Two state treasurers are urging Cardinal Health shareholders to vote against a $2.5 million bonus for CEO Michael Kaufmann, arguing that such a payout ignores the company's history in allegedly contributing to the opioid crisis.
Seth Magaziner, Rhode Island's treasurer, and Shawn Wooden, Connecticut's treasurer, wrote in a filing with the U.S Securities and Exchange Commission that Cardinal "appears to have persistently failed" to ensure safe and secure distribution of controlled substances.
"The result was that communities across our nation were flooded with highly addictive prescription painkillers that under no reasonable estimation could have been construed to represent legitimate demand," they wrote.
The treasurers argue that giving Mr. Kaufmann such a large bonus would "risk long-term shareholder value and have profound long-term implications for our economy and society."
They said that Cardinal's payment toward a global opioid settlement erased half a decade's worth of earnings and drove the company to a $3.7 billion loss, its largest ever.
"Despite insisting that its compensation programs hold employees accountable for the company’s results and values, the opioid charge is inexplicably swept under the rug when it comes to calculating executive bonus awards," they wrote in the filing.
A Cardinal Health spokesperson told STAT that at the 2019 annual shareholders meeting, the bonus received support from stockholders with 94 percent of company shares.
Cardinal also released a proxy statement saying that Mr. Kaufmann was rewarded for various goals, including progress made in Our Path Forward, a set of culture initiatives Cardinal set last year. The company said Mr. Kaufmann recently formed a Cabinet of African American leaders within the company to help educate senior leaders on racial equity issues and advise the company.
Mr. Kaufmann has been with Cardinal for 27 years, previously leading the pharmaceutical distribution business from 2009 to 2014, according to STAT.
Read the full statement from the treasurers here.