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  • January 2023
  • Teaching Note
  • HBS Case Collection

The Opioid Settlement and Executive Pay at AmerisourceBergen

By: Suraj Srinivasan and Li-Kuan Ni
  • Format:Print
  • | Language:English
  • | Pages:13
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Abstract

Teaching Note for HBS Case No 122-014. In 2020, AmerisourceBergen Corporation, a Fortune 50 company in the drug distribution industry, agreed to settle thousands of lawsuits filed nationwide against the company for its opioid distribution practices that critics alleged had contributed to the nationwide opioid crisis. The $6.6 billion global settlement, had caused a net loss larger than the cumulative net income earned under the current CEO since he took the helm in 2011. The legal troubles had been accompanied by initiatives by shareholder activists who had become increasingly successful in driving corporate governance changes in companies in the opioid supply chain, including AmerisourceBergen. Determined to hold the leadership accountable, these shareholders launched a campaign in early 2021 to reject the pay packages of the Company’s executives. They were protesting the increase in pay in 2020 to $13.3 million, up from $11.3 million in 2019. The result of the Vote NO campaign was almost split down the middle, with 48% voting with the activists and 52% with the company. The case describes the drug distribution industry, internal controls at Amerisource, shareholder demands on corporate governance, and the events related to the opioid crisis and Amerisource’s role in it. The case can be used for a wide range of teaching purposes to discuss issues relating to governance, compliance, executive compensation, and shareholder activism in the context of the one of the biggest social challenges of the past two decades – the opioid crisis.

Keywords

Opioids; Shareholder Activism; Investment Activism; Corporate Accountability; Corporate Governance; Governance Compliance; Governance Controls; Executive Compensation; Risk Management; Corporate Social Responsibility and Impact; Business and Shareholder Relations; Business and Stakeholder Relations; Distribution Industry; Health Industry; Pharmaceutical Industry; United States; West Virginia; Tennessee; Ohio; Pennsylvania

Citation

Srinivasan, Suraj, and Li-Kuan Ni. "The Opioid Settlement and Executive Pay at AmerisourceBergen." Harvard Business School Teaching Note 123-067, January 2023.
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About The Author

Suraj Srinivasan

Accounting and Management
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