-site and had the opportunity to tour facilities and meet with employees.

Director Retirement

The Governance and Sustainability Committee and the Board believe that setting a retirement age for Cardinal Health directors is advisable to facilitate the addition of new directors. Accordingly, our Corporate Governance Guidelines provide that a director will not be nominated for re-election after their 75th birthday.

Additional Board Service

Directors are expected to commit sufficient time and attention to the activities of the Board. In accordance with our Corporate Governance Guidelines, except as approved by the Board:

Directors must advise the Chairman of the Board, the Chair of the Governance and Sustainability Committee, and the Corporate Secretary in advance of accepting an invitation to serve on another board.

In August 2022, the Governance and Sustainability Committee approved amendments to the Corporate Governance Guidelines that formalized an annual review of director capacity and outside public company board commitments. In this annual review, the Governance and Sustainability Committee may consider all factors it deems to be relevant, including the following:

The Governance and Sustainability Committee conducted a review of director capacity for our 2023 director nominees and affirms that they are compliant with our outside board commitments policy. 

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Director Attendance

The Board held 12 meetings during fiscal 2023. Each director attended 75% or more of the meetings of the Board and Board committees on which they served during the fiscal year. Average director attendance across all Board and Board committee meetings was 96%.

All our then-current directors attended the annual meeting of shareholders last year. Absent unusual circumstances, each director is expected to attend the annual meeting of shareholders.

Board Committees

The Board has four standing committees: the Audit Committee; the Governance and Sustainability Committee; the Human Resources and Compensation Committee (the “Compensation Committee”); and the Risk Oversight Committee. Each member of these committees is independent under our Corporate Governance Guidelines and under applicable committee independence rules.

The charter for each of these committees is available on our website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Governance — Committee Composition.” This information also is available in print (free of charge) to any shareholder who requests it from our Investor Relations department.

In addition to its four standing committees, the Board has a Business Review Committee that was formed on September 6, 2022 under the Cooperation Agreement. On May 3, 2023, the term of the Business Review Committee was extended until July 15, 2024. The Board also had an Ad Hoc Committee on Opioids, which was formed in 2018 to assist the Board in its oversight of opioid-related issues, until November 2022 when it met for the last time, transitioned its responsibilities to the Risk Oversight Committee, and terminated. 

Audit Committee

Members:(1)							4 Meetings in fiscal 2023
Akhil Johri (Chair)	Michelle M. Brennan(2)	Sujatha Chandrasekaran(2)	Sheri H. Edison(2)	David C. Evans

The Audit Committee’s primary duties are to:

The Board has determined that each of Messrs. Evans and Johri is an “audit committee financial expert” for purposes of the SEC rules.

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Governance and Sustainability Committee

Members:(1)							7 Meetings in fiscal 2023
Patricia A. Hemingway Hall (Chair)	Steven K. Barg(2)	Carrie S. Cox(2)	Bruce L. Downey(3)	Gregory B. Kenny	Nancy Killefer(2)

The Governance and Sustainability Committee’s primary duties are to:

Human Resources and Compensation Committee

Members:(1)							8 Meetings in fiscal 2023
Carrie S. Cox (Chair)(2)	Michelle M. Brennan(3)	Patricia A. Hemingway Hall	Nancy Killefer	Christine A. Mundkur(3)

The Compensation Committee’s primary duties are to:

The CD&A, which begins on page 40, discusses how the Compensation Committee makes compensation-related decisions regarding our named executive officers.

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Risk Oversight Committee

Members:(1)							4 Meetings in fiscal 2023
Sheri H. Edison (Chair)(2)	Sujatha Chandrasekaran(2)	Bruce L. Downey(2)	David C. Evans(2)	Christine A. Mundkur(2)

The Risk Oversight Committee assists the Board in monitoring and overseeing risks associated with the company’s operations, including risks associated with ethical, quality, and legal and regulatory compliance matters (other than financial matters overseen by the Audit Committee). The Risk Oversight Committee’s primary duties are to:

The Risk Oversight Committee coordinates with the Audit Committee in monitoring compliance by the company with legal and regulatory requirements as they relate to the responsibilities of the Audit Committee. Mses. Chandrasekaran and Edison and Mr. Evans sit on the Audit Committee.

Business Review Committee

Members:							11 Meetings in fiscal 2023
Jason M. Hollar (Chair)	Steven K. Barg	Akhil Johri

Under the Cooperation Agreement, the Board established an advisory Business Review Committee to conduct a comprehensive review of the company’s strategy, portfolio, capital allocation framework, and operations. Since its formation on September 6, 2022, the Business Review Committee has been reviewing and making recommendations to the Board regarding the following matters:

Results of the review to date were reported to the company’s shareholders at an Investor Day held on June 8, 2023. On May 3, 2023, in connection with the extension of the term of the Cooperation Agreement, the Board extended the term of the Business Review Committee until July 15, 2024.

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Our Board’s Primary Role and Responsibilities and Processes

Our Board’s Primary Role and Responsibilities

Our Corporate Governance Guidelines provide that our Board serves as the representative of, and acts on behalf of, all the shareholders of Cardinal Health. The Board, operating directly and through its committees, fulfills the following primary functions:

How Our Board Oversees Our Strategy and Capital Deployment

The Board receives updates on company performance and regularly discusses our strategy considering the competitive environment, developments in the rapidly changing healthcare industry, and the global business and economic environment. The Board reviews and approves capital deployment, including dividends, financing and share repurchase plans, and significant acquisitions and divestitures.

At least annually, the Board conducts a dedicated strategy session with in-depth discussions of our industry, specific businesses, and new business opportunities. At these sessions, the Board also discusses risks related to our strategies, including risks resulting from possible actions by competitors, disrupters, customers, and suppliers. The Board also considers various elements of strategy at each regular quarterly meeting. The collective backgrounds, skills, and experiences of our directors, including broad industry experience, contribute to robust discussions of strategy and the related risks.

As described elsewhere in this proxy statement, on September 6, 2022, we established an advisory Business Review Committee under the Cooperation Agreement to conduct a comprehensive review of the company’s strategy, portfolio, capital allocation framework, and operations. In connection with the extension of the Cooperation Agreement term, the Board extended the term of the Business Review Committee until July 15, 2024.

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How Our Board Oversees Risk

A summary of the allocation of general risk oversight functions among management, the Board, and the Board’s committees follows below.

Management has day-to-day responsibility for assessing and managing risks, and the Board is responsible for risk oversight. Management has developed and administers an enterprise risk management (“ERM”) program, which the Audit Committee oversees. Through this ERM program, management identifies and prioritizes enterprise risks and develops systems to assess, monitor, and mitigate those risks. Management reviews and discusses with the Board and its committees significant risks facing the company. 

Our internal audit function, which the Audit Committee oversees, also helps to identify and mitigate risks and improve internal controls. 

Risks Associated with Operations

The Risk Oversight Committee assists the Board in monitoring and overseeing risks associated with our operations, including risks associated with ethical, quality, and legal and regulatory matters.

The Risk Oversight Committee oversees our ethics and compliance program, product quality and safety program, and our compliance with legal and regulatory requirements other than audit, accounting, and financial disclosure matters and related internal controls, which are overseen by the Audit Committee. The Risk Oversight Committee receives quarterly updates from senior leadership regarding all the areas that the Committee oversees, and the Board receives annual updates from senior leadership regarding our ethics and compliance program and our product quality and safety program.

The Risk Oversight Committee coordinates with the Audit Committee in monitoring compliance by the company with legal and regulatory requirements as they relate to the responsibilities of the Audit Committee. To facilitate this coordination, Risk Oversight Committee Chair Edison and Risk Oversight Committee members Chandrasekaran and Evans sit on the Audit Committee.

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Controlled Substance Distribution Risks

The Board remains active in overseeing our response to the opioid epidemic. The Ad Hoc Committee on Opioids formed in 2018 assisted the Board in its oversight of opioid-related issues until November 2022, when it met for the last time, transitioned its responsibilities to the Risk Oversight Committee, and terminated. The Risk Oversight Committee now addresses, and receives quarterly updates from senior leadership regarding, among other things:

Cybersecurity and Other Information Technology Risks

The Audit Committee is responsible for discussing with management our cybersecurity and other major information technology risk exposures. The Audit Committee receives quarterly updates from the Chief Information Officer and Chief Information Security Officer on these risk exposures and the Board receives an annual cybersecurity update. These updates focus on, among other things, the threat environment and the risks our businesses face, the state, priorities of, and investments in our information protection program, the availability of cyber insurance, and relevant cybersecurity operational metrics. 

Oversight of ESG Matters

Given the breadth of ESG matters for a company of our size and scale, oversight of those issues is allocated throughout the Board and its committees:

At the management level, our ESG matters are led and coordinated by our Vice President, ESG who regularly engages with the Board’s Governance and Sustainability Committee. The Vice President, ESG is responsible for, among other things:

Providing management oversight to our ESG program is an ESG Governance Committee composed of the CEO, the CEO’s direct reports, and other senior business and functional leaders. 

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The Board’s Role in Oversight of Corporate Culture and Human Capital

The Board continues to assess and monitor corporate culture at Cardinal Health and how it enables our business strategies. The Board and its Compensation Committee engage with management on various specific aspects of human capital and cultural health, including talent management and succession planning, DE&I initiatives, and employee engagement.

Our Path Forward

Our Path Forward (see illustrative graphic below) is a comprehensive, enterprise-wide strategy that creates clarity regarding our mission, where we are going, how we will grow, what we believe, and how we act. This initiative reflects our vision and strategy to position the company for the future. 

Our Path Forward goals have been a part of our annual cash incentive and performance share unit (“PSU”) grants over the past four years to help align our senior leaders’ incentives with this important strategic initiative. Our Path Forward goals for the fiscal 2023 compensation programs are discussed in the CD&A beginning on page 45.

Our Path Forward

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Human Capital Strategy

Our Compensation Committee plays a leading role in overseeing and advising the Board about our human capital management strategies and policies, including with respect to:

The Board is periodically updated on specific aspects of our human capital management strategy, as appropriate.

Talent Management and Succession Planning

The Compensation Committee and the Board are actively engaged in our talent management program. The Compensation Committee oversees the process for succession planning for the CEO and other senior executives, and management provides an organizational update at each quarterly Committee meeting and shares key talent metrics.

The full Board holds a formal succession planning and talent review session annually, which includes succession planning for the CEO and other senior executives. These sessions include identification of internal candidates and desired leadership skills and key capabilities and experience. Directors also interact with our leaders through Board presentations and discussions as well as through informal events and planned one-on-one meetings.

As a result of its CEO succession planning process, the Board elected Mr. Hollar as CEO, effective September 1, 2022. Mr. Hollar succeeded Michael C. Kaufmann, who served as CEO for almost five years. In selecting Mr. Hollar as our CEO, the Board considered his extensive management, operational, and financial expertise and his strong performance as CFO since joining the company in 2020. 

Also during the last fiscal year, the Board elected an experienced internal hire and former President of our Pharmaceutical Distribution business, Deborah L. Weitzman, as CEO, Pharmaceutical Segment, effective September 19, 2022. Later in the fiscal year, the Board elected external hire Aaron E. Alt to fill our open CFO role, effective February 10, 2023. Mr. Alt joined us from food service distribution company Sysco Corporation, where he also served as CFO.

Diversity, Equity, and Inclusion

The Compensation Committee receives an annual update on DE&I initiatives.

We remain focused on continuing to build and foster a workplace that values the unique perspectives and contributions of all our employees. Our people are our most important assets — and we believe that a diverse and inclusive workforce leads to better business results. 

With oversight from the Compensation Committee, we formulated a comprehensive talent strategy that furthers our aspiration to be an employer of choice for all. Our DE&I program helps identify and eliminate barriers to equal opportunity and development, inspires outreach and recruitment efforts to reach a broader base of qualified individuals, and allows all individuals to feel comfortable bringing their authentic selves to work. We believe these efforts will help us drive progress in our program, including toward our aspirational diverse management representation goals.

Consistent with our aspirational goals, we are focused on attracting, developing, and retaining diverse talent, from entry-level to senior leadership positions. We have eliminated the college degree requirement from 80% of positions at the company and are focusing instead on experience and accomplishments as we recruit and hire new employees. We have increased the number of diverse candidate slates and our interview panels include people with differing experiences and backgrounds in the new hire process within the U.S. We conduct “stay conversations” to help leaders understand why employees stay and what might cause them to leave.

During fiscal 2023, we made progress toward our 2030 aspirational goals. We plan to report on our DE&I initiatives in more detail in our fiscal 2023 ESG report, which we expect to issue in January 2024.

Employee Engagement

Management reviews with the Board our employee engagement survey results across multiple categories, such as sustainable engagement, communication, leadership, customer focus, DE&I, and work environment. These questions give insight into the experience of the employee and their supervisor, team, senior leadership, and the enterprise. 

With respect to our 2023 biennial full employee engagement survey, we experienced an 88% participation rate, which was in line with historical levels at the company and was considered to be well above our outside consultant’s global high performance norm benchmark. 

Our Board Evaluation Process

Each year, our Board conducts a rigorous self-evaluation process, which includes individual director evaluations. This process is overseen by the Governance and Sustainability Committee, led by our Governance and Sustainability Committee Chair, and conducted by an outside facilitator with corporate governance experience. The outside facilitator interviews each director to obtain anonymous feedback regarding Board performance and effectiveness and reviews the feedback during an executive session of the Board. This feedback helps the Board identify follow-up items and provide feedback to management.

The Board evaluation process includes an assessment of both Board process and substance, including:

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Feedback received regarding individual directors is shared with the Governance and Sustainability Committee Chair and the individual directors. The Board believes that this annual evaluation process supports its effectiveness and continuous improvement.

Actions taken in response to feedback from past Board evaluations and other feedback received include:

In addition to the full Board’s evaluation process, each of the Audit, Compensation, Governance and Sustainability, and Risk Oversight Committees annually review their charters and conduct their own committee self-evaluation.

Director Independence

The Board has established director independence standards based on the New York Stock Exchange (“NYSE”) rules. These standards can be found in our Corporate Governance Guidelines on our website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Governance — Governance Documents.” These standards address, among other things, employment and compensation relationships, relationships with our auditor and customers, and business relationships.

The Board assesses director independence at least annually, based on the recommendations of the Governance and Sustainability Committee. The Board has determined that each of Mses. Brennan, Chandrasekaran, Cox, Edison, Hemingway Hall, Killefer, and Mundkur, and each of Messrs. Barg, Downey, Evans, Johri, and Kenny, is independent.

Messrs. Scarborough and Weiland, who served on our Board until their terms expired at the 2022 annual meeting of shareholders, were determined to be independent as disclosed in our proxy statement for the 2022 annual meeting of shareholders.

Public Policy Engagement

We participate on public policy issues related to our industry and business priorities, employees, customers, shareholders, and the communities we serve. The Governance and Sustainability Committee provides oversight of our policies and practices regarding political and lobbying activities and expenditures, including an annual review of our political contributions policy, corporate political

contributions, lobbying activities, and trade association payments. Additional information about our public policy engagement can be found in our annual Political Activities and Contributions Reports available at www.cardinalhealth.com under “About Us — Environmental, Social and Governance (ESG) — Policies and principles.”

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Shareholder Engagement

Our Annual Engagement Process

It has been our long-standing practice to meet with shareholders throughout the year so that management and the Board can better understand shareholder perspectives on governance, executive compensation, sustainability, and other topics. A general overview of our annual engagement process is below.

Our Fiscal 2023 Engagement Efforts

Our Board Chairman, another independent director, and members of management engaged with shareholders during the summer of 2023 to provide updates on our strategy and ongoing business review process, Board composition and refreshment, senior leadership transitions, executive compensation, and ESG topics.

See pages 41 and 42 in the CD&A for further detail of our shareholder engagement efforts with respect to executive compensation and consideration of last year’s say-on-pay vote.

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Board Responsiveness to Shareholder Feedback

After considering feedback from shareholders, which is shared with the full Board, and focusing on best practices, we have taken a number of actions with respect to our governance, executive compensation, and sustainability practices and disclosures in recent years. 

Standards of Business Conduct

Our Board has adopted written Standards of Business Conduct that outline our corporate values and standards of integrity and behavior for every employee, officer, and director. The Standards of Business Conduct are designed to foster a culture of integrity, drive compliance with legal and regulatory requirements, and protect and promote the reputation of our company. The full text of the Standards of Business Conduct is posted on our website at www.cardinalhealth.com under “About Us — Who we are — Ethics and Compliance.” This information also is available in print (free of charge) to any shareholder who requests it from our Investor Relations department.

Related Person Transactions Policy and Process

Related Person Transactions Policy

We have a written policy that the Audit Committee must approve or ratify any “related person transactions” (transactions exceeding $120,000 in which we are a participant and any related person has a direct or indirect material interest). “Related persons” include our directors, nominees for election as a director, persons controlling over 5% of our common shares, executive officers, and the immediate family members of each of these individuals.

Once a related person transaction is identified, the Audit Committee will review all relevant facts and circumstances and determine whether to approve the transaction. The Audit Committee will take into account such factors as it considers appropriate, including the material terms of the transaction, the nature of the related person’s interest in the transaction, the significance of the transaction to the related person and to us, the nature of the related person’s relationship with us, and whether the transaction would be likely to impair the judgment of a director or executive officer to act in our best interest.

If advance approval of a transaction is not feasible, the Audit Committee will consider the transaction for ratification at its next regularly scheduled meeting. The Audit Committee Chairman may pre-approve or ratify any related person transactions in which the aggregate amount is expected to be less than $1 million.

Related Person Transactions

Since July 1, 2022, there have been no transactions, and there are no currently proposed transactions, involving an amount exceeding $120,000 in which we were or are to be a participant and in which any related person had or will have a direct or indirect material interest.

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Director Compensation

Overview

Our non-management director compensation program is approved by our Board based on the recommendation of the Compensation Committee. The Compensation Committee annually reviews comparative market data and receives recommendations from its independent compensation consultant with regard to the structure and amounts of our director compensation. Total director compensation is targeted at the median amount among our Comparator Group, which is discussed beginning on page 52.

Following the Compensation Committee’s most recent review of director compensation, and based on the recommendation of its compensation consultant, the Compensation Committee recommended to the Board, and the Board approved, increases to the annual cash retainer and restricted share unit (“RSU”) grant value effective November 15, 2023. The new compensation aligns with our target of the median director compensation for the Comparator Group.

Compensation Arrangements

The table below shows the elements and amount of compensation that we pay our non-management directors.

Directors may receive additional compensation for performing duties assigned by the Board or its committees that are considered beyond the scope of the ordinary responsibilities of directors or committee members. Mses. Cox and Edison and Mr. Kenny received $10,000 per year for service on the Ad Hoc Committee on Opioids and Mr. Downey received $25,000 per year for chairing the Ad Hoc Committee on Opioids. The Ad Hoc Committee on Opioids last met in November 2022, transitioned its responsibilities to the Risk Oversight Committee, and terminated.

Directors may elect to defer payment of their cash retainers into the Cardinal Health Deferred Compensation Plan (“DCP”). For directors, deferred balances under the DCP are paid in cash upon termination from Board service, death, or disability in a single lump sum or annual installment payments over a period of five or ten years, depending upon the director’s election. A director also may defer receipt of common shares that otherwise would be issued on the date that RSUs vest until termination from Board service.

Our directors may participate in our matching gift program. Under this program and subject to certain restrictions, the Cardinal Health Foundation (our philanthropic affiliate) will match contributions for eligible non-profit organizations.

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Director Compensation for Fiscal 2023

The non-management directors received the following compensation during fiscal 2023:

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AUDIT COMMITTEE MATTERS

PROPOSAL 2 — Ratification of Appointment of Ernst & Young LLP as Independent Auditor

The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent auditor and approves the audit engagement with Ernst & Young LLP and its audit fees. The Audit Committee has appointed Ernst & Young LLP as our independent auditor for fiscal 2024 and believes that the continued retention of Ernst & Young LLP as our independent auditor is in the best interest of Cardinal Health and its shareholders. Ernst & Young LLP has served as our independent auditor since 2002. In accordance with SEC rules, lead audit partners are subject to rotation requirements, which limit the number of consecutive years an individual partner may serve us. The Audit Committee oversees the rotation of the audit partners. The Audit Committee Chair interviews candidates for audit partner and the Audit Committee discusses them.

While not required by law, we are asking our shareholders to ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal 2024 at the Annual Meeting as a matter of good corporate governance. If shareholders do not ratify this appointment, the Audit Committee will consider whether it is appropriate to appoint another audit firm. Even if the appointment is ratified, the Audit Committee in its discretion may appoint a different audit firm at any time during the fiscal year if it determines that such a change would be in the best interest of Cardinal Health and its shareholders. Our Audit Committee approved, and our shareholders ratified with 96% support, the appointment of Ernst & Young LLP as our independent auditor for fiscal 2023.

We expect representatives of Ernst & Young LLP to attend the Annual Meeting. They will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions from shareholders.

	THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITOR FOR FISCAL 2024.

Audit Committee Report

The Audit Committee is responsible for overseeing: the integrity of Cardinal Health’s financial statements; the independent auditor’s qualifications, independence, and performance; Cardinal Health’s internal audit function; Cardinal Health’s compliance with legal and regulatory requirements; and Cardinal Health’s processes for assessing and managing risk. As of the date of this report, the Audit Committee consists of five members of the Board of Directors. The Board of Directors has determined that each of Messrs. Evans and Johri is an “audit committee financial expert” for purposes of the SEC rules and that each Committee member is independent. The Audit Committee’s activities are governed by a written charter, which is available on Cardinal Health’s website at www.cardinalhealth.com under “About Us — Corporate — Investor Relations — Governance — Committee Composition.”

Management has primary responsibility for the financial statements and for establishing and maintaining the system of internal control over financial reporting. Management also is responsible for reporting on the effectiveness of Cardinal Health’s internal control over financial reporting. Cardinal Health’s independent auditor, Ernst & Young LLP, is responsible for performing an independent audit of Cardinal Health’s consolidated financial statements and for issuing a report on the financial statements and a report on the effectiveness of Cardinal Health’s internal control over financial reporting based on its audit.

The Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended June 30, 2023 with management and with Ernst & Young LLP. The Audit Committee also reviewed and discussed with management and Ernst & Young LLP the effectiveness of Cardinal Health’s internal control over financial reporting as well as management’s report and Ernst & Young LLP’s report on the subject. The Audit Committee discussed with Ernst & Young LLP the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC and matters related to Cardinal Health’s financial statements, including critical accounting estimates and judgments. The Audit Committee received from Ernst & Young LLP the written disclosures and letter required by the applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence and discussed with Ernst & Young LLP its independence.

The Audit Committee meets regularly with Ernst & Young LLP, with and without management present, to review the overall scope and plans for Ernst & Young LLP’s audit work and to discuss the results of its examinations, the evaluation of Cardinal Health’s internal control over financial reporting, and the overall quality of Cardinal Health’s accounting and financial reporting. In addition, the Audit Committee annually considers the performance of Ernst & Young LLP.

In reliance on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the fiscal year ended June 30, 2023 be included in Cardinal Health’s Annual Report on Form 10-K for filing with the SEC.

Submitted by the Audit Committee of the Board of Directors on August 1, 2023.

Akhil Johri, Chairman
Michelle M. Brennan
Sujatha Chandrasekaran
Sheri H. Edison
David C. Evans

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Fees Paid to Ernst & Young LLP

The following table sets forth the fees billed to us by Ernst & Young LLP for services in fiscal 2023 and 2022.

Policy on Pre-Approval of Services Provided by Ernst & Young LLP

The Audit Committee must pre-approve the audit and permissible non-audit services performed by our independent accountants in order to help ensure that the accountants remain independent of Cardinal Health. The Audit Committee has adopted a policy governing this pre-approval process.

Under the policy, the Audit Committee annually pre-approves certain services and assigns specific dollar thresholds for these types of services. If a proposed service is not included in the annual pre-approval, the Audit Committee must separately pre-approve the service before the engagement begins.

The Audit Committee has delegated pre-approval authority to the Audit Committee Chairman for proposed services up to $500,000. Proposed services exceeding $500,000 require full Audit Committee approval.

All audit and non-audit services provided for us by Ernst & Young LLP for fiscal 2023 and 2022 were pre-approved by the Audit Committee.

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EXECUTIVE COMPENSATION

	PROPOSAL 3 — Advisory Vote to Approve the Compensation of Our Named Executive Officers	39
	PROPOSAL 4 — Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation of our Named Executive Officers	39
	Compensation Discussion and Analysis	40
	Executive Summary	40
	Shareholder Engagement and Consideration of 2022 Say-on-Pay Vote	41
	Executive Compensation Governance Features	42
	Compensation Philosophy and Practices	42
	Elements of Compensation for Executive Officers	42
	Fiscal 2023 Base Salary	44
	Fiscal 2023 Annual Incentive Compensation	44
	Fiscal 2021-2023 Performance Share Unit Payouts	47
	Fiscal 2023 Long-Term Incentive Targets and Grants	49
	Fiscal 2023-2025 Performance Share Unit Grants	50
	Other Elements of Compensation	50
	Our Policies, Guidelines, and Practices Related to Executive Compensation	52
	Human Resources and Compensation Committee Report	54
	Executive Compensation Tables	55
	Summary Compensation Table	55
	All Other Compensation	56
	Grants of Plan-Based Awards for Fiscal 2023	57
	Incentive Plans	58
	Performance Measure Calculations	58
	Potential Impact on Compensation from Executive Misconduct (“Clawbacks”)	60
	Outstanding Equity Awards at Fiscal Year-End for Fiscal 2023	61
	Option Exercises and Stock Vested for Fiscal 2023	62
	Deferred Compensation	62
	Nonqualified Deferred Compensation in Fiscal 2023	63
	Potential Payments upon Termination of Employment or Change of Control at Fiscal Year-End	64
	Pay Ratio Disclosure	67
	Pay Versus Performance	68
	Most Important Performance Measures	69
	Description of Compensation Actually Paid Versus Company Performance	69
	Equity Compensation Plan Information	71

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PROPOSAL 3 — Advisory Vote to Approve the Compensation of Our Named Executive Officers

In accordance with Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”), we are asking our shareholders to approve, on a non-binding advisory basis, the compensation of our named executive officers, as defined and disclosed in the CD&A, the Summary Compensation Table, and the related compensation tables, notes, and narrative in this proxy statement.

We urge shareholders to read the CD&A beginning on page 40 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative disclosures appearing on pages 55 through 70, which provide detailed information on the compensation of our named executive officers.

The Board and the Compensation Committee believe that the policies and procedures articulated in the CD&A are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to our long-term success. Additionally, we believe the fiscal 2023 pay outcomes demonstrate alignment between pay and performance.

Although this advisory vote is not binding on the Board, the Board and the Compensation Committee will review and consider the voting results when evaluating our executive compensation program.

The Board has adopted a policy providing for annual say-on-pay advisory votes such as the one in this Proposal 3. Accordingly, subject to the outcome of Proposal 4 and the decision of the Board, the next say-on-pay advisory vote will be held at our 2024 annual meeting of shareholders.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE CD&A, THE SUMMARY COMPENSATION TABLE, AND THE RELATED COMPENSATION TABLES, NOTES, AND NARRATIVE IN THIS PROXY STATEMENT.

PROPOSAL 4 — Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation of Our Named Executive Officers

In accordance with Section 14A of the Exchange Act, we are asking shareholders to recommend, in an advisory vote, whether future shareholder advisory approval of the compensation of our named executive officers should occur every one, two, or three years.

At our 2017 annual meeting of shareholders, our shareholders voted to hold say-on-pay votes annually and our Board adopted this practice. Under SEC rules, we are required to conduct this advisory vote again in 2023 (and the next such vote will occur in 2029). After careful consideration, the Board recommends that future say-on-pay votes continue to be held annually. Our Board believes that holding a vote every year is the most appropriate option because it would continue to enable our shareholders to provide us with timely input regarding the compensation of named executive officers.

Shareholders are not voting to approve or disapprove the Board’s recommendation. Instead, shareholders may indicate their preference regarding the frequency of future say-on-pay votes by selecting one year, two years, or three years, or abstaining.

Although the vote is non-binding, the Compensation Committee and the Board value your opinion and will consider the outcome of the vote in establishing the frequency with which future say-on-pay votes will be held.

THE BOARD RECOMMENDS THAT YOU VOTE TO CONDUCT FUTURE ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY ONE YEAR.

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Compensation Discussion and Analysis

Executive Summary

This CD&A focuses on the fiscal 2023 compensation of the following current and former executive officers (the “named executive officers” or “named executives”) and describes the executive compensation program and the Compensation Committee’s decisions under it.  

Fiscal 2023 Performance

Fiscal 2023 was an inflection point for Cardinal Health, with improved performance, strong execution, and notable progress made against both short and long-term plans in new CEO Jason Hollar’s first year in the role. We finished the fiscal year well, with continued strong growth in the Pharmaceutical segment, robust cash flow generation, and improvement in the Medical segment, driven by execution of our Medical Improvement Plan.

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See Annex A for reconciliations to the comparable financial measures prepared in accordance with GAAP and the reasons why we use non-GAAP financial measures.

Fiscal 2023 Compensation Highlights

Executive Transitions during Fiscal 2023

Shareholder Engagement and Consideration of 2022 Say-on-Pay Vote

Our annual say-on-pay vote is an opportunity to receive feedback from shareholders regarding our executive compensation program. The Compensation Committee takes the result of this vote into consideration when it determines the compensation of our executive officers. Shareholders demonstrated strong support for our executive compensation program in 2022, as evidenced by the 91% of votes cast in favor of say-on-pay last year. A general overview of our annual shareholder engagement process can be found on page 32.

Our Board Chairman, another independent director, and members of senior management engaged with shareholders during the summer of 2023 to discuss executive compensation as well as to provide updates on our strategy and ongoing business review process, Board composition and refreshment, senior leadership transitions, and ESG topics.

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In our meetings, shareholders continued to express support for the structure of our executive compensation program and its alignment of pay with performance. Shareholders also provided positive feedback on our return to setting three-year PSU goals beginning with the fiscal 2023 annual grant, rather than using a three-year cumulative PSU goal, which was the sum of annual targets.

See pages 32 and 33 of this proxy statement for additional information about shareholder engagement.

Executive Compensation Governance Features

WHAT WE HAVE			WHAT WE DO NOT HAVE
	Significant portion of executive pay consists of performance-based “at risk” elements			No employment agreements with executive team
	Performance goals for cost savings and Our Path Forward			No payment of dividend equivalents on PSUs or RSUs until, and only to the extent that, the underlying award vests
	Caps on annual cash incentive and PSU payouts			No executive pensions
	Minimum vesting period for long-term incentive awards			No repricing of underwater options without shareholder approval
	Stock ownership guidelines for directors and executive officers			No hedging or pledging of company stock
	Compensation recoupment (“clawback”)			No “single trigger” change of control arrangements
	Long-standing, proactive shareholder engagement program and history of responsiveness			No excise tax gross-ups upon change of control

Compensation Philosophy and Practices

Our compensation program is designed to support our long-term growth, with accountability for key annual results. It has the following key objectives:

Elements of Compensation for Executive Officers

Our executive officers’ total direct compensation has three primary elements: base salary; annual incentive; and long-term incentive. In fiscal 2023, long-term incentive awards were granted 60% in PSUs and 40% in RSUs. A significant portion of executive compensation is based on company performance and is at-risk (annual incentive and PSUs). At the beginning of each performance period, the Compensation Committee sets performance goals under our annual incentive program and for our PSUs. After the performance period ends, the Compensation Committee evaluates the performance and determines payouts.

The charts below show the components of fiscal 2023 target total direct compensation and the elements of fiscal 2023 pay for our CEO and other named executives.

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Fiscal 2023 Target Total Direct Compensation

The Compensation Committee established fiscal 2023 target total direct compensation for our current named executives as shown below. ⁽¹⁾ The Compensation Committee takes a number of factors into consideration when setting target total direct compensation and each of the individual elements, including job responsibilities, time in role, and competitive market data derived from our Comparator Group discussed on pages 52 and 53. Further information on the primary elements of compensation can be found in the following pages, where each pay element is described more fully.

Consistent with the company’s past practice for an internally promoted CEO, when the Compensation Committee set Mr. Hollar’s initial target total direct compensation as CEO, it was positioned approximately at the 25th percentile of the competitive market range, as established using the company’s existing Comparator Group. This percentile placement includes annual vesting of Mr. Hollar’s August 2022 alignment equity grant over a three-year period and assumes attainment of the applicable performance metrics for the performance portion of the award.

Fiscal 2023 Base Salary

The Compensation Committee annually reviews our named executives’ base salaries. The Compensation Committee approved base salary increases of between 3.7% and 8.0% for Messrs. Crawford and Mason and Ms. Mayer at the beginning of fiscal 2023 to move their target total direct compensation closer to the median of the Comparator Group market data for their respective roles as well as for internal pay equity considerations.

The Compensation Committee set Messrs. Hollar’s and Alt’s base salaries at $1,350,000 and $825,000, respectively, and set Ms. Weitzman’s and Ms. English’s base salaries at $625,000 and $300,000, respectively, in connection with their appointment to their new roles.

Fiscal 2023 Annual Incentive Compensation

Consistent with last year, the Compensation Committee based the goals for the fiscal 2023 annual cash incentive award program on adjusted non-GAAP operating earnings, operating cash flow, cost savings, and Our Path Forward objectives.

Operating Earnings Goal

The earnings goal continued to be based on non-GAAP operating earnings because it is one of our primary measures of operating performance.

The Compensation Committee set the adjusted non-GAAP operating earnings target of $2,018 million at the beginning of fiscal 2023. Based on the Board-approved budget, the earnings target represented approximately 7.9% growth over the prior year’s actual adjusted non-GAAP operating earnings of $1,871 million.

In our August 11, 2022 earnings call, we explained that our key assumptions for fiscal 2023 non-GAAP operating earnings outlook included, among other things, continued stability in overall pharmaceutical volumes and consistent market dynamics within our generic pharmaceutical program in the Pharmaceutical segment and a net negative impact similar to fiscal 2022 in our Medical segment from inflation and global supply constraints, offset by planned mitigation actions.

Operating Cash Flow Goal

The operating cash flow goal was based on GAAP net cash provided by operating activities. The Compensation Committee set the operating cash flow target at the beginning of fiscal 2023 based on the Board-approved budget. 

The fiscal 2023 target was lower than the fiscal 2022 target and actual results largely due to the receipt of a significant tax refund from a net operating loss carryback in fiscal 2022 that did not repeat in fiscal 2023,as well as to the timing of customer and vendor payments.

The Compensation Committee included this liquidity-focused measure in the annual incentive program to align with our focus on capital deployment. Our ability to generate cash is critical to our growth and necessary to fund the activities needed to meet our capital deployment objectives.

Cost Savings Goal

The Compensation Committee set the target for new cost savings projects during fiscal 2023 to align with our internal projections and a publicly announced cost savings goal of more than $750 million over five years against a fiscal 2018 base year. This initiative is designed to streamline our cost structure and position us for sustainable future growth. 

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Our Path Forward Goal

Our Path Forward, which is discussed on page 29, is a comprehensive, enterprise-wide strategy setting forth our mission, where we are going, how we will grow, what we believe, and how we act. The initiative reflects our vision and strategy to position the company for the future.

For fiscal 2023, the Our Path Forward goal required incentive-eligible employees to complete trainings focused on building general manager and DE&I-related capabilities. A greater than 90% training completion rate across all eligible employees was required to earn a 100% payout. If a payout was earned, the Compensation Committee had the ability to apply a modifier to adjust the payout either up or down by up to five percentage points considering certain other pre-established DE&I-related goals.

We describe how we calculate the measures referenced above under “Performance Measure Calculations” beginning on page 58.

The table below shows goals for the fiscal 2023 annual incentive program, actual performance, and enterprise funding.

(dollars in millions)

Weight

Threshold

Target

Max

Percent of Target

Impact on Enterprise Funding

Adjusted non-GAAP operating earnings(1)

103%

67 pp

Operating cash flow(1)

181%

30 pp

Cost savings(2)

127%

13 pp

Our Path Forward(3)

Payout is earned only if employee training goal is achieved (with possible 5 pp +/- modifier)

100%

10 pp

Enterprise funding percentage

120%

Annual Incentive Targets and Payouts

The Compensation Committee annually reviews our named executives’ annual incentive targets as a percentage of base salary. After the review at the beginning of fiscal 2023, the Committee increased Ms. Mayer’s target to 100% (from 90%) to move her target total direct compensation closer to the median of the Comparator Group market data for her role as well as for internal pay equity considerations. The Compensation Committee set the targets for Messrs. Hollar and Alt and Ms. Weitzman at 150%, 110%, and 100% of their respective base salaries in connection with their appointments to their new roles.

The Compensation Committee awarded each named executive a fiscal 2023 annual incentive award based on the 120% enterprise funding percentage, segment performance with respect to Ms. Weitzman and Messrs. Crawford and Mason, and an individual performance factor.

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Mr. Hollar’s annual incentive was based on enterprise performance and his individual performance in his first year as CEO, which exceeded expectations. Mr. Hollar was instrumental in growing our non-GAAP operating earnings, advancing our long-term strategy, establishing his leadership team, and simplifying and restructuring the enterprise and its business organizations and corporate functions. Mr. Hollar also led the ongoing business review being conducted by the Board’s Business Review Committee and drove significant improvement in employee engagement.

Mr. Alt’s annual incentive, which was prorated from when he joined us on January 16, 2023, was based on enterprise performance and his individual performance, which exceeded expectations. After on-boarding, Mr. Alt quickly assumed a key leadership role in the ongoing business review, helping the company conduct a successful Investor Day in June, and immediately influenced our capital deployment strategy and focused the company on generating strong operating cash flow.

Mr. Mason’s annual incentive was based on Medical segment performance, which, although below expectations, reflected progress made towards the segment’s Medical Improvement Plan, including improvement in segment profit later in the fiscal year, strong customer retention, and new customer wins.

Ms. Weitzman’s annual incentive was based on Pharmaceutical segment performance and her individual performance in her first year as segment CEO, both of which exceeded expectations. Ms. Weitzman led the restructuring of the segment’s organizational structure, developed and prioritized strategic growth initiatives for the segment’s Specialty and other businesses, and helped to complete the business review for the Pharmaceutical segment.

Ms. Mayer’s annual incentive was based on enterprise performance and her individual performance leading our legal, quality, regulatory, and compliance functions and restructuring functional leadership roles.

Ms. English’s annual incentive was based on performance of the enterprise (in her Interim CFO role) and corporate function (in her other roles held during the fiscal year) and her individual performance leading the finance organization as interim CFO before Mr. Alt joined us.

Messrs. Kaufmann and Crawford each received a prorated portion of their fiscal 2023 annual incentive award based on enterprise and Pharmaceutical segment performance, respectively, under the Cardinal Health, Inc. Senior Executive Severance Plan (“Severance Plan”). 

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Fiscal 2021-2023 Performance Share Unit Payouts

In August 2023, the Compensation Committee certified the payout level of the Fiscal 21-23 PSUs at 137%. The Fiscal 21-23 PSUs were eligible to be earned based on achievement versus a three-year cumulative adjusted non-GAAP EPS goal, a three-year cost savings goal, and an Our Path Forward measure focused on leadership score improvement from our employee engagement survey. In addition, operating cash flow must have exceeded net earnings for the first two years of the performance period for any of the Fiscal 21-23 PSUs to vest, regardless of whether the other goals were achieved. 

The final payout was also subject to adjustment based on a relative TSR modifier, which decreased the payout by 20% if relative TSR was below the 20th percentile of the S&P 500 Health Care Index and increased it by 20% if relative TSR was above the 80th percentile of the index.

The three-year cumulative EPS goal was the sum of annual targets set by the Compensation Committee which aligned with the Board-approved budget in each fiscal year and were consistent with our public EPS guidance range issued at the beginning of each fiscal year. 

The Compensation Committee set the three-year cost savings target to align with our internal projections and our publicly announced cost savings goal at the time of more than $500 million over five years against a fiscal 2018 base year.

(dollars in millions, except for per share amounts)	Weighting	Fiscal Year	Threshold	Target	Maximum	Percent of Target	Impact on Payout Level
Adjusted non-GAAP EPS(1)		2021
		2022
		2023
	3-Year Cumulative					97%	60 pp
Cost savings(2)						209%	40 pp
Our Path Forward(3)						150%	15 pp
			No change in leadership score	2 pp increase in leadership score	9 pp increase in leadership score
Payout level before relative TSR modifier applied							115%
Relative TSR modifier(4)						94th percentile
Final payout level							137%

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The chart below shows our PSU payouts (after application of the relative TSR modifier) over the last five performance cycles, illustrating the correlation of pay with performance. The relative TSR modifier was introduced beginning with the PSUs for fiscal 2018 through fiscal 2020 performance cycle. three-year TSR is calculated as TSR over the three fiscal year period expressed as a percentage, calculated based on changes in stock price assuming reinvestment of dividends.

	3-year TSR	(33.7)%	(25.3)%	31.1%	24.2%	100.0%
	Application of relative TSR modifier	NA	20% reduction in payout	20% reduction in payout	No modification	20% increase in payout

The table below shows the target and earned Fiscal 21-23 PSUs for those named executives who had received this grant.

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Fiscal 2023 Long-Term Incentive Targets and Grants

The Compensation Committee annually reviews our named executives’ long-term incentive targets. After the review at the beginning of fiscal 2023, the Committee increased each of Messrs. Crawford and Mason’s targets to $3.0 million (from $2.75 million) and Ms. Mayer’s target to $2.75 million (from $2.5 million) to move their target total direct compensation closer to the median of the Comparator Group market data for their respective roles as well as for internal pay equity considerations. The Compensation Committee set Mr. Hollar’s long-term incentive target at $11.0 million in connection with his appointment to CEO, the same as his predecessor’s. This new target was used for Mr. Hollar’s fiscal 2023 annual grant.

The following table shows the long-term incentive awards made in the fiscal 2023 annual grant (made in August 2022) to the named executives. The annual grant award mix was 60% in PSUs and 40% in RSUs, except with respect to Mses. Weitzman’s and English’s annual grants, which were made when they were in their former roles.

In addition to Mr. Hollar’s annual grant, the Compensation Committee approved a $3.0 million alignment grant to give him, as a new CEO, an appropriate ownership stake to align with shareholders. This alignment grant was made as part of Mr. Hollar’s fiscal 2023 annual grant and was split equally between PSUs and RSUs. 

In addition to Ms. Weitzman’s annual grant, in September 2022, the Compensation Committee approved a grant of $750,000 in PSUs to her in connection with her promotion to CEO, Pharmaceutical Segment. She had also received an additional $750,000 in value of RSUs in her August 2022 annual grant, which was made when she was in her former role, to help retain her considering leadership changes.

As part of Ms. English’s compensation for serving as Interim CFO, she received an additional $500,000 in value of PSUs in her annual grant.

When Mr. Alt joined us as CFO, the Compensation Committee approved initial long-term incentive grants of $2.5 million in PSUs and $1.0 million in RSUs, which were made in February 2023. These grants and a cash sign-on bonus were intended to address compensation he forfeited when he left his prior employer.

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Fiscal 2023-2025 Performance Share Unit Grants

When granting the PSUs for the fiscal 2023 through fiscal 2025 performance cycle (the “Fiscal 23-25 PSUs”), the Compensation Committee returned to setting a three-year EPS goal and, consistent with prior grants, also included strategic measures for cost savings and Our Path Forward goals.

(dollars in millions)	Weighting	Threshold	Target	Maximum
Adjusted non-GAAP EPS CAGR and average annual dividend yield(1)
Cost savings(1)
Our Path Forward(2)		Achieved based on progress against long-term aspirational diverse management representation goals
Relative TSR modifier(3)

EPS CAGR and Dividend Yield Goal

Returning to a three-year EPS goal, seventy percent of the payout for the Fiscal 23-25 PSUs will be earned based on the sum of adjusted non-GAAP EPS CAGR and average annual dividend yield over the three-year performance cycle. The measures are the same that we used for PSU grants prior to fiscal 2018. 

These measures influence TSR over the long term, align management’s interests with shareholders’ interests, and reflect operating performance as well as capital deployment through acquisitions, dividends, and share repurchases. The financial goal set by the Compensation Committee aligned with the long-term target to average double-digit combined non-GAAP EPS growth and dividend yield that we had reiterated on our August 11, 2022 earnings call. 

Cost Savings Goal

Consistent with last year’s PSU grant, the Fiscal 23-25 PSUs included a three-year cost savings measure. The Compensation Committee set the three-year cost savings target to align with our internal projections.

Our Path Forward Goal

The Fiscal 23-25 PSUs included an Our Path Forward measure (see page 29 for a discussion of Our Path Forward) focused on progress against long-term aspirational diverse management representation goals that we established in 2021. The overall payout level for the metric is based on the three-year increases needed to be on pace for the long-term aspirational goals.

Relative TSR Modifier

A relative TSR modifier measured over a three-year period continues to link this long-term incentive compensation directly to our relative shareholder returns and provide further alignment with shareholder interests while also recognizing factors that impact our industry and peers. We use the S&P 500 Health Care Index as the peer group because it is an objective, widely available index with broad representation in the healthcare sector.

We describe how we calculate the measures referenced above under “Performance Measure Calculations” beginning on page 58.

Other Elements of Compensation

401(k) Savings and Deferred Compensation Plans

Our 401(k) Savings Plan and DCP allow U.S.-based employees to accumulate value on a tax-deferred basis and allow us to be competitive in recruiting and retaining talent. Our DCP permits certain management employees, including the named executives, to defer payment and taxation of a portion of their salary and annual incentive compensation into a variety of different investment alternatives. We make matching contributions subject to limits discussed under “Deferred Compensation” on page 62. We also may make additional contributions to the 401(k) Savings Plan and DCP on the same basis for all employees. Named executives also may elect to defer payment and taxation of PSUs and RSUs.

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Other Benefits and Perquisites

The Compensation Committee encourages use of our corporate aircraft for the personal travel of our CEO because it increases his time available for business purposes and enhances his safety and security. Mr. Hollar’s fiscal 2023 personal travel allowance as CEO was $350,000. Prior to becoming CEO, Mr. Hollar was authorized to commute by corporate aircraft between his out-of-state residence and our corporate headquarters to increase his time available for business purposes. Mr. Hollar did not receive tax reimbursement for any imputed income associated with personal travel during fiscal 2023.

In November 2022, Mr. Hollar entered into an aircraft time-sharing agreement with us, under which he can reimburse us for incremental costs when he uses the aircraft for personal travel. Reimbursed travel does not count against the personal travel allowance.

Relocation assistance is an important tool for us to recruit talent. We provided Mr. Alt a $250,000 lump sum payment for relocation. Our offer letter agreement with Mr. Alt allows us to recover the full relocation payment if he is terminated with cause or if he voluntarily leaves the company during the first year following his start date and 50% of it if he is terminated for cause or leaves during the second year following his start date.

Severance and Change of Control Benefits

Under our Board-adopted Severance Plan, our named executives are eligible for severance benefits under certain circumstances. Specifically, if

then (except as noted in the next section below), the named executive will receive:

Receipt of severance benefits is subject to the terms of the Severance Plan, including the required execution of a general release and compliance with certain restrictive covenants.

We believe that the Severance Plan is competitive with market practices and provides appropriate levels of benefits under standard terms and conditions related to executive separations. These benefits are an important component of our compensation packages designed to attract and retain top caliber talent in senior leadership roles and define terms and conditions of separation events. We do not have any agreements to provide change-of-control excise tax gross-ups.

We have a Policy Regarding Shareholder Approval of Severance Agreements, which requires shareholder approval prior to our entering into severance agreements with executives that would provide cash severance benefits exceeding 2.99 times base salary and target bonus. 

We discuss our severance benefits in detail, including the payments and benefits that Messrs. Kaufmann and Crawford received under the Severance Plan upon their departures, under “Potential Payments on Termination of Employment or Change of Control” beginning on page 64. As previously disclosed, the Board determined that Messrs. Kaufmann’s and Crawford’s departures from the company during fiscal 2023 entitled them to severance benefits as involuntary terminations without cause under the Severance Plan. 

Recent Developments Regarding Severance Benefits for Involuntary Terminations without Cause

As noted in the Proxy Summary on pages 8 and 9, the Board has formed an advisory Business Review Committee under the Cooperation Agreement to review the company’s strategy, portfolio, capital allocation framework, and operations. This review began in early fiscal 2023 and remains ongoing. 

In order to ensure that we effectively align our executive team through this ongoing review with long-term shareholders’ interests and allow them to focus on business decisions associated with the ongoing review without consideration for how a potential business transaction may affect them personally, on September 21, 2023, the Compensation Committee approved the Third Amendment (the “Amendment”) to the Severance Plan, in which all our currently-employed named executives participate. 

The Amendment effects an increase in the cash severance multiple for executive officers if we terminate them without cause before September 21, 2025 (and not during the change of control period). The multiple for the CEO was increased from 2 times to 2.25 times the sum of annual base salary and target bonus and the multiple applicable to other named executives was increased from 1.5 times to 1.75 times the sum of annual base salary and target bonus. 

The Amendment also effected a change to the treatment of unvested equity awards held by executive officers if we terminate them without cause before September 21, 2025, which would provide for prorated vesting of unvested awards through the period of employment (with performance awards also remaining subject to actual performance). If terminated under this scenario, under existing equity agreements, the underlying shares would not be delivered until six months after the named executive’s termination or, if earlier, the date of their death. This treatment of unvested equity awards generally mirrors the existing treatment of unvested equity awards held by retirement-eligible executives. Mses. Weitzman and Mayer are currently retirement eligible, and Mr. Mason will become retirement eligible in October 2023.

The Compensation Committee believes that the combination of an increase in severance multiples and retirement treatment of unvested equity awards best suits the Committee’s goal of maintaining management continuity throughout the business review. The above-described changes to the Severance Plan remain in place only until September 21, 2025, following which the Severance Plan will automatically revert to its prior non-change of control severance formulation.

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Our Policies, Guidelines, and Practices Related to Executive Compensation

Role of Compensation Committee’s Compensation Consultant

The Compensation Committee has utilized Korn Ferry as its independent executive compensation consultant since 2018. In its role as the Compensation Committee’s executive compensation consultant during fiscal 2023, Korn Ferry (among other things):

Fees paid to Korn Ferry in fiscal 2023 for executive and director compensation consulting services provided to the Compensation Committee were $265,600. Korn Ferry also provided leadership development services to management during the fiscal year. Fees paid to Korn Ferry in fiscal 2023 for these other services were $412,550.

The Compensation Committee has determined that Korn Ferry is independent and its work for the company does not raise any conflicts of interest. The Compensation Committee reached this determination by reviewing the fees paid to Korn Ferry and evaluating its work under applicable SEC and NYSE rules on conflicts of interest and independence. This evaluation included considering all the services provided to the company, the amount of fees received as a percentage of Korn Ferry’s annual revenue, Korn Ferry’s policies and procedures designed to prevent conflicts of interest and maintain independence, any business or personal relationships between Korn Ferry and the members of our Compensation Committee or executive officers, and any ownership of our stock by Korn Ferry’s team that provided executive and director compensation consulting services. The Compensation Committee must pre-approve the engagement of Korn Ferry for any consulting services provided in addition to those provided to the Compensation Committee.

Role of Executive Officers

Our CEO and Chief Human Resources Officer participate in Compensation Committee meetings to make recommendations regarding program design and compensation amounts, present performance assessments of the named executives (other than our CEO), and discuss company performance. The Compensation Committee may delegate authority to our executive officers to administer certain compensation plans for participants who are not officers subject to Section 16 of the Exchange Act.

Our CEO reviews performance objectives with the Compensation Committee at the beginning of the fiscal year. Following the end of the fiscal year, the Committee reviews and discusses the performance and compensation of the CEO in executive session and with the Chairman of the Board. The CEO does not participate in discussions regarding his own compensation.

Comparator Group

Each year, the Compensation Committee, in consultation with Korn Ferry, evaluates a “Comparator Group” of similarly situated public companies that serves as a reference for comparing our named executives’ pay to the market. Our Comparator Group reflects the industry in which we primarily compete for executive talent and includes direct competitors and other companies in the healthcare field. Our Comparator Group also includes air/freight and logistics companies and retailers because of their similar sizes and business models. The following companies comprised the Comparator Group for fiscal 2023 executive pay decisions, which did not change from the prior fiscal year:

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The Compensation Committee uses the following guidelines when it reviews the Comparator Group’s composition to ensure that the companies remain relevant for comparison purposes:

Our revenue is in the top quintile of the Comparator Group and our market capitalization is in the bottom quintile.

How We Use Comparator Group Data

Each spring, Korn Ferry presents to the Compensation Committee an annual review of the market competitiveness of our named executives’ target total direct compensation using Comparator Group proxy statement data. The review assesses the market positioning of each named executive by position and, for the named executives other than the CEO and CFO, pay rank, and indicates where target total pay falls within a competitive range (generally within 20%) of the median of the Comparator Group. The review also indicates the competitive positioning of each named executive’s base salary, target annual incentives, target total cash compensation, target long-term incentives, target pay mix, and long-term incentive vehicles.

At the beginning of the fiscal year, the Compensation Committee determines target total direct compensation for each named executive using the market competitiveness assessment from the prior spring as a reference point. In addition, the Compensation Committee also takes into consideration internal pay equity and an executive’s experience, scope of responsibility, individual performance, potential, and unique or hard-to-replace skills, as well as retention and other considerations.

Risk Assessment of Compensation Programs

Management has assessed our compensation programs and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on Cardinal Health. This risk assessment included reviewing the design and operation of our compensation programs, identifying and evaluating situations or compensation elements that could raise more significant risks, and evaluating other controls and processes designed to identify and manage risk. The Compensation Committee along with Korn Ferry reviewed the risk assessment for fiscal 2023 and concurred with management’s conclusion.

Compliance Review with Risk Oversight Committee

At the beginning of fiscal 2022, the Compensation Committee adopted a formal process which provides that when it assesses executives’ individual performance for annual incentive awards, it considers executives’ alignment with our Standards of Business Conduct, values, and behaviors. The Risk Oversight Committee with the support of the company’s Ethics and Compliance organization, provides input in this process.

CFO Offer Letter

Mr. Alt joined us as on January 16, 2023 and became CFO on February 10, 2023. Mr. Alt’s offer letter was the result of an arms-length negotiation and set his initial base salary and annual and long-term incentive targets. To address compensation forfeited at his former employer, the offer letter also provided for Mr. Alt to receive:

Under the terms of the offer letter, Mr. Alt must repay 100% of the sign-on bonus and the relocation payment if he is terminated for cause or if he voluntarily leaves the company during the first year following his start date and 50% of those amounts if he is terminated for cause or leaves during the second year following his start date.

We discuss the terms of Mr. Alt’s offer letter in more detail under “CFO Offer Letter” on page 56.

Stock Ownership Guidelines

We have established stock ownership guidelines to align the interests of our executive officers and directors with the interests of our shareholders. The guidelines specify a dollar value (expressed as a multiple of salary or cash retainer) of shares that executive officers and directors must accumulate and hold while serving in these positions. In August 2022, in consultation with Korn Ferry, the Board adjusted the CEO’s stock ownership guideline to six times base salary from 10 times base salary effective when Mr. Hollar assumed the CEO role. This change was made to align with market practice and in recognition that Mr. Hollar is shorter tenured and has had less of an opportunity to acquire shares than his predecessor. 

We count common shares, RSUs, and phantom shares held through the DCP as shares owned for purposes of the stock ownership guidelines. Executive officers and directors must retain 100% of the net after-tax shares received under any equity awards until they satisfy the required ownership levels. 

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Potential Impact on Compensation from Executive Misconduct (“Clawbacks”)

We may require repayment of cash incentives and gains realized under equity awards and cancel outstanding equity awards in specified instances of executive misconduct, including misconduct causing a financial statement restatement or a violation of our Standards of Business Conduct. We will adopt a clawback policy that complies with the requirements of NYSE clawback listing standards, as required by SEC Rule 10D-1 in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which policy will augment our existing clawback provisions.

We will disclose publicly the incentive compensation forfeitures or repayments from our executive officers if required by law or NYSE listing standard or if we have already disclosed publicly the underlying event triggering the forfeiture or repayment and the disclosure would not violate any individual’s privacy rights, is not likely to result in or exacerbate any existing or threatened employee, shareholder, or other litigation, arbitration, investigation, or proceeding against us, and is not otherwise prohibited.

These clawback provisions support our compliance and risk management programs. We discuss the provisions in more detail under “Potential Impact on Compensation from Executive Misconduct (“Clawbacks”)” on page 60.

Hedging and Pledging Shares

Our Board has adopted a policy prohibiting all employees (including executives) and directors from entering into short sales, publicly traded options, puts and calls, forward sale contracts, and other swap, hedging, or derivative transactions relating to our securities. The Board also has adopted a policy prohibiting our executive officers and directors from holding our securities in margin accounts or pledging our securities as collateral for a loan.

Equity Grant Practices

The Compensation Committee typically approves the annual equity grant in August of each year and sets August 15 as the grant date. The Compensation Committee expects the annual grant date to follow the release of earnings for the prior fiscal year in early August, without regard to whether we are aware of material nonpublic information.

Equity Dilution Practices

Our fiscal 2023 annual equity run rate was 0.69%. We calculate our equity run rate as the total number of shares subject to equity awards granted in the fiscal year divided by the weighted average number of our common shares outstanding during the fiscal year. 

Human Resources and Compensation Committee Report

We have reviewed and discussed the foregoing CD&A with management. Based on that review and discussion, we have recommended to the Board that the CD&A be included in this proxy statement and in Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Submitted by the Human Resources and Compensation Committee of the Board.

Carrie S. Cox, Chair 
Michelle M. Brennan 
Patricia A. Hemingway Hall 
Nancy Killefer 
Christine A. Mundkur

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Executive Compensation Tables

The table below summarizes fiscal 2023 (and, where required, prior year) compensation for:

Summary Compensation Table