2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 106 GOODYEAR TIRE & RUBBER COMPANY MANPOWERGROUP MARATHON PETROLEUM CORPORATION MCKESSON CORPORATION COMPENSATIONDISCUSSIONANDANALYSIS Executive Summary COMPENSATIONBEST PRACTICES TheCompensationCommitteehasadoptedanumberofbestpracticesthatareconsistentwithourperformance-based compensationphilosophyandservethelong-terminterestsofourshareholders: StrongLinktoFinancial Performance Useofdiversifiedfinancialmetricsinourannualandlong-termplansthatarecloselytiedtoour long-termstrategy,alongwitharelativeTSRmodifieronalllong-termperformance-based awards DividendPolicy Nodividendsordividendequivalentsonunearnedperformance-basedequityawards NoRepricing Norepricingofoptionswithoutshareholderapproval NoAdditionalService CreditinPension Nopensioncreditfornewlyhiredexecutivestomakeupforserviceatprioremployers Double-Trigger Change-in-Control Double-triggerchange-in-controlprovisionsinourchange-in-controlplanandourequity compensationplans,andnowalk-awayrights NoGross-Ups Notaxgross-upsinourchange-in-controlplanorforperquisites StrongStockholding andRetentionPolicies Robuststockholdingguidelinesforofficersanddirectors,includingstockretentionprovisions followingtheexerciseofstockoptionsorthevestingofotherstock-basedawards In2017,weincreasedthestockholdingrequirementfortheCEOfrom5xto6xhisannualbase salary NoHedgingorPledging HedgingandpledgingofourCommonStockbyofficers,directorsandemployeesisprohibited ClawbackPolicy Robustclawbackpolicyinplace Independent Committee CompensationCommitteeconsistsonlyofindependentBoardmembers LeadingIndependent Consultant EngagedaleadingindependentcompensationconsultanttoassisttheCompensationCommittee andBoardindeterminingexecutivecompensationandevaluatingprogramdesign 26 CompensationDiscussionandAnalysis KeyCompensationandGovernancePolicies TheCommittee continuallyreviewsthe Company’sexecutivecompensationprogram to maintaincompensation practices that are inthe best interests of our shareholders.Some of our key policiesare summarized below: WHATWE DO: WHATWE DON’T DO: ✓ Wetiepaytoperformance,includingtheuseof performanceshareunits.Themajorityof executivepayisperformance-basedand variable. ✘ We do not reward our NEOs on Total ShareholderReturn (“TSR”) as a performance metric. In our experience,our stock price can rise or fallquickly,often inadvanceof perceived changesinthe globalbusinessclimate. These fluctuationsare often de-coupledfrom the fundamentalsof our business.We believeother performance metrics are more effective at incentingexecutiveperformance, andwedo not make use of TSR.Instead, our Committee sets meaningfultargets eachyear for our three key metrics. ✓ We set challengingperformance objectives. ✘ We do not providetax gross up payments for any amounts consideredexcess parachute payments. ✓ We appropriatelybalanceshort-term andlong- term incentives. ✘ We do not pay dividendson performance share units. ✓ We use doubletriggers inour severance agreements andour equityawards. ✘ We do not permit the repricingof stock options withoutprior shareholderapproval,except in connectionwitha transaction. ✓ We maintainsignificantstock ownership guidelinesfor our NEOs. ✘ We do not allowhedgingor pledgingof ManpowerGroup stock. ✓ TheCommittee engagesan independent compensationconsultantthat works solelyin support of the Committee. ✘ We do not provideexcessiveperquisitesto our NEOs. ✓ We use appropriatepeer groups when establishingcompensation. ✓ We listento our shareholders.In additionto an annual“say-on-pay” advisoryvote, weregularly reach out to leadingshareholdersandtheir advisoryfirms to discussour governanceand executivecompensation.In 2017, wecontinued to meet withour shareholdersto reviewthese topics andensure our programs are well- understoodandconsistent withtheir expectations. ✓ We adjustour programs basedon shareholder input. For example, inthe past, wereceived comments that the performance periodwe utilizedinour performance share unit program wastoo short. In response, the Committee moved the performance periodfor our performance share units to a 3-year, rather than a 1-year, measurement period. 2018ProxyStatement | 28 Total of 02 pages in section ITEM1.ELECTIONOFDIRECTORS Corporate Governance McKesson is committed to, and for many years has adhered to, sound and effective corporate governance practices. Our Board diligently exercises its oversight responsibilities with respect to the Company’s business and affairs consistent with the highest principles of business ethics and corporate governance requirements of federal law, state law and the NYSE. We highlightthesepracticesbelow. KeyGovernanceAttributes IndependentBoard Alldirectors,withtheexceptionofMr.Hammergren,areindependent,consistentwithNYSE requirementsandourCorporateGovernanceGuidelines. StrongRoleforLead IndependentDirector(LID) Initiallyestablishedin2013,theroleofLeadIndependentDirectorhasarobustsetofdutiesand authoritiesunderourCorporateGovernanceGuidelines.Detailsofthisroleareprovidedbelow. CommitmenttoSplitCEO/Chair uponNextCEOSuccession CommencingwiththenextCEO,theBoardwillsplittheroleofchairmanandCEO,butcontinue toevaluatetheCompany’sleadershipstructureannually. LeadingonBoardDiversity One-halfofMcKesson’s2018directornomineesarediverse.Since2002,womenhaveheld3of ourBoard’sseatswhichrepresentsmorethanone-thirdofourcurrentnominees. SignificantRiskOversight TheBoardasawholeanditscommitteesdevotesignificanttimeandefforttounderstandingand reviewingenterpriserisks.ThisincludesoversightofourCompany’sstrategyandreputationas wellasreviewofrisksrelatedtofinancialreporting,compensationpractices,cybersecurityand opioiddistribution. AnnualDirector PerformanceEvaluation TheLeadIndependentDirectorconductstheperformanceevaluationofallBoardmembers. AnnualCEO SuccessionReview TheBoardisresponsibleforapprovingandmaintainingasuccessionplanfortheCEOandother executiveofficers.TheannualCEOsuccessionreviewisoverseenandfacilitatedbytheLead IndependentDirectorandheldinexecutivesessionofthefullBoard. ShareholderRighttoCalla SpecialMeeting ABy-Lawamendmentin2013establishedtherighttocallaspecialmeetingofstockholders,for recordholderswhohaveheldanetlongpositionofatleast25%oftheCompany’soutstanding sharesforatleast1year. PoliticalContributionsand LobbyingTransparency McKessonbelievesthattransparencyandaccountabilitywithrespecttopoliticalexpenditures andlobbyingareimportant.Thisyear,weenhancedtheCompany’spoliciestoprovidegreater transparencyandcodifyourpracticesrelatedtolobbyingactivity.Beginninglastyear,the Companyalsovoluntarilydisclosescorporatepoliticalcontributionsandtradeassociationsto whichpaymentsexceed$50,000.TheCompanyalsoprohibitstradeorganizationsfromusing corporatedollarsforpoliticalpurposes. ProxyAccess Ashareholderorshareholdergroupholdingatleast3%oftheCompany’sstockforatleast3 yearsmayincludeinMcKesson’sproxymaterialsdirectorcandidatestofillupto20%ofavailable Boardseats. GlobalCodeofConduct McKesson’sCodeofConduct,whichdescribesfundamentalprinciples,policiesandprocedures thatshapeourworkandhelpouremployees,officersanddirectorsmakeethicaldecisions,has beenadaptedandtranslatedtoapplythroughoutourglobalpresence. CorporateGovernance Guidelines McKesson’sCorporateGovernanceGuidelinesaddressvariousgovernancematters,including accesstomanagementandindependentadvisors;annualBoardperformanceevaluation executivesession;andBoardreviewofcorporatesocialresponsibilitypractices,including environmentalsustainability. OtherShareholder-Friendly Practices • Eliminated“poisonpill” • Eliminatedsupermajorityvotingrequirements • Majorityvotingstandardforuncontesteddirectorelections • DeclassifiedBoard You can access our Certificate of Incorporation, By-Laws, Corporate Governance Guidelines, Committee Charters, Director Independence Standards and Code of Conduct on our website at www.mckesson.com under the caption “Investors—CorporateGovernance.” -2018ProxyStatement 19 The B oard o f Dire c tors and Corporate G o v ernan c e RecentCorporateGovernanceChanges ShareholderRighttoCallaSpecialMeeting I n J anuary2018,the B oardadoptedanamendmenttoour B yla w se x tendingtoshareholderso w ningintheaggregate 25per c ento f MPC ’ soutstanding c ommonsto ck and c omplying w ithotherre q uirementsset f orthinour B yla w sthe righttore q uestthattheCompany c allaspe c ialmeetingo f shareholders.The B oard b elie v esthe25per c ento w nership thresholdstri k estheappropriate b alan c e b et w eenallo w ing shareholdersto v oteonimportantmattersthatmayarise b et w eenannualmeetingsandprote c tingagainsttheris k that asingleshareholderorsmallgroupo f shareholders c ould c all aspe c ialmeetingthatser v esonlyanarro w agenda.MPC ’ s 25per c ento w nershipthresholdisa c ommonthreshold amonglargepu b li cc ompanieso ff eringshareholdersthisright andhelpsprote c tshareholderrights w ithoutthee x penseand ris k asso c iated w ithalo w erspe c ialmeetingthreshold. BoardDiversity I n J anuary2018,the B oardadoptedanamendmenttoour Corporate G o v ernan c ePrin c iplestoe x presslya ff irmits c ommitmenttoa c ti v elysee k initsdire c torre c ruitmente ff orts w omen c andidatesand c andidateso f di v erseethni c and ra c ial b a ck grounds w hopossessthes k illsand c hara c teristi c s identi f ied w ithinourCorporate G o v ernan c ePrin c iples.This e x press c ommitmentisinadditiontotheemphasisona di v ersityo f dire c tor b a ck groundsande x perien c esalready f ound w ithinourCorporate G o v ernan c ePrin c iples. LeadDirector Our B oardhasappointed J amesE. R ohrtosu cc eedDa v idA. Da b er k oas L eadDire c tor w henMr.Da b er k oretires f romthe B oarduponthe c on c lusiono f theAnnualMeeting.The L ead Dire c tor f un c tionsasa v oi c eo f thenon - management dire c torsandrein f or c ese ff e c ti v eindependentleadershipon the B oard. MajorityVoting Our B oardhasadoptedama j ority v otingstandard f or un c ontesteddire c torele c tions. ProxyAccess I nFe b ruary201 6 ,our B oardo f Dire c torsadoptedshareholder pro x ya cc ess b yla w pro v isionstoena b leshareholders satis f ying c ertainre q uirementstosu b mitdire c tornominations f orin c lusionintheCompany ’ spro x ystatement.Asingle shareholder,oragroupo f upto20shareholders, w hoha v e held3per c ento f MPCsto ckf oratleastthreeyearsmay nominate c andidates c omprisinguptothegreatero f t w o indi v idualsor20per c ento f the B oardo f Dire c tors.Our B yla w sdes c ri b ethepro c eduresthatmust b e f ollo w ed b ya shareholder,orgroupo f shareholders,see k ingtoma k e dire c tornominations b y w ayo f shareholderpro x ya cc ess. MPC’sProxyAccessBylaw (1) : doesallo w shareholder(s)tosu b mitdire c tornominees f orin c lusionintheCompany ’ spro x ystatement ; doesre q uirea3 % o w nershipthreshold ; doeslimitto20thenum b ero f shareholdersaggregating sharesto c omprisethe3 % o w nershipthreshold ; does c appro x ya cc essnomineesatthegreatero f t w o indi v idualsor20 % o f the B oard ; and doese x pli c itlyallo w loanedsharesto c ountas “ o w ned ” sharesi f re c alla b le. doesnotprohi b itre - nominationo ff ailednominees ; doesnotimposeMPCsto ck holdingre q uirements b eyondtheannualmeetingin q uestion ; doesnotprohi b itthe c ountingo f loanedsharestomeet the3 % o w nershipthresholdsolongastheyaresu bj e c t tore c all(noa c tualre c alla c tionre q uired) ; doesnot c ountindi v idual f unds w ithina f amilyo ff unds asseparateshareholders f orpurposeso f the 20 - shareholderaggregationlimit ; doesnotprohi b itthird - partydire c tor c ompensation arrangementssolongasdis c losed ; and doesnotimpose q uali f i c ationrestri c tionsonpro x y a cc essnomineesthataredi ff erent f romthoseimposed on B oardnominees. (1) Thedes c riptiono f thematerialtermso f theMPCpro x ya cc ess b yla w pro v isionsin c luded w ithinthisPro x ySummaryis q uali f iedin itsentirety b yre f eren c etotheMPC B yla w s, w hi c harea v aila b leon our w e b siteat http://ir.marathonpetroleum.com b ysele c ting “ Corporate G o v ernan c e ” and c li ck ingon “R estatedCerti f i c ateo f I n c orporationand B yla w s, ”“B yla w so f MarathonPetroleum Corporation. ” Wein v iteourshareholderstore v ie w these c orporate go v ernan c e c hangesasre f le c tedinour B yla w sandour Corporate G o v ernan c ePrin c iples b y v isitingour w e b siteat http://ir.marathonpetroleum.com andsele c ting “ Corporate G o v ernan c e. ” Fromthatpage,the B yla w sarea cc essi b le b y c li ck ingon “R estatedCerti f i c ateo fI n c orporationand B yla w s, ” “B yla w so f MarathonPetroleumCorporation ” andthe Corporate G o v ernan c ePrin c iplesarea cc essi b le b y c li ck ing on “ Corporate G o v ernan c ePrin c iples. ” page12 / MarathonPetroleumCorporationPro x yStatement Total of 02 pages in section