McKesson : 2021 Annual Meeting of Shareholders and Proxy Statement

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2021 Annual Meeting of Shareholders and Proxy Statement

A LETTER FROM OUR INDEPENDENT CHAIR

June 8, 2021

Dear Fellow Shareholders,

This past year was a year unlike any other - one where our mission of improving care in every setting - one product, one partner, one patient at a time - has never been more important. Our foremost priorities through the pandemic have been delivering critical supplies and medications, and protecting our employees, many whom are on the frontline. Employees at all levels across the enterprise demonstrated unmatched dedication during these unpredictable and unprecedented times, executing in support of our heroic caregivers and the communities that they serve. As a Board, we recognize that we have been elected by you to oversee and help ensure the long-term success and sustainability of McKesson's business for the benefit of all stakeholders. We thank you for your investment in McKesson and for your confidence in McKesson's employees, management team and Board. Despite the challenges presented by the past year, the Company made significant progress executing against strategic growth initiatives while adapting to near-term uncertainties. During this trying time our Board remained committed to providing critical oversight and nurturing a culture that values protecting and growing your investment over the long term.

The 2021 Annual Meeting provides a moment to reflect on some of the Board's key focus areas over the last fiscal year:

Commitment to Board Refreshment

Strong independent leadership and ongoing attention to Board composition are critical in our commitment to a thoughtful governance structure that is aligned with our strategic needs and accountable to shareholders. We routinely evaluate the composition of the Board and strategically refresh our membership to ensure we have a balanced mix of expertise across disciplines to guide the Company during times like these - when all companies are facing new and unexpected challenges. The Governance Committee has invested a substantial amount of time considering Board composition as part of the annual self-evaluation process, and revisits the topic throughout the year.

Consistent with that director succession plan, this year brings departures and new additions to our Board. Chris Jacobs and Marie Knowles, our two longest-serving directors, will not be standing for reelection at the 2021 Annual Meeting. Additionally, Tony Coles informed the Board in April that he will not stand for reelection this year. On behalf of all of the members of the Board, we wish them well and want to thank them for their years of dedicated service.

We also welcomed Linda Mantia, former senior executive vice president and chief operating officer of Manulife Financial Corporation, as our newest independent director and member of the Board's Audit and Governance Committees. Linda is the fifth independent director to join our Board since 2018 and brings more than 25 years of experience in managing extensive financial services, operations and digital technology, adding to the Board's breadth of experience and diverse background.

In 2022, we plan to implement a policy requiring directors with more than 12 years tenure to offer to resign from Board service annually, which the Board, after careful consideration, can choose to accept or reject. If the Board decides it is in the best interests of the Company and its shareholders to reject a resignation, the Board will disclose its rationale.

Navigating the Impact of COVID-19

When the scale of the COVID-19 pandemic began to crystallize in early 2020, the Board collaborated with management to help ensure the stability of our critical services to our customers and protection of our employees. Experts at every level within our organization mobilized to address new developments as they occurred and interacted with regulatory authorities around the world to help ensure we were well prepared to address our customers' evolving needs, so that they can, in turn, care best for their patients. Additionally, we have partnered with government agencies at the federal, state and local level, along with other industry leaders, to help find solutions to the most complex and pressing issues the crisis presented. Throughout the pandemic, we have taken steps to advance public health goals, maintain essential access to medications and supplies for our customers, and safeguard our employees from the spread of COVID-19. Some of the measures we have taken in response to the COVID-19 pandemic include:

• Protecting Our Team: Enacting measures to keep our employees safe to continue our service to healthcare
• Vaccine Distribution: Supporting the U.S. government as the centralized distributor of COVID-19 vaccines and ancillary supply kits. McKesson is also playing a role in vaccine distribution in Canada and certain jurisdictions in Europe
• Pharmaceutical Supply Chain: Protecting and ensuring the supply of medications for healthcare providers
• Medical Supplies: Supporting demand and equitable supply of personal protective equipment

This critical work speaks to the important role we play in the health care supply chain and to the depth of McKesson's expertise in sourcing, picking, packing and distributing supplies to sites of care across the U.S. The Board is proud to see that our approach to addressing the pandemic has been consistent with our vision to improve care in every setting. McKesson will continue to be part of the recovery, serving our customers and partners every step of the way.

Setting the Tone At the Top

At McKesson, the way we do business is just as important as the business itself, and doing business in the right way continues to be fundamental to, and embedded in, our culture. Our Board is dedicated to cultivating a culture focused on integrity and accountability. We take our role in risk oversight seriously, including on matters related to controlled substances. Our Board, which has long believed that oversight of the Company's culture and reputation are key Board responsibilities, works with management to establish and communicate the right ethical tone, which guides our conduct and helps protect the Company's reputation. Further, the entire Board and its committees seek to understand and review our corporate risks, overseeing matters from our reputation and legal and financial reporting risk to compensation practices and cybersecurity.

McKesson is deeply concerned by the impact the opioid epidemic is having on families and communities across the U.S., and this issue is top of mind for our Board of Directors. McKesson is in ongoing advanced discussions regarding opioid-related claims of governmental entities and based on the substantial progress we have made toward a broad settlement of those claims, we determined it was appropriate to accrue for this potential liability. In the third quarter of FY 2021, we made an accrual of approximately $8.1 billion, reflecting McKesson's estimated liability over a period of 18 years for those opioid-related claims. We remain hopeful that a broad resolution can be achieved, which would accelerate relief efforts for the people and communities impacted by this public health crisis. As we have previously disclosed, in May 2018, the Compensation Committee reinforced and codified its longstanding practice of considering the impact of regulatory, compliance and legal issues when making executive compensation decisions. As a result, the Compensation Committee considered the impact of this estimated liability for opioid-related claims in its decision-making process for FY 2021, and concluded that it would be appropriate to reduce incentive plan payouts. Please refer to page 35 of our Compensation Discussion & Analysis to learn more.

Executing a Clear Growth Strategy

Among the Board's stewardship functions, providing oversight related to McKesson's near- and long-term strategies is paramount. We are actively engaged in reviewing, guiding and overseeing the development and the execution of these value- creation strategies. McKesson focused on building out a connected ecosystem over the last several years in the areas of oncology and biopharma services where we believe we have key differentiated capabilities. As we reflect on FY 2021, our results reflect McKesson's ability to rise to the challenge and meet the evolving demands of our customers and partners, and demonstrate continued execution against our priorities: strong operating profit performance, promoting an inclusive culture and streamlining McKesson's portfolio. Page 2 provides highlights of some of our more significant financial and strategic accomplishments.

We Ask for Your Support

The Board leverages a year-round shareholder engagement program to understand key areas of shareholder interest. Our robust program, which includes director participation, meets with a broad base of shareholders throughout the year to discuss corporate governance, executive compensation, sustainability and ESG practices, and other matters of importance. This dialogue provides us with valuable insight and feedback from shareholders on an ongoing basis, allowing the Board to better understand our shareholders' priorities and perspectives and to incorporate them into our deliberations and decision-making.

We value the trust you place in us through your investment in McKesson. We appreciate the opportunity to serve McKesson on your behalf in 2021 and beyond, and will continue our focus on the sustainable and long-term growth of the Company. We look forward to hearing your views at this year's annual meeting and in the year to come.

Your vote is very important to us. We strongly encourage you to read both our proxy statement and annual report in their entirety prior to the Annual Meeting on July 23, 2021, and request that you support our voting recommendations.

Edward A. Mueller

Independent Chair

Notice of 2021 Annual Meeting of Shareholders

To be Held on July 23, 2021

Due to the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees and shareholders, we have decided to have a virtual annual meeting this year. The meeting will be solely by means of remote communication. You will be able to attend the Annual Meeting online, view the list of registered stockholders entitled to vote at the meeting, vote and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/MCK2021 and entering the 16-digit control number included in our Notice Regarding the Availability of Proxy Materials (Notice), voting instructions form or proxy card. Online access to the audio webcast will open approximately 15 minutes prior to the start of the Annual Meeting to allow time for you to log in and test the computer audio system.

ITEMS OF BUSINESS:

• Elect for a one-year term a slate of 9 directors as nominated by the Board of Directors;
• Ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the fiscal year ending March 31, 2022;
• Conduct a non-binding advisory vote on executive compensation;
• Vote on 1 proposal submitted by a shareholder, if properly presented; and
• Conduct such other business as may properly be brought before the meeting.

Shareholders of record at the close of business on May 28, 2021 are entitled to notice of and to vote at the meeting or any adjournment or postponement of the meeting.

June 8, 2021

By Order of the Board of Directors

Michele Lau

Senior Vice President,

Corporate Secretary and

Associate General Counsel

On June 8, 2021, we began delivering proxy materials to all shareholders of record at the close of business on May 28, 2021.The mailing address of our principal executive offices is McKesson Corporation, 6555 State Highway 161, Irving, Texas 75039.

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TABLE OF CONTENTS

Proxy Summary	1
Item 1.	Election of Directors	13
	Nominees	13
	The Board, Committees and Meetings	18
	Corporate Governance	21
	Director Compensation	26
Item 2.	Ratification of Appointment of Deloitte & Touche LLP as the Company's Independent Registered
	Public Accounting Firm for Fiscal Year 2022	29
	Audit Committee Report	30
Principal Shareholders	31
	Security Ownership of Certain Beneficial Owners	31
	Security Ownership of Directors and Executive Officers	32
Executive Compensation	33
	Compensation Discussion and Analysis	34
	Compensation Committee Report on Executive Compensation	60
	Compensation Committee Interlocks and Insider Participation	60
	2021 Summary Compensation Table	61
	2021 Grants of Plan-Based Awards Table	63
	2021 Outstanding Equity Awards Table	64
	2021 Option Exercises and Stock Vested Table	65
	2021 Nonqualified Deferred Compensation Table	66
	Executive Severance Policies	68
	Potential Payments upon Termination or Change in Control	69
	CEO Pay Ratio	71
Item 3.	Advisory Vote on Executive Compensation	72
Item 4.	Shareholder Proposal on Action by Written Consent of Shareholders	73
Annual Meeting Information	76
Appendix A	Supplemental Information: GAAP to Non-GAAP Reconciliation	A-1

Website addresses and hyperlinks are included for reference only. The information contained on or available through websites referred to and/or linked to in this Proxy Statement (other than the Company's website to the extent specifically referred to herein as required by the SEC or NYSE rules) is not part of this proxy solicitation and is not incorporated by reference into this Proxy Statement or any other proxy materials.