Teamsters lost a shareholder vote on executive bonuses at AmerisourceBergen. They still view the results as ‘remarkable.'

When shareholders at AmerisourceBergen voted at the drug distributor’s annual meeting on a new proposal on executive bonuses, the company got its way. The suggestion to delay a portion of bonuses, as the company faces a litany of opioid lawsuits, was defeated.

But the investors behind the proposal — the International Brotherhood of Teamsters — see a silver lining in the outcome that was disclosed this week: If you don’t count the large number of company shares owned by Walgreens Boots Alliance, the proposal actually got majority support from investors.

“I think this was a huge wake-up call” for Chesterbrook-based AmerisourceBergen, said Michael Pryce-Jones, a senior governance analyst with the Teamsters. “For a new proposal to gain so much traction so quickly is really quite remarkable."

The Teamsters, whose pension and benefit funds own shares in the company, put the “bonus deferral” measure forward at AmerisourceBergen’s annual meeting last week, joined by two other members of a coalition called Investors for Opioid and Pharmaceutical Accountability. The group has advocated for increased board oversight at drug companies, distributors, and pharmacies since 2017, as those firms have faced nationwide litigation over the opioid epidemic.

A global settlement to resolve the suits could potentially cost the companies billions of dollars. AmerisourceBergen and other companies in the opioid supply chain have denied wrongdoing.

The proposal on bonuses recommended that AmerisourceBergen’s board adopt a longer time frame to decide whether bonuses for top executives were warranted in a given year.

The company recommended that investors vote against it. On Wednesday, AmerisourceBergen reiterated a previous statement toTthe Inquirer, saying that its “existing executive compensation policies already focuses on the long-term performance of the company.”

In the case of CEO Steve Collis, who was paid $11.3 million last year, a spokesperson said that “long-term equity incentive awards accounted for approximately 72% of his total direct compensation” in fiscal year 2019.

But two influential advisory firms that make voting recommendations to shareholders — Institutional Shareholder Services and Glass Lewis — backed the proposal. Glass Lewis said investors in the company would benefit from policies that “serve to both disincentivize excessive risk taking and to ensure executives do not receive unjust enrichment following incidents of misconduct.”

The final vote tally was filed this week with the Securities and Exchange Commission. Votes in favor of the Teamsters’ proposal came to 61.2 million shares; there were 114.5 million shares against.

Walgreens owns a 28% stake in AmerisourceBergen, or 56.85 million shares, according to securities filings. The co-chief operating officer of Walgreens, Ornella Barra, serves on AmerisourceBergen’s board of directors.

To some extent, AmerisourceBergen is "insulated by Walgreens’ internal stake, but at the same time they have to realize the pressure on them will increase,” Pryce-Jones said. “By not taking a step to address this concern, they are only going to store up more trouble for themselves.”

The investor coalition agreed either not to file, or to withdraw, the bonus deferral measure at companies that committed to work with the coalition on the issue. AmerisourceBergen chose not to participate in that process, Pryce-Jones said.

The AmerisourceBergen spokesperson said the company “welcomes and appreciates a productive dialogue with our shareholders.”

The Teamsters also filed a proposal on deferring bonuses at Walgreens this proxy season, but withdrew it “due to a promise to further discuss the issue,” Pryce-Jones said.

Walgreens did not respond to a request for comment.