Michele Lau
MCKESSONAbout Michele Lau
Executive Vice President and Chief Legal Officer (NEO) of McKesson, appearing as one of five named executive officers for FY 2025 . McKesson delivered FY 2025 revenue of $359B (+16% YoY), Adjusted EPS of $33.05, Adjusted Operating Profit of $5.6B and Free Cash Flow of $5.2B; the Board Chair highlighted a 25% stock price increase in FY 2025 . Long-term incentive performance for FY 2023–FY 2025 paid at 148% of target driven by cumulative Adjusted EPS ($86.35), average ROIC (24.03%) and rTSR at the 93.33rd percentile versus the comparator group . Lau complies with stock ownership guidelines at 9.9x salary ($7.15M held vs. $2.17M requirement) and is subject to anti-hedging/anti-pledging policies .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| McKesson | Senior Vice President, Corporate Secretary and Associate General Counsel | 2018 | Legal signatory; certified amended By-Laws as Corporate Secretary |
| McKesson | Executive Vice President and Chief Legal Officer | 2025 | Named executive officer; signed SEC filings; oversight of legal and compliance |
Fixed Compensation
Multi-year cash and reported compensation (SCT):
| Metric | FY 2024 | FY 2025 |
|---|---|---|
| Salary ($) | 175,000 | 720,417 |
| Bonus ($) | 1,500,000 | -0- |
| Stock Awards ($) | 6,851,529 | 3,001,093 |
| Non-Equity Incentive Plan Compensation ($) | 199,500 | 857,296 |
| All Other Compensation ($) | 80,225 | 647,899 |
| Total ($) | 8,806,254 | 5,226,705 |
Additional fixed compensation details (FY 2025):
- Base salary rate at fiscal year-end: $724,500; MIP target: 100% of base ($724,500) .
- All Other Compensation components: SRSP match $22,997; financial counseling $18,933; relocation $592,414 including $452,689 expenses and $139,725 tax gross-up; other perqs $13,555 .
Performance Compensation
Annual MIP structure and payout (FY 2025):
| Metric | Weight | Result (%) | Payout Contribution |
|---|---|---|---|
| Adjusted EPS | 50% | 132% | Incorporated in 119% total payout |
| Adjusted Operating Profit (AOP) | 25% | 114% | Incorporated in 119% total payout |
| Free Cash Flow (FCF) | 25% | 100% | Incorporated in 119% total payout |
| Total MIP Payout | — | — | 119% (Eligible earnings $720,417 → Payout $857,296) |
FY 2025 long-term equity awards (grant date 5/23/2024):
| Award Type | Units | Grant Date Fair Value ($) |
|---|---|---|
| RSU | 2,173 | 1,200,343 |
| PSU (target) | 3,064 | 1,800,750 |
PSU performance framework and recent results:
- FY 2023–FY 2025 PSU metrics: Cumulative Adjusted EPS (50%), three-year average ROIC (25%), rTSR vs. comparator group (25%); results: Adjusted EPS result $86.35, ROIC 24.03%, rTSR at 93.33rd percentile; payout at 148% of target (Lau was not granted FY 2023–FY 2025 PSU target award) .
- Future PSU completions (scheduled payouts): FY 2026 PSUs for Lau: 6,102 shares; FY 2027 PSUs for Lau: 6,128 shares (subject to plan certification) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 3,385 shares; <1.0% of class; includes 138 shares in 401(k) |
| Unvested RSUs | 7,679 units; market value $5,167,890 (at $672.99) |
| Unearned PSUs (outstanding) | 12,230 units; market/payout value $8,230,668 (at $672.99) |
| Vesting schedule (RSUs) | 724 on 5/21/2025; 4,748 on 2/9/2026; 724 on 5/21/2026; 758 on 2/9/2027; 725 on 5/21/2027 |
| Ownership guidelines | Requirement: 3x base salary ($2,173,500); actual: 9.9x ($7,150,809); compliant as of 3/31/2025 |
| Hedging/pledging | Prohibited for directors and executive officers |
| 10b5-1 plan | Adopted 8/19/2025 to sell up to 9,200 shares through 8/19/2026 (pre-arranged) |
Employment Terms
Severance and change-in-control (CIC) economics:
- Executive Severance Policy: salary continuation minimum 12 months, +1 month per year of service up to 24 months; benefits subject to restrictive covenants and clawback .
- CIC Policy: double-trigger vesting; cash benefit for Tier 1 participants equal to 2.99x “Earnings” (base salary + greater of target bonus or three-year average bonus); excise tax gross-ups eliminated (benefits cut to avoid 4999 excise tax if more favorable after-tax) .
- Equity treatment on CIC: PSUs convert to time-based awards at greater of target or actual-to-date; RSUs accelerated; MIP pays greatest of target/actual/three-year average; also payable upon involuntary termination within 12 months post-CIC .
Illustrative FY 2025 separation values (assuming separation 3/31/2025):
| Scenario | Salary/Severance ($) | MIP ($) | Equity Vesting ($) | Medical ($) | Total ($) |
|---|---|---|---|---|---|
| Involuntary termination | 1,454,796 | 857,296 | 487,245 | — | 2,799,337 |
| Involuntary termination in connection with CIC | 4,435,222 | 857,296 | 9,283,223 | 97,331 | 14,673,072 |
Clawbacks and recoupment:
- Two recoupment policies; incorporated into all incentive plans; governance best practices emphasize recoupment triggers including reputational harm .
Performance Compensation Details (PSU Program Context)
Relative TSR comparator group (FY 2023–FY 2025) includes CAH, COR, CI, CVS, ELV, HSIC, JNJ, KR, OMI, PFE, SNY, TEVA, UNH, VTRS, WBA . PSU payout for the period was 148% based on the weighted results across Adjusted EPS, ROIC and rTSR .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval: approximately 90% of votes cast in favor; program left unchanged for FY 2025 following engagement .
- 2025 Annual Meeting: NEO compensation proposal received 91,831,997 votes for, 7,955,440 against, 769,779 abstentions, with 10,344,141 broker non-votes .
Compensation Peer Group
Peer selection uses a “value supply chain” framework (healthcare supply chain peers, operationally similar non-healthcare, managed care). The committee uses peer data to inform but does not target a specific percentile for any component or in aggregate .
Investment Implications
- Strong pay-for-performance alignment: MIP and 60% of LTI tied to Adjusted EPS/ROIC/rTSR; FY 2025 MIP paid at 119% and FY 2023–FY 2025 PSU paid at 148%, consistent with robust operating results and stock performance .
- Retention and selling pressure: Significant unvested RSUs and PSUs (7,679 RSUs; 12,230 PSUs) with near-term vest dates, plus a 10b5-1 plan for up to 9,200 shares through August 2026, suggest scheduled liquidity events rather than discretionary selling; ownership at 9.9x salary mitigates alignment risk .
- CIC economics: Double-trigger equity vesting and 2.99x cash multiple provide substantial protection in a transaction, potentially influencing executive stability during strategic events; excise tax gross-ups eliminated, aligning with shareholder-friendly practices .
- Governance quality: Anti-hedging/anti-pledging, rigorous stock ownership policy, and robust recoupment policies reduce agency risks; compensation oversight by an independent committee with best-practice design .