CARDINAL HEALTH INCCAH
CARDINAL HEALTH INC Stock Compensation Disclosure
15. Share-Based Compensation
We maintain Cardinal Health, Inc. stock incentive plans (collectively, the “Plans”) for the benefit of certain of our officers, directors, and employees. Upon vesting these units convert to common shares without restrictions or future service requirements. At June 30, 2025, 15 million shares remain available for future grants under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan ("2021 LTIP"). Under the 2021 LTIP's fungible share counting provisions, stock options are counted against the plan as one share for every share issued; awards other than stock options are counted against the plan as two and one-half shares for every share issued. This means that only 6 million shares could be issued under awards other than stock options while 15 million shares could be issued under stock options. Shares are issued out of treasury shares when stock options are exercised and when restricted share units and performance share units vest. Until the end of fiscal 2018, stock options were granted to our officers and certain employees. There were no stock options granted to employees during fiscal 2025, 2024, or 2023.
During fiscal 2024, we modified the equity incentive awards of four employees to amend provisions over involuntary termination. We recognized incremental share-based compensation expense of $9 million.
The following table provides total share-based compensation expense by type of award:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Restricted share unit expense | $ | 71 | $ | 77 | $ | 64 | |||||||||||
| Performance share unit expense | 50 | 44 | 32 | ||||||||||||||
Total share-based compensation expense | $ | 121 | $ | 121 | $ | 96 | |||||||||||
The total tax benefit related to share-based compensation was $14 million, $16 million, and $12 million for fiscal 2025, 2024, and 2023, respectively. Share-based compensation expense is included in selling, general, and administrative expenses in the consolidated statements of earnings. Our consolidated statements of cash flows present our share-based compensation expense as a reconciling adjustment between net income and net cash provided by operating activities for all periods presented.
Restricted Share Units
Restricted share units granted under the Plans generally vest in equal annual installments over three years. Restricted share units accrue cash dividend equivalents that are payable upon vesting of the awards.
The following table summarizes all transactions related to restricted share units under the Plans:
| (in millions, except per share amounts) | Restricted Share Units | Weighted-Average Grant Date Fair Value per Share | |||||||||
| Nonvested at June 30, 2023 | 2.2 | $ | 57.37 | ||||||||
| Granted | 0.9 | 91.06 | |||||||||
| Vested | (1.2) | 60.47 | |||||||||
| Canceled and forfeited | (0.2) | 74.40 | |||||||||
| Nonvested at June 30, 2024 | 1.7 | 70.98 | |||||||||
| Granted | 0.7 | 108.72 | |||||||||
| Vested | (0.9) | 72.07 | |||||||||
| Canceled and forfeited | (0.1) | 94.67 | |||||||||
| Nonvested at June 30, 2025 | 1.4 | $ | 86.30 | ||||||||
The following table provides additional data related to restricted share unit activity:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Total compensation cost, net of estimated forfeitures, related to nonvested restricted share and share unit awards not yet recognized, pre-tax | $ | 64 | $ | 71 | $ | 73 | |||||||||||
| Weighted-average period in years over which restricted share and share unit cost is expected to be recognized (in years) | 2 | 2 | 2 | ||||||||||||||
| Total fair value of shares vested during the year | $ | 60 | $ | 63 | $ | 58 | |||||||||||
Performance Share Units
Performance share units generally vest over a three-year performance period based on achievement of specific performance goals. Based on the extent to which the performance goals are achieved and the Company's TSR relative to the S&P 500 Health Care Index, vested shares may range from zero to 240 percent of the target award amount. Performance share units accrue cash dividend equivalents that are payable upon vesting of the awards.
The following table summarizes all transactions related to performance share units under the Plans (based on target award amounts):
| (in millions, except per share amounts) | Performance Share Units | Weighted-Average Grant Date Fair Value per Share | |||||||||
| Nonvested at June 30, 2023 | 1.2 | $ | 82.17 | ||||||||
| Granted | 0.5 | 94.66 | |||||||||
| Vested | (0.4) | 62.26 | |||||||||
| Canceled and forfeited | — | — | |||||||||
| Nonvested at June 30, 2024 | 1.3 | 97.03 | |||||||||
| Granted | 0.5 | 113.88 | |||||||||
| Vested | (0.3) | 108.79 | |||||||||
| Canceled and forfeited | — | — | |||||||||
| Nonvested at June 30, 2025 | 1.5 | $ | 99.45 | ||||||||
The following table provides additional data related to performance share unit activity:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Total compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized, pre-tax | $ | 47 | $ | 46 | $ | 38 | |||||||||||
| Weighted-average period over which performance share unit cost is expected to be recognized (in years) | 2 | 2 | 2 | ||||||||||||||
| Total fair value of shares vested during the year | $ | 49 | $ | 20 | $ | 23 | |||||||||||
Employee Retirement Savings Plans
Substantially all of our domestic non-union employees are eligible to be enrolled in our company-sponsored contributory retirement savings plans, which include features under Section 401(k) of the Internal Revenue Code of 1986 and provide for matching and discretionary contributions by us. The total expense for our employee retirement savings plans was $89 million, $65 million, and $66 million for fiscal 2025, 2024, and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 12, 2025 | Showing above |
| 2024 | Aug 14, 2024 | |
| 2023 | Aug 15, 2023 | |
| 2022 | Aug 11, 2022 | |
| 2021 | Aug 16, 2021 | |
| 2020 | Aug 13, 2020 | |
| 2019 | Aug 20, 2019 | |
| 2018 | Aug 22, 2018 | |
| 2017 | Aug 10, 2017 | |
| 2016 | Aug 12, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.