Cardinal Health : 2022 Proxy Statement

Proxy Statement

Notice of Annual Meeting of Shareholders

TABLE OF CONTENTS

LETTER TO CARDINAL HEALTH
SHAREHOLDERS	3
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS	5
PROXY SUMMARY	6
ABOUT US	6
FISCAL 2022 PERFORMANCE	6
CEO TRANSITION	7
AGREEMENT WITH ELLIOTT	7
OUR 2022 BOARD NOMINEES	8
GOVERNANCE AND BOARD HIGHLIGHTS	9
ADDRESSING THE OPIOID EPIDEMIC	9
APPROACH TO ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
("ESG")	11
VIRTUAL ANNUAL MEETING	13
ROADMAP TO VOTING MATTERS	13
HOW TO VOTE IN ADVANCE OF THE ANNUAL MEETING	13
CORPORATE GOVERNANCE	14
PROPOSAL 1 - ELECTION OF DIRECTORS	14
BOARD MEMBERSHIP CRITERIA: WHAT WE LOOK FOR	14
OUR DIRECTOR NOMINEES	15
OUR BOARD'S COMPOSITION AND STRUCTURE	23
OUR BOARD'S PRIMARY ROLE AND RESPONSIBILITIES AND
PROCESSES	28
STANDARDS OF BUSINESS CONDUCT	33
RELATED PERSON TRANSACTIONS POLICY AND PROCESS	33
SHAREHOLDER ENGAGEMENT	34
DIRECTOR COMPENSATION	36
AUDIT COMMITTEE MATTERS	38
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITOR	38
AUDIT COMMITTEE REPORT	38
FEES PAID TO ERNST & YOUNG LLP	39
POLICY ON PRE-APPROVAL OF SERVICES PROVIDED BY ERNST &
YOUNG LLP	39

EXECUTIVE COMPENSATION	40
PROPOSAL 3 - ADVISORY VOTE TO APPROVE THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS	41
COMPENSATION DISCUSSION AND ANALYSIS	42
HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT	57
EXECUTIVE COMPENSATION TABLES	57
PAY RATIO DISCLOSURE	70
EQUITY COMPENSATION PLAN INFORMATION	70

SHARE OWNERSHIP INFORMATION	71
BENEFICIAL OWNERSHIP	71
DELINQUENT SECTION 16(a) REPORTS	72
OTHER MATTERS	73
GENERAL INFORMATION ABOUT THE ANNUAL MEETING	73
COMMUNICATING WITH THE BOARD	75
SHAREHOLDER RECOMMENDATIONS FOR DIRECTOR NOMINEES	75
SUBMITTING PROXY PROPOSALS AND DIRECTOR NOMINATIONS
FOR THE NEXT ANNUAL MEETING OF SHAREHOLDERS	76
CORPORATE GOVERNANCE DOCUMENTS	77
TRANSFER AGENT	77
ANNEX A:
USE OF NON-GAAP FINANCIAL MEASURES	A-1
EXCLUSIONS FROM NON-GAAP FINANCIAL MEASURES	A-1
FISCAL 2022 GAAP TO NON-GAAP RECONCILIATIONS	A-2
DEFINITIONS	A-3

GREGORY B. KENNY

Chairman of the Board

September 28, 2022

+12%

REVENUE GROWTH

IN FY 2022 VS FY 2021

+29%

OPERATING CASH FLOW GROWTH FY 2022 VS FY 2021

LETTER TO CARDINAL HEALTH SHAREHOLDERS

Over the past year, the Board and management have remained focused on disciplined execution of our strategic priorities to drive long-term value in the face of global economic headwinds. Although performance fell short of our stated goals, the company demonstrated resilience in the face of unprecedented inflation and supply chain constraints and laid the groundwork for a clear path forward.

In August, we announced that Jason Hollar would become our next Chief Executive Officer, effective September 1. Jason served as our Chief Financial Officer beginning in May 2020 and brings a wealth of experience, including expertise in leading in dynamic and challenging environments. We look forward to leveraging Jason's experience and are confident in his ability to lead Cardinal Health on a path to long-term growth. We are grateful for all that Mike Kaufmann contributed to our company over his nearly 32 years of service.

In September, Cardinal Health entered into a cooperation agreement with Elliott Associates, L.P. and Elliott International, L.P. that included the addition of four new members to our Board and the formation of a new Business Review Committee to review the company's business, operations, and capital allocation policy. Cardinal Health and Elliott are aligned in our objective to create value for all shareholders, and I am pleased to welcome the new members to our Board who bring considerable experience and skills in areas like healthcare and technology.

In addition, Dean Scarborough and John Weiland will be leaving the Board following the annual meeting of shareholders. On behalf of the Board, I would like to thank Dean and John for their valuable contributions.

These changes will bring the total number of directors to thirteen, twelve of whom are independent and eight of whom are gender or racially or ethnically diverse.

FISCAL 2022 PERFORMANCE

In fiscal 2022, we grew revenue and operating cash flow, and continued to streamline our cost structure, once again surpassing our enterprise cost savings target. Fiscal year 2022 revenue was $181.4 billion, a 12% increase from the prior fiscal year, and we returned $1.6 billion to our shareholders through share repurchases and dividends. While our Pharmaceutical segment profit grew 5%, our Medical segment faced challenges primarily due to inflationary impacts and global supply chain constraints. Following the fiscal year-end, we announced a detailed Medical Improvement Plan that targets Medical segment profit of at least $650 million by fiscal 2025.

CardinalHealth / 2022 PROXY STATEMENT

3

LETTER TO CARDINAL HEALTH SHAREHOLDERS

FINALIZING THE NATIONAL OPIOID SETTLEMENT

In February, we announced that we and the two other national distributors would proceed with a comprehensive agreement to settle the vast majority of opioid-related lawsuits filed by state and local government entities. This is a significant achievement and will provide meaningful relief to communities across the United States impacted by the opioid epidemic. Following these developments, we recently made the decision to wind down the Board's Ad Hoc Committee assisting the Board in its oversight of opioid-related matters. The Ad Hoc Committee will meet again in November and will then transition its responsibilities, including overseeing compliance with the national settlement, to the Board's Risk Oversight Committee.

OPERATING SUSTAINABLY

In recognition of the Board's increasing focus on oversight of sustainability matters, we updated the Nominating and Governance Committee's Charter in May to formalize its oversight of environmental, social, and governance (ESG) activities, policy, strategy, and reporting and disclosure practices and renamed the committee the Governance and Sustainability Committee.

Last August, we announced a comprehensive talent strategy to increase representation of diverse employees at the manager level and above by 2030. This strategy is aimed at increasing the company's leadership representation of women globally and African American and Black and other ethnically diverse employees in the United States. To ensure these important strategic efforts are closely aligned to our management incentive structure, the Board's Human Resources and Compensation Committee approved expanding diversity, equity, and inclusion (DE&I) metrics in the company's fiscal 2022 annual and long-term incentive programs.

Last September, we announced a goal to reduce our Scope 1 and 2 greenhouse gas (GHG) emissions by 50% by fiscal 2030, compared to a fiscal 2019 base year. We plan to set a science-based target for GHG emission reductions and are assessing our Scope 3 supply chain emissions to set a Scope 3 reduction goal.

SHAREHOLDER ENGAGEMENT

During the past year, our Board and management team continued its long-standing and robust shareholder engagement program. Over the course of the year, the company contacted shareholders representing 61% of our outstanding shares and met with shareholders representing 36% of outstanding shares. Along with our Human Resource and Compensation Committee Chair Carrie Cox, I participated in meetings with shareholders representing 23% of outstanding shares. In those meetings, we discussed updates on board composition, the national opioid settlement, our executive compensation practices, and our increased prioritization of ESG matters, including DE&I. These are important conversations, and we greatly value the insights our shareholders provide.

LOOKING FORWARD

Our success would not be possible without the commitment of our more than 46,500 employees. Throughout the challenges of this past year, our employees remained focused on our mission to improve the lives of people every day. They continued to deliver for our customers, and they are foundational to our success.

On behalf of our Board, I thank you for your share ownership and for your continued support of Cardinal Health. With a new Chief Executive Officer and a clear path forward that has the full confidence of the Board, we look forward to working with you and all our partners to ensure that Cardinal Health continues to perform our essential role in healthcare.

Sincerely,

Gregory B. Kenny

Chairman of the Board

4	CardinalHealth / 2022 PROXY STATEMENT

NOTICE

OF ANNUAL MEETING

OF SHAREHOLDERS

September 28, 2022

This year's annual meeting of shareholders (the "Annual Meeting") will be conducted exclusively online without an option for physical attendance. You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CAH2022. We aim to offer shareholders rights and participation opportunities during the virtual meeting that are comparable to those at an in-person annual meeting of shareholders.

VIRTUAL MEETING

The Annual Meeting is a virtual shareholder meeting at

www.virtualshareholdermeeting.com/CAH2022.

RECORD DATE

September 20, 2022. Only shareholders of record at the close of business on the record date are entitled to receive notice of, and to vote at, the Annual Meeting.

PROXY VOTING

Please vote your shares promptly to ensure the presence of a quorum during the Annual Meeting. Voting your shares now via the Internet, by telephone, or by signing, dating, and returning the enclosed proxy card or voting instruction form will save the expense of additional solicitation. If you wish to vote by mail, we have enclosed an addressed envelope with postage prepaid if mailed in the United States. Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option. We are requesting your vote to:

WEDNESDAY, NOVEMBER 9, 2022

8:00 a.m. Eastern Time

Virtual Meeting www.virtualshareholdermeeting.com/CAH2022

VOTE IN ADVANCE OF THE MEETING IN ONE OF FOUR WAYS:

INTERNET

Visit 24/7

www.proxyvote.com

BY TELEPHONE

Call the toll-free number 1-800-690-6903 within the United States, U.S. territories, or Canada

BY MAIL

Mark, sign, and date proxy card and return by mail in enclosed postage-paid envelope

Virtual Meeting

See page 73 for instructions on how to attend

Please refer to the enclosed proxy materials or the information forwarded by your bank, broker, or other holder of record to see which voting methods are available to you.

ITEMS OF BUSINESS

1. Elect the 13 director nominees named in the proxy statement;
2. Ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year ending June 30, 2023;
3. Approve, on a non-binding advisory basis, the compensation of our named executive officers; and
4. Transact such other business as may properly come before the meeting or any adjournment or postponement.

MEETING DETAILS

See "Proxy Summary" and "Other Matters" for details.

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on November 9, 2022: The Notice of Annual Meeting of Shareholders, the accompanying proxy statement, and our 2022 Annual Report to Shareholders are available at www.proxyvote.com. These proxy materials are first being sent or made available to shareholders commencing on September 28, 2022.

By Order of the Board of Directors.

Patrick C. Pope

Senior Vice President, Deputy General Counsel and Secretary

CardinalHealth / 2022 PROXY STATEMENT

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