CARDINAL HEALTH INC, DEF 14A, 1999-09-30

CARDINAL HEALTH INC
DEF 14A, 1999-09-30
DRUGS, PROPRIETARIES & DRUGGISTS' SUNDRIES

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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>

Cardinal Health, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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[LOGO]
CARDINAL
HEALTH, INC.

---------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1999
----------------------

Notice is hereby given that the Annual Meeting of Shareholders of
Cardinal Health, Inc., an Ohio corporation (the "Company"), will be held at the
Company's corporate offices at 7000 Cardinal Place, Dublin, Ohio, on Wednesday,
November 3, 1999, at 8:00 a.m., local time, for the following purposes:

1. To elect five Directors, each to serve for a term of three
years and until his or her successor is duly elected and
qualified;

2. To vote on a proposal to adopt the Cardinal Health, Inc.
Employee Stock Purchase Plan pursuant to Section 423(b) of
the Internal Revenue Code;

3. To vote on a proposal to re-approve the Performance Goals
under the Cardinal Health, Inc. Equity Incentive Plan
relating to Section 162(m) of the Internal Revenue Code;
and

4. To transact such other business as may properly come
before the meeting or any adjournment or postponement
thereof.

Only shareholders of record on September 15, 1999, are entitled to
notice of and to vote at the meeting or any adjournment or postponement thereof.

By Order of the Board of Directors.

/s/ Steven Alan Bennett

STEVEN ALAN BENNETT, Secretary

September 21, 1999

SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN
PERSON, ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE, OR VOTE BY TELEPHONE OR INTERNET PURSUANT TO
INSTRUCTIONS PROVIDED WITH THE PROXY CARD.

<PAGE> 3
[LOGO]
CARDINAL
HEALTH, INC.

PROXY STATEMENT

This Proxy Statement is being furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Cardinal Health,
Inc., an Ohio corporation (the "Company"), for use at the annual meeting of the
shareholders of the Company (the "Annual Meeting") to be held on Wednesday,
November 3, 1999, at the offices of the Company, located at 7000 Cardinal Place,
Dublin, Ohio 43017, at 8:00 a.m. local time and at any adjournment or
postponement thereof. This Proxy Statement and the accompanying proxy, together
with the Company's Annual Report to Shareholders for the fiscal year ended June
30, 1999, are first being sent to shareholders on or about September 30, 1999.

The close of business on September 15, 1999, has been fixed as the
record date for the determination of shareholders of the Company entitled to
notice of and to vote at the Annual Meeting. At that date, the Company had
outstanding 280,141,018 common shares, without par value ("Common Shares").
Except as set forth below, holders of Common Shares at the record date are
entitled to one vote per share for the election of Directors and upon all
matters on which shareholders are entitled to vote.

The address of the Company's principal executive office is 7000
Cardinal Place, Dublin, Ohio 43017.

ELECTION OF DIRECTORS

The Company's Board of Directors currently consists of thirteen
members, divided into two classes of four members each and one class of five
members. The Company's Restated Code of Regulations, as amended (the "Code of
Regulations"), currently provides that the number of Directors may be increased
or decreased by action of the Board of Directors upon the majority vote of the
Board, but in no case may the number of Directors be fewer than nine or more
than sixteen without an amendment to the Code of Regulations approved by the
affirmative vote of the holders of not less than 75% of the shares having voting
power with respect to the proposed amendment.

At the Annual Meeting, the Company's shareholders will be asked to vote
for the election of the five nominees hereinafter named, each to serve for a
term of three years and until his or her successor is duly elected and
qualified. (See PROPOSAL 1 below.) Common Shares represented by proxies unless
otherwise specified will be voted for the named nominees. If, by reason of death
or other unexpected occurrence, any one or more of the nominees should not be
available for election, the proxies will be voted for the election of any
substitute nominee(s) as the Board of Directors may propose. Proxies may not be
voted at the Annual Meeting for more than five nominees.

Under Ohio law, if notice in writing is given by any shareholder
entitled to vote at the Annual Meeting to the President, a Vice President or the
Secretary of the Company not less than 48 hours before the time fixed for
holding the meeting that such shareholder desires that the voting for election
of Directors be cumulative, and if an announcement of the giving of such notice
is made upon the convening of such meeting by the Chairman or Secretary, or by
or on behalf of the shareholder giving such notice, each shareholder entitled to
vote at the Annual Meeting shall have the right to cumulate such voting power as
he possesses at such election and to give one nominee a number of votes equal to
the number of Directors to be elected multiplied by the number of shares he
holds, or to distribute his votes on the same basis among two or more nominees,
as he sees fit. If voting for the election of Directors is cumulative, the
persons named in the enclosed proxy will vote the shares represented

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thereby and by other proxies held by them so as to elect as many of the five
nominees named below as possible. Under Ohio law and the Company's Articles of
Incorporation, broker non-votes will not be counted in favor of or against
election of any nominee. The five nominees receiving the greatest number of
votes will be elected Directors.

Listed below are the names of those persons nominated for election as
Directors of the Company (each is currently a Director of the Company), and of
the Directors of the Company whose terms of office will continue after the
Annual Meeting, their principal occupations, other public companies of which
they are directors (which are shown parenthetically), ages, the year in which
they first became a Director of the Company or the Company's predecessor in
interest, and the year in which their term as a Director is scheduled to expire
(information provided as of September 15, 1999):

NOMINEES FOR ELECTION AT THE ANNUAL MEETING

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION (1) DIRECTOR TERM
- ---- --- ------------------------ -------- ----
SINCE EXPIRES
----- -------

<S> <C> <C> <C> <C>
Regina E. Herzlinger........ 55 Professor, Harvard University Graduate 1995 1999
School of Business Administration (C.R.
Bard, Inc., Deere & Company,
Schering-Plough Corporation, and Total
Renal Care Holdings, Inc.).

J. Michael Losh............. 53 Executive Vice President and Chief 1996 1999
Financial Officer of General Motors
Corporation, an automobile manufacturing
company (The Quaker Oats Company).

John C. Kane................ 59 President and Chief Operating Officer of 1993 1999
the Company (Connetics Corporation). (2)

John B. McCoy............... 56 President and Chief Executive Officer of 1987 1999
Bank One Corporation, a bank holding
company (Bank One Corporation, Federal Home
Loan Mortgage Corporation, Paymentech,
Inc., and Ameritech Corporation).

Michael D. O'Halleran....... 48 President and Chief Operating Officer of 1999 1999
Aon Corporation, an insurance brokerage,
consulting and underwriting company (Aon
Corporation).
</TABLE>

2
<PAGE> 5

DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION (1) DIRECTOR TERM
- ---- --- ------------------------ -------- ----
SINCE EXPIRES
----- -------

<S> <C> <C> <C> <C>
Silas S. Cathcart.......... 73 Retired Chairman and Chief Executive 1999 2000
Officer of Illinois Tool Works Inc., an
industrial products manufacturing company
(General Electric Company and Montgomery
Ward and Co.).

John F. Finn............... 51 Chairman and Chief Executive 1994 2000
Officer of Gardner, Inc., an
outdoor power equipment distributor.

John F. Havens............. 72 Retired Chairman and Director 1979 2000
Emeritus of Bank One
Corporation, a bank holding
Company (Worthington Industries, Inc.).

Robert D. Walter........... 54 Chairman and Chief Executive Officer of the 1971 2000
Company (Bank One Corporation, CBS, Inc.,
and Infinity Broadcasting Corporation). (2)

Robert L. Gerbig........... 54 Chairman and Chief Executive Officer of 1975 2001
Gerbig, Snell/Weisheimer & Associates,
Inc., an advertising agency.

George R. Manser........... 68 Chairman of Uniglobe Travel (Capital 1977 2001
Cities) Inc. and Director of Corporate
Finance of Uniglobe Travel (U.S.A.) LLC,
travel planning services companies; and
Advisory Director to Corporate Finance
Dept. of J.C. Bradford & Co., a financial
services company (AmeriLink Corporation,
Checkfree Corporation, Hallmark Financial
Services, Inc., and State Auto Financial
Corporation).

Jerry E. Robertson......... 65 Retired Executive Vice President of the 1991 2001
Life Sciences Sector and Corporate Services
of Minnesota Mining & Manufacturing Company,
a manufacturer of industrial Commercial,
health-care and consumer products (Coherent,
Inc., Haemonetics Corporation, Steris
Corporation, Medwave, Inc., and Choice Hotels
International, Inc.).

Melburn G. Whitmire.... 59 Retired Vice Chairman of the Company. 1994 2001
</TABLE>

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<PAGE> 6

(1) Each of the Directors either has had the positions shown or has had
other executive positions with the same employer for more than five
years.

(2) Messrs. Kane and Walter are officers and directors of various
subsidiaries of the Company.

Four regular meetings and two special meetings of the Company's Board
of Directors were held during the fiscal year ended June 30, 1999. Each Director
attended 75% or more of the meetings of the Board and Board committees on which
he or she served.

Messrs. Finn, Losh, McCoy, and Walter are the current members of the
Board's Executive Committee, which is empowered to exercise all powers and
perform all duties of the Board of Directors when the Board is not in session
other than the authority to fill vacancies among the Directors or in any
committee of the Board. The Executive Committee met one time during the last
fiscal year, and, as permitted by Ohio law, acted numerous times by written
action without a meeting.

Messrs. Finn, Gerbig, and O'Halleran, Mrs. Herzlinger and Dr. Robertson
are the current members of the Board's Audit Committee, which is empowered to
exercise all powers and authority of the Board of Directors with respect to the
Company's annual audit, accounting policies, financial reporting, and internal
controls. The Audit Committee met four times during the last fiscal year.

Messrs. Losh, Cathcart, Manser and Whitmire are the current members of
the Board's Compensation and Personnel Committee, which is empowered to exercise
all powers and authority of the Board of Directors with respect to compensation
of the employees of the Company, sales to employees of stock in the Company, and
grants of stock-based incentives to employees, including options to purchase
stock in the Company. The Compensation and Personnel Committee met four times
during the last fiscal year and, as permitted by Ohio law, acted several times
by written action without a meeting. Messrs. Losh, Cathcart and Manser are
current member's of the Board's Compensation and Personnel Subcommittee which
was formed to act on matters relating to and affected by Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section
162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code").

Messrs. McCoy, Finn, Havens, Losh and Manser, and Dr. Robertson are the
current members of the Board's Nominating Committee, which is empowered to
exercise all powers and authority of the Board of Directors with respect to
selection of nominees to serve on the Board and its various committees. The
Nominating Committee will consider nominees recommended by shareholders upon
submission in writing to the Secretary of the Company of the names of such
nominees, together with their qualifications for service as a Director of the
Company. The Nominating Committee met two times during the last fiscal year.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

A property which includes parts of the Company's former Columbus food
distribution center is leased by the Company from a limited partnership in which
the general partner is Mr. Walter and the limited partners include Mr. Walter.
The Company has subleased this property to third parties at rentals
substantially in excess of the rentals it is required to pay to the limited
partnership. The initial term of the Company's lease expired February 29, 1984,
and the lease is currently in its second ten-year renewal term. The Company has
options to renew the lease for two additional ten-year terms. The rent payable
by the Company is $92,000 per annum during each of the first two renewal terms,
and the fair rental value of the premises during each of the last two renewal
terms. The Company has a first-refusal option to purchase the premises in the
event the limited partnership proposes to sell the premises to a third party.

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<PAGE> 7

All executive officers and Directors of the Company, except Michael
E. Beaulieu and Robert J. Zollars, who was an executive officer of the Company
until his resignation as an executive officer effective June 30, 1999, timely
filed all reports required under Section 16(a) of the Exchange Act during the
fiscal year ended June 30, 1999. Mr. Zollars filed one Form 4 late reporting one
acquisition transaction pursuant to which shares of a company acquired by the
Company were exchanged into shares of the Company. Mr. Beaulieu filed one Form 4
late reporting one sale transaction.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Shares as of September 15, 1999,
by: (a) the Company's Directors; (b) each other person who is known by the
Company to own beneficially more than 5% of the outstanding Common Shares; (c)
the Company's Chief Executive Officer and the other executive officers named in
the Summary Compensation Table; and (d) the Company's executive officers and
Directors as a group. Except as otherwise described in the notes below, the
following beneficial owners have sole voting power and sole investment power
with respect to all Common Shares set forth opposite their names:

<TABLE>
<CAPTION>
Number of
Common Shares
Name of Beneficial Owner Beneficially Owned Percent of Class
- ------------------------ ------------------ ----------------

<S> <C> <C>
Fidelity Management & Research Co. (1) 33,540,824 12.3%
Robert D. Walter (2) (3) 4,204,539 1.5%
Melburn G. Whitmire (4) (6) 1,556,444 *
John C. Kane (3) 788,660 *
James F. Millar (3) 168,794 *
George L. Fotiades (3) 158,993 *
George R. Manser (6) (7) 125,267 *
Robert L. Gerbig (5) (6) 96,866 *
John B. McCoy (6) (8) 77,643 *
Silas S. Cathcart (6) 36,729 *
Michael D. O'Halleran (6) 34,047 *
John F. Havens (6) (9) 31,866 *
John F. Finn (6) (10) 24,977 *
Jerry E. Robertson (6) 23,489 *
Carl A. Spalding (3) 10,500 *
Regina E. Herzlinger (6) 7,708 *
J. Michael Losh (6) 7,172 *
All Executive Officers and Directors as a 7,995,412 2.9%
Group (11) (21 Persons)
</TABLE>

5
<PAGE> 8

* Indicates beneficial ownership of less than 1% of the outstanding
Common Shares.

(1) Based on information obtained from a Schedule 13G/A filed by Fidelity
Management & Research Co. with the Securities and Exchange Commission
on or about May 10, 1999. The address of Fidelity Management &
Research Co. is 82 Devonshire Street, Boston, Massachusetts 02109. The
Schedule 13G/A indicates that Fidelity Management & Research Co. has
sole voting power with respect to 653,591 Common Shares and sole
dispositive power with respect to all 33,540,824 Common Shares.

(2) Includes 2,297,559 Common Shares held in Mr. Walter's grantor retained
annuity trusts.

(3) Common Shares and the percent of class listed as being beneficially
owned by the Company's named executive officers include outstanding
options to purchase Common Shares which are exercisable within 60 days
of September 15, 1999, as follows: Mr. Walter - 335,445 shares; Mr.
Kane - 429,929 shares; Mr. Millar - 115,142 shares; Mr. Spalding - 0
shares; and Mr. Fotiades - 141,251 shares.

(4) Includes 11,604 Common Shares held by Mr. Whitmire and his wife as
custodian for the benefit of their minor daughter.

(5) Includes 82,297 Common Shares held in Mr. Gerbig's grantor retained
annuity trust.

(6) Common Shares and the percent of class listed as being beneficially
owned by the listed Company Directors (except for Messrs. Kane and
Walter) include outstanding options to purchase Common Shares which
are exercisable under the Company's Directors' Stock Option Plan,
Equity Incentive Plan, or Allegiance Director Option Agreements as
follows: Mr. Cathcart - 34,047 shares; Mr. Finn - 11,315 shares; Mrs.
Herzlinger - 7,708 shares; Mr. Losh - 4,922 shares; Mr. O'Halleran -
34,047 shares; Dr. Robertson - 1,440 shares; Mr. Whitmire - 30,038
shares; and each other listed Director (except for Messrs. Kane and
Walter) - 1,460 shares.

(7) Includes 45,000 Common Shares which are held in a Manser family
partnership.

(8) Includes 4,291 Common Shares which are held by Mr. McCoy in trust for
the benefit of his son, but does not include Common Shares owned by
Bank One Corporation or its subsidiaries.

(9) Includes 17,806 Common Shares held in trust for the benefit of Mr.
Havens' spouse and children.

(10) Includes 12,835 Common Shares held jointly by Mr. Finn and his wife,
688 Common Shares held in his wife's individual retirement account and
139 Common Shares held by his son.

(11) Common Shares and percent of class listed as being beneficially owned
by all executive officers and Directors as a group include outstanding
options to purchase Common Shares which are exercisable within 60 days
of September 15, 1999, but do not include any Common Shares
beneficially owned by Bank One Corporation or its subsidiaries.

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<PAGE> 9

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Company's executive compensation program is administered by the
Compensation and Personnel Committee (the "Compensation Committee") of the
Company's Board of Directors, which has responsibility for reviewing all aspects
of the compensation program for the Company's executive officers. The
Compensation Committee currently is comprised of Messrs. Losh, Cathcart, Manser
and Whitmire(1). The Compensation Committee's primary objective with respect to
executive compensation is to establish programs which attract and retain key
managers and align their compensation with the Company's overall business
strategies, values and performance. To this end, the Compensation Committee has
established, and the Board of Directors has endorsed, an executive compensation
philosophy which includes the following considerations:

- A "pay-for-performance" orientation that differentiates
compensation results based upon corporate, business unit, and
individual performance;

- An emphasis on stock incentives as a significant component of
total compensation in order to more closely align the interests
of Company executives with the long-term interests of
shareholders;

- An emphasis on total compensation vs. cash compensation,
rewarding Company executives with total compensation (including
cash and stock incentive programs) at or above competitive
levels, if performance is superior;

- Recognition that as an executive's level of responsibility
increases, a greater portion of the total compensation
opportunity should be based upon stock and other performance
incentives; and

- An appropriate mix of short-term and long-term compensation which
facilitates retention of talented executives and encourages
Company stock ownership and capital accumulation.

The primary components of the Company's executive compensation program
are: (a) base salaries; (b) annual cash incentive opportunities; and (c)
long-term incentive opportunities in the form of stock options and restricted
shares. Each primary component of executive pay is discussed below.

Base Salaries. Base salaries for Company executives are generally
subject to annual review and adjustment on the basis of individual and company
performance, level of responsibility, and competitive, inflationary, and
internal equity considerations. The Company has adopted a market-rate focused
base salary philosophy, in recognition of the Company's aggressive performance
expectations and to more effectively recruit and retain key managers. The
"market" rate is determined from information gathered by the Company from
independent compensation surveys for companies which include some of, but are
not the same as, those in the Value Line Health Care Index utilized in the
Shareholder Performance Graph set forth on page 14, and which represent a
broader spectrum of wholesale, retail and manufacturing companies which the
Compensation Committee believes to be a more representative measure of the
market for competitive executive talent. With respect to the base salary
established for Mr. Walter for the fiscal year ended June 30, 1999, the
Compensation Committee took into account the factors described above for
executive officers, weighting most heavily competitive compensation
considerations and Company performance. In addition, in establishing Mr.
Walter's compensation for the fiscal year ended June 30, 1999, the Compensation
Committee considered the expansion of the Company's business from previous
years, including increased revenues, a significantly larger market
capitalization, more diversified lines of business, a substantially increased
and more geographically diverse work force, and significantly increased and
expansive foreign operations.

- ------------

(1) Mr. Whitmire is not a member of the Compensation & Personnel Subcommittee
which acts upon matters relating to or affected by Section 16 of the Exchange
Act or Section 162(m) of the Internal Revenue Code.

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<PAGE> 10

Annual Cash Incentives. Company executives are eligible to receive
annual cash incentive awards to focus attention on achieving key goals, pursuant
to the Company's Management Incentive Plan ("MIP"). Targeted MIP incentive
amounts are established each year on an individualized basis, with such amounts
varying as a percentage of base salary depending upon each executive's level of
responsibility and function. Performance objectives are established for the
Company and for each significant business unit within the Company at the
beginning of each fiscal year, and are designed to provide competitive incentive
pay. These objectives include a specific target for Company earnings growth,
which target was met for the fiscal year ended June 30, 1999. In addition,
individual performance objectives are established for each executive, which
include both specific performance goals and other, more qualitative and
developmental, criteria. For managers with primary staff or corporate
responsibilities, 60% of the MIP amount is weighted to achievement of the
Company's corporate performance objectives and 40% to achievement of individual
performance objectives. For managers with primary operating unit
responsibilities, 50% of the MIP amount is weighted to performance of the
relevant business unit, 30% to achievement of individual performance objectives,
and 20% to achievement of the Company's performance objectives. Incentive awards
for the fiscal year ended June 30, 1999, for the Company's named executive
officers other than Messrs. Walter and Kane were approved by the Compensation
Committee based upon these corporate, business unit and individual performance
criteria. For the fiscal year ended June 30, 1999, the Company also instituted a
President's Over-Performance Plan ("POP") for eligible employees, including
executives. The POP, which is designed to reward exceptional business unit and
Company performance, provides for a maximum payment of an additional 50% of an
employee's MIP or Performance-Based Plan (defined below) target amount, provided
100% of the Company performance objectives have been achieved. The POP
percentage paid for the fiscal year ended June 30, 1999 varied for each business
unit of the Company depending upon the applicable business unit performance.

Mr. Walter's annual incentive award was not paid under the MIP, but
instead was paid pursuant to the Cardinal Health, Inc. Performance-Based
Incentive Compensation Plan (the "Performance-Based Plan"). The Budget
Reconciliation Act of 1993 (the "Act") amended the Internal Revenue Code to add
Section 162(m), which prohibits a deduction to any publicly held corporation for
non-performance-based compensation paid to a "covered employee" in excess of $1
million per year (the "Dollar Limitation"). A covered employee is an employee
who, on the last day of the Company's taxable year, is the chief executive
officer of the Company or an employee who appears in the Summary Compensation
Table by reason of being one of the four most highly compensated executive
officers for the taxable year (other than the chief executive officer). In
anticipation that the deductibility of compensation paid to Mr. Walter and other
executive officers could be affected by the Act, in August 1996, the Company's
Board of Directors adopted the Performance-Based Plan, the material terms of the
performance goals of which were approved by the Company's shareholders in
October 1996, and amendments to which were approved by the Company's
shareholders in November 1998. Compensation paid in accordance with the
Performance-Based Plan generally will not be applied toward the Dollar
Limitation. The performance goals established by the Compensation Committee
under the Performance-Based Plan for Mr. Walter for the fiscal year ended June
30, 1999, were fully satisfied resulting in payment to Mr. Walter of an annual
incentive award of $1,237,500. In addition to Mr. Walter, Mr. Kane, the
Company's President and Chief Operating Officer, participated in the
Performance-Based Plan for the fiscal year ended June 30, 1999. Mr. Walter also
received a POP award equal to $526,875 for the fiscal year ended June 30, 1999,
which amount was calculated based upon the same POP percentage applicable to all
POP Participants at the corporate division of the Company, and will apply toward
the Dollar Limitation.

Long-Term Stock Incentives. The Company has granted equity-based
awards to its executives under the Company's Stock Incentive Plan (the "Stock
Incentive Plan"), which was initially approved by the Company's shareholders in
1987, and the Company's Amended and Restated Equity Incentive Plan (the "Equity
Incentive Plan"), which replaced the Stock Incentive Plan as to ongoing grants,
and which was approved by the Company's shareholders in November 1995, and
amendments to which were approved by the Company's shareholders in November
1998. The Stock Incentive Plan was, and Equity Incentive Plan is, designed to
align a significant portion of the executive compensation package with the
long-term interests of the Company's shareholders by providing an incentive that
focuses attention on managing the Company from the perspective of an owner with
an

8
<PAGE> 11

equity stake in the business. The Stock Incentive Plan provided, and the Equity
Incentive Plan provides, for the grant of several types of equity-based awards,
including stock options and restricted shares.

The Company makes annual grants of stock options to its management
personnel, including its executive officers. This annual grant program is
designed to provide Company managers, over a number of years, with multiple
stock options, each granted with an exercise price equal to the market price for
Common Shares on the date of the grant. Individual option grants are determined
by the Compensation Committee based on a manager's current performance,
potential for future responsibility, and salary multiples designed to increase
the portion of the total compensation opportunity represented by stock
incentives as a manager's level of responsibility increases. Because a primary
purpose of granting stock options is to encourage positive future performance,
when granting options the Compensation Committee does not consider the number of
options granted to an individual in previous years. The Company's standard stock
option agreement contains provisions providing for forfeiture of the option or
option value received in the event the option holder engages in certain behavior
in competition with or contrary to the interests of the Company. The
Compensation Committee places a relatively heavy emphasis on stock options,
consistent with its philosophy that stock incentives more closely align the
interests of Company managers with the long-term interests of shareholders.

Grants of restricted shares are generally limited to the Company's
executive officers and other senior management personnel to reward exceptional
performance with a long-term benefit in lieu of cash, to facilitate stock
ownership, and to deter recruitment of key Company managers by competitors and
others. Unlike the Company's stock option program, restricted share grants are
not made on an annual or other regularly established basis. Recipients of
restricted share grants are subject to restrictions on the disposition of the
stock during a period determined by the Compensation Committee at the time of
grant. Restricted stock awards are forfeited by their terms if the recipient
terminates employment with the Company prior to the expiration of the
restriction period. Restricted stock awards are, in most instances, also
forfeited by their terms if the recipient engages in certain behavior in
competition with or contrary to the interests of the Company.

Consistent with the Company's philosophy of linking total compensation
to stock performance for all of its executive officers, a significant portion of
Mr. Walter's overall compensation package is comprised of stock incentives. In
March 1999, the Compensation Committee granted Mr. Walter options to purchase
125,000 Common Shares with an exercise price of $71.00 per share (the market
price on the date of grant) as part of the annual option grant normally made to
Company executives. In making this grant, the Compensation Committee considered
the target range established for the Company's most senior officers, the
improvement in the Company's strategic positioning, and Mr. Walter's progress in
accomplishing personal objectives. In August 1998, Mr. Walter also received
options to purchase 90,000 Common Shares with an exercise price of $64.71 per
share (the market price on the date of grant) in connection with a one-time
grant made to certain executives to better align the Company's stock option
compensation levels with those of the Company's peer companies (which include
some of, but are not the same as, those in the Value Line Health Care Index
utilized in the Shareholder Performance Graph set forth on page 14 of this Proxy
Statement). Mr. Walter's options granted during fiscal year 1999 vest on the
third anniversary of the grant date and are generally exercisable for a period
of seven years following the vesting date, consistent with grants made to other
option recipients. All of the options granted to Mr. Walter during the fiscal
year also contain provisions providing for forfeiture of the option or option
value received in the event Mr. Walter engages in certain behavior in
competition with or contrary to the interests of the Company.

Impact of 1993 Tax Act Changes. As discussed above, Section 162(m) of
the Internal Revenue Code prohibits a deduction to any publicly held corporation
for non-performance-based compensation paid to a covered employee in excess of
the Dollar Limitation. As a result of the amount of the Dollar Limitation,
exclusions of certain performance-based compensation under the Stock Incentive
Plan, Equity Incentive Plan and the Performance-Based Plan, and salary deferral
elections made by Mr. Walter, the deductibility of compensation paid in fiscal
year 1999 was not affected by the Act.

9
<PAGE> 12

Conclusion. As described above, the Company's executive
compensation program provides a significant link between total compensation and
the Company's performance and long-term stock price appreciation consistent with
the compensation philosophies set forth above. This program is believed to be a
significant factor in the Company's growth and profitability and the resulting
long-term gains achieved by the Company's shareholders.

J. Michael Losh, Chairman
Silas S. Cathcart
George R. Manser
L. Jack Van Fossen(2)
Melburn G. Whitmire

EXECUTIVE COMPENSATION

The following information is set forth with respect to the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers:

I. SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
- --------------------------- ----------- ------------------------------------- ------------------------------ ----------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS
----------- ------------------------------------- ------------------------------
NAME AND FY - SALARY BONUS OTHER RESTRICTED SECURITIES ALL
PRINCIPAL POSITION ENDED ($) ($) ANNUAL STOCK UNDERLYING OTHER
COMPENSATION AWARDS OPTIONS COMPENSATION
($) ($)(1)(2) (#)(2) ($)(3)
- --------------------------- ----------- ----------- ------------ ------------ --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Walter 1999 $824,808 $1,794,375 -0- -0- 215,000 $201,944(5)
Chairman & Chief 1998 724,231 800,000 -0- -0- 94,268 196,552
Executive Officer 1997 582,494 700,000 $72,217(4) $650,190 66,939 190,518

John C. Kane 1999 $575,347 $967,845 -0- -0- 220,000 $ 31,509
President & Chief 1998 488,462 489,945 -0- -0- 57,021 29,717
Operating Officer 1997 440,096 440,069 -0- $216,742 42,395 28,583

James F. Millar 1999 $368,403 $462,788 -0- -0- 39,131 $ 31,509
Executive Vice President 1998 310,501 221,810 -0- $527,100 22,500 29,717
& Group President - 1997 290,762 218,084 -0- 50,018 24,854 28,583
Cardinal Distribution

Carl A. Spalding 1999 $315,000 $378,009 -0- -0- 23,780 $ 31,509
Executive Vice President 1998 24,231 100,909 -0- $617,295 15,000 -0-
& Group President -
Healthcare Product
Services (6)

George L. Fotiades 1999 $366,593 $187,275 -0- $999,898 55,614 $ 83,833(8)
Executive Vice President
& Group President - R.P.
Scherer Corporation (7)
</TABLE>

(2) Mr. Van Fossen was a member of the Compensation Committee during the fiscal
year ended June 30, 1999 and thereafter until his retirement from the Board
effective August 11, 1999.

10
<PAGE> 13

(1) Aggregate restricted share holdings and values at June 30, 1999 (based upon
the closing price of the Common Shares on the New York Stock Exchange on
such date), for the named executive officers are as follows: (i) Mr. Walter
- 94,009 shares, $6,028,327; (ii) Mr. Kane - 35,662 shares, $2,286,826;
(iii) Mr. Millar - 11,857 shares, $760,330; (iv) Mr. Spalding - 10,500
shares, $673,313; and (v) Mr. Fotiades - 16,042 shares, $1,028,693.
Dividends are paid on restricted shares at the same rate as all Common
Shares.

(2) All numbers have been adjusted to reflect the 3-for-2 split of the
Company's Common Shares in December 1996 and the 3-for-2 split of the
Company's Common Shares in October 1998.

(3) Amounts shown represent Company contributions to the executive's account
under the Company's Profit Sharing and Retirement Savings Plan and the
Company's Incentive Deferred Compensation Plan for fiscal 1999 as follows:
Messrs. Walter, Kane, Millar and Spalding - $31,509; Mr. Fotiades - $0. Mr.
Fotiades' account under the R.P. Scherer Corporation Savings Plan includes
a Company contribution of $500.

(4) Includes $56,037 relating to personal use of a Company airplane.

(5) Includes $170,435 for premiums paid by the Company on a split-dollar life
insurance arrangement among the Company, Mr. Walter, and a trust for Mr.
Walter's family. The Company will recover all such premiums paid by it,
plus interest at the rate of 3% per annum, upon the earlier to occur of
January 12, 2003, or the death of the survivor of Mr. Walter and his
spouse.

(6) Mr. Spalding joined the Company in June 1998. Compensation included in the
Summary Compensation Table for Mr. Spalding excludes all compensation paid
prior to that date.

(7) Mr. Fotiades joined the Company in August 1998 following the acquisition by
the Company of R.P. Scherer Corporation (the "R.P. Scherer Acquisition").
Compensation included in the Summary Compensation Table for Mr. Fotiades
excludes all compensation paid prior to the R.P. Scherer Acquisition.

(8) Includes $83,833 paid to Mr. Fotiades as an Incentive Fee pursuant to
certain provisions contained in Mr. Fotiades' Employment Agreement (as
described below under "Employment Agreements and Other Arrangements").

11
<PAGE> 14

II. OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------
NAME NUMBER OF PERCENT OF EXERCISE EXPIRATION
SECURITIES TOTAL PRICE DATE POTENTIAL REALIZABLE VALUE
UNDERLYING OPTIONS ($/SH)(3) AT ASSUMED ANNUAL RATES
OPTIONS GRANTED TO OF STOCK PRICE APPRECIATION
GRANTED EMPLOYEES FOR OPTION TERM(4)
(#)(1) IN FISCAL
YEAR(2) 0% ($) 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Walter 90,000 2.64% $64.71 08/11/08 $0 $3,662,619 $9,281,797
125,000 3.67 71.00 03/01/09 0 5,581,440 14,144,464

John C. Kane 180,000 5.28% $64.71 08/11/08 $0 $7,325,239 $18,563,593
40,000 1.17 74.25 02/09/09 0 1,867,817 4,733,415

James F. Millar 7,500 0.22% $64.71 08/11/08 $0 $305,218 $773,483
31,631 0.93 71.00 03/01/09 0 1,412,372 3,579,228

Carl A. Spalding 23,780 0.70% $71.00 03/01/09 $0 $1,061,813 $2,690,843

George L. Fotiades 37,500 1.10% $62.33 09/16/08 $0 $1,469,963 $3,725,174
18,114 0.53 71.00 03/01/09 0 808,817 2,049,703
</TABLE>

(1) All options granted during the fiscal year to the named executives are
nonqualified stock options and are exercisable on and after the third
anniversary from the date of grant.

(2) Based on 3,410,287 options granted to all employees during the fiscal year
ended June 30, 1999 under the Company's Equity Incentive Plan.

(3) Market price on date of grant.

(4) These amounts are based on hypothetical appreciation rates of 0%, 5% and
10% and are not intended to forecast the actual future appreciation of the
Company's stock price. No gain to optionees is possible without an actual
increase in the price of the Company's Common Shares, which increase
benefits all of the Company's shareholders.

12
<PAGE> 15

III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
AT FY-END OPTIONS
(#) AT FY-END ($) (2)
SHARES VALUE ----------------------------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) (1) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert D. Walter 41,837 $2,857,676 392,008/376,207 $18,081,675/$2,899,679
John C. Kane -0- -0- 369,929/319,416 $18,033,221/$1,858,673
James F. Millar 10,548 $601,869 124,705/86,485 $5,637,535/$802,650
Carl A. Spalding -0- -0- 0/38,780 $0/$80,025
George L. Fotiades -0- -0- 141,251/104,444 $3,856,254/$394,229
</TABLE>

(1) Value calculated as the difference between the fair market value of the
Common Shares on the date of exercise and the option exercise price before
payment of any taxes.

(2) Value calculated as the difference between the fair market value of the
Common Shares on June 30, 1999 and the option exercise price.

13
<PAGE> 16

SHAREHOLDER PERFORMANCE GRAPH

Set forth below is a line graph comparing the cumulative total return
of Common Shares with the cumulative total return of the Standard & Poor's
Composite - 500 Stock Index and the Value Line Health Care Sector Index, an
independently prepared index which includes more than 100 companies in the
health care industry (the "Value Line Health Care Index"). The graph assumes, in
each case, an initial investment of $100 as of June 30, 1994 based on the market
prices at the end of each fiscal year through and including June 30, 1999, with
the Value Line Health Care Index investment weighted on the basis of market
capitalization at the beginning of each such fiscal year, and assuming
reinvestment of dividends (and taking into account all stock splits during such
periods).

[GRAPH]
<TABLE>
<CAPTION>
Fiscal Year 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Cardinal Health, Inc. 100.00 120.85 184.84 220.45 361.49 371.43
S&P 500 100.00 126.12 159.06 214.34 278.51 342.24
Value Line Health Care Index 100.00 143.82 197.77 289.33 394.53 438.91
</TABLE>

EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS

Mr. Millar has entered into an employment agreement (the "Millar
Employment Agreement") with the Company, which provides for an employment term
of three years commencing on May 12, 1998 (the "Commencement Date"). In addition
to a base salary, the Millar Employment Agreement provides for stock incentive
awards as described in the Summary Compensation Table contained in this Proxy
Statement, and an annual cash incentive payable under the standard terms of the
Company's Management Incentive Plan or any successor to such plan in which other
Company executives participate from time to time. The Millar Employment
Agreement provides that Mr. Millar will also be entitled to participate in the
Company's group health, life, disability insurance and retirement savings plans.
In addition, the Millar Employment Agreement contains a noncompete covenant
effective throughout the term of Mr. Millar's employment with the Company and
for a

14
<PAGE> 17

period of one year thereafter. Under the Millar Employment Agreement, if Mr.
Millar's employment is terminated without Cause by the Company or for Good
Reason by Mr. Millar (as those terms are defined in the Millar Employment
Agreement): (i) prior to the second anniversary of the Commencement Date, then
Mr. Millar shall receive his base salary at the rate in effect on the date of
termination through the end of the term of the Millar Employment Agreement, plus
an annual amount equal to his most recent annual bonus actually paid, at the
same time and in the same manner as his bonus would have been paid during the
remaining term of the Millar Employment Agreement; or (ii) on or after the
second anniversary of the Commencement Date, then Mr. Millar shall receive his
base salary at the rate in effect on the date of termination for a period of one
year from the date of such termination, plus an amount equal to his most recent
annual bonus actually paid, at the same time and in the same manner as such
annual bonus would have been paid had Mr. Millar continued to be employed by the
Company during such one year period.

In connection with the R.P. Scherer Acquisition, Mr. Fotiades entered
into an Amended and Restated Employment Agreement (the "Fotiades Employment
Agreement") with R.P. Scherer Corporation ("R.P. Scherer") and the Company. The
Fotiades Employment Agreement provides for an initial term of one year
commencing on August 7, 1998, and automatically renews for successive periods of
one year, unless prior to 30 days before the termination date of any one-year
period, either party notifies the other of an intention to terminate, in which
event the Fotiades Employment Agreement will terminate on such termination date.
In addition to a base salary, cash bonus, use of a Company car, and other fringe
benefits applicable to other R.P. Scherer executives, the Fotiades Employment
Agreement also provides for (i) participation in the Company's stock option
plans, in accordance with the terms thereof, as from time to time in effect, and
(ii) a fee (the "Incentive Fee") in the aggregate of $500,000 payable in
installments over a three-year period commencing August 7, 1998 in consideration
of Mr. Fotiades' agreement to continue to serve the Company pursuant to the
terms of the Fotiades Employment Agreement. The Fotiades Employment Agreement
also obligates Mr. Fotiades to comply with certain confidentiality and
noncompetition restrictions. If Mr. Fotiades' employment is terminated without
Cause by R.P. Scherer or for Good Reason by Mr. Fotiades (as those terms are
defined in the Fotiades Employment Agreement) during the term of such Agreement,
then Mr. Fotiades will receive (in addition to the Incentive Fee): (x) for
twenty-four months following such termination, his monthly base salary at a rate
equal to Mr. Fotiades' annual average base salary for the prior twenty-four
months, plus (y) on each of the first two anniversaries of the date of
termination, an amount equal to the average of the annual bonuses paid to Mr.
Fotiades for the prior twenty-four months, plus (z) continuation of group health
benefits for twenty-four months following such termination.

The Company's Stock Incentive Plan and Equity Incentive Plan each
provide for acceleration of the vesting of stock options and restricted share
awards based upon the occurrence of a change of control of the Company. A change
of control is defined generally, with certain exclusions, as acquisition by an
individual or group of 25% or more of the Common Shares, an involuntary change
in the composition of at least a majority of the members of the Board of
Directors, or approval by the Company's shareholders of a merger,
reorganization, consolidation, liquidation, or sale of substantially all of the
assets of the Company.

COMPENSATION OF DIRECTORS

During the fiscal year ended June 30, 1999, the Company's
non-employee Directors ("Outside Directors") were paid $5,000 per quarter plus
$1,750 for each Board meeting attended in person and $900 for each Board meeting
attended telephonically. Outside Directors were also entitled to receive $900
for each Committee meeting attended (in person or telephonically). Effective
July 1, 1999, in accordance with the recommendation of the Compensation
Committee, the Board of Directors approved an increase in the quarterly cash
retainer paid to Outside Directors from $5,000 to $10,000, and elimination of
regular, special, and telephonic meeting and other fees. The Company also
reimburses Outside Directors for out-of-pocket travel expenses incurred in
connection with attendance at Board and Committee meetings. Employee Directors
do not receive additional compensation in their capacity as a Director.

15
<PAGE> 18

Pursuant to the Company's Equity Incentive Plan as currently in effect,
options to purchase that number of Common Shares having a fair market value of
$100,000 on the date of grant are automatically granted on an annual basis to
each Outside Director who has served as such for three consecutive annual
meetings. The exercise price of these options is the fair market value of the
Common Shares on the date of grant. In addition, options to purchase that number
of Common Shares having a fair market value of $150,000 on the date of grant are
automatically made to each Outside Director subsequently added to the Board. The
exercise price of these options is the fair market value of Common Shares on the
date of grant. All grants to Outside Directors under the Equity Incentive Plan
vest immediately, are exercisable for ten years from the date of grant, and are
subject to adjustment for subsequent stock dividends, splits, and other changes
in the Company's capital structure. Options granted under the Plan are treated
as "nonqualified options" under the Internal Revenue Code. On November 23, 1998,
Messrs. Finn, Gerbig, Havens, Losh, Manser and McCoy, Mrs. Herzlinger and Dr.
Robertson each were granted an option to purchase 1,440 Common Shares in
accordance with the provisions of the Equity Incentive Plan.

PROPOSAL 1 - ELECTION OF NOMINEES FOR DIRECTORS OF THE COMPANY AT THE ANNUAL
MEETING

The Company's Board of Directors has nominated each of Regina E.
Herzlinger, J. Michael Losh, John C. Kane, John B. McCoy and Michael D.
O'Halleran to serve as a Director of the Company for a term of three years and
until his or her successor is duly elected and qualified. Each of Mrs.
Herzlinger and Messrs. Losh, Kane, McCoy and O'Halleran currently serves as a
Director of the Company. The Board of Directors recommends that the Company's
shareholders elect these nominees to serve as more fully described under
"Election of Directors" in this Proxy Statement.

PROPOSAL 2 - ADOPTION OF THE CARDINAL HEALTH, INC. EMPLOYEE STOCK PURCHASE PLAN
UNDER SECTION 423(b) OF THE INTERNAL REVENUE CODE

GENERAL

On August 11, 1999, the Company's Board of Directors adopted the
Cardinal Health, Inc. Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") under Section 423(b) of the Internal Revenue Code, subject to approval by
the Company's shareholders of the Employee Stock Purchase Plan. The purpose of
the Employee Stock Purchase Plan is to facilitate the purchase of Common Shares
by Eligible Employees (defined below). Under the Employee Stock Purchase Plan,
5,000,000 Common Shares will be available for issuance and sale, which may
consist of authorized but unissued shares, treasury shares, or shares purchased
by the Employee Stock Purchase Plan in the open market. The closing sales price
for a Common Share on September 20, 1999, on the New York Stock Exchange was
$52.50. If approved by the Company's shareholders, the Employee Stock Purchase
Plan will be effective from January 3, 2000, and will remain in effect until it
is terminated by action of the Company's Board of Directors. The Employee Stock
Purchase Plan is set forth as Annex A to this Proxy Statement.

ADMINISTRATION OF THE EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan will be administered by the Company's
Board of Directors, a designated committee thereof, or the persons or entity
delegated the responsibility of administering the Employee Stock Purchase Plan,
which initially will be the Cardinal Health, Inc. Profit Sharing and Retirement
Savings Plan Committee (the "Administrator"). Subject to the terms of the
Employee Stock Purchase Plan, the Administrator will have full and exclusive
discretionary authority to construe, interpret and apply the terms of the
Employee Stock Purchase Plan, to determine eligibility and to adopt rules and
regulations for carrying out the terms of the Employee Stock Purchase Plan.

16
<PAGE> 19

PURCHASE OF COMPANY COMMON SHARES UNDER THE EMPLOYEE STOCK PURCHASE PLAN

The Administrator of the Employee Stock Purchase Plan may designate one
or more Offering Periods (as defined in the Employee Stock Purchase Plan) during
each fiscal year of the Company. On the first day of each Offering Period, each
Participant (as defined in the Employee Stock Purchase Plan) will be granted an
option to purchase Common Shares under the Employee Stock Purchase Plan. Each
option granted will expire at the end of the Offering Period for which it was
granted. Shares purchased under the Employee Stock Purchase Plan will be held in
separate accounts for each Participant.

ELIGIBILITY FOR PARTICIPATION IN THE EMPLOYEE STOCK PURCHASE PLAN

All Eligible Employees of the Company and its Designated Subsidiaries
(as defined in the Employee Stock Purchase Plan) generally are eligible to
participate in the Employee Stock Purchase Plan. An Employee who otherwise is an
Eligible Employee of the Company and its Designated Subsidiaries will not be
entitled to purchase Shares under the Plan if (1) such purchase would cause such
Eligible Employee to own Common Shares representing 5% or more of the total
combined voting power or value of each class of stock of the Company or any
Subsidiary or (2) such purchase would cause such Eligible Employee to have
options to purchase more then $25,000 of Common Shares under the Plan for any
calendar year. "Eligible Employee" is defined in the Employee Stock Purchase
Plan as any Employee (as defined in the Employee Stock Purchase Plan) who (1)
has worked as an Employee of the Company or its Designated Subsidiaries at least
30 days and (2) is customarily employed at least 5 months of each calendar year
or is classified as a "PRN" or on-call Employee. The approximate number of
Eligible Employees as of September 15, 1999 was 20,000, which number is expected
to change over time.

EMPLOYEE STOCK PURCHASE PLAN BENEFITS

Participation in the Employee Stock Purchase Plan is voluntary. Each
Eligible Employee will make his or her own election whether and to what extent
to participate in the Employee Stock Purchase Plan. It is therefore not possible
to determine the benefit or amounts that will be received in the future by
individual employees or groups of employees under the Employee Stock Purchase
Plan. A Participant may authorize payroll withholdings of a maximum of 15% and a
minimum of 1% of base compensation. The fair market value of Common Shares which
may be purchased by any Eligible Employee during any calendar year may not
exceed $21,250. The purchase price for each Common Share purchased under the
Employee Stock Purchase Plan will be the lesser of (1) 85% of the Closing Value
(defined below) of a Common Share on the first Trading Day (as defined in the
Employee Stock Purchase Plan) of the applicable Offering Period, or the earliest
date thereafter as is administratively feasible, or (2) 85% of the Closing Value
of a Common Share on the last Trading Day of the Offering Period, or the
earliest date thereafter as is administratively feasible. "Closing Value", as of
a particular date, is defined in the Employee Stock Purchase Plan as the closing
sales price for a Common Share (or the closing bid price, if no sales were
reported) as quoted on the New York Stock Exchange for the last market trading
day prior to the date of determination as reported in THE WALL STREET JOURNAL or
such other source as the Administrator deems reliable.

CESSATION OF ACTIVE PARTICIPATION

A Participant in the Employee Stock Purchase Plan may, by giving notice
to the Administrator or Employer, revoke his or her authorization for payroll
deduction for the Offering Period in which such revocation is made. A
Participant who revokes authorization for payroll deduction may not again
participate under the Employee Stock Purchase Plan until the next Offering
Period immediately subsequent to the Offering Period during which the
Participant revoked payroll deduction authorization with respect thereto.
Separation from employment from the Company and its Designated Subsidiaries for
any reason will be treated automatically as a withdrawal from the Employee Stock
Purchase Plan.

17
<PAGE> 20

TERMINATION AND AMENDMENT OF THE EMPLOYEE STOCK PURCHASE PLAN

The Company's Board of Directors will have the right to amend, modify
or terminate the Employee Stock Purchase Plan without notice, provided, however,
that no Participant's existing options will be adversely affected by any such
amendment, modification or termination, except to comply with applicable law,
stock exchange rules or accounting rules. In any event, the Board will have the
right to terminate the Employee Stock Purchase Plan with respect to all future
payroll deductions and related purchases at any time. Such termination will also
terminate any then-current Offering Period.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of the general federal income tax
consequences to Participants and the Company of participation in the Employee
Stock Purchase Plan. This summary is not intended to be exhaustive and does not
describe foreign, state or local tax consequences, nor does it describe
consequences based on particular circumstances. For these reasons, each
Participant should consult with a tax advisor as to specific questions relating
to tax consequences of participation in the Employee Stock Purchase Plan.
Reference should be made to the specifics of the Employee Stock Purchase Plan
set forth in Annex A.

Under the proposed Employee Stock Purchase Plan, the option to purchase
Common Shares granted under the Employee Stock Purchase Plan will constitute an
option issued pursuant to an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code. If Common Shares are purchased
under the Employee Stock Purchase Plan, and no disposition of these Common
Shares is made within two years of the first day of the Offering Period for the
option, nor within one year after the last day of the Offering Period for that
option, then no income will be realized by the Participant at the time of the
transfer of the Common Shares to such Participant's Plan Account. In the event
of the death of a Participant while owning the Common Shares, no income will be
realized at the time of the transfer of the Common Shares to such Participant's
Plan Account. When a Participant sells or otherwise disposes of the Common
Shares, there will be included in such Participant's income, as compensation, an
amount equal to the lesser of (i) an amount equal to 15% of the fair market
value of the Common Shares on the first day of the applicable Offering Period,
or (ii) the amount by which the fair market value of the Common Shares at the
time of disposition or death exceeds the purchase price for the Common Shares.
Any additional gain would be treated for tax purposes as long-term capital gain,
provided that the Eligible Employee holds the Common Shares for the applicable
long-term capital gain holding period after the last day of the Offering Period
applicable to such Common Shares.

If a Participant disposes of the Common Shares within either the one-
or two- year period described above, such Participant would realize ordinary
income in the year of disposition in an amount equal to the difference between
the purchase price and the fair market value of the Common Shares on the last
day of the applicable Offering Period. Any difference between the amount
received upon such a disposition and the fair market value of the Common Shares
on the last day of the applicable Offering Period would be treated as a capital
gain or loss, as the case may be.

The Company is not allowed a deduction for federal income tax purposes
in connection with the grant or exercise of the option to purchase Common Shares
under the Employee Stock Purchase Plan, provided there is no disposition of
Common Shares by a Participant within either the one- or two- year period
described above. If such a disposition occurs within either of these two
periods, the Company will be entitled to a deduction in the same amount and at
the same time that the Participant realizes ordinary income.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of the holders of a majority of Common Shares
present or represented at the Annual Meeting is required for the approval of
this Proposal. Broker non-votes and abstentions will be treated as votes against
this Proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

18
<PAGE> 21

PROPOSAL 3 - RE-APPROVAL OF PERFORMANCE GOALS UNDER THE CARDINAL HEALTH, INC.
EQUITY INCENTIVE PLAN RELATING TO 162(m) OF THE INTERNAL REVENUE CODE

The Company's Board of Directors adopted the Cardinal Health, Inc.
Equity Incentive Plan in August 1995, and it was approved by the Company's
shareholders at the 1995 Annual Meeting of Shareholders. Subsequent amendments
were adopted by the Board and approved by the Company's shareholders at the 1998
Annual Meeting of Shareholders. In August 1999, the Board amended the Equity
Incentive Plan and restated it as the Amended and Restated Equity Incentive Plan
(the "Equity Incentive Plan"). The majority of such amendments to the Equity
Incentive Plan were effected as a result of changes to laws and regulations
applicable to the Equity Incentive Plan.

Under the terms of the Equity Incentive Plan, awards of options to
purchase Common Shares may be made to officers and other key employees of the
Company or its subsidiaries. The Equity Incentive Plan also provides for awards
of Common Shares which may be subject to certain vesting restrictions. Under the
Equity Incentive Plan, certain officers and key employees who also participate
in the Company's MIP may be eligible to receive all or a portion of their annual
incentive compensation under the MIP in Incentive Compensation Restricted Shares
(as defined in the Equity Incentive Plan). Performance Shares and Performance
Share Units (as each such term is defined in the Equity Incentive Plan) also may
be awarded under the Equity Incentive Plan to certain officers and other key
employees. To date, no Incentive Compensation Restricted Shares, Performance
Shares or Performance Share Units have been awarded under the Equity Incentive
Plan.

Section 162(m) of the Internal Revenue Code disallows a corporation's
federal income tax deduction for compensation to an executive who is a "covered
employee" (i.e., the CEO or one of the four top-paid other officers) in excess
of $1 million during the corporation's fiscal year. The $1 million deduction
limitation covers various types of compensation, including cash and stock
awards. However, certain types of compensation may be excluded from the $1
million calculation, including certain performance-based compensation. The
provisions of the Equity Incentive Plan, as currently in effect, governing
Performance Shares and Performance Share Units which may be awarded as described
above, are intended to comply with the guidelines established under Section
162(m) in order to preserve the Section 162(m) exception for such awards.

Under the Equity Incentive Plan as currently in effect, Performance
Shares and Performance Share Units are earned based upon the financial
performance of the Company or a business unit of the Company during a
performance period which will have a duration of at least one year in length,
but can extend over a number of years (a "Performance Period"). Performance
Shares are paid in the form of Common Shares; Performance Share Units are paid
in the form of cash. For each Performance Period, the Compensation Committee,
within such time as required by Section 162(m), establishes targets for certain
performance measures of the Company (and/or business units of the Company, if
applicable) for the Performance Period ("Performance Goals"). Performance Goals
include achievement of pre-established targets based upon either earnings or
return on capital. The extent to which the Performance Goals are satisfied
determines the number of Performance Shares or Performance Share Units, if any,
that each grantee earns. The Performance Goals may vary for different
Performance Periods and need not be the same for each Grantee receiving an award
for a Performance Period. The maximum number of Common Shares with respect to
which stock options, Performance Shares and Performance Share Units may be
granted to any single participant under the Equity Incentive Plan during any
single fiscal year of the Company is 375,000 Common Shares.

When the shareholders of the Company approved the Equity Incentive Plan
in 1995, they approved the material terms of the Performance Goals. The
regulations governing Section 162(m) generally require re-approval of the
material terms of the Performance Goals every five years. Therefore, shareholder
re-approval of the Performance Goals under the Equity Incentive Plan is being
sought currently in order for Performance Shares and Performance Share Units to
continue to be eligible for exemption from the Dollar Limitation imposed by
Section 162(m). If approval of this Proposal is not obtained, no future awards
of Performance Shares or Performance Share Units will be made after the
five-year period.

19
<PAGE> 22

VOTE REQUIRED FOR APPROVAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

SHAREHOLDER PROPOSALS

Any shareholder who intends to present a proposal for the
Company's 2000 Annual Meeting of Shareholders for inclusion in the proxy
statement and form of proxy relating to that meeting is advised that the
proposal must be received by the Company at its principal executive offices not
later than May 27, 2000. The Company will not be required to include in its
proxy statement a form of proxy or shareholder proposal which is received after
that date or which otherwise fails to meet the requirements for shareholder
proposals established by regulations of the Securities and Exchange Commission.

SELECTION OF INDEPENDENT AUDITORS

The Company and R.P. Scherer completed a merger on August 7, 1998. The
Company and Allegiance Corporation ("Allegiance") completed a merger on February
3, 1999. The Company has historically engaged Deloitte & Touche LLP ("D&T") as
its certifying accountant while R.P. Scherer has historically engaged Arthur
Andersen LLP ("AA") and Allegiance has historically engaged
PricewaterhouseCoopers LLP ("PWC") as their certifying accountants. For the
Company's fiscal year ended June 30, 1999, these certifying accountant
relationships were left intact, with D&T serving as the principal certifying
accountant, with reference in its audit opinion to work performed on R.P.
Scherer by AA and Allegiance by PWC. This was done to provide management with
sufficient time to conduct a diligent process to select one firm as the
certifying accountant for the merged entity. Selection of AA as the certifying
accountant was recommended to and approved by the Company's Audit Committee on
August 30, 1999.

The reports of D&T on the financial statements of the Company and PWC
on the financial statements of Allegiance for the past two fiscal years
contained no adverse opinion or disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope or accounting principles. In connection
with their audits for the two most recent fiscal years and through August 30,
1999, there have been no disagreements with D&T or PWC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
D&T or PWC would have caused them to make reference thereto in their reports on
the financial statements for such years. In addition, there were no reportable
events (as defined in SEC Regulation S-K, Item 304(a)(1)(v)) during the two most
recent fiscal years and through August 30, 1999.

The Company requested that D&T and PWC each furnish it with a letter
addressed to the SEC stating whether or not they agree with the above
statements. A copy of D&T's letter, dated September 2, 1999, is filed as Exhibit
16.01 to the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1999. A copy of PWC's letter, dated September 1, 1999, is filed as Exhibit
16.02 to that Form 10-K.

Representatives of AA and D&T are expected to be present at the Annual
Meeting, with the opportunity to make a statement about the Company's financial
condition, if they desire to do so, and to respond to appropriate questions from
shareholders.

20
<PAGE> 23

OTHER MATTERS

This solicitation of proxies is made by and on behalf of the Board of
Directors. The cost of the solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by Directors,
officers and employees of the Company in person or by telephone, telegraph, or
other means of communication. These persons will receive no additional
compensation for solicitation of proxies but may be reimbursed for reasonable
out-of-pocket expenses in connection with such solicitation. The Company has
retained MacKenzie Partners, Inc. at an estimated cost of $8,500, plus
reimbursement of expenses, to assist in its solicitation of proxies from
brokers, nominees, institutions and individuals. Arrangements will also be made
by the Company with custodians, nominees, and fiduciaries for forwarding of
proxy solicitation materials to beneficial owners of shares held of record by
such custodians, nominees and fiduciaries, and the Company will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.

If the enclosed proxy is executed and returned, or a proxy is voted by
telephone or internet, the Common Shares represented thereby will be voted in
accordance with any specifications made by the shareholder. In the absence of
any such specification, such proxies will be voted FOR adoption of the Cardinal
Health, Inc. Employee Stock Purchase Plan pursuant to Section 423(b) of the
Internal Revenue Code and FOR re-approval of the Performance Goals under the
Cardinal Health, Inc. Equity Incentive Plan relating to Section 162(m) of the
Internal Revenue Code. With respect to the election of Directors, proxies
returned without specifications made by the shareholder will be voted to elect
five Directors as set forth under "Election of Directors" above. Although
management does not presently anticipate cumulating votes pursuant to proxies it
obtains as a result of this solicitation, it reserves the right to cumulate such
votes and vote for less than all of the Director nominees named herein.

The presence of any shareholder at the Annual Meeting will not operate
to revoke his or her proxy. A proxy may be revoked at any time insofar as it has
not been exercised by giving written notice to the Company or in open meeting or
by executing and forwarding a later-dated proxy to the Company or voting a later
proxy by telephone or internet.

If any other matters shall properly come before the Annual Meeting, the
persons named in the proxy, or their substitutes, will vote thereon in
accordance with their judgment. The Board of Directors does not know of any
other matters which will be presented for action at the Annual Meeting.

By order of the Board of Directors.

/s/ Steven Alan Bennett

September 21, 1999 STEVEN ALAN BENNETT, Secretary

21
<PAGE> 24

ANNEX A

CARDINAL HEALTH, INC.
EMPLOYEE STOCK PURCHASE PLAN

SECTION 1 - PURPOSE
-------------------

The Cardinal Health, Inc. Employee Stock Purchase Plan is adopted and
established by Cardinal Health, Inc., an Ohio corporation, on the date set forth
below, effective as of January 3, 2000, for the general benefit of the Employees
of the Company and of certain of its Subsidiaries. The purpose of the Plan is to
facilitate the purchase of Shares by Eligible Employees.

SECTION 2 - DEFINITIONS
-----------------------

a. "ACT" shall mean the Securities Act of 1933, as amended.

b. "ADMINISTRATOR" shall mean the Board of Directors of the Company, a
designated committee thereof, or the person(s) or entity delegated the
responsibility of administering the Plan, which initially shall be the
Cardinal Health, Inc. Profit Sharing and Retirement Savings Plan
Committee.

c. "AGENT" shall mean the bank, brokerage firm, financial institution, or
other entity or person(s) engaged, retained or appointed to act as the
agent of the Employer and of the Participants under the Plan, which
initially shall be Merrill Lynch, Pierce, Fenner, & Smith, Inc.

d. "BOARD" shall mean the Board of Directors of the Company.

e. "CLOSING VALUE" shall mean, as of a particular date, the value of a
Share determined by the closing sales price for such Share (or the
closing bid, if no sales were reported) as quoted on The New York Stock
Exchange for the last market trading day prior to the date of
determination, as reported in THE WALL STREET JOURNAL or such other
source as the Administrator deems reliable.

f. "CODE" shall mean the Internal Revenue Code of 1986, as amended and
currently in effect, or any successor body of federal tax law.

g. "COMPANY" shall mean Cardinal Health, Inc., including any successor
thereto.

h. "COMPENSATION" shall mean wages, salaries, fees for professional
service and other amounts received for personal services actually
rendered in the course of employment with the Employer (including, but
not limited to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses) including amounts excludible from the
Employee's gross income under Code Section 402(a)(8) (relating to a
Code Section 401(k) arrangement), Code Section 402(h) (relating to a
Simplified Employee Pension), Code Section 125 (relating to a cafeteria
plan) or Code Section 403(b) (relating to a tax-sheltered annuity) and
compensation paid by the Employer to an Employee through another person
under the common paymaster provisions of Code Sections 3121(s) and
3306(p). Compensation does not include: (1) amounts realized from the
exercise of a non-qualified stock option, or when restricted stock (or
property) held by an Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture, (2) amounts
realized from the sale, exchange, or other disposition of stock
acquired under a qualified stock option, (3) moving allowances,
automobile allowances, tuition reimbursement, financial/tax planning
reimbursement, other extraordinary compensation, including tax
"gross-up" payments, and imputed income from other employer-provided
benefits, and (4) other amounts that receive special tax benefits, such
as premiums for

- --------------------------------------------------------------------------------
Annex A Page 1
<PAGE> 25

group term life insurance or contributions made by the Employer
(whether or not under salary reduction agreement) towards the purchase
of an annuity contract described in Code Section 403(b) (whether or not
the contributions are excludible from the gross income of the
Employee), other than amounts described above.

i. "DESIGNATED SUBSIDIARIES" shall mean all Subsidiaries whose Employees
have been designated by the Administrator, in its sole discretion, as
eligible to participate in the Plan.

j. "ELIGIBLE EMPLOYEE" means any Employee who (1) has worked as an
employee of an Employer for at least thirty (30) days and (2) is
customarily employed for at least five (5) months each calendar year or
who is classified as a "PRN" or on-call Employee.

k. "EMPLOYEE" means any person who performs services as a common law
employee of an Employer, and does not include "leased employees," as
that term is defined under Code Section 414(n), or other individuals
providing services to an Employer in a capacity as an independent
contractor.

l. "EMPLOYER" means, individually and collectively, the Company and the
Designated Subsidiaries.

m. "ENROLLMENT PERIOD" shall mean the period immediately preceding the
Offering Period that is designated by the Administrator in its
discretion as the period during which an Eligible Employee may elect to
participate in the Plan.

n. "OFFERING PERIOD" shall mean the period during which Participants in
the Plan authorize payroll deductions to fund the purchase of Shares on
their behalf under the Plan pursuant to the options granted to them
hereunder.

o. "PARTICIPANT" means any Eligible Employee who has elected to
participate in the Plan for an Offering Period by authorizing payroll
deductions and following all applicable procedures established by the
Administrator during the Enrollment Period for such Offering Period.

p. "PLAN" shall mean this Cardinal Health, Inc. Employee Stock Purchase
Plan.

q. "PLAN ACCOUNT" shall mean the individual account established by the
Agent for each Participant for purposes of accounting for and/or
holding each Participant's payroll deductions, Shares, etc.

r. "PLAN YEAR" shall mean the fiscal year of the Company.

s. "PURCHASE PRICE" shall mean, for each Share purchased in accordance
with Section 4 hereof, an amount equal to the lesser of (1) eighty-five
percent (85%) of the Closing Value of a Share on the first Trading Day
of each Offering Period, or the earliest date thereafter as is
administratively feasible (which for Plan purposes shall be deemed to
be the date the option to purchase such Shares was granted to each
Eligible Employee who is, or elects to become, a Participant); or (2)
eighty-five percent (85%) of the Closing Value of such Share on the
last Trading Day of the Offering Period, or the earliest date
thereafter as is administratively feasible (which for Plan purposes
shall be deemed to be the date each such option to purchase such Shares
was exercised).

t. "SHARES" means the Class A common shares, without par value, of the
Company.

u. "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than fifty percent (50%) of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or
is hereafter organized or acquired by the Company or a Subsidiary (or
as otherwise may be defined in Code Section 424).

- --------------------------------------------------------------------------------
Annex A Page 2
<PAGE> 26

v. "TRADING DAY" shall mean a day on which national stock exchanges and
The New York Stock Exchange are open for trading.

SECTION 3 - ELIGIBLE EMPLOYEES
------------------------------

a. IN GENERAL. Participation in the Plan is voluntary. All
Eligible Employees of an Employer are eligible to participate in the Plan. All
Eligible Employees granted options to purchase Shares hereunder shall have the
same rights and privileges as every other such Eligible Employee, and only
Eligible Employees of an Employer satisfying the applicable requirements of the
Plan will be entitled to be granted options hereunder.

b. LIMITATIONS ON RIGHTS. An Employee who otherwise is an
Eligible Employee shall not be entitled to purchase Shares under the Plan if:
(1) such purchase would cause such Eligible Employee to own Shares (including
any Shares which would be owned if such Eligible Employee purchased all of the
Shares made available for purchase by such Eligible Employee under all options
or rights then held by such Eligible Employee, whether or not then exercisable)
representing five percent (5%) or more of the total combined voting power or
value of each class of stock of the Company or any Subsidiary; or (2) such
purchase would cause such Eligible Employee to have options or rights to
purchase more than $25,000 of Shares under the Plan (and under all other
employee stock purchase plans of the Company and its Subsidiary corporations
which qualify for treatment under Section 423 of the Code) for any calendar year
in which such rights are outstanding (based on the Closing Value of such Shares,
determined as of the date such rights are granted and can first be exercised
hereunder). For purposes of clause (1) of this subsection b., the attribution
rules set forth in Section 424(d) of the Code and related regulations shall
apply.

SECTION 4 - ENROLLMENT AND OFFERING PERIODS
-------------------------------------------

a. ENROLLING IN THE PLAN. To participate in the Plan, an
Eligible Employee must enroll in the Plan. Enrollment for a given Offering
Period will take place during the Enrollment Period for such Offering Period.
The Administrator shall designate the initial Enrollment Period and each
subsequent Enrollment Period and the Offering Period to which each Enrollment
Period relates. Participation in the Plan with respect to any one or more of the
Offering Periods shall neither limit nor require participation in the Plan for
any other Offering Period.

b. THE OFFERING PERIOD. Any Employee who is an Eligible
Employee and who desires to be granted options to purchase Shares hereunder must
enroll in accordance with the procedures established by the Administrator during
an Enrollment Period. Such authorization shall be effective for the Offering
Period immediately following such Enrollment Period. The duration of an Offering
Period shall be determined by the Administrator prior to the Enrollment Period
and shall commence on the first day (or the First Trading Day) of the Offering
Period and end on the last day (or the last Trading Day) of the Offering Period;
provided, however, that if the Administrator terminates the Plan during an
Offering Period, pursuant to its authority in Section 17 of the Plan, such
Offering Period shall be deemed to end on the date the Plan is terminated. The
termination of the Plan and the Offering Period shall end the Participant's
rights to contribute amounts to the Plan or continue participation in the
Offering Period. The date of termination of the Plan shall be deemed to be the
final day of the Offering Period for purposes of determining the Purchase Price
under the Offering Period and all amounts contributed during the Offering Period
will be used as of such termination date to purchase Shares in accordance with
the general provisions of Section 9.

The Administrator may designate one or more Offering Periods
during each Plan Year during the term of this Plan. On the first day (or the
First Trading Day) of each Offering Period, each Participant shall be granted an
option to purchase Shares under the Plan. Each option granted hereunder shall
expire at the end of the Offering Period for which it was granted. In no event
may an option granted hereunder be exercised after the expiration of 27 months
from the date of grant.

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Annex A Page 3
<PAGE> 27

c. CHANGING ENROLLMENT. The offering of Shares pursuant to
options granted hereunder the Plan shall occur only during an Offering Period
and shall be made only to Participants. Once an Eligible Employee is enrolled in
the Plan, the Administrator or Employer will inform the Agent of such fact. Once
enrolled, a Participant shall continue to participate in the Plan for each
succeeding Offering Period until he or she terminates his or her participation
by revoking his or her payroll deduction authorization or ceases to be an
Eligible Employee. Once a Participant has elected to participate under the Plan,
that Participant's payroll deduction authorization shall apply to all subsequent
Offering Periods unless and until the Participant ceases to be an Eligible
Employee, or modifies or terminates said authorization. If a Participant desires
to change his or her rate of contribution, he or she may do so effective for the
next Offering Period by following the procedures established by the
Administrator during the Enrollment Period immediately preceding such Offering
Period.

SECTION 5 - TERM OF PLAN
------------------------

This Plan shall be in effect from January 3, 2000, until it is
terminated by action of the Board.

SECTION 6 - NUMBER OF SHARES TO BE MADE AVAILABLE
-------------------------------------------------

Subject to adjustment as provided in Section 16 hereof, the
total number of Shares made available for purchase by Participants granted
options which are exercised under Section 9 hereof is 5,000,000, which may
consist of authorized but unissued shares, treasury shares, or shares purchased
by the Plan in the open market. The provisions of Section 9 b. shall control in
the event the number of Shares covered by options which are exercised for any
Offering Period exceeds the number of Shares available for sale under the Plan.
If all of the Shares authorized for sale under the Plan have been sold, the Plan
shall either be continued through additional authorizations of Shares made by
the Board (such authorizations must, however, comply with Section 17 hereof), or
shall be terminated in accordance with Section 17 hereof.

SECTION 7 - USE OF FUNDS
------------------------

All payroll deductions received or held by an Employer under
the Plan may be used by the Employer for any corporate purpose, and the Employer
shall not be obligated to segregate such payroll deductions. Any amounts held by
an Employer or other party holding amounts in connection with or as a result of
payroll withholding made pursuant to the Plan and pending the purchase of Shares
hereunder shall be considered a non-interest-bearing, unsecured indebtedness
extended to the Employer or other party by the Participants. Administrative
expenses of the Plan shall be allocated to each Participant's Plan Account
unless such expenses are paid by the Employer.

SECTION 8 - AMOUNT OF CONTRIBUTION; METHOD OF PAYMENT
-----------------------------------------------------

a. PAYROLL WITHHOLDING. Except as otherwise specifically
provided herein, the Purchase Price will be payable by each Participant by means
of payroll withholding. The withholding shall be in increments of one percent
(1%). The minimum withholding permitted shall be an amount equal to one percent
(1%) of a Participant's Compensation and the maximum withholding shall be an
amount equal to fifteen percent (15%) of a Participant's Compensation. In any
event, the total withholding permitted to be made by any Participant for a
calendar year shall be limited to the sum of $21,250. The actual percentage of
Compensation to be deducted shall be specified by a Participant in his or her
authorization for payroll withholding. Participants may not deposit any separate
cash payments into their Plan Accounts.

b. APPLICATION OF WITHHOLDING RULES. Payroll withholding will
commence with the first paycheck issued during the Offering Period and will,
except as otherwise provided herein, continue with each paycheck throughout the
entire Offering Period, except for pay periods for which such Participant
receives no compensation (e.g., uncompensated personal leave, leave of absence).
A pay period which ends at such time that it is administratively impracticable
to credit any paycheck for such pay period to the then-current Offering Period
will be credited in its entirety to the immediately subsequent Offering Period.
A pay period which overlaps Offering Periods will be credited in its entirety to
the Offering Period in which it is paid. Payroll withholding shall

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Annex A Page 4
<PAGE> 28

be retained by the Employer or other party responsible for making such payment
to the Participant, until applied to the purchase of Shares as described in
Section 9 and the satisfaction of any related federal, state or local
withholding obligations (including any employment tax obligations).

At the time the Shares are purchased, or at the time some or
all of the Shares issued under the Plan are disposed of, Participants must make
adequate provision for the Employer's federal, state, local or other tax
withholding obligations (including employment taxes), if any, which arise upon
the purchase or disposition of the Shares. At any time, the Employer may, but
shall not be obligated to, withhold from each Participant's Compensation the
amount necessary for the Employer to meet applicable withholding obligations,
including any withholding required to make available to the Employer any tax
deductions or benefits attributable to the sale or early disposition of Shares
by the Participant. Each Participant, as a condition of participating under the
Plan, agrees to bear responsibility for all federal, state, and local income
taxes required to be withheld from his or her Compensation as well as the
Participant's portion of FICA (both the OASDI and Medicare components) with
respect to any Compensation arising on account of the purchase or disposition of
Shares. The Employer may increase income and/or employment tax withholding on a
Participant's Compensation after the purchase or disposition of Shares in order
to comply with federal, state and local tax laws, and each Participant agrees to
sign any and all appropriate documents to facilitate such withholding.

SECTION 9 - PURCHASING, TRANSFERRING SHARES
-------------------------------------------

a. MAINTENANCE OF PLAN ACCOUNT. Upon the exercise of a
Participant's initial option to purchase Shares under the Plan, the Agent shall
establish a Plan Account in the name of such Participant. At the close of each
Offering Period, the aggregate amount deducted during such Offering Period by
the Employer from a Participant's Compensation (and credited to a
non-interest-bearing account maintained by the Employer or other party for
bookkeeping purposes) will be communicated by the Employer to the Agent and
shall thereupon be credited by the Agent to such Participant's Account (unless
the Participant has given notice to the Administrator of his or her revocation
of authorization prior to the date such communication is made). As of the last
day of each Offering Period, or as soon thereafter as is administratively
practicable, each Participant's option to purchase Shares will be exercised
automatically for him or her by the Agent with respect to those amounts reported
to the Agent by the Administrator or Employer as creditable to that
Participant's Plan Account. On the date of exercise, the amount then credited to
the Participant's Plan Account for the purpose of purchasing Shares hereunder
will be divided by the Purchase Price and there shall be transferred to the
Participant's Plan Account by the Agent the number of full and fractional shares
which results.

The Agent shall hold in its name, or in the name of its
nominee, all Shares so purchased and allocated. No certificate will be issued to
a Participant for Shares held in his or her Plan Account unless he or she so
requests in writing or unless such Participant's active participation in the
Plan is terminated due to death, disability, separation from service or
retirement. Notwithstanding any provision herein to the contrary, no
certificates shall be issued for Shares until such Shares have been held in the
Participant's Plan Account for a period of at least 24 months following the date
of exercise of the option to purchase such Shares.

b. INSUFFICIENT NUMBER OF AVAILABLE SHARES. In the event the
number of Shares covered by options which are exercised for any Offering Period
exceeds the number of Shares available for sale under the Plan, the number of
Shares actually available for sale hereunder shall be limited to the remaining
number of Shares authorized for sale under the Plan and shall be allocated by
the Agent among the Participants in proportion to each Participant's
Compensation during the Offering Period over the total Compensation of all
Participants during the Offering Period. Any excess amounts withheld and
credited to Participants' Accounts then shall be returned to the Participants as
soon as is administratively practicable.

c. HANDLING EXCESS SHARES. In the event that the number of
Shares which would be credited to any Participant's Plan Account in any Offering
Period exceeds the limit specified in Section 3 b. hereof, such Participant's
Account shall be credited with the maximum number of Shares permissible, and the
remaining amounts will be refunded in cash as soon as administratively
practicable.

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Annex A Page 5
<PAGE> 29

d. STATUS REPORTS. Statements of each Participant's Plan
Account shall be given to participating Employees at least annually.

SECTION 10 - DIVIDENDS AND OTHER DISTRIBUTIONS
----------------------------------------------

a. REINVESTMENT OF DIVIDENDS. Cash dividends and other cash
distributions received by the Agent on Shares held in its custody hereunder will
be credited to the Plan Accounts of individual Participants in accordance with
such Participants' interests in the Shares with respect to which such dividends
or distributions are paid or made, and will be applied, as soon as practical
after the receipt thereof by the Agent, to the purchase in the open market at
prevailing market prices of the number of whole Shares capable of being
purchased with such funds (after deduction of any bank service fees, brokerage
charges, transfer taxes, and any other transaction fee, expense or cost payable
in connection with the purchase of such Shares and not otherwise paid by the
Employer).

b. SHARES TO BE HELD IN AGENT'S NAME. All purchases of Shares
made pursuant to this Section will be made in the name of the Agent or its
nominee, shall be held as provided in Section 9 hereof, and shall be transferred
and credited to the Plan Account(s) of the individual Participant(s) to which
such dividends or other distributions were credited. Dividends paid in the form
of Shares will be allocated by the Agent, as and when received, with respect to
Shares held in its custody hereunder to the Plan Accounts of individual
Participants in accordance with such Participants' interests in such Shares with
respect to which such dividends were paid. Property, other than Shares or cash,
received by the Agent as a distribution on Shares held in its custody hereunder,
shall be sold by the Agent for the accounts of the Participants, and the Agent
shall treat the proceeds of such sale in the same manner as cash dividends
received by the Agent on Shares held in its custody hereunder.

c. TAX RESPONSIBILITIES. The automatic reinvestment of
dividends under the Plan will not relieve a Participant (or Eligible Employee
with a Plan Account) of any income or other tax that may be due on or with
respect to such dividends. The Agent shall report to each Participant (or
Eligible Employee with a Plan Account) the amount of dividends credited to his
or her Plan Account.

SECTION 11 - VOTING OF SHARES
-----------------------------

A Participant shall have no interest or voting right in the
Shares covered by his or her option until such option has been exercised. Shares
held for a Participant (or Eligible Employee with a Plan Account) in his or her
Plan Account will be voted in accordance with the Participant's (or Eligible
Employee's) express directions. In the absence of any such directions, such
Shares will not be voted.

SECTION 12 - IN-SERVICE DISTRIBUTION OR SALE OF SHARES
------------------------------------------------------

a. SALE OF SHARES. Subject to the provisions of Section 19, a
Participant may at any time, and without withdrawing from the Plan, by giving
notice to the Agent, direct the Agent to sell all or part of the Shares held on
behalf of the Participant. Upon receipt of such a notice, the Agent shall, as
soon as practicable after receipt of such notice, sell such Shares in the
marketplace at the prevailing market price and transmit the net proceeds of such
sale (less any bank service fees, brokerage charges, transfer taxes, and any
other transaction fee, expense or cost) to the Participant.

b. IN-SERVICE SHARE DISTRIBUTIONS. A Participant may, without
withdrawing from the Plan, request that a certificate for all or part of the
full Shares held in his or her Plan Account be sent to him or her after the
relevant Shares have been purchased and allocated SUBJECT TO THE REQUIREMENT
THAT SUCH SHARES BE HELD IN THE PARTICIPANT'S PLAN ACCOUNT FOR A PERIOD OF AT
LEAST 24 MONTHS AFTER THE DATE OF EXERCISE, AS DESCRIBED IN SECTION 9 a., above.
All such requests must be submitted in writing to the Agent. No certificate for
a fractional Share will be issued; the fair value of fractional Shares on the
date of withdrawal of all Shares credited to a Participant's Plan Account shall
be paid in cash to such Participant. The Plan may impose a reasonable charge, to
be paid by the Participant, for each stock certificate so issued prior to the
date active participation in the Plan ceases; such charge shall be paid by the
Participant to the Administrator or Employer prior to the date any distribution
of a certificate evidencing ownership of such Shares occurs.

- --------------------------------------------------------------------------------
Annex A Page 6
<PAGE> 30

SECTION 13 - CESSATION OF ACTIVE PARTICIPATION
----------------------------------------------

A Participant may at any time, by giving notice to the
Administrator or Employer, revoke his or her authorization for payroll deduction
for the Offering Period in which such revocation is made. A PARTICIPANT WHO
REVOKES AUTHORIZATION FOR PAYROLL DEDUCTION MAY NOT AGAIN PARTICIPATE UNDER THE
PLAN UNTIL THE NEXT OFFERING PERIOD IMMEDIATELY SUBSEQUENT TO THE OFFERING
PERIOD DURING WHICH THE PARTICIPANT REVOKED PAYROLL DEDUCTION AUTHORIZATION WITH
RESPECT THERETO.

SECTION 14 - SEPARATION FROM EMPLOYMENT
---------------------------------------

Separation from employment for any reason, including death,
disability, termination or retirement shall be treated automatically as a
withdrawal from the Plan.

SECTION 15 - ASSIGNMENT
-----------------------

Neither payroll deductions credited to a Participant's Plan
Account nor any rights with regard to options or Shares held under the Plan may
be assigned, alienated, transferred, pledged, or otherwise disposed of in any
way by a Participant other than by will or the laws of descent and distribution.
Any such assignment, alienation, transfer, pledge, or other disposition shall be
without effect, except that the Administrator may treat such act as an election
to withdraw from the Plan. A Participant's right to purchase Shares under this
Plan may be exercisable during the Participant's lifetime only by the
Participant. A Participant's Plan Account shall be payable to the Participant's
estate upon his or her death.

SECTION 16 - ADJUSTMENT OF AND CHANGES IN SHARES
------------------------------------------------

If at any time after the effective date of the Plan the
Company shall subdivide or reclassify the Shares which have been or may be
optioned under the Plan, or shall declare thereon any stock split or dividend
payable in Shares, or shall alter the capital structure of the Shares or the
Company in any similar manner, then the number and class of shares held in the
Plan and which may thereafter be optioned (in the aggregate and to any
Participant) shall be adjusted accordingly, and in the case of each option
outstanding at the time of any such action, the number and class of shares which
may thereafter be purchased pursuant to such option and the Purchase Price shall
be adjusted accordingly, as necessary to preserve the rights of the holder(s) of
such Shares and option(s).

SECTION 17 - AMENDMENT OR TERMINATION OF THE PLAN
-------------------------------------------------

The Board shall have the right, at any time, to amend, modify
or terminate the Plan without notice; provided, however, that no Participant's
existing options shall be adversely affected by any such amendment, modification
or termination, except to comply with applicable law, stock exchange rules or
accounting rules. Notwithstanding the foregoing, the Board shall have the right
to terminate the Plan with respect to all future payroll deductions and related
purchases at any time. Such termination of the Plan shall also terminate any
current Offering Period in accordance with Section 4 of the Plan.

Designations of participating corporations may be made from
time to time from among a group of corporations consisting of the Employer, its
parent and its Subsidiaries (including corporations that become Subsidiaries or
a parent after the adoption and approval of the Plan).

SECTION 18 - ADMINISTRATION
---------------------------

a. ADMINISTRATION. The Plan shall be administered by the
Administrator. The Administrator shall be responsible for the administration of
all matters under the Plan which have not been delegated to the Agent. The
Administrator shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Any rule or regulation
adopted by the Administrator shall remain in full force and effect unless and
until altered, amended or repealed by the Administrator.

- --------------------------------------------------------------------------------
Annex A Page 7
<PAGE> 31

b. Specific Responsibilities. The Administrator's
responsibilities shall include, but shall not be limited to:

(1) interpreting the Plan (including issues relating
to the definition and application of "Compensation");

(2) identifying and compiling a list of persons who
are Eligible Employees for an Offering Period; and

(3) identifying those Eligible Employees not entitled
to be granted options or other rights for an Offering
Period on account of the limitations described in
Section 3 b. hereof.

The Administrator may from time to time adopt rules and regulations for carrying
out the terms of the Plan. Interpretation or construction of any provision of
the Plan by the Administrator shall be final and conclusive on all persons,
absent specific and contrary action taken by the Board. Any interpretation or
construction of any provision of the Plan by the Board shall be final and
conclusive.

SECTION 19 - SECURITIES LAW RESTRICTIONS
----------------------------------------

Notwithstanding any provision of the Plan to the contrary, no
payroll deductions shall take place and no Shares may be purchased under the
Plan until a registration statement has been filed and become effective with
respect to the issuance of the Shares covered by the Plan under the Act. Prior
to the effectiveness of such registration statement, Shares subject to purchase
under the Plan may be offered to Eligible Employees only pursuant to an
exemption from the registration requirements of the Act.

SECTION 20 - NO INDEPENDENT EMPLOYEE'S RIGHTS
---------------------------------------------

Nothing in the Plan shall be construed to be a contract of
employment between an Employer or Subsidiary and any Employee, or any group or
category of Employees (whether for a definite or specific duration or
otherwise), or to prevent the Employer, its parent or any Subsidiary from
terminating any Employee's employment at any time, without notice or recompense.
No Employee shall have any rights as a shareholder until the option to purchase
Shares, granted to him or her hereunder, has been exercised.

SECTION 21 - APPLICABLE LAW
---------------------------

The Plan shall be construed, administered and governed in all
respects under the laws of the State of Ohio to the extent such laws are not
preempted or controlled by federal law.

SECTION 22 - MERGER OR CONSOLIDATION
------------------------------------

If the Company shall at any time merge into or consolidate
with another corporation or business entity, each Participant will thereafter be
entitled to receive at the end of the Offering Period (during which such merger
or consolidation occurs) the securities or property which a holder of Shares was
entitled to upon and at the time of such merger or consolidation. A sale of all
or substantially all of the assets of the Company shall be deemed a merger or
consolidation for the foregoing purposes.

- --------------------------------------------------------------------------------
Annex A Page 8

<PAGE> 32
[LOGO]
CARDINAL
HEALTH, INC.

CARDINAL HEALTH, INC.
7000 CARDINAL PLACE
DUBLIN, OHIO 43017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints John F. Finn, Robert L. Gerbig and Carl A.
Spalding, and each of them, the attorneys and proxies of the undersigned with
full power of substitution to vote as indicated herein, all the common shares,
without par value, of Cardinal Health, Inc. held of record by the undersigned on
September 15, 1999, at the annual meeting of shareholders to be held on November
3, 1999, or any postponements or adjournments thereof, with all the powers the
undersigned would possess if then and there personally present.

[PERFORATION]

[THE TEXT SET FORTH BELOW IS NOT PART OF THE PROXY]

FOLD AND DETACH HERE

ALL SHAREHOLDERS ARE URGED TO VOTE THEIR PROXY AS EARLY AS POSSIBLE.

PARTICIPANTS HOLDING SHARES THROUGH ANY OF THE COMPANY'S
EMPLOYEE BENEFIT PLANS ARE URGED TO VOTE THEIR SHARES
NO LATER THAN FRIDAY, OCTOBER 29, 1999 IN ORDER TO
ENSURE COMPLETE VOTING BY THE APPLICABLE PLAN ADMINISTRATOR.

PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING
YOUR PROXY BY TELEPHONE OR INTERNET.
<PAGE> 33
[X] Please mark your votes as in this example.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE SHAREHOLDER.
IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED TO ELECT THE NOMINEES
DESCRIBED IN ITEM 1 ABOVE, FOR PROPOSALS 2 AND 3, AND WITH DISCRETIONARY
AUTHORITY ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.

1. [ ] FOR all nominees listed (except as marked to the contrary) or [ ]
WITHHOLD AUTHORITY (to vote for all nominees listed):

01 Regina E. Herzlinger, 02 John C. Kane, 03 J. Michael Losh, 04
John B. McCoy, 05 Michael D. O'Halleran

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)

2. [ ] FOR or [ ] AGAINST or [ ] ABSTAIN -- Proposal to adopt the Cardinal
Health, Inc. Employee Stock Purchase Plan pursuant to Section 423(b) of the
Internal Revenue Code.

3. [ ] FOR or [ ] AGAINST or [ ] ABSTAIN -- Proposal to re-approve Performance
Goals under the Cardinal Health, Inc. Equity Incentive Plan relating to
Section 162(m) of the Internal Revenue Code.

By returning this proxy card you are conferring upon management the authority to
vote in their discretion upon such other business as may properly come before
the meeting or any postponement or adjournment thereof.

Receipt of Notice of Annual Meeting of Shareholders and the related Proxy
Statement is hereby acknowledged.

Please sign as your name appears
hereon. If shares are held
jointly, all holders should sign.
When signing as attorney,
executor, administrator, trustee
or guardian, please give your
full title. If a corporation,
please sign in full corporate
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person, indicating where proper,
official position or
representative capacity.

---------------------------------

, 1999
---------------------------
Signature(s) Date

[PERFORATION]

[THE TEXT SET FORTH BELOW IS NOT PART OF THE PROXY]

FOLD AND DETACH HERE

[LOGO]
CARDINAL
HEALTH, INC.

Dear Shareholder:

We encourage you to take advantage of two new and convenient ways by which you
can vote your shares. You can vote your shares electronically by telephone or
via the Internet, which eliminates the need to return the proxy card.

VOTE BY TELEPHONE: To vote your shares by telephone, use a touch-tone telephone
and call the following toll-free number: 1-877-PRX-VOTE, 24 hours a day, 7 days
a week. Insert the Control Number printed in the box above, just below the
perforation. Follow the simple recorded instructions.

VOTE BY INTERNET: To vote via the Internet, go to web site
WWW.EPROXYVOTE.COM.CAH. Insert the Control Number printed in the box above, just
below the perforation, and then follow the simple instructions. Please be aware
that if you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be responsible.

The Internet and telephone voting facilities will be available until midnight on
November 2, 1999, the day before the Annual Meeting.

DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET