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Share-Based Compensation | 12 Months Ended
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Mar. 31, 2026
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company provides share-based compensation to its employees, officers, and non-employee directors, including restricted stock units (“RSUs”), performance-based stock units (“PSUs”), 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.” Impact on Net Income The components of share-based compensation expense and related tax benefits were as follows:
| Years Ended March 31,
(In millions) | 2026 |  | 2025 |  | 2024
Restricted stock unit awards (1) | $ | 231 |  |  | $ | 211 |  |  | $ | 168 |
Employee stock purchase plan | 16 |  |  | 15 |  |  | 14 |
Share-based compensation expense | 247 |  |  | 226 |  |  | 182 |
Tax benefit for share-based compensation expense | (72) |  |  | (85) |  |  | (72) |
Share-based compensation expense, net of tax | $ | 175 |  |  | $ | 141 |  |  | $ | 110 |
(1)Includes share-based compensation expense recognized for RSUs and PSUs. Stock Plans In April 2022, the Company’s stockholders approved the McKesson Corporation 2022 Stock Plan (the “2022 Stock Plan”), which 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. As of March 31, 2026, 4.0 million shares remain available for future grant under the 2022 Stock Plan. Restricted Stock Unit Awards 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, 2026, approximately 33,000 RSUs for the Company’s directors were vested. Performance Stock Unit Awards 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 (“TSR”) 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. Starting in fiscal 2026, PSU awards are based on cumulative three‑year earnings per share and average return on invested capital targets and, for certain participants, include a TSR modifier. For awards with a TSR modifier, the Company uses a Monte Carlo simulation model to measure grant‑date fair value. For awards without a TSR modifier, the PSUs are 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. The weighted-average assumptions used in the Monte Carlo valuations were as follows:
| Years Ended March 31,
| 2026 |  | 2025 |  | 2024
Expected stock price volatility | 23 | % |  | 21 | % |  | 24 | %
Expected dividend yield | 0.4 | % |  | 0.5 | % |  | 0.6 | %
Risk-free interest rate | 3.9 | % |  | 4.5 | % |  | 3.9 | %
Expected life (in years) | 3 |  | 3 |  | 3
The following table summarizes activity for RSUs and PSUs during fiscal 2026:
(In millions, except per share data) | Shares |  | Weighted- Average Grant Date Fair Value Per Share
Nonvested, March 31, 2025 | 0.9 |  |  | $ | 434.89 |
Granted | 0.3 |  |  | 728.77 |
Cancelled | 0.0 |  |  | 527.76 |
Vested | (0.4) |  |  | 394.72 |
Nonvested, March 31, 2026 | 0.8 |  |  | $ | 556.43 |
The following table provides data related to RSU and PSU award activity:
| Years Ended March 31,
(In millions) | 2026 |  | 2025 |  | 2024
Total fair value of shares vested | $ | 179 |  |  | $ | 192 |  |  | $ | 143 |
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock unit awards not yet recognized, pre-tax | $ | 187 |  |  | $ | 191 |  |  | $ | 205 |
Weighted-average period in years over which restricted stock unit award cost is expected to be recognized | 1 |  | 1 |  | 2
Employee Stock Purchase Plan 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 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 2026, fiscal 2025, and fiscal 2024. At March 31, 2026, 3.1 million shares remain available for issuance.

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