Executive Briefings

Hard Questions for a Company at the Center of the Opioid Crisis

The immense pay packages bestowed on corporate chieftains are often said to reflect feats of management that enrich company shareholders. An executive's masterly performance justifies the compensation, in other words.

But what about managers who take home bounties amid leadership failures that harm other stakeholders? Should shareholders give these executives a pass because the company's stock price rose on their watch?

That's the question facing investors in the McKesson Corporation, the nation's largest drug distributor and a company that finds itself at the center of the nation's opioid epidemic. What do opioids have to do with corporate governance at McKesson? A lot, according to some of its shareholders. They say that leadership lapses at McKesson have enabled the opioid scourge to spread across the United States and that the company's executives have not been held to account for those failings.

In January, for example, McKesson paid a record fine of $150m to settle Justice Department allegations that from mid-2008 through May 2013 it had repeatedly failed to report suspicious orders for controlled substances, including opioids, as required by law. Twelve of McKesson’s distribution centers had not maintained “effective controls against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels,” the government said.

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But what about managers who take home bounties amid leadership failures that harm other stakeholders? Should shareholders give these executives a pass because the company's stock price rose on their watch?

That's the question facing investors in the McKesson Corporation, the nation's largest drug distributor and a company that finds itself at the center of the nation's opioid epidemic. What do opioids have to do with corporate governance at McKesson? A lot, according to some of its shareholders. They say that leadership lapses at McKesson have enabled the opioid scourge to spread across the United States and that the company's executives have not been held to account for those failings.

In January, for example, McKesson paid a record fine of $150m to settle Justice Department allegations that from mid-2008 through May 2013 it had repeatedly failed to report suspicious orders for controlled substances, including opioids, as required by law. Twelve of McKesson’s distribution centers had not maintained “effective controls against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels,” the government said.

Read Full Article