The Director Compensation Project: Walgreens Boots Alliance, Inc.

This post is part of an ongoing series that examines the way stock exchange independence rules relate to director compensation. We are for the most part including companies from 2016’s Fortune 500 and using information found in their 2016 proxy statements.

NASDAQ and the NYSE have similar rules with respect to director independence. NYSE Rule 303A.01 requires that each listed company’s board of directors be comprised of a majority of independent directors. A director does not qualify as “independent” if he or she has a “material relationship with the company.” NYSE Rule 303A.02(a). In addition, the director is not considered independent under NYSE Rule 303A.02(b)(ii) if the director received more than $120,000 in direct compensation, other than director’s fees, during any of the previous three years. The NYSE imposes a higher independence standard for directors serving on the company’s audit committee by requiring them to comport with Rule 10A-3 (C.F.R. §240.10A-3) (see Rule 303A.06) and requires consideration by the board of directors of certain specified factors in designating directors for the Compensation Committee. See NYSE Rule 303A.02(a)(ii).

Finally, as the Commission has noted with respect to director independence:

All compensation committee members must meet the general independence standards under NYSE’s rules in addition to the two new criteria being adopted herein. The Commission therefore expects that boards, in fulfilling their obligations, will apply this standard to each such director’s individual responsibilities as a board member, including specific committee memberships such as the compensation committee. Although personal and business relationships, related party transactions, and other matters suggested by commenters are not specified either as bright-line disqualifications or explicit factors that must be considered in evaluating a director’s independence, the Commission believes that compliance with NYSE’s rules and the provision noted above would demand consideration of such factors with respect to compensation committee members, as well as to all Independent Directors on the board.

Exchange Act Release No. 68639 (Jan. 11, 2013); see also Exchange Act Release No. 68641 (Jan. 11, 2013).

Independent directors are compensated for their service on the board. The amount of “total compensation” can be seen from examining the director compensation table from the Walgreens and Boots Alliance 2016 proxy statement. According to the proxy statement, the company paid the directors the following amounts:



Fees Earned or Paid in Cash ($)*

Stock Awards ($)**

All Other Compensation ($)***

Total ($)


Janice M. Babiak





David J. Brailer





William C. Foote





Ginger L. Graham





John A. Lederer





Dominic P. Murphy





Barry Rosenstein****





Leonard D. Schaeffer





Nancy M. Schlichting






*Includes the annual retainer and other cash retainers outline above (in all cases including deferred amounts). Directors who join the board during a specific year receive a prorated amount for his or her service during that year

**Represents the grant date (11/1/2015) fair value determined in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Certification Topic 718 of the stock grant under the Omnibus Incentive Plan to each Non-Employee Director who received this stock award (including any deferred amounts).

***Represents dividends credited to DSUs. In addition to the amounts reported, directors also are eligible to receive the same discount on merchandise purchased from the Company as is made available to employees generally.

**** Mr. Rosenstein resigned from the Board effective May 16, 2016

 Director Compensation. During the fiscal year 2015, Walgreens and Boots Alliance held twelve (12) board meetings. Each current director participated in 75% or more of the aggregate of (i) the total number of meetings of the Board held during the period for which such person has been a director, and (ii) the total number of meetings held by each committee of the Board on which such person served during the periods that such person served. The independent directors meet in executive sessions in conjunction with each regular quarterly Board meeting. The company expects all of its directors to attend the Annual Meeting of Stockholders.

 Director Tenure. In 2015, Mr. Foote, who has held his position as a member of the Board of Directors since 1997, held the longest tenure. Mr. Schaeffer and Mr. Lederer hold the shortest term as they joined in 2015. All but three of the other directors sit on other boards: Ms. Schlichting serves as a director for the Kresge Foundation, Mr. Schaeffer serves as a director of scPharmaceuticals, Mr. Pessina serves as a director for Galenice AG (a publically traded Swiss-Healthcare group) and a number of private companies including Spring Acquisitions Holdings Limited, Mr. Murphy serves as a director for Amea Holding AB & Mehilanien Oy, Acteon Group Ltd. and The Hut Group Limited and OEG Offshore Group, Mr. Graham serves as a director for a number of private companies, Mr. Foote serves as a director for Kohler Co., and Mr. Brailer serves as a director for several private companies in the healthcare sector. Additionally, Mr. Foote is a trustee of Williams College and Mr. Skinner is a trustee of the Ronald McDonald House Charities.

 CEO Compensation. Stefano Pessina, Walgreens and Boots Alliance, Inc.’s Executive Vice Chairman and Chief Executive Officer since 2015, earned total compensation of $7,133,155 in 2015. He earned a base salary of $35,850, stock awards of $7,000,006 and other compensation of $97,299. George R. Fairweather, Executive Vice President and Global Chief Financial Officer, earned total compensation of $3,047,951 in 2015 consisting of a base salary of $687,268, incentive compensation of $2,051,657 and other compensation of $309,026. Alexander Gourlay, Co-Chief Operating Officer, earned $4,495,066 in 2015. James Skinner, Executive Chairman, earned $5,480,427 in 2015.