Cardinal Health : 2023 Proxy Statement

Proxy

Statement

Notice of Annual Meeting of Shareholders

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Table of contents

LETTER TO CARDINAL HEALTH SHAREHOLDERS	2
NOTICE	4
PROXY SUMMARY	5
About Us	5
Fiscal 2023 Performance	5
Our 2023 Board Nominees	7
Governance and Board Highlights	8
Shareholder Engagement	8
Agreement with Elliott	8
Approach to ESG Topics	10
Virtual Annual Meeting	11
Roadmap to Voting Matters	11
How to Vote in Advance of the Annual Meeting	11
ForwardટLooking Statements	12

CORPORATE GOVERNANCE	13
PROPOSAL 1 - Election of Directors	13
Board Membership Criteria: What We Look For	13
Our Director Nominees	14
Our Board's Composition and Structure	21
Our Board's Primary Role and Responsibilities and Processes	26
Shareholder Engagement	32
Standards of Business Conduct	33
Related Person Transactions Policy and Process	33
Director Compensation	34

AUDIT COMMITTEE MATTERS	36
PROPOSAL 2 - Ratification of Appointment of Ernst & Young LLP as Independent Auditor	36
Audit Committee Report	36
Fees Paid to Ernst & Young LLP	37
Policy on PreટApproval of Services Provided by Ernst & Young LLP	37

EXECUTIVE COMPENSATION	38
PROPOSAL 3 - Advisory Vote to Approve the Compensation of Our Named Executive Officers	39
PROPOSAL 4 - Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation of
Our Named Executive Officers	39
Compensation Discussion and Analysis	40
Human Resources and Compensation Committee Report	54
Executive Compensation Tables	55
Pay Ratio Disclosure	67
Pay Versus Performance	68
Equity Compensation Plan Information	71

SHAREHOLDER PROPOSALS	72
Proposal 5 - Executives to Retain Significant Stock	72
Proposal 6 - Shareholder Ratification of Excessive Termination Pay	74
SHARE OWNERSHIP INFORMATION	76
Beneficial Ownership	76
Delinquent Section 16(a) Reports	77
OTHER MATTERS	78
General Information About the Annual Meeting	78
Communicating with the Board	80
Shareholder Recommendations for Director Nominees	80
Submitting Proxy Proposals and Director Nominations for the Next Annual Meeting of Shareholders	81
Corporate Governance Documents	81
Transfer Agent	81
ANNEX A: USE OF NONટGAAP FINANCIAL MEASURES	82
Exclusions from NonટGAAP Financial Measures	82
Fiscal 2023 GAAP to NonટGAAP Reconciliations	83
Definitions	83

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GREGORY B. KENNY

Chairman of the Board

CARDINALHEALTH 2023 Proxy Statement

LETTER TO CARDINAL HEALTH SHAREHOLDERS

SEPTEMBER 27, 2023

The past year brought about key changes at Cardinal Health and, with them, strong results. The Board and management remain committed to our refreshed strategic priorities, and we look forward to continuing this work in the year ahead.

FISCAL 2023 PERFORMANCE

We delivered strong financial performance in fiscal 2023, growing revenue and earnings at the enterprise level. We grew Pharmaceutical segment profit an impressive 13%, and, in the Medical segment, we drove significant sequential improvement in operating performance - from a segment loss in the first quarter to over $80 million of segment profit in the fourth quarter. We also generated $2.8 billion of operating cash flow and returned $2.5 billion to shareholders through share repurchases and dividends.

TAKING ACTION TO MAXIMIZE AND SUSTAIN VALUE

As a result of the Board's succession planning process, in August 2022, we named Jason Hollar as the company's new CEO. Under Jason's leadership, we took decisive action this year to advance our three strategic priorities: building on the growth and resiliency of our Pharmaceutical segment; executing our Medical Improvement Plan initiatives; and relentlessly focusing on shareholder value creation. Consistent with what we shared at our Investor Day in June, our strong fiscal 2023 results were achieved through a commitment to prioritize the core of our business and to better serve our customers, so they, in turn, could focus on caring for their patients.

We simplified our operations by streamlining our organizational structure, exiting nonટcore product lines, and rationalizing our geographic and manufacturing footprints to meet our current business needs. We made key leadership changes, adding talent in critical positions across the enterprise. We formed and recently extended the term of the Board's Business Review Committee tasked with evaluating our strategy, portfolio, capital allocation framework, and operations. Key outputs of this review to date include the completion of a review of the Pharmaceutical segment and the launch of our new NavistaTM Network supporting community oncologists, our recent announcement of further investment in our Nuclear and Precision Health Solutions business, and the merger of the segment's OutcomesTM business into Transaction Data System.

UPDATES TO THE COMPOSITION OF OUR BOARD

The cooperation agreement we entered into with Elliott Management last September included the addition of four new independent directors, each of whom bring a depth of experience and skills, including healthcare and technology, which are core to our strategic direction. These new directors were welcomed by our existing directors, and they contributed to the Board's dialogue over the past year.

As noted in the proxy statement, Carrie Cox and Bruce Downey will be departing the Board when their terms expire this year. Both Carrie and Bruce have provided indispensable guidance over the past 14 years, helping to position Cardinal Health well for the future. On behalf of the Board, I would like to thank Carrie and Bruce for their many years of service and valuable contributions.

Following Carrie's and Bruce's departures, the total number of directors will be reduced to eleven, ten of whom are independent and seven of whom are gender or racially or ethnically diverse.

OPERATING SUSTAINABLY

The Board is highly engaged on our environmental, social, and governance, or ESG, priorities and provides oversight of the company's overall efforts through our Governance and Sustainability Committee. As detailed in our robust ESG report released this past January, we remain steadfast in our strategic approach to deliver a sustainable future. We believe that our existing ESG initiatives align well with, and can help drive, our existing business strategies. Our ESG priorities are organized into four broad categories focused on empowering our people, creating value for our customers and communities, operating sustainably and responsibly, and having strong governance, ethics, and compliance. These priorities inform our ESG strategies, goals, and disclosure. Details on progress against key goals are available in our ESG reports and on our website.

SHAREHOLDER ENGAGEMENT

This past summer, the company contacted shareholders representing 52% of our outstanding shares and met with shareholders representing 37% of our outstanding shares. Another independent director and I participated in select meetings with shareholders. In these discussions, we provided updates on our strategy and ongoing business review process, Board composition and refreshment, senior leadership transitions, executive compensation, and sustainability topics. These are important conversations, and we greatly value the insights that our shareholders provide.

LOOKING FORWARD

Our success would not be possible without the commitment of our employees, who remain focused on our mission to improve the lives of people every day. They continue to deliver for our customers and are foundational to our success.

On behalf of our Board, I thank you for your share ownership and continued support of Cardinal Health. Following a strong first year under Jason Hollar's leadership, the Board is excited to oversee execution of the company's strategic priorities designed to achieve our targeted growth for fiscal 2024 and beyond. We look forward to working with you and all our partners to ensure that Cardinal Health continues its essential role in healthcare.

Sincerely,

Gregory B. Kenny

Chairman of the Board

CARDINALHEALTH 2023 Proxy Statement

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