Document

DEF 14A 1 defproxy2021.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

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Securities Exchange Act of 1934

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¨			Soliciting Material Pursuant to §240.14a-12

CERNER CORPORATION

(Name of Registrant as Specified In Its Charter)

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April 2, 2021

Cerner shareholders:

I am pleased to invite you to the 2021 Annual Shareholders' Meeting of Cerner Corporation to be held on May 19, 2021 at 10:00 a.m. (CT). We have seen positive progress with the COVID-19 vaccine efforts and are hopeful the end of the pandemic is near. Even so, it is Cerner's responsibility to help protect the health of our associates, clients and their patients, shareholders, and our communities, and therefore, we have elected to hold our Annual Shareholders' Meeting virtually. You will be able to attend the 2021 Annual Shareholders' Meeting online, vote your shares, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CERN2021.

Details of the business to be conducted at the Annual Shareholders' Meeting are provided in the attached Notice of Annual Shareholders' Meeting and Proxy Statement. We will also report on matters of current interest to shareholders.

Amidst the challenges, COVID-19 showcased the best of Cerner and hospitals and health systems. Collectively, we are reimagining care delivery through innovation that has the potential to reduce cognitive burden, increase clinician and patient satisfaction, eliminate inequities in healthcare and return joy to practicing medicine. Cerner has amassed more than 250 million patient records and supports more than 80 million patient visits each year as a leader in the digitization and automation of healthcare. The next evolution involves making this data usable through interoperable networks, delivering a new era of precision and personalization. Cerner's top priority is to relentlessly advance client success, and the Company remains committed to innovating new products and enhancements to address current needs. Cerner also has made investments and established collaborations to lay the foundation in data science for the next wave of healthcare, creating a brighter future for patients, providers and populations.

Since the last meeting, Cerner has augmented its leadership structure through new hires and promotions, has made tangible progress on transformation efforts and continues to evolve its return-to-office strategy based on COVID-19 spread and vaccine progress. Other 2020 highlights include the following:

•Cerner saw a burst of innovation alongside providers as they responded to and recovered from the pandemic. Cerner's Command Center enabled organizations to make operational decisions based on real-time data, and with the Cerner Learning Health NetworkTM, we created a substantial clinical dataset of COVID-positive patients for research purposes.

•Through our investment in and collaboration with Elligo Health Research and an announced agreement to acquire Kantar Health, a division of Kantar Group (expected to close in the second quarter of 2021), Cerner is advancing its data business. We believe these important collaborations will help the Company play a meaningful role in the clinical trials value chain, making studies more accessible to patients and decreasing the cost and time of treatment discovery.

•Cerner continued to make progress modernizing the health records for the U.S. Departments of Defense and Veterans Affairs and, new in 2020, the U.S. Coast Guard. For the first time, all three organizations are using and can access the same EHR through the launch of a joint Health Information Exchange. We also successfully completed several go-lives, remotely and in a hybrid format, during COVID-19.

•Cerner further enhanced its focus on corporate responsibility in 2020 through thoughtful management of its COVID-19 response, continued advancement of diversity and inclusion initiatives, impactful community involvement and expansion, diversification and initiation of the process of declassifying the Company's Board of Directors.

•Cerner delivered financial results in line with expectations and returned nearly $1 billion of capital to shareholders in 2020 through share buybacks and dividend payments.

These actions demonstrate Cerner's focus on delivering shareholder value through operational improvements, improved governance and world-class client support. Whether or not you plan to attend the virtual Annual Shareholders' Meeting, I hope that you will vote as soon as possible. Your vote is important.

One additional and sad note, Linda M. Dillman, a treasured Director who served our stakeholders for more than a decade, unexpectedly passed away March 13, 2021. We are grateful and appreciative of her many contributions to Cerner during her tenure on the Board. The Board extends its deep condolences to Linda's family and pays tribute to her life and legacy.

On behalf of the entire Board of Directors, thank you for your continued interest in Cerner.

Brent Shafer

Chairman of the Board of Directors and Chief Executive Officer

CERNER CORPORATION

2800 ROCK CREEK PARKWAY

NORTH KANSAS CITY, MISSOURI 64117

NOTICE OF 2021 ANNUAL SHAREHOLDERS' MEETING

MAY 19, 2021

Virtual Annual Meeting of Shareholders - Online Meeting Only - No Physical Meeting Location

TO OUR SHAREHOLDERS:

The 2021 Annual Shareholders' Meeting of Cerner Corporation will be held virtually on Wednesday, May 19, 2021, at 10:00 a.m. (CT). You can attend the 2021 Annual Shareholders' Meeting online, vote your shares, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CERN2021. Be sure to have the Control Number we have provided to you to join the meeting.

At the meeting, shareholders will be asked to vote on the following:

1. To elect four Class II Directors: Mitchell E. Daniels, Jr., Elder Granger, M.D., John J. Greisch and Melinda J. Mount, each to serve until the 2022 Annual Shareholders' Meeting, or until their respective successors are duly elected and qualified (see Proposal #1).

2. To ratify the appointment of KPMG LLP as the independent registered public accounting firm of Cerner Corporation for 2021 (see Proposal #2).

3. To conduct a non-binding advisory vote to approve the compensation of our Named Executive Officers (see Proposal #3).

4. To consider a shareholder proposal to eliminate supermajority voting (Proposal #4).

5. Any other business that may properly come before the 2021 Annual Shareholders' Meeting or any postponement or adjournment thereof.

These items are more fully described in the following pages, which are made part of this notice.

Holders of record as of the close of business on Monday, March 22, 2021 (the "Record Date"), are entitled to receive notice of and to vote at the 2021 Annual Shareholders' Meeting or any adjournment or postponement of the meeting. A list of all shareholders as of the Record Date will be made available during the meeting at www.virtualshareholdermeeting.com/CERN2021.

It is important that your shares be voted at the 2021 Annual Shareholders' Meeting. Even if you plan to attend, the Board of Directors of Cerner Corporation requests that you submit your proxy in advance by telephone or the Internet or, if you have requested a paper copy of these materials, by marking, signing, dating, and promptly mailing the Proxy Card or voting instruction form in the enclosed postage prepaid envelope.

A copy of our 2020 Annual Report to Shareholders, which includes audited consolidated financial statements, is available at both www.cerner.com and www.proxyvote.com or, if you have requested a paper copy of these materials, is enclosed. The Annual Report is not part of our proxy soliciting material.

BY ORDER OF THE BOARD OF DIRECTORS,

Daniel P. Devers

Secretary

You may vote your shares in advance by telephone, via the Internet or, if you requested to receive printed proxy materials, by completing, signing, dating, and mailing your Proxy Card. The proxy may be revoked at any time before your shares are voted at the meeting by submitting written notice of revocation to the Secretary of Cerner Corporation or by submitting another timely proxy before the applicable deadlines. If you attend the meeting online, you may choose to vote your shares at www.virtualshareholdermeeting.com/CERN2021 and following the instructions, and any previously submitted proxy will not be used. If you hold shares through a broker, bank or other nominee, please check the voting instructions used by that broker, bank or nominee.

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Shareholders' Meeting to be held on May 19, 2021: The 2021 Proxy Statement and 2020 Annual Report to Shareholders are available at www.proxyvote.com and on www.cerner.com under "Investor Relations, Financials, Proxy Materials."

PROXY STATEMENT

TABLE OF CONTENTS


PROXY SUMMARY	1	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	66

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING	6	AUDIT-RELATED MATTERS	68
		Guidelines for Pre-Approval of Independent Auditor Services	68
CORPORATE GOVERNANCE AND BOARD MATTERS	12	Annual Evaluation and Selection of Independent Auditors	68
Information Concerning Directors and Nominees	12	Audit and Non-Audit Fees	69
Director Independence	20	Audit Committee Report	70
Committees of the Board	21
Consideration of Director Nominees	23	ITEMS TO BE VOTED ON	71
Board Leadership Structure and Role in Risk Oversight	27	Proposal #1 Election of Directors	71
		Proposal #2 Ratification of the Appointment of KPMG as Independent Registered Public Accounting Firm	72
DIRECTOR COMPENSATION	29	Proposal #3 Advisory Vote to Approve the Compensation for our Named Executive Officers	73
		Proposal #4 Shareholder Proposal to Eliminate Supermajority Voting	74
EXECUTIVE COMPENSATION	31
Compensation Committee Report	31	SHAREHOLDER PROPOSALS	77
Compensation Discussion & Analysis	31
Pay Ratio	63	HOUSEHOLDING OF PROXY MATERIALS	78
Compensation Committee Interlocks and Insider Participation	64
		OTHER MATTERS	78
CERTAIN TRANSACTIONS	64
		APPENDIX I - RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS	79

CERNER CORPORATION

2800 ROCK CREEK PARKWAY

NORTH KANSAS CITY, MISSOURI 64117


PROXY STATEMENT

2021 ANNUAL SHAREHOLDERS' MEETING

MAY 19, 2021

This Proxy Statement, which is first made available on or about April 2, 2021, is furnished to you in connection with the solicitation of proxies by the Board of Directors (the "Board") of Cerner Corporation, a Delaware corporation ("Cerner," the "Company," "us," "our" or "we"), for use at the 2021 Annual Shareholders' Meeting of the Company to be held on May 19, 2021, commencing at 10:00 a.m. (CT) (the "2021 Annual Shareholders' Meeting"). As part of our precautions regarding the coronavirus (COVID-19), and in an effort to protect the health and safety of our shareholders, associates (employees) and other stakeholders, we are holding our annual meeting solely by means of remote communication. You can attend the 2021 Annual Shareholders' Meeting online, vote your shares, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/CERN2021. Your vote is very important. For this reason, the Board is requesting that you allow your shares of common stock, par value $0.01 per share, of the Company ("Common Stock") to be represented at the 2021 Annual Shareholders' Meeting by the persons named as proxies on the Proxy Card.

PROXY SUMMARY

This summary highlights certain information in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement and 2020 Annual Report before you vote.


Proposal						Recommendation of the Board

Proposal 1: Election of Directors To elect Mitchell E. Daniels, Jr., Elder Granger, M.D., John J. Greisch and Melinda J. Mount, each to serve until the 2022 Annual Shareholders' Meeting, or until their respective successors are duly elected and qualified						FOR Each Nominee
Proposal 2: Ratification of Auditors To ratify the appointment of KPMG LLP as the independent registered public accounting firm of Cerner Corporation for 2021						FOR
Proposal 3: Say-on-Pay To conduct a non-binding advisory vote to approve the compensation of our Named Executive Officers						FOR
Proposal 4: Shareholder Proposal To consider a shareholder proposal to eliminate supermajority voting						AGAINST

COVID-19 Response

Amidst the pandemic-related challenges, our response to COVID-19 showcased the best of Cerner. We devoted substantial attention in 2020 to responding to the human and business impacts of the COVID-19 pandemic while maintaining focus on long-term strategy to drive future growth.

Throughout the COVID-19 pandemic, the Company acted to support its associates, clients and communities during these challenging times, responded to the associated business impact and developed processes to ensure we were meeting the needs of our clients. These actions have included:

•Transitioning all associates whose work allowed to a virtual environment.

•Mobilizing a taskforce to provide work-from-home and travel guidance based on information from the World Health Organization, the U.S. Centers for Disease Control and other global health agencies and input from provider clients.

•Enhancing health, wellness and family resources for our associates.

•Partnering with Testing for America, the United Negro College Fund and the Thurgood Marshall College Fund to offer affordable, rapid COVID-19 testing for students, faculty and staff at Historically Black Colleges and Universities.

•Supporting our communities with community giving, including donations of meals for healthcare professionals and first responders, personal protective equipment and hand sanitizer for students.

•Hosting a series of mass COVID-19 vaccination events at our World Headquarters through a collaboration with North Kansas City Hospital, Liberty Hospital, Clay County Public Health Center and cities within Clay County.

Company Performance1

Although we experienced some challenges in connection with the COVID-19 pandemic during 2020, including declines in revenue related to project delays, we have not experienced a material negative impact on our liquidity, access to capital or overall operations. See our most recent Annual Report on Form 10-K for more detailed discussion of our 2020 performance. Key highlights include:

•A 7% decrease in bookings to $5.58 billion compared to $5.99 billion in 2019, with the decrease primarily driven by the impact of the pandemic and divestitures of our commercial RevWorks and certain global businesses during 2020. Bookings represents the value of executed contracts for software, hardware, professional services and managed services.

•A 3% decrease in revenues to $5.51 billion in 2020 compared to $5.69 billion in 2019. Our 2020 revenues increased 1% organically as compared to 2019 when excluding revenues from divested businesses.

•GAAP operating margin of 12.7% for the fourth quarters of both 2020 and 2019; and a full year 2020 GAAP operating margin of 16.6% compared to 10.6% in 2019. On a non-GAAP basis, a fourth quarter 2020 Adjusted Operating Margin of 21.5% compared to 20.3% in the fourth quarter of 2019. Full year Adjusted Operating Margin was 19.9%, representing 140 basis points of margin expansion over 2019. The increase is primarily the result of our ongoing operational improvement initiatives.

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1 Adjusted Operating Margin, Adjusted Diluted Earnings per Share and Free Cash Flow are non-GAAP financial measures. See Appendix I for further details regarding these non-GAAP financial measures, including reconciliations to their most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles ("GAAP").

•A 53% increase in GAAP diluted earnings per share in 2020 compared to 2019. On a non-GAAP basis, our Adjusted Diluted Earnings per share increased 6% in 2020 compared to 2019.

•Operating cash flows were $1.44 billion in 2020 compared to $1.31 billion in 2019. Free Cash Flow for financial reporting purposes was $857 million in 2020, up 51% compared to $568 million in 2019.

•We returned capital to shareholders by paying regular quarterly dividends (which were increased 22% effective December 2020 to $0.22 per share) and by repurchasing 10.6 million shares of Common Stock for $757 million.

Governance Highlights

Our Board believes that good corporate governance enhances shareholder value. Our governance practices include the following:


Ø			Phase Out of Classified Board. Our Third Restated Certificate of Incorporation (as amended to date, the "Certificate of Incorporation") and Amended and Restated Bylaws (effective as of May 27, 2020) (the "Bylaws") were amended in May 2020 to eliminate the classification of our Board of Directors over a three-year period. Class II, which is up for election this year, is the first class to be elected

SEC Form DEF 14A filed by Cerner Corporation