Share-Based Compensation |
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| Share-Based Compensation | 13. Share-Based Compensation We maintain Cardinal Health, Inc. corporate stock incentive plans (collectively, the “Plans”) for the benefit of certain of our officers, directors, and employees. As of September 30, 2026, we have 16 million shares authorized for issuance under the Plans. Upon vesting, these units convert to common shares without restrictions or future service requirements. The following table provides total share-based compensation expense by type of award:
The total tax benefit related to share-based compensation was $5 million and $4 million for the three months ended September 30, 2026 and 2025, respectively. Share-based compensation expense is included in selling, general, and administrative expenses in the condensed consolidated statements of earnings. Our condensed consolidated statements of cash flows present our share-based compensation expense as a reconciling adjustment between net income and net cash provided by operating activities for all periods presented. Restricted Share Units Restricted share units granted under the Plans generally vest in equal annual installments over three years. Restricted share units accrue cash dividend equivalents that are payable upon vesting of the awards. The following table summarizes all transactions related to restricted share units under the Plans:
The total fair value of units vested during the three months ended September 30, 2026 and 2025 were $52 million and $53 million, respectively. At September 30, 2026, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted share units not yet recognized was $120 million, which is expected to be recognized over a weighted-average period of two years. Performance Share Units Performance share units vest over a three-year performance period based on achievement of specific performance goals. Based on the extent to which the targets are achieved and our total shareholder return relative to the S&P 500 Health Care Index, vested shares may range from zero to 240 percent of the target award amount. Performance share units accrue cash dividend equivalents that are payable upon vesting of the awards. The following table summarizes all transactions related to performance share units under the Plans (based on target award amounts):
The total fair value of units vested during the three months ended September 30, 2026 and 2025 were $110 million and $108 million, respectively. At September 30, 2026, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized was $63 million, which is expected to be recognized over a weighted-average period of two years if the performance goals are achieved. Specialty Alliance Share-Based Compensation The Specialty Alliance, a majority-owned subsidiary of Cardinal Health, maintains standalone share-based compensation plans. Share-based compensation expense associated with these awards of $80 million and $63 million was recognized during the three months ended September 30, 2026 and 2025, respectively. Of the expense recognized for the three months ended September 30, 2026 and 2025, $78 million and $61 million is included in acquisition-related cash and share-based compensation costs, respectively, and $2 million is included in SG&A expenses, for both periods, in the condensed consolidated statements of earnings, respectively. We recognize activity within SG&A expenses for awards that are granted in relation to regular course of business and are not acquisition-related. The liability and associated future expenses may vary based on the changes in the estimated fair value. The following table summarizes the fair market value of The Specialty Alliance Units as of September 30, 2026:
The total fair value of The Specialty Alliance Units vested during the three months ended September 30, 2026 and 2025 was $46 million and $53 million, respectively. During the three months ended September 30, 2026 and 2025, we recognized adjustments to the fair value of the liability, resulting in expense of $34 million and $10 million, respectively, related to the vested Specialty Alliance Units, which is recognized in acquisition-related cash and share-based compensation costs. At September 30, 2026, the total pre-tax compensation cost related to nonvested Specialty Alliance Units not yet recognized was $372 million, which is expected to be recognized over a weighted-average period of approximately four years. |
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