James Cleary
About James Cleary
James F. Cleary is Executive Vice President and Chief Financial Officer (CFO) of Cencora (ticker: COR). For fiscal 2024 his base salary was increased to $900,000 to reflect expanded responsibilities, including oversight of Cencora Business Services, the company’s global shared service centers . Company performance under his finance leadership in fiscal 2024 included total shareholder return of 26.2%, revenue of $294.0B (+12.1% YoY), adjusted operating income of $3.6B (+10.9% YoY), adjusted EPS of $13.76 (+14.8% YoY), and adjusted free cash flow of $3.1B . He is currently eligible for retirement treatment on outstanding equity awards, indicating tenure and age thresholds have been met under plan definitions .
Fixed Compensation
- Base salary: $900,000 effective Nov 19, 2023 (FY2024) vs $795,000 in FY2023 .
- Perquisites/other compensation (FY2024): $100,000 consisting of 401(k) match ($16,731), benefit restoration contributions ($60,544), financial/tax planning ($18,975), and other perquisites ($3,750) .
- Deferred compensation: benefit restoration account balance $485,297 at FY2024 year-end; company contributions $60,544 in FY2024 .
Multi-year compensation for James Cleary:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | $770,000 | $795,000 | $885,943 |
| Stock Awards ($) | $3,200,064 | $3,500,270 | $6,600,508 |
| Non-Equity Incentive Plan Compensation ($) | $1,071,777 | $1,048,605 | $1,417,509 |
| All Other Compensation ($) | $279,860 | $105,498 | $100,000 |
| Total ($) | $5,321,701 | $5,449,373 | $9,003,960 |
Performance Compensation
Short-term incentive (AIP) – FY2024 design, targets, and outcomes:
| Metric | Weighting | Target | Actual | Payout (%) | Vesting/Payment |
|---|---|---|---|---|---|
| Adjusted Operating Income | 40% | ~5% YoY growth vs FY2023 | Company exceeded target | 151.6 | Paid in cash Q1 FY2025 |
| Adjusted EPS | 25% | ~7% YoY growth vs FY2023 | Company exceeded target | 175.0 | Paid in cash Q1 FY2025 |
| Adjusted Free Cash Flow | 25% | $2.1B target (vs $3.1B FY2023) | Company exceeded target | 200.0 | Paid in cash Q1 FY2025 |
| ESG Objectives | 10% | Business resiliency (100%), increase female leadership, maintain “highly inclusive” score | Exceeded resiliency and female leadership; met inclusion | Committee-assessed | Paid in cash Q1 FY2025 |
| Final AIP Payout | — | — | — | 160.0% (discretionary reduction from 164.4%) | Paid Q1 FY2025 |
Long-term incentives – performance shares:
| PSU Plan | Metric | Weighting | Baseline | Actual (FY2022–FY2024) | Payout Modifier | Total Payout |
|---|---|---|---|---|---|---|
| 2022–2024 PSUs | Compound Annual Adjusted EPS Growth | 75% | $9.26 | 14.11% CAGR | — | 200% |
| 2022–2024 PSUs | Average Annual Adjusted ROIC | 25% | N/A | 19.73% | — | 200% |
| 2022–2024 PSUs | Relative TSR Modifier (S&P 500 Health Care Providers & Services Industry Index) | +/-15% | Target 55th percentile | 86th percentile | +15% | — |
| 2022–2024 PSUs | Aggregate Result | — | — | — | — | 230% |
- Shares earned (James Cleary) from 2022–2024 PSU cycle: 35,137 shares (target 15,277 x 230%) .
- PSU three-year performance period; post-vest holding requirement for CFO: 50% of earned performance shares for one year .
- Relative TSR comparator: S&P 500 Health Care Providers & Services Industry Index .
FY2024 equity grant details (awarded under 2022 Omnibus Incentive Plan):
| Grant Type | Grant Date | Shares (#) | Grant Date Fair Value ($) |
|---|---|---|---|
| RSUs | 11/8/2023 | 7,318 | $1,440,109 |
| PSUs (target) | 11/8/2023 | 10,977 | $2,160,164 |
| Leadership RSUs (one-time retention) | 3/11/2024 | 12,623 | $3,000,235 |
Vesting schedules:
- RSUs vest ratably over three years; Leadership RSUs cliff vest on second anniversary of grant (no retirement vesting terms) .
- PSUs vest at end of three-year performance period; payout 0–230% based on metrics; modifier applies; negative absolute TSR caps payout at 100% .
Realization activity (FY2024):
- Options exercised: 38,136; value realized $4,563,163 .
- Stock vested: 45,052 shares; value realized $9,867,496 .
Equity Ownership & Alignment
| Category | Detail |
|---|---|
| Total beneficial ownership | 194,393 shares; <1% of outstanding (193,841,901 shares) |
| Options (exercisable vs unexercisable) | 79,031 exercisable; 0 unexercisable (grants 11/14/2018, 11/13/2019) |
| RSUs unvested (count, market value) | 28,930 RSUs; $6,511,565 (at $225.08 close on 9/30/2024) |
| PSUs outstanding (max possible) | 55,782 shares (at maximum attainment) |
| Ownership guidelines | CFO must own 3x base salary; compliance confirmed for all NEOs |
| Hedging/pledging | Prohibited for executive officers; exceptions require stringent capacity tests; no pledging disclosed |
Option strike details:
- 11/14/2018 grant: 33,877 exercisable; $89.58 strike; expires 11/14/2025 .
- 11/13/2019 grant: 45,154 exercisable; $86.09 strike; expires 11/13/2026 .
Employment Terms
Standard NEO Employment Agreement (New form effective Nov 22, 2024 for NEOs including Cleary):
- Non-compete/non-solicit: two years post-termination; applies to businesses the company engages in or considers for development/investment .
- Clawback: company clawback policies (including Dodd-Frank) apply to compensation .
- Severance cap: cash-based severance limited to 2.99x base salary + target bonus (policy adopted Nov 9, 2022) .
- Termination without cause / good reason: two years’ base salary; pro-rated bonus for year of termination (based on actual performance); health coverage reimbursement up to 24 months; outplacement; continued equity vesting per award terms .
- Change in control: double-trigger required; upon qualifying termination within two years of change in control, additional cash equal to two times average annual bonus over prior three years; PSUs determined through end of quarter prior to change in control; accelerated vesting per plan .
Illustrative FY2024 potential payments for James Cleary (as of 9/30/2024):
- Termination without cause/good reason: $1,800,000 salary continuation; $1,417,509 FY2024 bonus; $70,471 health premiums; $35,000 outplacement; PSUs $5,458,865; RSUs $2,906,233; total $8,781,845 .
- Change-in-control qualifying termination: salary continuation $1,800,000; bonus continuation $2,210,189; health premiums $70,471; outplacement $35,000; PSUs $5,458,865; RSUs $6,511,564; total $10,992,034 .
Compensation Structure vs Performance Metrics
- AIP metrics and weights: 40% Adjusted Operating Income, 25% Adjusted EPS, 25% Adjusted Free Cash Flow, 10% ESG; FY2024 payout set to 160% of target after committee discretion .
- LTI metrics: 75% Adjusted EPS CAGR, 25% Average Annual Adjusted ROIC, +-15% relative TSR modifier; target TSR at 55th percentile; FY2022–2024 PSU cycle paid at 230% on 14.11% EPS CAGR, 19.73% ROIC, 86th percentile TSR .
- Pay mix emphasizes variable pay: equity and annual incentive comprise majority of CFO target direct compensation .
Vesting Schedules and Insider Selling Pressure
- Upcoming vesting: Leadership RSUs granted 3/11/2024 cliff vest on 3/11/2026; routine RSUs vest annually over three years (11/8/2023 grant) .
- FY2024 exercises/vesting: 38,136 options exercised ($4.56M value); 45,052 shares vested ($9.87M value realized) .
- Policy constraints on trading: hedging/pledging prohibited; executives must retain equity until ownership guideline met .
Equity Ownership Alignment and Pledging
- Ownership guideline compliance: CFO meets/exceeds 3x salary requirement; required holding of 50% of earned PSUs for one year post-vest further aligns incentives .
- Pledging/hedging prohibitions: robust policy and exceptions require demonstrated capacity to avoid forced sale; no disclosed pledging by Cleary .
Say-on-Pay & Peer Group
- Say-on-Pay: ~94% approval at 2024 Annual Meeting; no changes to FY2024 executive compensation program .
- Peer group: includes McKesson, Cardinal Health, CVS Health, Elevance, UnitedHealth, UPS, FedEx, Sysco, Kroger, Target, Abbott, Eli Lilly, IQVIA, HCA, Labcorp, Quest, Humana, Cigna, Viatris, Henry Schein, Walgreens Boots Alliance; overall pay posture aligned with pay-for-performance philosophy .
- Relative TSR comparator for PSUs: S&P 500 Health Care Providers & Services Industry Index .
Employment Contracts, Severance, Change-of-Control Economics
- Severance cap and double-trigger change-in-control structure mitigate excessive payouts; pro-rata or accelerated equity vesting tied to performance preserves alignment .
- Mandatory arbitration added in new employment agreements; clawback policies explicitly apply .
Risk Indicators & Red Flags
- No hedging/pledging permitted; no tax gross-ups in change in control; equity awards have maximum caps; clawback policies in place .
- Leadership RSUs are one-time and designed for transition stability; they cliff vest and lack retirement terms, reducing unearned windfall risk .
Investment Implications
- High variable pay tied to multi-year EPS/ROIC and relative TSR aligns CFO incentives with shareholder value; FY2022–2024 PSU payout at 230% reflects strong financial execution and peer-relative stock performance .
- Ownership guideline compliance and post-vest holding requirements limit short-term selling; upcoming 3/11/2026 leadership RSU cliff vest could modestly increase liquidity needs near that date .
- Severance capped and double-trigger change-in-control reduces parachute risk; clawback breadth and hedging/pledging prohibitions strengthen governance, reducing misalignment risk .