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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a Party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
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Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material Under Rule 14a-12

Walgreens Boots Alliance, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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As a global leader in retail pharmacy, we impact millions of lives


every day by dispensing medicines, and providing accessible,


high-quality care.



OUR WHY
Purpose

More joyful lives through better health.

    

OUR WHAT
Vision

To be the leading partner in reimagining
local healthcare and wellbeing for all.


OUR HOW
Values


              

Courageous
Challenging the status-quo, addressing conflict directly, and driving informed risk-taking.

Connected
Reflecting the communities we serve, understanding the needs of others, and innovating together.

Committed
Leading with integrity, building on our legacy, and striving boldly toward the future.

Curious
Continuously learning and adapting, following the science and data, and creating paths where none existed.









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A Message from our Executive Chairman and our CEO

Dear Fellow Investors,

We are pleased to present the Walgreens Boots Alliance Proxy Statement and cordially invite you to our 2022 Annual Meeting of Stockholders to be held on Thursday, January 27, 2022 at 8:30 a.m. Central Time at the Four Seasons Hotel Chicago.

As you know, this has been an extraordinary year for Walgreens Boots Alliance. The pandemic definitely allowed us to step up like never before and deliver in so many ways.

However, we are just getting started in terms of how we can mobilize to solve big, complex problems in healthcare and build on our strengths, and our current momentum is expected to lead to sustainable, profitable growth. We also see many ways that we can do even more good for the world, including addressing some of the social determinants that result in health disparities.

Bill Foote, our Board’s lead independent director, shares more of these details on the next page. First though, we want to outline briefly our plans for the future, which we discussed in more depth during our Investor Event in October.

As we move forward, we are committed to transparency, accountability, and extremely well thought out strategy, and to achieve our goals, we will be laser focused on acceleration, execution, and accountability. We have put in place a series of KPIs to report back regularly on our progress with our four key strategic priorities, which align closely with our Purpose, Vision, and Values. These priorities are:

1.

Transform and align the core. We will build the pharmacy of the future by reimagining retail through expanded health and wellness offerings and mass personalization, accelerating our brands and digital offerings, and expanding our Transformational Cost Management Program.

2.

Build the next growth engine with consumer-centric healthcare solutions. We will move quickly to become a leading provider of local clinical care services, while also leveraging a consumer-centric technology and pharmacy network to deliver value-based care. As core to this approach, we will strengthen partnerships with payors, providers, and patients.

3.

Focus the portfolio and optimize capital allocation. We will prioritize our core assets and healthcare ambitions in order to maximize value.

4.

Build a high-performance culture and a winning team. We will attract and retain a best-in-class, diverse team.

We deeply appreciate your support as we go on this journey together, and work toward achieving even better outcomes for our patients and customers and further returns for all of you.

Sincerely,

    

Stefano Pessina
Executive Chairman

Rosalind G. Brewer
Chief Executive Officer

2022 Proxy Statement       3


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A Message from our
Lead Independent Director

 

“When I look back at the year since we last met, I would characterize it as a year of change. And change is not always easy but is a necessary component of a successful company over the long term.”

Dear Fellow Stockholders,

As your lead independent director, I look forward to welcoming you to our 2022 Annual Meeting of Stockholders.

When I look back at the year since we last met, I would characterize it as a year of change. And change is not always easy but is a necessary component of a successful company over the long term. First, as a result of a rigorous process to find the Company’s next Chief Executive Officer, we were pleased to appoint Rosalind G. Brewer as the Company’s new leader. Roz’s energy, focus and expertise have revitalized the Company and could not be more timely as we focus on execution of our integrated healthcare, pharmacy and retail strategy. Although the Company’s transformation will take time, we as a Board could not be more excited about the future of the Company and the leadership that we have in place to execute our plans.

We continued to make stockholder engagement a priority in 2021. I, along with Nancy Schlichting, our Compensation and Leadership Performance Committee Chair, personally engaged with many stockholders on executive compensation. We were intent on understanding specific stockholder feedback related to our executive compensation program and our say on pay vote last year, and believe stockholders were pleased to hear the changes being made to our programs for fiscal 2021, including the addition of objective diversity, equity and inclusion (DEI) goals.

Environmental, social and governance (ESG) matters were also at the forefront of our conversations with stockholders. We believe that ESG success is an important component of our overall success as a company. We maintain our focus on our Company’s ESG strategy, which is centered on the health and well-being of our communities, our employees and our planet.

Our stockholders have been clear about their desire to ensure that we are caring for our employees, especially in this time of crisis as the COVID-19 pandemic has continued and given our role as an integral part of the response to the pandemic. The Company made extraordinary efforts to care for employees and provide flexibility to promote personal and professional success, and our efforts have been recognized by JUST Capital and Forbes, which ranked Walgreens 19 out of 100 of the largest U.S. employers for COVID-19 response.

We heard that DEI is a critical focus for our stockholders. The Company has ingrained DEI in everything we do, as evidenced through our addition of DEI metrics as a part of our Company-wide compensation program. Our 2020-21 DEI Report provides further evidence of our focus as a company to be a leader in these efforts. Finally, our commitment to transparency around our DEI efforts can be seen through our decision to release our EEO-1 data on an annual basis, which the Board overwhelmingly agreed should be public for all of our stakeholders.

On behalf of my fellow independent directors and the entire Board, we thank you for your partnership with WBA. We thank you for your investment in WBA. And finally, we appreciate your trust and confidence in our leadership.

Sincerely,



William C. Foote
Lead Independent Director


4       Walgreens Boots Alliance, Inc.


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Notice of 2022 Annual Meeting of Stockholders

Date and Time
Thursday, January 27, 2022
at 8:30 a.m.
Central Time
      Location
Four Seasons Hotel Chicago
120 East Delaware Place
Chicago, Illinois 60611
      Who Can Vote
The Board of Directors has fixed the close of business on November 29, 2021 as the record date. You are entitled to vote at the Annual Meeting and at any adjournment thereof if you were a holder of the Company’s common stock as of the close of business on November 29, 2021.

Proposals That Require Your Vote      Board Recommendation      Learn More
1 Vote on the election of 10 director nominees named in this Proxy Statement FOR each nominee Page 18
2 Approve, on an advisory basis, our named executive officer compensation FOR Page 57
3 Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending August 31, 2022 FOR Page 99
4-6 Consider three stockholder proposals, if properly presented at the meeting AGAINST Page 103

Stockholders will also transact such other business as may properly be brought before the meeting or any adjournment thereof by or at the direction of the Board of Directors.

Your vote is important. Please vote by Internet, telephone or mail as soon as possible to ensure your vote is recorded properly. Stockholders of record may vote without attending the Annual Meeting by one of the following methods:

Mail
Complete, sign and date the enclosed proxy card and return it in the prepaid envelope provided.

   

Telephone
Call the toll-free telephone number 1-800-690-6903 and follow the recorded instructions.

   

Internet
Go to https://www.proxyvote.com and follow the instructions on the website.

These proxy materials are first being sent (or, as applicable, made available) to stockholders commencing on December 8, 2021.

If you want to attend the Annual Meeting in person, you must pre-register and obtain an admission ticket in advance and have a valid, government-issued photo identification. To do so, please follow the instructions on page 115 of this Proxy Statement.

By order of the Board of Directors,
 
Joseph B. Amsbary, Jr.
Vice President, Corporate Secretary
December 8, 2021
Walgreens Boots Alliance, Inc.
108 Wilmot Road
Deerfield, Illinois 60015
(principal executive office)

2022 Proxy Statement       5


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Contents

A Message from our Executive Chairman and our CEO 3
A Message from our Lead Independent Director 4
Notice of 2022 Annual Meeting of Stockholders 5
Our Company 7
Proxy Voting Roadmap 12
Corporate Governance 18
   
Proposal 1 Election of Directors 18

Director Nomination Process 19        Board Responsibilities 35
Board Membership Criteria 20 Board Structure 41
2022 Director Nominees 22 Board Committees and Meetings 44
Board Effectiveness is the Foundation of Our
Corporate Governance
33 Board Operation and Additional Governance Matters 47
Director Independence and Related Party Transactions 49
Our Commitment to Strong Corporate Governance 34 Director Compensation 52

Security Ownership of Certain Beneficial Owners and Management 55
 
Proposal 2 Advisory Vote to Approve Named Executive Officer Compensation 57
     
Executive Compensation     58
Compensation Discussion and Analysis 58 Executive Compensation Tables and Supporting Information 85
Compensation Committee Report 84

CEO Pay Ratio 97
Equity Compensation Plan Information 98
 
Proposal 3 Ratification of the Appointment of Deloitte & Touche LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2022 99
 
Audit Committee Report 101
   
Proposal 4-6 Stockholder Proposals 103
 
Questions and Answers About the Proxy Materials and the Annual Meeting 110
Additional Information 115
Attending the Annual Meeting 115        Other Proposals or Director Nominations for Presentation at
the 2023 Annual Meeting
116
Stockholder Proposals for Inclusion in the Proxy Statement for
the 2023 Annual Meeting
116
Cautionary Note Regarding Forward-Looking Statements 117
Director Nominations for Inclusion in the Proxy Statement for
the 2023 Annual Meeting
116 Other Matters 117
Appendix A Reconciliation of GAAP and Non-GAAP Financial Measures 118

Our Board of Directors (the “Board”) is soliciting your proxy on behalf of the Company for our 2022 annual meeting of stockholders (the “Annual Meeting”), which will be held on January 27, 2022 at 8:30 a.m., Central Time, or any adjournment or postponement thereof. This Proxy Statement (this “Proxy Statement”) and the accompanying Notice of Annual Meeting of Stockholders and proxy card are being distributed, along with the 2021 Annual Report, beginning on December 8, 2021 to holders of our common stock, par value $0.01 per share, as of the close of business on November 29, 2021 (the “Record Date”). The Proxy Statement Summary highlights selected information that is provided in more detail throughout this Proxy Statement. The Proxy Statement Summary does not contain all of the information you should consider before voting. You should read the full Proxy Statement before casting your vote.

Unless otherwise stated, references herein to the “Company,” “WBA,” “we,” “us,” and “our” refer to Walgreens Boots Alliance, Inc. Unless otherwise stated, all information presented in this Proxy Statement is based on our fiscal calendar, which ends on August 31 (e.g., references to “2021” refer to the fiscal year ended August 31, 2021).

6      Walgreens Boots Alliance, Inc.


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Our Company

Company Overview

Walgreens Boots Alliance is the largest retail pharmacy, health and daily living destination across the United States and Europe, with sales of $132.5 billion in the fiscal year ended August 31, 2021. We are an integrated pharmacy, healthcare and retail leader serving millions of customers and patients every day, with a 170-year heritage of caring for communities. Through dispensing medicines, improving access to a wide range of health services, providing high quality health and beauty products and offering anytime, anywhere convenience across its digital platforms, WBA is shaping the future of healthcare.

Our company’s three segments are United States, International and Walgreens Health. We provide customers with convenient, omni-channel access through our portfolio of consumer brands: Walgreens, Boots, Duane Reade, the No7 Beauty Company, Benavides in Mexico and Ahumada in Chile. Additionally, WBA has a portfolio of healthcare-focused investments located in several countries, including China and the U.S. We continually seek to drive further innovative ways to address global health and wellness challenges. Strategic partnerships with some of the world’s leading companies enable our company to extend our healthcare solutions and convenience offerings to the communities we serve.

More information about our Company can be found on our corporate website and in our Annual Report.

Directly employs more
than 315,000 people
Operations in 9 countries
The largest retail pharmacy,
health and daily living
destination across the U.S.
and Europe
A global leader in
pharmacy-led, health
and well-being retail with
approximately 13,000 stores
in 9 countries
One of the world’s
largest purchasers of
prescription drugs

Leading During the Pandemic

Our Company’s essential role in healthcare has been put to the test during the unprecedented global COVID-19 pandemic. We rose to the challenge, living our purpose to create more joyful lives through better health. Our people have worked tirelessly on the front lines to help vulnerable people adhere to their medications and stay healthy, deliver millions of vaccinations worldwide, ramp up new testing services, implement delivery options including free prescription delivery, expand our digital and telehealth capabilities and ability to fill orders, facilitate supply chain continuity and access to essential items and help keep our patients, customers and team members safe.

45M
COVID-19 vaccinations

To date Walgreens has administered approximately 45 million COVID-19 vaccinations, including 34.6 million in fiscal 2021.

      

16M+
COVID-19 tests

Walgreens has administered more than 16 million COVID-19 tests to date.

     

3.7M+
COVID-19 tests

Boots is one of the UK’s leading COVID-19 test providers with more than 3.7 million COVID-19 tests administered to date, the majority in partnership with the National Health Service (NHS).

Steps to support and recognize team members

Walgreens recognized pharmacy team members for their critical role in fighting the pandemic through new bonuses and rewards, as well as increased starting wage for U.S. team members to $15.00 an hour to be fully implemented by November 2022.

2022 Proxy Statement       7


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  Our Company  

2021 Business Highlights

2021 Performance Highlights

Sales1        Reported EPS1        Adjusted EPS1,2
$132.5B
up 8.6% year-on-year
$2.30
up from $0.20 in the year ago period
$4.91
up 14.6% year-on-year
         
Free cash flow2 Net Cash from Operating Activities
$4.2B
an increase of $65 million from fiscal 2020
$5.6B
an increase of $70 million from fiscal 2020

1 Results are for WBA continuing operations and do not include operations discontinued following completion of the sale of Alliance Healthcare.
2 Non-GAAP financial measures. Please refer to Appendix A beginning on page 118 for related definitions and reconciliations to the most directly comparable U.S. GAAP financial measures.

Leadership Transition

On March 15, 2021, the Company was excited to welcome our new Chief Executive Officer (“CEO”) and member of the Board of Directors, Rosalind G. Brewer, following an extensive search process. Ms. Brewer is an extraordinary leader and a consumer and retail industry expert with a distinguished career, having served most recently as Chief Operating Officer and member of the Board of Directors of Starbucks Corporation.

As planned, upon Ms. Brewer’s succession as CEO, Mr. Pessina resigned as CEO and Executive Vice Chairman of the Board and was appointed as the Executive Chairman of the Board. In addition, upon Mr. Pessina assuming his new role, James A. Skinner resigned as Executive Chairman and has remained on the Board to provide continuity to the Board during the management transition.

8      Walgreens Boots Alliance, Inc.


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  Our Company  

Environmental, Social and Governance Highlights

Our Approach to ESG

Healthy Communities

Access to Affordable and Quality Healthcare

We have introduced performance metrics to measure our progress in the U.S., where access to quality and affordable healthcare is a priority issue:

Performance Metric Fiscal 2020 Performance
Number of new in-store health service locations that increase access Increased 64%, driven primarily by expanded nutrition and weight management and lab locations through our collaborations with Jenny Craig and Labcorp. The increase also includes primary care, dental and Medicare services.
Number of collaborations with healthcare service providers covered on the Walgreens app through Walgreens Find Care, which help increase access 40, including services offering diabetes management, telehealth such as virtual primary care doctor visits, pain management, eye exams, laboratory testing, weight loss support, teletherapy for mental health, sleep solutions and more.

Addressing the High Cost of Care

Co-Pay Assistance Secured through Supply Chain
Collaborations
      Free Flu Vaccination Voucher Commitment in the U.S.
$430M $5M
     
in fiscal 2020 for approximately 829,000 patients in the U.S. through 2024

2022 Proxy Statement       9


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  Our Company  

Healthy and Inclusive Workplace

Focus on Employee Safety and Well-Being and Diversity, Equity and Inclusion

Focus Actions
Employee Safety In the U.S., the Company created a task force and COVID-19 pandemic response team that worked seven days a week to roll out training, conduct disease monitoring and surveillance, and establish and communicate COVID-19 employee compensation tools and support, including a Communicable Disease Policy and dozens of custom COVID-19 playbooks. The Company provided personal protective equipment to our employees and implemented cleaning policies and safety procedures across our stores.
Employee Well-Being At the onset of the COVID-19 pandemic, the benefits team quickly launched a COVID-19 tool kit and resources, including free counseling sessions, information about government assistance under the CARES Act and retirement savings plan changes. During the pandemic, the Company also paid stipends to employees, introduced new paid time off benefits and increased its employee aid programs to serve employees in need.
Diversity, Equity and Inclusion We launched DEI goals in fiscal 2021, which are components of our incentive compensation program in order to create accountability and sharpen the Company’s focus and efforts on DEI.

Sustainable Marketplace

WBA is committed to ethical and responsible sourcing and promotes these practices through our rigorous supplier assessments program, supplier diversity program and new supplier sustainability program.

Ethical Sourcing
We screen owned-brand suppliers against social and environmental criteria and assess them using a detailed, matrix-based grading based on internationally recognized standards – the Ethical Trading Initiative Base Code and International Labor Organization Conventions and Recommendations. We have also partnered with The Sustainability Consortium in developing a Global Supplier Sustainability Program that aims to provide greater transparency around the social and environmental performance in our owned brand supply chain.

Supplier Diversity
We developed new processes in fiscal 2020 to further track and ensure increased diversity in sourcing. For example, across Walgreen Co. (“Walgreens”), we activated 32 supplier diversity ambassadors who support and implement the supplier diversity strategy within their respective functions. We also have included supplier diversity as a DEI goal for fiscal 2021 which are components of our employee compensation program.

Packaging, Labeling and Transparency
The Company has a WBA Global Plastics Task Force which oversees our approach to the issue of plastics across businesses – developing holistic policies and implementing operational changes. The Company also supports a number of organizations, including the Consumer Goods Forum and the Sustainable Packaging Coalition, seeking industry-wide solutions for plastics. The Company is committed to processing all new owned brand items and items being rebranded through the How2Recycle program. During fiscal 2020, How2Recycle labeling was introduced on more than 500 new basic owned brand items and more than 300 new seasonal items, in addition to hundreds of products that already carried the label.

10      Walgreens Boots Alliance, Inc.


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  Our Company  

   Healthy Planet

WBA’s work to reverse climate change impacts

30%    

TOP 100

   

20%

   

Boots UK along with more than 70 other retailers has joined The British Retail Consortium Climate Action Roadmap to be carbon neutral by 2040.

reduction in WBA’s absolute Scope 1 and Scope 2¹ carbon emissions by 2030 compared with fiscal 2019.

WBA has been listed on 3BL Media’s 100 Best Corporate Citizens List 2021 for outstanding environmental, social and governance transparency.

reduced energy intensity across 100 million square feet of retail space between fiscal 2011 and fiscal 2020. Walgreens was recognized by the U.S. Department of Energy as a 2021 Better Buildings Challenge Goal Achiever.

2,020

39,000     

4.3+
million

20.2
million     

metric tons of throwaway plastic packaging removed from Boots and No7 Beauty Company seasonal gift products in 2020.

bees in a Walgreens on-campus hive, to support pollination efforts in a three-mile radius around campus.

contact lenses recycled by Boots Opticians, Johnson & Johnson Vision (JJV) & TerraCycle since April 2019.

Boots paper bags purchased in the UK, which replaced plastic bags. All profits from sales of bags are donated to charity.

93%

1500

65%

of waste from 18 Walgreens distribution facilities in the U.S. and Puerto Rico diverted from landfill in fiscal 2020.

Liz Earle Beauty Co. achieved CarbonNeutral certification, in accordance with The CarbonNeutral Protocol, the leading global framework for carbon neutrality.

recycled Red Noses used to create one Buddy Bench. Walgreens and Red Nose Day have made 20 benches so far and donated them to schools, thus recycling the material and avoiding landfill.

carbon footprint reduction from new No7 glass jar. Approx. 740 tons of plastic removed per year. Calculated using the Sustainable Packaging Initiative for CosmEtics (SPICE) methodology.

700

100%

100%

No7 Beauty Company joined the Sustainable Packaging Initiative for CosmEtics (SPICE) to measure sustainability and carbon footprint of cosmetics packaging.

Boots UK stores with Boots and No7 takeback scheme rewarding customers for returning hard-to-recycle plastics. Recycled materials used to make Christmas trees and chairs.

Boots UK and No7 Beauty Company brands use Roundtable Sustainable Palm Oil (RSPO) certified palm oil, including use of credits.

renewable energy used in Boots Ireland stores and support office.

60%

Farmacias Benavides stores sell reusable bags with part of the profit going toward a reforestation project with Reforestación Extrema that helps plant trees across Mexico.

Boots UK signed up to the UK Plastics Pact in 2018, along with more than 100 members to work collectively to transform the UK plastic packaging sector by 2025.

Liz Earle Beauty virgin plastic reduced in Daily Essentials range 2020-2021, which amounts to a 75 metric tons reduced.

¹ Scope 1 = direct emissions from owned sources. Scope 2 = indirect emissions from purchased power and heat.
Learn more about our ESG and DEI commitments by reading our 2020 CSR Report and 2020-21 DE&I Report.

2022 Proxy Statement     11


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Proxy Voting Roadmap

  Proposal 1  
Election of Directors
A Snapshot of Our 2022 Nominees

Independence

8 of 10 nominees are independent

Each member of the Audit Committee, the Compensation and Leadership Performance Committee (“CLP Committee”), and the Nominating and Governance Committee is independent

Tenure

Less than 10 years average tenure

2 nominees appointed since October 2020; both of whom are women and racial minorities

Age

Approximately 65 years average age

Diversity

Two African American women on the Board

One-half of director nominees are women

Highly Engaged Board

In fiscal 2021, all directors attended at least 75% of the total number of Board and applicable Committee meetings

10 Board and 23 Committee meetings held during fiscal 2021


Skills, Qualifications and Experience

The Board has identified key skills, qualifications and experience that are important to be represented on the Board as a whole in light of our current business strategy and expected needs. Our nominees have the following skills, qualifications and experience:

Business Development and M&A
     

Global Operations
 

 

 

Finance and Accounting

Current or Former Public Company CEO
 

 

 

Human Capital

Retail or Consumer-Facing Industries
 

 

Corporate Governance
 

Risk Management
 

 

Healthcare or Regulated Industries
 

Technology or E-Commerce
 

12      Walgreens Boots Alliance, Inc.


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  Proxy Voting Roadmap  

Board of Directors

The Board consists of highly experienced and accomplished directors who are uniquely qualified to oversee our business. The following table provides summary information about each director nominee as of the Record Date. Each director stands for election annually. On October 19, 2021, José E. Almeida notified us that he had decided not to stand for re-election in order to focus on other commitments. Additionally, James A. Skinner is not being renominated now that the orderly leadership transition of the Company has been accomplished. Detailed information about each director nominee’s background, skill set and areas of experience can be found beginning on page 22 of the Proxy Statement.

Director Nominee Details

Name and Principal
Occupation
Director
Since
(Calendar
Year)
Currently Serving on
Other Public Boards
Committee
Memberships
Independent Age A C F N

Janice M. Babiak

Former Managing Partner, Ernst & Young LLP

63 2012
Bank of Montreal
Euromoney Institutional Investor PLC

David J. Brailer

Chairman, Health Evolution Partners

62 2010

Rosalind G. Brewer

Chief Executive Officer, Walgreens Boots Alliance, Inc.

59 2021

William C. Foote

Lead Independent Director, Walgreens Boots Alliance, Inc.

70 1997

Ginger L. Graham

Former President and CEO, Amylin Pharmaceuticals

66 2010
Clovis Oncology, Inc.

Valerie B. Jarrett

Chief Executive Officer, Obama Foundation

65 2020
Lyft, Inc.
Ralph Lauren Corporation
Sweetgreen, Inc.

John A. Lederer

Senior Advisor, Sycamore Partners

66 2015
NextPoint Financial, Inc.
US Foods Holding Corp.

Dominic P. Murphy

Managing Partner and Co-Head of UK Investments, CVC Capital Partners

54 2012
THG Holdings plc

Stefano Pessina

Executive Chairman, Walgreens Boots Alliance, Inc.

80 2012

Nancy M. Schlichting

Former CEO, Henry Ford Health System

67 2006
Hill-Rom Holdings, Inc.
Encompass Health Corporation
Chair Member A Audit C Compensation and Leadership Performance F Finance N Nominating and Governance

2022 Proxy Statement     13


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  Proxy Voting Roadmap  

Corporate Governance




















Key Governance Practices
Annual Election of All Directors;
Majority Voting for All Directors in Uncontested Elections;
Cumulative Voting for Election of Directors;
No Supermajority Voting Provisions;
No Stockholder Rights Plan (“Poison Pill”);
3%, 3-Year Proxy Access By-law;
Stockholder Right to Request Special Meetings at 20%;
Stockholder Right to Act by Written Consent;
Active Stockholder Engagement;
Enhanced Commitment to Diversity, including Women and Minorities, in Corporate Governance Documents;
Independent Lead Director Responsibilities;
Regular Executive Sessions of Independent Directors;
Annual Board and Committee Evaluation Process;
Strategic and Risk Oversight by Board and Committees;
Commitment to Sustainability at the Senior Executive and Board Levels;
Stock Ownership Guidelines for Executives and Directors;
Policies Prohibiting Hedging and Short Sales of Stock by Directors, Executives and Senior Employees; and
Board Composition Requirement of Two-Thirds Independent Directors.
Fiscal 2021 Stockholder Engagement
We value an open dialogue with our stockholders, and we believe that regular communication with our stockholders and other stakeholders is a critical part of enabling our long-term success. We engage with our stockholders and the broader corporate governance community through a continuous engagement program, which is management-led and overseen by the Board. In fiscal 2021, topics discussed were wide-ranging, including Board oversight of response to the COVID-19 pandemic, Board oversight of strategy and risk management, corporate governance and Board succession planning, executive compensation, diversity, equity and inclusion and human capital, and sustainability and corporate social responsibility initiatives.
Fiscal 2021 Outreach Board Participation

Reached out to approximately 40 of our largest stockholders representing over 47% of our outstanding stock (as of August 31, 2021, excluding shares held by affiliates of Stefano Pessina, our Executive Chairman).

Lead Independent Director/Chair of Nominating and Governance Committee
Chair of CLP Committee
Outreach Related to our Say on Pay Vote
Our 2021 stockholder engagement focused heavily on executive compensation as we sought to understand the results from our 2021 annual meeting, at which our say on pay proposal received the support of approximately 47% of the votes cast.
During fiscal 2020, after careful consideration and in light of the impact of the COVID-19 pandemic and to recognize the extraordinary efforts of our executives and broader team members to address the pandemic and to keep our business strategy moving forward, the CLP Committee made the decision to exercise discretion in the payout of our long-term incentive program. The Board and the CLP Committee believe positive discretion should be limited to extraordinary circumstances. Prior to fiscal 2020, the CLP Committee had not exercised such discretion. As we learned through our extensive outreach, the use of discretion was the primary reason many of our stockholders did not vote to support our fiscal 2020 Say on Pay vote.
Our constructive dialogue with stockholders provided an additional opportunity to clarify the CLP Committee’s rationale, balanced approach and use of objective metrics in connection with its fiscal 2020 decisions and to continue listening to stockholder feedback related to our executive compensation programs. In addition, we were able to outline the programmatic changes to our compensation programs that were designed to be responsive to stockholder feedback, particularly in light of the decision to exercise discretion.
The Board and the CLP Committee take very seriously the voting results and the feedback received from our stockholders. We believe that the results of last year’s vote on executive compensation were unusual because of the unique circumstances of fiscal 2020, as reflected by the fact that the Company has received an average approval over the prior three years of 91% of the votes cast for our executive compensation programs. However, the CLP Committee will consider investor feedback if it believes that circumstances warrant the exercise of positive discretion in future years. Notably and as discussed further herein, the CLP Committee chose to use negative discretion in the performance share payout to the named executive officers for fiscal 2021.
As a result of ongoing feedback and to further our strategy, the CLP Committee implemented several changes to our compensation programs effective for fiscal 2021 as discussed below and in the “Compensation Discussion and Analysis”.


The Board recommends a vote FOR each of the director nominees. See Page 18

14      Walgreens Boots Alliance, Inc.


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  Proxy Voting Roadmap  

  Proposal 2  
Advisory Vote to Approve Named Executive Officer Compensation
 
Compensation Philosophy

The CLP Committee’s focus is to provide a competitive compensation package that enables us to:
Attract and retain talented executives;
Reward Company and individual performance; and
Link the interest of our senior executives to the interests of our stockholders.
Our executive compensation program is designed to:
Be competitive with the pay practices of other companies of comparable size, scope and industry;
Attract and retain executives who can contribute to our future success
Create a strong linkage between pay and performance through the use of variable performance-based short-term and long-term incentive awards, such that executives will receive higher compensation in more successful periods for the Company and lower compensation during less successful periods; and
Incentivize leaders to support the Company’s culture and model desired behaviors, ensuring ethical behavior.

Fiscal 2021 Compensation Program – Reflects Changes in Our Business, Transformation Goals and Stockholder Feedback

In response to the changes in our business, our transformation goals, and our ongoing stockholder engagement, the CLP Committee, with the advice of our independent compensation consultant, implemented several changes to our executive compensation programs for fiscal 2021. More detailed information regarding stockholder feedback can be found in “Corporate Governance” above and “Compensation Discussion and Analysis” below.

Fiscal 2021 Program Changes   Responsiveness and Rationale

Former CEO Elected No Compensation

     

In response to the impact of COVID-19 on our business and to support our front-line team members, Mr. Pessina elected not to receive any compensation for fiscal 2021, other than limited perquisites and, therefore, did not participate in the November fiscal 2021 long-term equity grants.

No Salary Increases for Executive Vice Presidents

In response to the impact of COVID-19 on our business and to support our front-line team members, no salary increases were provided to the EVP-level executives in recognition of the challenges presented to the business.

No discretionary adjustments resulting in increased incentive plan payouts

In response to significant stockholder feedback and consistent with our executive compensation framework that emphasizes pay and performance, fiscal 2021 payouts under both our short-term cash and long-term equity incentives were based on formulaic results. For the long-term performance shares, the CLP Committee determined that exercising negative discretion was appropriate to decrease the fiscal 2021 payout amounts for our named executive officers from 106.8% to target (or 100%).

 NEW     New Short-Term Cash Incentive Metrics(1):

Adjusted Operating Income (“AOI”)
Free Cash Flow
DEI

In response to significant stockholder feedback that we consider multiple metrics and in support of business objectives and consistent with market trends, we added Free Cash Flow and Diversity Equity & Inclusion (“DEI”) as metrics to our short-term cash incentive plan. We believe this mix of incentive metrics balances business performance with investment in our future.

AOI continues to be viewed as a key metric in driving business performance.
Focus on growing our Free Cash Flow will allow us to continue to invest in our business strategy for the future.
DEI is a critical objective for our business and we believe incorporating a metric into our incentive programs demonstrates our commitment to diversity, equity and inclusion throughout our business.

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  Proxy Voting Roadmap  

Fiscal 2021 Program Changes Responsiveness and Rationale

 NEW  New Long-Term Equity Incentive Metrics and Structure for Performance Shares:

 

In response to significant stockholder feedback that we consider multiple metrics and market trends, as well as to support the growth of our long-term strategies and creating value for our stockholders, we added Adjusted Revenue Growth as a long-term incentive metric. We also restructured our performance shares to address the challenge of setting meaningful targets over a cumulative three-year period, which has become increasingly difficult in the COVID-19 environment and fails to adequately provide for unknown and unplanned macroeconomic or strategic changes.

Adjusted EPS Growth continues to be viewed as a strong measure of our long-term Company performance.
Adjusted Revenue Growth as a long-term metric will help focus executives on growing existing revenue and identifying new revenue streams to continue the long-term growth of the Company.

Targets for each fiscal year are set at the beginning of the three-year performance period. The final payout will be based on the simple average of the three annual performance periods.

Target Pay Mix(1)

Rosalind G. Brewer (CEO)

Average of All Other NEOs

(1) Target pay mix is based on total direct compensation (i.e., annual base salary, target annual cash incentive and target long-term incentive compensation) and excludes one-time or sign-on awards and other elements of compensation, including perquisites. For Ms. Brewer, the target pay mix is based on her annual direct compensation agreed to pursuant to the terms of her employment agreement and includes the target long-term incentive award that was granted in fiscal 2022.

Leadership Transition

Ms. Brewer’s compensation as our new CEO was recommended by our independent compensation consultant, Mercer, and is consistent with median pay at our peer companies. The chart above reflects her target pay mix; however, for fiscal 2021, Ms. Brewer’s target Annual Cash Incentive award was pro-rated and she did not receive a fiscal 2021 long-term equity incentive award. In connection with Ms. Brewer’s appointment, she received one-time sign-on awards to replace cash and a portion of equity awards forfeited when she left her prior employer and resigned from the board of directors of Amazon.com, Inc.

Mr. Pessina received no compensation, other than limited perquisites, for the portion of fiscal 2021 that he served as Executive Chairman. Mr. Skinner received an award of performance-based Restricted Stock Units (“RSUs”) that will be prorated based on the portion of fiscal 2021 during which he served as Executive Chairman also then received a pro-rated retainer and equity award for the portion of fiscal 2021 during which he served as a Non-Employee Director.

More detailed information regarding Ms. Brewer’s, Mr. Pessina’s and Mr. Skinner’s compensation arrangements with the Company can be found in “CEO and Executive Chairman Compensation.”

The Board recommends a vote FOR this proposal. See Page 57

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  Proxy Voting Roadmap  

Proposal 3
Ratification of the Appointment of Deloitte & Touche LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2022
The Audit Committee has re-appointed Deloitte to serve as our independent registered public accounting firm and as auditors of our consolidated financial statements for fiscal 2022.
Deloitte has been the independent registered public accounting firm of the Company (including its predecessor Walgreens) since May 2002.
Deloitte provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding Deloitte’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed and confirmed with Deloitte its independence.

The Board recommends a vote FOR this proposal. See Page 99

Proposals 4-6
Stockholder Proposals

Proposal 4 – Stockholder Proposal Requesting Conversion to a Public Benefit Corporation

Stockholder requests that our Board of Directors take steps to amend the Company’s certificate of incorporation to become a public benefit corporation.

Proposal 5 – Stockholder Proposal to Reduce the Ownership Threshold for Calling Special Meetings of Stockholders

Stockholder requests that our Board of Directors amend the Company’s governing documents to give the owners of 10% of outstanding common stock the power to call a special shareholder meeting.

Proposal 6 – Stockholder Proposal Requesting Report on Public Health Costs Due to Tobacco Product Sales and the Impact on Overall Market Returns

Stockholders request the Board of Directors commission and disclose a report on the external public health costs created by the sale of tobacco products by the Company and the manner in which such costs affect the vast majority of its stockholders who rely on overall market returns.


The Board recommends a vote AGAINST each stockholder proposal. See Page 103

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Corporate Governance

Proposal 1
Election of Directors
 

What am I voting on?
Stockholders are being asked to elect 10 director nominees named in this Proxy Statement for a one-year term.

What is the Board’s voting recommendation?

  Vote FOR

The Board recommends a vote FOR each of the director nominees named in this Proxy Statement. Valid proxies solicited by the Board will be so voted unless stockholders specify a contrary choice in their voting instructions.

What is the required vote?
With respect to the election of directors, the number of votes FOR a director’s election must be a majority of the votes cast by the holders of the shares of our common stock voting in person or by proxy at the Annual Meeting with respect to that director’s election. Abstentions with respect to a director will have the same effect as a vote “AGAINST” him or her.

Upon the recommendation of the Nominating and Governance Committee, the Board has nominated 10 directors for election at the Annual Meeting, each to hold office until our next annual meeting of stockholders and until his or her successor is duly elected and qualified or upon his or her earlier death, resignation, or removal. On October 19, 2021, Mr. Almeida notified us that he had decided not to stand for re-election in order to focus on other commitments. Additionally, Mr. Skinner is not being renominated for election now that the orderly leadership transition of the Company has been accomplished.

All of the nominees are currently serving as directors of the Company. Each nominee was elected to the Board by our stockholders at our 2021 annual meeting of stockholders (the “2021 Annual Meeting”) with the support of more than 93% of votes cast, other than Rosalind Brewer who was appointed to the Board in March 2021. All of the nominees are expected to attend the Annual Meeting.

Each nominee has agreed to be named in this Proxy Statement and to serve if elected. Consequently, we know of no reason why any of the nominees would be unable or unwilling to serve if elected. However, if any nominee is for any reason unable or unwilling to serve, the proxyholders intend to vote all proxies received by them for any substitute nominee proposed by the Board (consistent with any applicable terms of the Shareholders’ Agreement, as defined and described further in “—Director Nomination Process—Shareholders’ Agreement and Other Arrangements with Mr. Pessina” below), unless the Board instead chooses to reduce its size.

We are committed to the principle that a firm foundation of board effectiveness is essential to best serve the interests of stockholders, guide the Company and oversee management. As is detailed below in “Corporate Governance—Board Effectiveness is the Foundation of Our Corporate Governance,” we believe that our Board functions in an effective manner and that this is a result of having a strong Lead Independent Director to work alongside our Executive Chairman, the right combination of diverse and expert individuals on the Board, and having the right processes and structures in place to promote the efficient, engaged and dynamic execution of the Board’s duties and responsibilities.

 
 
 
 
 
 

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  Corporate Governance  

Director Nomination Process

We believe decisions regarding the structure and composition of the Board are critical to ensuring a strong Board that is best suited to guide the Company. As specified in its charter, the Nominating and Governance Committee oversees our director nomination process.

1
Consideration of Necessary Skills, Experience and Attributes

The Nominating and Governance Committee considers a wide range of factors when assessing potential director nominees. It actively seeks out women and individuals from minority groups to include in the pool from which Board nominees are chosen. The Nominating and Governance Committee’s assessment of potential directors includes a review of the potential nominee’s judgment, experience, independence, understanding of our business or other related industries, and such other factors as the Nominating and Governance Committee concludes are pertinent in light of the needs of the Board. The Nominating and Governance Committee’s goal is to put forth a diverse slate of candidates with a combination of skills, experience, viewpoints, perspectives and personal qualities that will best serve the Board, the Company, and our stockholders.

2
Nominating and Governance Committee Assessment

With respect to the potential re-nomination of current directors, the Nominating and Governance Committee assesses their current contributions to the Board. Among other matters, the Nominating and Governance Committee considers the results of the annual evaluation of the Board and its Committees, which the Nominating and Governance Committee also oversees, when assessing potential director nominees. More detail regarding this annual evaluation process can be found in “Corporate Governance—Board Operation and Additional Governance Matters—Board Evaluation and Director Peer Review Process” below.

3
Nomination for Stockholder Vote

The Nominating and Governance Committee recommends to the Board a slate of candidates for election at each annual meeting of stockholders. The Nominating and Governance Committee assesses how each potential nominee would impact the skills and experience represented on the Board as a whole in the context of the Board’s overall composition and the current and future needs of the Company and the Board. The Nominating and Governance Committee also evaluates whether a potential director nominee meets the qualifications required of all directors and any of the key qualifications and experience to be represented on the Board, as described further in “—Board Membership Criteria” below.

Stockholder-Recommended Director Candidates

Nominees may be suggested by directors, members of management, stockholders or other third parties. Stockholders who would like the Nominating and Governance Committee to consider their recommendations for director nominees should submit their recommendations in writing by mail to Walgreens Boots Alliance, Inc., 108 Wilmot Road, MS #1858, Deerfield, Illinois 60015, Attention: Corporate Secretary. The Nominating and Governance Committee considers stockholder-recommended candidates on the same basis as other suggested nominees.

Stockholder-Nominated Director Candidates (“Proxy Access”)

We have adopted a proxy access by-law, which permits a stockholder, or a group of up to 20 stockholders, owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to 20% of the Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in Article II, Section 2.20 of our by-laws. See “Additional Information—Director Nominations for Inclusion in the Proxy Statement for the 2023 Annual Meeting” below for more information.

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  Corporate Governance  

Shareholders’ Agreement and Other Arrangements with Mr. Pessina

On August 2, 2012, in connection with Walgreens’ acquisition of 45% of Alliance Boots GmbH (“Alliance Boots”), Walgreen Co., Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and, inter alios, Stefano Pessina, our current Executive Chairman and former CEO (and together with certain of his affiliates, the “SP Investors”) entered into a Shareholders’ Agreement (the “Shareholders’ Agreement”). Pursuant to the Shareholders’ Agreement, for so long as the SP Investors continue to meet certain common stock beneficial ownership thresholds and subject to certain other conditions, the SP Investors are entitled to designate a nominee for election to the Board. The SP Investors continue to meet these beneficial ownership thresholds, and Mr. Pessina is the current designee of the SP Investors. In addition, on July 23, 2020, Mr. Pessina and the Company entered into a letter agreement which provides, among other things, that upon the effective date of the appointment of the new CEO, the Board will appoint Mr. Pessina on an annual basis (subject to applicable law, including fiduciary duties) as Executive Chairman, provided that Mr. Pessina is a member of the Board at the time. For more information about the Shareholders’ Agreement, see “Corporate Governance—Director Independence and Related Party Transactions—Related Party Transactions” below.

Agreement Involving VillageMD Board Nominee

In connection with the launch of Walgreens Health, the center of the Company’s new healthcare strategy, the Company announced earlier this year that it had agreed to make an additional, $5.2 billion investment in VillageMD, in order to increase its ownership stake in VillageMD to approximately 63% from approximately 30%. The transaction closed on November 24, 2021. In connection with this incremental investment, and as a condition to closing of the transaction, the Company agreed to appoint one member of VillageMD’s governing body to the Board effective no later than the closing date of the transaction. The candidate is subject to the approval of the Nominating and Governance Committee, which will recommend the candidate to the Board for appointment. In connection with the closing, the parties executed an agreement waiving the closing condition and agreeing that a candidate (if not already identified) would be identified within ten days of the closing and, if the candidate is acceptable to the Committee and the Board, would be appointed to the Board no later than January 31, 2022. VillageMD has identified a candidate and the Company’s due diligence on the candidate is ongoing. The Company expects that the candidate will be appointed to the Board following the 2022 Annual Meeting of Stockholders. If the Committee or the Board does not approve the initial candidate identified by VillageMD, under the waiver agreement, VillageMD will identify another member of its governing body as a candidate for the Board.

Board Membership Criteria

Pursuant to its charter, the Nominating and Governance Committee is charged with establishing, and reviewing as necessary, criteria to be used by the Board for selecting directors. The Nominating and Governance Committee believes there are general qualifications that all directors must exhibit and other key qualifications and experience that should be represented on the Board as a whole, but not necessarily by each director.

Core Competencies Required of All Directors

The Nominating and Governance Committee seeks to construct a Board consisting of directors with the following qualities:

Experience

High-level leadership experience in business or managerial activities and significant accomplishments;
Expertise in key facets of corporate management;
Breadth of knowledge about issues affecting the Company; and
Proven ability and willingness to contribute special competencies to the Board’s activities.
     

Personal attributes

Personal integrity;
Loyalty to the Company and concern for its success and welfare;
Willingness to apply sound and independent business judgment;
Awareness of a director’s vital role in good corporate governance and citizenship;
Willingness and energy to devote the time necessary for meetings and for consultation on relevant matters; and
Willingness to assume the fiduciary responsibility of a director and enthusiasm about the prospect of serving.

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  Corporate Governance  

With respect to directors who are not current employees of the Company (“Non-Employee Directors”), the Nominating and Governance Committee also focuses on continued independence under the listing standards of The Nasdaq Global Select Market (“Nasdaq”) (other than with respect to former employees), transactions that may present conflicts of interest, changes in principal business activities, and overall prior contributions to the Board.

Key Skills, Qualifications and Experience to be Represented on the Board

The Board has identified key skills, qualifications and experience that are important to be represented on the Board as a whole in light of our current business strategy and expected needs. The table below summarizes the key skills, qualifications and experience of each nominee. This summary is not intended to be an exhaustive list of each nominee’s skills or contributions to the Board.

Walgreens Boots Alliance, Inc. Director Nominee Expertise Analysis Matrix

Key Competencies/Experience
Business Development and M&A
Corporate Governance
Current or Former Public Company CEO        
Finance and Accounting
Global Operations  
Healthcare or Regulated Industries  
Human Capital
Retail or Consumer-Facing Industries        
Risk Management      
Technology or E-commerce          

Consideration of Diversity

The Nominating and Governance Committee also assesses whether the group of nominees is comprised of individuals with a diversity of perspectives, viewpoints, backgrounds and professional experiences that would best serve the Board, the Company, and our stockholders. The Board, in accordance with our Corporate Governance Guidelines, considers diversity in broad terms, including, but not limited to, competencies, experience, geography, gender, ethnicity, race and age, with the goal of obtaining diverse perspectives, viewpoints, backgrounds and professional experiences. In 2020, the Board reaffirmed its commitment to diversity, when it amended the Corporate Governance Guidelines and the charter of the Nominating and Governance Committee to provide that when searching for new directors, the Nominating and Governance Committee will actively seek out women and individuals from minority groups to include in the pool from which Board nominees are chosen. In October 2020, the Board appointed Valerie B. Jarrett, who is the Company’s first female African American director and one of five women on the current Board. In addition, in March 2021, the Board appointed Rosalind G. Brewer as the Company’s first female African American CEO, who at the time of her appointment was the only female African American CEO in the Fortune 500, and one of five women on the current Board.

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  Corporate Governance  

Board Diversity Matrix

The table below provides certain highlights of the composition of our Board members and nominees as of November 29, 2021. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).

Board Diversity Matrix (as of November 29, 2021)
Total Number of Directors 12
Female Male Non-Binary Did Not Disclose
Gender
Gender Identity
Directors 5 7 - -
Demographic Background
African American or Black 2 - - -
Alaskan Native or Native American - - - -
Asian - - -
Hispanic or Latinx - 1 - -
Native Hawaiian or Pacific Islander - - - -
White 3 6 - -
Two or More Races or Ethnicities - - - -
LGBTQ+ 2
Did Not Disclose Demographic Background -

2022 Director Nominees

Our by-laws provide that the number of directors shall be determined by the Board, which has currently set the number at 12. The Board reserves the right to increase or decrease its size at any time. Upon the recommendation of the Nominating and Governance Committee, the Board has nominated each of the following 10 nominees for election at the Annual Meeting. The number of directors will be reduced from 12 to 10 if the 10 nominees are elected at the Annual Meeting. Proxies cannot be voted for a greater number of persons than the nominees named. As noted above, on October 19, 2021, Mr. Almeida notified us that he decided not to stand for re-election to the Board in order to focus on other commitments. Also, as previously noted, Mr. Skinner agreed to remain on the Board to provide continuity during the Company's previously-described leadership transition. Following the successful leadership transition described in "Board Structure" on page 41 and given that he has reached the Company's mandatory retirement age, Mr. Skinner likewise was not re-nominated for election to the Board. All of the nominees, other than Ms. Brewer and Mr. Pessina, are independent under Nasdaq listing standards. See “Corporate Governance—Director Independence and Related Party Transactions” below for more information.

Joe Almeida and Jim Skinner, who will not be director nominees at the 2022 Annual Meeting, have been valuable members of our Board. We thank them for their years of dedication and service to the Company and the Board.

The Board believes that each nominee has the skills, experience and personal qualities the Board seeks in its directors, and that the combination of these nominees creates an effective and well-functioning Board, with a diversity of perspectives, viewpoints, backgrounds and professional experiences that best serves the Board, the Company and our stockholders. Included in each director nominee’s biography is a description of select key qualifications and experience that led the Board to conclude that each nominee is qualified to serve as a member of the Board. All biographical information below is as of the Record Date.

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  Corporate Governance  

Janice M. Babiak

 

Director since: April 2012
Age: 63

Independent

Committee Memberships:

Audit (Chair)
Finance

Other Current Public Company Boards:

Bank of Montreal
Euromoney Institutional Investor PLC

Professional Experience

 

Ernst & Young LLP

Former Managing Partner
Variety of roles in the United States and the United Kingdom (1982-2009)
Founder and Global Leader of EY’s Climate Change and Sustainability Services practice (July 2008-December 2009)
Board Member and Managing Partner of Regulatory & Public Policy for the Northern Europe, Middle East and India and Africa (NEMIA) region (July 2006-July 2008)
A Founder of EY’s technology security and risk services practice in 1996, building and leading cyber and IT security, data analytics, and technology risk practices in the NEMIA region

Key Qualifications and Experience

Ms. Babiak is a U.S.-qualified Certified Public Accountant (CPA), Certified Information Systems Auditor (CISA), and Certified Information Security Manager (CISM). She is a Chartered Accountant (FCA), and a member of the Institute of Chartered Accountants in England and Wales (ICAEW), of which she served as a Council Member from 2011 until she reached the term limit in 2019.

Ms. Babiak brings to the Board her general management expertise and depth of experience in the areas of audit, accounting, and finance, through her prior experience as a Council Member of the ICAEW and as a managing partner at EY, including service as partner for a number of retail and healthcare-related industry clients. With her extensive accounting knowledge and experience, she is highly qualified to serve as the chair of the Audit Committee of the Board (the “Audit Committee”) and as a member of the Finance Committee of the Board (the “Finance Committee”). Through her career experience and current CISM and CISA qualifications, she provides the Board with meaningful insight and knowledge related to information technology, cybersecurity best practices, and the relationship between information security programs and broader business goals and objectives. Her international experience, leadership in the areas of climate change and sustainability, and experience working with and serving on the audit committees of other publicly-traded companies further contribute to the perspective and judgment that she brings to service on the Board.

Other Directorships

Ms. Babiak has served on the board of directors of Bank of Montreal since October 2012 and on the board of directors of Euromoney Institutional Investor PLC, an international business-information group listed on the London Stock Exchange, since December 2017. Previously, she served as a non-executive director of Royal Mail Holdings plc from March 2013 to April 2014 as it transitioned from government ownership to a FTSE 100-listed company; Experian plc from April 2014 to January 2016; and Logica plc from January 2010 until its sale in August 2012.

 

 

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  Corporate Governance  

David J. Brailer, MD, PhD

 

Director since: October 2010
Age: 62

Independent

Committee Memberships:

Audit
Finance (Chair)

Professional Experience

 

Health Evolution Partners, a private equity firm focused on the healthcare industry

Chairman (2006-Present)

Department of Health and Human Services of the U.S. federal government

National Coordinator for Health Information Technology (May 2004-April 2006)

Health Technology Center

Senior Fellow (2002-2004)

CareScience, Inc., a provider of care management services and Internet-based healthcare solutions

Chairman and Chief Executive Officer (1992-2002)

The Wharton School of Business at the University of Pennsylvania

Former Adjunct Assistant Professor of Health Care Systems

Key Qualifications and Experience

With his experience as Chairman and Chief Executive Officer of CareScience, Inc. for more than ten years and his subsequent experience with the U.S. federal government, where he was commonly referred to as the “health information technology czar,” Dr. Brailer provides the Board with strong technology experience coupled with business leadership and expertise. In addition, he brings to the Board insight and knowledge of investment and market conditions in the healthcare industry.

Other Directorships

Dr. Brailer has served on the boards of directors of a number of privately-held companies in the healthcare industry.

 

 

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  Corporate Governance  

Rosalind G. Brewer

 

Director since: March 2021
Age: 59

Chief Executive Officer

Professional Experience

 

Walgreens Boots Alliance, Inc.

Chief Executive Officer and Director (March 2021-Present)

Spelman College

Chairperson, Board of Trustees

Starbucks Corporation, a global food and beverage company

Director (March 2017-February 2021)
Group President, Americas and Chief Operating Officer (October 2017-February 2021)

Walmart Inc., a global retailer

President and Chief Executive Officer, Sam’s Club (February 2012-February 2017)
Executive Vice President and President, East Business Unit (February 2011-January 2012)
Executive Vice President and President, Walmart South (February 2010-February 2011)
Senior Vice President and Division President, Southeast Operating Division (March 2007-January 2010)
Regional General Manager, Georgia Operations (2006-February 2007)

Kimberly-Clark Corporation, a global health and hygiene products company

President, Global Nonwovens Division (2004-2006)
Various management positions (1984-2006)

Key Qualifications and Experience

Ms. Brewer was appointed as Chief Executive Officer in March 2021. Ms. Brewer’s experience serving in a range of leadership positions with Starbucks and Walmart, two of the largest global companies, provides her with great breadth and depth of understanding of the strategic, operational, financial and human capital issues facing companies. It also gives her valuable insights and perspectives with respect to our retail and consumer-facing operations. Her extensive public company directorship experience, including as a director of Amazon.com, Inc., the world’s largest online retailer, provides her with valuable perspective on corporate responsibility and governance matters and enables her to draw on various viewpoints in her service as Chief Executive Officer and on the Board.

Other Directorships

Ms. Brewer formerly served on the board of directors of Amazon.com, Inc. from February 2019 until February 2021. She formerly served on the boards of directors for Lockheed Martin Corporation from April 2011 until October 2017 and Molson Coors Brewing Company from 2006 until 2011.

 

 

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  Corporate Governance  

William C. Foote

 

Director since: January 1997
Age: 70

Lead Independent Director

Committee Memberships:

Finance
Nominating and Governance (Chair)

Professional Experience

 

Independent Business Advisor

Walgreens Boots Alliance, Inc.

Lead Independent Director (January 2015-Present)

USG Corporation,a manufacturer and distributor of building materials

Chairman of the Board (April 1996-December 2011)
Chief Executive Officer (January 1996-December 2010)
President (September 1999-January 2006)

Williams College

Trustee

Northwestern Memorial HealthCare

Life Trustee

The Federal Reserve Bank of Chicago

Former Chairman of the Board

Key Qualifications and Experience

With many roles as a corporate director over the years and his experience as Chairman and Chief Executive Officer of USG Corporation, Mr. Foote provides the Board with strong business leadership, expertise in strategy formulation, financial acumen, management development and succession planning and substantial experience with respect to corporate governance matters. These roles, in addition to his service as Chairman of The Federal Reserve Bank of Chicago, enable him to provide valuable insights and perspectives with regard to business and market conditions. In addition, he brings strength in the area of corporate governance to his role as chair of the Nominating and Governance Committee.

 

 

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  Corporate Governance  

Ginger L. Graham

 

Director since: April 2010
Age: 66

Independent

Committee Memberships:

Audit
Compensation and Leadership Performance
Nominating and Governance

Other Current Public Company Boards:

Clovis Oncology, Inc.

Professional Experience

 

Two Trees Consulting, Inc., a healthcare and executive leadership consulting firm

President and Chief Executive Officer (November 2007-December 2016)

Harvard Business School

Senior Lecturer (October 2009-June 2012)

Amylin Pharmaceuticals, a biopharmaceutical company

Director (1995-2009)
Chief Executive Officer (September 2003-March 2007)
President (September 2003-June 2006)

Guidant Corporation, a cardiovascular medical device manufacturer

Various positions including Group Chairman, Office of the President, President of the Vascular Intervention Group, and Vice President (1994-2003)

Key Qualifications and Experience

Ms. Graham brings to the Board her extensive experience in senior management and leadership roles in the healthcare industry, including experience leading companies in drug, device, and product development and commercialization. The Board values her insight and experience, including her service on the faculty of Harvard Business School where she taught classes in entrepreneurship. She also brings to her service on the Board valuable experience as a director of publicly- and privately-held life sciences companies and as a consultant to healthcare companies regarding strategy, leadership, team building, and capability building.

Other Directorships

Ms. Graham has served on the board of directors of Clovis Oncology, Inc. since 2013 (and has served as its chair since 2019). She served on the board of directors of Genomic Health, Inc. from 2008 until its merger with Exact Sciences Corporation in 2020.

 

 

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  Corporate Governance  

Valerie B. Jarrett

 

Director since: October 2020
Age: 65

Independent

Committee Memberships:

Audit
Compensation and Leadership Performance

Other Current Public Company Boards:

Lyft, Inc.
Ralph Lauren Corporation
Sweetgreen, Inc.

Professional Experience

 

Obama Foundation, a non-profit organization

Chief Executive Officer (October 2021-Present)
President/Senior Advisor (April 2018-October 2021)

University of Chicago Law School

Distinguished Senior Fellow (January 2018-Present)

United States White House

Senior Advisor to the President (January 2009-January 2017)

The Habitat Company, a Chicago real estate development and management firm

Various senior positions, including Chief Executive Officer (1995-2009)

City of Chicago

Commissioner of the Chicago Department of Planning and Development (1992-1995)
Former Deputy Chief of Staff for the Mayor

Key Qualifications and Experience

Ms. Jarrett brings to the Board her unique experience and expertise in governmental and public policy matters, including as a result of her service to a former President of the United States and in various positions with the City of Chicago, along with significant private sector experience. The Board also values her diverse perspectives as a business executive and civic leader, as well as an African-American woman.

Other Directorships

Ms. Jarrett has served on the boards of directors of Lyft, Inc., a ride sharing service company, since July 2017, Ralph Lauren Corporation, a premium lifestyle products company, since October 2020 and Sweetgreen, Inc. a healthy restaurant and lifestyle brand, since August 2020. She also serves on the board of Ariel Investments, LLC, a private investment company. She was formerly on the board of directors of 2U, Inc., an education technology company, from December 2017 to October 2021.

 

 

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John A. Lederer

 

Director since: April 2015
Age: 66

Independent

Committee Memberships:

Compensation and Leadership Performance
Finance
Nominating and Governance

Other Current Public Company Boards:

NextPoint Financial, Inc.
US Foods Holding Corp.

Professional Experience

 

Sycamore Partners, a private equity firm

Senior Advisor (September 2017-Present)
Interim Chief Executive Officer (June 2021-Present) and Executive Chairman (September 2017-Present) of privately-held Staples, Inc. (and its newly formed and independent U.S. and Canadian retail businesses following acquisition by Sycamore Partners in 2017), a leading provider of office products and services to business customers

US Foods Holding Corp., a leading food service distributor in the United States

President and Chief Executive Officer (2010-2015)

Duane Reade, a New York-based pharmacy retailer (acquired by Walgreens in 2010)

Chairman of the Board and Chief Executive Officer (2008-2010)

Loblaw Companies Limited, Canada’s largest grocery retailer and wholesale food distributor

President (2000-2006)
Spent 30 years in various positions including a number of leadership roles

Key Qualifications and Experience

Mr. Lederer brings to the Board significant management and business experience in the retail and healthcare industries as a result of his experience as Chief Executive Officer of a retail pharmacy. The Board values his understanding of the business operations of and issues facing large retail companies, including in the areas of marketing, merchandising, and supply chain logistics. Mr. Lederer also has extensive experience with respect to mergers & acquisitions and other corporate development activities. His prior and current service as a director of several public companies also provides him with insight into public company operations, including with respect to talent development, executive compensation, and succession planning.

Other Directorships

Mr. Lederer has served on the board of directors of US Foods Holding Corp. since 2010 and has served on the board of directors of NextPoint Financial Inc. (formerly NextPoint Acquisition Corp.), a company listed on the Toronto Stock Exchange, since 2020. He previously served on the board of directors of Maple Leaf Foods, a company listed on the Toronto Stock Exchange, from 2016 until May 2021. He also served on the board of directors of Restaurant Brands International from 2014 until 2016 and as a director of Tim Hortons Inc. from 2007 until 2014, when it was acquired by Restaurant Brands International.

 

 

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Dominic P. Murphy

 

Director since: August 2012
Age: 54

Independent

Committee Memberships:

Finance
Nominating and Governance

Other Current Public Company Boards:

THG Holdings plc

Professional Experience

 

CVC Capital Partners, a private investment firm

Managing Partner and Co-Head of UK Investments (2019-Present)

8c Capital LLP, a private investment firm

Founder and Chief Executive Officer (2017-2019)

KKR, a private equity firm

Partner, responsible for the development of the firm’s activities in the United Kingdom and Ireland, served as the head of its healthcare industry team in Europe and served as a member of the firm’s European investment and portfolio management committees (2005-2017)

Cinven, a European-based private equity firm

Partner (1996-2004)

3i Group plc, an international investment management firm

Investment Manager (1994-1996)

Key Qualifications and Experience

Mr. Murphy brings to the Board his considerable international business experience gained through his prior role in KKR-related private equity investments. The Board values his insights and experience, including his substantial mergers & acquisitions, corporate finance, and retail and healthcare industry experience, as well as his in-depth familiarity with many of the markets in which we operate. He also brings valuable insights gained from his experience serving as a director of publicly- and privately-held healthcare companies.

Other Directorships

Mr. Murphy serves on the board of directors of THG Holdings plc, a digital first consumer brands group listed on the London Stock Exchange. From 2007 until 2015, he served on the board of directors of Alliance Boots and certain of its affiliates.

 

 

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  Corporate Governance  

Stefano Pessina

 

Director since: April 2012
Age: 80

Executive Chairman

Professional Experience

 
Walgreens Boots Alliance, Inc.
Executive Chairman (March 2021-Present)
Chief Executive Officer (July 2015-March 2021)
Executive Vice Chairman (January 2015-March 2021)
Acting Chief Executive Officer (January 2015-July 2015)
Alliance Boots
Executive Chairman (July 2007-December 2014)
Former Executive Deputy Chairman
Alliance UniChem
Executive Deputy Chairman prior to the merger of Alliance UniChem and Boots Group
Chief Executive Officer (2001-December 2004)
Key Qualifications and Experience
As our Executive Chairman, Mr. Pessina leads our Board and brings an in-depth knowledge of the Company, including through his prior service as Chief Executive Officer of the Company and Executive Chairman of Alliance Boots, as well as the retail and healthcare industries. His substantial international business experience and business acumen provide the Board with valued strategic, financial, and operational insights and perspectives. The Board also values his significant mergers & acquisitions experience as well as his experience serving on the boards of directors of numerous publicly- and privately-held healthcare and retail companies. He brings valued perspective and judgment to the Board’s discussions regarding our competitive landscape and strategic opportunities and challenges.
Other Directorships
Mr. Pessina serves on the board of directors of a number of privately-held companies. He served on the board of directors of Galenica AG, a publicly-traded Swiss healthcare group, from 2000 to 2017.

 

 

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Nancy M. Schlichting

 

Director since: October 2006
Age: 67

Independent

Committee Memberships:

Audit
Compensation and Leadership Performance (Chair)

Other Current Public Company Boards:

Hill-Rom Holdings, Inc.
Encompass Health Corporation

Professional Experience

 
Henry Ford Health System, a leading hospital network and healthcare and medical services provider
Chief Executive Officer (June 2003-December 2016)
Executive Vice President (June 1999-June 2003)
President and Chief Executive Officer of Henry Ford Hospital (August 2001-June 2003)

Key Qualifications and Experience

As a result of her leadership of hospitals and health systems, Ms. Schlichting brings to her service on the Board a deep knowledge and understanding of the healthcare industry. The Board highly values her experience and insights gained at Henry Ford Health System, where she was responsible for the strategic and operational performance of a leading integrated health system, including an academic medical center, community hospitals, a health plan, a multi-specialty medical group, and an ambulatory and health retail network.

Other Directorships

Ms. Schlichting has served on the board of directors of Hill-Rom Holdings, Inc. since March 2017 and on the board of directors of Encompass Health Corporation (formerly, HealthSouth Corporation) since December 2017. She also serves on the board of directors of The Kresge Foundation and several other non-profit organizations.

 

 

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Board Effectiveness is the Foundation of Our Corporate Governance

We are committed to the principle that a firm foundation of board effectiveness is essential to best serve the interests of stockholders, guide the Company and oversee management. Board effectiveness results from having the right combination of diverse and expert individuals on the Board as well as having the right processes and structures in place to promote the efficient, engaged and dynamic execution of the Board’s duties and responsibilities.

Board Composition
 
 
Key Skills and Attributes
Identifies desirable skills, attributes and qualifications in light of the Company’s current strategy, anticipated market conditions and industry challenges and opportunities
Ensures that the Board is comprised each year of the mix of directors best able to serve the evolving needs of the Company and that fresh viewpoints and perspectives are regularly considered
Board Diversity
Commits to board diversity in a broad sense, including, but not limited to, competencies, experience, geography, gender, ethnicity, race and age
Actively seeks out women and individuals from minority groups to include in the pool from which Board nominees are chosen
Director Evaluations
Assesses the effectiveness of each director, the Board as a whole and the Board Committees
Identifies opportunities to enhance individual and group performance, including through director training or Board operational changes
Allows Board to ensure that the Board has the best mix and fit on an ongoing basis
 
 
 
 
Succession Planning
Identifies directors approaching retirement age or who otherwise are expected to resign from the Board
Allows Board to plan for replacement of such departing director’s skill set and Committee leadership and membership
Director Orientation and Continuing Education
Informs directors about the Company’s business and significant operational, financial, accounting and risk management matters
Allows directors to stay current on industry and company trends
Retirement Policy
Supports Board refreshment
Provides flexibility to allow Nominating and Governance Committee and Board to nominate candidates above retirement age if in best interests of the Company (and the nomination is approved by the Board)
 
 
Director Nominee Identification
Identifies potential nominees possessing the skills and attributes that can best serve the Company in combination with the other nominees
 
Includes assessment of current directors for re-nomination
 

BOARD EFFECTIVENESS

Board Operation

   
 

Leadership Structure

Lead Independent Director focused on the long-term objectives of all stakeholders of the Company
Executive Chairman focused on leadership of the Board
CEO focused on setting strategy and leading our business and operations

Allocation of Oversight Responsibility

Board and its Committees provide oversight and guidance to management regarding our strategy, operating plans, and overall performance
At least one meeting between the Board and management each year to focus on our long-term business strategic planning

Committee Assignments and Rotation

Committee assignments reviewed at least annually and more frequently as needed
Stockholder Engagement
As part of our formal engagement program, we reached out to approximately 40 of our largest stockholders
Discussed a wide range of topics and took specific actions in response to stockholder feedback
Board Compensation
A substantial portion of each Non-Employee Director’s annual compensation is in the form of equity to help align his or her compensation with the interests of our stockholders
Directors are required to meet established stock ownership guidelines
 
 

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Our Commitment to Strong Corporate Governance

The Board believes that a commitment to strong corporate governance standards is an essential element of enhancing long-term stockholder value in a sustainable manner. The Board believes that its commitment to good governance is demonstrated in part by the continuous implementation of best governance practices, as set forth in part on page 14, that the Board believes are in the best interests of our Company.

The Board has adopted Corporate Governance Guidelines that are designed to provide guidance as a component of the flexible framework within which the Board, assisted by its Committees, oversees and directs the affairs of the Company. The Corporate Governance Guidelines establish policies and practices with respect to numerous areas of Board operations and responsibilities, including in the areas of Board structure and leadership and director independence. The Board periodically reviews the Corporate Governance Guidelines and updates them in response to changing regulatory requirements and evolving best practices. A copy of the Corporate Governance Guidelines can be found at https://investor.walgreensbootsalliance.com/ governance.

Board Refreshment and Committee Rotation

The Board believes that a degree of refreshment is important to ensure that Board composition is aligned with the changing needs of the Company and the Board, and that fresh viewpoints and perspectives are regularly considered. The Board also believes that directors develop an understanding of the Company and an ability to work effectively as a group over time that provides significant value, and therefore a significant degree of continuity year-over-year should be expected.

As part of planning for director succession, the Nominating and Governance Committee periodically engages in the consideration of potential director candidates, occasionally with the assistance of a third-party advisor or recruitment firm.

Director Nominee Tenure Diversity


As set forth in the Corporate Governance Guidelines, the Board does not have absolute limits on the length of time that a director may serve, but considers the tenure of directors as one of several factors in re-nomination decisions. The Board has established a retirement age of 75. Subject to our contractual obligations and applicable law, no individual is eligible for election to the Board after his or her 75th birthday unless the Nominating and Governance Committee makes a finding that the nomination of the individual is in the best interests of the Company notwithstanding the individual’s age, and the nomination is also approved by the Board.


While the Board believes that refreshment is an important consideration in assessing Board composition, it also believes the best interests of the Company are served by being able to take advantage of all available talent. Therefore, the Board does not make determinations with regard to its membership based solely on age or tenure.

Stefano Pessina, our Executive Chairman, is and will be older than the retirement age as of the date of the Annual Meeting. However, as described further in “—Shareholders’ Agreement and Other Agreements with Mr. Pessina” below, Mr. Pessina is the contractual designee of the SP Investors (as defined above) for nomination to the Board, and the Shareholders’ Agreement (as defined above) includes a contractual waiver of any mandatory retirement age policy applicable to his service on the Board.

The Board also reviews Committee assignments on an annual basis to ensure that fresh viewpoints and perspectives are regularly considered on each Committee while also ensuring the Committees have continuity of operations in order to maintain effectiveness of the Committee.

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Code of Conduct and Business Ethics

We have adopted a Code of Conduct and Business Ethics that applies to all of our employees, officers and directors that the Board, through the Nominating and Governance Committee, reviews annually. We have also adopted a Code of Ethics for our CEO and Financial Executives that applies to and has been signed by our CEO, Global Chief Financial Officer and Global Controller and Chief Accounting Officer. These can be found at https://investor.walgreensbootsalliance.com/governance.

We intend to promptly disclose on our website, in accordance with applicable rules, any required disclosure of changes to or waivers, if any, of our Code of Conduct and Business Ethics or our Code of Ethics for our CEO and Financial Executives.

Our employees, partners, suppliers, and customers can ask questions about our Code of Conduct and Business Ethics or our Code of Ethics for our CEO and Financial Executives, or report suspected violations of these codes, our policies or the law, through one of the confidential reporting telephone lines or website addresses listed in our Code of Conduct and Business Ethics or by e-mailing wbacompliance@wba.com.

Board Responsibilities

Board Oversight Responsibilities

Strategy

As set forth in our Corporate Governance Guidelines, oversight of our business strategy is a key responsibility of the Board. Throughout the year, the Board and its Committees provide oversight and guidance to management regarding our strategy, operating plans and overall performance. While elements of strategy are embedded in every regularly-scheduled meeting of the Board, the Board also dedicates at least one multi-day meeting each year to focus on our long-term business strategic planning. During fiscal 2021, the Company’s business strategy was consistently discussed during executive sessions, as well as during meetings of the Board with management in attendance. In addition to long-term business strategic planning, the Board focused on, among other things, the Company’s strategic priorities, including digitalization, transforming and restructuring the Company’s retail offering, creating neighborhood health destinations and the execution of the Company’s Transformational Cost Management Program.

The Board fulfills its oversight role with respect to strategy, as well as operating plans and business performance, by, among other things:

Selecting, evaluating, compensating and, as appropriate, replacing the CEO, and planning for his or her succession;
Providing advice and counsel to the CEO, including on the selection, evaluation and development of members of the Company’s senior management team;
Overseeing the conduct of the Company’s business and strategic plans to evaluate whether the business is being properly managed;
Reviewing and approving the Company’s financial objectives and major corporate plans and actions; and
Overseeing the Company’s risk management policies and processes designed to promote ethical conduct and legal compliance and the Company’s compliance with applicable laws and regulations.

The Board, primarily through the Finance Committee, also dedicates significant focus to reviewing our capital allocation strategy. Our current Board-approved capital allocation policy, which is reviewed on an annual basis, is designed to ensure a balanced and disciplined approach to deploying capital intended to drive business growth and generate strong returns, while returning cash to stockholders through dividends and share repurchases over the long-term.

Further, the Board, through the CLP Committee, oversees the Company’s strategies and programs for leadership development, which include the consideration of diversity and which are critical to ensuring that the Company has a talent pipeline for executive roles, including those executives who are tasked with executing our strategy. The CLP Committee also maintains continual oversight of the Company’s executive compensation strategies and programs, which directly influence the compensation program for all employees of the Company.

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While the Board and its Committees oversee elements of our strategic planning, our management is charged with executing the business strategy. To monitor our performance against our strategic goals, the Board receives regular updates and actively engages in dialogue with our executive management team. Directors also periodically visit certain of our stores and other locations to see our strategy execution first hand.

The Board’s oversight and our management’s execution of our business strategy are intended to help promote the creation of long-term stockholder value in a sustainable manner, with a focus on assessing both potential opportunities available to us and risks that we might encounter.

Risk Management

We face a broad array of risks, including market, operational, strategic, legal, regulatory, reputational and financial risks. Our management is responsible for establishing and maintaining systems to manage these risks. The Board exercises oversight over the elements and dimensions of major risks that we face. The Board administers its risk oversight function as a whole and through its Committees.

We have established a global enterprise risk management (“ERM”) program, which is led by our Global Chief Compliance and Ethics Officer. Our Governance, Risk and Compliance (“GRC”) committee, which is comprised of key members of senior management, oversees and monitors the activities of our ERM program and reviews, on a regular basis, the top current and emerging enterprise risks we face, and relevant risk mitigation activities. Since the strategic combination of Walgreens and Alliance Boots in 2014, the Company has enhanced the overall ERM program and expanded its scope. Currently, in addition to the executive-level GRC committee, the Company has established similar GRC committees within each of its three segments. In addition, risk assessments are created by each business unit and consolidated into segment and WBA-level risk assessments and mitigation plans. Our ERM leader meets regularly with senior members of the Company’s global leadership team, other of the Company’s oversight and support functions and specific risk owners to ensure the latest insights and mitigation are incorporated into the Company’s risk register and map.

This global ERM approach helps the Board and its Committees receive relevant information about risks and understand our risk management process, the participants in the process, and key information gathered through the process.

The purpose of the ERM process is to identify risks that could affect us and the achievement of our objectives; to understand, assess, and prioritize those risks; to communicate identified events and risks quickly and effectively to necessary parties across the Company; and to facilitate the implementation of risk management strategies and processes across the Company.

The Board uses the processes described below to help assess and monitor the risks we face. The Board’s oversight of risk occurs as an integral and continuous part of the Board’s oversight of our business and seeks to ensure that management has processes in place to appropriately manage risk. The Board actively engages with senior management to understand and oversee the various risks we face.

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Board of Directors

Formal review of Global Enterprise Risk Management Program
Receives regular reports from Committees

Audit Committee

Reviews our policies and processes with respect to enterprise risk assessment and risk management
Regularly reviews, discusses and addresses the key risks identified in the ERM process with management and their potential impact on us
Periodically reviews the steps management has taken to monitor and control such risk exposures, including the risk assessment and risk management policies
Regularly conducts reviews of the efficacy of our information security and technology risks (including cybersecurity) and related policies and procedures
Regularly reviews and discusses with management major litigation and financial risks
Regularly reviews and discusses with management legal and compliance matters, including related risks

Compensation and Leadership Performance Committee

Reviews risks associated with the design and implementation of our compensation programs, including the extent to which they encourage excessive or inappropriate risk-taking
Regularly reviews and discusses with management risks relating to executive succession and leadership performance matters, including matters such as diversity and inclusion, management development and talent recruitment, retention and engagement

Finance Committee

Oversees key aspects of our financial risk management activities, including with respect to capital structure and financing, capital expenditures and investments, and M&A
Regularly reviews financial policy risk and our capital priorities

Nominating and Governance Committee

Reviews risks related to our governance structures and processes
Regularly discusses Board composition and director succession planning, including related risks
Regularly reviews and discusses with management the Company’s management of risks related to sustainability and the environment

Stockholder Engagement Program

We value an open dialogue with our stockholders, and we believe that regular communication with our stockholders and other stakeholders is a critical part of enabling our long-term success. We engage with our stockholders and the broader corporate governance community through a continuous engagement program which is management-led and overseen by the Board. Our engagement program is designed to address questions and concerns, provide perspective on Company policies and practices, seek stockholder input and incorporate feedback as appropriate.

The Board believes that, in most circumstances, our CEO and other authorized members of our senior management are best positioned to speak on behalf of the Company with our stockholders. However, the Board or its Committees regularly receive reports on our stockholder engagement activities, and they are provided with the opportunity to discuss and ask questions about significant stockholder feedback we receive.

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Stockholder Engagement and Company Responses

During fiscal 2021, members of our management team met with many of our stockholders. In some cases, the Chairs of our Nominating and Governance Committee and CLP Committee participated in these calls. In addition, in advance of the Annual Meeting, we conducted formal outreach relating to the matters described below.

1

Engage

Outreach to approximately 40 of our largest stockholders representing over 47% of our outstanding stock (as of August 31, 2021, excluding shares held by affiliates of Stefano Pessina, our Executive Chairman).

 
 

2

Report

Formal report to Board, through the Nominating and Governance Committee, on stockholder feedback annually. Stockholder feedback shared with Board, through the Nominating and Governance Committee, informally as engagements occur. Feedback from engagements included discussions relating to:
Executive Compensation, including our fiscal 2020 Say on Pay vote;
Board oversight of response to COVID-19 pandemic;
Board oversight of strategy and risk management;
Corporate governance and Board succession planning;
Board oversight of diversity, equity and inclusion and human capital; and
Sustainability and corporate social responsibility initiatives.
 
 

3

Analyze

Board considered stockholder feedback in its continuous review of best practices, governance enhancements and compensation program design.
 

We have made numerous improvements in response to stockholder feedback and our continuous focus on best practices

 
 
 

4

Respond

We made the decision to publicly disclose our annual EEO-1 report as submitted to the U.S. Equal Employment Opportunity Commission in an effort to enhance transparency about our workforce diversity.
We amended our Corporate Governance Guidelines and the charter of the Nominating and Governance Committee in 2020 to provide that when searching for new directors, the Nominating and Governance Committee will actively seek out women and individuals from minority groups to include in the pool from which Board nominees are chosen.
We approved new performance metrics for our fiscal 2021 short and long-term incentive programs, including a diversity metric in the short-term incentive program, to further align our incentive programs with key Company initiatives.
We first published our Board Report on Oversight of Risks Related to Opioids in June 2019; it was subsequently revised to include disclosures as a result of stockholder engagement.
We revised our clawback policy to provide that we will publicly disclose enforcement against any of our executive officers, unless the Board or the CLP Committee concludes that legal or privacy concerns would prevent such disclosure.
We amended the charter of and renamed our CLP Committee to reflect the Committee’s dedication to broader oversight of leadership performance, including areas of diversity and inclusion, management development and talent recruitment, retention and engagement.
We enhanced our disclosure regarding our Board leadership structure and our Board’s role in the oversight of risk management and strategy.
 

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The Board and its Committees also regularly consider stockholder perspectives, among other considerations, when making decisions related to their specific duties and responsibilities. Finally, our Corporate Governance Guidelines state that, from time to time, upon the reasonable request of one of our major stockholders, the Lead Independent Director will make himself available for consultation and direct communication with such stockholder where appropriate. In connection with the Company’s formal outreach in advance of the Annual Meeting, the Lead Independent Director is expected to meet with one of the Company’s major stockholders, as has been the Company’s practice in recent years.

Environmental, Social and Governance

Our Company’s purpose is to help people across the world lead more joyful lives through better health. To achieve this purpose, we commit to deliver value to all our stakeholders across the globe and to be a responsible and engaged corporate citizen. Our commitment to ESG is embedded in our drive to operate both a sustainable and profitable enterprise for the long-term. Advancing our ESG performance through our sustainability initiatives builds trust in our businesses and in our brands, helping us to drive our financial performance and to achieve our vision of being the first choice for pharmacy, well-being, and beauty – caring for people and communities around the world.

In 2020, the Company joined the United Nations Global Compact (“UNGC”) Initiative, a voluntary leadership platform for the development, implementation and disclosure of responsible business practices. The UNGC is a call to companies everywhere to align their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption, and to take action in support of UN goals and issues embodied in the Sustainable Development Goals (SDGs). Joining the UNGC reinforced our long-term commitment to take action to support the SDGs, 17 goals agreed to by all UN member nations to participate in a shared blueprint for peace and prosperity for people and the planet.

In our most recent CSR Report, published in February 2021, we provided an update on our progress on our 12 ESG commitments, which are organized into four priority areas for the Company.


Healthy Communities

We engage with local communities to improve societal health and well-being through:

Programs and campaigns to improve access to affordable, quality healthcare and awareness about critical health issues
Efforts to help combat opioid abuse and prevent overdose-related deaths
Partnerships, particularly aiming to:
Help support people living with cancer at every moment of their journey
Enable young people across the world achieve their potential

Healthy Planet

We are determined to protect the planet through programs in our operations and by engaging suppliers on environmental issues. We are committed to:

Reduce energy consumption and emissions
Reduce waste, increase re-use and recycling and collaborate to help create an increasingly circular economy
Reduce the negative impacts of plastics in our owned brand products

Sustainable Marketplace

We aim to do business fairly and with integrity and are taking actions to:

Provide a platform of transparency into our owned brand products, including ingredient and material level information, and ensuring product safety
Continue to improve traceability of ingredients and materials of our owned brand products to reduce their environmental impact, protect healthy ecosystems and reduce climate change impact
Continue to drive responsible sourcing practices throughout our supply chain, protecting human rights and engaging with suppliers around ethical and environmental issues

Healthy and Inclusive Workplace

We strive to treat our people with dignity and respect. We are working to:

Proactively support the personal health and well-being of our employees
Deliver our commitment to offer equal opportunities and foster a diverse, equitable and inclusive culture for all through strong employment, pay and recruitment practices, policies and procedures
Continue to improve our robust approach to health, safety and data privacy, actively caring for our employees and customers

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Transparency and accountability are central to our approach to sustainability. Each year we publish a CSR Report aligned with internationally accepted sustainability reporting standards. Within each report, select key performance metrics and disclosures are externally assured.

Our CSR Committee plays a leading role in providing the appropriate oversight and governance of our ESG program, which is critical to its success. The CSR Committee is chaired by our Chief Operating Officer, International and includes senior executives from our key business functions as well as from our Legal, Human Resources, Marketing, Government Relations and Communications functions. Among other obligations, the CSR Committee is charged with selecting our ESG commitments and monitoring our progress towards achieving those commitments.

BOARD
ACTION

At the Board level, the Nominating and Governance Committee has primary oversight responsibility for the Company’s ESG initiatives and risks, reviewing at least annually our policies and activities regarding sustainability and ESG and assessing our management of risks with respect thereto. Additionally, the Audit Committee regularly reviews and discusses the key risks identified in the ERM process with management, their potential impact on us and our operations, and our risk mitigation strategies and related disclosure matters. These risks may include risks related to climate change, sustainability and other ESG-related matters.

 

To learn more about our sustainability and ESG efforts, please view our 2020 CSR Report and other information on our website at https://www.walgreensbootsalliance.com/corporate-responsibility.

Public Policy Engagement

Responsible corporate citizenship includes exercising our responsibility to actively participate in the political process. Primarily through Walgreens, we engage in the political and policymaking processes in the United States, at the federal, state, and local levels, to participate in democratic self-government and to have a voice in public policy debates that have a direct impact on us. We support candidates whose policies and goals are consistent with our purpose to create more joyful lives through better health, and who are aligned with the interests of our businesses, customers, communities, and stockholders. Policies on which we focused in fiscal 2021 included reimbursement for pharmacist-delivered clinical services, the expansion of the role of pharmacists in the healthcare delivery system (including the important role pharmacists play in the response to the COVID-19 pandemic), retail business regulation, and taxation.

We work to advance this agenda in part through: (1) supporting a government relations program that aims to educate elected officials and regulatory agencies on key public policy issues; (2) our membership in trade associations; and (3) contributing to candidates, parties, and political organizations, both directly from corporate funds and through the Walgreen Co. Political Action Committee. All of our political and advocacy activities are intended to focus on promoting our business and strategic interests without regard to the personal political preferences or affiliations of any of our directors, officers, or employees. Walgreens’ Government Relations organization is responsible for the day-to-day implementation of our political advocacy and contributions. Walgreens’ Government Relations department relies on inside and outside legal counsel, when appropriate, to help ensure our compliance with laws applicable to these activities.

BOARD
ACTION

The Nominating and Governance Committee is responsible for the oversight of policies and activities regarding political advocacy and contributions. At least annually, the Nominating and Governance Committee receives a report regarding these activities from senior management in Walgreens’ Government Relations organization.

 

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Board Structure

Board Leadership Structure

As stated in the Corporate Governance Guidelines, decisions regarding the Board’s leadership structure and the selection of the persons who should be in leadership positions are of critical importance to the functioning of the Board and the Company. The Board believes these decisions must be based on the application of business judgment and consideration of the relevant circumstances at the time, and the Board should not be constrained by a policy mandate when making these decisions. Upon the recommendation of the Nominating and Governance Committee, the Board selects a Chairman from among its members each year following the annual election of directors. Our by-laws provide that the Chairman of the Board may, but need not, be the Chief Executive Officer, and we have had a separate Chairman and Chief Executive Officer since 2009. The Corporate Governance Guidelines also state that if the Chairman of the Board is the Chief Executive Officer or another director who does not qualify as independent, then the independent directors will select a Lead Independent Director to help ensure robust independent leadership on the Board.

Our current Board leadership structure was adopted in connection with the strategic combination of Walgreen Co. and Alliance Boots to form Walgreens Boots Alliance and is designed to meet the unique business needs of the Company and to build on the strengths of our Board. Our Board leadership structure blends the unique heritage of the Company, which has deep corporate roots tied to both U.S. and UK-based governance principles. Our Board is comprised of a majority of independent directors, including a Lead Independent Director, as well as an Executive Chairman and a Chief Executive Officer who are not independent. The appointment of an executive chairman who is not the chief executive officer is an accepted practice in the United Kingdom, with the election of a lead independent director being critical to help ensure robust independent leadership on the Board.

Board Leadership Transition

In January 2021, we announced the appointment of Rosalind G. Brewer as the Company’s CEO, effective March 15, 2021, as successor to Mr. Pessina. As of the effective date of Ms. Brewer’s service as CEO, Mr. Pessina transitioned from the role of CEO and Executive Vice Chairman of the Board to the role of Executive Chairman of the Board. Mr. Pessina succeeded Mr. Skinner as Executive Chairman, who remained on the Board.

Our Current Board Leadership Structure

Executive Chairman of the Board Chief Executive Officer Lead Independent Director
Stefano Pessina Rosalind G. Brewer William C. Foote
Mr. Pessina’s intimate understanding of the Company’s business and strategy and vast institutional knowledge serve as invaluable resources to Ms. Brewer and other members of senior management as they set and execute the strategy of the Company. Mr. Pessina has extensive operational leadership in healthcare and pharmacy and proven success in leading a multinational healthcare business. He has cultivated relationships with each director through consistent and transparent communication and works closely with Mr. Foote in matters related to Board operations, Board strategy and Board meeting planning. As CEO, Ms. Brewer manages the business of the Company and executes the strategy developed with the Board. Following Mr. Skinner’s January 2015 executive appointment, the then-serving independent directors elected William C. Foote to serve as Lead Independent Director. In each succeeding year, including fiscal 2021, Mr. Foote was re-elected to the position of Lead Independent Director by the independent directors in recognition of his skills in overseeing the Company’s strong governance policies and practices and his overall leadership abilities.

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Strong Independent Board Leadership

We have had a Lead Independent Director since 2015. We believe that strong independent leadership is a critical component of an effective board. Our Board has had a strong Lead Independent Director in place for nearly seven years. The Company’s Corporate Governance Guidelines describe the responsibilities of the Lead Independent Director, the resources available to the Lead Independent Director to carry out his or her duties and the Lead Independent Director selection process. Our Lead Independent Director is elected annually by the independent directors in executive session with no non-independent directors or management present.

Mr. Foote has served as our Lead Independent Director since 2015. As Lead Independent Director, he leads executive sessions of the independent directors, provides leadership for independent oversight of executive management, serves as a liaison and supplemental channel of communication between independent directors and Ms. Brewer, and serves as a sounding board and advisor to Mr. Pessina and Ms. Brewer. As Lead Independent Director, Mr. Foote’s responsibilities include:

Presiding at all meetings of the independent directors and all meetings of the Board at which the Chairman of the Board is not present;
Encouraging and facilitating the active participation of all directors;
Serving as a communication facilitator between the CEO and other members of senior management, on the one hand, and the independent and non-management directors, on the other hand (without inhibiting direct communication between senior management and other directors), and between individual directors and the Board, including by:
providing the CEO and other members of senior management with feedback as determined in executive sessions;
being available to discuss with independent and non-management directors any concerns they may have and, as appropriate, relaying those concerns to the full Board and/or the CEO or other members of senior management; and
being a sounding board and advisor to the CEO and/or other members of senior management regarding his concerns and those of the independent directors;
Approving, in consultation with the Executive Chairman of the Board and other members of senior management to the extent practicable, the information to be provided to the Board in preparation for and at Board meetings, and consulting with directors as to their information needs;
Approving Board meeting agendas after conferring with the Executive Chairman of the Board, as appropriate, including adding agenda items in his discretion;
Approving Board meeting schedules to help ensure that there is sufficient time for discussion of all agenda items;
Calling meetings of the independent directors in his sole discretion, as and when required;
Leading the Board’s annual evaluation of the Executive Chairman of the Board and CEO;
Making himself available to advise the Committee chairs in fulfilling their designated roles and responsibilities to the Board;
Upon the reasonable request of a major stockholder, making himself available for consultation and direct communication with such stockholder where appropriate; and
Performing such other functions as the Board or other directors may request.

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Why our Board Leadership Structure is Effective
Our Board leadership requirements reflected in our by-laws and Corporate Governance Guidelines represent our belief that an effective board must have independent leadership with a meaningful voice in all board matters. Our current Board leadership structure, consisting of an Executive Chairman, a CEO who is also a director and a Lead Independent Director, provides for leadership of the Board that consists of a strong independent director with substantial structural influence, a non-independent member who has extensive experience in the Company’s industry and a unique understanding of the Company’s operations and a CEO who has unfettered access to both the Lead Independent Director and Executive Chairman as resources in developing and executing the Company’s strategy.

Executive Chairman Chief Executive Officer Lead Independent Director
Role
Organizes and directs the work of the Board, providing robust leadership, direction and strategic vision for the Company Leads our business and operations; Executes the strategy developed with the Board and manages the operations of the Company Ensures strong leadership and independent oversight of executive management
Key Responsibilities and Duties
Chairing Board meetings
Chairing annual and special stockholder meetings
Setting agendas for Board meetings, subject to approval by Lead Independent Director
Guiding discussions at Board meetings
Fostering open and collegial discussion among all Board members
Ensuring that the Board receives accurate, timely, relevant and clear information
Working closely with the CEO to provide strategic operational and governance advice
Acting as a source of institutional knowledge
Monitoring and supporting the Company’s performance and value creation relative to stated goals of Board-approved strategic plans, investments and relationships
Conducting, along with the Lead Independent Director, the CEO’s annual performance review incorporating feedback from the directors
Creating and implementing a compelling vision and mission for the Company
Leading the development of value creating and sustainable strategies – both short- and long-term – for the Company
Anticipating and mitigating potential risks to the Company and its businesses, and ensuring that they are identified, monitored and minimized
Setting meaningful and measurable operating and strategic goals for the Company
Building and guiding a highly capable and dynamic leadership team
Establishing a strong performance management culture
Leading and inspiring the team in executing the Company’s strategy
Serving as primary interface between management and the Board
Assessing the performance of the leadership team and providing guidance and mentorship to individual leaders
Reviewing organization structure needs and developing ongoing management succession plans
Representing the face of the Company to stakeholders
Providing regular updates and information to the Board on all key issues and business developments and status of operations
Presiding at all meetings of the independent directors
Presiding at all meetings of the Board at which the Executive Chairman of the Board is not present
Serving as liaison between the independent directors, Executive Chairman and CEO by facilitating open, transparent and candid dialogue
Collaborating with the independent directors to assess the Executive Chairman’s and the CEO’s performance
Communicating directly with and providing consultation to stockholders, as appropriate
Recommending to the Board, in consultation with the CEO and Executive Chairman, the retention of advisors and consultants reporting directly to the independent directors

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Why our Leaders are Ideally Suited for their Roles

Stefano Pessina Rosalind G. Brewer William C. Foote
Executive Chairman Chief Executive Officer Lead Independent Director
Institutional knowledge and deep understanding of the Company’s business
Substantial international business experience and business acumen and valued strategic, financial and operational insights
Institutional knowledge of Alliance Boots and deep understanding of the Company’s business and its European heritage
Extensive operational leadership in healthcare and pharmacy
Proven success in leading a multinational healthcare business
Substantial expertise and success in leading large, complex global organizations
Extensive experience as chief operations officer of some of the world’s largest retail operations
Successful track record of building high-functioning leadership teams and performance-driven company cultures
Substantial experience developing and implementing marketing, technology and innovation initiatives in large-scale operations
Well-known track record of implementation of diversity and inclusion initiatives in large organizations
Independence and gravitas enabling strong oversight of executive leadership
Institutional knowledge of Walgreens and deep understanding of the Company’s business
Strong working relationship with fellow directors
Substantial experience with respect to corporate governance matters

Board Committees and Meetings

Independent Board Committees with Well-Qualified Chairs

The Board has four standing Committees: the Audit Committee, the CLP Committee, the Finance Committee, and the Nominating and Governance Committee. Each committee is led by an independent director that the Board believes has the specific skills and attributes to effectively lead the respective committee. The Charter for each of our standing Committees is available on our website at https://investor.walgreensbootsalliance.com/governance.

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Audit Committee       Number of Meetings in fiscal 2021: 8
           
Current Committee

Key Responsibilities:

Selecting our independent registered public accounting firm, reviewing its performance, and taking appropriate action to oversee its independence;
Reviewing and discussing with our management and independent registered public accounting firm our financial statements;
Reviewing and discussing certain matters with the independent registered public accounting firm and the Company’s General Auditor (who is responsible for the internal audit function), including any major issues regarding the adequacy of the Company’s internal controls;
Reviewing our enterprise risk assessment and key enterprise risks, including major litigation and financial risks as well as information security and technology risks (including cybersecurity);
Reviewing the overall adequacy and effectiveness of our legal and compliance programs; and
Reviewing the responsibilities, budget, and staffing of our internal audit function.

Financial Expertise, Independence, and Financial Literacy

The Board has determined that each member of the Audit Committee satisfies the criteria adopted by the SEC to serve as an “audit committee financial expert.”

In addition, the Board has determined that each member of the Audit Committee is an independent director pursuant to the requirements under the Corporate Governance Guidelines, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Nasdaq listing standards and meets the financial literacy requirements of Nasdaq.

Janice M. Babiak
(Chair)

Members

David J. Brailer
Ginger L. Graham
Valerie B. Jarrett
Nancy M. Schlichting

   

Compensation and Leadership Performance Committee      Number of Meetings in fiscal 2021: 5
                 
Current Committee

Key Responsibilities:

Reviewing and approving our executive compensation philosophy, strategy, principles, and levels;
Developing market-comparable total compensation that enables us to attract and retain talented executives and reward outstanding performance in a manner designed to lead to long-term enhancement of stockholder value;
Evaluating our Chief Executive Officer’s performance and reviewing and approving his or her total compensation;
Reviewing and approving the evaluation process and compensation structure for our senior executives other than the Chief Executive Officer;
Administering our executive compensation program, including base salaries; cash and equity plans used to provide short-term and long-term incentive awards; and certain executive deferred compensation plans and perquisites; and
Overseeing talent development, diversity and inclusion and executive succession planning.

The Compensation and Leadership Performance Committee may also delegate to one or more subcommittees such duties as it deems necessary and appropriate.

Independence

The Board has determined that each member of the Compensation and Leadership Performance Committee is independent under the Corporate Governance Guidelines and the Nasdaq listing standards for directors and compensation committee members.

The Board has also determined that each member of the Compensation and Leadership Performance Committee is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code (the “Code”) and a “non-employee director” for purposes of Section 16 of the Exchange Act.

Nancy M. Schlichting
(Chair)

Members

Ginger L. Graham
Valerie B. Jarrett
John A. Lederer
José E. Almeida(1)

(1)Not standing for re-election
   

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Talent Development and Human Capital Management

The Board is actively engaged in overseeing the Company’s talent development and human capital management strategies designed to attract, develop and retain business leaders who can drive financial and strategic growth objectives and build long-term stockholder value. The Board’s involvement in leadership development and succession planning is systematic and ongoing, and the Board provides input on important decisions in each of these areas. The CLP Committee has primary responsibility for succession planning for the CEO and oversight of succession planning for other executive officer positions.

Independent Compensation Advisor

The CLP Committee is supported in its work by our independent compensation consultant, Mercer. Mercer provides the CLP Committee with information regarding market compensation and practices, assists the CLP Committee in the review and evaluation of such compensation and practices, and advises the CLP Committee on executive compensation decisions. Mercer also assists the CLP Committee in the review and evaluation of our Non-Employee Director compensation program. Beginning in January 2016, the CLP Committee also engaged Mercer to serve as the executive compensation consultant to the Company.

For fiscal 2021, Mercer’s aggregate fees for executive and Non-Employee Director compensation consulting services were approximately $460,000 relating to executive and Board compensation matters.

Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (“MMC”). In fiscal 2021, MMC and its affiliates (excluding Mercer) provided certain services to us and our affiliates unrelated to executive and Non-Employee Director compensation, primarily insurance brokerage and other professional services. For these services, MMC and its affiliates received compensation totaling approximately $440,000, excluding insurance premiums that are paid through MMC to insurance carriers on behalf of us and our affiliates. These non-compensation-related services were recommended by management, and the services and fees are not subject to the CLP Committee’s or the Board’s review or approval. The Mercer consultants providing services to the CLP Committee and the Company do not market or sell to us, nor do they receive incentive or other compensation based on, these non-compensation-related services.

The CLP Committee considered the independence of Mercer under applicable SEC rules and regulations and Nasdaq listing standards. Based on its review, the CLP Committee determined that the services provided by MMC and its affiliates and the engagement of Mercer did not raise any conflict of interest or other issues that would adversely impact Mercer’s independence.

Finance Committee       Number of Meetings in fiscal 2021: 5
           
Current Committee

Key Responsibilities:

Reviewing our dividend policy and other financial and investment policies;
Reviewing our capital structure and financing requirements;
Reviewing the principal terms and conditions of significant proposed borrowings and issuances of debt or equity securities by us;
Reviewing our plans for capital expenditures and significant capital investments; and
Reviewing our strategies and plans for significant mergers, acquisitions, divestitures, joint ventures, and investments in third party securities.

Independence

The Board has determined that each member of the Finance Committee is independent under the Corporate Governance Guidelines and the Nasdaq listing standards.

David J. Brailer
(Chair)

Members

Janice M. Babiak
William C. Foote
John A. Lederer
Dominic P. Murphy

   

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Nominating and Governance Committee       Number of Meetings in fiscal 2021: 5 
           
Current Committee

Key Responsibilities:

Establishing and reviewing criteria to be used by the Board for selecting new directors;
Actively seek out women and individuals from minority groups to include in the pool of new director nominees in support of the Board’s commitment to diversity;
Recommending candidates for election to the Board;
Overseeing succession planning for Board and Committee membership;
Making recommendations to the Board regarding the Corporate Governance Guidelines and other significant governance policies;
Overseeing the annual Board evaluation and director peer review process; and
Reviewing our policies and activities regarding Corporate Social Responsibility (including with respect to sustainability and the environment), charitable donations and political contributions.

Independence

The Board has determined that each member of the Nominating and Governance Committee is independent under the Corporate Governance Guidelines and the Nasdaq listing standards.

William C. Foote
(Chair)

Members

Ginger L. Graham
John A. Lederer
Dominic P. Murphy
José E. Almeida(1)

(1)Not standing for re-election
   

Board Meetings and Attendance

During fiscal 2021, the Board held ten meetings. In fiscal 2021, all directors attended over 75% of the total number of Board and applicable Committee meetings held during the period that such director served, with most directors having attended all such meetings.

Our directors are expected to attend each annual meeting of stockholders. All of our directors attended the 2021 Annual Meeting.

Our independent directors hold regularly-scheduled executive sessions without our management present. These executive sessions of independent directors are chaired by our Lead Independent Director. The independent directors met in executive session at each of the regularly-scheduled quarterly Board meetings held in fiscal 2021.

Board Operation and Additional Governance Matters

Director Orientation and Continuing Education

The Corporate Governance Guidelines state that the Board shall maintain an orientation process for new directors. As part of this process, each new director receives a series of in-person briefings provided by our corporate officers on our business operations; significant financial, accounting and risk management matters; corporate governance; and key policies and practices. The new director also receives briefings on the responsibilities, duties, and activities of the Committee(s) on which the director will initially serve. Finally, the new director has the opportunity to visit and learn more about each of our divisions and select cross-divisional functions, both within and outside of the United States, where he or she receives additional in-person briefings from divisional and cross-functional leadership. The Nominating and Governance Committee develops and oversees this orientation program with the assistance of our management.

Our directors are encouraged to participate in director continuing education programs sponsored by third-party organizations. Our executive management team also periodically provides materials and briefing sessions on subjects that assist directors in fulfilling their duties. Directors are encouraged to visit our facilities and operations and to directly communicate and interact with our employees, which allows them to gain a first-hand view of our business.

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Board Evaluation and Director Peer Review Process

The Board recognizes that a robust evaluation process is an essential component of strong corporate governance practices and promotes Board effectiveness. The Nominating and Governance Committee oversees an annual evaluation process led by the Lead Independent Director (who also serves as Chair of the Nominating and Governance Committee).

          The Nominating and Governance Committee reviews the format of the Board evaluation and director peer review process as necessary to help ensure that the solicited feedback remains relevant and appropriate.
 

Each director completes an annual self-evaluation of the Board and the Committee(s) on which he or she serves. These self-evaluations are designed to help assess the skills, qualifications, and experience represented on the Board and its Committees, and to determine whether the Board and its Committees are functioning effectively.

 

The results of this annual self-evaluation are discussed by the full Board and each Committee, as applicable, and changes to the Board’s and its Committees’ practices are implemented as appropriate.

 

The Lead Independent Director also conducts a confidential director peer review process. As part of this process, the Lead Independent Director speaks with each other director individually to obtain insights regarding the contributions of other directors (and the Executive Chairman of the Board may speak with each other director regarding the contributions of the Lead Independent Director), and to discuss issues in greater depth and obtain more targeted feedback with respect to Board, Committee and individual director effectiveness.


Director Resignation Policy

Our amended and restated by-laws state that if a nominee for director who was in office prior to the Annual Meeting is not elected and no successor is elected at such Annual Meeting, the director must promptly tender his or her resignation from the Board. Thereafter, the Nominating and Governance Committee, excluding the director in question, will make a recommendation to the Board about whether to accept or reject the resignation or whether to take other action. The Board, excluding the director in question, will act on the recommendation of the Nominating and Governance Committee and publicly disclose its decision and its rationale within 90 days from the date the election results are certified.

Communication with the Board

Stockholders and other interested parties may communicate with the Board or individual directors. Communications with the Board or individual directors should be in writing, in the English language, and should be delivered by one of the following methods:

By courier or mail, addressed to:
Walgreens Boots Alliance, Inc.
108 Wilmot Road, MS #1858
Deerfield, Illinois 60015
Attention: Corporate Secretary
 

By e-mail, to:
WBABoard@wba.com

Our Corporate Secretary reviews all communications sent to the Board. All such communications will be forwarded to the Board or the appropriate Committee or member thereof (or an individual director), except for those items that our Corporate Secretary deems, in his discretion, to be unrelated to a director’s duties and responsibilities as a director. Communications addressed to the Board may, at our discretion, be shared with members of our management.

Further information regarding the submission of comments or complaints relating to accounting, internal accounting controls, or auditing matters can be found in our Audit Committee Complaint Procedures, which is available at https://investor. walgreensbootsalliance.com/governance.

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Director Independence and Related Party Transactions

Director Independence

Under the Corporate Governance Guidelines, the Board must consist of at least two-thirds of independent directors. In making independence determinations, the Board will consider all relevant facts and circumstances and observe all applicable requirements, including the relevant listing standards established by Nasdaq.

To be considered “independent” for these purposes, (a) the director must meet the bright-line independence standards under Nasdaq listing standards, and (b) the Board must affirmatively determine that the director otherwise has no relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director of the Company. In each case, the Board shall broadly consider all relevant facts and circumstances.

To aid in the director independence assessment process, the Board has adopted categorical standards that identify categories of relationships that the Board has determined would not affect a director’s independence. These categorical standards, which are part of the Corporate Governance Guidelines, stipulate that the following will not be considered material relationships that would impair a director’s independence:

Immaterial
Sales/Purchases
    

At the time of the independence determination, the director is an executive officer or employee, or an immediate family member of such director is an executive officer, of another organization that does business with us and the sales by that organization to us, or purchases by that organization from us, in any single fiscal year during the evaluation period, are less than the greater of (i) $200,000 or (ii) 3% of the annual revenues of that organization. For the avoidance of doubt, payments arising solely from investments in our securities are not included in received payments for this purpose.

Immaterial
Indebtedness

At the time of the independence determination, the director is an executive officer or employee, or an immediate family member of such director is an executive officer, of another organization that is indebted to us, or to which we are indebted, and the total amount of either entity’s indebtedness to the other at the end of the last completed fiscal year is less than 5% of the other entity’s total consolidated assets.

Immaterial
Position

At the time of the independence determination, the director serves as a director or trustee, but not an executive officer, or an immediate family member of such director is a director, trustee or employee (but not an executive officer) of any other organization (other than our independent auditors) that does business with, or receives donations from, us.

Immaterial
Charitable
Donations

At the time of the independence determination, the director serves as an executive officer of a charitable organization, and our discretionary charitable contributions to the organization are less than the greater of (i) $200,000 or (ii) 3% of that organization’s annual consolidated gross revenues during its last completed fiscal year. Our automatic matching of employee charitable contributions will not be included in the amount of our contributions for this purpose.

The Board, through the Nominating and Governance Committee, annually reviews all relevant relationships of each director to determine whether such director meets the categorical standards described above. Where an organization does not publish its financial information, the Board will make a good faith determination of whether the amounts exceed any of the thresholds set forth above. The Board may determine that a director who has a relationship that exceeds the limits described in the categorical standards (to the extent that any such relationship would not constitute a bar to independence under Nasdaq listing standards) is nonetheless independent.

Independence Determination

Based on the standards described above under “—Director Independence,” and as a result of its annual review, the Board has affirmatively determined that the following director nominees are independent: Janice M. Babiak, David J. Brailer, William C. Foote, Ginger L. Graham, Valerie B. Jarrett, John A. Lederer, Dominic P. Murphy and Nancy M. Schlichting. In addition, the Board has affirmatively determined that José E. Almeida, who is not standing for re-election, is independent.

Stefano Pessina, the current Executive Chairman of the Board and our former CEO, and Rosalind G. Brewer, our current CEO, are not independent directors. James A. Skinner, the former Executive Chairman who is not being nominated for re-election, also is not an independent director.

The Board has determined that each member of the Audit Committee, the CLP Committee, and the Nominating and Governance Committee is independent as defined in our independence standards, the applicable rules of the SEC and Nasdaq listing standards. All members of the Finance Committee of the Board are also independent.

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Related Party Transactions

The Board has adopted a written policy for the review of certain related party transactions, including those that are required to be disclosed in this Proxy Statement. For purposes of this policy, a “related party transaction” includes, subject to certain exceptions, a transaction (or series of similar transactions), arrangement or relationship in which (i) the Company or any of its subsidiaries was, is or will be a participant, (ii) the aggregate amount involved will exceed, or may be reasonably expected to exceed, $120,000 in any fiscal year, and (iii) any related person has or will have a direct or indirect material interest. The policy defines a “related person” to include: any of our directors, director nominees or executive officers; a holder of more than 5% of our common stock; and immediate family members of any of the foregoing.

Pursuant to this policy, all such related party transactions must be reviewed and approved, ratified or disapproved by the Nominating and Governance Committee. In the event that a member of the Nominating and Governance Committee has an interest in a related party transaction, the transaction must be approved, ratified or disapproved by the disinterested members of the Nominating and Governance Committee. In deciding whether to approve or ratify a related party transaction, the Nominating and Governance Committee considers, among other factors:

The purpose of, and the potential benefits to the Company of, the transaction;
The extent of the related party’s interest in the transaction;
Whether the transaction is fair to the Company and on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances;
Whether the transaction would impair the independence of a Non-Employee Director; and
Whether the transaction would present an improper conflict of interest for any of our directors, director nominees or executive officers, taking into account the size of the transaction, the overall financial position of the applicable related person, the direct or indirect nature of the applicable related person’s interest in the transaction and the ongoing nature of any proposed relationship.

Shareholders’ Agreement and Other Agreements with Mr. Pessina
Pursuant to the Shareholders’ Agreement, for so long as the SP Investors meet certain common stock beneficial ownership thresholds, and subject to certain other conditions, the SP Investors are entitled to designate a nominee for election to the Board. Mr. Pessina is the current designee of the SP Investors.

The Shareholders’ Agreement also includes, among other things, registration rights, standstill provisions and restrictions on the SP Investors’ ability to dispose of shares of our common stock or to acquire additional shares of our common stock.

In addition, on July 23, 2020, Mr. Pessina and the Company entered into a letter agreement which provides, among other things, that upon the effective date of the appointment of the new CEO, Mr. Pessina will resign as CEO and Vice Chairman of the Board, and the Board will appoint Mr. Pessina on an annual basis (subject to applicable law, including fiduciary duties) as Executive Chairman, provided that Mr. Pessina is a member of the Board of the Company at the time. Ms. Brewer was appointed CEO of the Company by the Board, effective March 15, 2021, and Mr. Pessina was elected Executive Chairman, effective as of the same day.

Transactions with Alliance Healthcare Italia S.p.A. and its Affiliates
From time to time, we or our subsidiaries have entered into, or may be deemed to have entered into by virtue of our acquisition of Alliance Boots, certain equity-related transactions and agreements with affiliates of Mr. Pessina, our Executive Chairman, a director of the Company, and an indirect holder of more than 5% of our common stock. Alliance Healthcare Italia SpA (“AHI”) is an entity indirectly controlled by Mr. Pessina (via Alliance Santé Participations S.A. (“ASP”)), in which the Company has an indirect 9% interest (held via Alliance Boots Holdings Limited (“AB Holdings”)). ASP and AB Holdings are the two shareholders of Sprint Lux Holdco 3 S.à.r.l. (“Sprint Lux”), the entity that directly owns AHI, and in such capacity ASP and AB Holdings are parties to a shareholders’ agreement. The shareholders’ agreement has a 50-year term, ending in 2068, and provides, among other things, that AB Holdings will not compete, and will cause its affiliates (including the Company) not to compete, with AHI in Italy, the Vatican City State and the Republic of San Marino for the duration of, and for the 24 months following termination of, the shareholders’ agreement. For the same duration, ASP will cause Sprint Lux and its subsidiaries, including AHI, to not compete

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with AB Holdings or any of its affiliates (including the Company) in any territory in which they are active in the health and beauty retail market or the pharmaceutical wholesale market as of the date of the shareholders’ agreement. If ASP proposes to sell any of its shares of Sprint Lux or make a substantial disposal of the assets of Sprint Lux or its subsidiaries, including AHI, to a third party, ASP must first permit AB Holdings to make an offer for all, but not less than all, of such shares or assets. If ASP does not accept AB Holdings’ offer, ASP may sell the shares or assets to a third party, but only on terms no less favorable to ASP than those offered by AB Holdings. AB Holdings is entitled to sell its shares of Sprint Lux on the same terms as any sale of the shares of Sprint Lux by ASP (a so-called tag-along right). In addition, after complying with the right of first offer provision described above, ASP is entitled to cause AB Holdings to sell all, but not less than all, of its shares of Sprint Lux on the same terms as any sale of the shares of Sprint Lux by ASP (a so-called drag-along right). The shareholders’ agreement also provides that any transaction between Sprint Lux or any of its subsidiaries, including AHI, on the one hand, and either ASP (or any of its affiliates, including Mr. Pessina) or AB Holdings (or any of its affiliates, including the Company), on the other hand, shall be on arms-length terms.

On January 1, 2015, WBAD Holdings Limited (“WBAD Holdings”), our wholly-owned subsidiary, transferred 320 common shares of Walgreens Boots Alliance Development GmbH (“WBAD”), our global sourcing enterprise, to a subsidiary of AHI, Alliance Healthcare Italia Distribuzione S.p.A. (“AHID”), in exchange for 32,000 Swiss francs. WBAD Holdings retained the remainder of the equity interests in WBAD, which consist of 6,000 preferred shares. In August 2018, all of the preferred shares of WBAD were transferred to our wholly-owned subsidiary, WBAD Holdings 2 Limited (“WBAD Holdings 2”). As the holder of common shares, AHID is entitled only to its pro rata share (approximately 5%) of any dividends paid by WBAD in excess of $3 billion per annum. AHID has never been paid any dividends in respect of its common shares of WBAD. Upon the liquidation of WBAD, AHID is entitled to receive its pro rata share (approximately 5%) of 10% of the net proceeds of such liquidation (or approximately 0.5%). Under certain circumstances, AHID has the right to put, and WBAD Holdings 2 has the right to call, the common shares of WBAD held by AHID for a purchase price of $100,000.

Certain of our executive officers or other employees may provide services to AHI and its affiliates, and AHI and its affiliates may provide services to us and our subsidiaries. Furthermore, we and our subsidiaries may sell products to AHI and its affiliates, and AHI and its affiliates may sell products to us and our subsidiaries. These services and products are procured pursuant to written agreements between the relevant parties.

Pursuant to license agreements entered into between affiliates of Alliance Boots and AHI prior to the 100% acquisition of Alliance Boots by Walgreen Co. in December 2014, AHI was granted the exclusive right to use certain Boots-related trademarks and other intellectual property in the promotion, advertisement and sale of certain products in Italy, the Vatican City State and the Republic of San Marino for a period of 99 years, in accordance with the terms of such license agreements and a store operations agreement entered into in fiscal 2018. These agreements provide that the parties will review the royalty rates for such licenses every five years and the first review was initiated by the Company in November 2019.

The Company engaged independent counsel to advise on the review process. The Company’s Nominating and Governance Committee received regular updates from, and provided regular feedback to, the Company and its independent counsel regarding the status and expected outcome of the negotiations with AHI and its counsel regarding the license agreements. On July 13, 2021, the Nominating and Governance Committee approved entering into an agreement between the Company and AHI, as negotiated by the Company and its independent counsel, to terminate the license agreements and to enter into a two-year interim trial license for AHI’s use of Boots-related service marks in 11 Boots-branded pharmacies owned by AHI.

In 2018, following partial de-regulation of the Italian pharmacy market, the management services agreement pursuant to which services are provided to AHI by certain of our subsidiaries was amended to allow, among other things, additional retail advisory and related services to be provided to AHI to facilitate AHI’s intention to conduct a trial of Boots-branded stores in Italy and to assist with the possible roll out of further Boots branded stores (subject to the success of the pilot stores). Further, a distribution agreement was entered into between a subsidiary of the Company and AHI, which replaced previous distribution agreements between the parties and which allows AHI to purchase products for sale in Boots branded stores in Italy. In fiscal 2021, pursuant to the agreements described in this paragraph, the Company and its subsidiaries provided products and services valued at $2.7 million to AHI and its affiliates, of which payment of $0.5 million remained due at the end of fiscal 2021.

In fiscal 2021, AHI and its affiliates provided services and products valued at $0.3 million to subsidiaries of the Company.

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  Corporate Governance  

Other Relationships and Transactions

Mr. Pessina and Ms. Barra are partners and share a private residence. As noted in “Executive Compensation—Compensation Discussion and Analysis” below, Ms. Barra reported to James A. Skinner, the Executive Chairman of the Board until March 15, 2021, which is also the date of Ms. Brewer’s appointment as CEO of the Company. Until March 15, 2021, Mr. Skinner was the only member of management who made recommendations concerning Ms. Barra’s compensation to the CLP Committee. On and after March 15, 2021, Ms. Barra reports to Ms. Brewer and Ms. Brewer is the only member of management who makes recommendations concerning Ms. Barra’s compensation to the CLP Committee. For a description of Ms. Barra’s fiscal 2021 compensation and benefits, see “Executive Compensation—Compensation Discussion and Analysis” and “Executive Compensation—Executive Compensation Tables and Supporting Information” below.

During fiscal 2021, Mr. Pessina had one child employed by the Company in a non-executive officer capacity. Elena Pessina serves as Director, Global Communications Agency Operations and received total compensation in fiscal 2021 of more than $120,000. The compensation of Ms. Pessina is comparable to other Company employees at a similar level.

Director Compensation

Each Non-Employee Director receives compensation for his or her service to the Board. Mr. Pessina, our former CEO and current Executive Chairman, and Ms. Brewer, our CEO, are employees of the Company and therefore do not receive any additional compensation for their service to the Board. In addition, while serving as our former Executive Chairman, Mr. Skinner did not receive any additional compensation for his service on the Board. Information about their compensation, including compensation received by Mr. Skinner while he was Executive Chairman, can be found in “Executive Compensation—Compensation Discussion and Analysis—VI. CEO and Executive Chairman Compensation” and “Executive Compensation—Executive Compensation Tables and Supporting Information” below.

Pursuant to its charter, the CLP Committee is charged with reviewing annually all elements of Non-Employee Director compensation and recommending to the Board any changes. In consultation with Mercer, the Board approves any changes to the form and amount of Non-Employee Director compensation after reviewing the CLP Committee’s recommendations.

Cash Retainers

In fiscal 2021, each Non-Employee Director received a $100,000 annual cash retainer. Also in fiscal 2021, the Lead Independent Director received an additional annual cash retainer of $40,000, the Chair of the Audit Committee received an additional annual cash retainer of $25,000, and the Chairs of the other standing Board Committees received an additional annual cash retainer of $20,000. All cash retainers were paid in quarterly installments. For fiscal 2021, Ms. Schlichting received an additional $100,000 cash retainer for her service as the Chair of the CEO search committee. Other than the additional retainer paid to Ms. Schlichting for her services as Chair of the CEO search committee, the cash retainer amounts have not increased since fiscal 2018.

Equity-Based Awards

A substantial portion of each Non-Employee Director’s annual compensation is in the form of equity, which the Board believes helps align director compensation with the interests of our stockholders. Under the Walgreens Boots Alliance, Inc. 2021 Omnibus Incentive Plan (the “2021 Omnibus Incentive Plan”), each Non-Employee Director is granted fully-vested shares of our common stock annually, on a date determined by the Board (currently November 1), for his or her service during the prior 12 months.

In fiscal 2021, each Non-Employee Director received a grant of our common stock with a market value of $200,000 as of the grant date (November 1, 2020) under the Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan (the “2013 Omnibus Incentive Plan” and, together with the 2021 Omnibus Incentive Plan, the “Omnibus Incentive Plans”). This grant was made under the 2013 Omnibus Incentive Plan for service as a director from November 1, 2019 through October 31, 2020. The equity-based retainer has not increased since fiscal 2018.

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  Corporate Governance  

Deferral Opportunities

Under the Omnibus Incentive Plans, the following deferral opportunities are available as elected by the Non-Employee Directors:

All cash retainer payments may be deferred into a deferred cash compensation account or awarded in the form of deferred stock units (“DSUs”); and
The annual stock grant may be awarded in the form of DSUs.

All amounts deferred into the deferred cash compensation account accrue interest at a monthly compounding rate equal to 120% of the applicable federal midterm rate. The Omnibus Incentive Plans provide Non-Employee Directors with election options relating to the timing and form of payment of account balances following termination of his or her service as a director, subject to certain restrictions. DSUs accrue dividend equivalents, which are then subsequently credited as additional DSUs.

Other Director Compensation Matters

A Non-Employee Director who joins the Board during a fiscal year (or, in the case of Mr. Skinner, who transitioned from Executive Chairman to Non-Employee Director during the fiscal year) receives pro-rated amounts for all elements of his or her compensation for such fiscal year. A Non-Employee Director who leaves the Board during a fiscal year is entitled to retain any portion of his or her cash retainer already received for his or her service during such fiscal year, but is not entitled to receive a pro-rated equity award on the following November 1 for such pro-rated service.

All directors are reimbursed for expenses incurred in connection with meetings of the Board and its Committees. On a very limited basis, we may determine that it is appropriate for a Non-Employee Director to be accompanied by his or her spouse or partner in connection with these meetings and/or at other events related to such Non-Employee Director’s service on the Board and its Committees. In these circumstances, we also reimburse the spouse’s or partner’s travel expenses. In addition, in accordance with the Corporate Governance Guidelines, directors are reimbursed for reasonable expenses related to continuing education programs. In addition to the amounts reported, directors are eligible to receive the same discount on merchandise purchased from us as we make available to employees generally.

Non-Employee Director Stock Ownership Guidelines

We have adopted stock ownership guidelines for Non-Employee Directors. Under these guidelines, each Non-Employee Director is expected to accumulate shares of our common stock equal to the lesser of (a) 20,000 shares of our common stock or (b) the number of shares valued at three times such director’s total annual cash and equity compensation for Board service. Each Non-Employee Director is required to satisfy the stock ownership guidelines applicable to him or her within five years after first becoming subject to the guidelines. We consider DSUs as shares owned for purposes of compliance with these guidelines.

As of the Record Date, each Non-Employee Director had either met these guidelines or was within the five-year transition period. The stock ownership guidelines applicable to Mr. Pessina and Ms. Brewer are described further in “Executive Compensation—Compensation Discussion and Analysis—VIII. Executive Compensation Corporate Governance—B. Stock Ownership Guidelines” below.

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  Corporate Governance  

2021 Non-Employee Director Compensation

The following table shows information regarding the compensation earned or paid during fiscal 2021 to Non-Employee Directors who served on the Board during the fiscal year. Mr. Pessina and Ms. Brewer are employees of the Company and therefore did not receive any additional compensation for their service to the Board in fiscal 2021. Mr. Skinner was an employee of the Company for a portion of fiscal 2021 and, during such period, did not receive any additional compensation for his service to the Board.

Name       Fees Earned
or Paid in Cash
($)(1)
      Stock
Awards
($)(2)
      All Other
Compensation
($)
      Total
($)
José E. Almeida 100,000 199,985 299,985
Janice M. Babiak 125,000 200,000 325,000
David J. Brailer 120,000 200,000 320,000
William C. Foote 160,000 200,000 360,000
Ginger L. Graham 100,000 200,000 300,000
Valerie B. Jarrett 84,066 84,066
John A. Lederer 100,000 200,000 300,000
Dominic P. Murphy 100,000 200,000 300,000
Nancy M. Schlichting 220,000 199,985 419,985
James A Skinner 45,924 45,924
(1) Includes the annual retainer and other cash retainers outlined above (in all cases including deferred amounts). For Mr. Skinner, represents pro-rated fees received by Mr. Skinner for his service as a Non-Employee Director after March 15, 2021, the date on which he transitioned from the Executive Chairman role. During fiscal 2021, the following directors deferred all of their retainers into DSUs: Dr. Brailer; Ms. Jarrett; Mr. Lederer; Mr. Murphy and Mr. Skinner.
(2) Represents the grant date (November 1, 2020) fair value determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 of the stock grant under the 2013 Omnibus Incentive Plan to each then-serving Non-Employee Director (including any deferred amounts). The number of shares granted was calculated by dividing $200,000 by $34.04, the closing stock price on November 1, 2020. All stock awards are fully vested at the grant date. Amounts for Mr. Almeida and Ms. Schlichting are less than $200,000 because these directors elected to receive the annual equity award in stock, and fractional shares are not issued. All other eligible Non-Employee Directors elected to receive this award in the form of DSUs.
The table below shows DSUs issued under the Omnibus Incentive Plans and the former Walgreen Co. Nonemployee Director Stock Plan held as of August 31, 2021 by each Non-Employee Director who served during the fiscal year. The aggregate number of DSUs accumulated in each Non-Employee Director’s account relates to deferrals of cash retainer payments and stock awards, including additional DSUs credited as a result of dividend equivalents earned with respect to the DSUs.

Name       DSUs
José E. Almeida
Janice M. Babiak 30,988
David J. Brailer 54,630
William C. Foote 70,189
Ginger L. Graham 43,108
Valerie B. Jarrett 1,793
John A. Lederer 31,015
Dominic P. Murphy 41,134
Nancy M. Schlichting 63,404
James A Skinner 89,382

2022 Non-Employee Director Annual Compensation Review

The CLP Committee conducted its annual review of our Non-Employee Director compensation program in July 2021. Following that review, the CLP Committee, in consultation with Mercer, did not recommend any changes in the compensation program for Non-Employee Directors for fiscal 2022.

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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information, as of the Record Date (unless otherwise noted), concerning the ownership of our common stock by each person who is known to us to beneficially own more than 5% of our common stock, by each director and director nominee, by each NEO (as defined below), and by all current directors and executive officers as a group. Beneficial ownership is determined according to the rules of the SEC and generally includes any shares over which a person possesses sole or shared power to vote or to direct the disposition of, as well as any shares that such person has the right to acquire within 60 days, including through the exercise of options or other rights. Under these rules, the same shares may be beneficially owned by more than one person if there is shared power to vote and/or shared power to direct the disposition of the shares. Except as otherwise noted, to our knowledge, the persons named possessed sole voting and investment power over such shares, and such shares are not subject to any pledge.

Name(1)        Shares of
Common
Stock
Owned(2)
       Options
Currently
Exercisable or
Exercisable
Within 60 Days
      Total Shares of
Common Stock
Beneficially
Owned(2)
      Percent of
Class
The Vanguard Group(3) 58,059,957 58,059,957 6.7%
BlackRock, Inc.(4) 49,962,675 49,962,675 5.8%
State Street Corporation(5) 46,922,371 46,922,371 5.4%
José E. Almeida(6) 17,581 17,581 **
Janice M. Babiak(6) 1,200 1,200 **
Ornella Barra(2)(7) 1,882,069 660,955 2,543,024 **
David J. Brailer(6) 5,167 5,167 **
Rosalind G. Brewer **
William C. Foote(6) 8,207 8,207 **
Alexander W. Gourlay 830,680 801,188 1,631,868 **
Ginger L. Graham(6) 2,150 2,150 **
Valerie B. Jarrett(6) **
James Kehoe 102,014 244,508 346,522 **
John A. Lederer(6) 50,000 50,000 **
Dominic P. Murphy(6) 798 798 **
Marco Pagni 28,223 323,985 352,258 **
Stefano Pessina(8) 145,246,600 1,853,674 147,100,274 17.0%
Nancy M. Schlichting(6) 16,570 16,570 **
James A. Skinner(6) 565,230 565,230 **
John Standley 24,251 41,212 65,463 **
All current directors and executive officers as a group
(18 individuals)(6)
147,644,925 2,832,779 150,477,704 17.4%
(1) Unless otherwise indicated, the business address of each of the identified individuals is c/o Walgreens Boots Alliance, Inc., 108 Wilmot Road, Deerfield, IL 60015.
(2) Does not include shares underlying restricted stock units (“RSUs”) and RSUs credited as dividends on RSUs issued under equity incentive plans that do not vest within 60 days of the Record Date. The table below presents such unvested RSUs separately and, in total with beneficially owned stock, as of the Record Date for each NEO then serving and current executive officers as a group. In the cases of Messrs. Gourlay, Pagni and Skinner, this column includes RSUs that will vest within 60 days of the Record Date upon their separation/retirement dates, and the RSUs listed in the table below reflect the remaining RSUs that will be forfeited upon their separation/retirement dates. Also see “2021 Potential Payments Upon Termination or Change in Control” below for further information on this topic. Except as set forth in the table below, none of the directors has any RSUs.

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  Security Ownership of Certain Beneficial Owners and Management  

Name       Restricted
Stock Units
      Shares of
Common Stock
Beneficially
Owned
      Total
Ornella Barra 51,024 2,543,024 2,594,048
Rosalind G. Brewer 249,215 249,215
Alexander W. Gourlay 24,404 1,631,868 1,656,272
James Kehoe 89,757 346,522 436,279
Marco Pagni 10,349 352,258 362,607
Stefano Pessina 196,407 147,100,274 147,296,681
James A. Skinner 95,155 565,230 660,385
John Standley 66,973 65,463 132,436
All current executive officers as a group (8 individuals) 681,035 150,090,611 150,771,646
(3) Represents shares beneficially owned as of December 31, 2020, based on a Schedule 13G/A filed on February 10, 2021 by The Vanguard Group. In such filing, The Vanguard Group lists its address as 100 Vanguard Blvd., Malvern, PA 19355, and indicates that it has shared voting power with respect to 1,176,821 shares, sole dispositive power with respect to 54,845,669 shares, and shared dispositive power with respect to 3,214,288 shares.

(4)

Represents shares beneficially owned as of December 31, 2020, based on a Schedule 13G/A filed on February 1, 2021 by BlackRock, Inc. In such filing, BlackRock, Inc. lists its address as 55 East 52nd Street, New York, NY 10055, and indicates that it has sole voting power with respect to 41,774,741 shares and sole dispositive power with respect to 49,962,675 shares.
(5) Represents shares beneficially owned as of December 31, 2020, based on a Schedule 13G filed on February 11, 2021 by State Street Corporation. In such filing, State Street Corporation lists its address as State Street Financial Center, One Lincoln Street, Boston, MA 02111, and indicates that it has shared voting power with respect to 38,204,601 shares and shared dispositive power with respect to 46,839,692 shares.
(6) Does not include DSUs issued under the Omnibus Incentive Plans and the former Walgreen Co. Nonemployee Director Stock Plan. The table below shows DSUs (including additional DSUs credited as a result of dividend equivalents earned with respect to the DSUs) held separately, and in total with beneficially owned stock, as of the Record Date by each Non-Employee Director who held DSUs including Mr. Skinner, who was a Non-Employee Director until his appointment as Executive Chairman in January 2015, and then resumed Non-Employee Director status in March 2021 following Mr. Pessina’s assumption of the role of Executive Chairman. Please note that the ownership of these DSUs by our directors is also reflected above in the section entitled “Director Compensation”.
** Less than 1% of the Company’s outstanding common stock.

Name       Deferred
Stock Units
      Shares of
Common Stock
Beneficially
Owned
      Total
José E. Almeida 17,581 17,581
Janice M. Babiak 35,514 1,200 36,714
David J. Brailer 60,004 5,167 65,171
William C. Foote 75,094 8,207 83,301
Ginger L. Graham 47,751 2,150 49,901
Valerie B. Jarrett 6,553 6,553
John A. Lederer 36,058 50,000 86,058
Dominic P. Murphy 46,274 798 47,072
Nancy M. Schlichting 64,016 16,570 80,586
James A. Skinner 93,227 565,230 658,457
(7) 1,718,000 shares beneficially owned by Ms. Barra are held of record by OLB Holdings Ltd., which is wholly owned by Ms. Barra.
(8) Based on a Schedule 13D/A jointly filed with the SEC on July 27, 2020 by Alliance Santé Participations S.A. (“ASP”), NewCIP II S.a.r.l. (“NEWCIP II”), and Stefano Pessina and a Form 4 filed with the SEC by Mr. Pessina on November 1, 2021. Such filings indicate that ASP has sole voting power and sole dispositive power with respect to the 144,788,821 shares that it holds directly and of record, that NEWCIP II is the sole shareholder of ASP, and that Mr. Pessina holds 100% voting control over NEWCIP II. Accordingly, each of NEWCIP II and Mr. Pessina may be deemed to be the beneficial owner of the 144,788,821 shares held directly and of record by ASP. In the Schedule 13D/A, the address of both ASP and NEWCIP II is listed as 14, avenue du X Septembre, L-2550, Luxembourg, Grand Duchy of Luxembourg.

As a result of being beneficial owners of more than 5% of our common stock, The Vanguard Group, BlackRock, Inc., and State Street Corporation are currently considered “related persons” under our Related Party Transactions Policy described under the caption entitled “Related Party Transactions” of this Proxy Statement.

56      Walgreens Boots Alliance, Inc.


Table of Contents

Proposal 2

Advisory Vote to Approve Named Executive Officer Compensation

What am I voting on?
Stockholders are being asked to approve, on an advisory basis, the compensation of our NEOs as described in the “Executive Compensation—Compensation Discussion and Analysis” and “Executive Compensation—Executive Compensation Tables and Supporting Information” sections of this Proxy Statement.

What is the Board’s voting recommendation?

  Vote FOR

The Board recommends a vote FOR Proposal 2. Valid proxies solicited by the Board will be so voted unless stockholders specify a contrary choice in their voting instructions.

What is the required vote?
Approval of Proposal 2 requires the affirmative vote of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the matter. If you elect to abstain, the abstention will have the same effect as an “AGAINST” vote on Proposal 2.

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to cast an advisory vote to approve the compensation of our NEOs as disclosed pursuant to the SEC’s compensation disclosure rules, including the “Executive Compensation—Compensation Discussion and Analysis” and “Executive Compensation—Executive Compensation Tables and Supporting Information” sections of this Proxy Statement (a “say-on-pay proposal”).

Our executive compensation program incorporates policies and practices designed to be aligned with our long-term goals and strategies and promote responsible pay and governance practices. We believe our executive compensation program appropriately rewards performance and is aligned with the long-term interests of our stockholders. We encourage our stockholders to read the “Executive Compensation—Compensation Discussion and Analysis” and “Executive Compensation—Executive Compensation Tables and Supporting Information” sections of this Proxy Statement, which describe the details of our executive compensation program and many of the executive compensation decisions made by the CLP Committee in fiscal 2021.

We value the feedback provided by our stockholders. At the 2021 Annual Meeting, our stockholders did not support our executive compensation program, with approximately 47% of the votes cast in favor of the say-on-pay proposal. Both prior to the vote and following the vote we conducted extensive outreach with our stockholders, including discussions with many of our institutional stockholders regarding executive compensation, and the CLP Committee and the Board consider the views of our stockholders regarding the design and effectiveness of our executive compensation program.

For a discussion of last year’s say on pay vote, see “B. Consideration of Fiscal 2020 Say on Pay and Related Stockholder Feedback.”

Our stockholders are being asked to approve the following resolution at the Annual Meeting:

RESOLVED, that the stockholders approve the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure shall include the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure, each as set forth in the Company’s Proxy Statement for its 2022 Annual Meeting of Stockholders).

As an advisory vote, this Proposal 2 is not binding on us or on the CLP Committee or the Board. However, the CLP Committee and the Board value the opinions expressed by our stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding our NEOs.

We currently include say-on-pay proposals in our proxy materials on an annual basis, and it is expected that the next vote on a say-on-pay proposal will occur at our 2023 annual meeting of stockholders (the “2023 Annual Meeting”).


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Table of Contents

Executive Compensation

Compensation Discussion and Analysis

This “Compensation Discussion and Analysis” section describes the material elements of our executive compensation program, practices and processes, focusing in particular on the executive pay decisions for our Named Executive Officers (“NEOs”) listed below in fiscal 2021:

Stefano Pessina       Former Chief Executive Officer and Current Executive Chairman
Rosalind G. Brewer   Chief Executive Officer
James Kehoe   Executive Vice President and Global Chief Financial Officer
Ornella Barra   Chief Operating Officer, International
John Standley   Executive Vice President and President, Walgreen Co.
Marco Pagni(1)   Former Executive Vice President and Global Chief Administrative Officer and General Counsel
Alexander W. Gourlay(1)   Former Co-Chief Operating Officer
James A. Skinner(1)   Former Executive Chairman
(1) Messrs. Pagni, Gourlay and Skinner ceased to be executive officers of the Company on September 13, 2021, May 17, 2021, and March 15, 2021, respectively.

This section is organized as follows:

I. Executive Summary 59
A. Our Company in Fiscal 2021 59
B. Consideration of Fiscal 2020 Say on Pay and Related Stockholder Feedback 60
C. Components of our Fiscal 2021 Executive Compensation Program 61
D. Compensation Program Best Practices 63
 
II. Executive Compensation Philosophy and Process 63
A. Compensation Philosophy 63
B. Compensation Decision-Making 64
C. Role of the Compensation Consultant 65
 
III. Target Setting for Incentive Compensation 66
A. 2021 Annual Cash Incentive Target 66
B. 2021 Long-Term Incentive Compensation Target 68
 
IV. Annual Compensation 69
A. 2021 Base Salary Decisions 69
B. 2021 Annual Cash Incentive Payments 69
 
V. Long-Term Incentive Compensation 72
A. 2021 Grants of Long-Term, Performance-Based Incentives 72
B. 2021 Performance Share Award Grants 73
C. 2021 Stock Option Grants 73
D. 2021 Restricted Stock Unit Grants 74
E. Additional 2021 NEO Grants 74
F. Payout of 2019-2021 Long-Term Incentive Awards 75
 
VI. CEO and Executive Chairman Compensation 76
A. Rosalind G. Brewer, our Current CEO 76
B. Stefano Pessina, our Former CEO and Current Executive Chairman 77
C. James A. Skinner, our Former Executive Chairman 77
 
VII. Retirement and Other Benefits 77
A. Retirement Plans and Programs 77
B. Perquisites 78
C. Employment and Separation Arrangements 79
D. Severance and Change in Control Plan 81
 
VIII. Executive Compensation Corporate Governance 82
A. Compensation Risk Oversight 82
B. Stock Ownership Guidelines 83
C. Compensation Recovery (Clawback) Policy 83
D. Anti-Hedging and Anti-Pledging Policies 83

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  Executive Compensation  

I. Executive Summary

A. Our Company in Fiscal 2021

We are an integrated pharmacy, healthcare and retail leader serving millions of customers and patients every day through dispensing medications, improving access to a wide range of health services, providing high quality health and beauty products and offering anytime, anywhere convenience across its digital platforms, with sales of $132.5 billion in the fiscal year ended August 31, 2021, an increase of 8.6% over the prior year. We are focused on reimagining healthcare and well-being for all.

Our Company’s essential role in healthcare has been put to the test during the unprecedented global COVID-19 pandemic. We rose to the challenge, living our purpose to create more joyful lives through better health. Our people have worked tirelessly on the front lines to help vulnerable people adhere to their medications and stay healthy, to deliver more than 40 million vaccines across the globe (34.6 million in fiscal 2021), to ramp up new testing services, to implement delivery options including free prescription delivery, to expand our digital and telehealth capabilities and ability to fill orders, to facilitate supply chain continuity and access to essential items and to help keep our patients, customers and team members safe.

Despite the continued challenges of COVID-19, we performed above target with respect to our adjusted operating income, free cash flow, and DEI objectives under our annual cash incentive program, resulting in a formulaic payout of 159% of target for the Company and 129% for the Walgreens division. Similarly, we achieved above target performance for our earnings per share metric over the prior three-year performance period, resulting in a formulaic payout of 106.8% with respect to the Performance Shares granted in 2018 with the actual payout for the NEOs reduced to target (or 100%) through the CLP Committee’s use of negative discretion.

In November 2020, Mr. Pessina elected not to receive compensation for fiscal 2021, other than limited perquisites, and neither he nor Mr. Skinner participated in the annual cash incentive program described above. Mr. Skinner was paid entirely in performance-based RSUs and was not a participant in the 2018 performance share program described above.

Leadership Transition – CEO

During fiscal 2021, we underwent several leadership transitions. As described earlier, we were thrilled to welcome Ms. Brewer as our CEO. Ms. Brewer’s compensation as our new CEO was determined after considering the input of Mercer, our independent compensation consultant, and the level of compensation deemed necessary by the CLP Committee to recruit her to join the Company. As we have shared with our stockholders, this is a transformational time for the Company, and the Board selected Ms. Brewer for the role during this critical time based on her exceptional leadership experience during similar transformations, her significant expertise in the retail industry, and her ability to build exemplary leadership teams. With respect to the setting of her compensation and based on the advice received from Mercer, Ms. Brewer’s annual direct compensation as our CEO is consistent with median pay at our peer companies. The structure of Ms. Brewer’s annual direct compensation is consistent with the executive compensation program in which our other executive officers participate, with her target cash compensation prorated to reflect her service with the Company in fiscal 2021 and her annual long-term incentive awards beginning in fiscal 2022. To induce Ms. Brewer to join the Company and to compensate her for awards she forfeited to join the Company, Ms. Brewer also received a sign-on cash award and sign-on equity awards. For detailed information regarding Ms. Brewer’s compensation arrangement with the Company, see “CEO and Executive Chairman Compensation” below.

Leadership Transition – Other Leadership Transitions

In addition, during fiscal 2021, we entered into separation agreements with each of Messrs. Gourlay and Pagni, as detailed in “VII.C.—Employment and Separation Agreements.” The separation agreements with Messrs. Gourlay and Pagni were each structured to support and promote a smooth leadership transition given the institutional knowledge of each of Messrs. Gourlay and Pagni that needed to be transferred to their successors. In addition, both executives met the requirements for retirement eligibility (at least age 55 with ten years of service), based on CLP Committee approval of their retirement status for purposes of applicable long-term incentive awards.

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  Executive Compensation  

B. Consideration of Fiscal 2020 Say on Pay and Related Stockholder Feedback

Say on Pay Vote

At the 2021 Annual Meeting, our say-on-pay proposal received the support of approximately 47% of the votes cast. As we learned through our extensive stockholder outreach, the use of discretion in our long-term incentive program was the primary reason many of our stockholders did not vote to support the say on pay vote. Our constructive dialogue with stockholders provided an additional opportunity to clarify the CLP Committee’s rationale, balanced approach and use of objective metrics in connection with its fiscal 2020 decisions and to continue to listen to stockholder feedback related to our executive compensation program. In addition, we were able to outline the programmatic changes to our compensation programs that were designed to be responsive to stockholder feedback, particularly in light of the decision to exercise discretion.

The Board and the CLP Committee take very seriously the voting results and the feedback received from our stockholders. We believe that the results of last year’s vote on executive compensation were unusual because of the unique circumstances of fiscal 2020, as reflected by the fact that the Company has received an average approval over the prior three years of 91% of the votes cast for our executive compensation programs. However, the CLP Committee will consider investor feedback if it believes that circumstances warrant the exercise of positive discretion in future years.

As a result of ongoing feedback and to further our Company strategy, the CLP Committee implemented several changes to our executive compensation programs.

Stockholder Feedback        Responsiveness and Rationale
Concern with the exercise of discretion resulting in an above-target payout for the fiscal 2020 performance shares
During fiscal 2020, in light of the impact of COVID-19 and to recognize the extraordinary efforts of our executives and broader team members to pivot their efforts to address COVID-19 and to keep our business strategy moving forward, the CLP Committee exercised discretion in the payout of our long-term incentive program based on what it believes was a balanced approach, using objective metrics and recognizing performance prior to the onset of the pandemic.
The Board and the CLP Committee understand the concerns raised by stockholders and believe positive discretion should be limited to only extraordinary circumstances. Prior to fiscal 2020, the CLP Committee had not exercised such discretion and will consider investor feedback if it believes that circumstances warrant the exercise of positive discretion in future years.
Consistent with our compensation program framework that emphasizes pay and performance, fiscal 2021 payouts under both our short-term cash and long-term equity incentives were based on formulaic results. For the long-term performance shares, the CLP Committee determined that exercising negative discretion was appropriate to decrease the fiscal 2021 payout amounts from 106.8% to target (or 100%).
Concern with the use of one financial metric in the short-term incentive plan

The CLP Committee included the following three financial metrics for the fiscal 2021 short-term incentive plan:

Adjusted Operating Income (weighted at 65%)
Free Cash Flow (weighted at 25%)
Diversity Equity & Inclusion (weighted at 10%) based on quantitative goals

Concern with the use of one financial metric in the performance share portion of the long-term incentive plan

The CLP Committee included the following two financial metrics for the fiscal 2021-2023 performance share portion of the long-term incentive plan:

Adjusted Earnings per Share growth (weighted at 70%)
Adjusted Revenue growth (weighted at 30%) 

Concern that the existing clawback policy would be difficult to enforce and did not require disclosure of any exercise of the policy.

The CLP Committee adopted resolutions that require disclosure of enforcement of the clawback policy with respect to any Section 16 officer, unless the Board or CLP Committee conclude that legal or privacy concerns would prevent such disclosure.

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C. Components of our Fiscal 2021 Executive Compensation Program

The CLP Committee oversees our executive compensation program, which includes elements designed to support our compensation objectives and reward specific aspects of our financial performance that the Board believes are critical to driving long-term stockholder value in a sustainable manner. The CLP Committee is dedicated to ensuring that a substantial portion of executive compensation is “at-risk” and variable, with between 83% and 91% of the total direct compensation paid to the CEO and the other NEOs, tied to Company and individual performance.

Annual Compensation

The key components of total direct compensation under our fiscal 2021 executive compensation program, and how each supports our compensation objectives are listed below.

      Compensation Element       Description       Primary Objectives

Base Salary

Annual fixed cash compensation
Provides a form of fixed compensation determined based on individual performance, level of responsibility, experience, internal equity, and competitive pay levels
Supports the attraction and retention of talented executives
           
           

Annual Cash Incentive Payments

Annual cash incentive with payouts, if any, based on Company and individual performance
Targets determined at the beginning of the fiscal year
Payout decisions made following conclusion of fiscal year based on Company performance, including consideration of any unanticipated or unplanned extraordinary events
Incentivizes performance by linking annual cash compensation to attainment of key short-term performance goals:
by the Company, as measured against annual targets for the following metrics:
adjusted operating income, weighted 65%;
 NEW  free cash flow, weighted 25%, and
 NEW  diversity, equity and inclusion, weighted 10%
by the individual, as measured by achievement of specific strategic goals and an assessment of individual performance.

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Long-Term Incentive Compensation

      Element Compensation       Description       Primary Objectives

Performance Shares (50%)

Long-term incentive award with payout tied to achievement of Company performance over a three-year performance period
 NEW  Performance targets
established at the beginning of the three year performance period for each year during the performance period, with payout determined by the simple average of the three annual performance periods
Payable in common stock
Granted near start of fiscal year
Incentivizes performance by linking long-term incentive compensation to performance over three one-year performance periods based on attainment of goals in the following metrics, as well as changes in share price on an absolute basis:
 NEW  adjusted earnings per share growth, weighted 70%, and
 NEW  adjusted revenue growth, weighted 30%.
Increases executive stock ownership
Facilitates retention and further aligns our executives’ interests with those of our stockholders

Stock Options (25%)

Provides opportunity to purchase stock at the grant date fair market value over a ten-year period from the grant date (subject to applicable vesting conditions)
Results in value only if stock price increases
Incentivizes performance by linking realized compensation over long-term appreciation in stock price
Increases executive stock ownership
Facilitates retention and further aligns our executives’ interests with those of our stockholders

RSUs (25%)

Long-term incentive award with value fluctuating based on Company stock price performance
Payable in common stock
Facilitates retention and further aligns interests with those of our stockholders by focusing executives on long-term objectives over a multi-year vesting period, with the value of the award fluctuating based on stock price performance
Increases executive stock ownership

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D. Compensation Program Best Practices

The CLP Committee has adopted a number of commonly-viewed best practices that it believes are consistent with our compensation philosophy and serve the long-term interests of our stockholders. These include the following:

     
We DO Have This Practice

We DO NOT Have This Practice

Incentive award goals that are objective and tied to key Company performance metrics
A majority of compensation delivered as at-risk compensation in the form of equity-based awards that are tied to stockholder return
Robust stock ownership guidelines
Policies prohibiting hedging/short sales of stock by directors, executives and senior employees
Clawback policy
Double-trigger change in control severance for participating NEOs
Performance Share awards generally have a three-year performance period to drive sustainable value and promote retention
Market comparison of executive compensation against a relevant peer group
Multi-year guarantees for salary increases, nonperformance based bonuses, or equity compensation
Change in control excise tax gross-ups for NEOs
Repricing of options without stockholder approval
Excessive perquisites
Excessive severance and/or change in control provisions
Payout of dividends or dividend equivalents on unearned or unvested equity
Excessive pension or defined benefit supplemental executive retirement plan
A high percentage of fixed compensation

In addition, we actively engaged with stockholders in soliciting input on our executive compensation program. See “Governance—Board Responsibilities—Stockholder Engagement” for a summary of our stockholder engagement efforts.

II. Executive Compensation Philosophy and Process

A. Compensation Philosophy

The CLP Committee is responsible for establishing, implementing and monitoring our executive compensation philosophy and objectives. The CLP Committee typically reviews the philosophy on a quarterly basis to evaluate whether it reflects the views of the members, best practices at peer companies and the goals of the Company. The CLP Committee is currently undertaking a review of the compensation philosophy to modernize the philosophy and align it with the new vision, purpose and values of the Company.

       
The CLP Committee’s focus is to provide a competitive compensation package that enables us to:            

Our executive compensation program is designed to:

Attract and retain talented executives;
Reward Company and individual performance; and
Link the interest of our senior executives to the interests of our stockholders.
Be competitive with the pay practices of other companies of comparable size, scope and industry;
Attract and retain executives who can contribute to our future success as a global organization;
Create a strong linkage between pay and performance through the use of variable performance-based short-term and long-term incentive awards, such that executives will receive higher compensation in more successful periods for the Company and lower compensation during less successful periods; and
Incentivize leaders to support the Company’s culture and model desired behaviors, ensuring ethical behavior.
       

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The CLP Committee believes that it has designed and implemented an executive compensation program that appropriately balances our short-term and long-term strategic objectives and otherwise links executive compensation with stockholder value, with approximately 83%-91% of the total direct compensation paid to the CEO and other NEOs in fiscal 2021, tied to Company performance.

Our executive compensation program, as described for Ms. Brewer, Ms. Barra and Messrs. Kehoe, Gourlay, Pagni and Standley generally has broader eligibility and, in most cases, applies to our executives outside of those NEOs.

Target Pay Mix(1)

Rosalind G. Brewer (CEO)


Average of All Other NEOs

(1)

Target pay mix is based on total direct compensation (i.e., annual base salary, target annual cash incentive and target long-term incentive compensation) and excludes one-time or sign-on awards and other elements of compensation, including perquisites. For Ms. Brewer, the target pay mix is based on her annual direct compensation agreed to pursuant to the terms of her offer letter and includes the target long-term incentive award that will be granted in fiscal 2022.

B. Compensation Decision-Making

The CLP Committee is responsible for overseeing our executive compensation program, which includes our annual cash incentive and long-term equity compensation programs as well as our retirement and other benefit programs and practices. The CLP Committee considers all elements of the program in total, as well as individual performance, Company-wide performance and internal equity and market compensation considerations, when making executive compensation-related decisions.

Market Review       Internal Review       Pay Decisions
         
Performed by Mercer
Considers peer pay practices
Influences program design
Provides benchmarking for senior executive roles
Our CEO evaluates performance
Our CEO and management review market data and internal comparable roles
Our CEO recommends to the CLP Committee program changes
Our CEO recommends to the CLP Committee any pay adjustments
Our CEO and management recommend to the CLP Committee any program changes to align with business objectives
Our CEO recommends pay adjustments
CLP Committee carefully considers:
historical and current market practices,
internal equity issues, and
established market trends
CLP Committee decides any program and pay changes.
         

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Our CEO, Ms. Brewer, reviews annually the performance and pay level of each of our “senior executives” (i.e., certain Senior Vice President level executives and above), develops recommendations concerning the compensation of each senior executive, and presents those recommendations to the CLP Committee. The CEO does not make any recommendation concerning her own compensation. As CEO at the time fiscal 2021 compensation decisions were made, Mr. Pessina was responsible for reviewing the performance and pay levels for each of the senior executives with respect to fiscal 2021, other than decisions with respect to himself and Ms. Barra. For fiscal 2021, Mr. Skinner (and not Mr. Pessina) made recommendations concerning the compensation of Ms. Barra. The CLP Committee determined that no individual performance adjustment would be applied to the fiscal 2021 long-term incentive awards.

The composition of our peer group is reviewed annually by the CLP Committee and is updated as deemed appropriate by the CLP Committee in consultation with Mercer, our independent compensation consultant. In evaluating companies for inclusion in our peer group, the CLP Committee considers, among other factors, revenue size, industry and the peer groups of our closest competitors. The CLP Committee believes that our peer group appropriately reflects the industries and markets in which we compete for executive talent, and it includes companies in both the retail and healthcare industries. The CLP Committee also considers companies of similar global size, while balancing the need to have a peer group comprised of a sufficiently large number of companies so as to be able to derive meaningful insights and observations.

Set forth below is our fiscal 2021 peer group, which was the same peer group used for fiscal 2019 and fiscal 2020 compensation decisions, except for changes to reflect the mergers of Aetna and CVS and Express Scripts and Cigna:

Abbott Laboratories       Humana       PepsiCo
Anthem Johnson & Johnson Pfizer
Cardinal Health Kroger Procter & Gamble
Cigna McDonald’s Target
Coca-Cola McKesson United Health
Costco Medtronic Wal-Mart
CVS Health Mondelez

The CLP Committee has made no changes to the peer group for fiscal 2022.

For the respective companies’ most recently completed fiscal year for which data was available prior to the setting of fiscal 2021 compensation in October 2020, we were at the 66th percentile of our peer group in terms of revenue reported and the 15th percentile of our peer group in terms of market value. After the review of peer group data, the CLP Committee establishes base salary adjustments, annual cash incentive awards and long-term incentive awards, as applicable, for the NEOs and our other senior executives.

In each case, the CLP Committee generally targets total direct compensation at rates that result in median market levels when compared to our peer group. The actual positioning of target total direct compensation relative to the median varies based on each senior executive’s experience and skill set, and generally results in senior executives who are newer to their role being placed lower in the range and those with more experience being placed higher in the range.

The target total direct compensation can also be differentiated from the peer group median for, among other reasons, an individual’s performance or other contributions to our long-term performance.

C. Role of the Compensation Consultant

As noted above, the CLP Committee has engaged Mercer as its independent compensation consultant. Among other matters, the CLP Committee uses Mercer to provide information regarding market compensation practices and trends and to advise the CLP Committee on Non-Employee Director and executive compensation decisions, particularly with respect to our CEO and Executive Chairman. A representative of Mercer meets regularly with the CLP Committee and, as needed, has access to the CLP Committee and its Chair during and between regularly-scheduled meetings.

Beginning in January 2016, we also engaged Mercer to serve as the executive compensation consultant to our management team. The CLP Committee has reviewed and considered the relevant factors specified under SEC and Nasdaq rules regarding our relationship with Mercer and, based upon this review, has concluded that the advice it receives from Mercer is and was objective and is and was not influenced by any relationships Mercer or its affiliates may otherwise have with our management team, the Board, the Company or its subsidiaries. See “Corporate Governance—Board Committees and Meetings—Independent Compensation Advisor” above for more information regarding our relationship with Mercer and its affiliates.

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III. Target Setting for Incentive Compensation

The CLP Committee set the short-term and long-term performance targets for our fiscal 2021 executive compensation program in October 2020. The CLP Committee believed at the time that the performance targets it established were rigorous yet achievable, and therefore established the targets so that they would be achieved, at the target performance level, if we successfully executed our operating plan for fiscal 2021 and the fiscal 2021-2023 performance period, therefore promoting demonstrable value creation for our stockholders.

A. 2021 Annual Cash Incentive Target

The CLP Committee approved the use of adjusted operating income, free cash flow, and diversity, equity and inclusion as the metrics for measuring Company and division performance for purposes of the annual cash incentive awards for fiscal 2021. The CLP Committee believes that this combination of metrics is consistent with our business objectives to both grow our existing business and to create cash to invest in our future business strategy, as well as drive our diversity, equity and inclusion objectives. The CLP Committee regularly reviews the selection of metrics and considers whether to incorporate other metrics, including other financial, non-financial, or relative metrics, into its short- and long-term incentive compensation programs, and elected to retain Adjusted Operating Income (weighted at 65%), and to add Free Cash Flow (weighted at 25%) and Diversity, Equity and Inclusion (weighted at 10%) as additional metrics, based on the rationale shown below:

Metric

     

Rationale

Adjusted Operating Income
(weighted 65%)
1

Reflects:

Overall operating performance and profitability
Effective cost management
Operational efficiency
Prudent allocation of resources

  NEW   Free Cash Flow
(weighted 25%)
2

Reflects:

The opportunity to invest in our key priorities, including innovation
Effective cost management
Operational efficiency
Prudent allocation of resources

  NEW   Diversity Equity and Inclusion
(weighted 10%)

Reflects:

Ongoing commitment to a diverse and inclusive workforce, based on the following criteria:
Growth in the number of women in leadership roles (global – weighted at 25% for U.S. and 50% for International)
Growth in the number of People of Color in leadership roles (U.S. – weighted at 25%)
Compliance with diverse slates of candidates (global – weighted at 15% for U.S. and 25% for International)
Compliance with diverse interview panels (global – weighted at 15% for U.S. and 25% for International)
Increase in spend with diverse suppliers (U.S. – weighted at 20%)
Financial incentive for leadership behaviors that align with Company values
1

Adjusted operating income is a non-GAAP financial measure that refers to our operating income, calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), as adjusted to reflect certain specified adjustments approved by the CLP Committee. Such adjustments are made in accordance with the Walgreens Boots Alliance, Inc. Management Incentive Plan (the “MIP”), the plan under which annual cash incentive awards are paid to our executives. The CLP Committee reserves the right to make these adjustments to help ensure that certain items that are non-operating or otherwise out of management’s control do not impact payouts in either a positive or negative manner in order to support the program objective of incenting operational performance with respect to key short-term performance goals.

2

Free cash flow is the Company’s Free Cash Flow as calculated for the fiscal 2021 budget, which is defined as net cash provided by (used in) operating activities, as defined for GAAP reporting purposes, less additions to property, plant and equipment, as further adjusted for any other unplanned or unknown material items as may be approved by the CLP Committee in accordance with the MIP. The CLP Committee reserves the right to make these adjustments to help ensure that certain items that are non-operating or otherwise out of management’s control do not impact payouts in either a positive or negative manner in order to support the program objective of incenting operational performance with respect to key short-term performance goals. This measurement is calculated on a constant currency basis, eliminating the effects of variance to the Company’s budget currency rate in manner consistent with internal management reporting.

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For Ms. Brewer and our other participating NEOs (other than Mr. Standley), these results are based on our consolidated performance. The CLP Committee believes this design reinforces the need for collaboration among those executives. Mr. Standley’s award is based 70% on the results of the U.S. business performance and 30% on our consolidated performance. This balance is intended to align his incentive more heavily with the performance of the business unit he leads, while still reinforcing the need for collaboration with the overall corporate objectives.

For fiscal 2021, the adjusted operating income target was set at $5,186 million and $4,885 million for WBA and the U.S. business, respectively. For fiscal 2021, the free cash flow target was set at $3,819 million and $4,394 million for WBA and the U.S. business, respectively. The targets were set in relation to our Board approved fiscal 2021 budget and were approved by the CLP Committee in October 2020. The CLP Committee believed that the targets it established were rigorous yet achievable in light of our internal forecast as well as the macroeconomic and industry environments at the time the goals were established in October 2020, in the midst of the COVID-19 pandemic.

Company Performance
(as a % of weighted target)
Award(1)
(as a % of weighted target grant)
Adjusted Operating Income Performance
Measure
Below Threshold <85% 0%
Threshold 85% 50%
Target 100% 100%
Maximum 115% 200%
Free Cash Flow Performance Measure
Below Threshold <70% 0%
Threshold 70% 50%
Target 100% 100%
Maximum 130% 200%
Diversity, Equity and Inclusion Performance
Measure
Below Threshold <85% of prior year results 0%
Threshold 85% 50%
Target 100% of prior year results 100%
Maximum >115% 200%
(1)

Performance between threshold and target, or between target and maximum, will earn award on a straight line interpolated basis between 50% and 100% or between 100% and 200%, respectively.

In addition, the CLP Committee has approved the use of an individual performance factor, which could result in an incremental increase of up to 20% or decrease of as much as 100% in the annual cash incentive paid to an individual based on his or her performance. The use of this factor allows such individual’s manager to differentiate payouts based on a qualitative assessment of individual performance against broader Company performance goals and objectives.

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B. 2021 Long-Term Incentive Compensation Target

The CLP Committee approved the use of adjusted earnings per share growth (weighted 70%) and adjusted revenue growth (weighted 30%) for the fiscal 2021-2023 performance period as the metrics for measuring performance for purposes of the Performance Share awards. The CLP Committee believes that this combination of metrics, along with the metrics in the annual cash incentive program, strikes an appropriate balance with respect to incenting top-line growth, profitability, cash flow generation and important non-financial business imperatives. These metrics were selected based on the rationale shown below:

Metric

    

Rationale

Adjusted EPS Growth
(weighted 70%)
(1)

Correlates with long-term stockholder value creation
Key indicator of sustainable, long-term profitability
Operational efficiency
Prudent allocation of resources

Adjusted Revenue Growth
(weighted 30%)
(2)

Focus on increasing revenue in our base business and growing new revenue streams
Key indicator of growth of the business
Prudent allocation of resources and investments

For the NEOs (other than Mr. Skinner, who received performance-based RSUs while serving as Executive Chairman) and other corporate-level executives, results will be based on our consolidated performance, with no award tied to specific business unit results, which the CLP Committee believes reinforces the need for collaboration among those executives.

We do not publicly disclose our specific long-term incentive compensation target due to the potential for competitive harm. The 2021-2023 plan targets were set in relation to our Board approved three-year financial plan for the period and were approved by the CLP Committee in October 2020. The CLP Committee believed that the targets it established were rigorous yet achievable in light of our internal forecast as well as the macroeconomic and industry environments at the time the goals were established in October 2020, in the midst of the COVID-19 pandemic.

The following table illustrates the range of Performance Shares that can be earned under these awards depending on our performance during the fiscal 2021-2023 performance period:

Performance Measure Company Performance
(as a % of weighted target)
Performance Shares Earned(3)
(as a % of weighted target grant)
Adjusted EPS Growth
Below Threshold <10 percentage points below growth target 0%
Threshold 10 percentage points below growth target 50%
Target at growth target 100%
Maximum ≥10 percentage points above growth target 150%
Adjusted Revenue Growth
Below Threshold <5 percentage points below growth target 0%
Threshold 5 percentage points below growth target 50%
Target at growth target 100%
Maximum ≥5 percentage points above growth target 150%
(1)

“Adjusted EPS Growth” means GAAP diluted net earnings per share annual growth, as adjusted for acquisition-related amortization, LIFO inventory accounting, cost transformation expenses, asset impairments, acquisition-related costs, and any other unplanned or unknown significant items in accordance with the Company’s Non-GAAP financial measures policy maintained by the Global Controllership as well as any other unplanned or unknown material items as may be approved by the CLP Committee in accordance with the Omnibus Incentive Plan, measured based on three one-year periods, with payouts determined based on the simple average of the formulaic achievement during the three one-year periods. As with adjusted operating income, the CLP Committee reserves the right to adjust our GAAP earnings per share to help ensure that certain items that are non-operating or otherwise out of management’s control do not impact payouts in either a positive or negative manner in order to incent operational performance.

(2)

“Revenue Growth” means the Company’s year-over-year percent change in revenue as calculated under GAAP. Revenue shall be calculated on a constant currency basis, eliminating the effects of variance to the Company’s three-year plan currency in a manner consistent with internal management reporting. Further, revenue shall be calculated on a basis that normalizes for changes in Average Wholesale Price and generic utilization within the U.S. reporting segment relative to the corresponding three year plan assumption, so as to eliminate the effects of these variables which may skew revenue in a way that is inconsistent with underlying business performance. As with adjusted EPS growth, the CLP Committee reserves the right to adjust revenue to help ensure that certain items that are non-operating or otherwise out of management’s control do not impact payouts in either a positive or negative manner in order to incent operational performance.

(3)

Performance between threshold and target, or between target and maximum, will earn Performance Shares on a straight line interpolated basis between 50% and 100% or between 100% and 150%, respectively.


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IV. Annual Compensation

A. 2021 Base Salary Decisions

Base salary is a key component of compensation, both on its own and because annual incentive awards are calculated based on salary. In October 2020, the CLP Committee completed its annual review of market data and individual performance in connection with its consideration of base salary adjustments for the NEOs (other than Messrs. Pessina and Skinner). At the conclusion of the review, the CLP Committee approved no base salary increases for the then-serving NEOs in response to the impact of COVID-19 on our business and to support our front-line team members. As noted above, Ms. Brewer’s annual base salary was determined at the time she joined the Company after considering the input of our independent compensation consultant, Mercer, and the level of compensation deemed necessary by the CLP Committee to recruit her to join the Company.

Name 2021 Annual
Base Salary(1) ($)
% Increase
from 2020
Stefano Pessina             0%
Rosalind G. Brewer 1,500,000 N/A
James Kehoe 945,563 0%
Ornella Barra 1,088,116 0%
John Standley 950,000 N/A
Marco Pagni 922,445 0%
Alexander W. Gourlay 1,088,116 0%
James A. Skinner 0%
(1)

Amounts for Ms. Barra, Mr. Pagni and Mr. Gourlay were determined and paid in British Pounds Sterling and converted to U.S. dollars at an exchange rate of approximately £1=1.36221 (the average exchange rate during fiscal 2021 used by the CLP Committee for purposes of executive compensation decisions).

B. 2021 Annual Cash Incentive Payments

For fiscal 2021, substantially all of our senior executives (including our NEOs other than Messrs. Pessina and Skinner) were eligible to receive an annual cash incentive payment through the MIP. The MIP rewards executives for achieving key financial and non-financial goals at both the Company and individual levels and is intended to align our senior executives’ interests directly with our financial goals and leadership behaviors. For fiscal 2021, the target cash incentive opportunity for each of the NEOs who participated in the MIP was set considering market practices for each specific role, among other factors, and target percentages were unchanged from fiscal 2020 for continuing NEOs, as follows:

Name

2021 Target Bonus (% of Salary)

Stefano Pessina       0%
Rosalind G. Brewer 200%
James Kehoe 125%
Ornella Barra 125%
John Standley 100%
Marco Pagni 90%
Alexander W. Gourlay 125%
James A. Skinner 0%

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For the participating NEOs, annual cash incentive payments were calculated as follows:

Earned Base Salary

   x   

Target Short-Term
Incentive
Opportunity %

   x   

Company
Performance
Against Annual Goals

   =   

Determined by reviewing:

Internal and market-based peer group benchmarks
Individual performance

Established using:

Market-based peer group benchmarks
Internal calibration

Adjusted Operating Income (65%)

Free Cash Flow (25%)

Diversity, Equity and Inclusion (10%)

Preliminary Cash
Incentive Award
Amount

Individual
Performance
Adjustment

Final Cash Incentive
Award Amount


Company Performance. As described further in “—III. Target Setting for Incentive Compensation—A. 2021 Annual Cash Incentive Target” above, the CLP Committee approved the use of adjusted operating income (weighted 65%), free cash flow (weighted 25%) and diversity, equity and inclusion (weighted 10%) as the metrics for measuring Company performance for purposes of payment of annual cash incentive awards in fiscal 2021.

The CLP Committee retains the right under the MIP to modify the results of Adjusted Operating Income to exclude from the measurement of performance income impacts resulting from unusual or unpredictable events. For fiscal 2021, the CLP Committee used the same adjustments for purposes of reconciling Adjusted Operating Income (which is a non-GAAP financial measure) to our operating income as determined in accordance with GAAP as those we disclosed in our full year fiscal 2021 earnings release and related presentation on October 14, 2021. These adjustments to Adjusted Operating Income include impacts, both positive and negative, arising from the sale of the Pharmaceutical Wholesale business and gain from the German partnership. The U.S. business results, on which a portion of Mr. Standley’s bonus was paid, were adjusted in accordance with the terms of the MIP to reflect an allocation of the contingency for initiatives that were delayed at the request of the Company and for certain charitable contributions made by the U.S. business at the request of the Company.

Free Cash Flow (which is a non-GAAP measure) was measured as total free cash flow for WBA, which included the adjustments to net cash provided by operating activities as determined in accordance with GAAP that we disclosed in our full year fiscal 2021 earnings release and related presentation on October 14, 2021. When targets were set in October 2020, the CLP Committee agreed that divisional Free Cash Flow, which was used for a portion of Mr. Standley’s bonus, would be evaluated on divisional, directly controlled free cash flow (quantitative weighted at 70%) and quality and consistency of free cash flow delivery (weighted at 30%). This decision was intended to tie the divisional bonus to the free cash flow actually controlled by the division. Similar to Adjusted Operating Income, the results were adjusted for the positive and negative impacts of the sale of the Pharmaceutical Wholesale business.

The following sets forth the threshold, target and maximum goals, as well as actual results for fiscal 2021:

WBA Performance(1)
      Adjusted
Operating Income
($ in millions)
      Free Cash Flow
($ in millions)
    Diversity, Equity
and Inclusion(3)
Threshold $4,296 $2,318 See details in table below
Target $5,054 $3,312
Maximum $5,812 $4,306
Result $5,575 $3,889
% Achievement 110% 117%
% Payout 169% 153%
Metric Weighting 65% 25% 10%
Total Weighted Payout % 109.85% 38.25% 10.838%
Total WBA Payout: 159%
(1)

WBA performance applies to all bonus eligible NEOs, except it is weighted at 30% for Mr. Standley.

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U.S. Segment Performance(1)

Adjusted
Operating Income
($ in millions)
Free Cash Flow
($ in millions)
Diversity, Equity
and Inclusion(3)
Threshold $3,750 $3,009 See details in table
below
Target $4,412 $4,299
Maximum $5,074 $5,589
Result $4,646 $4,520
% Achievement 105% 109% (2) 
% Payout 135% 122%
Metric Weighting 65% 25% 10%
Total Weighted Payout % 87.75% 30.5% 10.838%
Total U.S. Segment Payout: 129%
(1)

U.S. segment performance is weighted at 70% for Mr. Standley.

(2)

As described in more detail in the paragraph preceding these tables, this U.S. segment metric includes a qualitative component tied to quality and consistency of free cash flow delivery (weighted at 30% of this metric), which contributed to this achievement level.

(3)

The table below shows the details of DEI performance:

WBA and Walgreens DEI Performance

% Increase in
Women Leadership
(1)
% Increase in People
of Color(2)
Compliance with Diverse
Interview Panels and
Slates of Candidates(3)
Diverse
Supplier Spend
($ in millions)(4)
Threshold Prior Year Prior Year N/A $447
Target +3% +2% 100% $500
Maximum +8% +3% 100% $592
Result +2.3% +2.4% 100% $521.5
% Achievement 85% 116.5% 100% 140%
Metric Weighting 2.5% U.S. 2.5% U.S. 3% U.S. 2% U.S.
Total Weighted Payout % 2.125% U.S. 2.913% U.S. 3% U.S. 2.8% U.S.
Total U.S. DEI Metric Payout: 10.838%
(1) U.S. Weight: 25%.
(2) U.S. Weight: 30%.
(3) U.S. Weight: 25%.
(4) U.S. Weight: 20%.

Individual Performance. In order to improve our ability to link pay and performance for our senior executives, including each of the NEOs who participated in the MIP (Mses. Brewer and Barra and Messrs. Kehoe, Pagni, Standley and Gourlay), when the fiscal 2021 MIP performance design components were approved in October 2020, the CLP Committee retained the authority to adjust cash incentive award payments by up to 120% of the formula-driven MIP payout levels (subject to an aggregate maximum of 200% of target) or down to 0% of target. The CEO was given authority by the CLP Committee to recommend to the CLP Committee adjustments for participants other than herself. In October 2021, the CLP Committee reviewed individual performance for each of the NEOs and approved an individual performance payout level for Ms. Brewer of 110% to recognize her excellent efforts during the first six months of her tenure.

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Payouts for Fiscal 2021 Performance. Fiscal 2021 cash incentive payments to our NEOs were as follows:

Name 2021 Cash
MIP Award
Eligible
Salary(1)
($)
2021
Target Cash
MIP
Award
(% of Salary)
2021
Target
Cash MIP
Awards(1)
($)
Company
Performance
(% of Target)
Individual
Performance
Adjustment
2021 Cash
Incentive
Award
Payment(1)
($)
Stefano Pessina $ —% $ $
Rosalind G Brewer $ 687,500 200% $ 1,375,000 159% 110% $ 2,404,875
James Kehoe $ 945,563 125% $ 1,181,954 159% 100% $ 1,879,306
Ornella Barra $ 1,088,116 125% $ 1,360,145 159% 100% $ 2,162,631
John Standley $ 950,000 100% $ 950,000 138% (2)  100% $ 1,311,000
Marco Pagni $ 922,445 90% $ 830,201 159% 100% $ 1,320,020
Alexander W. Gourlay $ 1,088,116 125% $ 1,360,145 159% 100% $ 2,162,631
James A. Skinner $ —% $ $
(1)

For Ms. Brewer, her cash incentive payout was based on the base salary earned by Ms. Brewer during the year following her hire date. Amounts for Ms. Barra, Mr. Pagni and Mr. Gourlay were determined and paid in British Pounds Sterling and converted to U.S. Dollars at an exchange rate of approximately £1.362214 (the average exchange rate during fiscal 2021 used by the CLP Committee for purposes of executive compensation decisions).

(2)

Mr. Standley’s bonus is based 70% on the performance of the U.S. business (129%) and 30% on the performance of WBA (159%) resulting in Company performance as a percentage of target of 138%.

V. Long-Term Incentive Compensation

The Company maintains a long-term incentive compensation program that is intended to further align our executives’ interests with those of our stockholders. Long-term incentive compensation is granted annually under the Omnibus Incentive Plan.

A. 2021 Grants of Long-Term, Performance-Based Incentives

The CLP Committee granted to substantially all of our senior executives, including our participating NEOs, long-term incentives with the targeted mix and targeted grant values set forth below. The targeted long-term incentive value as well as the equity mix for the then-serving NEOs did not change as compared to fiscal 2020. In connection with her appointment to the Company and as discussed in further detail below, Ms. Brewer did not participate in the fiscal 2021 long-term incentive program, except that her new hire performance share awards had the same performance terms and conditions as the fiscal 2021 performance share grants to the other NEOs.

NEO Stock Options RSUs Performance Shares Target Value ($)
James Kehoe 25% 25% 50% $4,500,000
Ornella Barra 25% 25% 50% $4,500,000
John Standley 25% 25% 50% $4,000,000
Marco Pagni 25% 25% 50% $1,800,000
Alexander W. Gourlay 25% 25% 50% $4,500,000
James A. Skinner 0% 100% 0% See Section VI for details

The targeted equity mix used for fiscal 2021 was chosen in order to further align the Company’s long-term incentive design with market practices and our business objectives, while continuing to align our leaders’ interest with those of the stockholders. Ms. Brewer did not receive an annual award for fiscal 2021. As noted earlier, Mr. Pessina did not receive an equity award with respect to fiscal 2021.

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B. 2021 Performance Share Award Grants

In October 2020, the CLP Committee authorized the grant of 50% of the target dollar amount of the fiscal 2021 total long-term, performance-based incentive award for eligible senior executives in the form of Performance Shares.

For the fiscal 2021 Performance Share awards, the CLP Committee decided that the performance metrics would be adjusted EPS growth (weighted 70%) and adjusted Revenue growth (weighted 30%). At the beginning of the three-year performance period, the CLP Committee set three one-year growth rate goals with the simple average of the three one-year periods determining the final payout. The payout can range from 0% to 150% of target for the fiscal 2021-2023 performance period based on actual results. See “—III. Target Setting for Incentive Compensation—B. 2021 Long-Term Incentive Compensation Target” above for more information regarding the performance goal.

The table below shows information regarding the Performance Shares granted to each of our NEOs who received Performance Share awards in November 2020. See Section VI below for the Performance Shares granted to Ms. Brewer as part of her new hire long-term incentive awards.

Name Total Target
Performance
Share Award
Number of
Performance
Shares
Aggregate Grant
Date Fair Value
of Performance
Share Award(1)
James Kehoe     $ 2,250,000 55,556            $ 1,891,126
Ornella Barra $ 2,250,000 55,556 $ 1,891,126
John Standley $ 2,000,000 49,383 $ 1,680,997
Marco Pagni $ 900,000 22,222 $ 756,437
Alexander W. Gourlay $ 2,250,000 55,556 $ 1,891,126
(1)

Calculated based on the probable satisfaction of the performance conditions for such awards as of the date of grant. This value is less than the target economic value approved by the CLP Committee due to the difference in the average share price used to determine the number of shares ($40.50) and the stock price on the date of grant ($34.04).

C. 2021 Stock Option Grants

In October 2020, the CLP Committee authorized the grant of 25% of the target dollar amount of the fiscal 2021 total long-term, performance-based incentive award for eligible senior executives in the form of Stock Options.

Stock Options are granted at an exercise price of no less than fair market value of a share of our common stock on the grant date and vest in one-third annual increments commencing on the one-year anniversary of the grant date. Accordingly, Stock Options provide value to the recipients only if our share price increases following the grant date, and provide no realizable value to recipients if our share price does not increase.

As in prior years, the CLP Committee recognized individual performance through the application of an individual performance factor. The individual performance factor is based on such individual’s performance during the prior year, which could result in an incremental increase or decrease in the target economic value of the Stock Options granted to such individual. In recognition of the impact of COVID-19 on our business, the CLP Committee determined that no individual multiplier would be applied to the fiscal 2021 stock option awards.

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The table below shows information regarding the Stock Options granted to each of our NEOs who received Stock Options in November 2020. The Company used a Black-Scholes valuation model, based on the average closing price of a share of our common stock over the last 30 trading days of fiscal 2020, to determine the number of shares subject to the Stock Options granted.

Name Total Target Dollar
Value of Stock
Option Award
Individual
Performance
Adjustment
Number of Stock
Options
Aggregate
Grant Date Fair
Value of Stock
Option Award
(1)
James Kehoe                     $ 1,125,000 100% 139,233     $ 1,015,009
Ornella Barra $ 1,125,000 100% 139,233     $ 1,015,009
John Standley $ 1,000,000 100% 123,762     $ 902,225
Marco Pagni $ 450,000 100% 55,693     $ 406,002
Alexander W. Gourlay $ 1,125,000 100% 139,233     $ 1,015,009
(1) This value is less than the target economic value approved by the CLP Committee due to the difference in the average share price used to determine the number of shares subject to the Stock Options granted ($40.50) and the stock price on the date of grant ($34.04).

D. 2021 Restricted Stock Unit Grants

In October 2020, the CLP Committee authorized the grant of the remaining 25% of the target dollar amount of the fiscal 2021 total long-term incentive awards for eligible senior executives in the form of RSUs. Given the volatile nature of the stock market, the CLP Committee believes that it is important for retention to have a portion of long-term incentives that is not tied to the achievement of performance goals or future stock price appreciation but still at-risk with the value fluctuating based on changes in stockholder value. RSUs also assist in attracting and retaining talented executives. The CLP Committee believes that RSUs are designed to complement Stock Options, and therefore the timing and structure of RSU grants are aligned with Stock Option grants in various ways. Similar to the annual Stock Option grants, the annual RSU grants vest one-third each year for three years, assuming continued employment through the applicable vesting date. Dividend equivalents with respect to RSUs are credited as additional RSUs, subject to the same vesting conditions as the underlying RSUs. Following vesting, each RSU is converted to one share of the Company’s common stock.

The table below shows information regarding the RSUs granted to each of our NEOs who received RSUs in November 2020 (except Mr. Skinner, as noted below). See below for additional RSUs granted to Messrs. Kehoe and Standley during fiscal 2021 and see Section VI below for the RSUs granted to Mr. Skinner and to Ms. Brewer as part of her new hire long-term incentive awards.

Name Total Target
RSU Award
Number of
RSUs
Aggregate Grant Date
Fair Value of
RSU Award
(1)
James Kehoe     $ 1,125,000 27,778                         $ 945,563
Ornella Barra $ 1,125,000 27,778 $ 945,563
John Standley $ 1,000,000 24,691 $ 840,842
Marco Pagni $ 450,000 11,111 $ 378,218
Alexander W. Gourlay $ 1,125,000 27,778 $ 945,563
(1)

This value is less than the target economic value approved by the CLP Committee due to the difference in the average share price used to determine the number of shares subject to the RSUs granted ($40.50) and the stock price on the date of grant ($34.04).

E. Additional 2021 NEO Grants

In addition to the above annual RSU Awards, Messrs. Kehoe and Standley received the following awards during fiscal 2021:

Mr. Standley. Mr. Standley received sign-on awards of RSUs equal in economic value to $2 million, $500,000 of which vested on the one year anniversary of the date of grant and $1.5 million of which will vest one-third each year for three years. The number of RSUs awarded to Mr. Standley were 13,602 and 40,805, respectively. The number of shares was determined by dividing the economic value by the closing stock price on the date of grant ($36.76).

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Mr. Kehoe. On April 20, 2021, the CLP Committee approved a special performance-based RSU award under the 2021 Omnibus Incentive Plan for Mr. Kehoe (the “CEO Transition RSUs”) as his role was deemed critical to the organization during the CEO transition to Ms. Brewer. The CEO Transition RSUs are intended to provide an incentive to Mr. Kehoe to drive the performance and success of our business during this transitional period. The CEO Transition RSUs were granted on May 1, 2021 in the form of performance-based RSUs that vest one-half on May 1, 2022 and one-half on May 1, 2023. Under the award, Mr. Kehoe must achieve the following performance goals in 2022 and 2023 for the award to vest:

i) Successful launch of the healthcare business model, in partnership with the healthcare leadership team;
ii) Achievement of publicly disclosed cost transformation goals;
iii) Successful completion of the Finance for the Future transformation program; and
iv) Increasing the diversity of the global finance leadership team (VP and above).

These goals were designed to be challenging but achievable with strong management performance. There is no acceleration of vesting, except in the event of a termination of employment within one year following a qualifying change in control. The number of CEO Transition RSUs granted to Mr. Kehoe were equal to $2.0 million divided by the closing price per share of the Company’s common stock on the grant date, resulting in 37,665 performance-based RSUs granted to Mr. Kehoe under this award.

F. Payout of 2019-2021 Long-Term Incentive Awards

In October 2018, Performance Shares were granted to our then-serving senior executives for the fiscal 2019-2021 performance period. The Performance Shares had a performance period of September 1, 2018 through August 31, 2021 and were contingent on the Company achieving its three-year cumulative adjusted EPS goals. The fiscal 2019-2021 target was set in relation to our Board approved three-year financial plan for the period and was approved by the CLP Committee in October 2018. The goals were designed to be challenging but achievable for the three-year performance period in light of our internal forecast as well as the macroeconomic and industry environments at the time.

The following chart sets forth the financial performance measure, performance period, the performance goals and corresponding payouts as a percentage of the target Performance Share opportunity for the fiscal 2019-2021 Performance Share cycle:

Performance Measure Performance Level Fiscal 2019-2021
Goal(1)
($)
Performance
(as a % of Target)
% of Performance
Shares Earned(2)
Cumulative Adjusted EPS Below Threshold: <16.15 <95% 0% of target grant
Threshold: 16.15 95% 50% of target grant
Target: 17.00 100% 100% of target grant
Maximum: 18.7 110% 150% of target grant
(1)

The goals for the fiscal 2019 portion of the three-year performance period were reset in April 2019 to reflect a revised three-year plan, as approved by the Board and which was updated to reflect significant changes to external reimbursement rates from when the Board originally approved the Company’s three-year plan.As disclosed in our fiscal 2020 proxy, the goal for the fiscal 2020 portion of the three-year performance period was adjusted to reflect the impacts of COVID-19 on the three year plan. Under the original terms of the awards, the target goal was set at $21.34 per share.

(2)

Performance between threshold and target, or between target and maximum, will earn Performance Shares on a straight line interpolated basis between 50% and 100% or between 100% and 150%, respectively.

The actual achievement over the three-year period was $17.23, or 101.4% of the goal resulting in a formulaic payout of 106.8% of target, and the CLP Committee used negative discretion to adjust the payout for the NEOs receiving a payout to 100% of target. Consequently, the CLP Committee approved the resulting Performance Share vesting levels for the NEOs who received such Performance Shares as follows: Mr. Pessina, 164,681 shares; Mr. Kehoe, 36,024 shares; Ms. Barra, 46,316 shares; Mr. Pagni, 18,526 shares and Mr. Gourlay, 46,316 shares.

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VI. CEO and Executive Chairman Compensation

As noted elsewhere in this “Compensation Discussion and Analysis” section, Ms. Brewer’s compensation was determined at the time she joined the Company after considering the advice of Mercer, our independent compensation consultant, and the level of compensation deemed necessary by the CLP Committee to recruit her to join the Company as well as the compensation that she would forfeit by accepting the position to be our CEO. In addition, unlike the other NEOs, Mr. Pessina elected to receive no compensation for fiscal 2021, other than limited perquisites, as described elsewhere in this “Compensation Discussion and Analysis” section. In addition, all of the compensation paid to Mr. Skinner as Executive Chairman in fiscal 2021 was in the form of equity-based awards, which was designed to further align his compensation with stockholder interests. Neither Mr. Pessina nor Mr. Skinner received a base salary in fiscal 2021 or was eligible to receive a cash incentive award for fiscal 2021.

A. Rosalind G. Brewer, our Current CEO

Ms. Brewer joined the Company on March 15, 2021 with a compensation package targeted to the median of our peer group of companies, 91% of which is at-risk. Her initial annual compensation package is as follows:

Base salary of $1.5 million,
Target bonus of 200% of salary,
$11 million annual equity awards, beginning in fiscal 2022,(1) and
50 hours of personal use of the corporate jet.
(1) At the October 2021 meeting, the CLP Committee increased Ms. Brewer’s target equity award for fiscal 2022 to $11.5 million in recognition of the excellent progress she has made in leading the transformation of the Company over her first six months in her role.

Ms. Brewer also received the following one-time payments:

$20.2 million equity awards (½ RSUs and ½ Performance Shares) to replace a portion of the equity she forfeited from her prior employer and the equity she forfeited when she resigned from the board of directors of Amazon. The number of each of the Performance Shares and RSUs granted to Ms. Brewer is equal to one-half of the $20.2 million value divided by the closing price per share of the Company’s common stock on the grant date. In the case of the Performance Shares, the performance metrics/goals, vesting date and other provisions are the same as the annual fiscal 2021 Performance Shares granted to the other NEOs, as described above, except that these Performance Shares will become fully vested upon an involuntary termination of employment without cause or voluntary resignation for good reason. The RSU terms and conditions are also the same as the annual RSUs granted to the other NEOs as of November 1, 2020, except for the same termination without cause and good reason vesting provisions, and the three-year vesting period starts as of Ms. Brewer’s March 15, 2021 hire date.
$4.5 million cash to replace a portion of the cash incentive Ms. Brewer forfeited from her prior employer, which is subject to repayment in the event Ms. Brewer is terminated for cause or resigns without good reason prior to the two-year anniversary of her start date.
Relocation benefits and assistance consistent with our relocation program available to all executives.

Ms. Brewer is joining the Company at a critical time of transformation and was recruited specifically for her experience with other companies undergoing a transition, her significant leadership expertise and her deep experience in the retail industry. The sign-on awards are consistent with our philosophy to attract critical talent to grow our Company and were viewed as key to providing Ms. Brewer with an attractive offer to induce her to join the Company, and which is also tied to the future success of the Company. In particular, the equity awards provide Ms. Brewer with a significant equity stake in the Company and immediately aligned her interests directly with those of our stockholders. Ms. Brewer received a pro-rata annual incentive plan award for fiscal 2021 based on actual Company performance and her actual earnings during fiscal 2021 and did not participate in the long-term incentive award program in fiscal 2021. The CLP Committee, after consultation with Mercer, consider the annual package and one-time sign-on payments to be competitive for such a critical leader, fair and consistent with CEO pay at our peer companies.

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B. Stefano Pessina, our Former CEO and Current Executive Chairman

Mr. Pessina was in the CEO role from September 1, 2020 until March 15, 2021, when Ms. Brewer joined the Company. Mr. Pessina elected to receive no compensation for his role as CEO, other than limited perquisites, as described elsewhere in this “Compensation Discussion and Analysis” section. Upon Ms. Brewer’s appointment, Mr. Pessina became Executive Chairman.

C. James A. Skinner, our Former Executive Chairman

Mr. Skinner served as Executive Chairman between September 1, 2020 and March 15, 2021 when he transitioned to a Non-Employee Director role. The CLP Committee believes (after consultation with Mercer) that providing Mr. Skinner with substantially all of his Executive Chairman compensation in the form of RSUs was appropriate, and closely aligned his compensation with the interests of our stockholders. The CLP Committee also believes (after consultation with Mercer) that the amount of Mr. Skinner’s Executive Chairman compensation package was consistent with current market practice for the compensation of executive chairs.

For fiscal 2021, in consideration of his service as our Executive Chairman, the CLP Committee granted Mr. Skinner an RSU award equal in total economic value to $8 million. The number of RSUs granted was determined by dividing the grant value by the average closing price for our common stock over the last 30 trading days of fiscal 2020, which was $40.50. In addition to the three-year vesting period, this RSU award also included a fiscal 2021 adjusted operating income performance goal originally designed to comply with the legacy performance-based compensation rules under Section 162(m) of the Code prior to U.S. tax reform. Pursuant to the terms of the award agreement, Mr. Skinner’s award will vest on a prorated basis based on the portion of fiscal 2021 during which Mr. Skinner served as Executive Chairman upon his retirement from the Board. Following his transition to a Non-Employee Director role as of March 15, 2021, Mr. Skinner participated in our Non-Employee Director compensation program during the remainder of fiscal 2021.

Name Total Dollar Value of
RSU Award
Number of
RSUs
Aggregate Grant Date Fair
Value of RSU Award(1)
James A. Skinner      $8,000,000      197,531      $6,723,955
(1) This value is less than the target economic value approved by the CLP Committee due to the difference in the average share price used to determine the number of shares ($40.50) and the stock price on the date of grant ($34.04). Upon his retirement from the Board, this award will vest on a prorated basis on the portion of fiscal 2021 during which Mr. Skinner served as Executive Chairman.

VII. Retirement and Other Benefits

A. Retirement Plans and Programs

U.S. Plans. The primary retirement program applicable to our U.S. employees is a tax-qualified 401(k) Retirement Savings Plan (the “401(k) Plan”). The 401(k) Plan is a defined contribution plan designed to accumulate retirement funds for participating employees, including participating executive officers of the Company, via individual contributions and, following one year of employment, employer matching contributions. The retirement benefits available for the Company’s executive officers under the tax-qualified 401(k) Plan are the same as those available for other eligible employees.

The Company also has a non-qualified supplemental retirement plan, the Walgreens Boots Alliance, Inc. Executive Retirement Savings Plan (“Executive Deferred Plan”). The Executive Deferred Plan replaces the contributions the Company is unable to provide under the 401(k) Plan as a result of various tax law limitations that restrict contributions made for highly-compensated participants under the 401(k) Plan. The amounts credited to the Executive Deferred Plan are unfunded, unsecured promises to pay a benefit in the future. The Executive Deferred Plan includes two features. First, participants receive Company contribution credits equal to the matching contributions that cannot be made to the 401(k) Plan due to the tax law limitations described above (“Company Contributions”). Second, participants may also elect to defer, on a pre-tax basis, up to (i) 50% of their annual base salary and/or (ii) 85% of their short-term incentive awards (“Participant Contributions”). A participant’s account under the Executive Deferred Plan is credited with investment gains and/or losses based on the investment fund elections of the participant. Executive Deferred Plan accounts are paid following termination of employment. Company Contribution accounts are paid in a lump sum or installments, depending on the size of the account balance and the participant’s age at the time of employment termination. Participant Contribution accounts are paid in a lump sum or installments over a selected number of years, based on the participant’s advance election at the time of deferral.

Ms. Brewer and Messrs. Kehoe and Standley are the only NEOs who are currently eligible to participate in these plans.

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UK Plans. Mr. Gourlay has accrued benefits in the Boots Pension Plan, which covers certain employees in the United Kingdom, as well as in two smaller defined benefits plans, the Boots Supplementary Pension Plan and the Boots Additional Pension Arrangement. The Boots Pension Plan is a funded final salary defined benefit plan providing a retirement pension and a dependent’s pension on the death of the participant. The Boots Pension Plan was closed to future accruals effective June 30, 2010, with benefits calculated by reference to pensionable salaries as of that date. The plan is subject to an actuarial funding valuation on a triennial basis. The Boots Supplementary Pension Plan and the Boots Additional Pension Arrangement were also closed to future accruals effective June 30, 2010.

In lieu of further participation in any defined contribution plan, Ms. Barra and Messrs. Gourlay and Pagni receive a pension supplement of 40% of base salary, consistent with relevant market practice at the time of implementation.

B. Perquisites

We provide our NEOs and other senior executives with perquisites and other personal benefits that we believe are non-excessive and competitive with those offered by companies comparable to us. In April 2021, in consultation with Mercer, the CLP Committee conducted a review of these perquisites and other personal benefits and determined that they remained generally consistent with relevant market practice.

Aircraft Usage. Pursuant to our guidelines for aircraft usage, we permit the personal use of our aircraft by each of Ms. Brewer and Messrs. Pessina and Skinner. We also allow the partner or spouse of each, as applicable, to accompany the executive on such personal trips (in addition to accompanying him or her on business trips). In limited circumstances, pre-approved personal use of our aircraft by other senior executives is also permitted.

The CLP Committee has authorized each of Mr. Pessina and Mr. Skinner, during the time they served as CEO and Executive Chairman, respectively, to use our aircraft without requiring reimbursement for up to 20 flight hours per year for personal travel. During fiscal 2021, Mr. Pessina had limited usage of the aircraft for personal travel and Mr. Skinner did not use the aircraft for personal travel. Apart from the allocated hours, and from time to time, Mr. Pessina and Ms. Barra may charter our aircraft for his or her personal use, which they did not do during fiscal 2021. In such cases, they do so through a third-party chartering service on an arm’s-length basis, and in doing so pay us market rates for the personal use of such aircraft.

Each of Mr. Pessina and Mr. Skinner, to the extent his use of our aircraft for personal travel exceeds the number of hours per year allowed by the CLP Committee without reimbursement, and our other senior executives who use our aircraft for personal travel, are required to reimburse us, pursuant to an aircraft time-sharing agreement consistent with Federal Aviation Administration regulations, an amount intended to approximate our incremental cost of such travel. To the extent either Mr. Pessina’s or Mr. Skinner’s use of our aircraft for personal travel without the need to reimburse us constitutes taxable income to him under applicable tax laws, then he pays the taxes on such income without gross-ups.

Pursuant to her offer letter, Ms. Brewer was authorized to use the aircraft without reimbursement for personal use up to 50 hours. In addition, the Company hired an outside security provider to perform a comprehensive security assessment with respect to Ms. Brewer. Based on its security assessment, the outside security provider recommended certain home security services be provided to Ms. Brewer and that Ms. Brewer continue to use corporate aircraft for all business and personal travel. Accordingly, the Company paid for certain security services for Ms. Brewer and corporate aircraft for all personal travel. Because the Company believes it is in the best interests of the Company and its stockholders to protect Ms. Brewer against possible security threats to her and her family members, the Company requires that Ms. Brewer accept such personal security protection. The Company also believes that the costs of this security are appropriate and necessary. Although the Company does not consider Ms. Brewer’s required use of corporate aircraft for security purposes to be a perquisite or other personal benefit for the reasons described above, the Company has reported the costs related to the use of the corporate aircraft for personal travel in the “2021 All Other Compensation Table.” Occasionally, Ms. Brewer’s spouse or other guests may accompany her on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In those cases, there is no additional aggregate incremental cost to the Company and, as a result, no amount associated with such use is reflected in the “2021 All Other Compensation Table.”

Relocation and Related Benefits. Executive officers are eligible for certain relocation and related benefits if they are assigned to work in a country that is not their “home country” or are otherwise requested to relocate for their role (as defined in the applicable policies). Ms. Brewer and Mr. Standley received relocation benefits in fiscal 2021 in connection with these policies. In addition to certain other benefits described in the paragraph below, Mr. Gourlay and Mr. Pagni are entitled to certain other benefits, including car allowance; payment of certain costs associated with life and other insurance policies (including, in some cases, coverage for his spouse and dependent children); long-term disability coverage; and a guaranteed death-in-service

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benefit of five times base salary. If Mr. Gourlay or Mr. Pagni decline a particular benefit (other than the death-in-service benefit), then they may receive a cash payment in lieu thereof. Mr. Gourlay also receives certain tax equalization benefits and tax assistance (as described further below in “—C. Employment and Separation Arrangements”) consistent with his expatriate assignment.

Other. We provide limited additional perquisites and other personal benefits to our NEOs and other senior executives, including an annual medical examination, limited reimbursement of health club dues, long-term disability, life insurance and personal accident insurance, preferred flight status with certain airline programs, and tax preparation services for executives with tax obligations in multiple countries. The perquisites and other benefits we provided to our NEOs during fiscal 2021 are further quantified in the footnotes in the “2021 Summary Compensation Table” under “—Executive Compensation Tables and Supporting Information” below.

C. Employment and Separation Arrangements

Rosalind Brewer and John Standley. For U.S.-based executives, including Ms. Brewer and Mr. Standley, we generally execute an offer of employment before an executive joins the Company. This offer describes the basic terms of the executive’s employment, including his or her start date, starting salary, annual incentive target, long-term incentive award target and perquisites. The terms of the executive’s employment are based thereafter on sustained good performance rather than contractual terms, and the Company’s policies, such as the Executive Severance and Change in Control Plan, will apply as applicable. Under certain circumstances, the Company also recognizes that special arrangements with respect to an executive’s employment may be necessary or desirable.

As described above, we entered into an offer letter with Ms. Brewer in connection with her joining the company as of March 15, 2021. We also entered into an offer letter with Mr. Standley who joined the Company as Executive Vice President, President of Walgreen Co. as of August 31, 2021, and has served as an executive officer since that time. In both cases, these offer letters set forth key elements of their compensation, including salary, the sign-on incentives described above, relocation benefits in accordance with Company policy and other employee benefits consistent with those received by the Company’s other U.S.-based senior executives. In addition, Ms. Brewer’s offer letter provides for certain expanded relocation benefits (relocation concierge services and expanded personal usage of the Company aircraft) and expanded termination without cause and good reason rights as applied to her one-time new hire cash and equity awards described above; and Mr. Standley’s offer letter provides for a six-month extension to the standard relocation deadline (due to COVID-19), a slightly revised definition of “cause” (where applicable) and extended “good reason” rights (where applicable) for the first 15 months of his employment. The CLP Committee determined the terms of these offer letters based on input from Mercer, the compensation received by each at their prior employer as well as the negotiations of the parties.

Alexander Gourlay, Ornella Barra and Marco Pagni. Ms. Barra and Messrs. Gourlay and Pagni, each of whom was employed by Alliance Boots or its subsidiaries prior to the closing of Walgreen Co.’s acquisition of the remaining 55% interest of Alliance Boots on December 31, 2014 (the “Second Step Transaction”), have employment agreements from such time (and in the case of Mr. Pagni an updated agreement dated January 17, 2020). Formal employment agreements are a competitive market practice in the United Kingdom, where each of Messrs. Gourlay and Pagni was a resident when he entered into his employment agreement; and in Monaco, where Ms. Barra was a resident when she entered into her employment agreement.

Benefits provided to Ms. Barra pursuant to her agreement are described above in “—B. Perquisites” and in the “2021 Summary Compensation Table” under “—Executive Compensation Tables and Supporting Information” below. Ms. Barra’s agreement provides for a 12-month notice period prior to termination of employment by either Ms. Barra or us, subject to certain exceptions set forth in the agreement. We also provide, at our expense, annual tax advice from external tax advisors relating to U.S. and UK tax returns in relation to Ms. Barra’s employment with us.

In September 2013, Walgreens entered into a Secondment Agreement (the “Secondment Agreement”) with Alliance Boots Management Services Limited, an affiliate of Alliance Boots, pursuant to which Alliance Boots may second certain of its employees to Walgreens for particular assignments. Since 2013, Mr. Gourlay has been seconded to Walgreens pursuant to the Secondment Agreement and an assignment letter, which was most recently extended in July 2020.

Benefits provided to Mr. Gourlay pursuant to his employment agreement are described above in “—B. Perquisites” and in the “2021 Summary Compensation Table” under “—Executive Compensation Tables and Supporting Information” below, and include cost of living and housing allowances, expenses associated with annual tax advice from external tax advisors related to Mr. Gourlay’s employment with us, tax equalization benefits, and reimbursement of the difference between his real estate liability

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in the United States and his liability in the United Kingdom. Mr. Gourlay’s agreement provides for a 12-month notice period prior to termination of employment by either Mr. Gourlay or us, subject to certain exceptions set forth in the agreement, and also provides for the payment of redundancy payments in certain circumstances.

Mr. Gourlay ceased serving as Co-Chief Operating Officer of the Company as of May 17, 2021 (the “Transition Date”). Pursuant to the terms of a Settlement Agreement between Mr. Gourlay and the Company dated June 30, 2021, he is serving as a Senior Advisor to the Company’s CEO through December 31, 2021, at which time he will separate from the Company and return to the United Kingdom. The CLP Committee determined that it was in the best interest of the Company to enter into this Settlement Agreement to provide for a smooth transition of Mr. Gourlay’s duties and responsibilities, to ensure that our new CEO has the benefit of Mr. Gourlay’s guidance, experience and significant institutional knowledge for the first several months of her tenure, and to provide Mr. Gourlay with both contractual and enhanced separation benefits as described below.

This Settlement Agreement provides that, following the Transition Date, Mr. Gourlay will continue to receive his current annual base salary through December 31, 2021 and will continue to be eligible to earn an annual cash bonus at the current rate for fiscal year 2021 and a pro-rated bonus for fiscal year 2022 for the period September 1, 2021 to December 31, 2021 (based on his retirement eligible status under the terms and conditions of the MIP), subject to Company and individual performance for each applicable fiscal year.

Also pursuant to the Settlement Agreement, Mr. Gourlay’s departure on December 31, 2021 will be considered a termination of his employment agreement by the Company not for cause. As such, pursuant to the applicable terms of his employment agreement, the Company will pay Mr. Gourlay an amount equal to his current base salary ($1,088,116) in 12 equal monthly installments commencing in January 2022 in lieu of the 12 months’ notice required under the employment agreement. Mr. Gourlay meets the requirements for retirement eligibility (at least age 55 with ten years of service). As such, based on the approval of the CLP Committee, he is considered retirement eligible under the Omnibus Incentive Plan, and his outstanding equity awards will vest or be forfeited according to the terms of that Plan and the applicable award agreements. In addition, following his departure and pursuant to the terms of his employment agreement and the applicable UK severance plan called the Boots UK Redundancy Scheme, Mr. Gourlay will receive a redundancy payment of $1,925,251, which is based on the applicable redundancy pay formula under this Boots UK Scheme, as applied to Mr. Gourlay’s years of service with WBA and predecessor companies. Following his departure, Mr. Gourlay will remain subject to the confidentiality, non-disclosure, non-solicitation, non-competition and non-disparagement obligations that apply under his employment agreement, the Settlement Agreement and/or other applicable agreements and Company policies.

Also pursuant to the Settlement Agreement, and subject to his execution of a general release of claims, Mr. Gourlay will receive a separation payment of $1,362,214 (referred to in the Agreement as an ex gratia payment), and in recognition of the fact that Mr. Gourlay relocated to the United States at the request of the Company, the Company will support Mr. Gourlay’s relocation back to the United Kingdom, including assisting Mr. Gourlay with the sale of his U.S. residence and paying Mr. Gourlay any difference between the sale price and the original purchase price Mr. Gourlay paid for the property in 2013. Based on the actual sales price of Mr. Gourlay’s U.S. residence, the Company did not incur any costs in this regard. Pursuant to the Settlement Agreement, the Company will also continue to provide Mr. Gourlay with tax preparation assistance through the UK tax year ending in 2022 and will provide private medical insurance to Mr. Gourlay and his spouse through its standard programs until the end of the policy year ending in 2022. The Settlement Agreement includes certain confidentiality obligations and provides for a release of claims both at the time of entering into the Agreement and at the end of the transition period. The CLP Committee determined that the above Settlement Agreement terms, including the payment and benefits in addition to Mr. Gourlay’s contractual entitlements, were necessary and appropriate in exchange for Mr. Gourlay’s obligations under the agreement – in particular in order to support and promote a smooth leadership transition as described above.

Benefits provided to Mr. Pagni pursuant to his employment agreement are described above in “—B. Perquisites” and in the “2021 Summary Compensation Table” under “—Executive Compensation Tables and Supporting Information” below, and include expenses associated with annual tax advice from external tax advisors related to Mr. Pagni’s employment with us. Mr. Pagni’s agreement provides for a six-month notice period prior to termination of employment by either Mr. Pagni or us, subject to certain exceptions set forth in the agreement, and also provides for the payment of redundancy payments in certain circumstances.

Mr. Pagni ceased serving as Global Chief Administrative Officer and General Counsel of the Company as of September 13, 2021 (the “Transition Date”), and he continued to serve as Senior Advisor through November 30, 2021, at which time he separated from the Company, pursuant to the terms of a Settlement Agreement between Mr. Pagni and the Company dated June 16, 2021. The CLP Committee determined that it was in the best interest of the Company to enter into this Settlement Agreement with

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Mr. Pagni to provide for a smooth transition of Mr. Pagni’s duties and responsibilities, to ensure that his successor has the benefit of Mr. Pagni’s guidance, experience and significant institutional knowledge during the transition period, and to provide Mr. Pagni with both contractual and enhanced separation benefits as described below.

This Settlement Agreement provides that, following the Transition Date, Mr. Pagni will continue to receive his current annual base salary through November 30, 2021 and will continue to be eligible to earn an annual cash bonus at the current rate for fiscal 2021 and a pro-rated bonus for fiscal 2022 for the period September 1, 2021 to November 30, 2021 (based on his retirement eligible status under the terms and conditions of the MIP), subject to Company and individual performance for each applicable fiscal year.

Also pursuant to the Settlement Agreement, Mr. Pagni’s departure on November 30, 2021 was considered a termination of his employment agreement by the Company not for cause. As such, pursuant to the applicable terms and conditions of his employment agreement, the Company will pay Mr. Pagni an amount representing six months of his current base salary ($461,223) in six equal monthly installments commencing in December 2021 in lieu of the six months’ notice required under the employment agreement. Mr. Pagni meets the requirements for retirement eligibility (at least age 55 with 10 years of service). As such, based on the approval of the CLP Committee, he is considered retirement eligible under the Omnibus Incentive Plan, and his outstanding equity awards have vested or were forfeited according to the terms of that Plan and the applicable award agreements. In addition, following his departure and pursuant to the terms of his employment agreement and the currently-applicable Boots UK Redundancy Scheme, Mr. Pagni will receive a redundancy payment of $928,437, which is based on the applicable redundancy pay formula under this Boots UK Scheme, as applied to Mr. Pagni’s years of service with WBA and predecessor companies. Mr. Pagni will remain subject to the confidentiality, non-disclosure, non-solicitation, non-competition and non-disparagement obligations that apply under his employment agreement, the Settlement Agreement and/or other applicable agreements and Company policies.

Pursuant to the Settlement Agreement and subject to his execution of a general release of claims, Mr. Pagni will receive a separation payment of $1,675,322 (referred to in the Agreement as an ex gratia payment), and the Company will also continue to provide Mr. Pagni with U.S., Irish and UK tax preparation assistance through the UK tax year ending in 2024. The Settlement Agreement includes certain confidentiality obligations and provides for a release of claims both at the time of entering into the agreement and at the end of the transition period. The CLP Committee determined that the above Settlement Agreement terms, including the payment and benefits in addition to Mr. Pagni’s contractual entitlements, were necessary and appropriate in exchange for Mr. Pagni’s obligations under the agreement – in particular in order to support and promote a smooth leadership transition as described above.

D. Severance and Change in Control Plan

We maintain the Walgreens Boots Alliance, Inc. Executive Severance and Change in Control Plan (the “CIC Plan”). The CIC Plan provides eligible executives certain severance benefits (a) upon an involuntary termination by us at any time (other than for cause or upon death or disability, as those terms are defined in the CIC Plan) or (b) within one year following a “change in control,” upon an involuntary termination not for cause, death or disability, or upon a voluntary termination for “good reason” (as those terms are defined in the CIC Plan).

The CIC Plan contains a double-trigger feature with respect to a change in control, meaning that the CIC Plan requires both a change in control and a qualifying termination of employment within one year following the change in control in order to receive severance benefits. If the payments and benefits to a participant under the CIC Plan would subject the participant to an excise tax, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, but only if such reduction will result in the participant receiving a higher net after-tax amount.

Ms. Brewer and Messrs. Kehoe and Standley are the only NEOs who are currently eligible for benefits under the CIC Plan, as (1) Mr. Pessina and previously Mr. Skinner, as Executive Chairmen, are not eligible for participation in the CIC Plan, and (2) the other NEOs would receive benefits pursuant to their individual employment agreements in lieu of benefits under the CIC Plan.

Ms. Brewer’s, Mr. Standley’s and Mr. Kehoe’s benefits under the CIC Plan and the other NEOs’ benefits under their individual employment arrangements (and settlement agreements in the case of Messrs. Gourlay and Pagni) are described under “—Executive Compensation Tables and Supporting Information—2021 Potential Payments upon Termination or Change in Control.”

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VIII. Executive Compensation Corporate Governance

A. Compensation Risk Oversight

The CLP Committee retained Mercer to conduct a risk review of our compensation programs and assess whether any of our incentive compensation plans, either individually or in the aggregate, would encourage our executives or employees to undertake unnecessary or inappropriate risks that were reasonably likely to have a material adverse impact on us. The CLP Committee reviewed this external risk assessment of our variable pay plans and considered several factors, including the type of plan; the number of participants in each plan; the participants’ levels within the organization; the target and maximum payout potential; performance criteria under each plan; and risk mitigating controls in place for each plan.

As part of these assessments, our management and the CLP Committee, as well as Mercer, evaluated those plans that were identified as having the potential to deliver a significant amount of compensation, which included the short-term and long-term incentive programs described elsewhere in this “Compensation Discussion and Analysis” section.

The CLP Committee thereafter concluded that it was not reasonably likely that risks arising from our compensation policies and practices would have a material adverse effect on us due to a variety of factors. In reaching this conclusion, the CLP Committee considered the following:

Our compensation programs are designed to provide a mix of both fixed and variable incentive compensation;
Our compensation programs are balanced between a variety of different measures, and both short-term and long-term incentives are designed to reward execution of our short-term and long-term corporate strategies;
We allocate compensation among base salary, annual cash incentives, and long-term incentives, such as Stock Options, Performance Shares and RSUs, that include both time of service and performance-based criteria;
The annual cash incentive component involves cash-based plan awards with payouts tied to the achievement of pre-established Company-wide financial and individual performance objectives;
Long-term incentive compensation includes components that are paid based on results averaged out over a number of years and that vest over an extended period;
Executives are required to own a specified level of shares in order to comply with the stock ownership guidelines described in “—B. Stock Ownership Guidelines” below, which encourages focusing on enhancing long-term stockholder value in a sustainable manner;
As described below under “—C. Compensation Recovery (Clawback) Policy,” we have adopted a clawback policy applicable to all officers that is designed to allow us to recover incentive compensation paid if there is a restatement of financial results or misconduct, including fraud;
As described below under “—D. Anti-Hedging and Anti-Pledging Policies,” we have a policy that prohibits directors, executives and senior employees from participating in transactions designed to hedge or speculate on any change in our stock price ensuring that, as designed, directors, executives and senior employees bear the full risk of their ownership of our securities and have the same objectives as the Company’s other stockholders; and
We have incentive programs that provide the CLP Committee with discretion to make downward adjustments to certain payments or awards under the component programs.

In light of the absence of any significant changes in our executive compensation program since this review, the CLP Committee continues to believe that it is not reasonably likely that risks arising from our compensation policies and practices would have a material adverse effect on us, primarily for the same reasons set forth above.

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B. Stock Ownership Guidelines

The Board first adopted executive stock ownership guidelines in 2008. Under the current guidelines, each senior executive has five years from the date of election or appointment to his or her position to achieve the lesser of the fixed or variable ownership level associated with his or her position. The minimum stock ownership guidelines for our Chief Executive Officer and other senior executives are as follows:

Executive Level Fixed Number of Shares Variable Number of Shares(1)
Executive Chairman       230,000       5x Salary
Chief Executive Officer 230,000 5x Salary
Chief Operating Officer 130,000 4x Salary
Executive Vice President 60,000 3x Salary
Senior Vice President 30,000 2x Salary
(1) Variable number of shares equals stated salary multiple divided by share price as of the measurement date.

The following are included in determining stock ownership for purposes of these guidelines (to the extent applicable):

restricted stock and RSUs, discounted by an assumed tax rate of 35% and only up to 50% of the applicable ownership target;
shares held by minor dependents and spouses; and
shares owned outright, such as shares acquired upon the vesting of Performance Shares and the exercise of Stock Options.

In October 2021, the CLP Committee reviewed our executives’ progress towards meeting these guidelines. The CLP Committee concluded that each of the continuing NEOs has either met the stock ownership requirement applicable to him or her or is within the five-year transition period.

More information about the stock ownership guidelines applicable to Non-Employee Directors can be found in “Corporate Governance—Director Compensation—Non-Employee Director Stock Ownership Guidelines” above.

C. Compensation Recovery (Clawback) Policy

The Board has adopted a compensation recovery, or “clawback,” policy for cash and equity incentive awards paid to executive officers. If there is a restatement of financial results or other misconduct (including fraud), then the policy allows the CLP Committee to seek reimbursement of the incremental portion of incentive compensation paid to executive officers in excess of the awards that would have been paid based on the restated financial results or in the absence of such misconduct. The CLP Committee may look back over the three-year period prior to the restatement or other misconduct for the recoupment, and may also look to both current and former executive officers.

The policy provides the CLP Committee with the discretion to recoup amounts of excess incentive compensation paid to an officer in conjunction with any materially incorrect results (even if not resulting in a restatement), or misconduct on the part of the executive officer, including fraud or other conduct that would lead to a “for cause” termination (as defined in the Company’s clawback policy). The clawback policy requires disclosure of any exercise of the clawback policy for any Section 16 officer, unless the Board or CLP Committee concludes that legal or privacy concerns would prevent such disclosure.

In addition to the clawback policy, our CEO and Global Chief Financial Officer are subject to any clawbacks that may be required under the Sarbanes-Oxley Act of 2002.

D. Anti-Hedging and Anti-Pledging Policies

We have adopted, as part of our insider trading policy, prohibitions on the short sale of our common stock and other securities and transactions in publicly-traded options relating to Company securities, as well as the purchase or sale of financial instruments that are designed to hedge or offset any decrease in the market value of our common stock or other securities. These policies prohibit our directors, officers and senior employees, including each of the NEOs, from hedging the risk of their ownership of our common stock through the use of financial mechanisms, such as exchange funds, prepaid variable forward contracts, equity swaps, puts, calls, collars and other derivative instruments.

This policy also prohibits our directors, officers and senior employees, including each of the NEOs, from pledging our common stock or other securities as collateral for a loan without the prior written approval of our Global Chief Legal Officer and our Corporate Secretary where specified criteria are met.

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Compensation Committee Report

The following Compensation Committee Report shall not be deemed to be incorporated by reference into any filing we may make under the Securities Act or the Exchange Act, notwithstanding any general statement contained in any such filing incorporating this Proxy Statement by reference, except to the extent we incorporate such report by specific reference.

The Compensation and Leadership Performance Committee reviews the Company’s Compensation Discussion and Analysis on behalf of the Board. The Compensation and Leadership Performance Committee has reviewed and discussed the Compensation Discussion and Analysis with management.

Based on this review and discussion, the Compensation and Leadership Performance Committee recommended to the Board that the Compensation Discussion and Analysis above be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2021.

Compensation and Leadership Performance Committee

Nancy M. Schlichting, Chair
José E. Almeida
Ginger L. Graham
Valerie B. Jarrett
John A. Lederer

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Executive Compensation Tables and Supporting Information

2021 Summary Compensation Table

The following table shows information regarding the compensation of each Named Executive Officer (“NEO”) for fiscal 2021, 2020 and 2019. The values shown represent each NEO’s compensation during the fiscal year, including the grant date fair value of equity awards that were granted during a fiscal year that vest in a future year or years, subject to the terms and conditions of each award.

Certain amounts paid to or earned by certain NEOs were paid or accrued in British Pounds Sterling. In the tables below, amounts for fiscal 2021 (other than the pension value calculations, as noted in footnote 6 below) were converted to U.S. dollars at an exchange rate of approximately £1=$1.362214 (the average exchange rate during fiscal 2021 used by the CLP Committee for purposes of executive compensation decisions).

Name and Principal
Position
(1)
Fiscal
Year
Salary
($)
Bonus
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)(6)
All Other
Compensation
($)(7)
Total
Compensation
($)
Stefano Pessina
Executive Chairman and
Former CEO
   2021                             131,064     131,064
2020 13,180,703 4,252,100 50,384 17,483,187
2019 13,158,012 5,969,372 28,818 19,156,202
Rosalind G. Brewer
Chief Executive Officer
2021 695,652 4,500,000 20,200,048 2,404,875 532,923 28,333,498
James Kehoe
Executive Vice
President and Global
Chief Financial Officer
2021 945,563 4,836,701 1,015,009 1,879,306 76,998 8,753,577
2020 941,719 521,626 5,207,062 1,435,077 467,179 83,756 8,656,419
2019 918,750 1,250,000 2,878,318 1,566,937 70,710 6,684,715
Ornella Barra
Chief Operating Officer,
International
2021