2018 Guide to Effective Proxies

2.4 Proxy summary | 87 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES MCKESSON CORPORATION PROXYSUMMARY Director Nominees ThereareeightnomineesforelectiontotheBoardofDirectors.Additionalinformationoneachnomineemaybefoundunder Item 1 - Election of Directors, beginning on page 8. Our Board approved a number of changes to the composition and leadership of its committees, which will be effective on July 23, 2018. The new committee memberships are outlined below. Informationonthecurrentcommitteemembershipscanbefoundonpage13. CommitteeMemberships* NameandTitle AC CC FC GC N.AnthonyColes,M.D. ChairmanandChiefExecutiveOfficer,YumanityTherapeutics,LLC C ✓ JohnH.Hammergren ChairmanoftheBoard,PresidentandChiefExecutiveOfficer,McKessonCorporation M.ChristineJacobs ChairmanoftheBoard,PresidentandChiefExecutiveOfficer,TheragenicsCorporation(Retired) ✓ ✓ DonaldR.Knauss ExecutiveChairmanoftheBoard,TheCloroxCompany(Retired) ✓ C MarieL.Knowles ExecutiveVicePresidentandChiefFinancialOfficer,ARCO(Retired) C ✓ BradleyE.Lerman– Newin2018 SeniorVicePresident,GeneralCounselandCorporateSecretary,Medtronicplc ✓ C EdwardA.Mueller – LeadIndependentDirector ChairmanoftheBoardandChiefExecutiveOfficer,QwestCommunicationsInternationalInc. (Retired) ✓ ✓ SusanR.Salka ChiefExecutiveOfficerandPresident,AMNHealthcareServices,Inc. ✓ ✓ AC: AuditCommittee CC: CompensationCommittee FC: FinanceCommittee GC: GovernanceCommittee C : CommitteeChair *CommitteemembershipseffectiveJuly23,2018 TheeightdirectornomineesstandingforreelectiontotheBoardhavediversebackgrounds,skillsandexperiences.Webelieve their varied backgrounds contribute to an effective and well-balanced Board that is able to provide valuable insight to, and effectiveoversightof,ourseniormanagementteam. MultidisciplinaryBoardSkills 4 6 5 3 7 Diversity GlobalLeadership Healthcare SupplyChain Technology BalancedBoardTenure 0-5 years 10-15 years 15+ years 4 1 3 -2018ProxyStatement 3 Total of 07 pages in section PROXYSUMMARY Company Highlights McKesson is a global leader in delivering pharmaceutical and medical products and business services to retail pharmacies, hospitals, health systems, physician offices and others throughout North America and Europe. While distribution represents our core competency and generates the majority of our business by revenue (99% in FY 2018), we also provide technology solutionstosupporthealthcareorganizationsinareassuchasclinical,financialandsupplychainmanagement. In FY 2018, our Company delivered solid performance across many of our businesses. Despite so e i dusry-wide headwinds,weproducedstrongreturnsandinvestedtoenhanceourabilitytodelivervaluetoourmanufacturingpartners,our customers and patients. The Company generated revenues of $208.4 billion compared to $198.5 billion in FY 2017 and producedadjustedearningsof$12.62perdilutedsharecomparedto$12.54inFY2017. To build sustainable long-term value, we try to think years out as opposed to quarters out. In April 2018, we announced a multi-yeargrowthinitiative,whichisintendedtopositionustotakeadvantageofsignificantnewgrowthopportunitiesinpatient care delivery. Over the next few years, we anticipate achieving meaningful cost savings through an operating model review andredesignthatweanticipatewillprimarilybeusedtofundthefollowinggrowthpriorities: • Expandedsupplychainandcommercializationservicesforpharmaceuticalandmedicalsupplymanufacturers; • Enhancedsolutionsfortherapidlygrowingspecialtypharmaceuticalmarket; • Newofferingsthatwillstrengthenandexpandtheroleofretailpharmacyinpatientcaredelivery;and • Developworld-classdataandanalyticsplatformsandbuildsolutionstobecomemoreefficientandagile. $208B FY18 revenues $4.3B FY18operating cashflow 78,ooo + employeesworldwide Delivering 1/3 of allprescription medicine inNorth America Fortune6 company More than 16,000 ownedandbanner pharmacies $100M to createnon-profit foundation to fight opioid epidemic 2.1M+ customers servedeachdaya ross 13European countries 9,100+ oncologists&other specialists supportedwith Speciality solutions Governance Highlights The Board actively seeks input from our shareholders and is committed to continuous monitoring of sound and effective governancepractices.Belowarehighlightsofsomeofourkeygovernanceattributes.Detailsonourcorporategovernancecan befoundonpages19-25. ProxyAccess Commitment toSplitCEO/ChairRoles uponCEOSuccession ShareholderRight toCallSpecialMeeting MajorityVoting forUncontested DirectorElections Board-LevelRiskOversight AnnualCEOSuccessionReview PoliticalContributions& LobbyingTransparency 7 of 8DirectorNomineesAre Independent Diverse andBalancedBoard NoPoisonPill Robust Lead IndependentDirectorRole Key Governance Attributes NoSupermajorityVoteProvisions 2 -2018ProxyStatement PROXY SUMMARY This summary highlights certain information in this proxy statement and does not contain all the information you should consider in voting your shares. Please refer to the complete proxy statement and our annual report prior to voting at the AnnualMeetingofStockholderstobeheldonJuly25,2018(“AnnualMeeting”). Meeting Information 2018 Annual Meeting of Stockholders Date andTime ......... Wednesday,July25, 2018| 8:30 a.m. CentralDaylightTime Location ................. Dallas/FortWorth Airport Marriott, 8440Freeport Parkway, Irving, Texas RecordDate ............ May 31, 2018 Voting Items Ourboardofdirectors(“Board”or“BoardofDirectors”)isaskingyoutotakethefollowingactionsattheAnnualMeeting: Item YourBoard’s Recommendation Page 1 ElectionofEightDirectorsforaOne-YearTerm Vote FOR 8 2 RatificationoftheAppointmentoftheIndependentRegisteredPublicAccountingFirm Vote FOR 26 3 Non-bindingAdvisoryVoteonExecutiveCompensation Vote FOR 76 4 ShareholderProposalonDisclosureofLobbyingActivitiesandExpenditures Vote AGAINST 77 5 ShareholderProposalonAcceleratedVestingofEquityAwards Vote AGAINST 79 6 ShareholderProposalonPolicytoUseGAAPFinancialMetricsforPurposesofDetermining ExecutiveCompensation Vote AGAINST 81 7 ShareholderProposalonOwnershipThresholdforCallingSpecialMeetingsofShareholders Vote AGAINST 84 How to Vote (seepages86-90foradditionalvotinginformation) Your vote is important. On June 15, 2018, McKesson Corporation (“Company,” “McKesson,” “we” or “us”) began delivering proxy materials to all shareholders ofrecordatthecloseofbusinessonMay31,2018(“RecordDate”).Asashareholder,you are entitled to one vote for each share of common stock you held on the Record Date. You can vote in any of the following ways: Vote via Internet Call Toll-Free Vote by Mail Vote in Person www.proxyvote.com Callthephonenumberlocated atthetopofyourproxycard Followtheinstructionson yourproxycard AttendourAnnualMeeting andvotebyballot -2018ProxyStatement 1 MICROSOFT CORPORATION Our director nominees SeePart2–“BoardofDirectors”formoreinformation. Thefollowingtableprovidessummaryinformationabouteachdirectornominee.Eachdirectoriselectedannuallybya majorityofvotescast. Name Occupation Age Director since Independent Otherpublic boards Committeememberships AC CC GN RPP WilliamH.GatesIII Co-ChairandTrustee, Bill&MelindaGatesFoundation 61 1981 No 1 ReidG.Hoffman Partner,GreylockPartners 50 2017 Yes 0 M HughF.Johnston ViceChairmanandCFO,PepsiCo,Inc. 56 2017 Yes 0 F TeriL.List-Stoll ExecutiveVicePresidentandCFO,Gap,Inc. 54 2014 Yes 1 F M SatyaNadella CEO,MicrosoftCorporation 50 2014 No 1 CharlesH.Noski FormerViceChairman, BankofAmericaCorporation 65 2003 Yes 2 C F M HelmutPankePh.D. FormerChairmanoftheBoardof Management, BMWBayerischeMotorenWerkeAG 71 2003 Yes 1 F C SandraE.Peterson GroupWorldwideChair, Johnson&Johnson 58 2015 Yes 0 M M PennyS.Pritzker Chairman,PSPCapitalPartners,LLC 58 New Nominee Yes 0 CharlesW.Scharf CEO,TheBankofNewYorkMellon Corporation 52 2014 Yes 1 M M ArneM.Sorenson PresidentandCEO,MarriottInternational,Inc. 58 New Nominee Yes 1 JohnW.Stanton Chairman,TrilogyPartnerships 62 2014 Yes 2 C M JohnW.Thompson IndependentChairman,MicrosoftCorporation; FormerCEO,VirtualInstruments,Inc. 68 2012 Yes 1 C M PadmasreeWarrior CEO,NIOUSA,Inc. 56 2015 Yes 0 M AC: AuditCommittee CC: CompensationCommittee GN: GovernanceandNominatingCommittee RPP: RegulatoryandPublicPolicyCommittee C Chair M Member F Financialexpert MasonMorfitwillnotseekre-electionatthe2017AnnualMeeting.Mr.MorfitcurrentlyservesontheAuditCommitteeand CompensationCommittee.PennyPritzkerandArneSorensonarebothnominatedforelectiontotheBoardattheAnnual Meeting.TheBoardwillconsidercommitteeappointmentsforMs.PritzkerandMr.SorensononceelectedtotheBoard. 2 Total of 06 pages in section Corporate governance highlights SeePart1–“CorporategovernanceatMicrosoft”formoreinformation. Ourdirectornominees Experience 9 Technology 13 Globalbusiness Leadership 12 9 Financial 11 Mergersand acquisitions 5 Salesand marketing 7 Gender,ethnic,national, orotherdiversity 14 Publiccompanyboard serviceandgovernance Independent Independent Other 2 12 Diverse 50% are female,nationally, orethnicallydiverse Diverse Other Independent Boardand Boardcommittees • IndependentChairmanoftheBoard ;Chairman andCEOpositionsseparatesince2000 • 12of14 director nomineesareindependent • WearecommittedtoBoardrefreshment.To balancebetweendirectorswithdeepknowledge oftheCompanyandthosewithafresh perspective, theBoardwillseektomaintainan averagetenureoftenyearsorlessforits independentdirectorsasagroup. • Allcommitteemembers are independent • Independentdirectorsmeetinexecutive session atleastquarterly • Regularcommitteeexecutivesessionsof independentdirectors –Ateachregularly scheduledmeeting,theAuditCommittee, CompensationCommittee,andRegulatoryand PublicPolicyCommitteemeetinexecutive session.AdditionalsessionsofallBoard committeesareheldasneeded. • Weconduct annualboardandcommittee evaluations • Wehave robustdirectororientationand continuingeducation programsfordirectors • AllAuditCommitteemembersare financially literate andfourareauditcommittee financial experts • OurCompensationCommitteeusesan independentcompensationconsultant Progressive shareholder rights • Directorsare electedbymajorityvote in uncontestedelections • Alldirectorsare electedannually • Ourbylawsprovidefor proxyaccessby shareholders • 15%ofoutstandingsharescancallaspecial meeting • Wehavea confidentialvotingpolicy Strongshareholder supportonsay-on-pay 96%say-on-paysupportatour2016Annual Meeting. OurcompensationCommitteeb li ves thevoteindicatessupportforourprogram, includingenhancementsmadeoverthepastthree years. Activeshareholder engagement Duringfiscalyear2017,independentmembersof ourBoardandmembersofseniormanagement conductedoutreachtoacross-sectionof shareholdersowningalmost45% ofourshares. 2017PROXYSTATEMENT 3 Proxy summary ThissummaryhighlightsinformationcontainedelsewhereinthisProxyStatement.Thissummarydoesnot containallinformationyoushouldconsider.PleasereadtheentireProxyStatementcarefullybeforevoting. Annual Shareholders Meeting Recorddate September29,2017 Mailingdate ThisProxyStatementwasfirstmailed toshareholdersonorabout October16,2017. Meetingagenda Themeetingwillcovertheproposalslisted undervotingmattersandvote recommendationsbelow,andanyother businessthatmayproperlycom b fore themeeting. Voting Shareholdersasoftherecorddate areentitledtovote.Eachshareofcommon stockofMicrosoftCorporation(the “Company”)isentitledtoonevoteforeach directornomineeandonevoteforeachof theproposals. Date November29,2017 Time 8:00a.m.PacificTime Place MeydenbauerCenter 11100NE6thStreet Bellevue,Washington 98004 Voting matters and vote recommendations Proposal Board recommends Reasonsfor recommendation See page 1. Electionof14directors FOR TheBoardanditsGovernanceandNominatingCommitteebelieve the14Boardnomineespossesstheskills,experience,anddiversityto effectivelymonitorperformance,provideoversight,andadvise managementontheCompany’slong-termstrategy. 13 2. Advisoryvoteon executivecompensation “say-on-pay” FOR Ourexecutivecompensationprogramsdemonstratetheevolutionof ourpayforperformancephilosophy,andreflecttheinputof shareholdersfromourextensiveoutreachefforts. 31 3. Advisoryvoteonthe frequencyoffuture advisoryvoteson executivecompensation FOREVERY YEAR Webelievethereisabroadinvestorconsensusfavoringanannual say-on-payvote,andanannualvotebestpromotesaccountability andtransparencyforourexecutivecompensationprogram. 57 4. Ratificationoftheselection ofDeloitte&ToucheLLPas ourindependentauditor forfiscalyear2018 FOR BasedontheAuditCommittee’sassessmentofDeloitte&Touche’s qualificationsandperformance,itbelievestheirretentionforfiscal year2018isinthebestinterestsoftheCompany. 58 5. Approvematerialtermsof theperformancegoals undertheMicrosoft CorporationExecutive IncentivePlan FOR Shareholdersmustapprovethesematerialtermsatleasteveryfive yearssocertainpaytoexecutiveofficersiseligibletobededucted forfederalincometaxpurposes.Beingabletoawardpaythatmay bedeductibleisinthebestinterestsoftheCompany. 62 6. ApprovetheMicrosoft Corporation2017Stock Plan FOR ApprovingtheMicrosoftCorporation2017StockPlanallowsusto continuetoawardequitycompensation,whichincentivizesalong- termperspectiveontheCompany’sbusinessandcreatesstrong alignmentwithshareholders. 66 Vote in advance of the meeting Voteyoursharesatwww.proxyvote.com. HaveyourNoticeofInternetAvailabilityor proxycardinhandforthe12-digitcontrol numberneededtovote. Calltoll-freenumber1-800-690-6903 Sign,date,andreturntheenclosedproxy cardorvotinginstructionform. Vote in person at the meeting SeePart6– “Information aboutthemeeting” fordetailson admission requirementsto attendthe AnnualMe ting. 2017PROXYSTATEMENT 1