The Company provides share-based compensation to its employees, officers, and non-employee directors, including restricted stock units (“RSUs”), performance-based stock units (“PSUs”), stock options, and an employee stock purchase plan (“ESPP”) (collectively, “share-based awards”). Most of the share-based awards are granted in the first quarter of each fiscal year.

Share-based compensation expense for the share-based awards is recognized for the portion of awards ultimately expected to vest. The Company estimates the number of share-based awards that will ultimately vest primarily based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period and is adjusted when actual forfeitures occur. The actual forfeitures in future reporting periods could be higher or lower than current estimates.

Share-based compensation expense is classified in the Consolidated Statements of Operations in the same manner as cash compensation paid to the Company’s employees and included in “Selling, distribution, general, and administrative expenses.”


	Years Ended March 31,
(In millions)	2024		2023		2022
Restricted stock unit awards (1)	$	168	$	149	$	148
Stock options	—		—		2
Employee stock purchase plan	14		13		11
Share-based compensation expense	182		162		161
Tax benefit for share-based compensation expense (2)	(72)		(87)		(35)
Share-based compensation expense, net of tax	$	110	$	75	$	126

(2)Income tax benefit is computed using the tax rates of applicable tax jurisdictions. Additionally, a portion of share-based compensation expense is not tax-deductible. Income tax benefit for fiscal 2024, fiscal 2023, and fiscal 2022 included discrete income tax benefits of $37 million, $58 million, and $10 million, respectively.

In April 2022, the Company’s stockholders approved the McKesson Corporation 2022 Stock Plan (the “2022 Stock Plan”), to replace the McKesson Corporation 2013 Stock Plan (the “2013 Stock Plan”), which expired in 2023. The 2022 Stock Plan permits the grant of awards in the form of restricted stock, RSUs, PSUs, stock options, and other share-based awards to selected employees, officers, and non-employee directors. The shares previously reserved under the 2013 Stock Plan are no longer available for issuance pursuant to the 2022 Stock Plan. As of March 31, 2024, 4.5 million shares remain available for future grant under the 2022 Stock Plan and no shares are available for future grant under the 2013 Stock Plan.

RSUs entitle the holder to receive a specified number of shares of the Company’s common stock which vest over a period of generally three to four years as determined by the Compensation Committee at the time of grant. The fair value of the award is determined based on the price of the Company’s common stock on the grant date and the related share-based compensation expense is recognized over the vesting period on a straight-line basis.

Non-employee directors receive an annual grant of RSUs, which vest immediately and are expensed upon grant. The director may elect to receive the underlying shares immediately or defer receipt of the shares if they meet director stock ownership guidelines. The shares will be automatically deferred for those directors who do not meet the director stock ownership guidelines. At March 31, 2024, approximately 40,000 RSUs for the Company’s directors were vested.

PSUs are conditional upon the attainment of market and performance objectives over a specified period. The number of vested PSUs is assessed at the end of a three-year performance period upon attainment of meeting certain earnings per share targets, average return on invested capital, and for certain participants, total shareholder return relative to a peer group of companies. The Company uses the Monte Carlo simulation model to measure the fair value of the total shareholder return portion of the PSUs. The earnings per share portion of the PSUs is measured at the grant date market price. PSUs have a requisite service period of generally three years. Expense is attributed to the requisite service period on a straight-line basis based on the fair value of the PSUs, adjusted for the performance modifier at the end of each reporting period. For PSUs that are designated as equity awards, the fair value is measured at the grant date.


(In millions, except per share data)	Shares	Weighted- Average Grant Date Fair Value Per Share
Nonvested, March 31, 2023	1.7	$	238.77
Granted	0.5	405.03
Cancelled	(0.1)	314.09
Vested	(0.7)	203.55
Nonvested, March 31, 2024	1.4	$	307.73


	Years Ended March 31,
(In millions)	2024		2023		2022
Total fair value of shares vested	$	143	$	200	$	144
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock unit awards not yet recognized, pre-tax	$	205	$	192	$	165
Weighted-average period in years over which restricted stock unit award cost is expected to be recognized	2		2		2

Stock options are granted with an exercise price at no less than the fair market value and those options granted under the stock plans generally have a contractual term of seven years and follow a four-year vesting schedule. The Company did not grant any stock options during the years ended March 31, 2024, 2023, and 2022.

Share-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period and is based on the grant-date fair value for the portion of the awards that is ultimately expected to vest. The Company uses the Black-Scholes options-pricing model to estimate the fair value of its stock options. Once the fair value of an employee stock option is determined, current accounting practices do not permit it to be changed, even if the estimates used are different from actual.


			Options Outstanding				Options Exercisable
Range of Exercise Prices			Number of Options Outstanding at Year End (In millions)	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Number of Options Exercisable at Year End (In millions)	Weighted- Average Exercise Price
$124.12	—	$159.00	0.1	1	$	145.78	0.1	$	145.78


(In millions, except per share data)	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (2)
Outstanding, March 31, 2023	0.4	$	154.36	1	$	73
Granted	—	—
Cancelled	—	—
Exercised	(0.3)	157.99
Outstanding, March 31, 2024	0.1	145.78		1	42
Vested and expected to vest (1)	0.1	145.78		1	42
Vested and exercisable, March 31, 2024	0.1	145.78		1	42


	Years Ended March 31,
(In millions, except per share data)	2024		2023		2022
Weighted-average grant date fair value per stock option	$	—	$	—	$	—
Aggregate intrinsic value on exercise	$	77	$	69	$	28
Cash received upon exercise	$	40	$	93	$	157
Tax benefits realized related to exercise	$	16	$	4	$	5
Total fair value of stock options vested	$	—	$	1	$	5
Total compensation cost, net of estimated forfeitures, related to unvested stock options not yet recognized, pre-tax	$	—	$	—	$	—
Weighted-average period in years over which stock option compensation cost is expected to be recognized	0		0		0

The Company has an ESPP under which 23.1 million shares have been authorized for issuance. The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions. The deductions occur over three-month purchase periods and the shares are then purchased at 85% of the market price at the end of each purchase period. Employees are allowed to terminate their participation in the ESPP at any time during the purchase period prior to the purchase of the shares, subject to the Company’s insider trading policies and procedures. The 15% discount provided to employees on these shares is included in share-based compensation expense. The shares related to funds outstanding at the end of a quarter are included in the calculation of diluted weighted-average shares outstanding. These amounts have not been significant for all the years presented. The Company recognizes costs for employer matching contributions as ESPP expense over the relevant purchase period. Shares issued under the ESPP were not material in fiscal 2024, fiscal 2023, and fiscal 2022. At March 31, 2024, 3.4 million shares remain available for issuance.