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Why Cardinal Health Spinoff is impotent: George S. Barrett to replace Kerry Clark

By Amarendra Bhushan for CEOWORLD Magazine Updated:September 30, 2008 Become a writer!

Medical supplier Cardinal Health Inc, a global provider of products and services paid Chairman and CEO R. Kerry Clark $9.7 million in total compensation in fiscal 2008, more than doubling his compensation from the year before. Clark’s 2008 pay package included $1.4 million in base salary and a $691,804 bonus, the company disclosed in a proxy filing with the U.S. Securities and Exchange Commission. He also received other compensation totaling $246,801, which included $169,095 for personal use of the company’s aircraft. For 2008, Cardinal Health’s earnings fell to $1.31 billion, or $3.60 per share, compared with $1.93 billion, or $4.77 per share a year earlier. Excluding one-time items, its profit came to $3.80 per share, with $91.09 billion in revenue.

In other news, Cardinal Health Inc. said Monday that it is spinning off its tech-focused clinical and medical products businesses into a separate public company in a move that will affect Cardinal’s 80-employee Creedmoor operation. The new company will be based in San Diego and led by Cardinal Vice Chairman David Schlotterbeck. Cardinal Health announced it will, “spin off its clinical and medical products business into a separate, publicly traded company.”

Fight between Cardinal’s traditional supply chain services business and the young upstart CTS (clinical technologies and services) the two groups have decided to go their own way. With the retirement of Cardinal chair and CEO, Kerry Clark, the two vice chairs, George Barrett for supply chain services and David Schlotterbeck for CTS, are going separate ways. Barrett will take Clark’s position and Schlotterbeck will head the $4 billion global company to be headquartered in San Diego.

David L. Schlotterbeck to be named chairman and CEO of new company

George S. Barrett to be named Cardinal Health chairman and CEO, succeeding R. Kerry Clark who will retire following spin-off. The company also announced that Chairman and CEO R. Kerry Clark, 56, will continue to lead Cardinal Health through the spin-off and then will retire from the company. Clark will be succeeded by George S. Barrett, 53, who has served as vice chairman and CEO of Healthcare Supply Chain Services since joining Cardinal Health in January.

Clark joined as president and CEO in April 2006 following a 32-year career at Procter & Gamble. During his tenure with Cardinal Health, he focused the company – through organic growth, acquisition and divestiture – on the global opportunity to help hospitals, physicians and pharmacies make the practice and delivery of health care safer and more productive. Under his leadership, the company acquired medical-technology leaders, MedMined, Care Fusion, VIASYS Healthcare and Enturia to bolster its patient-safety offerings, and divested a $2 billion business that developed, manufactured and packaged medicine for the pharmaceutical industry. Clark also took important steps to strengthen the management team and provide a focus on people for succession planning and development of future company leaders. He was named chairman and CEO in September2007.

“Kerry has led the company through the important, strategic decisions to position Cardinal Health and our medical technologies spin-off company very strongly in their respective markets,” said Richard C. Notebaert, presiding director of the Cardinal Health board. “His tenure has been, and will continue to be as he leads the company through the spin-off, critical to long-term value creation for customers and shareholders.”

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. is a $91 billion, global company serving the health care industry with products and services that help hospitals, physician offices and pharmacies reduce costs, improve safety, productivity and profitability, and deliver better care to patients. With a focus on making supply chains more efficient, reducing hospital-acquired infections and breaking the cycle of harmful medication errors, Cardinal Health develops market leading technologies, including Alaris® IV pumps, Pyxis® automated dispensing systems, MedMined™ infection surveillance services and the CareFusion™ patient identification system. The company also manufactures medical and surgical products and is one of the largest distributors of pharmaceuticals and medical supplies worldwide. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 40,000 people on five continents. More information about the company may be found at www.cardinalhealth.com.

Kerry Clark Profile:

Chairman and Chief Executive Officer, Cardinal Health, April 2006 to present

Vice Chairman of the Board – P&G Family Health and a director of The Procter & Gamble Company, a marketer of consumer products (”Procter & Gamble”), July 2004 to April 2006
Vice Chairman of the Board and President – Global Market Development and Business Operations of Procter & Gamble, 2002 to July 2004

Director of Textron Inc., an aircraft, automotive and industrial products manufacturer and financial services company

Kerry Clark is the chairman and chief executive officer of $87 billion Cardinal Health, a global provider of products and services that improve the safety and productivity of health care.

Since joining Cardinal Health in April 2006, Clark has focused the company – through organic growth, acquisition and divestiture – on the global opportunity to help hospitals, physicians and pharmacies make the practice and delivery of health care safer and more productive. Under his leadership, the company acquired medical technology leaders, MedMined, Care Fusion and VIASYS Healthcare to bolster its patient-safety offerings, and divested a $2 billion business that developed, manufactured and packaged medicine for the pharmaceutical industry.

Internal programs instituted during Clark’s tenure reflect his passion for the development of leaders and the importance of innovation as a driver of organic growth. In addition, Clark’s global business experience helped shape Cardinal Health’s strategy to participate in the health-care industry worldwide, a market valued at more than $1 trillion. Today, less than 10 percent of company revenues are generated by the sale of products and services outside the U.S.

He joined Cardinal Health from The Procter & Gamble Company, where he served as vice chairman of the board and was responsible for the company’s $20-billion Family Health business. During his 32-year career with P&G, Clark had considerable strategic, operational and corporate management experience and held leadership positions in North America and Asia. Since beginning his career with P&G in Canada as a brand assistant in 1974, he held positions of increasing responsibility, including group vice president of Laundry and Cleaning products, president of P&G Asia and president of Global Market Development and Business Operations.

Clark is a director of Textron, Inc. and CompeteColumbus, and a member of The Business Council, Healthcare Leadership Council, Ohio Business Roundtable, The Columbus Partnership, and the Dean’s Advisory Council for The Ohio State University’s Fisher College of Business. A native of Ottawa in Ontario, Canada, Clark graduated from Queen’s University with a bachelor of commerce degree. He also holds an honorary doctorate in Commercial Science from St. Bonaventure University.

George Barrett Profile:

Vice Chairman, Cardinal Health and CEO, Healthcare Supply Chain Services
CEO, Healthcare Supply Chain Services

As chief executive officer of the company’s $81 billion Healthcare Supply Chain Services sector, George Barrett is responsible for Cardinal Health’s supply chain businesses, including pharmaceutical and medical/surgical distribution, nuclear pharmacy services and Presource® kitting services. Operating more than 70 distribution centers, 160 nuclear pharmacies and six surgical kitting facilities nationwide, Cardinal Health’s supply chain sector is the nation’s largest distributor of pharmaceuticals and medical supplies to retail pharmacies, hospitals, laboratories and physician offices.

Prior to joining Cardinal Health in January 2008, Barrett served as CEO of Teva North America since 2005 and as corporate executive vice president of Teva’s Global Pharmaceutical Markets since January 2007. He also served as of president and CEO of Teva Pharmaceuticals USA from 1999 to 2004.

Prior to joining Teva, Barrett served as CEO of Diad Research, a technology start-up based at the Johns Hopkins School of Medicine. He also held various senior management positions with pharmaceutical companies Alpharma Inc. and NMC Laboratories. Barrett is a past chairman of the Generic Pharmaceutical Association and serves on the board of ambassadors of Johns Hopkins School of Medicine’s Project Restore. He earned a bachelor’s degree from Brown University in 1977 and a master’s degree in business administration from New York University in 1988.