UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

Filed by the Registrant þ

 Filed by a Party other than the Registrant  o

Check the appropriate box:

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

AmerisourceBergen Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 22, 2010

 

Dear Stockholder:

 

I am pleased to invite you to attend our 2010 Annual Meeting of Stockholders on Thursday, March 4, 2010, at 2:00 p.m., Eastern Time. The meeting will be held at the Four Seasons Hotel Philadelphia, One Logan Square, Philadelphia, Pennsylvania.

 

The Notice of the 2010 Annual Meeting of Stockholders and the Proxy Statement describe the items of business for the meeting. At the meeting we will also report on AmerisourceBergen’s performance and operations during fiscal year 2009 and respond to stockholder questions.

 

Your vote is very important. Whether or not you plan to attend the 2010 Annual Meeting of Stockholders, we urge you to vote and to submit your proxy over the Internet, by telephone or by mail. If you are a registered stockholder and attend the meeting, you may revoke the proxy and vote your shares in person. If you hold your shares through a bank or broker and want to vote your shares in person at the meeting, please contact your bank or broker to obtain a legal proxy.

 

Thank you for your support.

 

Sincerely,

 

 

RICHARD C. GOZON
Chairman of the Board

 

Notice of 2010 Annual Meeting of Stockholders

 

 

By order of the Board of Directors,

 

 

JOHN G. CHOU
Senior Vice President, General Counsel and Secretary

January 22, 2010

AmerisourceBergen Corporation
1300 Morris Drive
Chesterbrook, PA 19087

 

PROXY STATEMENT

 

TABLE OF CONTENTS

 

 

Why am I being furnished this Proxy Statement?

 

This Proxy Statement is furnished by AmerisourceBergen’s Board of Directors in connection with its solicitation of proxies for use at the 2010 Annual Meeting of Stockholders to be held March 4, 2010, and at any adjournments thereof. Our Annual Report on Form 10-K for the fiscal year ended September 30, 2009 accompanies this Notice and Proxy Statement, but is not incorporated as a part of the Proxy Statement and is not to be regarded as part of the proxy solicitation material.

 

What are the items of business for the meeting?

 

The items of business for the meeting are as follows:

 

 

Who is soliciting my proxy?

 

The Board of Directors is soliciting your proxy in order to provide you with an opportunity to vote on all matters scheduled to come before the meeting whether or not you attend the meeting in person.

 

What if I received a Notice of Internet Availability of Proxy Materials?

 

We are providing access to our proxy materials over the Internet. Accordingly, on or about January 22, 2010, we are mailing to our record and beneficial stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access our proxy materials over the Internet and vote online. If you received a Notice of Internet Availability of Proxy Materials, you will not receive a printed copy of our proxy materials by mail unless you request one. You may request a printed copy of our proxy materials for the 2010 Annual Meeting of Stockholders. If you wish to receive a printed copy of our proxy materials, you should follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials.

 

Who is entitled to vote?

 

You may vote if you owned shares of our common stock as of the close of business on January 4, 2010, which is the record date. You are entitled to one vote for each share of common stock that you own. As of January 4, 2010, we had 284,910,132 shares of common stock outstanding.

 

What shares can I vote?

 

You may vote all shares owned by you as of the close of business on January 4, 2010, the record date. These shares include:

 

 

How do I vote before the meeting?

 

If you hold your shares in your own name as the stockholder of record, you have three options for voting and submitting your proxy before the meeting:

 

 

If you hold your shares through an account with a bank or broker, your ability to vote over the Internet or by telephone depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker.

 

May I vote at the meeting?

 

You may vote your shares at the meeting if you attend in person. If you hold your shares through an account with a bank or broker, you must obtain a legal proxy from the bank or broker in order to vote at the meeting.

 

Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. You may vote by proxy over the Internet, by telephone or by mail.

 

How do I revoke my proxy?

 

If you are the stockholder of record, you may revoke your proxy at any time before the polls close at the meeting. You may revoke your proxy by:

 

 

If you hold your shares through an account with a bank or broker, your ability to revoke your proxy depends on the voting procedures of the bank or broker. Please follow the directions provided to you by your bank or broker.

 

May I change my vote?

 

You may change your vote at any time before the polls close at the meeting. You may change your vote by:

 

 

What if I return my proxy card but do not provide voting instructions?

 

Proxy cards that are signed and returned but do not contain instructions will be voted as follows:

 

 

What does it mean if I receive more than one proxy card or instruction form?

 

It means that you have multiple accounts with our transfer agent and/or banks or brokers. Please vote all of your shares.

 

We recommend that you consolidate as many accounts as possible under the same name and address. For assistance consolidating accounts where you are the stockholder of record, you may contact our transfer agent, BNY Mellon, at 1-866-233-1957.

 

Will my shares be voted if I do not provide my proxy?

 

If you are a registered stockholder and do not provide a proxy, you must attend the meeting in order to vote your shares.

 

If you hold shares through an account with a bank or broker, your shares may be voted even if you do not provide voting instructions to your bank or broker. Banks and brokers have the authority under the rules of the New York Stock Exchange, or NYSE, to vote shares for which their customers do not provide voting instructions on certain routine matters. The ratification of the appointment of our independent registered public accounting firm is considered a routine matter for which banks and brokers may vote without specific instructions from their customers.

 

May stockholders ask questions at the meeting?

 

Yes. Representatives of AmerisourceBergen will answer stockholders’ questions of general interest at the end of the meeting. In order to be eligible to ask questions at the meeting, you must be able to establish that you are a stockholder either as of January 4, 2010 or as of the date of the meeting.

 

How many votes must be present to hold the meeting?

 

In order for us to conduct our meeting, a majority of the shares of our common stock outstanding as of January 4, 2010 must be present in person or by proxy at the meeting. This is referred to as a quorum. Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy over the Internet, by telephone or by mail. Shares voted by banks or brokers on behalf of beneficial owners also are counted as present at the meeting. In addition, abstentions and broker non-votes will be counted for purposes of establishing a quorum with respect to any matter properly brought before the meeting. Broker non-votes occur on a matter when a bank or broker is not permitted under applicable rules and regulations to vote on a matter without instruction from the beneficial owner of the underlying shares and no instruction has been given.

 

How many votes are needed for each proposal and how are the votes counted?

 

The favorable vote of a majority of the votes cast will be required for:

 

 

The favorable vote of the holders of a majority of shares outstanding and entitled to vote on the amendment will be required to approve the amendment and restatement of AmerisourceBergen’s Amended and Restated Certificate of Incorporation to replace all supermajority vote requirements with a majority vote requirement (Item 2 on the Proxy Card). Abstentions and broker non-votes will be counted as negative votes in the tabulation of the votes cast by stockholders on this proposal.

 

Any other proposal that might properly come before the meeting will require the favorable vote of a majority of the votes cast in order to be approved.

 

A majority of the votes cast means that the votes cast “for” a matter exceed the number of votes cast “against” that matter. Abstentions and broker non-votes are disregarded when determining if a majority of the votes have been cast in favor of a matter. Both abstentions and broker non-votes are counted for purposes of establishing a quorum.

How will proxies be voted on other items or matters that properly come before the meeting?

 

If any other items or matters properly come before the meeting, the proxies received will be voted on those items or matters in accordance with the discretion of the proxy holders.

 

Is AmerisourceBergen aware of any other item of business that will be presented at the meeting?

 

We are not aware of any other business to be presented at the 2010 Annual Meeting of Stockholders. However, if any other matter should properly come before the 2010 Annual Meeting of Stockholders, the enclosed proxy confers discretionary authority with respect to such matter.

 

Will there be any further solicitation of proxies for the meeting?

 

Our directors, officers and employees may solicit proxies by telephone or in person. In addition, we have hired Morrow & Co., LLC to assist us in soliciting proxies, if necessary. Morrow may solicit proxies by telephone or in person. We will pay Morrow a fee of $10,000, plus expenses, for providing such services. All costs and expenses of any solicitation, including the cost of preparing this Proxy Statement and posting it on the Internet and mailing the Notice of Internet Availability of Proxy Materials, will be borne by AmerisourceBergen.

 

Will AmerisourceBergen reimburse any expenses of banks, brokers, nominees and fiduciaries?

 

We will reimburse the expenses of banks, brokers, nominees and fiduciaries that send notices, proxies and proxy materials to our stockholders.

 

Will the directors be in attendance at the meeting?

 

We currently expect all of our directors to be in attendance at the 2010 Annual Meeting of Stockholders. It has been customary for our directors to attend our annual meetings of stockholders. All of our directors attended the 2009 Annual Meeting of Stockholders.

 

How often are directors elected?

 

AmerisourceBergen’s directors are divided into three classes — Class I, Class II and Class III — with each class being as close in number as possible. The directors of each class serve for terms of three years. The terms of office of the classes are staggered so that only one class of directors is elected at each annual meeting of stockholders.

 

How many directors are to be elected at the meeting?

 

The term of office of the current Class III directors will expire at the 2010 Annual Meeting of Stockholders. There currently are three Class III directors, all of whom have been nominated for election at the 2010 Annual Meeting of Stockholders.

 

What is the size of the Board of Directors?

 

The current size of the Board of Directors is nine. The Board of Directors currently consists of eight members, there being a vacancy among the Class II directors resulting from the retirement of J. Lawrence Wilson on June 1, 2009. The Board of Directors intends to fill the vacancy.

 

Who are the current Class III directors?

 

The current Class III directors are Richard W. Gochnauer, Edward E. Hagenlocker and Henry W. McGee.

 

Who are this year’s nominees?

 

Messrs. Gochnauer, Hagenlocker and McGee will stand for reelection as Class III directors.

Which of this year’s nominees are independent?

 

Each of Messrs. Gochnauer, Hagenlocker and McGee is independent (as independence is defined in Section 303A of the NYSE Listed Company Manual and in our corporate governance principles).

 

What is the term of office for which this year’s nominees are to be elected?

 

The nominees are to be elected for a three-year term and are expected to hold office until the 2013 Annual Meeting of Stockholders and until their successors are elected and qualified.

 

What if a nominee is unwilling or unable to serve?

 

Each nominee for director has consented to his nomination and, so far as the Board of Directors and management are aware, intends to serve a full term as a director if elected. However, if any of the nominees should become unavailable or unable to stand for election prior to the election, the shares represented by proxies may be voted for the election of substitute nominees selected by the Board of Directors.

 

Biographical information about this year’s nominees:

 

Richard W. Gochnauer

 

 

Edward E. Hagenlocker

 

 

Henry W. McGee

 

 

How does the Board of Directors recommend that I vote?

 

We recommend that you vote For the election of each of the three nominees named in this Proxy Statement to the Board of Directors.

 

Who are the Class I directors?

 

The Class I directors are Charles H. Cotros, Jane E. Henney, M.D. and R. David Yost.

 

When does the term of the Class I directors expire?

 

The term of office of the Class I directors will expire at the 2011 Annual Meeting of Stockholders.

 

Biographical information about Class I directors:

 

Charles H. Cotros

 

 

Jane E. Henney, M.D.

 

 

R. David Yost

 

 

 

Who are the Class II directors?

 

The Class II directors are Richard C. Gozon and Michael J. Long.

 

When does the term of the Class II directors expire?

 

The term of office of the Class II directors will expire at the 2012 Annual Meeting of Stockholders.

 

Biographical information about Class II directors:

 

Richard C. Gozon

 

 

Michael J. Long

 

 

Are there any family relationships among AmerisourceBergen’s directors and executive officers?

 

No.

What are the committees of the Board of Directors?

 

The Board of Directors has the following standing committees: Executive and Finance; Audit and Corporate Responsibility; Compensation and Succession Planning; and Governance and Nominating.

 

 

How often did the Board and the committees meet in fiscal year 2009?

 

During fiscal year 2009, the Board of Directors met five times; the Executive and Finance Committee met three times; the Audit and Corporate Responsibility Committee met eleven times; the Compensation and Succession Planning Committee met six times; and the Governance and Nominating Committee met five times.

 

Did each director attend at least 75% of the meetings of the Board of Directors and of the committees on which he or she served?

 

Yes.

 

Do the non-management directors meet regularly?

 

The non-management directors meet at or near the end of each regularly scheduled meeting of the Board of Directors. The Chairman of the Board of Directors presides at such meetings. If the Chairman is not present, the committee chairs preside on a rotating basis.

 

How do interested parties make their concerns known to the non-management directors?

 

Interested parties who wish to make any concerns known to the non-management directors may submit communications at any time in writing to: John G. Chou, Secretary, AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087. AmerisourceBergen’s Secretary will determine, in his good faith judgment, which communications will be relayed to the non-management directors.

How are directors compensated?

 

The following table summarizes the total compensation earned by directors who were not employees of AmerisourceBergen during fiscal year 2009. Directors who are employees of AmerisourceBergen receive no compensation for their service as directors or as members of Board committees.

 

Non-Employee Director Compensation at 2009 Fiscal Year End

 

 

 

 

 

 

Director Fees.  We pay our non-employee directors an annual retainer and meeting attendance fees in quarterly increments during the course of each year. During fiscal year 2009, the Chairman of the Board received an annual retainer

of $90,000 and each other non-employee director received an annual retainer of $60,000. As explained below, a director may elect to have the annual retainer paid in cash, restricted common stock or options exercisable for common stock or credited to a deferred compensation account. For attending a Board meeting in person, the Chairman of the Board receives $7,500 and each other non-employee director receives $3,000. For attending a committee meeting in person, the Chairmen of the Audit and Corporate Responsibility Committee and the Compensation and Succession Planning Committee receive $5,000, the Chairman of the Governance and Nominating Committee receives $3,000 and other committee members receive $1,500. Telephonic meeting fees are 50% of the in-person meeting fee. A director may elect to have the meeting fees paid in cash or credited to a deferred compensation account. In addition, we provide our directors with a prescription drug benefit. We also reimburse our directors for the cost of transportation, food and lodging in connection with their service as directors.

 

Restricted Stock Awards.  Our non-employee directors receive a grant of restricted stock having a fair value of $50,000 in connection with their initial election to the Board. In most cases, the restrictions on the stock lapse three years after the grant date. A director who retires before the restrictions lapse may, in the Board’s discretion, receive a partial or full distribution of such stock. These grants are made under the AmerisourceBergen Corporation 2001 Restricted Stock Plan.

 

Option Awards.  Our non-employee directors also receive an annual grant of non-qualified options on our common stock having a grant date fair value of $100,000 (or a pro rata portion of the annual stock option grant in the year of their initial election to the Board). The exercise price of all options granted is the closing price of a share of our common stock on the date of grant. Options vest over three years beginning on the first anniversary of the grant date, with one-third of the options granted vesting each year. Vested options may be exercised at any time prior to the tenth anniversary of the grant date unless a director ceases to be a member of the Board. Generally, options will expire one or three years after the director ceases to be a member of the Board, depending on the reason for termination.

 

Deferral and Other Arrangements.  Directors may elect to defer all or any part of the annual retainer and meeting fees and credit the deferred amount to an account under the AmerisourceBergen Corporation 2001 Deferred Compensation Plan. Payment of deferred amounts will be made or begin on the first day of the month after the non-employee director ceases to serve as a director. A director may elect to receive the deferred benefit (i) over annual periods ranging from three to fifteen years and payable in quarterly installments or (ii) in a single distribution. We pay all costs and expenses incurred in the administration of the deferred compensation plan.

 

Directors may also elect to forego 50% or more of their annual cash retainer and receive an enhanced amount of restricted stock or stock options for the cash compensation foregone. If they choose to receive restricted stock, they will receive restricted stock having a value equal to 125% of the cash compensation foregone. If they choose to receive options, they will receive non-qualified stock options having a fair value equal to 150% of the cash compensation foregone.

 

Stock Ownership Guidelines.  We require our non-employee directors to own shares of our common stock to align their interests with those of the stockholders and to provide an incentive to foster our long-term success. In the first and second years after their election to the Board, non-employee directors must own stock equal in value to one or two times the annual retainer, respectively. From and after the third year following their Board election, non-employee directors must own stock equal in value to at least three times the annual retainer. We may take unusual market conditions into consideration when assessing compliance.

 

Has AmerisourceBergen adopted a code of ethics and business conduct that applies to directors, officers and employees?

 

The Board of Directors adopted the AmerisourceBergen Corporation Code of Ethics and Business Conduct, in its current form, in May 2004. It applies to directors and employees, including officers, and is intended to comply with the requirements of Section 303A.10 of the NYSE Listed Company Manual.

 

Any waivers of the application of the AmerisourceBergen Corporation Code of Ethics and Business Conduct to directors or executive officers must be made either by the Board of Directors or the Audit and Corporate Responsibility Committee. We will disclose any such waiver or amendment of the Code of Ethics and Business Conduct promptly on our website.

 

Has AmerisourceBergen adopted a code of ethics for the principal executive officer and principal financial and accounting officers of AmerisourceBergen as required by SEC regulations?

 

We have adopted the AmerisourceBergen Corporation Code of Ethics for Designated Senior Officers in accordance with Item 406 of the SEC’s Regulation S-K. It applies to our President and Chief Executive Officer, Chief Financial Officer and Corporate Controller. Any waiver or amendment of the AmerisourceBergen Corporation Code of Ethics for Designated Senior Officers will be disclosed promptly on our website.

 

Where can stockholders obtain copies of the codes of ethics?

 

We have posted both the AmerisourceBergen Corporation Code of Ethics and Business Conduct and the AmerisourceBergen Corporation Code of Ethics for Designated Senior Officers under the Investors section of our Internet website at www.amerisourcebergen.com. A copy of the AmerisourceBergen Corporation Code of Ethics for Designated Senior Officers has also been filed with the SEC as an exhibit to our periodic reports under the Securities Exchange Act of 1934, as amended.

 

Has AmerisourceBergen adopted corporate governance principles for the Board of Directors?

 

The Board of Directors has adopted the AmerisourceBergen Corporation Corporate Governance Principles, which are intended to comply with the requirements of Section 303A.09 of the NYSE Listed Company Manual.

 

The corporate governance principles for the Board, together with the charters of the Board committees, provide the framework for the governance of AmerisourceBergen. The Board reviews and updates the corporate governance principles and the committee charters from time to time to reflect corporate governance best practices. The corporate governance principles address a variety of governance issues, including:

 

 

 

The corporate governance principles are posted under the Investors section of our website at www.amerisourcebergen.com.

 

Has the Board adopted a majority vote standard for director elections and a director resignation policy?

 

In November 2007, the Board adopted amendments to our bylaws and corporate governance principles to provide for a majority vote standard for the election of directors. Under the majority vote standard, each director must be elected by a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote. A “majority of the votes cast” means that the number of votes cast “for” a candidate for director must exceed the number of votes cast “against” that director. A plurality voting standard will apply instead of a majority voting standard if:

 

 

Under Delaware law, if an incumbent nominee for director in an uncontested election does not receive the required votes for reelection, the director remains in office until a successor is elected and qualified. Our bylaws and corporate governance principles require each director nominee to tender an irrevocable resignation prior to the applicable meeting of stockholders and include post-election procedures in the event an incumbent director does not receive the required votes for reelection, as follows:

 

 

Has the Board determined which of the directors are independent?

 

The Board has determined that, except for Mr. Yost, all of the directors and director nominees are independent. Our corporate governance principles require us to maintain a minimum of 70% independent directors on our Board. If the three director nominees are elected at the 2010 Annual Meeting of Stockholders, seven out of eight directors then serving, or approximately 90% of the Board, will be independent.

 

The Board has adopted guidelines in our corporate governance principles to assist it in making independence determinations, which meet or exceed the independence requirements set forth in the NYSE listing standards. These guidelines are contained in Section 5 of our corporate governance principles, which are available to stockholders under the Investors section of our website at www.amerisourcebergen.com. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with AmerisourceBergen.

 

With the assistance of legal counsel to the company, the Board reviewed the applicable legal standards for director and Board committee member independence and our corporate governance standards. As a result of this review, the Board has determined that each of the following directors is independent: Charles H. Cotros, Richard W. Gochnauer, Richard C. Gozon, Edward E. Hagenlocker, Jane E. Henney, M.D., Michael J. Long and Henry W. McGee. J. Lawrence Wilson, who retired from the Board on June 1, 2009, was also determined to be independent prior to his retirement from the Board. The Board has also determined that, as required by their charters, all members of the Audit and Corporate Responsibility, Compensation and Succession Planning and Governance and Nominating Committees are independent. In addition to the

independence standards in our corporate governance principles, members of the Audit and Corporate Responsibility Committee may not accept directly or indirectly any consulting, advisory or other compensatory fee from us other than their directors’ compensation. All members of the Audit and Corporate Responsibility Committee satisfy this additional SEC and NYSE independence requirement for audit committee members. We also apply this additional independence standard to the Compensation and Succession Planning Committee and the Governance and Nominating Committee and their members satisfy this standard. In undertaking its review, the Board considered that some of our directors serve on the board of directors of companies for which we perform (or may seek to perform) drug distribution and other services in the ordinary course of business.

 

Where can stockholders find our corporate governance documents?

 

Our corporate governance principles and the charters of the Executive and Finance, Audit and Corporate Responsibility, Compensation and Succession Planning and Governance and Nominating Committees have been posted under the Investors section of our website at www.amerisourcebergen.com.

 

How does the Governance and Nominating Committee identify and evaluate director nominees?

 

Director nominees should:

 

 

The Governance and Nominating Committee seeks to identify candidates who bring diverse experience at policymaking levels in business, management, marketing, finance, technology, human resources, communications, education, government, healthcare and in other areas that are relevant to our activities.

 

Additionally, director nominees should have sufficient time to effectively carry out their duties. The President and Chief Executive Officer of AmerisourceBergen may serve on the board of no more than one other public company. Other director nominees may serve on the boards of no more than four other public companies.

 

What process should a stockholder follow to propose nominees for consideration by the Governance and Nominating Committee?

 

Stockholders may propose nominees for consideration by the Governance and Nominating Committee by submitting the names, appropriate biographical information and qualifications in writing to: John G. Chou, Secretary, AmerisourceBergen Corporation, 1300 Morris Drive, Chesterbrook, Pennsylvania 19087.

 

In considering any nominee proposed by a stockholder, the Governance and Nominating Committee will reach a conclusion based on the criteria described above. After full consideration, the stockholder proponent will be notified of the decision of the committee.

 

In order to be considered by the Governance and Nominating Committee for the Annual Meeting of Stockholders to be held in 2011, the name of the proposed nominee and supporting biographical information and description of the qualifications of the proposed nominee must be received by us no later than September 24, 2010.

 

What am I voting on?

 

You are voting on a proposal to amend and restate our Amended and Restated Certificate of Incorporation (our “certificate of incorporation”) to adopt a majority vote requirement in lieu of all supermajority vote requirements for stockholder action contained in our certificate of incorporation.

 

Our Board of Directors has unanimously approved an amendment to our certificate of incorporation to replace all supermajority vote requirements for stockholder action with a majority vote requirement, and recommends that the stockholders vote in favor of the amendment. In deliberating on the amendment, our Board of Directors considered the evolving standards of corporate governance and the concerns of our stockholders.

 

The supermajority vote requirements in our certificate of incorporation and bylaws were implemented in connection with our formation as a corporation. These heightened voting standards were designed to require broad stockholder consensus to effect corporate governance changes and to protect minority stockholder interests. In recent years, however, investors and others have come to believe that supermajority voting provisions conflict with the principles of good corporate governance because they can, either in appearance or practice, be viewed as making it more difficult for stockholders to effect change and to participate in decisions that are properly within the realm of stockholders under state corporate law. A majority voting threshold for stockholder action can increase the ability of stockholders to participate in corporate governance. Our Board of Directors also considered current investor voting guidelines, stockholder preferences and the practices of our peer companies. After evaluating these considerations, the Governance and Nominating Committee recommended the elimination of all supermajority vote requirements in our certificate of incorporation and bylaws, and the Board of Directors agreed and unanimously determined that the elimination of these provisions and the adoption of a majority vote standard is advisable and in the best interests of the company and our stockholders.

 

The full text of our certificate of incorporation, as amended by the proposed amendment and restatement, is attached to this Proxy Statement as Appendix A, and is incorporated herein by reference. You are encouraged to read the entire text of our certificate of incorporation.

 

What provisions of our certificate of incorporation will be amended?

 

Our certificate of incorporation currently requires the affirmative vote of 80% of the voting power of all of our outstanding shares to remove a director for cause and to amend our bylaws at an annual or special meeting of stockholders. In addition, unless the proposed amendment has been declared advisable by at least 75% of our Board of Directors, the affirmative vote of 80% of all outstanding shares of our stock then entitled to vote generally in the election of directors is currently required in order to amend, alter or repeal the provisions in our certificate of incorporation relating to the following matters:

 

 

How will our certificate of incorporation be changed?

 

If the stockholders approve the amendment and restatement of our certificate of incorporation, all supermajority vote requirements in our certificate of incorporation will be replaced with a majority vote requirement. In particular:

 

 

Why is the certificate of incorporation being restated in its entirety?

 

Since 2001, we have made several amendments to our certificate of incorporation. We would like to amend and restate our certificate of incorporation so that it integrates into a single document all of the prior amendments to our certificate of incorporation, together with the amendment being proposed today.

 

When will the amendment be effective?

 

If approved by the stockholders at the 2010 Annual Meeting of Stockholders, the amendment and restatement of our certificate of incorporation will become effective upon the filing of an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware. We intend to file the amended and restated certificate of incorporation as soon as practicable after the 2010 Annual Meeting of Stockholders.

 

Will the Board of Directors amend the bylaws in a manner consistent with the amendment to our certificate of incorporation?

 

Our Board of Directors has approved the amendment of our bylaws in order to adopt a majority vote standard that is consistent with the amendment to our certificate of incorporation. If the amendment to our certificate of incorporation is approved by our stockholders, our Board of Directors intends to adopt the amendment to our bylaws at a meeting to be held immediately following the 2010 Annual Meeting of Stockholders. The changes to our bylaws will be effective upon adoption.

 

How many votes are needed for this proposal and how are the votes counted?

 

Because at least 75% of the Board of Directors has approved the proposed amendment and restatement of our certificate of incorporation, approval of the proposed amendment and restatement of our certificate of incorporation will require the affirmative vote of the holders of a majority of shares of our common stock outstanding. Abstentions and broker non-votes will be counted in the tabulation of the votes cast by stockholders on the proposal and will have the effect of a negative vote.

 

There are no appraisal or similar rights of dissenters under Delaware law with respect to the amendment and restatement of our certificate of incorporation.

 

How does the Board of Directors recommend that I vote?

 

We recommend that you vote For the amendment and restatement of our certificate of incorporation to replace all supermajority vote requirements with a majority vote requirement.

 

The Board of Directors has determined that Mr. Hagenlocker is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K. Mr. Hagenlocker serves as Chairman of the Audit and Corporate Responsibility Committee.

 

The Audit and Corporate Responsibility Committee consists of the four directors named below. All of the committee members are independent (as independence is defined in Section 303A of the NYSE Listed Company Manual and our corporate governance principles) and all of the members are financially literate.

 

The committee reviewed and discussed with AmerisourceBergen’s management and its independent registered public accounting firm (i) the audited financial statements contained in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009 and (ii) the company’s internal control over financial reporting. AmerisourceBergen’s management has the primary responsibility for the company’s financial statements and its financial reporting and control processes and procedures, including its internal control over financial reporting and its disclosure controls and procedures. AmerisourceBergen’s management has represented to the Audit and Corporate Responsibility Committee that the financial statements contained in the company’s fiscal year 2009 Annual Report on Form 10-K Report were prepared in accordance with U.S. generally accepted accounting principles and that the company’s internal control over financial reporting was effective as of September 30, 2009 (based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission).

 

The committee discussed with the company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles, the firm’s judgments as to the quality, not just the acceptability, of the company’s accounting principles, the reasonableness of significant judgments reflected in the financial statements and the clarity of disclosures in the financial statements as well as such other matters as are required to be discussed with the committee under the standards of the Public Company Accounting Oversight Board (United States).

 

The committee discussed with the company’s independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. In addition, the committee discussed with the independent registered public accounting firm the firm’s independence from the company and its management, including the matters in the written disclosures and letter which were received by the committee from the independent registered public accounting firm as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence.

 

The committee also discussed with the company’s independent registered public accounting firm, the firm’s audit of the effectiveness of the company’s internal control over financial reporting, as of September 30, 2009.

 

Based on the reviews and discussions referred to above, the Audit and Corporate Responsibility Committee recommended to the Board of Directors that the audited financial statements be included in AmerisourceBergen’s Annual Report on Form 10-K for fiscal year 2009.

 

AUDIT AND CORPORATE RESPONSIBILITY

COMMITTEE

 

Edward E. Hagenlocker, Chairman

Charles H. Cotros

Jane E. Henney, M.D.

Henry W. McGee

 

The Audit and Corporate Responsibility Committee’s policy is to pre-approve all audit services and all non-audit services that the company’s independent registered public accounting firm is permitted to perform for the company under applicable federal securities regulations. As permitted by the applicable regulations, the committee’s policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent registered public accounting firm and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the committee. Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.

 

During the fiscal years ended September 30, 2009 and 2008, Ernst & Young LLP, AmerisourceBergen’s independent registered public accounting firm, billed the company the fees set forth below in connection with services rendered by the independent registered public accounting firm to the company:

 

 

Audit fees consisted of fees for the audit of AmerisourceBergen’s annual financial statements, consultation concerning financial accounting and reporting standards and consultation concerning matters relating to Section 404 of the Sarbanes-Oxley Act of 2002, review of quarterly financial statements as well as services normally provided in connection with statutory and regulatory filings or engagements, comfort letters, consents and assistance with and review of company documents filed with the SEC. Audit fees also included the fees for the audit of the effectiveness of the company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.

 

Audit-related fees consisted of fees for assurance and related services, including employee benefit plan audits and due diligence related to acquisitions. Audit-related fees also included fees for the audit during fiscal year 2008 of financial statements for PMSI, our former workers’ compensation business, which we divested in October 2008.

 

Tax fees consisted primarily of fees for tax compliance, tax advice and tax planning services.

 

Other fees consisted of subscription fees for Internet-based professional literature.

 

Our Audit and Corporate Responsibility Committee reviewed and approved all fees charged by Ernst & Young LLP in accordance with the policy described above and monitored the relationship between audit and permissible non-audit services provided. The policy is intended to ensure that the fees earned by Ernst & Young are consistent with the maintenance of the independent registered public accounting firm’s independence in the conduct of its auditing functions.

 

What am I voting on?

 

You are voting on the ratification of the appointment of Ernst & Young LLP as AmerisourceBergen’s independent registered public accounting firm for the fiscal year ending September 30, 2010. The Audit and Corporate Responsibility Committee of the Board of Directors has appointed Ernst & Young LLP to serve as our independent registered public accounting firm for fiscal year 2010. Although our governing documents do not require the submission of the appointment of AmerisourceBergen’s independent registered public accounting firm to the stockholders for approval, the Board considers it desirable that the stockholders ratify the appointment of Ernst & Young LLP. Should the

stockholders not ratify the appointment of Ernst & Young LLP as AmerisourceBergen’s independent registered public accounting firm for the fiscal year ending September 30, 2010, the Audit and Corporate Responsibility Committee will investigate the reasons for the rejection by the stockholders and will reconsider the appointment of Ernst & Young LLP.

 

What services will the independent registered public accounting firm provide?

 

Audit services provided by Ernst & Young LLP for fiscal year 2010 will include the examination of the consolidated financial statements of AmerisourceBergen and services related to periodic filings made with the SEC. Audit services for fiscal year 2010 also will include the audit of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Additionally, Ernst & Young LLP may provide audit-related, tax and other services comparable in nature to the services performed in fiscal years 2008 and 2009, as described above under the heading Independent Registered Public Accounting Firm’s Fees.

 

Will representatives of the independent registered public accounting firm be present at the 2010 Annual Meeting of Stockholders?

 

Representatives of Ernst & Young LLP are expected to be present at the 2010 Annual Meeting of Stockholders. Such representatives will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions.

 

How does the Board of Directors recommend that I vote?

 

We recommend that you vote For the ratification of the appointment of Ernst & Young LLP as AmerisourceBergen’s independent registered public accounting firm for fiscal year 2010.

 

General

 

The members of the Compensation and Succession Planning Committee, referred to as the Committee, are Charles H. Cotros (Chairman), Richard C. Gozon, Michael J. Long and Henry W. McGee. The Board of Directors has determined that each of them is independent in accordance with the standards set forth in our corporate governance policies and those applicable to companies listed on the NYSE. None of them has ever been an officer or employee of the company, is or was a participant in any related person transaction in 2009 (see page 43 for a description of our policy on related person transactions), or is an executive officer of another entity at which one of our executive officers serves on the board of directors.

 

The Committee is responsible for our executive compensation program and review of succession planning. It reviews and approves compensation for our executives, including the named executive officers listed in the Summary Compensation Table on page 32. The Committee also oversees our employee pension, long-term incentive, savings, health and welfare plans. The Committee’s duties and responsibilities under its charter are described on page 9. The Committee reviews its charter annually. The Committee has delegated the administration of our pension and benefit plans to an internal benefits committee, composed of senior finance, human resources and legal executives.

 

Processes and Procedures

 

Meetings.  The Committee met six times in 2009. The Chairman, in consultation with the other Committee members and with AmerisourceBergen management, prepares agendas, which address an annual calendar of topics and other matters requiring the attention of the Committee. The Committee meets without management present, whenever necessary to discuss matters it deems appropriate.

 

Role of External Compensation Consultant.  The Committee’s charter provides that the Committee has sole authority to retain or terminate any consulting firm engaged to advise it in the evaluation of compensation for executive officers, including the chief executive officer. In addition, any consulting firm retained by the Committee to assist with executive compensation must be independent, although any such firm will not be disqualified if it has received no more than $100,000 in the aggregate for the performance of any other services for us (including services for management, another Committee or

the Board) during the fiscal year in which the firm is providing executive compensation-related services. The Committee has engaged Towers Perrin to serve as its external compensation consultant, subject to annual review.

 

During 2009, Towers Perrin advised us on executive compensation matters, plan design and industry trends and practices. They prepared analyses and recommendations for the Committee and the Board relating to all aspects of the compensation of our executives, including pay recommendations for Mr. Yost. Towers Perrin advised the Committee on market practices regarding the treatment of equity incentive awards after retirement, and made recommendations on changes to our management incentive plan. Towers Perrin also reviewed our benchmarking methodology and market positioning of the compensation provided to our named executive officers and other senior management. In addition to meeting with the Committee without management present, the external compensation consultants met privately with members of the Committee from time to time to plan for Committee meetings and discuss executive compensation matters.

 

In 2009, Towers Perrin also received approximately $20,000 in compensation from us for the provision of actuarial services in connection with retirement plans that we maintain for former officers of one of our predecessor companies.

 

Role of Executive Officers and Management.  The chief executive officer gives the Committee a performance assessment and, taking into account the recommendation of our senior vice president, human resources, and the compensation consultant, a pay recommendation for senior management, including each of the other named executive officers. Our senior vice president, human resources, in consultation with the chief executive officer and the compensation consultant, also formulates and makes recommendations on matters of compensation philosophy and plan design. The compensation consultant provides competitive data concerning Mr. Yost’s pay in comparison to the peer group. The Committee considers the recommendations and competitive data and makes decisions, as it deems appropriate, on compensation for the named executive officers based on its assessment of individual performance and achievement of goals. Our chief executive officer, senior vice president, human resources, and senior vice president, general counsel and secretary generally attend the Committee meetings, but they are not present when the Committee meets in executive session and they do not make recommendations regarding their own compensation.

 

The Board of Directors establishes the compensation of directors upon the recommendation of the Governance and Nominating Committee.

 

Overview

 

AmerisourceBergen is one of the largest pharmaceutical services companies in the world. We operate in a highly competitive business environment. Our compensation program is designed to pay our executives fairly and to link compensation with the attainment of our financial and strategic goals. We believe that employees will be best motivated to achieve these goals by making a portion of their compensation dependent upon corporate performance and stockholder returns, and that executives should have a greater portion of their compensation at risk than other employees. Accordingly, a substantial portion of the compensation provided to our named executive officers is tied to our future performance.

 

Our long-term financial goals are to grow diluted earnings per share from continuing operations approximately 15 percent annually by growing operating revenues in line with pharmaceutical market growth, expanding operating margins and generating free cash flow that approximates net income. Our specific financial targets for each fiscal year may vary to some extent from our long-term goals based on industry trends and market conditions. Our compensation program is designed to provide total direct compensation (base salary, cash bonus and long-term incentive) in the median range for executives at the companies in our peer group when we deliver targeted financial results.

 

Our results from continuing operations in fiscal year 2009 reflected strong performance and resiliency in our business. Despite a difficult economy, our revenue grew by 2% to $71.8 billion. We generated free cash flow of $637.9 million and income from continuing operations of $511.9 million. We achieved a return on invested capital (ROIC) that exceeded our weighted average cost of capital. Diluted earnings per share from continuing operations (EPS) were up by 17% to $1.69 per share. Our distribution business, and our specialty distribution business in particular, demonstrated solid growth this past year. We returned a substantial amount of cash to our stockholders in fiscal year 2009 through

$62.7 million in dividends and $450.4 million in stock repurchases. We had outstanding expense and working capital management in fiscal year 2009. We believe that the leadership and demonstrated discipline of our management team will serve us well in the coming year. Under our bonus program, we exceeded our target goals for both fiscal 2009 EPS and ROIC at the corporate and business unit levels. As a result, bonus payments to our named executive officers and to employees generally, which are paid out largely based on the attainment of specified financial goals, were above the target established for fiscal year 2009.

 

Management and the Board regularly evaluate the major risks to the company. The Committee considers how risks taken by management could impact the value of executive compensation. A substantial component of the compensation of our named executive officers is weighted to the achievement of corporate performance goals. For example, approximately 28% to 43% of the fiscal year 2009 annual compensation of our named executive officers is in the form of stock options and restricted stock (or restricted stock units), which provide an incentive to achieve favorable long-term performance. Our executives are required to comply with our stock ownership guidelines, which encourages a focus on long-term growth. In addition, Mr. Yost also receives compensation under a 3-year long-term incentive plan. Our Annual Incentive Plan, or AIP, provides an incentive to achieve annual performance targets, and approximately 32% to 41% of the fiscal year 2009 annual compensation of our named executive officers was awarded through this cash bonus program. The AIP does not provide payment for poor performance, regardless of whether the failure to achieve target was due to the occurrence of an event within or outside of management’s control. Moreover, there is a maximum limit on the amount of cash bonus that an executive may receive under the AIP, even for spectacular performance. This limit is designed to moderate the level of risk that employees are encouraged to take in order to achieve their financial performance goals. We believe our executive pay is reasonable and provides appropriate incentives to our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions.

 

Role of the Compensation and Succession Planning Committee

 

The Committee reviews and makes decisions about executive compensation policies and plans. The Committee determines the amount of base salary, cash bonus and long-term incentive awarded to our executives. The Committee evaluates the named executive officers’ performance and determines their compensation in light of the objectives of our executive compensation program. Our chief executive officer and senior vice president, human resources, assist the Committee in reaching compensation decisions with respect to the named executive officers, but do not participate in decisions regarding their own compensation. The compensation consultant provides information and analysis to assist the Committee in making decisions about our chief executive officer’s compensation and executive compensation generally.

 

Executive Compensation Policy and Objectives

 

We seek to employ and retain talented senior executives who will help us fulfill our business goals, meet the needs of our customers and suppliers and contribute to our long-term success. Our executive compensation program is designed to link pay with the achievement of our annual and long-term business goals.

 

The Committee considers the following objectives in setting executive compensation:

 

 

Benchmarking Process

 

We consider market pay practices when setting executive compensation. Benchmarking helps the Committee assess whether our level of executive pay is appropriate when compared to industry standards. We generally conduct a detailed market review of executive pay to evaluate each element of pay and benefit competitiveness, review pay practices (such as pay mix, incentive plan leverage, performance measurement and weighting) and compare performance against our peer group. In light of recent economic developments and market changes with respect to executive pay, we asked Towers

Perrin to conduct a detailed market review of our executive pay in 2009. The Committee considered peer group proxy statement data for similar positions when benchmarking compensation for Messrs. Yost, DiCandilo and Collis and reviewed published compensation survey data when reviewing compensation for Ms. Fisher, Mr. Chou and other members of senior management. When assessing pay levels, the Committee also reviews the relative positioning of our named executive officers with each other. In 2009, Towers Perrin concluded that our overall competitive posture with respect to executive pay remained similar to our positioning in the 2008 assessment of executive pay.

 

Our peer group is composed of companies with business models and operations comparable to our own, including our two largest direct competitors. Most companies in our peer group are similar in size to AmerisourceBergen, and some of them also operate in the healthcare industry. Their revenues fall within a range of approximately 50% to 200% of our expected revenues. We believe this mix of companies reflects the type and complexity of business risks managed by our executives. We also believe that we compete with many of these companies for executive talent. The 2009 peer group was comprised of the following 15 companies:

 

2009 Peer Group

 

 

Our compensation program targets various levels relative to our peer group for each element of executive pay as follows:

 

Target Percentile Compensation for Fiscal Year 2009

 

 

For years in which we meet our financial goals, our program is intended to pay base salary in the range of the 35^th percentile, total cash compensation (base salary and cash bonus) in the range of the 50^th percentile, and total direct compensation (base salary, cash bonus and long-term incentive) at or above the median (50^th percentile) of our peer group. If we exceed our financial goals, depending on the extent of our success, total direct compensation could reach the 75^th percentile of our peer group. In fiscal year 2009, the base salaries and total cash compensation of our named executive officers were at or fell below our target percentiles, with one exception where total cash compensation fell substantially below target. Despite strong financial performance in fiscal year 2009, total direct compensation for each of our named executive officers fell below and, in some cases, substantially below our targeted 50^th percentile for total direct compensation in fiscal year 2009. This shortfall as compared to our target pay philosophy is due, in part, to the fact that the target opportunity of our long-term incentive awards is generally lower than that of our peers. We took some action to address the difference between our compensation philosophy and actual pay for the most affected named executive officers. In November 2007, we implemented a performance-based long-term incentive award for Mr. Yost, in part to provide him with the opportunity to bring his total direct compensation closer to the median for chief executive officers in our peer group. In November 2008, we increased, where necessary, base salary and bonus opportunity available to our named executive officers for fiscal year 2009 to bring total cash compensation more in line with our target if we meet our financial goals.

 

Components of the Executive Compensation Program

 

Our executive compensation program consists of three components — base salary, cash bonus and long-term incentive. This represents a mix of fixed pay and short-and long-term incentives. A significant portion of each of our named executive officers’ pay is at risk or subject to our future performance. We believe that emphasizing incentive pay helps our executives to focus on the financial and strategic goals that create profitability and value for our stockholders.

 

Base Salary.  Base salary is a fixed component of pay that is determined yearly in advance. We aim to provide base salary that is reasonable for a company of our size and complexity, and sufficiently competitive to attract and retain

talented individuals. For the named executive officers, we target base salary in the 35th percentile for similar positions in our peer group. Base pay is intended to provide a regular stream of income and financial security for our executives. By providing base salary below our peer median, we place greater emphasis on incentive compensation for our named executive officers.

 

The Committee has historically reviewed executive performance and pay each November. The Committee determines whether an executive merits a salary increase and, if so, how much. Our executives are evaluated on job performance, changes in duties, scope and responsibilities and expected future contributions, and their pay is evaluated with reference to our peer group. In November 2008, the Committee approved the following salary increases for our named executive officers for fiscal year 2009:

 

 

These salary increases reflected a positive performance review for all of the named executive officers. In August 2009, we reorganized our senior management team. Mr. Collis was named Executive Vice President and President of AmerisourceBergen Drug Corporation and, in connection with the responsibilities associated with his new role, was awarded an additional 8% salary increase beginning in October 2009.

 

We are in the process of transitioning to a single performance review cycle for the entire workforce. Going forward, we will review salary and determine merit increases, if any, for the named executive officers in May of each year. Accordingly, none of our named executive officers received a salary increase in November 2009.

 

Cash Bonus.  Cash bonuses depend upon the achievement of pre-established performance goals for the fiscal year. We use cash bonuses to motivate executives to improve financial performance year-over-year and to reward executives who deliver targeted financial results in a particular year. All executives and other eligible employees participate in the AIP, our annual cash bonus program. In fiscal year 2009, our named executive officers were eligible to receive target cash bonuses ranging from 85% to 120% of their salary if we met our financial performance goals.

 

The Committee establishes the performance goals, incentive levels and bonus maximums for each of our named executive officers under our AIP. When making its determinations, the Committee reviews the financial and strategic plan prepared by management for the Board. It also reviews recommendations on incentive levels and bonus maximums prepared by the compensation consultant and our human resources department for the Committee’s use. The Committee makes its own assessment regarding the appropriate goals and target incentives for executives and then assigns a relative weighting to each performance measure. These weightings may differ for each named executive officer.

 

For each financial performance measure, there is a target and threshold. Target is the expected level of performance. Threshold refers to the minimum acceptable level of performance. We do not pay bonus if our performance is at or below the threshold. Executives may receive an amount in excess of their target bonus (up to an additional 50% of the target incentive level) if our performance exceeds our financial goals for the fiscal year. An individual’s actual bonus consists of the amount determined for exceeding the thresholds and, if applicable, an amount for exceeding the targets.

 

In November 2008, the Committee approved performance measures for fiscal year 2009. Corporate financial performance measures for fiscal year 2009 were EPS of $1.59 (as adjusted to reflect our two-for-one stock split in June 2009) and ROIC of 12.3%. The fiscal 2009 cash bonuses of Messrs. Yost, DiCandilo and Chou and Ms. Fisher were based on the achievement of corporate EPS and ROIC and leadership goals. The fiscal 2009 cash bonus of Mr. Collis was based on the achievement of Specialty Group EBIT and ROIC, corporate EPS and ROIC and leadership goals. ROIC equals after tax operating income divided by invested capital. ROIC measures how well we generate cash flow relative to the capital we invest in our business, including not only the cost of the assets employed but also the cost to acquire those assets. The Committee chose these measures because they are the key metrics used by management to set business goals and evaluate financial results. In addition, we communicate our expectations about future business performance to investors by using

an EPS range for each fiscal year. We generally set EPS targets to reflect our long-term goal of growing EPS as close to 15% as is realistic annually, while allowing for reasonable flexibility based on the impact of industry trends, other market factors and special items from year to year. The corporate financial performance measures apply to all of the named executive officers. The table below shows corporate financial performance measures and actual performance for fiscal year 2009 (as adjusted to reflect our two-for-one stock split in June 2009):

 

 

 

 

The majority of a business unit leader’s bonus is tied to business unit performance. We believe that this mix, which emphasizes business unit performance, appropriately links pay to operating responsibility. We select performance goals that generally reflect, at a minimum, greater than 10% annual earnings before interest and taxes (EBIT) growth in our business units each fiscal year. We establish business unit ROIC targets based on the proportionate contribution from the particular business that is necessary to achieve the overall corporate ROIC target for the fiscal year, which was 12.3% in fiscal year 2009. The Committee intends the business unit performance goals to be challenging. Both our Specialty Group and our drug distribution business, which we refer to as ABDC, have not achieved target on one or both of the financial performance measures applicable to any named executive officer two times in the last five fiscal years.

 

Target and actual fiscal year 2009 cash bonuses for our named executive officers were as follows:

 

 

We delivered very strong financial performance in fiscal year 2009. We exceeded target for both our corporate EPS and ROIC goals. As a result, bonuses to our named executive officers were above the target incentive established for them. We link a substantial majority of the bonus to the achievement of corporate performance measures so that bonus payments to our most senior executives reflect our overall financial results for the year. Accordingly, over 80% of the bonus payments to Messrs. Yost and DiCandilo depended upon the achievement of corporate performance goals, with EPS weighted at 50% and 49% and ROIC weighted at 33% and 32% of the total target incentive for Mr. Yost and Mr. DiCandilo, respectively. The remaining portions of their respective bonus payments, 17% for Mr. Yost and 19% for Mr. DiCandilo, were tied to the attainment of individual leadership goals. The Committee’s assessment of whether a particular individual met his or her leadership goal can involve both objective and subjective determinations, depending on the specific goal. The Committee determined that Messrs. Yost and DiCandilo had met their leadership goals for 2009. Mr. Yost led the company to record revenues and EPS from continuing operations in fiscal year 2009. He successfully implemented expense management and cost reduction initiatives, which have served us well in light of the tightening economy, and avoided material regulatory failure. Mr. Yost also developed a comprehensive succession plan. Mr. DiCandilo successfully managed financial reporting and compliance and closed the fiscal year without any material weaknesses. He avoided material regulatory failure and maintained our investment grade rating during 2009. For Ms. Fisher and Mr. Chou, 70% of the bonus payment is tied to the achievement of corporate performance measures (with EPS weighted at 42% and ROIC weighted at 28% of the total target incentive) and 30% of the bonus depends upon the achievement of leadership goals. This balance reflects their responsibilities for our human resources and legal departments, respectively. The Committee determined that Ms. Fisher and Mr. Chou met their leadership goals. Ms. Fisher implemented

comprehensive training and associate engagement programs and avoided material regulatory failure. Mr. Chou maintained legal and ethical compliance in fiscal year 2009, avoiding any material regulatory failure, and successfully implemented departmental succession planning and training.

 

As Executive Vice President of AmerisourceBergen and President of the AmerisourceBergen Specialty Group during fiscal year 2009, Mr. Collis received a bonus award that was tied to a greater extent to the performance of the Specialty Group. Fiscal year 2009 bonus for Mr. Collis was tied 25% to corporate EPS, 5% to corporate ROIC, 50% to Specialty Group EBIT, 10% to Specialty Group ROIC and 10% to leadership goals. In fiscal year 2009, our Specialty Group exceeded its EBIT and ROIC targets. The Committee determined that Mr. Collis met his leadership goals, which included the charge to develop and execute structural changes within the Specialty Group to streamline its organization, reduce costs and improve its integration within our company. Mr. Collis also avoided material regulatory failure within the Specialty Group, which was his area of responsibility during fiscal year 2009.

 

The Committee has discretion to give a bonus even though the pre-established performance goals have not been met. Historically, the Committee has only exercised this discretion in unusual circumstances where a named executive officer has made significant contributions that were not reflected in the financial performance measures for the fiscal year. The Committee did not award any discretionary bonus to named executive officers for fiscal year 2009.

 

In November 2009, the Committee set fiscal year 2010 performance measures for our named executive officers. These measures include EPS and ROIC at the corporate level for each of the named executive officers and, in addition in the case of Mr. Collis, ABDC pre-tax profit and, to a lesser extent, ABDC gross profit. Pre-tax profit under the AIP is measured by determining a business unit’s EBIT minus an intercompany charge based on the business unit’s committed capital. We believe that the specific business unit measures for Mr. Collis, which focus on ABDC pre-tax profit and, to a lesser extent, ABDC gross profit, will serve as a meaningful way to create incentives for ABDC business unit performance for fiscal year 2010. The Committee also established leadership goals for each of the named executive officers. Fiscal year 2010 target incentive levels for the named executive officers range from 100% to 120% of base salary, with the opportunity for each named executive officer to earn an additional 50% of his or her target incentive level (or a maximum bonus, depending on the target incentive level, ranging from 150% to 180% of base salary) if we exceed our financial performance goals. A portion of each named executive officer’s bonus is tied to the attainment of individual leadership goals, which may include avoiding material regulatory or legal failure within the executive’s area of responsibility, executing specified business plans, facilitating organizational integration, developing succession plans and/or implementing corporate programs to address matters such as diversity, leadership development or employee satisfaction.

 

Long-Term Incentive.  We use equity incentive awards of stock options and restricted stock to align our management’s interests with those of our stockholders and to motivate continued efforts to achieve favorable financial results over the long-term. We believe that linking compensation to stock price appreciation encourages our management team to use their talent and best efforts to realize corporate goals.

 

Each February, the Committee reviews and approves the number of long-term incentive awards to each named executive officer under our Management Incentive Plan or MIP. In making its decisions, the Committee reviews Mr. Yost’s recommendations, evaluates each individual’s position and responsibilities, job performance and expected future contributions to the company. Mr. Yost does not make any recommendations to the Committee about himself. The value of long-term incentive awards made to our named executive officers is also determined with reference to the total direct compensation made to the executive officers holding similar positions in our peer group.

 

Annual equity grants consist of a mix of stock options and restricted stock (or restricted stock units). This mix of stock options and restricted stock (or restricted stock units) aligns our practices more closely with the companies with whom we compete for executive talent. The value of the annual equity grants to each executive is divided as follows: approximately 75% in the form of stock options and approximately 25% in the form of restricted stock (or restricted stock units). We believe that this mix provides our executives with an incentive for favorable long-term performance at a reasonable cost to the company. The use of equity incentives also supports our executive stock ownership requirements.

 

Stock options and restricted stock are subject to vesting and forfeiture provisions, described on page 42. For existing grants, restricted stock is forfeited if the executive leaves the company prior to vesting, except by reason of death, disability or an involuntary termination of employment within two years of a change in control of the company and unvested stock options are forfeited if the executive leaves the company for any reason other than an involuntary

termination of employment within two years of a change in control of the company. In 2008, we amended the MIP to change the treatment of awards after retirement to support the plan’s focus on building value for the long-term. Retirement is defined as a voluntary termination of employment at age 62 with at least 60 months of continuous service. As a result of the changes, for equity awards made in 2009 and beyond, when an executive retires, unvested awards would continue to vest according to their schedule and vested options would remain exercisable for the length of their original term (which is currently expected to be seven years), subject to forfeiture and re-payment provisions for misconduct or competitive behavior that is detrimental to the company. We believe that these requirements support our goal of retaining executives and aligning individual performance with our long-term growth. In addition, we believe that the post-retirement provisions for future awards provide a more appropriate incentive for our executives, particularly those near retirement, to continue to focus on our long-term performance and, with the forfeiture and re-payment provisions, an added measure of protection against detrimental behavior by former employees.

 

In fiscal year 2009, the named executive officers in the aggregate received options to purchase 610,500 shares of our common stock and were awarded 67,836 restricted shares (or restricted stock units) of our common stock. These awards represented approximately 17% of the stock options and restricted stock (or restricted stock units) granted to our management and other employees as a whole in fiscal year 2009. Because of the different treatment between restricted stock and restricted stock units for federal income tax purposes that results when an individual has attained retirement age but continues to work with us, we awarded Mr. Yost and Ms. Fisher restricted stock units in lieu of restricted stock in fiscal year 2009. Mr. Yost and Ms. Fisher received 20,834 and 5,834 restricted stock units, respectively. A restricted stock unit is a grant of shares of our common stock that is delivered at the time and to the extent that the shares vest. Restricted stock units vest and are then delivered according to the same schedule as shares of our restricted stock.

 

In November 2007, the Committee approved a performance-based long-term incentive award for Mr. Yost under the MIP. Payment of the cash incentive depends upon the achievement of specified EPS and total stockholder return (TSR) goals over three one-year periods, beginning October 1, 2007 and ending September 30, 2010. The Committee implemented this award for several reasons. First, Mr. Yost’s total direct compensation falls below our target of the median for total direct compensation of chief executive officers in our peer group. If the specified corporate goals are attained, payment of the cash incentive will bring Mr. Yost’s total direct compensation in line with our target. Second, in accordance with our stated objective of linking the compensation of executives who drive corporate financial results to the achievement of those results, the award provides Mr. Yost with an additional incentive to achieve superior financial results and growth for our stockholders over the long-term. We believe that the use of EPS and TSR goals provides a clear link between Mr. Yost’s compensation and the creation and growth of stockholder value. Finally, the award promotes retention, as any payout is generally subject to Mr. Yost’s continuous employment throughout the performance period.

 

The award provides Mr. Yost with the opportunity to earn a target cash incentive of $900,000 annually (totaling $2,700,000 over the three-year term of the award) if we meet target EPS and TSR each fiscal year during the performance period. The award could pay up to a maximum amount of $1,350,000 annually (totaling $4,050,000 over the three-year term of the award) if we exceed both goals each fiscal year. The Committee will certify annual EPS and TSR growth at the end of the performance period and determine the amount of the cash payout under the award. EPS and TSR goals are weighted equally when calculating the payout. TSR means the annual growth rate in the value of our common stock due to stock appreciation and the reinvestment of dividends. The beginning stock price used to calculate TSR each fiscal year will be the average closing sales prices on the NYSE for the trading days in the September immediately preceding the commencement of that fiscal year. The Committee established the following performance goals for each fiscal year during the three-year performance period:

 

 

Based on our performance in fiscal years 2008 and 2009 in which we exceeded target EPS and TSR goals for each fiscal year, Mr. Yost became entitled to receive the maximum amount of $1,350,000 each fiscal year, or $2,700,000 in the aggregate to date under the award. Subject to some exceptions, Mr. Yost must remain employed by us from now until September 30, 2010 to become entitled to a payout under the award. If Mr. Yost dies, retires or terminates his employment because of disability before September 30, 2010, he will receive a bonus earned based on the performance years already

completed, plus a pro rata portion through the date of termination of the bonus earned, if any, for the performance year in which the termination occurs. In addition, if a change in control of the company occurs before the end of the performance period, we will pay a bonus earned for any performance years already completed, plus one-third of the total target value for the performance year that includes the change in control event. In 2008, we amended the terms of the award to permit deferral elections in connection with the award and to change the timing of the payout. As a result of the amendments, Mr. Yost may not receive distribution of the award until at least 13 months after he terminates employment with us (other than as a result of his death), and may elect to defer receipt of the award for a longer period. We believe that this change is beneficial, as it gives Mr. Yost greater flexibility in planning for retirement.

 

Equity Award Grant Practices

 

We have a written policy on equity grants designed to formalize our equity grant practice and ensure that equity awards will be made on specified dates. We make annual stock option and restricted stock awards to executives and other eligible employees in the first calendar quarter of each year (around the time of our annual meeting of stockholders). We may make equity awards at other times during the year for new hires or other reasons, such as a job promotion or as a result of an acquisition. In accordance with our policy and the MIP, the Committee has delegated limited authority to the chief executive officer to approve special grants to non-executive officers. These special awards may only be made on the 1st day of a month (or the next trading day, if the first day of the month is not a trading day). The Committee or the Board must approve any equity awards to the named executive officers.

 

In all cases, the exercise price of any stock option award is the closing price of our common stock on the date of grant. We do not backdate or grant options or restricted stock retroactively. We generally schedule board and Committee meetings at least one year in advance and, as noted above, make annual equity awards to our named executive officers at around the same time every year. We do not time our equity awards to take advantage of the release of earnings or other major announcements by us or market conditions.

 

Other Compensation

 

Our named executive officers receive a limited amount of other benefits. We believe that these benefits are important to attract and retain our executives. These benefits include a company matching contribution under the 401(k) plan, which is provided to all employee participants. We pay for tax and financial planning services for our executives to give them the opportunity to maximize the benefits from the compensation and benefits programs offered to them. We pay a car allowance for our chief executive officer. We view the car allowance as reasonable in consideration of the substantial time and effort we expect Mr. Yost to devote to business travel, employee recruitment and developing customer relationships. In the aggregate, these other benefits constitute only a small percentage of each named executive officer’s total compensation. These benefits appear in the All Other Compensation column in the Summary Compensation Table on page 32.

 

Employee and Retirement Benefits

 

Core employee benefits are available to the named executive officers on the same basis as all domestic employees. This approach supports our philosophy to provide basic employee and retirement benefits to our executives on an equal footing with our employees generally. They include medical and dental coverage, disability insurance, life insurance and a 401(k) plan.

 

In 2006, we began to offer a supplemental 401(k) plan to selected key management, including the named executive officers. We implemented this plan to address the absence of any non-legacy executive retirement plan following the 2001 merger to form the company and to permit executives to receive the full amount of the company match available for other employees generally under the 401(k) plan. This plan, which is called the AmerisourceBergen Corporation Supplemental 401(k) Plan, provides an annual contribution amount equal to 4% of a participant’s salary and bonus to the extent that his or her compensation exceeds IRS limits applicable to our 401(k) plan.

 

Mr. Yost and Mr. DiCandilo are the only named executive officers who participate in any of the pension plans that we maintain. The pension plans in which they participate were in existence prior to the 2001 merger to form our company, and

both of them are now frozen with respect to participation and benefit accruals. As more fully described on pages 36 - 37, these legacy plans are:

 

 

Severance and Change in Control Benefits

 

Severance Benefits.  We will provide severance benefits if we discharge a named executive officer without cause or he or she leaves the company for good reason. An executive will be deemed to have a good reason to leave the company if we reduce his or her base salary or we otherwise fail to comply with our obligations (including by diminishing the executive’s authority, duties and responsibilities). We provide severance benefits to give executives a measure of financial security following the loss of employment and because we believe that these types of benefits are important to attract and retain our executives in a competitive industry. The terms of these severance benefits are set out in the employment agreements with each named executive officer and various plans, the material terms of which are described more fully on pages 38 - 39.

 

Severance benefits, which are generally paid for a period of two years following termination of employment unless otherwise noted, include:

 

 

We do not provide severance benefits if a named executive officer is terminated for cause or leaves the company without good reason. In that case, we would only pay the named executive officer the amount of accrued obligations. We will have cause to terminate an executive’s employment if he or she continues to fail to substantially perform his or her duties, engages in willful misconduct, is convicted of a felony or is convicted of a misdemeanor involving moral turpitude that materially harms the company.

 

Change in Control.  If a named executive officer’s employment is involuntarily terminated by us within two years following a change in control of the company, all unvested stock options will vest and restrictions on stock awards will lapse. In general, we condition acceleration of benefits on a double trigger – a change in control followed by an involuntary loss of employment within two years. (A single trigger would result in the acceleration of vesting immediately upon a change in control.) We believe that a double trigger approach better serves our objective, which is to provide financial protection to employees following an involuntary loss of employment in connection with a change in control. We believe that these types of benefits enable our executives to focus on important business decisions should we be acquired in the future without regard to how the transaction may affect them personally. We believe that this structure provides executives with an appropriate incentive to cooperate in completing a change in control transaction. The Board and the Committee, however, have discretion under the MIP to take certain actions in the event of a change in control. These actions include cancelling options that are not exercised within 30 days after a change in control; cashing out the value of outstanding options; cancelling any restricted stock awards in exchange for the payment of cash, property or a combination of cash and property equal to the value of the award; or substituting other property (including securities of another entity) for awards granted under the MIP.

In addition, under the AIP plan, there is discretion to pay bonuses during any year in which a change in control occurs. If this discretion is exercised, bonus payments would be based on performance for the portion of the fiscal year until the change in control event and paid within 75 days of the change in control.

 

Any payments that are made to the named executive officer as a result of termination are not intended to constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code. The employment agreements of the named executive officers require us to reduce these payments, if necessary, to ensure that they do not constitute excess parachute payments.

 

Non-Compete Obligations.  For a period of two years following termination of employment, Messrs. Yost, DiCandilo and Chou and Ms. Fisher may not compete, directly or indirectly, with any business in which we or our subsidiaries engage or solicit any of our employees for employment. For a period of two years from termination of employment, Mr. Collis has agreed to refrain from being employed or engaged as a director, officer, consultant or independent contractor for specified competitors of the company or AmerisourceBergen Specialty Group and may not solicit any of our employees for employment.

 

Other Matters

 

Deferred Compensation

 

Executives may defer receipt of part or all of their cash compensation under our deferred compensation plan. The plan is intended to promote retention of executives by providing a long-term, tax efficient savings opportunity at low cost to us. Amounts deferred under the plan are allocated to the plan investment options chosen by the executive. The executive receives a quarterly adjustment in his or her account for any gains and losses on the amounts deferred under the plan. We have been operating the plan in compliance with the regulations promulgated pursuant to Section 409A of the Internal Revenue Code, which are applicable to non-qualified deferred compensation, and affect, among other things, severance or separation pay benefits, and approved Section 409A amendments to the plan in October 2008.

 

Executive Stock Ownership Guidelines

 

Our executives must own shares of our common stock in an amount equal to a multiple of their base salary. We believe that stock ownership aligns management’s interests with those of our stockholders and provides a continuing incentive for management to focus on long-term growth. Under our executive stock ownership guidelines, adopted in 2006, Mr. Yost must own shares worth five times his base salary and the other named executive officers must own shares worth three times their respective base salaries. Any other member of senior management who becomes subject to the guidelines in the future has until three years from the date of hire or the date of a change in status, whichever is later, to comply with the ownership requirements. Each of the named executive officers is in compliance with the guidelines. The Committee reviews compliance with the guidelines on an annual basis. Penalties for non-compliance with the guidelines could include requiring the executive to use a portion of any annual cash incentive to purchase common stock, requiring the executive to hold shares of common stock purchased through option exercises or other potential penalties, including a combination of any of these.

 

Derivatives Trading and Hedging Prohibition

 

We prohibit illegal trading on the basis of material, non-public information and short-term or speculative transactions involving our securities. We believe that buying or selling derivative securities, such as puts or calls, on our common stock is inconsistent with the goal of aligning management’s interests with those of our stockholders and focusing on long-term growth. Our directors, officers and employees are not permitted to buy or sell derivative securities, such as puts or calls, on our stock or to hedge the economic exposure to the AmerisourceBergen stock that they own. We also strongly discourage our employees from holding shares of our stock in a margin account or pledging our stock as collateral for a loan. We have a written policy for our employees on these matters.

 

Tax and Accounting Considerations

 

In October 2008, the Committee approved amendments to our executive employment agreements and other director and executive compensation and retirement plans in order to make them compliant or exempt from Section 409A of the

Internal Revenue Code of 1986, as amended. Section 409A regulates deferred compensation by limiting the timing of deferral elections and the ability of companies to change the form and timing of payments. It generally requires that elections to receive payment in the future be made in a specific manner and that distributions occur on a specified date in the future. It does not permit payments to be accelerated once deferred. Failure to bring our arrangements into compliance with Section 409A could have resulted in a penalty on the individual beneficiaries of these arrangements. The deadline for Section 409A compliance was December 31, 2008. In general, the amendments to our plans clarified election and distribution procedures and otherwise updated our plans to reflect our current plan administration. The following compensation arrangements and retirement plans were amended: our executive employment agreements, the AmerisourceBergen Corporation Supplemental 401(k) Plan (formerly named the Executive Retirement Plan), the 2001 Restricted Stock Plan, the Deferred Compensation Plan, the AmeriSource Supplemental Retirement Plan, the Bergen Supplemental Retirement Plan, and the Amended and Restated Long-Term Incentive Award for Mr. Yost.

 

In 2009, we paid cash compensation in the amount of $2,044,355 to Mr. Yost and $368,302 to Mr. Collis that was not deductible. U.S. federal tax law prohibits us from deducting compensation in excess of $1,000,000 paid to the named executive officers (other than, under current rules, the chief financial officer). Performance-based compensation, as defined in federal tax law, is fully deductible if the compensation program is approved by the stockholders and meets other requirements. We have not taken action to date to structure the elements of cash compensation payable to our executive officers so as to comply specifically with federal tax law regarding the deductibility of compensation in excess of $1,000,000. We will continue to consider and evaluate all of our compensation programs in light of federal tax law and regulations. However, we may continue to pay compensation that is not deductible if sound business judgment so requires.

 

As noted above in our discussion of severance benefits, any payments made to our named executive officers as a result of termination are not intended to constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code. Our employment agreements with the named executive officers require us to reduce any such payments, if necessary, to ensure that they do not constitute excess parachute payments.

 

The Compensation and Succession Planning Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in the 2010 Proxy Statement. Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the 2010 Proxy Statement and incorporated by reference into the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

 

COMPENSATION AND SUCCESSION PLANNING COMMITTEE

 

Charles H. Cotros, Chairman
Richard C. Gozon
Michael J. Long
Henry W. McGee

 

Summary Compensation Table

 

The following table sets forth the compensation paid to or earned by our Chief Executive Officer, Executive Vice President and Chief Financial Officer and the three other most highly compensated executive officers during fiscal year 2009, who we refer to in this Proxy Statement as the named executive officers.

 

 

Salary (Column C)

 

The amounts reported as salary represent the base salaries paid to each of the named executive officers for each fiscal year shown. Amounts shown for Mr. Collis and Ms. Fisher include $111,402 and $63,289, respectively, deferred into our deferred compensation plan.

 

Stock Awards and Option Awards (Columns D and E)

 

The amounts reported in Columns D and E represent the compensation cost for current and prior year equity awards that would be recognized by us in the fiscal year shown in accordance with ASC 718 for outstanding restricted stock (or restricted stock units) and option awards held by the named executive officers if the estimate of forfeitures related to service-based vesting conditions was disregarded. There were no forfeitures by the named executive officers in fiscal years 2009, 2008 or 2007. See Note 10 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

 

Long-term equity incentive awards are made pursuant to our MIP. The value of annual equity awards generally consist of 25% restricted stock (or restricted stock units) and 75% stock options. Restricted stock awards vest on the third anniversary of the grant date. Unvested restricted stock (or restricted stock units) is forfeited if the executive leaves the company prior to vesting, except by reason of death, disability or an involuntary termination of employment within two years after a change in control. In accordance with the dividend rate applicable to the declaration of dividends on our common stock from time to time, dividends on unvested restricted stock (and restricted stock units) are accrued and paid upon vesting. The dividend rate is not preferential. A restricted stock unit is a grant of shares of our common stock that is delivered at the time and to the extent that the shares vest. Restricted stock units vest and are then delivered according to the same schedule as shares of our restricted stock. Because of the different treatment between restricted stock and restricted stock units for federal income tax purposes that results when an individual has attained retirement age but

continues to work with us, we awarded Mr. Yost and Ms. Fisher restricted stock units in lieu of restricted stock in fiscal year 2009. Unvested restricted stock units continue to vest according to the schedule set forth in the applicable award agreement if employment is terminated due to voluntary retirement, defined as reaching age sixty-two (62) and completing sixty (60) full months of continuous service with AmerisourceBergen. In accordance with the dividend rate applicable to the declaration of dividends on our common stock from time to time, dividend equivalents on unvested restricted stock units are accrued and paid in cash on the date of delivery of the shares.

 

Stock options have an exercise price equal to the closing price of our common stock on the date of grant. Stock options vest 25% per year beginning on the first anniversary of the grant date and may be exercised over a term of ten (10) years from the date of grant for those stock options granted prior to February 27, 2008 and over a term of seven (7) years from the date of grant for those stock options granted on or after February 27, 2008. Unvested options granted before 2009 normally cease to vest upon any termination of employment other than involuntary termination of employment within two years after a change in control. If we terminate a named executive officer for cause, all outstanding options (vested and unvested) are immediately cancelled. (See page 42 for a description of the impact of termination of employment on vesting and exercisability of restricted stock and stock options.)

 

Non-Equity Incentive Plan Compensation (Column F)

 

The amounts reported in Column F represent the annual cash bonuses for the fiscal year shown awarded to the named executive officers under our AIP plan. Cash bonuses were calculated based on the degree to which the named executive officer achieved the performance criteria established for him or her by the Compensation and Succession Planning Committee in the preceding November and approved by the committee and paid in the November following the close of the applicable fiscal year. The amounts shown for Mr. Yost for 2009 and 2008 also include $1,350,000 accrued for him each year as a result of the satisfaction of performance criteria under a multi-year long-term incentive award for the performance periods ended September 30, 2009 and 2008. This amount will not be paid to Mr. Yost until at least 13 months after he terminates employment with us (other than as a result of his death), and may be deferred for a longer period of time.

 

Under the AIP, payment of cash bonus depends upon the achievement of pre-established performance goals for the fiscal year. The Compensation and Succession Planning Committee establishes the performance goals and incentive levels under the bonus plan early in the fiscal year. Cash bonus payments depend primarily on the achievement of financial performance goals and secondarily on individual leadership goals. We use a mix of financial performance goals at the corporate and, depending on the named executive officer, business unit level. In fiscal year 2007, corporate level financial performance measures were EPS and ROCC and business unit financial performance measures were business unit EBIT and ROCC. In fiscal years 2008 and 2009, corporate level financial performance measures were EPS and ROIC and business unit level financial performance measures were business unit EBIT and ROIC. (See cash bonus discussion on pages 24-26 under “Compensation Discussion and Analysis.”)

 

Change in Pension Value and Non-Qualified Deferred Compensation Earnings (Column G)

 

The amounts reported in Column G include the aggregate year-to-year change in the actuarial present value of the accumulated benefit under the AmerisourceBergen Corporation Participating Companies Pension Plan, the AmerisourceBergen Corporation 2001 Deferred Compensation Plan and the AmerisourceBergen Drug Corporation Supplemental Retirement Plan.

All Other Compensation (Column H)

 

The following table shows the specific components of the amounts shown for fiscal year 2009 in Column H of the Summary Compensation Table:

 

 

 

 

Grants of Plan-Based Awards in Fiscal Year 2009

 

The following table sets forth certain information regarding grants of plan-based awards to each of our named executive officers during fiscal year 2009.

 

 

 

Outstanding Equity Awards at 2009 Fiscal Year End

 

The following table provides information on the current holdings of stock options and restricted stock (or restricted stock unit) awards by our named executive officers as of September 30, 2009. The market value of the shares set forth under the “Stock Awards” column was determined by multiplying the number of unvested shares by the closing price of our common stock on September 30, 2009, the last trading day of fiscal year 2009.