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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9626
MCKESSON CORPORATION
A DELAWARE CORPORATION I.R.S. EMPLOYER NUMBER 94-3040479
MCKESSON PLAZA, ONE POST STREET, SAN FRANCISCO, CA 94104
TELEPHONE--AREA CODE (415) 983-8300
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
(NAME OF EACH EXCHANGE
(TITLE OF EACH CLASS) ON WHICH REGISTERED)
--------------------- ----------------------
<S> <C>
Common Stock, $2 par value New York Stock Exchange
Pacific Stock Exchange
Cumulative Preferred Stock New York Stock Exchange
(Convertible), $35 par value; Pacific Stock Exchange
$1.80 Series A
6% Convertible Subordinated De- New York Stock Exchange
bentures Due June 15, 1994
4.5% Exchangeable Subordinated Nasdaq Stock Market
Debentures Due 2004
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: NONE.
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NONAFFILIATES OF THE
REGISTRANT AT JUNE 1, 1994: $3,023,397,973
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT JUNE 1, 1994: 40,695,417
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE APPENDIX TO THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JULY 27, 1994 ARE INCORPORATED BY
REFERENCE INTO PARTS I AND II OF THIS REPORT. PORTIONS OF THE REGISTRANT'S
PROXY STATEMENT FOR SAID MEETING ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS REPORT.
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TABLE OF CONTENTS
PART I
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ITEM PAGE
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1. Business............................................... 1
2. Properties............................................. 4
3. Legal Proceedings...................................... 5
4. Submission of Matters to a Vote of Security Holders.... 6
Executive Officers of the Registrant................... 7
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters.................................. 9
6. Selected Financial Data................................ 9
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 9
8. Financial Statements and Supplementary Data............ 9
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. 9
PART III
10. Directors and Executive Officers of the Registrant..... 10
11. Executive Compensation................................. 10
12. Security Ownership of Certain Beneficial Owners and
Management........................................... 10
13. Certain Relationships and Related Transactions......... 10
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.......................................... 11
Signatures............................................. 12
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
In fiscal 1994, the Company consummated several transactions reflecting its
increased focus on health care.
The Company's capabilities in managed health care were expanded through
acquisitions. In April 1993, the Company acquired Clinical Pharmaceuticals, Inc.
("CPI"), an administrator of clinically based managed prescription drug benefit
programs. In December 1993, the Company acquired interests in Technology
Assessment Group ("TAG"), a consulting firm specializing in health outcomes
assessment, and Integrated Medical Systems ("IMS"), a developer of community
medical information systems. IMS's networks link physicians with other health
care providers, managed care organizations and health plan sponsors.
In April 1993, the Company acquired a 22.7% interest in Nadro S.A. de C.V.
("Nadro"). Nadro is the leading pharmaceutical wholesale distributor in Mexico.
At the same time, the Company received an option to acquire an additional 9% of
Nadro's common stock.
The Company's plan is to make its majority-owned subsidiary, Armor All
Products Corporation ("Armor All") an independent entity over time. In the first
quarter of fiscal 1994, the Company sold to the public 5,175,000 shares and
donated to the McKesson Foundation 250,000 shares of common stock of Armor All.
A pre-tax gain of $55.1 million was recorded on the sale and contribution of
these shares. The shares donated to the McKesson Foundation had a market value
of $4.3 million. These transactions reduced the Company's equity interest in
Armor All from 83% to 57%. In addition, in March, 1994, the Company sold $180
million of subordinated debentures that are exchangeable, at the option of the
holders, into 6.9 million additional shares of Armor All common stock owned by
the Company. If all of the debentures were exchanged, McKesson's ownership
interest in Armor All would be reduced to approximately 24%.
Developments which could be considered significant to individual segments
of the business are described under (c)(1) "Narrative Description of Business"
on pages 1 through 4 of this report.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Financial information for the three years ended March 31, 1994 appears in
Financial Note 15, "Segments of Business", on pages 34 and 35 of the Appendix to
the Company's 1994 Proxy Statement, which note is incorporated herein by
reference.
(C) NARRATIVE DESCRIPTION OF BUSINESS
(1) DESCRIPTION OF SEGMENTS OF BUSINESS
The principal segments of the Company's business are:
Health Care Services
Water Products
Armor All
1
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HEALTH CARE SERVICES
Products & Markets
Wholesale Distribution of Pharmaceutical & Health Care Products --Within
the United States and Canada, McKesson is the largest distributor of ethical and
proprietary drugs and health and beauty care products. Its products are
distributed to chain and independent drug stores, hospitals, food stores and
mass merchandisers throughout the United States and Canada. This business
requires large inventories, significant amounts of which are financed by related
payables. In addition, McKesson owns a 22.7% equity interest in Nadro, the
leading pharmaceutical wholesaler in Mexico.
Using the name "Economost" and "Econolink" and a number of related service
marks, McKesson has promoted electronic order entry systems and a wide range of
computerized merchandising and asset management services for drug retailers and
hospitals. McKesson is also a supplier of computer systems and software for
pharmacists.
In the United States, McKesson does business under the McKesson Drug Co.
tradename. In Canada, McKesson does business under the Medis and Groupe
Pharmaceutique Focus names.
Voluntary Marketing Program -- Under the Valu-Rite pharmacy program,
McKesson provides its independent U.S. retail drug store customers with a common
marketing identity, group advertising, purchasing programs, promotional
merchandise and access to a pharmacy provider network. At March 31, 1994,
approximately 4,500 stores were participating in the Valu-Rite program. Similar
programs are available to independent drug stores through other drug
wholesalers. McKesson provides similar services to retail drug stores in Canada.
Millbrook Distribution Services -- Millbrook Distribution Services
(formerly Service Merchandising) distributes health and beauty care products,
general merchandise and specialty foods to supermarkets, drug stores and
discount department stores. The distribution services provided often include a
review of inventory levels and restocking of retail sales areas for customers.
PCS Health Systems, Inc. -- PCS Health Systems, Inc. ("PCS") provides
computer-based prescription drug claims processing and pharmacy benefit design,
administration and management services to health plan sponsors, including,
insurance companies, third party administrators, self-insured employers, and
health maintenance and Blue Cross/Blue Shield organizations that underwrite or
administer prescription benefit plans. PCS helps these customers manage the cost
of prescription plans by providing drug utilization reviews, clinically-based
formularies and generic substitution programs. Clinically-based drug formulary
services are provided by McKesson's subsidiary, CPI. PCS also operates an on-
line electronic network to transmit medical, hospital, laboratory, clinical and
billing information that links health care providers (physicians, hospitals and
clinics) with health plan sponsors. RECAP/TM/, PCS's on line prescription claims
management system, is linked with over 95% of retail pharmacies in the U.S.
Other -- Through its Sunmark operations, McKesson supplies durable medical
equipment to the home health care industry. Through its Central American
operation, McKesson manufactures a full line of McKesson branded generic
pharmaceuticals that are distributed directly and indirectly to retailers in
Central America. Through Zee Medical, Inc., McKesson distributes first-aid
products and supplies to industrial and commercial customers.
2
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Competition
In every area of operations, the distribution businesses face strong
competition both in price and service from national, regional and local full-
line, short-line and specialty wholesalers, service merchandisers, and from
manufacturers engaged in direct distribution.
PCS has strong competition from pharmaceutical benefit management companies
and from claims processors. For certain accounts, PCS competes with some retail
pharmacy chains, mail order programs and organized groups of independent
pharmacists.
WATER PRODUCTS
Products & Markets
McKesson Water Products Company is primarily engaged in the processing and
sale of bottled drinking water delivered to homes and businesses under its
Sparkletts, Alhambra, and Crystal brands. It also sells packaged water through
retail stores in California, Arizona, Nevada and Texas and sells and leases
processed water dispensers and coolers. In addition, under the Aqua-Vend
trademark, it sells processed water through vending machines in California,
Arizona, Nevada, Texas, Louisiana and Florida.
Competition
This operation faces significant competition in both price and service in
all aspects of its business.
ARMOR ALL
Products & Markets
The Company is engaged through its majority-owned Armor All Products
Corporation subsidiary in developing and marketing a line of branded appearance
enhancement and protection products primarily for the do-it-yourself automotive
aftermarket. Its principal brand, Armor All/R/, has the leading position in the
domestic automotive protectant market. A second major brand, Rain Dance/R/, is a
strong competitor in the market for automotive waxes, polishes and washes. Armor
All's principal product, Armor All/R/ Protectant, is designed to protect and
beautify natural and synthetic polymer materials and is used primarily on
certain automobile surfaces. Armor All's products are marketed in the U.S. and
Canada by its direct sales force and through independent manufacturers'
representatives and distributors. International sales are effected through
foreign sales offices, foreign distributors and a marketing and distribution
alliance with S.C. Johnson. Primary customers include mass merchandiser
retailers, auto supply stores, warehouse clubs, hardware stores and other retail
outlets. The Company has recently extended its product lines by introducing
Armor All/R/ Tire Foam/R/ Protectant, Armor All Quicksilver/TM/ Wheel Cleaner,
Armor All/R/ Protectant Low-Gloss Natural Finish, Armor All Spot & Wash/TM/
Concentrate, Armor All/R/ Leather Care Protectant and three car polishes under
the Rain Dance name. In January 1994, Armor All acquired the E-Z D/TM/ line of
do-it-yourself products for use on home exteriors.
3
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Competition
Armor All Protectant has one principal competitor and several secondary
competitors in the domestic protectant market. Armor All Tire Foam Protectant
has one principal competitor and several secondary competitors. Armor All brand
cleaner competes against many specialty automotive and household cleaner
products. Armor All brand wax and wash products and all of the Rain Dance brand
products compete with many wash, wax and polish products in the automotive
appearance chemical aftermarket. In the domestic home care products market, the
E-Z D/TM/ line of do-it-yourself products has two principal and several
secondary competitors.
(2) OTHER INFORMATION ABOUT THE BUSINESS
Customers -- Sales to the Company's largest customer, Wal-Mart Stores,
Inc., accounted for 10% of consolidated revenues in fiscal 1994. No material
part of the business is dependent upon a single or a very few customers, the
loss of any one of which would have a material adverse effect on the Company.
Environmental Legislation -- The Company sold its Chemical distribution
operations in fiscal 1987. In connection with the disposition of those
operations, the Company retained responsibility for certain environmental
obligations and has entered into agreements with the Environmental Protection
Agency and certain states pursuant to which it is or may be required to conduct
environmental assessments and cleanups at several closed sites. These matters
are described further in Item 3 below. Other than any capital expenditures which
may be required in connection with those matters, the Company does not
anticipate making substantial capital expenditures for environmental control
facilities or to comply with environmental laws and regulations in the future.
The amount of capital expenditures for environmental compliance was not material
in fiscal 1994 and is not expected to be material in the next fiscal year.
Employees -- At March 31, 1994, the Company employed approximately
14,500 persons.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Information as to foreign operations is included in Financial Note 4,
"Acquisitions and Investments" on pages 22 and 23 and in Financial Note 15,
"Segments of Business" on pages 34 and 35 of the Appendix to the
Company's 1994 Proxy Statement, which notes are incorporated herein by
reference.
ITEM 2. PROPERTIES
Because of the nature of the Company's principal businesses, plant and
warehousing facilities are operated in widely dispersed locations. The
warehouses are typically owned or leased on a long-term basis. The Company
considers its operating properties to be in satisfactory condition and adequate
to meet its needs for the next several years.
Information as to lease commitments is included in Financial Note 10,
"Lease Obligations" on pages 26 and 27 of the Appendix to the Company's 1994
Proxy Statement, which note is incorporated herein by reference.
4
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ITEM 3. LEGAL PROCEEDINGS
In addition to commitments and obligations in the ordinary course of
business, the Company is subject to various claims, other pending and possible
legal actions for product liability and other damages, investigations relating
to governmental laws and regulations, and other matters arising out of the
normal conduct of the Company's business.
The Company is a defendant in several civil actions filed in late 1993 and
early 1994 by independent pharmacies in the Superior Court for the State of
California (County of San Francisco) and in multiple federal district courts.
Most of the actions were brought as purported class actions on behalf of all
other similarly-situated retail pharmacies, and the Federal actions have since
been transferred to the U.S. District Court for the Northern District of
Illinois for consolidated proceedings. There are numerous other defendants in
these actions including pharmaceutical manufacturers, one pharmaceutical mail
order firm, and several other wholesale distributors. These cases allege, in
essence, that the defendants have unlawfully conspired together and agreed to
fix the prices of brand name pharmaceuticals sold to plaintiffs at artificially
high, discriminatory, and non-competitive levels, all in violation of various
state and federal antitrust laws. Plaintiffs seek remedies in the form of
injunctive relief, unquantified monetary damages (trebled as provided by law),
and attorneys fees and costs. The Company believes it has meritorious defenses
to the allegations made against it and intends to vigorously defend itself in
this litigation.
Primarily as a result of the operation of its former chemical businesses,
which were divested in fiscal 1987, the Company is involved in numerous matters
pursuant to various environmental laws and regulations. The Company has received
various claims and demands from governmental agencies relating to investigative
and remedial actions purportedly required to address environmental conditions
alleged to exist at six (6) sites where the Company formerly conducted
operations; and the Company, by administrative order or otherwise, has agreed to
take certain actions at those sites. A seventh site, in Commerce City, Colorado,
is the subject of a consent decree entered in fiscal 1991 whereby the site has
been fully remediated by the successor of the former site operator and the
Company and was removed from the National Priorities List (i.e., Superfund) in
fiscal 1993. Another such Superfund site is a closed wood treatment facility
formerly operated by Mass Merchandisers, Inc. ("MMI") acquired by the Company in
1985. In fiscal 1993, a consent decree was entered whereby the Company will
remediate the site at a cost estimated by the EPA to be approximately $11
million, with an additional estimated contingent cost of approximately $4
million. The Company's escrow dispute with the former MMI shareholders regarding
the costs of investigation and cleanup of that site has been settled.
In addition to the foregoing remedial actions, the Company has been asked
by current property owners to contribute to the investigation and environmental
cleanup of eight (8) properties which the Company formerly owned or leased. The
Company has also been designated as a potentially responsible party ("PRP") by
the EPA under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended (the "Superfund" law), for environmental
assessment and cleanup costs as the result of the Company's alleged treatment or
disposal of hazardous substances at thirty-two (32) Superfund sites. With
respect to each of these Superfund sites, numerous other PRPs have similarly
been designated and, while the current state of the law potentially imposes
joint and several liability upon PRPs, as a practical matter costs of these
sites are typically shared with other PRPs. In some cases the Company has
partial indemnity agreements with its insurers or an allocation or contribution
agreement with other PRPs, and settlements and costs paid by the Company in
Superfund matters to date have not been significant.
The potential costs to the Company related to all of these environmental
matters are highly uncertain due to such factors as: the unknown magnitude of
possible pollution and cleanup costs; the complexity and evolving nature of
governmental laws and regulations and their interpretations; the timing,
5
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varying costs and effectiveness of alternative cleanup technologies; the
determination of the Company's liability in proportion to other PRPs; and the
extent, if any, to which such costs are recoverable from insurance or other
parties. The Company has established reserves which it considers to be
appropriate for these environmental matters, net of amounts which third parties
have agreed to pay in settlement, where the Company believes it is probable the
third parties will fulfill their agreements to pay.
Finally, the product liability lawsuits involving the nutrition supplement
L-tryptophan, which the Company has previously reported, have continued to be
resolved by the manufacturer of the product without any payment by the Company.
Only one such lawsuit is currently pending against the Company. Consistent with
its existing agreements with the manufacturer and experience to date, the
Company continues to believe it is entitled to full indemnification both with
respect to the remaining case and any possible future suits involving L-
tryptophan. While no assurance can be given, it appears unlikely that the
Company will face non-indemnified damages as a result of this litigation.
In view of the inherent difficulty in predicting the outcome of litigation
and governmental proceedings, management cannot state what the eventual outcome
of such litigation and proceedings will be. Although liabilities associated with
the foregoing matters could be substantial, management believes, based on
current knowledge, that the outcome of such litigation and proceedings will not
have a material adverse effect on the Company's consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended March 31,
1994.
6
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the executive
officers of the Registrant as of June 1, 1994. The number of years of
service with the Company includes service with predecessor and acquired
companies.
There are no family relationships between any of the executive
officers or directors of the Registrant. The executive officers are chosen
annually to serve until the first meeting of the Board of Directors
following the next annual meeting of stockholders and until their
successors are elected and have qualified, or until death, resignation or
removal, whichever is sooner.
NAME AGE POSITION WITH REGISTRANT AND BUSINESS EXPERIENCE
- -------------------- --- ---------------------------------------------------
Alan Seelenfreund 57 Chairman of the Board and Chief Executive Officer
since November 1989 and a Director since July
1988; Executive Vice President from November 1986
to November 1989; and Chief Financial Officer from
April 1984 to April 1990. Service with the
Company - 19 years.
David E. McDowell 51 President and Chief Operating Officer and a
Director since January 1992; Vice President and
General Manager, Quality and Chief Information
Officer, IBM Corporation from November 1990 to
January 1992; President of IBM's National Service
Division from July 1987 to August 1990 and
Assistant General Manager from January to July
1987. Service with the Company - 2.5 years.
William A. Armstrong 53 Vice President Human Resources and Administration
since April 1993; Vice President Administration
from July 1991 to April 1993; Executive Assistant
to the Office of the Chief Executive from 1990 to
April 1992; Staff Vice President, Management
Development from 1988 to 1990. Service with the
Company - 22 years.
Jon W. d'Alessio 47 Treasurer since January 1992; Staff Vice President
and Chief Information Officer from 1990 to
November 1991; Staff Vice President, Operations
Planning and Information Technology from 1988 to
1990. Service with the Company - 16 years.
Richard H. Hawkins 44 Vice President since April 1993; Controller since
April 1990 and Chief Financial Officer of McKesson
Drug Company since September 1993; Vice President
Finance of the McKesson Distribution Group from
February 1991 to April 1993; Assistant Corporate
Controller from June 1984 to April 1990. Service
with the Company - 10 years.
7
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NAME AGE POSITION WITH REGISTRANT AND BUSINESS EXPERIENCE
- -------------------- --- -------------------------------------------------
Robert C. Johnson 58 Vice President, Government Relations since
September 1992; Chairman (since April 1990),
Chief Executive Officer (from April 1990 until
February 1994) and President (from November 1990
until May 1993) of PCS Health Systems, Inc., a
wholly-owned subsidiary of the Company. Executive
Vice President, California Pharmacists
Association from 1969 until 1990. Service with
the Company - 4 years.
Marvin L. Krasnansky 64 Vice President Corporate Relations since 1979.
Service with the Company - 15 years.
David L. Mahoney 39 Vice President Strategic Planning since July
1990. Principal at McKinsey & Company, Inc. (an
international management consulting firm) from
1987 to July 1990. Service with the Company - 4
years.
Ivan D. Meyerson 49 Vice President and General Counsel since January
1987. Service with the Company - 16 years.
Nancy A. Miller 50 Vice President and Corporate Secretary since
December 1989; Staff Vice President and Corporate
Secretary from November 1986 to December 1989.
Service with the Company - 16 years.
Charles A. Norris 49 Vice President since April 1993 and President of
McKesson Water Products Company since May 1990.
President of Deer Park Water Company (a bottled
drinking water firm) from 1981 until May 1990.
Service with the Company - 4 years.
Garret A. Scholz 54 Vice President Finance since April 1990; Vice
President and Treasurer from November 1984 to
April 1990. Service with the Company - 21 years.
James H. Smith 50 Vice President and President of McKesson Drug
Company since February 1994. Senior Vice
President of Avnet, Inc. (a distributor of
electrical and computer components) from 1990
until February 1994; Executive Vice President of
the Hamilton Hallmark Division from 1990 until
February 1994 and Vice President of the Hamilton
Avnet Division from 1986 to 1990. Service with
the Company - 4 months.
8
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(A) MARKET INFORMATION
The principal market on which the Company's common stock is traded is the
New York Stock Exchange. High and low prices for the common stock by quarter
appear in Financial Note 18, "Quarterly Financial Information" on pages 38 and
39 of the Appendix to the Company's 1994 Proxy Statement, which note is
incorporated herein by reference.
(B) HOLDERS
The approximate number of record holders of the Company's common stock as
of March 31, 1994 was 18,995.
(C) DIVIDENDS
Dividend information is included in Financial Note 18, "Quarterly Financial
Information" on pages 38 and 39 of the Appendix to the Company's 1994 Proxy
Statement, which note is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is shown on pages 2 to 5 of the Appendix to the
Company's 1994 Proxy Statement and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of the Company's financial condition
and results of operations appears in the Financial Review on pages 6 to 13 of
the Appendix to the Company's 1994 Proxy Statement and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Supplementary Data appear on pages 16 to 39 of the
Appendix to the Company's 1994 Proxy Statement and are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
9
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference from the Company's 1994 Proxy Statement. Certain information relating
to Executive Officers of the Company appears at pages 7 and 8 of this Form 10-K
Annual Report. The information with respect to this item required by Item 405 of
Regulation S-K is incorporated herein by reference from the Company's 1994 Proxy
Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is incorporated herein by reference
from the Company's 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is incorporated herein by reference
from the Company's 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is incorporated by reference from
Item 14(a) - Consolidated Supplementary Financial Schedules -- Schedule II --
Amounts Receivable from Related Parties and Underwriters, Promoters, and
Employees (other than related parties). Information with respect to certain
transactions with management is incorporated by reference from the Company's
1994 Proxy Statement.
10
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of the Company and the
Independent Auditors' Report are included on pages 15 to 39 of the Appendix to
the Company's 1994 Proxy Statement and are incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Financial Statements
Statements of Consolidated Income for the years ended
March 31, 1994, 1993 and 1992
Consolidated Balance Sheets, March 31, 1994, 1993 and
1992
Statements of Consolidated Stockholders' Equity for the
years ended March 31, 1994, 1993 and 1992
Statements of Consolidated Cash Flows for the years
ended March 31, 1994, 1993 and 1992
Financial Notes
<TABLE>
<CAPTION>
The following are included herein: Page
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<S> <C>
Independent Auditors' Report on Supplementary
Financial Schedules 13
Consolidated Supplementary Financial Schedules:
II Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees
(other than related parties) 14
VIII Valuation and Qualifying Accounts 15
IX Short-term Borrowings 16
</TABLE>
Financial statements and schedules not included or incorporated by
reference herein have been omitted because of the absence of conditions under
which they are required or because the required information, where material, is
shown in the financial statements, financial notes or supplementary financial
information.
Exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings are listed on the Exhibit Index on
pages 17 through 19.
(B) REPORTS ON FORM 8-K
None.
11
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
McKESSON CORPORATION
Date: May 31, 1994 By: /s/Alan Seelenfreund
-------------------------------------
Alan Seelenfreund, Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on May 31, 1994 by the following persons on behalf
of the Registrant and in the capacities indicated:
/s/Alan Seelenfreund /s/David E. McDowell
- -------------------------------------- --------------------------------------
Alan Seelenfreund, Chairman and David E. McDowell, President and
Chief Executive Officer and Director Chief Operating Officer and Director
/s/Garret A. Scholz /s/Richard H. Hawkins
- -------------------------------------- --------------------------------------
Garret A. Scholz, Richard H. Hawkins,
Vice President Finance Vice President and Controller
/s/Tully M. Friedman /s/James R. Harvey
- -------------------------------------- --------------------------------------
Tully M. Friedman, Director James R. Harvey, Director
/s/George M. Keller
- -------------------------------------- --------------------------------------
George M. Keller, Director Leslie L. Luttgens, Director
/s/John M. Pietruski /s/Jane E. Shaw
- -------------------------------------- --------------------------------------
John M. Pietruski, Director Jane E. Shaw, Director
/s/Robert H. Waterman
- --------------------------------------
Robert H. Waterman, Jr., Director
12
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INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY FINANCIAL SCHEDULES
The Stockholders and Board of Directors of McKesson Corporation:
We have audited the consolidated financial statements of McKesson Corporation
and subsidiaries as of March 31, 1994, 1993 and 1992, and for the years then
ended and have issued our report thereon dated May 16, 1994 which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
Corporation's change in its method of accounting for postemployment benefits,
postretirement benefits other than pensions and environmental clean-up costs;
such consolidated financial statements and report are included in the Appendix
to your Proxy Statement for the 1994 annual meeting of stockholders of the
Corporation and are incorporated herein by reference. Our audits also included
the consolidated supplementary financial schedules of McKesson Corporation,
listed in Item 14(a). These consolidated supplementary financial schedules are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
supplementary financial schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
San Francisco, California
May 16, 1994
13
<PAGE>
SCHEDULE II
MCKESSON CORPORATION - CONSOLIDATED
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES (OTHER THAN RELATED PARTIES)
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------ ------------ ---------- ------------ --------------------------
Balance at End of Period
--------------------------
Deductions
Balance at ------------ Due Due
Beginning Amounts Within After
Name of Debtor of Period Additions Collected One Year One Year
- ------------------------------ ------------ --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Officers and Employees:
Year Ended March 31, 1994
R. Abrams (1)............. $450 $ 73 $ 4 $498 $ 21
R. Ashworth (2)........... 236 - 36 - 200
A. Chong (2).............. 200 - - - 200
K. Evans (3).............. 25 - 25 - -
T. Field (4).............. 600 - - 600 -
S. Geringer (1)........... - 200 - - 200
R. Harrison (2)........... 438 - 438 - -
R. Hawkins (5)............ - 285 9 23 253
K. Hicken (6)............. 400 - 400 - -
W. Howard (2)............. 100 - 100 - -
R. Johnson (2)(5)......... 406 96 3 9 490
S. Kliff (1).............. - 520 - - 520
D. McDowell (2)........... 600 - - - 600
D. Nelson (6)............. 200 - 200 - -
J. Perkins (2)(5)......... - 338 28 19 291
J. Smith (2).............. - 400 - - 400
G. Treude (7)............. 108 3 - - 111
D. Vanderhelm (6)......... 140 - 14 - 126
C. Villani (2)............ 100 - 20 20 60
Year Ended March 31, 1993
R. Abrams (2)............. $450 $ - $ - $ - $450
R. Ashworth (2)........... - 236 - - 236
A. Chong (2).............. 200 - - - 200
K. Evans (3).............. 150 - 125 25 -
T. Field (4).............. 770 6 176 600 -
R. Harrison (2)........... 500 - 62 63 375
K. Hicken (6)............. 400 - - - 400
W. Howard (2)............. - 100 - 20 80
R. Johnson (2)............ 406 - - - 406
S. Kliff (8).............. 290 - 290 - -
R. Malson (9)............. 126 1 127 - -
D. McDowell (2)........... 600 - - - 600
D. Nelson (6)............. 200 - - 200 -
G. Treude (7)............. - 108 - - 108
D. Vanderhelm (6)......... - 140 - 14 126
C. Villani (2)............ - 100 - 20 80
Year Ended March 31, 1992
R. Abrams (2)............. $450 $ - $ - $ - $450
A. Chong (2).............. 200 - - - 200
K. Evans (3).............. - 550 400 125 25
T. Field (4).............. 828 19 77 77 693
J. Gillen (2)............. 145 - 145 - -
R. Harrison (2)........... - 500 - - 500
K. Hicken (6)............. 400 - - - 400
R. Johnson (2)............ 406 - - - 406
C. Kennedy (2)............ 485 - 485 - -
S. Kliff (8).............. - 290 - 290 -
R. Malson (9)............. 141 12 27 27 99
D. McDowell (2)........... - 600 - - 600
D. Nelson (6)............. 200 - - - 200
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES: 1 Loan is secured by a deed of trust and is interest bearing.
2 Includes a loan secured by a deed of trust that is noninterest
bearing so long as the individual remains in the employ of the
Company or is under an employment contract.
3 Includes a $450,000 note used by the employee in connection with
his purchase of real property. The note is unsecured and non-
interest bearing.
4 Loan is secured by a deed of trust and was entered into when the
individual was in the employ of the Company.
5 Includes 6.75% interest bearing recourse notes relating to the
Company's Stock Purchase Plan due in installments through 2003 and
collateralized with common stock of the Registrant.
6 Loan is secured by a deed of trust and is noninterest bearing.
7 Includes a $100,000 secured note with interest equal to McKesson's
cost of funds.
8 Noninterest bearing short-term relocation loan.
9 Recourse note relating to the Company's Stock Purchase Plan due in
installments through 1992 and collateralized with common stock of
the Registrant.
14
<PAGE>
SCHEDULE VIII
MCKESSON CORPORATION - CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------------------- ---------- ---------------------- ---------- -------------
Additions
----------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions End of Period
- --------------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
AMOUNTS DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Year Ended March 31, 1994
- -------------------------
Allowances for doubtful
accounts receivable $27,185 $ 9,472 $ 1 $17,752 $18,906
Other reserves 16,773 5,302 - 5,107 16,968
------- ------- ------ ------- -------
$43,958 $14,774 $ 1/3/ $22,859/1/ $35,874/2/
======= ======= ====== ======= =======
Year Ended March 31, 1993
- -------------------------
Allowances for doubtful
accounts receivable $19,869 $18,215 $ 76 $10,975 $27,185
Other reserves 15,009 5,455 - 3,691 16,773
------- ------- ------ ------- -------
$34,878 $23,670 $ 76/3/ $14,666/1/ $43,958/2/
======= ======= ====== ======= =======
Year Ended March 31, 1992
- -------------------------
Allowances for doubtful
accounts receivable $18,262 $13,550 $2,543 $14,486 $19,869
Other reserves 12,516 6,337 - 3,844 15,009
------- ------- ------ ------- -------
$30,778 $19,887 $2,543/3/ $18,330/1/ $34,878/2/
======= ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1994 1993 1992
------- -------- --------
<S> <C> <C> <C>
NOTES: 1 Deductions:
Written off $17,752 $13,884 $16,856
Credited to other accounts 5,107 782 1,474
------- ------- -------
Total $22,859 $14,666 $18,330
======= ======= =======
2 Amounts shown as deductions from:
Current receivables $32,464 $40,740 $31,754
Other assets 3,410 3,218 3,124
------- ------- -------
Total $35,874 $43,958 $34,878
======= ======= =======
3 Recorded on the books of companies acquired.
</TABLE>
15
<PAGE>
SCHEDULE IX
MCKESSON CORPORATION - CONSOLIDATED
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E/1/ Column F/1/
- --------------------------------- --------- --------- ----------- ------------ -------------
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Balance Average Outstanding Outstanding Rate
at End Interest During During During
of Period Rate the Period the Period the Period
--------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Category of Short-Term Borrowings
- ---------------------------------
Year Ended March 31, 1994
- -------------------------
Bank borrowings - - $195,000 $ 18,361 3.4%
Commercial paper $19,992 3.5% 299,787 160,184 3.2%
International borrowings 37,175 5.8% 63,050 62,872 5.0%
Year Ended March 31, 1993
- -------------------------
Bank borrowings - - $ 45,000 $ 973 3.5%
Commercial paper - - 194,929 20,359 3.1%
International borrowings $61,189 6.3% 77,760 57,960 7.2%
Year Ended March 31, 1992
- -------------------------
Bank borrowings - - $ 60,000 $ 1,593 5.1%
Commercial paper - - 112,090 26,825 7.4%
International borrowings $67,667 7.5% 97,215 59,669 8.4%
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTES: 1 Based on average daily balances except for international borrowings
which are based on average monthly balances.
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ --------------------------------------------------------------------
<C> <S>
*(3)A Restated Certificate of Incorporation of Registrant effective
September 6, 1989 (Exhibit (19)A to the Registrant's Form SE dated
February 3, 1990).
*(3)B By-Laws of Registrant, as amended through July 28, 1993 (Exhibit
(3) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
*(4)A Registrant agrees to furnish to the Commission upon request a
copy of each instrument with respect to issues of long-term debt
of the Registrant, the authorized principal amount of which does
not exceed 10% of the total assets of Registrant.
*(4)B Rights Agreement between the Registrant and Morgan Shareholder
Services Trust Company (now First Chicago Trust Company of New
York), dated as of May 7, 1986, amended as of July 31, 1987 and
amended and restated as of June 1, 1988 (Exhibit (4) to the
Registrant's Form SE dated July 14, 1988).
*(10)A Credit Agreement dated as of December 30, 1988 among McKesson
Corporation, a Maryland corporation, McKesson Corporation, a
Delaware corporation and Bank of America National Trust and
Savings Association as agent for the other bank signatories
thereto (Exhibit (10)L to the Registrant's Form SE dated June 21,
1989).
*(10)B First Amendment dated September 29, 1989 to Credit Agreement
dated as of December 30, 1988 among McKesson Corporation, a
Maryland corporation, McKesson Corporation, a Delaware
corporation and Bank of America National Trust and Savings
Association as agent for the other bank signatories thereto
(Exhibit (19)A to the Registrant's Form SE dated June 9, 1992).
*(10)C Waiver and Second Amendment to Credit Agreement dated as of May
11, 1992 among McKesson Corporation, a Maryland corporation
(Borrower), McKesson Corporation, a Delaware corporation
(Guarantor) and Bank of America National Trust and Savings
Association, as agent for itself and the other bank signatories
thereto (Exhibit (19)B to the Registrant's Form SE dated June 9,
1992).
*(10)D Third Amendment to Credit Agreement dated as of October 5, 1992
among McKesson Corporation, a Maryland corporation (the
Borrower), McKesson Corporation, a Delaware corporation (the
Guarantor) and Bank of America National Trust and Savings
Association, as agent for itself and the other bank signatories
thereto (Exhibit (10)D to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1993).
*(10)E Note Purchase Agreement dated as of June 9, 1989 by and between
McKesson Corporation, a Maryland corporation and a wholly-owned
subsidiary of the Registrant, and The Prudential Insurance
Company of America (Exhibit (19) to the Registrant's Form SE
dated August 10, 1989).
*(10)F Letter Agreement dated March 7, 1991 amending Note Purchase
Agreement between McKesson Corporation and The Prudential
Insurance Company of America dated as of June 9, 1989 (Exhibit
(19)C to the Registrant's Form SE dated June 9, 1992).
</TABLE>
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ---------------------------------------------------------------------
<C> <S>
(10)G McKesson Corporation Deferred Compensation Administration Plan
II, amended as of March 30, 1994.
(10)H McKesson Corporation Deferred Compensation Administration Plan,
amended as of March 30, 1994.
(10)I McKesson Corporation Management Deferred Compensation Plan,
amended as of March 30, 1994.
(10)J McKesson Corporation 1985 Executives Elective Deferred
Compensation Plan, amended as of October 27, 1993.
(10)K McKesson Corporation Directors' Deferred Compensation Plan,
amended as of October 27, 1993.
(10)L McKesson Corporation 1985 Directors Elective Deferred
Compensation Plan, amended as of October 27, 1993.
(10)M McKesson Corporation Severance Policy for Executive Employees, as
adopted September 29, 1993.
*(10)N Description of McKesson Corporation Retirement Program for
Outside Directors, as amended through July 29, 1992 (Exhibit
(10)N to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1993).
*(10)O McKesson Corporation 1973 Stock Purchase Plan, amended
effective as of July 31, 1987 (Exhibit (10)D to the Registrant's
Form SE dated June 15, 1988).
(10)P McKesson Corporation Supplemental PSIP, amended as of March 30,
1994.
(10)Q 1981 Long-Term Incentive Plan of McKesson Corporation, as amended
through March 30, 1994.
(10)R McKesson Corporation 1989 Management Incentive Plan, amended as
of March 30, 1994.
(10)S McKesson Corporation 1988 Restricted Stock Plan, as amended
through March 30, 1994.
*(10)T McKesson Corporation 1978 Stock Option Plan, as amended through
July 31, 1991 (Exhibit (19)A to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1991).
(10)U McKesson Corporation 1984 Executive Benefit Retirement Plan,
amended as of October 27, 1993.
(10)V McKesson Corporation 1988 Executive Survivor Benefits Plan,
amended as of October 27, 1993.
</TABLE>
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ----------------------------------------------------------------------
<C> <S>
*(10)W Form of Amended Employment Agreement dated as of November 1,
1991 by and between the Registrant and certain designated
Executive Officers (Exhibit (19)B to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1991).
(10)X Form of Amended Termination Agreement dated as of February 1,
1994 by and between the Registrant and certain designated
Executive Officers.
*(10)Y Form of Employment Agreement dated as of January 13, 1992 by
and between the Registrant and its President and Chief Operating
Officer (Exhibit (19)F to Registrant's Form SE dated June 9,
1992).
*(10)Z Form of Employment Agreement dated as of January 15, 1990 by
and between the Registrant and its Vice President Government
Relations (Exhibit (10)FF to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1993).
*(10)AA Letter Agreement for Credit Facilities among Medis Health and
Pharmaceutical Services Inc. (Borrower), McKesson Corporation
(Guarantor), and The Toronto Dominion Bank (Lender) dated as of
April 14, 1993 (Exhibit (10)HH to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1993).
*(10)BB Stock Purchase Agreement entered into by and among McKesson
(Cayman Islands) Inc. (as Purchaser), the Registrant (as
Guarantor), and the Escandon Family Trust Constituted with Banco
Nacional de Mexico, S.A. (as Seller), and Messrs. Pablo Escandon
Cusi and Eustaquio Escandon Cusi, executed on April 27, 1993
(Exhibit (10)II to the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1993).
*(10)CC Irrevocable Offer to Purchase made by Banco Nacional de
Mexico, S.A. as Trustee of the Escandon Family Trust to McKesson
(Cayman Islands) Inc., executed on April 27, 1993 (Exhibit (10)JJ
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended March 31, 1993).
(11) Computation of earnings per common share for the five years ended
March 31, 1994.
*(13) 1994 annual report to security holders pursuant to Rule 14a-3(b)
(Appendix to Registrant's definitive Proxy Statement dated June
14, 1994 for the Annual Meeting of Stockholders to be held
on July 27, 1994).
(22) Subsidiaries of the Registrant.
(23) Independent Auditors' Consent.
</TABLE>
* Document has heretofore been filed with the Commission by the
Registrant and is incorporated by reference and made a part hereof.
19
<PAGE>
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
1. McKesson Corporation Deferred Compensation Administration Plan II,
amended as of March 30, 1994 (Exhibit (10)G to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1994).
2. McKesson Corporation Deferred Compensation Administration Plan, amended
as of March 30, 1994 (Exhibit (10)H to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994).
3. McKesson Corporation Management Deferred Compensation Plan, amended as
of March 30, 1994 (Exhibit (10)I to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1994).
4. McKesson Corporation 1985 Executives Elective Deferred Compensation
Plan, amended as of October 27, 1993 (Exhibit (10)J to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31, 1994).
5. McKesson Corporation Directors' Deferred Compensation Plan, amended as
of October 27, 1993 (Exhibit (10)K to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1994).
6. McKesson Corporation 1985 Directors Elective Deferred Compensation
Plan, amended as of October 27, 1993 (Exhibit (10)L to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31, 1994).
7. McKesson Corporation Severance Policy for Executive Employees, as
adopted September 29, 1993 (Exhibit (10)M to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1994).
8. Description of McKesson Corporation Retirement Program for Outside
Directors, as amended through July 29, 1992 (Exhibit (10)N to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
9. McKesson Corporation 1973 Stock Purchase Plan, amended effective as of
July 31, 1987 (Exhibit (10)D to the Registrant's Form SE dated June 15,
1988).
10. McKesson Corporation Supplemental PSIP, amended as of March 30,1994
(Exhibit (10)P to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994).
11. 1981 Long-Term Incentive Plan of McKesson Corporation as amended
through March 30, 1994 (Exhibit (10)Q to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994).
12. McKesson Corporation 1989 Management Incentive Plan, amended as of
March 30,1994 (Exhibit (10)R to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1994).
13. McKesson Corporation 1988 Restricted Stock Plan as amended through
March 30, 1994 (Exhibit (10)S to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1994).
20
<PAGE>
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
14. McKesson Corporation 1978 Stock Option Plan, as amended through July
31, 1991 (Exhibit (19)A to the Registrant's Quarterly Report on Form
10-Q for the quarter ended December 31, 1991).
15. McKesson Corporation 1984 Executive Benefit Retirement Plan, amended as
of October 27, 1993 (Exhibit (10)U to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1994).
16. McKesson Corporation 1988 Executive Survivor Benefits Plan, amended as
of October 27, 1993 (Exhibit (10)V to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1994).
17. Form of Amended Employment Agreement dated as of November 1, 1991 by
and between the Registrant and certain designated Executive Officers
(Exhibit (19)B to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1991).
18. Form of Amended Termination Agreement dated as of February 1, 1994 by
and between the Registrant and certain designated Executive
Officers (Exhibit (10)X to the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1994).
19. Form of Employment Agreement dated as of January 13, 1992 by and
between the Registrant and its President and Chief Operating Officer
(Exhibit (19)F to Registrant's Form SE dated June 9, 1992).
20. Form of Employment Agreement dated as of January 15, 1990 by and
between the Registrant and its Vice President Government Relations
(Exhibit (10)FF to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1993).
21
<PAGE>
EXHIBIT (11)
MCKESSON CORPORATION - CONSOLIDATED
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE FIVE YEARS ENDED MARCH 31
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Income after taxes from continuing operations $157,056 $114,735 $ 39,618 $99,977 $93,677
Dividend requirements - convertible preferred stocks - - (7,081)/1/ - -
Interest charges on convertible debentures - net of tax 18 1,352 - /2/ 3,391 3,628
Contribution adjustment - Series B ESOP convertible
preferred stock/3/ (3,706) (3,758) - /2/ (3,711) (3,273)
-------- -------- ----------- ------- -------
153,368 112,329 32,537 99,657 94,032
Income after taxes from discontinued operations - - (7,285) (4,650) -
Extraordinary item (4,186) - - - -
Cumulative effects of accounting changes (16,660) - (110,500) - -
-------- -------- ----------- ------- -------
Total $132,522 $112,329 $ (85,248) $95,007 $94,032
======== ======== =========== ======= =======
Fully diluted shares
Common shares outstanding/4/ 40,943 40,025 38,776 38,544 40,493
Convertible securities - dilutive 3,160 4,783 - /2/ 6,060 5,761
-------- -------- ----------- ------- -------
Total 44,103 44,808 38,776 44,604 46,254
======== ======== =========== ======= =======
Fully diluted earnings per share
Continuing operations $ 3.48 $ 2.51 $ .84 $ 2.23 $ 2.03
Discontinued operations - - (.19) (.10) -
Extraordinary item (.10) - - - -
Cumulative effects of accounting changes (.38) - (2.85) - -
-------- -------- ----------- ------- -------
Total $ 3.00 $ 2.51 $ (2.20) $ 2.13 $ 2.03
======== ======== =========== ======= =======
PRIMARY EARNINGS PER SHARE
Income after taxes from continuing operations $157,056 $114,735 $ 39,618 $99,977 $93,677
Dividend requirements - convertible preferred stocks/1/ (7,052) (7,010) (7,081) (6,973) (5,523)
-------- -------- ----------- ------- -------
150,004 107,725 32,537 93,004 88,154
Income after taxes from discontinued operations - - (7,285) (4,650) -
Extraordinary item (4,186) - - - -
Cumulative effects of accounting changes (16,660) - (110,500) - -
-------- -------- ----------- ------- -------
Total $129,158 $107,725 $ (85,248) $88,354 $88,154
======== ======== =========== ======= =======
Common shares outstanding/4/ 40,789 40,025 38,776 38,539 40,429
======== ======== =========== ======= =======
Primary earnings per share
Continuing operations $ 3.68 $ 2.69 $ .84 $ 2.41 $ 2.18
Discontinued operations - - (.19) (.12) -
Extraordinary item (.10) - - - -
Cumulative effects of accounting changes (.41) - (2.85) - -
-------- -------- ----------- ------- -------
Total $ 3.17 $ 2.69 $ (2.20) $ 2.29 $ 2.18
======== ======== =========== ======= =======
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Net of certain related tax benefits.
2 1992 fully diluted earnings per share computation excludes the effect of
convertible securities which were anti-dilutive.
3 Represents the assumed additional ESOP contribution expense that the
Company would have incurred if the Series B ESOP convertible preferred
stock had been converted at the beginning of the period presented.
4 Common shares outstanding have been computed by adding the monthly
average (beginning of the month plus end of the month divided by 2),
dividing the aggregate by 12 and adjusting this total for dilutive stock
options using the treasury stock method.
22
<PAGE>
DATA STATED IN MILLIONS
VOLUNTARY SCHEDULE - CERTAIN FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR YEAR YEAR
TO DATE TO DATE TO DATE
ENDED ENDED ENDED
REGULATION NUMBER STATEMENT CAPTION 3/31/94 3/31/93 3/31/92
- ----------------- ----------------- ------- ------- -------
<C> <S> <C> <C> <C>
5-02(1) Cash and cash items $ 96.3 $ 120.1 $ 160.5
5-02(2) Marketable securities
5-02(3)(a)(1) Accounts receivable - trade
5-02(3)(b)(1) Notes receivable trade
5-02(4) Allowance for doubtful accounts
5-02(5) Unearned income
5-02(6)(a)(1) Finished goods
5-02(9) Total current assets 2,186.2 1,898.2 1,814.2
5-02(18) Total assets 3,192.7 2,800.1 2,756.9
5-02(21) Total current liabilities 1,784.4 1,614.9 1,492.9
5-02(22) Bonds mortgages & similar debt
5-02(23) Indebtedness to related parties
5-02(24) Other liabilities
5-02(28) Preferred stock-mandatory redemption
5-02(29) Preferred stock-no mandatory redemption
5-02(30) Common stock 89.2 89.2 89.2
5-02(31)(a)(1) Additional paid in capital 164.9 172.4 204.2
5-02(31)(a)(2) Additional capital other
5-02(31)(1)(3)(i) Retained earnings - appropriated
5-02(31)(1)(3)(ii) Retained earnings - unappropriated 610.3 546.8 501.7
5-03(b)(1)(a) Net sales tangible products
5-03(b)(1)(b) Operating revenues utilities & others
5-03(b)(1)(c) Income from rentals
5-03(b)(1)(d) Revenues from services
5-03(b)(1)(e) Other revenues
5-03(b)(2)(a) Cost of tangible goods sold
5-03(b)(2)(b) Operating expenses utilities and others
5-03(b)(2)(c) Cost of income from rentals
5-03(b)(2)(d) Cost of services
5-03(b)(2)(e) Cost of other revenues
5-03(b)(8) Interest & amortization of debt discount 41.4 49.5 57.7
5-03(b)(10) Income before taxes and other items 275.3 196.9 81.7
5-03(b)(11) Income tax expense 109.2 78.8 39.9
5-03(b)(14) Income/loss from continuing operations 157.1 114.7 39.6
5-03(b)(15) Discontinued operations (7.3)
5-03(b)(17) Extraordinary items (4.2)
5-03(b)(18) Cumulative effect-chngs in acctg. prin. (16.7) (110.5)
5-03(b)(19) Net income or loss 136.2 114.7 (78.2)
</TABLE>
<PAGE>
EXHIBIT (10)G
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN II
(DCAP II)
Amended as of March 30, 1994
<PAGE>
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN II
(DCAP II)
A. PURPOSE
This Plan is established to further enhance the Company's
ability to attract and retain executive personnel and Directors.
The Plan replaces and supersedes the Directors' Deferred
Compensation Plan, the Management Deferred Compensation Plan, the
Deferred Compensation Administration Plan, and the PCS, Inc.
Optional Deferred Compensation Administration Plan.
B. ERISA PLAN
This Plan is an unfunded deferred compensation program for a
select group of management employees and Directors of the
Company. The Plan therefore is covered by Title I of ERISA
except that it is exempt from Parts 2, 3 and 4 of Title I of
ERISA.
C. PARTICIPATION
1. Eligibility to Participate
a. Eligible Executives. The Administrator may, at
its discretion, and at any time, and from time to time, select
Company executives who may elect to participate in this Plan
("Eligible Executives"). Selection of Eligible Executives may be
evidenced by the terms of the executive's employment contract
with the Company, or by inclusion among the persons or classes of
persons specified by the Administrator.
The Administrator may, at its discretion, and at any
time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Administrator
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such
determination are paid out under the terms of the Plan (or until
death, if earlier).
b. Eligible Directors. Each Director who is not a
Company employee may participate in this Plan ("Eligible
Directors").
2. Election to Participate. An Eligible Executive or an
Eligible Director may become a Participant in the Plan by
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electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Participant shall be deemed to
accept all of the terms and conditions of this Plan. All
elections to defer amounts under this Plan shall be made pursuant
to an election executed and filed with the Administrator before
the amounts so deferred are earned.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive and each Eligible
Director that he or she may participate in the Plan for the next
Year. Such notice shall also set forth the Declared Rate for the
next Year.
4. Relation to Other Plans.
a. Participation in Other Plans. An Eligible
Executive or a Director may participate in this Plan and may also
participate in any other benefit plan of the Company in effect
from time to time for which he or she is eligible, unless the
other plan may otherwise exclude participation on the basis of
eligibility for, or participation in, this Plan. No amounts may
be deferred under this Plan which have been deferred under any
other plan of the Company. Deferrals under this Plan may result
in a reduction of benefits payable under the Social Security Act,
the Company's Retirement Plan and the Company's Profit-Sharing
Investment Plan.
b. Automatic Deferral to Supplemental PSIP. Subject
to the last sentence of Section D.2. below, an Eligible Executive
who makes an election to defer compensation under this Plan shall
have an additional amount automatically deferred from his or her
remaining compensation. The amount of such additional deferral
will be an amount equal to (x) the amount deferred by the
Eligible Executive into the Plan, multiplied by (y) the
percentage rate of the Eligible Executive's deferrals into the
McKesson Corporation Profit-Sharing Investment Plan ("PSIP"), as
in effect at the beginning of each Year. The additional
deferrals will be credited to the Eligible Executive's account in
the McKesson Corporation Supplemental PSIP and governed by the
terms of that plan.
D. AMOUNTS OF DEFERRAL
1. Minimum Deferral. The minimum amount that an Eligible
Executive may defer under this Plan for any Year is $5,000 of
base salary, or $5,000 of any annual bonuses and $5,000 of any
Long-Term Incentive Plan award. The minimum amount of
compensation that an Eligible Director may defer for any Year is
$5,000.
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2. Maximum Deferral for Eligible Executives. The maximum
amount of compensation which an Eligible Executive may defer
under this Plan for any Year is (i) eighty percent (80%) of the
amount of such Eligible Executive's base salary for such Year,
and (ii) one hundred percent (100%) of any annual bonus award
and/or any Long-Term Incentive Plan Award determined and payable
to him or her in such Year. Notwithstanding these limits,
deferrals may be reduced by the Company to leave sufficient
remaining compensation legally required for taxes and other
authorized deductions, including, but not limited to, those for
Company benefit programs.
3. Maximum Deferral for Eligible Directors. The maximum
amount of compensation which an Eligible Director may defer under
this Plan for any Year is the amount of any annual retainer and
other fees from the Company earned by him or her in any such
Year.
E. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by a Participant under the Plan shall be credited to a
separate bookkeeping account for such Participant (the
"Account"). (Sub-Accounts may be established for each Year for
which the Participant elects to defer compensation.) Interest
shall be credited to each Account (including Sub-Accounts
established thereunder) for each Year at a rate equal to a rate
declared by the Administrator acting in its sole discretion after
taking into account, among other things, the following factors:
the Company's cost of funds, corporate tax brackets, expected
amount and duration of deferrals, number and age of eligible
Participants, expected time and manner of payment of deferred
amounts, and expected performance of available fixed-rate
insurance contracts covering the lives of Participants (the
"Declared Rate"). Each Account balance shall be compounded
monthly at the twelfth root of the annual Declared Rate of
interest provided for under this Plan. In the case of
installment payments as provided in Section E.3. below, interest
shall be credited on all amounts remaining in a Participant's
Account until all amounts are paid out.
2. Length of Deferral. An Eligible Executive or Eligible
Director shall elect in writing, and file with the Administrator,
at the same time as such Eligible Executive or Eligible Director
makes any election to defer compensation, the period of deferral
with respect to such election, subject to the minimum required
period of deferral, which is five years after the end of the Year
for which compensation is deferred. Notwithstanding the
foregoing, the five-year minimum deferral period shall not apply
to payments made as a result of death, Disability, Retirement,
pre-Retirement termination, or a Change in Control. Once such an
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election has been made, the Eligible Executive or Eligible
Director may alter the period of deferral, provided that:
a. such alteration is made at least one year prior to
the earliest date the Participant could have received
distribution of the amounts credited to his or her Account under
the earlier election, and
b. such alteration does not provide for the receipt
of such amounts earlier than one year from the date of the
alteration, subject to the five-year minimum deferral rule stated
above.
3. Election of Methods of Payment. A Participant shall
elect in writing, and file with the Administrator, at the same
time as any election to defer compensation, a method of payment
of benefits under this Plan from the following methods:
a. Payment of amounts credited to the Participant's
Account in any specified number of approximately equal annual
installments (not in excess of 10), the first installment to be
paid in January of the Year designated by the Participant.
b. Payment of the amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of ten), the first
installment to be paid in January after the designated interval
following the earlier of Participant's Retirement or of the
determination disability.
c. Payment of the amount credited to the
Participant's Account in a single sum.
4. Payments on Termination.
a. Director Termination. If an Eligible Director
ceases to be a Director of the Company for any reason other than
death, the entire undistributed amount credited to his or her
Account will be paid in the form elected by the Participant, or,
if no election has been made, in a lump sum as soon as
practicable after such cessation.
b. Executive Termination. If an Eligible Executive
terminates employment with the Company for any reason other than
Retirement, disability or death, the entire undistributed amount
credited to his or her Account will be paid in the form of a lump
sum as soon as practicable after such termination.
5. Payments on Death.
a. Death After Payments Have Begun. If a Participant
dies after payments from his or her Account have begun, the
remainder of the amounts credited to the Participant's Account
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shall be paid to his or her Beneficiary at the same time and in
the same manner as they would have been paid had the Participant
survived.
b. Death Before Payments Have Begun. If a
Participant dies before payments from his or her Account have
begun, the amount credited to his or her Account shall be paid to
his or her Beneficiary at the time and in the manner elected by
the Participant. Such election shall be made in writing and
filed with the Administrator at the time of any election to defer
compensation. Benefits shall be paid in one of the methods
specified in paragraphs a. and c. of Section E.3. The Ad-
ministrator, at his or her discretion, may distribute all
benefits to a Beneficiary in a single payment if the value of his
or her Account balance is less than $5,000.
6. Payments on Disability. If the Administrator
determines that a Participant has become Disabled, the entire
undistributed amount credited to his or her Account will be paid
in the form and at the time elected by the Participant, or, if no
election has been made, in a lump sum as soon as practicable
after such determination is made.
7. Payments on Hardship. The Administrator may in his or
her sole discretion direct payment to a Participant of all or of
any portion of the Participant's Account balance, notwithstanding
an election under Section E.3. above, at any time that he or she
determines that such Participant has suffered an event of undue
hardship which causes an emergency condition in his or her
financial affairs.
8. Change in Control. For purposes of this Plan, a Change
in Control of Company or its operating subsidiary, McKesson
Corporation, a Maryland corporation (each of which is referred to
herein as "Corporation"), shall be deemed to have occurred if any
of the events set forth in any of the following paragraphs shall
occur:
a. any "person" (as defined in section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as such term is modified in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the
same proportions as their ownership of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
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b. during any period of not more than two consecutive
years, individuals who at the beginning of such period constitute
the Board and any new director (other than a director designated
by a Person who has entered into an agreement with the Company to
effect a transaction described in clause a., c., or d. of this
paragraph) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
c. the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other
than (I) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
d. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be distributed upon a Change in
Control, if the Participant has so elected.
9. Designation of Beneficiary. A Participant may
designate any person(s) or any entity as his or her Beneficiary.
Designation shall be in writing and shall become effective only
when filed with the Administrator. Such filing must occur before
the Participant's death. A Participant may change the
Beneficiary, from time to time, by filing a new written
designation with the Administrator. If the Participant is
married, any Beneficiary designation which does not designate the
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Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
F. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company (whose claims may be subordinated to those of
creditors of Company subsidiaries) for payment of any obligations
hereunder. Nothing contained in this Plan shall be deemed to
create a trust of any kind for the benefit of any Participant or
Beneficiary, or create any fiduciary relationship between the
Company and any Participant or Beneficiary with respect to any
assets of the Company.
G. MISCELLANEOUS
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Applicable Law; Severability. The Plan hereby created
shall be construed, administered and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
H. ADMINISTRATION OF THE PLAN
1. In General. The Plan Administrator shall be the Vice
President, Human Resources, of the Company. If the Vice
President, Human Resources, is a Participant, any discretionary
action taken as Administrator which directly affects him or her
as a Participant shall be specifically approved by the
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Compensation Committee. The Administrator shall have the
authority and responsibility to interpret this Plan and shall
adopt such rules and regulations for carrying out this Plan as it
may deem necessary or appropriate. Decisions of the
Administrator shall be final and binding on all parties who have
or claim any interest in this Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
I. AMENDMENT OR TERMINATION OF THE PLAN
A majority of the Board may at any time amend this Plan.
Such action shall be prospective only and shall not adversely
affect the rights of any Participant or Beneficiary to any
benefit previously earned under this Plan. A majority of the
Board may at any time terminate this Plan; thereupon compensation
previously deferred plus interest credited thereon shall promptly
be paid, on termination, in single lump sums to the respective
Participants or Beneficiaries entitled thereto.
J. EFFECTIVE DATE
This Plan is effective as of January 27, 1993, the date on
which this Plan was approved by the Board.
K. DEFINITIONS
For purposes of this Plan, the following terms shall have
the meanings indicated:
1. "Account" means the Account specified in Section E.1.
2. "Administrator" shall mean the person specified in
Section H.
3. "Beneficiary" shall mean the person or entity described
by Section E.9.
4. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
5. "Company" shall mean McKesson Corporation, a Delaware
corporation and any subsidiary in which it owns at least 50% of
the issued and outstanding stock (and any subsidiary 50% of the
issued and outstanding stock of which is owned by such a
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subsidiary), except Armor All Products Corporation and its
subsidiaries.
6. "Compensation Committee" shall mean the Compensation
Committee of the Board.
7. "Declared Rate" shall have the meaning described in
Section E.1.
8. "Disabled" or "Disability" shall mean (1) a physical or
mental condition which, in the judgment of the Administrator,
based on competent medical evidence satisfactory to the
Administrator, renders a Participant unable to perform the work
of his or her regular occupation for the Company and which
impairment is likely to result in death or to be of long,
continued and indefinite duration, or (2) a judicial declaration
of incompetence.
9. "Eligible Director" shall mean a Director described by
Section C.1.b.
10. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in this Plan
under Section C.1.a.
11. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
12. "Participant" shall be any Company executive or member
of the Board for whom amounts are credited to an Account under
this Plan. Upon his or her death, his or her Beneficiary shall
be a Participant until all amounts are paid out of his or her
Account.
13. "Plan" shall mean the McKesson Corporation Deferred
Compensation Administration Plan II (DCAP II).
14. "Retirement" shall mean termination of employment after
attaining eligibility for a Retirement Allowance under the terms
of the McKesson Corporation Retirement Plan or receiving an
Approved Retirement under the terms of the Executive Benefit
Retirement Plan.
15. "Year" is the calendar year.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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EXHIBIT (10)H
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN (DCAP)
Amended as of March 30, 1994
<PAGE>
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN (DCAP)
Amended as of March 30, 1994
The purpose of this Plan is to provide a select group of
executives employed by McKesson Corporation, a Delaware
corporation ("McKesson"), and its subsidiaries (collectively, the
"Company"), and McKesson directors, an opportunity to defer for
later payment amounts earned as compensation.
1. PARTICIPATION
a. Employees. An employee of the Company is eligible to
be a Participant in this Plan for any year if (i) it is
reasonably anticipated by the Company that he or she will receive
an award under a Company incentive plan of at least $5,000, or
(ii) he or she is entitled to defer compensation from the Company
pursuant to the terms of an employment contract or incentive
plan. An eligible employee shall become a "Participant" by
making an irrevocable election in writing to participate in this
Plan or, if such employment contract or incentive plan provides
for automatic participation in this Plan, by making an
irrevocable election to defer compensation.
b. Directors. Each member of the Board of Directors of
McKesson may participate in this Plan in accordance with the
terms of the McKesson Directors' Deferred Compensation Plan
("DDCP").
2. COMPENSATION THAT MAY BE DEFERRED
a. Employees.
(i) Base Salary. Each employee who participates in
this Plan may elect to defer up to fifty percent (50%) of his or
her base salary earned from the Company in any calendar year.
For calendar year 1987, the maximum amount that may be deferred
under this provision is the lesser of fifty percent (50%) of the
employee's 1987 base salary or the amount earned by the employee
from the Company on and after September 1, 1987. In any event,
the Company may limit deferrals as is necessary or appropriate to
provide sufficient current compensation to cover taxes, benefit
payments and other necessary or appropriate deductions.
(ii) Incentive Plans. The Company maintains and
administers various incentive plans for its executives and key
employees. Pursuant to the terms of some of these plans or an
employment contract with the Company, a participating employee
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may make an irrevocable election to have the incentive
compensation awarded to him paid on a deferred basis.
b. Directors. A member of the Board of Directors of
McKesson entitled to compensation for service as a director may
make an irrevocable election to defer compensation in accordance
with the terms of the DDCP. To the extent that the terms of the
DDCP conflict with the terms of this Plan, the DDCP shall govern
with respect to all amounts deferred by any such Director.
3. ELECTION TO DEFER
a. Time and Manner of Election; Election is Irrevocable.
Each Participant shall make an election to defer compensation
under this Plan at the time and in the manner prescribed by the
Management Incentive Plan Committee. All elections to defer
compensation under this Plan shall be irrevocable and shall be
made prior to the year in which the compensation is earned. Once
an election is made, the Participant may alter the timing of
receipt of such deferred compensation, provided that such
alteration is made at least one year prior to the earliest date
the Participant could have received distribution of the deferred
compensation under a previous election and does not provide for
the receipt of such amounts earlier than one year from the date
of the alteration. An election to defer base salary in 1987,
however, shall be made prior to September 1, 1987, which is the
first date with respect to which base salary may be deferred
under this Plan.
b. $5,000 Minimum. The minimum amount that a Participant
may defer under this Plan for any one calendar year is $5,000.
c. No New Deferrals After January 1, 1994. Notwith-
standing paragraphs a. and b., above, no new deferrals shall be
made under this Plan after January 1, 1994.
4. RETAINED ACCOUNT OR STOCK ACCOUNT
a. Election of Account. Each Participant's deferred
compensation shall be credited to a separate bookkeeping account
of McKesson maintained for such Participant (the "Account"). The
Participant may elect that deferrals be credited either to the
"Retained Account" or the "Stock Account" as defined below. All
such elections shall be irrevocable.
b. Retained Account.
(i) The Retained Account shall accrue interest during
each calendar year equal to the median yield of all non-
convertible debt issues coming to market during the twelve-month
period ending one month prior to the end of the month in which
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the election instructions are issued in the prior fiscal year
from companies rated A (includes A- and A+), as reported by the
Standard & Poor's Monthly Bond Guides in its calendar of new
offerings. The rate of interest so determined shall be applied
to each Participant's entire Retained Account balance. The
Retained Account balance shall be compounded at the end of each
calendar year by the annual rate of interest so determined.
(ii) Notwithstanding paragraph (i), above, beginning
January 1, 1994, all deferrals made by a Participant into his or
her Retained Account after 1992 will earn interest at the same
rate as deferrals to the McKesson Corporation Deferred
Compensation Administration Plan II (DCAP II).
c. Stock Account.
(i) The amount of stock credited to the Stock Account
of the Participant shall be determined by the number of shares of
McKesson Common Stock which could be purchased with the amount of
the deferred compensation using the closing price of McKesson
Common Stock on the New York Stock Exchange on the day coinciding
with each date on which his or her deferred compensation is
credited to his or her Account. If the date of credit is not a
business day, then the closing price referred to in the prior
sentence shall be the closing price on the business day
immediately preceding the date of credit.
(ii) Under this bookkeeping arrangement, no shares of
McKesson Common Stock shall be issued to or held in any Account.
(iii) The total number of shares of McKesson Common
Stock which may be credited during any single year to the Account
of a Participant who is a non-employee Director shall be the
lesser of (I) the number of shares which could be purchased with
the aggregate amount of compensation eligible for deferral under
this Plan which such Participant elects to defer for such year,
or (II) the amount of one thousand (1,000) shares. The total
number of shares of McKesson Common Stock which may be credited
during any single year to the Account of a Participant who is an
employee shall be the number of shares which could be purchased
with the aggregate amount of compensation eligible for deferral
under this Plan which such Participant elects to defer for such
year, provided that such number, when combined with all other
shares of McKesson Common Stock theretofore credited to the
Participant's Account under this Plan, shall not exceed one
percent (1%) of the then outstanding shares of McKesson Common
Stock. For purposes of this subparagraph (iii), the calculation
of the number of shares which a Participant could purchase shall
be determined in accordance with subparagraph (i) above.
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5. DISTRIBUTION OF AMOUNTS DEFERRED UNDER THE PLAN
a. Irrevocable Election Concerning Distribution. Amounts
deferred under the Plan by eligible Directors shall be
distributed as specified by the DDCP. Amounts deferred under the
Plan by other eligible Participants shall be distributed in
whichever of the following forms was irrevocably elected by the
Participant at the time that he or she made an irrevocable
election to defer compensation:
(i) Installments Beginning Currently. Payment of the
funds in any number of approximately equal annual installments
not in excess of ten designated by the Participant, the first
installment to be paid at the time that the award is made, if
deferral is under an incentive plan or on the January 1 following
the year of deferral, if deferral is of base salary.
(ii) Installments Beginning in Designated Year.
Payment of the funds in any number of approximately equal annual
installments not in excess of ten designated by the Participant,
the first installment to be paid in the year designated by the
Participant.
(iii) Installments Beginning on Retirement, Disability
or Death. Payment of the funds in any number of approximately
equal annual installments not in excess of ten designated by the
Participant, the first installment to be paid at an interval
following the Participant's retirement, disability or death,
whichever is the first to occur, designated by the Participant.
If a Participant terminates employment with the Company before
retirement, for purposes of this subparagraph he or she shall be
treated as retired upon reaching the age of 65.
(iv) Lump Sum. Payment of the funds in one lump sum in
the year designated by the Participant.
b. Hardship Distributions. The Management Incentive Plan
Committee may in its sole discretion direct payment to a
Participant of all or of any portion of any amounts deferred,
notwithstanding an election under Subparagraphs (i), (ii), (iii)
and (iv) of Paragraph (a) above at any time that it determines
that such Participant has suffered an event of undue hardship
which causes an emergency condition in his financial affairs.
c. Payment to Beneficiary. If a Participant dies after
payments from his or her Account have begun, his or her
beneficiary or beneficiaries shall continue to receive payments
under this Plan in the same form and at the same time as they
would have been paid had the Participant survived. If a
Participant dies before payments from his or her Account have
begun, the amounts credited to the Account shall be paid to the
designated beneficiary or beneficiaries at the time and in the
manner previously irrevocably elected by the Participant.
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Benefits shall be paid in one of the forms described in section
5(a)(i), (ii) or (iv) of this Plan. Benefits shall be paid at
the time elected by the Participant and as allowed by the
Management Incentive Plan Committee of McKesson (the
"Committee").
A Participant may designate any person or entity as his
or her Beneficiary. Designation shall be in writing and shall
become effective only when filed with the Committee. Such filing
must occur before the Participant's death. A Participant may
change the Beneficiary, from time to time, by filing a new
written designation with the Committee. If the Participant is
married any Beneficiary designation which does not designate the
Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
d. Time of Payment. Payments of deferred funds shall be
made in the first two weeks of January each year except as
otherwise irrevocably elected at the time of election of
deferral.
e. Method of Payment. Amounts deferred and credited to
the Retained Account shall be paid in cash. Amounts deferred and
credited to the Stock Account shall be paid in shares of McKesson
Common Stock.
f. Change in Control. For purposes of this Plan, a Change
in Control of McKesson, or its operating subsidiary McKesson
Corporation, a Maryland corporation (each of which is referred to
herein as "Corporation"), shall be deemed to have occurred if any
of the events set forth in any one of the following paragraphs
shall occur:
(i) any "person" (as defined in section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as such term is modified in sections 13(d) and 14(d) of the
Exchange Act), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the
same proportions as their ownership of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
(ii) during any period of not more than two consecutive
years, individuals who at the beginning of such period constitute
the Board and any new director (other than a
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director designated by a Person who has entered into an agreement
with the Company to effect a transaction described in clause (i),
(iii) or (iv) or of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other
than (I) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be distributed upon a Change in
Control, if the Participant has so elected.
6. COMPANY PROPERTY
All amounts credited to the Retained Account and the Stock
Account shall be the property solely of the Company. Each
Participant and beneficiary shall be solely an unsecured general
creditor of the Company with respect to amounts credited to his
or her Retained Account or Stock Account and shall have no
special or prior right to any stock or assets for payment of any
obligations hereunder.
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7. NON-ASSIGNABLE
A Participant's rights in the Account shall be non-
assignable by him or her, except that payments may be made to his
or her estate or beneficiaries designated in accordance with the
terms of this Plan, his or her employment contract, the
applicable incentive plan or the DDCP.
8. ADMINISTRATION
This Plan shall be administered by the Committee. The
Committee shall have full power and authority to interpret the
provisions and supervise the administration of this Plan and to
take all action in connection therewith as it deems necessary or
advisable. All decisions and interpretations of the Committee
made hereunder shall be final.
9. AMENDMENT AND TERMINATION
While McKesson hopes to continue this Plan indefinitely, the
Plan may be amended, suspended or terminated at any time by the
Board of Directors of McKesson, provided that no such amendment,
suspension or termination shall adversely affect the
administration of amounts already credited to an Account under
the Plan, with respect to which amounts the Plan shall be
continued until all deferred compensation credited to an Account
under the Plan has been paid.
10. SUCCESSORS
This Plan shall be binding on the Company and any successors
or assigns thereto.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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EXHIBIT (10)I
McKESSON CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
Amended as of March 30, 1994
<PAGE>
McKESSON CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
A. PURPOSE
This Plan is established to further enhance the Company's
ability to attract and retain executive personnel and Directors.
B. ERISA PLAN
This Plan is an unfunded deferred compensation program for a
select group of management employees and Directors of the
Company. The Plan therefore is covered by Title I of ERISA
except that it is exempt from Parts 2, 3 and 4 of Title I of
ERISA.
C. PARTICIPATION
1. Eligibility to Participate
a. Eligible Executives. The Compensation Committee
may, at its discretion, and at any time, and from time to time,
select Company executives who may elect to participate in this
Plan ("Eligible Executives"). Selection of Eligible Executives
may be evidenced by the terms of the executive's employment
contract with the Company, or by inclusion among the persons
specified by the Compensation Committee.
The Compensation Committee may, at its discretion, and
at any time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Compensation Committee
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such determina-
tion are paid out under the terms of the Plan (or until death, if
earlier).
b. Eligible Directors. Each Director who is not a
Company employee may participate in this Plan ("Eligible
Directors").
2. Election to Participate. An Eligible Executive or an
Eligible Director may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Participant shall be deemed to
accept all of the terms and conditions of this Plan.
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All elections to defer amounts under this Plan shall be
made pursuant to an election executed and filed with the
Administrator before the amounts so deferred are earned. All
elections to defer compensation for any Year shall be executed
and filed with the Administrator no later than (i) November 30 of
the immediately preceding Year for Eligible Executives whose
salaries are paid monthly and (ii) December 15 of the immediately
preceding Year for all other Eligible Executives and Eligible
Directors.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive and each Eligible
Director that he or she may participate in the Plan for the next
Year. Such notice shall also set forth the Declared Rate for the
next Year.
4. Relation to Other Plans. An Eligible Executive or a
Director may participate in this Plan and may also participate in
any other benefit plan of the Company in effect from time to time
for which he or she is eligible, unless the other plan may
otherwise exclude participation on the basis of eligibility for,
or participation in, this Plan. No amounts may be deferred under
this Plan which have been deferred under any other plan of the
Company. Deferrals under this Plan may result in a reduction of
benefits payable under the Social Security Act, the Company's
Retirement Plan and the Company's Profit-Sharing Investment Plan.
D. AMOUNTS OF DEFERRAL
1. Minimum Deferral. The minimum amount that an Eligible
Executive may defer under this Plan for any Year is $5,000 of
base salary, or any annual bonuses and/or any Long-Term Incentive
Plan award. The minimum amount of compensation that an Eligible
Director may defer for any Year is $5,000.
2. Maximum Deferral for Eligible Executives. The maximum
amount of compensation which an Eligible Executive may defer
under this Plan for any Year is (i) fifty percent (50%) of the
amount of such Eligible Executive's base salary for such Year,
and (ii) the entire amount of any annual bonus award and/or any
Long-Term Incentive Plan Award determined and payable to him or
her in such Year.
3. Maximum Deferral for Eligible Directors. The maximum
amount of compensation which an Eligible Director may defer under
this Plan for any Year is the amount of any annual retainer and
other fees from the Company earned by him or her in any such
Year.
4. No New Deferrals After January 1, 1994. Notwith-
standing paragraphs 1, 2 and 3 of this Section D., no new
deferrals under this Plan shall be made after January 1, 1994.
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E. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by a Participant under the Plan shall be credited to a
separate bookkeeping account for such Participant (the
"Account"). (Sub-Accounts may be established for each Year for
which the Participant elects to defer compensation.) Interest
shall be credited to each Account (including Sub-Accounts
established thereunder) for each Year at a rate equal to a rate
declared by the Compensation Committee acting in its sole
discretion after taking into account, among other things, the
following factors: the Company's cost of funds, corporate tax
brackets, expected amount and duration of deferrals, number and
age of eligible Participants, expected time and manner of payment
of deferred amounts, and expected performance of available fixed-
rate insurance contracts covering the lives of Participants (the
"Declared Rate"). Each Account balance shall be compounded
monthly at the twelfth root of the annual Declared Rate of
interest provided for under this Plan. In the case of
installment payments as provided in Section E.3 below, interest
shall be credited on all amounts remaining in a Participant's
Account until all amounts are paid out.
2. Length of Deferral. An Eligible Executive or Eligible
Director shall elect in writing, and file with the Administrator,
at the same time as such Eligible Executive or Eligible Director
makes any election to defer compensation, the period of deferral
with respect to such election, subject to the minimum required
period of deferral, which is five years after the end of the Year
for which compensation is deferred, except as otherwise provided
in this Section E. Once such an election has been made, the
Eligible Executive or Eligible Director may alter the period of
deferral, provided that:
a. such alteration is made at least one year prior to
the earliest date the Participant could have received
distribution of the amounts credited to his or her Account under
the earlier election, and
b. such alteration does not provide for the receipt
of such amounts earlier than one year from the date of the
alteration, subject to the five-year minimum deferral rule stated
above.
3. Election of Methods of Payment. A Participant shall
elect in writing, and file with the Administrator, at the same
time as any election to defer compensation, a method of payment
of benefits under this Plan from the following methods:
a. Payment of amounts credited to the Participant's
Account in any specified number of approximately equal annual
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installments (not in excess of 10), the first installment to be
paid in the Year designated by the Participant.
b. Payment of the amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of ten), the first
installment to be paid at a designated interval following the
earlier of Participant's Retirement or one continuous year of
disability.
c. Payment of the amount credited to the
Participant's Account in a single sum.
4. Date Payments Begin. Single sum payments to be made
following Retirement shall be made as soon as practicable
following such Retirement. In the case of a Participant's death,
single sum or installment payments may begin as soon as
practicable after such death. All other payments shall begin
(or, in the case of payments to be made in a single sum, shall be
made) in January following the deferral period under Section E.2.
5. Payments on Termination. If for any reason other than
Retirement or Death, an Eligible Employee terminates employment
with the Company or an Eligible Director ceases to be a Director,
the entire undistributed amount of his or her deferred
compensation will be paid in the form of a lump sum as soon as
practicable after such termination or cessation.
6. Payments on Death.
a. Death After Payments Have Begun. If a Participant
dies after payments from his or her Account have begun, the
remainder of the amounts credited to the Participant's Account
shall be paid to his or her Beneficiary at the same time and in
the same manner as they would have been paid had the Participant
survived.
b. Death Before Payments Have Begun. If a
Participant dies before payments from his or her Account have
begun, the amount credited to his or her Account shall be paid to
his or her Beneficiary at the time and in the manner elected by
the Participant. Such election shall be made in writing and
filed with the Administrator at the time of any election to defer
compensation. Benefits shall be paid in one of the methods
specified in paragraphs a. and c. of Section E.3. and at the time
specified in Section E.4. The Administrator, at his or her
discretion, may distribute all benefits to a Beneficiary in a
single payment if the present value of the benefits payable to a
Participant or Beneficiary is less than $5,000.
7. Payments on Hardship. The Compensation Committee may
in its sole discretion direct payment to a Participant of all or
of any portion of any amounts deferred, notwithstanding an
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election under Section E.3 above at any time that it determines
that such Participant has suffered an event of undue hardship
which causes an emergency condition in his or her financial
affairs.
8. Effect of Change in Control on Minimum Deferral Period.
The five-year minimum deferral period described in Section E.2.
shall not apply in the event of a Change in Control of Company or
its operating subsidiary, McKesson Corporation, a Maryland
corporation (each of which is referred to herein as
"Corporation");
For purposes of this Plan, a Change in Control of a
Corporation shall be deemed to have occurred if any of the events
set forth in any one of the following paragraphs shall occur:
a. any "person" (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as such term is modified in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the
same proportions as their ownership of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
b. during any period of not more than two consecutive
years, individuals who at the beginning of such period constitute
the Board and any new director (other than a director designated
by a Person who has entered into an agreement with the Company to
effect a transaction described in clause a., c., or d. of this
paragraph) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
c. the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other
than (I) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
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outstanding immediately after such merger or consolidation, or
(II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
d. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be distributed upon a Change in
Control, if the Participant has so elected.
9. Designation of Beneficiary. A Participant may
designate any person(s) or any entity as his or her Beneficiary.
Designation shall be in writing and shall become effective only
when filed with the Administrator. Such filing must occur before
the Participant's death. A Participant may change the
Beneficiary, from time to time, by filing a new written
designation with the Administrator. If the Participant is
married, any Beneficiary designation which does not designate the
Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
F. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
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<PAGE>
G. MISCELLANEOUS
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Executive shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Participant's life, and shall
authorize the Company to purchase life insurance on his or her
life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
H. ADMINISTRATION OF THE PLAN
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice President,
Human Resources is a Participant, any discretionary action taken as
Administrator which directly affects him or her as a Participant
shall be specifically approved by the Compensation Committee.
The Compensation Committee shall have the authority and
responsibility to interpret this Plan and shall adopt such rules
and regulations for carrying out this Plan as it may deem
necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have or
claim any interest in this Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
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I. AMENDMENT OR TERMINATION OF THE PLAN
A majority of the Board may at any time amend this Plan.
Such action shall be prospective only and shall not adversely
affect the rights of any Participant or Beneficiary to any
benefit previously earned under this Plan. A majority of the
Board may at any time terminate this Plan; thereupon compensation
previously deferred plus interest credited thereon shall promptly
be paid, on termination, in single lump sums to the respective
Participants or Beneficiaries entitled thereto.
J. EFFECTIVENESS
This Plan is effective as of November 1, 1989, the date on
which this Plan was approved by the Board; provided, however,
that deferrals of compensation under this Plan shall not commence
unless and until the Company has received a favorable no-action
letter regarding this Plan from the Securities and Exchange
Commission.
K. DEFINITIONS
For purposes of this Plan, the following terms shall have
the meanings indicated:
1. "Account" means the Account specified in Section E.1.
2. "Administrator" shall mean the person specified in
Section H.
3. "Beneficiary" shall mean the person or entity described
by Section E.9.
4. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
5. "Company" shall mean McKesson Corporation, a Delaware
corporation and any subsidiary in which it owns at least 50% of
the issued and outstanding stock (and any subsidiary 50% of the
issued and outstanding stock of which is owned by such a
subsidiary), except Armor All Products Corporation and its
subsidiaries and PCS, Inc. and its subsidiaries.
6. "Compensation Committee" shall mean the Compensation
Committee of the Board.
7. "Declared Rate" shall have the meaning described in
Section E.1.
8. "Eligible Director" shall mean a Director described by
Section C.1.b.
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9. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in this Plan
under Section C.
10. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
11. "Participant" shall be any Company executive or member
of the Board for whom amounts are credited to an Account under
this Plan. Upon his or her death, his or her Beneficiary shall
be a Participant until all amounts are paid out of his or her
Account.
12. "Plan" shall mean the McKesson Corporation Management
Deferred Compensation Plan.
13. "Retirement" shall have the meaning described in the
McKesson Corporation Retirement Plan or have the same meaning as
"Approved Retirement" is defined in the Company's Executive
Benefit Retirement Plan.
14. "Year" is the calendar year.
Executed as of January 27, 1994, in the City and County of
San Francisco, State of California.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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EXHIBIT (10)J
McKESSON CORPORATION
1985 EXECUTIVES ELECTIVE DEFERRED COMPENSATION PLAN
Amended as of October 27, 1993
<PAGE>
McKESSON CORPORATION
1985 EXECUTIVES ELECTIVE DEFERRED COMPENSATION PLAN
A. PURPOSE
This Plan is established to further enhance the Company's
ability to attract and retain executive personnel.
B. ERISA PLAN
This Plan is an unfunded deferred compensation program for a
select group of management employees of the Company. The Plan
therefore is covered by Title I of ERISA except that it is exempt
from Parts 2, 3, and 4 of Title I of ERISA.
C. PARTICIPATION
1. Eligibility to Participate. The Compensation Committee
may, at its discretion, and at any time, and from time to time,
select Company executives who may elect to participate in this
Plan ("Eligible Executives"). Selection of Eligible Executives
may be evidenced by the terms of the executive's employment
contract with the Company, or by inclusion among the persons
specified by the Compensation Committee.
The Compensation Committee may, at its discretion, and at
any time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Compensation Committee
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such
determination are paid out under the terms of the Plan (or until
death, if earlier).
2. Election to Participate by Eligible Executives. Each
Eligible Executive may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Eligible Executive shall be
deemed to accept all of the terms and conditions of this Plan.
All elections to defer amounts under this Plan shall be
made pursuant to an election executed and filed with the
Administrator before the amounts so deferred are earned. All
elections to defer 1985 compensation shall be executed and filed
with the Administrator no later than September 15, 1985, or on
any later date in 1985 (no later than September 22, 1985) if the
election is to defer 1985 compensation earned after such later
date.
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3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive that he or she may
participate in the Plan for the next Year.
4. Relation to Other Plans.
a. DCAP. An Eligible Executive may participate in
this Plan and may also participate in the McKesson Corporation
Deferred Compensation Administration Plan. No amounts may be
deferred under this Plan which have been deferred under the
McKesson Corporation Deferred Compensation Administration Plan or
any other plan of the Company.
b. Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible
Executive under this Plan shall, to the extent relevant, be
treated in the same manner as amounts deferred under the McKesson
Corporation Deferred Compensation Administration Plan.
D. AMOUNTS OF DEFERRAL
1. Minimum Deferral. The minimum amount of compensation
that may be deferred by an Eligible Executive under this Plan for
1985 is one month's salary. The minimum amount that an Eligible
Executive may defer for 1986 and later Years is $10,000.
2. Maximum Deferral.
a. 1985. The maximum amount of compensation which an
Eligible Executive may defer under this Plan for 1985 shall be
his or her salary earned from September 16, 1985 through December
15, 1985.
b. Years After 1985. The maximum amount of
compensation which an Eligible Executive may defer under this
Plan for any Year after 1985 is (i) twenty-five percent (25%) of
the amount of such Eligible Executive's base salary for such
Year, calculated at the annual base salary rate in effect on
January 1 of such Year, and (ii) the amount of any annual bonus
award and/or any Long-Term Incentive Plan Award determined and
payable to him or her in such Years.
3. As Deferrals After 1986. Eligible Executives may not
defer compensation under this Plan for any Year after 1986.
E. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by an Eligible Executive under the Plan shall be
credited to a separate bookkeeping account for such Eligible
Executive (the "Account"). (Separate Accounts or Sub-Accounts
may be established for each Year for which the Eligible Executive
elects to defer compensation.) Interest shall be credited to
each Account for each Year at a rate equal to 6% plus the Moody's
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Corporate Bond Yield Average--Monthly Average Corporates as
published by Moody's Investors Service, Inc. (or any successor
thereto) for December of each Year prior to the Year in which
such interest rate is credited. Each Account balance shall be
compounded monthly, in a consistent manner as determined by the
Administrator, at the appropriate rate of interest provided for
under the Plan.
2. Reduced Interest Rate for Participants Who Leave Before
Approved Retirement. If a Participant's employment with the
Company is terminated for any reason whatsoever prior to the date
of his or her Approved Retirement (except on death or
disability), the interest rate which shall be credited to his or
her Account shall be the rate specified in Section E.1, above,
for the period up to and including the date his or her employment
terminates and thereafter shall be the rate specified in Section
E.1, above, less 6 percentage points per annum. Notwithstanding
the foregoing, the Compensation Committee may, in its discretion,
credit the Account of any Participant whose employment is
terminated at an interest rate up to the plan maximum for years
and portions thereof, following the date on which the
Participant's employment terminates. This reduced rate shall not
apply to any amounts which have been distributed under paragraph
b of Section E.3 (relating to interim distributions) prior to
such termination.
3. Length of Deferral.
a. Basic Deferral Period. An Eligible Executive
shall elect in writing, and file with the Administrator, at the
same time as such Eligible Executive makes any election to defer
compensation, the period of deferral with respect to such
election. Once such an election is made, an Eligible Executive
may alter the timing of receipt of benefits under the election,
provided that such alteration is made at least one year prior to
the earliest date the Participant could have received payment of
benefits under the Plan under the previous election and does not
provide for the receipt of such amounts earlier than one year
from the date of the alteration. Payment of amounts deferred and
interest credited thereon shall not begin after age 70, subject
to the minimum required period of deferral, which is 5 years.
b. Interim Distributions. An Eligible Executive may
elect to have up to 100% of the amount of compensation deferred
in any Year, plus credited interest, paid to him or her prior to
age 65. No election made pursuant to this paragraph may provide
for payments of deferred compensation and interest credited
thereon until at least 5 years from the date of the deferral
which is the subject of the election.
Any election under this paragraph shall be made in
writing and filed with the Administrator at the same time as any
election to defer compensation.
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c. Benefits Payable on Death. See Section F for the
payment of benefits on death of a Participant.
4. Method of Payment.
a. Election. An Eligible Executive shall elect in
writing, and file with the Administrator, at the same time as any
election to defer compensation, a method of payment of benefits
under the Plan.
b. Alternative Methods Available--Basic Deferral
Period. The following methods of benefit payment may be elected
by an Eligible Executive for amounts payable after deferral under
paragraph a. of Section E.3 relating to the basic deferral
period:
(i) Payment of amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of 10). In the case of
installment payments, interest at the appropriate rate shall be
credited on all amounts remaining in a Participant's Accounts.
(ii) Payment of the amount credited to the
Participant's Account in a single sum.
c. Alternative Methods Available--Interim
Distributions. The following methods of benefit payment may be
elected by an Eligible Executive for interim distributions under
paragraph b of Section E.3:
(i) Payment in any specified number of
approximately equal annual installments (not in excess of 10).
In the case of installment payments, interest at the appropriate
rate shall be credited on all amounts remaining in a
Participant's Accounts.
(ii) Payment in a single sum.
5. Date Payments Begin.
a. After Basic Deferral Period. Payments shall begin
(or, in the case of payments to be made in a single sum, shall be
made) on the first day of the month after the basic deferral
period ends under paragraph a. of Section E.3.
b. Interim Distributions. Payments shall begin (or,
in the case of payments to be made in a single sum, shall be
made) on the date previously elected by the Participant for
interim distributions.
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F. BENEFITS ON DEATH
1. Death After Payments Have Begun.
a. Basic Deferral. If a Participant dies after
payments from his or her Account have begun (not taking into
account interim distributions under paragraph b of Section E.3),
and if installment payments are being made, the remainder of the
amounts credited to the Participant's Account shall be paid to
his or her Beneficiary at the same time and in the same manner as
they would have been paid had the Participant survived until all
amounts were paid out. If installment payments have not been
elected, amounts shall be paid as provided for under any other
form of benefit payment elected.
b. Interim Distributions. If a Participant dies
after interim distributions under paragraph b of Section E.3 have
begun, the interim distributions shall be paid to the
Participant's Beneficiary at the same time and in the same manner
as they would have been paid had the Participant survived.
2. Death Before Payments Have Begun. If a Participant
dies before payments (except interim distributions) have begun,
the amount credited to his or her Account shall be paid to his or
her Beneficiary beginning at the time payments would have been
made under paragraph a. of Section E.3. (relating to basic
deferrals) or at such earlier time as the Participant elected.
Elections shall be made in writing and filed with the
Administrator at the time of any election to defer compensation.
Benefits shall be paid in one of the methods specified in
paragraph b. of Section E.4. If the Participant's employment
with the Company is terminated for any reason whatsoever prior to
the date of Approved Retirement (except on death or disability),
the rate of interest which shall be credited to his or her
Account for the period after such termination shall, of course,
be the lower rate specified in Section E.2., unless the
Compensation Committee otherwise determines as provided in that
Section E.2. The Administrator, at his or her discretion, may
distribute all benefits to a Beneficiary in a single payment if
the present value of the benefits payable to a Participant or
Beneficiary is less than $5,000.
3. Designation of Beneficiary. A Participant may
designate any person or entity as his or her Beneficiary, but may
not designate more than one person or any person that is not a
natural person without the approval of the Administrator.
Designation shall be in writing and shall become effective only
when filed with (and, if appropriate, approved by) the
Administrator. Such filing must occur before the Participant's
death. A Participant may change the Beneficiary, from time to
time, by filing a new written designation with (and, if
appropriate, approved by) the Administrator. If the Participant
is married any Beneficiary designation which does not designate
the Participant's spouse to receive at least one-half of the
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Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
G. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
H. MISCELLANEOUS
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state, or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Executive shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Eligible Executive's life, and
shall authorize the Company to purchase life insurance on his or
her life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
I. ADMINISTRATION OF THE PLAN
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice President,
Human Resources is a Participant, any discretionary action taken as
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Administrator which directly affects him or her as a Participant
shall be specifically approved by the Compensation Committee.
The Compensation Committee shall have the authority and
responsibility to interpret the Plan and shall adopt such rules
and regulations for carrying out the Plan as it may deem
necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have or
claim any interest in the Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
J. AMENDMENT OR TERMINATION OF THE PLAN
A majority of the Outside Directors may at any time amend
the Plan. Such action shall be prospective only and shall not
adversely affect the rights of any Participant or Beneficiary to
any benefit previously earned under the Plan. A majority of the
Outside Directors may increase or decrease the interest rate
credited to compensation previously deferred but the rate shall
not be reduced for periods prior to such action and shall not be
reduced below the interest rate specified in Section E.l less 6
percentage points per annum. A majority of the Outside Directors
may at any time terminate the Plan; thereupon compensation
previously deferred plus interest credited thereon shall promptly
be paid, on termination, in single sums to the respective
Participants or Beneficiaries entitled thereto.
K. DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Account" means the Account specified in Section E.l.
2. "Administrator" shall mean the person specified in
Section I.
3. "Approved Retirement" shall mean any termination of
employment with the Company at or after attainment of age 65 or
any retirement before age 65 without the approval of the Board.
4. "Beneficiary" shall mean the person or entity described
by Section F.3.
5. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
6. "Company" shall mean McKesson Corporation, a Delaware
corporation, and any subsidiary in which it owns at least 50% of
the issued and outstanding stock (and any subsidiary 50% of the
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issued and outstanding stock of which is owned by such a
subsidiary).
7. "Compensation Committee" shall mean the Compensation
Committee of the Board.
8. "Effective Date" shall be September 4, 1985.
9. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in this Plan
under Section C.
10. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
11. "Outside Directors" shall mean those members of the
Board who are not employees of the Company and who have not
deferred under this Plan compensation earned as an employee.
12. "Participant" shall be any company executive for whom
amounts are credited to an Account under this Plan. Upon his or
her death, his or her Beneficiary shall be a Participant until
all amounts are paid out of his or her Account.
13. "Plan" shall mean the McKesson Corporation 1985
Executives Elective Deferred Compensation Plan.
14. "Year" is the calendar year.
Executed as of September 27, 1993, in the City and County of San
Francisco, State of California.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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EXHIBIT (10)K
MCKESSON CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
Amended as of October 27, 1993
<PAGE>
MCKESSON CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
(Amended as of October 27, 1993)
1. ELIGIBILITY
Any director of McKesson Corporation (the "Company")
entitled to compensation by the Company for service as a director
("Eligible Director") may elect to defer receipt of his
compensation under this Plan (the "Plan") and thereby shall
become a participant under the Deferred Compensation
Administration Plan of the Company.
2. ELECTION TO PARTICIPATE IN PLAN
(a) An Eligible Director may at any time elect to
participate in the Plan and defer receipt of either all his
annual retainer fees and meeting fees or all his annual retainer
fees. Deferred compensation shall be credited to the Deferred
Compensation Administration Plan as of the end of each quarter.
An Eligible Director may at any time and from time to time, by
delivering a written request to the Company, change his election,
but all amounts accumulated pursuant to the Plan prior to such
election shall continue to be subject to the terms of any prior
election by the Eligible Director in effect when such amounts
were earned. No new deferrals shall be made under this Plan
after January 1, 1994.
(b) Income deferred hereunder shall remain the property of
the Company and no Eligible Director shall acquire any property
interest in the Account, stock or any other assets of the
Company, his right being limited to receiving from the Company
deferred payments measured as set forth in this Plan and this
right is conditioned upon continued compliance with the terms and
conditions of this Plan. To the extent that any Eligible
Director acquires a right to receive benefits under this Plan,
such right shall be no greater than the right of any unsecured
general creditor of the Company. No such right shall be
assignable by any Eligible Director, except that payments may be
made to his estate under the terms of Section 5.
(c) Each such Eligible Director shall file with the Company
at the time of his election to participate in the Plan an
irrevocable election of one of the methods of distribution
described in Section 4.
3. TERMINATION OF PARTICIPATION IN THE PLAN
Any Eligible Director having previously elected to
participate in the Plan may at any later date elect to terminate
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his participation in the Plan with respect to compensation as a
Director to be earned thereafter by executing and delivering to
the Company a notice to that effect, in which event the amount
accumulated pursuant to the Plan prior to notice of his election
to terminate will continue to be subject to the provisions of the
Plan. An Eligible Director who elects to terminate his
participation shall not be re-eligible to participate in this
Plan until one year from the effective date of the termination.
4. DISTRIBUTION OF AMOUNTS DEFERRED UNDER THE PLAN
(a) Amounts deferred under the Plan shall be paid in
approximately equal annual installments over such period of
years, not exceeding ten years, as the Eligible Director has
elected. The Eligible Director shall further elect that such
distribution shall commence as of:
(1) the first day of the first calendar quarter after
the Eligible Director ceases being a director of the Company, or
(2) the later of:
(i) the date determined pursuant to subsection
(1) or
(ii) the first day of the calendar year following
the calendar year in which the Eligible
Director has retired from his principal
occupation.
(b) Once an election is made, the Eligible Director may
alter the timing of receipt of such deferred compensation,
provided that such alteration is made at least one year prior to
the earliest date the Eligible Director could have received
distribution of the deferred compensation under a previous
election and does not provide for the receipt of such amounts
earlier than one year from the date of the alteration.
5. DEATH OF AN ELIGIBLE DIRECTOR
Upon the death of an Eligible Director or former Eligible
Director, the balance in full of any amounts deferred under the
Plan shall be payable, on the 2nd day of the calendar year
following the year in which he or she dies, to his or her
designated beneficiary or beneficiaries, and if he or she has
designated none, or if none is alive, then it shall be payable to
his or her estate.
6. AMENDMENT OF THE PLAN
The Plan may be amended from time to time by resolution of
the Board of Directors of the Company, but no such amendment
shall permit amounts accumulated pursuant to the Plan prior to
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the amendment to be paid to an Eligible Director prior to the
time he would otherwise be entitled thereto.
7. TERMINATION OF THE PLAN
The Plan will continue in effect until terminated by
resolution of the Board of Directors of the Company, but in the
event of such termination, the amounts accumulated pursuant to
the Plan prior to termination will continue to be subject to the
provisions of the Plan as if the Plan had not been terminated.
8. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective with respect to any compensation
payable to a Director for services as such following March 31,
1977.
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EXHIBIT (10)L
McKESSON CORPORATION
1985 DIRECTORS' ELECTIVE DEFERRED COMPENSATION PLAN
Amended as of October 27, 1993
<PAGE>
McKESSON CORPORATION
1985 DIRECTORS' ELECTIVE DEFERRED COMPENSATION PLAN
A. PURPOSE
This Plan is established to further enhance the Company's
ability to attract and retain Directors.
B. PARTICIPATION
1. Eligibility to Participate. Each Director of the
Company who is not a Company employee may participate in this
Plan ("Eligible Directors").
2. Election to Participate by Eligible Directors. Each
Eligible Director may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable, and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Eligible Director shall be
deemed to accept all of the terms and conditions of this Plan.
Except for the amounts deferred in 1985, all elections
to defer amounts under this Plan shall be made pursuant to an
election executed and filed with the Administrator before the
Year in which the amount deferred is earned. All elections to
defer 1985 compensation shall be executed and filed with the
Administrator no later than September 15, 1985, or on any later
date in 1985 (no later than September 22, 1985), if the election
is to defer 1985 compensation earned after such later date. All
elections to defer 1986 compensation shall be executed and filed
with the Administrator no later than September 22, 1985.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Director that he or she may
participate in the Plan for the next Year, and shall notify each
Eligible Director of the maximum and minimum amounts of
compensation that may be deferred under the Plan.
4. Relation to Other Plans. An Eligible Director may
participate in this Plan and may also participate in the McKesson
Corporation Directors' Deferred Compensation Plan. No amounts
may be deferred under this Plan which have been deferred under
the McKesson Corporation Directors' Deferred Compensation Plan or
any other plan of the Company.
C. AMOUNTS OF DEFERRAL
1. Minimum Deferral. The minimum amount of compensation
that may be deferred by an Eligible Director under this Plan for
1985 is an amount equal to the retainer payment to a Director in
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December 1985. The minimum amount that an Eligible Director may
defer for 1986 and later Years is $10,000.
2. Maximum Deferral.
a. 1985. The maximum amount of compensation which an
Eligible Director may defer under this Plan for 1985 shall be his
or her fees from the Company for meetings of the Board held on or
after September 16, 1985 and through and including December 31,
1985 and the retainer payment made to him or her in December
1985.
b. Years After 1985. The maximum amount of
compensation which an Eligible Director may defer under this Plan
for any Year after 1985 is the amount of any fees from the
Company earned by him or her in any such Year.
D. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by an Eligible Director under the Plan shall be credited
to a separate bookkeeping account for such Eligible Director (the
"Account"). (Separate Accounts or sub-Accounts may be
established for each Year for which the Eligible Director elects
to defer compensation.) Interest shall be credited to each
Account for each Year at a rate equal to 6% plus the Moody's
Corporate Bond Yield Average--Monthly Average Corporates as
published by Moody's Investors Service, Inc. (or any successor
thereto) for December of each Year prior to the Year in which
such interest rate is credited. Each Account balance shall be
compounded monthly, in a consistent manner as determined by the
Administrator, at the appropriate rate of interest provided under
the Plan.
2. Length of Deferral.
a. Basic Deferral Period. An Eligible Director shall
elect in writing, and file with the Administrator, at the same
time as such Eligible Director makes any election to defer
compensation, the period of deferral with respect to such
election. Payment of amounts deferred and interest credited
thereon shall not begin before age 65 and may begin as late as
age 73, subject to the minimum required period of deferral, which
is 5 years.
b. Interim Distributions. An Eligible Director may
elect to have up to 50% of the amount of compensation deferred in
any Year, plus credited interest, paid to him or her prior to age
65. No election made pursuant to this paragraph may provide for
payments of deferred compensation and interest credited thereon
until at least 5 years from the date of the deferral which is the
subject of the election.
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Any election under this paragraph shall be made in
writing and filed with the Administrator at the same time as any
election to defer compensation.
c. Alteration of Election. Once an election to defer
compensation is made, the Eligible Director may alter the timing
of receipt of such deferred compensation, provided that such
alteration is made at least one year prior to the earliest date
the Eligible Director could have received distribution of the
deferred compensation under a previous election and does not
provide for the receipt of such amounts earlier than one year
from the date of the alteration.
d. Benefits Payable on Death. See Section E for the
payment of benefits on death of a Participant.
3. Method of Payment.
a. Election. An Eligible Director shall elect in
writing, and file with the Administrator, at the same time as any
election to defer compensation, a method of payment of benefits
under the Plan.
b. Alternative Methods Available--Basic Deferral
Period. The following methods of benefit payment may be elected
by an Eligible Director for amounts payable after deferral under
paragraph a. of Section D.2, relating to the basic deferral
period:
(i) Payment of amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of 10). In the case of
installment payments, interest at the appropriate rate shall be
credited on all amounts remaining in a Participant's Accounts.
(ii) Payment of the amount credited to the
Participant's Account in a single sum.
c. Alternative Methods Available--Interim
Distributions. The following methods of benefit payment may be
elected by an Eligible Director for interim distributions under
paragraph b., Section D.2:
(i) Payment in any specified number of
approximately equal annual installments (not in excess of 10).
In the case of installment payments, interest at the appropriate
rate shall be credited on all amounts remaining in a
Participant's Accounts.
(ii) Payment in a single sum.
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<PAGE>
4. Date Payments Begin.
a. After Basic Deferral Period. Payments shall begin
(or, in the case of payments to be made in a single sum, shall be
made) on the first day of the month after the basic deferral
period ends under paragraph a. of Section D.2.
b. Interim Distributions. Payments shall begin (or,
in the case of payments to be made in a single sum, shall be
made) on the date previously elected by the Participant for
interim distributions.
E. BENEFITS ON DEATH
1. Death After Payments Have Begun.
a. Basic Deferral. If a Participant dies after
payments from his or her Account have begun (not taking into
account interim distributions under paragraph b. of Section D.2),
and if installment payments are being made, the remainder of the
amounts credited to the Participant's Account shall be paid to
his or her Beneficiary at the same time and in the same manner as
they would have been paid had the Participant survived until all
amounts were paid out. If installment payments have not been
elected, amounts shall be paid as provided for under any other
form of benefit payment elected.
b. Interim Distributions. If a Participant dies
after interim distributions under paragraph b. of Section D.2
have begun, the interim distributions shall be paid to the
Participant's Beneficiary at the same time and in the same manner
as they would have been paid had the Participant survived.
2. Death Before Payments Have Begun. If a Participant
dies before payments (except interim distributions) have begun,
the amount credited to his or her Account shall be paid to his or
her Beneficiary beginning at the time payments would have been
made under paragraph a. of Section D.2 (relating to basic
deferrals) or at such earlier time as the Participant elected.
Elections shall be made in writing and filed with the
Administrator at the time of any election to defer compensation.
Benefits shall be paid in one of the methods specified in
paragraph b. of Section D.3. The Administrator, at his or her
discretion, may distribute all benefits to a Beneficiary in a
single sum if the present value of the benefits payable to a
Participant or Beneficiary is less than $5,000.
3. Designation of Beneficiary. A Participant may
designate any person or entity as his or her Beneficiary, but may
not designate more than one person or any person that is not a
natural person without the approval of the Administrator.
Designation shall be in writing and shall become effective only
when filed with (and, if appropriate, approved by) the
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Administrator. Such filing must occur before the Participant's
death. A Participant may change the Beneficiary, from time to
time, by filing a new written designation with (and, if
appropriate, approved by) the Administrator. If the Participant
is married, any Beneficiary designation shall only become
effective when approved in writing by the Participant's spouse.
F. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
G. MISCELLANEOUS
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state, or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Director shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Eligible Director's life, and
shall authorize the Company to purchase life insurance on his or
her life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
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<PAGE>
H. ADMINISTRATION OF THE PLAN
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. The Board has the
authority and responsibility to interpret the Plan and shall
adopt such rules and regulations for carrying out the Plan as it
may deem necessary or appropriate. Decisions of the Board shall
be final and binding on all parties who have or claim any
interest in the Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
I. AMENDMENT OR TERMINATION OF THE PLAN
A majority of the Inside Directors may at any time amend the
Plan. Such action shall be prospective only and shall not
adversely affect the rights of any Participant or Beneficiary to
any benefit previously earned under the Plan. A majority of the
Inside Directors may increase or decrease the interest rate
credited to compensation previously deferred, but the rate shall
not be reduced for periods prior to such action and shall not be
reduced below the interest rate specified in Section D.1, less 6
percentage points per annum. A majority of the Inside Directors
may at any time terminate the Plan; thereupon compensation
previously deferred plus interest credited thereon shall promptly
be paid, on termination, in single sums to the respective
Participants or Beneficiaries entitled thereto.
J. DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Account" means the Account specified in Section D.1.
2. "Administrator" shall mean the person specified in
Section H.
3. "Beneficiary" shall mean the person or entity described
in Section E.3.
4. "Board" shall mean the Board of Directors of McKesson
Corporation.
5. "Company" shall mean McKesson Corporation and any
subsidiary in which it owns at least 50% of the issued and
outstanding stock.
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6. "Director" shall be a member of the Board of Directors
of McKesson Corporation.
7. "Effective Date" shall be September 4, 1985.
8. "Eligible Director" shall mean a Director eligible to
participate in this Plan under Section B.
9. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
10. "Inside Directors" shall mean Directors who are not
Eligible Directors.
11. "Participant" shall be any Director for whom amounts
are credited to an Account under this Plan. Upon his or her
death, his or her Beneficiary shall be a Participant until all
amounts are paid out of his or her Account.
12. "Plan" shall mean the McKesson Corporation Directors'
Elective Deferred Compensation Plan.
13. "Year" is the calendar year.
Executed as of October 27, 1993, in the City and County of
San Francisco, State of California.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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EXHIBIT (10)M
McKESSON CORPORATION
SEVERANCE POLICY FOR
EXECUTIVE EMPLOYEES
(As Adopted September 29, 1993)
SECTION 1. ADOPTION AND PURPOSE OF POLICY.
The McKesson Corporation Severance Policy for Executive
Employees (the "Policy") was adopted effective September 29,
1993 by McKesson Corporation, a Delaware corporation (the
"Company"), to provide a program of severance payments to
certain employees of the Company and its designated
subsidiaries. The Policy is an employee welfare benefit plan
within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and Section
2510.3-1 of the regulations issued thereunder. The plan
administrator of the Policy for purposes of ERISA is the
Company.
SECTION 2. DEFINITIONS.
Whenever used and capitalized in the text of the Policy,
the following terms shall have the meaning set forth below:
(a) "Cause" means:
(i) The continuing willful failure of the
Participant to perform the Participant's prescribed
duties to the Company (other than any such failure
resulting from the Participant's incapacity due to
physical or mental illness) after written notice
thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the
Participant by the Board of Directors or a committee
thereof; or
(ii) The willful commission by the Participant of
a wrongful act that caused or was reasonably likely to
cause substantial damage to the Company, or an act of
gross negligence, fraud, unfair competition,
dishonesty or misrepresentation in the performance of
the Participant's duties on behalf of the Company; or
-1-
<PAGE>
(iii) The conviction of the Participant for
commission of a felony.
(b) "Change in Control" shall have the meaning set forth
in the Company's standard form of termination agreement for
executive employees.
(c) "Earnings" means a Participant's monthly base salary
and 1/12 of the Participant's annual target bonus under the
Company's 1989 Management Incentive Plan.
(d) "Participant" means a Principal Officer whose
employment is terminated under circumstances that render him or
her eligible for the benefits described in Section 3 of the
Policy.
(e) "Principal Officers" means those persons who have been
designated as executive officers of the Company for purposes of
Section 16 of the Securities Exchange Act of 1934 by resolution
adopted by its Board of Directors.
(f) "Tier One Participant" means the Chairman and Chief
Executive Officer and the President and Chief Operating Officer.
(g) "Tier Two Participant" means any Principal Officer who
is not a Tier One Participant.
(h) "Year of Service" shall have the meaning set forth in
Section (1) of Article II of the McKesson Corporation Retirement
Plan.
SECTION 3. SEVERANCE BENEFITS.
(a) Basic Severance Benefits. In the event that the
Company terminates the employment of a Principal Officer for any
reason other than Cause at any time other than within two years
following a Change in Control, that Principal Officer shall be
entitled to a severance payment equal to:
(i) In the case of a Tier One Participant, the
lesser of (A) 18 months' Earnings plus one additional
month for each Year of Service or (B) 36 months'
Earnings.
(ii) In the case of a Tier Two Participant, the
lesser of (A) 12 months' Earnings plus one additional
month for each Year of Service or (B) 24 months'
Earnings.
In no event shall the number of months a Participant is entitled
to receive under (i) or (ii) above, as applicable, exceed the
number of months remaining between the Participant's termination
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date and the date he or she will attain age 62 (rounded to the
next higher whole month).
(b) Mitigation of Damages. The amount of a Participant's
benefits calculated under (a) above shall be reduced by the
amount of compensation, if any, the Participant receives from
any subsequent employer(s) for work performed during a period of
time following his or her termination of employment equal to the
number of months of Earnings the Participant is entitled to
receive under (a)(i) or (ii) above, as applicable.
(c) Effect on Other Plans. Nothing in this Policy shall
alter or impair any rights a Participant may have upon
termination of employment under any other plan or program of the
Company, except as follows:
(i) If a Participant is at least age 55 with 15
or more Years of Service at the time of his or her
termination under this Section 3, he or she will
automatically be granted "Approved Retirement" for
purposes of the 1984 Executive Benefit Retirement Plan
and the 1988 Executive Survivor Benefits Plan.
(ii) A Participant who is terminated pursuant to
this Section 3 shall receive pro rata Long-Term
Incentive Plan awards for all cycles in progress as of
his or her termination date. Such payments shall be
based on actual Company performance for the relevant
award cycle, and awards shall be paid at such time and
in such manner as are paid to other participants under
such Plan.
(d) No Duplication of Benefits. In no event shall a
Participant be entitled to any benefits under this Policy if his
or her employment with the Company terminates under
circumstances that entitle the Participant to receive severance
benefits following a Change in Control of the Company.
SECTION 4. FORM OF BENEFIT.
The benefit described in Section 3(a) shall be paid in a
lump sum or in monthly installments over a period commencing on
the date of the Participant's termination of employment not to
exceed the number of months determined under Section 3(a)(i) or
(ii), as applicable.
SECTION 5. EFFECT OF DEATH OF EMPLOYEE.
Should a Participant die after employment terminates but
while participating in the Policy and prior to the payment of
the entire benefit due hereunder, the balance of the benefit
payable under the Policy shall be paid in a lump sum to the
Participant's surviving spouse, or, if none, to his or her
surviving children or, if none, to his or her estate.
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SECTION 6. AMENDMENT AND TERMINATION.
The Company reserves the right to amend or terminate the
Policy at any time and to increase or decrease the amount of any
benefit provided under the Policy by action of the Compensation
Committee of its Board of Directors; provided, however, that no
such action shall have the effect of decreasing the benefit of a
Participant whose employment with the Company terminated prior
to the date of the Compensation Committee's action.
SECTION 7. ADMINISTRATION AND FIDUCIARIES.
(a) Plan Sponsor and Administrator. The Company is the
"plan sponsor" and the "administrator" of the Policy, within the
meaning of ERISA.
(b) Administrative Responsibilities. The Company shall be
the named fiduciary with the power and sole discretion to
determine who is eligible for benefits under the Policy, to
interpret the Policy and to prescribe such forms, make such
rules, regulations and computations and prescribe such
guidelines as it may determine are necessary or appropriate for
the operation and administration of the Policy and to change the
terms of or rescind such rules, regulations or guidelines. Such
determinations of eligibility, rules, regulations, interpreta-
tions, computations and guidelines shall be conclusive and
binding upon all persons. In administering the Policy, the
Company shall at all times discharge its duties with respect to
the Policy in accordance with the standards set forth in section
404(a)(1) of ERISA.
(c) Allocation and Delegation of Responsibilities. The
Compensation Committee may allocate any of the Company's
responsibilities for the operation and administration of the
Policy among the Company's officers, employees and agents. It
may also delegate any of the Company's responsibilities under
the Policy by designating, in writing, another person to carry
out such responsibilities.
(d) No Individual Liability. It is declared to be the
express purpose and intent of the Company that no individual
liability shall attach to or be incurred by any member of the
Board of Directors of the Company, or by any officer, employee
representative or agent of the Company, under, or by reason of
the operation of, the Policy.
SECTION 8. CLAIMS AND REVIEW PROCEDURES.
The Compensation Committee of the Company's Board of
Directors shall establish a procedure pursuant to which a
Participant may file a claim for benefits under the Policy, and
at the request of a Participant it shall also provide a full and
fair review of any denied claim for benefits under the Policy.
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A claim for benefits and a request for the review of a denied
benefit shall be made in writing and addressed to the
Compensation Committee at the Company's headquarters. The
Compensation Committee's response shall be in writing and shall
be given in a manner and time consistent with the regulations
under ERISA Section 503. The Compensation Committee shall
establish such rules and procedures, consistent with the Policy and
with ERISA, as it may deem necessary or appropriate in carrying out
its responsibilities under this Section 8.
SECTION 9. GENERAL PROVISIONS.
(a) Basis of Payments to and from Policy. All benefits
under the Policy shall be paid by the Company. The Policy shall
be unfunded and benefits hereunder shall be paid only from the
general assets of the Company. Nothing contained in the Policy
shall be deemed to create a trust of any kind for the benefit of
any employee, or create any fiduciary relationship between the
Company and any employee with respect to any assets of the
Company. The Company is under no obligation to fund the
benefits provided herein prior to payment, although it may do so
if it chooses. Any assets which the Company chooses to use for
advance funding shall not cause the Policy to be a funded plan
within the meaning of ERISA.
(b) No Employment Rights. Nothing in the Policy shall be
deemed to give any individual the right to remain in the employ
of the Company or a subsidiary or to limit in any way the right
of the Company or a subsidiary to discharge, demote, reclassify,
transfer, relocate an individual or terminate an individual's
employment at any time and for any reason, which right is hereby
reserved.
(c) Non-alienation of Benefits. No benefit payable under
the Policy shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void.
(d) Legal Construction. The Policy shall be governed and
interpreted in accordance with ERISA.
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SECTION 10. EXECUTION.
To record the establishment of the Policy effective as of
September 29, 1993, the Company's Vice President, Human Resources
and Administration has executed this document this ___ day of
___________, 1994.
McKESSON CORPORATION
By _______________________________
William A. Armstrong,
Vice President, Human Resources
and Administration
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EXHIBIT (10)P
McKESSON CORPORATION
SUPPLEMENTAL PSIP
Effective June 30, 1989
Amended as of March 30, 1994
<PAGE>
McKESSON CORPORATION
SUPPLEMENTAL PSIP
A. PURPOSE
This Plan is established to allow certain Company executives
to elect to defer compensation which cannot be deferred under the
McKesson Corporation Profit Sharing Investment Plan ("PSIP")
because of limitations of tax laws or participation in DCAP II,
and to provide for a Company Match on those deferrals at a rate
equivalent to the PSIP's "Matching Employer Contribution".
B. ERISA PLAN
This Plan is an unfunded deferred compensation program for a
select group of management employees of the Company. The Plan,
therefore, is covered by Title I of ERISA except that it is exempt
from Parts 2, 3, and 4 of Title I of ERISA.
C. PARTICIPATION
1. Eligibility to Participate. The Administrator may, at
his discretion, and at any time, and from time to time, select
Company executives who may elect to participate in this Plan
("Eligible Executives"). Selection of Eligible Executives may be
evidenced by the terms of the executive's employment contract
with the Company, or by inclusion among the persons specified in
writing by the Administrator. Participants in DCAP II who elect
to defer compensation under that plan shall be automatically
eligible to participate in and shall constitute Eligible
Executives under this Plan. The Administrator may, at his
discretion, and at any time, and from time to time, provide that
executives previously designated by him are no longer Eligible
Executives.
If the Administrator determines that an executive is no
longer an Eligible Executive, he or she shall remain a
Participant in the Plan until all amounts credited to his or her
Account prior to such determination are paid out under the terms
of the Plan (or until death, if earlier).
2. Election to Participate by Eligible Executives and
Deferral Election. Each Eligible Executive may become a
Participant in the Plan by electing to defer Compensation in
accordance with the terms of this Plan. However, no Eligible
Executive shall defer any Compensation under this Plan for the
first Plan Year in which the Eligible Executive becomes eligible
to make deferrals under this Plan unless his "Basic
Contributions" under the PSIP made with respect to Compensation
earned before November 1 of the Plan Year are limited by Code
Sections 402(g) or 401(a)(17) or are reduced due to deferral of
Compensation under DCAP II. If the Eligible Executive's "Basic
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Contributions" under the PSIP are not so limited by November 1 of
the first Plan Year in which the Eligible Executive becomes
eligible to elect deferrals under this Plan, then the Eligible
Executive's deferral election for that Plan Year shall be void.
An election to defer shall be in writing and shall be made at the
time and in the form specified by the Administrator. As a
condition of electing to defer Compensation under this Plan for a
Plan Year, the Eligible Executive shall agree not to change
(either by increasing or decreasing) the rate at which the
Eligible Executive's compensation is reduced under Section III(2)
of the PSIP to make "Basic Contributions" under PSIP. On
electing to defer Compensation under this Plan, the Eligible
Executive shall be deemed to accept all other terms and
conditions of this Plan.
All elections to defer amounts under this Plan shall be
irrevocable and shall be made pursuant to an election executed
and filed with the Administrator before the amounts so deferred
are earned. Once such an election is made, the Eligible
Executive may alter the timing of receipt of amounts deferred
under the Plan, provided that such alteration is made at least
one year prior to the earliest date the Eligible Executive could
have received distribution of such amounts under a previous
election and does not provide for the receipt of such amounts
earlier than one year from the date of the alteration. All
elections to defer 1989 Compensation shall apply only to
Compensation earned after the election is filed with the
Administrator and shall be executed and filed with the
Administrator no later than July 30, 1989. An election to defer
Compensation earned in later Years shall be made prior to the
beginning of any such Year. However, if an executive becomes an
Eligible Executive after the beginning of a Year, he may make an
election to defer Compensation for that Year no later than 30
days after the date he becomes an Eligible Executive, and such
election shall apply only to Compensation earned after the
election is filed with the Administrator.
3. Relation to Other Plans.
(a) DCAP and DCAP II. An Eligible Executive may
participate in this Plan and may also participate in the McKesson
Corporation Deferred Compensation Administration Plan ("DCAP")
and the McKesson Deferred Compensation Administration Plan II
("DCAP II"). However, no amounts may be deferred under this Plan
which have been deferred under the DCAP or DCAP II or any other
plan of the Company.
(b) Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible
Executive under this Plan shall, to the extent relevant, be
treated in the same manner as amounts deferred under the DCAP and
DCAP II, including, but not limited to, the definition of
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"Average Final Compensation" under the Executive Benefit
Retirement Plan.
D. AMOUNTS OF DEFERRAL
1. PSIP Supplement. This Plan allows an Eligible Executive
to defer Compensation, and receive credit for a Company Match, to
the extent that such deferrals (and corresponding Company Match)
cannot be made under the PSIP because of the limitations in Code
Section 402(g) (limiting annual elective deferrals under the PSIP
to $7,000, as adjusted from time to time under the Code), Code
Section 401(a)(17) (limiting the amount of annual compensation to
be taken into account under the PSIP to $150,000, as adjusted
from time to time under the Code), or to the extent such
deferrals cannot be made under the PSIP because of the Eligible
Executive's participation in DCAP II.
2. Amount of Deferrals. As illustrated in Appendix A, an
Eligible Executive may elect to defer under this Plan up to an
amount equal to (a) minus (b), where:
(a) is the maximum rate of deferral for "Basic
Contributions" under the PSIP multiplied by the Eligible
Executive's Compensation, and
(b) is the maximum amount that the Eligible Executive is
able to defer as a "Basic Contribution" under the PSIP, taking
into account the limits of Code Sections 402(g) and 401(a)(17)
and the exclusion of Compensation deferred under DCAP II.
E. COMPANY MATCH
1. Eligibility for Match.
(a) For any Year, a Company Match shall be credited only
to the Accounts of Eligible Executives who actually defer
Compensation under this Plan for such Year and who are employed
by the Company on March 31 following such Year.
(b) The requirement of employment on March 31 shall not
apply to any Eligible Executive who terminates his employment
with the Company (i) on or after attaining age 55 and completing
ten "Years of Service" under the PSIP, (ii) due to retirement
under the terms of the McKesson Corporation Retirement Plan,
(iii) on or after attaining age 65, or (iv) due to permanent and
total disability as determined under the PSIP. In this case, any
Company Match for the year of such Eligible Executive's
termination of employment shall not be credited to an Account
hereunder but shall be paid (to the extent vested) in a single
sum to him or his beneficiaries as soon as practicable after the
amount of that match is determined by the Company.
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(c) Amount of Match. The amount of the Company Match
credited to the Account of an Eligible Executive who is a
Participant for any Year shall be a percentage of the Eligible
Executive's deferrals under this Plan for the Year. This
percentage shall be the same percentage as the "Matching Employer
Contribution" (as defined in the PSIP) percentage that would have
been credited to the Eligible Executive's PSIP account if his
deferrals under this Plan had been made under the PSIP. In
determining this amount, the Administrator shall take into
account, as illustrated in example 3 in Appendix A, the different
"Matching Employer Contribution" rates that may apply under PSIP
during a Plan Year.
F. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Both Compensation
deferred by a Participant and any Company Match for the benefit
of a Participant shall be credited to a separate bookkeeping
account maintained for such Participant (the "Account").
Earnings shall be credited to each Account (both on the
Participant's deferrals and on any Company Match credited to his
Account hereunder) at a rate equal to the amount earned during
that same period by amounts invested under the PSIP's Guaranteed
Principal and Interest investment option. Interest shall be
credited to each Account as of the end of each month.
2. Vesting.
(a) A Participant shall be 100% vested at all times in
the value of his elective deferrals and earnings thereon credited
to his Account.
(b) A Participant shall vest in the amounts of Company
Match and earnings thereon credited to his Account at the same
time and in the same manner as if these amounts were "Matching
Employer Contributions" under the PSIP and if the rules of the
PSIP concerning vesting applied to such amounts. For this
purpose, any Company Match shall be deemed to be credited to an
Account as of March 31 with respect to which such Company
Match is determined. Any amounts that would be forfeited under
the rules of the PSIP applicable to "Matching Employer
Contributions" under that plan shall be forfeited hereunder. Any
forfeiture under this Plan of any portion of the Company Match
credited to a Participant's Account shall eliminate any
obligation of the Company to pay the forfeited amount hereunder.
3. Election of Methods of Payment. A Participant shall
elect in writing, and file with the Administrator, a method of
payment of benefits under this Plan from the following methods
based upon the nature of the Payment Event. Subsequent elections
by the Participant to change the method of payment shall
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supersede all prior elections and shall apply to the
Participant's entire Account.
(a) If the Payment Event is due to the Participant's
retirement, permanent and total disability as defined under the
PSIP, or because the Participant is an Employee of a subsidiary
that ceases to be a Company, the Participant may choose one of
the following payment methods:
(i) Payment of the vested amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments, not in excess of the number of whole
years remaining of the Participant's life expectancy, determined
as of his or her Payment Event and based upon the mortality
tables then in use under the McKesson Corporation Retirement
Plan, the first installment to be paid at a designated interval
following the Payment Event.
(ii) Payment of the vested amounts credited to the
Participant's Account in a single lump sum upon the occurrence of
the Payment Event.
(b) If the Payment Event occurs as a result of the
termination of the Participant's employment with the Company, and
such termination is not due to the Participant's death or one of
the Payment Events described above, payment of the vested amounts
credited to the Participant's Account shall be made in a single
lump sum upon the occurrence of the Payment Event.
(If any Company Match is payable under Section
E.1.b. hereunder, that amount may be paid separately and at a
later date as provided in such section.)
4. Date Payment Occurs. Payment shall be made as soon as
practicable after the earliest Payment Event occurs.
G. BENEFITS ON DEATH
1. Death Prior to Distribution. If a Participant dies
before distribution of the vested amounts credited to his or her
Account, such distribution shall be paid to his or her
Beneficiary in one of the following forms of benefit, as elected
by the Participant.
(a) in a single lump sum as soon as practicable after
the death of the Participant;
(b) in a specified number of approximately equal annual
installments, not in excess of ten (10) annual installments.
2. Death After Distribution Has Begun. If a Participant
has elected to receive the vested amounts credited to his or her
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account in installments, and dies after payment of such
installments has begun, the Beneficiary designated by the
Participant shall receive any remaining installments on an annual
basis, in the same manner as the Participant would have received
the installments.
3. Designation of Beneficiary. A Participant may designate
any person or entity as his or her Beneficiary, but may not
designate more than one person or any person that is not a
natural person without the approval of the Administrator.
Designation shall be in writing and shall become effective only
when filed with (and, if appropriate, approved by) the
Administrator. Such filing must occur before the Participant's
death. A Participant may change the Beneficiary, from time to
time, by filing a new written designation with (and, if
appropriate, approved by) the Administrator. If the Participant
is married, any Beneficiary designation which does not designate
the Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
If the Participant fails to effectively designate a
Beneficiary in accordance with the Administrator's procedures or
the person designated by the Participant is not living at the
time the distribution is to be made, then his or her Beneficiary
shall be his beneficiary under the PSIP.
H. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
I. MISCELLANEOUS
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state, or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
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2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
4. No Right to Continued Employment, Etc. Neither the
establishment or maintenance of the Plan nor the crediting of any
amount to any Participant's Account, nor the designation of an
executive as an Eligible Executive, shall confer upon any
individual any right to be continued as an employee of the
Company or shall affect the right of the Company to terminate any
executive's employment or change any terms of his employment at
any time.
J. ADMINISTRATION OF THE PLAN
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice
President, Human Resources is a Participant, any discretionary
action taken as Administrator which directly affects him or her
as a Participant shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
authority and responsibility to interpret the Plan and shall
adopt such rules and regulations for carrying out the Plan as it
may deem necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have or
claim any interest in the Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
K. AMENDMENT OR TERMINATION OF THE PLAN
A majority of the Outside Directors may at any time, and from
time to time, amend the Plan. Such action shall be prospective
only and shall not adversely affect the rights of any Participant
or Beneficiary to any benefit previously earned under the Plan.
A majority of the Outside Directors may increase or decrease the
interest rate credited to Compensation previously deferred but
the rate shall not be reduced for periods prior to such action.
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A majority of the Outside Directors may at any time terminate the
Plan; thereupon all amounts credited to the Participant's Account
for periods preceding the termination date, plus interest
credited thereon, shall promptly be paid, on termination, in
single sums to the respective Participants or Beneficiaries
entitled thereto.
L. DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Account" means the Account specified in Section F.1.
2. "Administrator" shall mean the person specified in
Section J.1.
3. "Beneficiary" shall mean the person or entity described
by Section G.3.
4. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
5. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
6. "Company" shall mean McKesson Corporation, a Delaware
corporation, and any subsidiary in which it owns at least 50% of
the issued and outstanding stock, with the exception of Armor All
Products Corporation and PCS, Inc.
7. "Company Match" shall mean, with respect to a Plan Year,
the amount credited to the Account of an Eligible Employee in
accordance with Section E.
8. "Compensation" shall mean, with respect to a Plan Year,
all salary and bonus amounts earned during that Plan Year.
9. "Compensation Committee" shall mean the Compensation
Committee of the Board.
10. "DCAP" shall mean the McKesson Corporation Deferred
Compensation Plan.
11. "DCAP II" shall mean the McKesson Corporation Deferred
Compensation Administration Plan II.
12. "Eligible Executive" shall mean an employee of the
Company who is eligible to participate in this Plan under Section
C.
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13. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
14. "Outside Directors" shall mean those members of the
Board who are not employees of the Company and who have not
deferred under this Plan Compensation earned as an employee.
15. "Participant" shall be any Company executive for whom
amounts are credited to an Account under this Plan. Upon his or
her death, his or her Beneficiary shall be a Participant until
all amounts are paid out of his or her Account.
16. "Payment Event"
(a) For any Participant shall mean the earliest of the
following: retirement from the Company, death, other termination
of employment with the Company, or permanent and total disability
as determined under the PSIP. If a subsidiary of McKesson
Corporation ceases to be a Company, and the Participant is
employed by that subsidiary, he shall be treated as having
terminated his employment with the Company upon such event.
(b) With respect to every Participant who has so
elected, Payment Event also shall mean a Change in Control as
defined in DCAP II.
17. "Plan" shall mean the McKesson Corporation Supplemental
PSIP.
18. "Plan Year" or "Year" shall mean the calendar year.
19. "PSIP" shall mean the McKesson Corporation
Profit-Sharing Investment Plan, as amended from time to time.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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APPENDIX A
Examples of Deferrals Under Plan
The following illustrate the extent to which a Participant could
make deferrals under this Plan. The examples assume that the
applicable deferral limit under Section 402(g) of the Code is
$7,000 and that the applicable compensation limit under Section
401(a)(17) of the Code is $150,000.
1. Example 1
E's Compensation for the Plan Year is $150,000. At all times
during the Plan Year E has elected to make Basic Contributions
under PSIP at the rate of 6% of his Compensation. Because of
section 402(g) of the Code, E may only defer $7,000 under PSIP
during the Plan Year instead of $9,000 (i.e., .06 X$150,000).
Accordingly, E may defer $2,000 for the Plan Year under the Plan
(i.e., $9,000 - $7,000).
The Matching Contribution under PSIP for the PSIP plan year
in which E's deferrals are made under this Plan is 50%.
Accordingly, E's Account will be credited with a Company
Contribution of $1,000 (i.e., .50 X $2,000).
2. Example 2
E's Compensation is $250,000. E elects to make Basic
Contributions under PSIP at the rate of 2% of his Compensation.
Section 402(g) of the Code would not limit E's Basic
Contributions (2% of $250,000 equals $5,000), even in the absence
of any compensation limit. However, because section 401(a)(17)
of the Code limits the amount of E's compensation which may be
considered by PSIP to $150,000, E's Basic Contributions for the
year are limited to $3,000 (2% of $150,000). Accordingly, E may
defer $2,000 (2% of his Compensation in excess of $150,000) into
this Plan. This deferral will then be eligible for a Company
Match based on the PSIP's "Matching Employer Contribution" for
the PSIP plan year ending March 31.
3. Example 3
In December, 1990, E elects to defer 6% of his Compensation
under this Plan, less the maximum available under PSIP. For the
period from January 1 to March 31, 1991, E earns $100,000 in
Compensation. For the PSIP plan year ending on March 31, 1991, E
has elected to make Basic Contributions under PSIP at a rate of
5% of his Compensation and E defers $5,000 (.05 X $100,000) under
the PSIP for that period. Because the 402(g) limits apply on a
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calendar year basis, E defers nothing under this Plan for this
period.
From April 1 through December 31, 1991, E earns $300,000 in
Compensation. Because of section 402(g), only $2,000 in Basic
Contributions are contributed to PSIP for E during this period.
Because of E's prior irrevocable election, E defers $15,600
under this Plan, (i.e., 6% of $260,000). ($260,000 is the
difference between E's $400,000 compensation and $140,000 which
is the Compensation level at which the $7,000 402(g) limit is
reached deferring at a rate of 5% under PSIP.)
For the PSIP plan year ending March 31, 1991, the "Matching
Employer Contribution" percentage under PSIP is 60% but that
percentage decreases to 50% for the PSIP plan year ending March
31, 1992.
Because all $15,600 of E's deferrals under this Plan for the
Plan Year ending December 31, 1991 were made with respect to
Compensation earned after March 31, 1991, the Company Match is
based on the PSIP's "Matching Employer Contribution" percentages
for the PSIP plan year ending March 31, 1992. Accordingly, the
Company Match is $7,800 (i.e., .50 X $15,600).
Example 4
E's Compensation for the Plan Year is $96,000, including a
bonus of $16,000. E is making Basic Contributions to PSIP at a
rate of 6%. As a participant in DCAP II, E elects to defer
$10,000 of his bonus. Because the $10,000 does not meet the
definition of Compensation under the PSIP, E is prevented from
deferring $600 (6% of $10,000) into the PSIP. Therefore, that
$600 is automatically deferred into this Plan. This deferral
will then be eligible for a Company Match based on the PSIP's
"Matching Employer Contribution" percentage for the PSIP Plan
Year ending March 31.
Page 11
<PAGE>
EXHIBIT (10)Q
1981 LONG-TERM INCENTIVE PLAN
OF McKESSON CORPORATION
(As Amended through March 30, 1994)
1. Name and Purpose. The name of this plan is the
McKesson Corporation Long-Term Incentive Plan (the "Plan"). Its
purpose is to advance and promote the interests of the
stockholders of McKesson Corporation, a Delaware Corporation (the
"Company") by attracting and retaining employees who strive for
excellence, and to motivate those employees to set and achieve
above-average financial objectives by providing competitive
compensation for those who contribute most to the operating
progress and earning power of the Company, its subsidiaries and
affiliates.
2. Regulations. The Board of Directors of the
Company shall have the power to adopt eligibility and other rules
and regulations (the "Regulations") not inconsistent with the
provisions of the Plan for the administration thereof, and to
alter, amend or revoke any Regulations so adopted.
3. Administration of the Plan. The Plan shall be
administered by a committee (the "Committee") consisting of at
least three directors of the Company, to be appointed by the
Board of Directors. No member of the Committee shall be eligible
to participate in the benefits of the Plan. The Committee shall
have full power and authority to interpret, construe and
administer the Plan in accordance with the Regulations as
delegated by the Board of Directors. All decisions,
determinations and interpretations of the Committee shall be
final and binding on all Plan participants.
4. Eligibility. Participation in the Plan shall be
limited to those full-time, salaried key officers and other
employees of the Company, its subsidiaries and affiliates who are
selected from time to time by the Committee in accordance with
the Regulations. Participants in the Plan are also eligible to
participate in any incentive plan of the Company.
5. Calculation of Awards. The Plan is designed to
reward participants with annual benefits which reflect the
financial performance of the Company over consecutive incentive
periods of three (3) to five (5) years' duration. The Committee,
subject to the approval of the Board, will designate for each
incentive period the measures of financial performance and the
performance objectives. Performance objectives will not be
changed during any incentive period, except as and to the extent
<PAGE>
Page 2
authorized by the Board in the event of changes in accounting
practices or extraordinary or unanticipated economic
circumstances which could have a material effect on the
achievement of the stated performance objectives.
The Committee may grant performance awards from time to
time while the Plan remains in effect. In making such awards,
the Committee shall be guided by the Company's then most recent
audited financial statements, prepared by the Company's
independent certified public accountants, and the Committee shall
make such adjustments as it deems appropriate to take into
account the effect of events outside the ordinary course of
business, and shall determine any increase or decrease in awards
in a manner consistent with the purposes of the Plan. In no
event, however, shall the amount actually paid to a participant
pursuant to an incentive period award exceed 125% of the
participant's highest rate of basic compensation for the first
year of the incentive period.
6. Payment of Awards. All awards to participants
pursuant to the Plan shall be paid in cash, provided, however,
that, at the participant's election, receipt of all or part of an
award may be deferred by having the same paid into the Company's
Deferred Compensation Administration Plan under regulations
established by the Committee.
A Participant shall have no right to receive payment of
any award unless he or she has been in the continuous employ of
the Company or one of its subsidiaries or affiliates throughout a
given incentive period; provided, however, that the Committee
may, in its sole and absolute discretion, grant pro-rated awards
in circumstances the Committee deems appropriate including, but
not limited to, a Participant's death, retirement or total
disability as those terms are defined in the Company's Retirement
and Long-Term Disability Plans. Any such pro-ration shall be
based upon the fraction of the incentive period during which the
participant remained employed by the Company.
Any other provision of the Plan to the contrary
notwithstanding, if the Committee determines that a Participant
has engaged in any of the actions described in (c) below, the
consequences set forth in (a) and (b) below shall result:
(a) Any outstanding award granted on or after October
27, 1993, shall be forfeited immediately and automatically and
shall not be payable to the participant under any circumstances.
(b) If the participant received payment of an award
granted on or after October 27, 1993, within six months prior to
the date that the Company discovered that the participant engaged
<PAGE>
Page 3
in any action described in (c) below, the participant, upon
written notice from the Company, shall immediately repay to the
Company in cash the amount of such award (including any amounts
withheld pursuant to Paragraph 9).
(c) The consequences described in (a) and (b) shall
apply if the participant, either before or after termination of
employment with the Company or one of its subsidiaries or
affiliates:
(i) Breaches any agreement entered into pursuant
to Paragraph 8 or otherwise discloses to others, or takes or uses
for his own purpose or the purpose of others, any trade secrets,
confidential information, knowledge, data or know-how belonging
to the Company or any of its subsidiaries or affiliates and
obtained by the participant during the term of his employment,
whether or not they are the participant's work product. Examples
of such confidential information or trade secrets include (but
are not limited to) customer lists, supplier lists, pricing and
cost data, computer programs, delivery routes, advertising plans,
wage and salary data, financial information, research and
development plans, processes, equipment, product information and
all other types and categories of information as to which the
participant knows or has reason to know that the Company or its
subsidiaries or affiliates intends or expects secrecy to be
maintained;
(ii) Fails to promptly return all documents and
other tangible items belonging to the Company or any of its
subsidiaries or affiliates in the participant's possession or
control, including all complete or partial copies, recordings,
abstracts, notes or reproductions of any kind made from or about
such documents or information contained therein, upon termination
of employment, whether pursuant to retirement or otherwise;
(iii) Fails to provide the Company with at least
thirty (30) days' written notice prior to directly or indirectly
engaging in, becoming employed by, or rendering services, advice
or assistance to any business in competition with the Company or
any of its subsidiaries or affiliates. As used herein, "business
in competition" means any person, organization or enterprise
which is engaged in or is about to become engaged in any line of
business engaged in by the Company or any of its subsidiaries or
affiliates at the time of the termination of the participant's
employment with the Company or any of its subsidiaries or
affiliates;
(iv) Fails to inform any new employer, before
accepting employment, of the terms of this paragraph 6 and of the
participant's continuing obligation to maintain the
<PAGE>
Page 4
confidentiality of the trade secrets and other confidential
information belonging to the Company or any of its subsidiaries
or affiliates and obtained by the participant during the term of
his employment with the Company or any of its subsidiaries or
affiliates;
(v) Induces or attempts to induce, directly or
indirectly, any of the customers of the Company or its
subsidiaries or affiliates, employees, representatives or
consultants to terminate, discontinue or cease working with or
for the Company, or any of its subsidiaries or affiliates, or to
breach any contract with the Company or any of its subsidiaries
or affiliates, in order to work with or for, or enter into a
contract with, the participant or any third party; or
(vi) Engages in conduct which is not in good faith
and which disrupts, damages, impairs or interferes with the
business, reputation or employees of the Company or any of its
subsidiaries or affiliates.
The Committee shall determine in its sole discretion
whether the participant has engaged in any of the acts set forth
in (i) through (vi) above, and its determination shall be
conclusive and binding on all interested persons.
Any provision of this paragraph 6 which is determined
by a court of competent jurisdiction to be invalid or
unenforceable should be construed or limited in a manner that is
valid and enforceable and that comes closest to the business
objectives intended by such invalid or unenforceable provision,
without invalidating or rendering unenforceable the remaining
provisions of this paragraph 6.
7. Transferability. Awards made pursuant to the Plan
are not transferable or assignable by the participant other than
by will or the laws of descent and distribution, and payment
thereunder during the participant's lifetime shall be made only
to the participant or to the guardian or legal representative of
the participant. Payments which are due to a deceased
participant pursuant to the Plan shall be paid to the person or
persons to whom such right to payment shall have been transferred
by will or the laws of descent and distribution.
8. Others Terms and Conditions. Each participant
shall be required to enter into a Long-Term Incentive Plan
Agreement with the Company in a form approved by the Committee,
which form shall include provisions that the participant
(a) shall not disclose any trade secret data or any other
confidential information of the Company acquired by the
participant during such participant's employment by the Company
<PAGE>
Page 5
or one of its subsidiaries or affiliates, or after the
termination of employment or retirement, and (b) shall abide by
all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee.
9. Withholding Taxes. Whenever the payment of an
award is made, such payment shall be net of an amount sufficient
to satisfy federal, state and local withholding tax requirements
and authorized deductions.
10. Funding. No provision of the Plan, or Regulations
adopted hereunder, shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or
segregate or place any assets in a trust or other entity to which
contributions are made.
11. Amendment and Construction. The Plan may be
amended or revised by the Board of Directors of the Company by
the affirmative vote of a majority of the directors in office.
Any amendment to or revision of the Plan made by the Board of
Directors may be altered, changed or repealed by the stockholders
of the Company. The Plan will not be amended, without prior
approval of the stockholders, to: (i) increase the percentage
limitation specified in Paragraph 5 of the Plan; or (ii) modify
the eligibility requirements of the Plan.
12. Termination. The Plan may be terminated at any
time by resolution of the Board of Directors of the Company by
the affirmative vote of a majority of the directors in office;
provided, however, that such termination shall not affect any
incentive award which shall have been granted prior to such
termination.
<PAGE>
EXHIBIT (10)R
McKESSON CORPORATION
1989 MANAGEMENT INCENTIVE PLAN
Amended as of March 30, 1994
<PAGE>
McKESSON CORPORATION
1989 MANAGEMENT INCENTIVE PLAN
The name of this plan shall be the McKesson Corporation 1989
Management Incentive Plan. This Plan replaces in their entirety
both the Company's Management Incentive Plan and its Performance
Award Plan for Key Employees. This Plan is effective for fiscal
years of the Company commencing on and after April 1, 1989.
A. PURPOSE
The purpose of the Plan is to attract, retain and motivate
key employees by providing cash incentive awards to designated
executive, managerial and professional employees of the Company,
its subsidiaries and affiliates. The Plan is designed to link
managers' interests more closely with the interests of the
Company's shareholders.
The Plan is established as a single incentive plan to reward
designated executives, managers and professionals who contribute
to shareholder value. Each Participant's award will take into
account corporate performance as well as, where appropriate, his
or her own business unit's performance. The Plan also provides
that awards will reflect individual performance.
B. ADMINISTRATION
The Compensation Committee of the Board of Directors
("Committee") shall have full power and authority, subject to the
provisions of the Plan, to review and approve the designation of
Participants and to promulgate such rules and regulations as it
deems necessary for the proper administration of the Plan, to
interpret the provisions and supervise the administration of the
Plan, and to take all action in connection therewith or in
relation to the Plan as it deems necessary or advisable.
Decisions and selections of the Committee shall be made by a
majority of its members and, if made pursuant to the provisions
of the Plan, shall be final. Any decision reduced to writing and
signed by all of the members of the Committee shall be fully
effective as if it had been made at a meeting duly held.
C. PARTICIPATION
1. Eligibility - Executives, Managers and Professionals
Only active employees of the Company, its subsidiaries
or affiliates who are employed in an executive, managerial or
professional capacity may be designated as Participants under the
Plan.
Page 1
<PAGE>
2. Designation and Removal of Participants
No person shall be entitled to any award under this
Plan for any Year unless he or she is so designated as a
Participant for that Year. The Chief Executive Officer (CEO) of
the Company and such other persons as the CEO may designate,
shall recommend to the Committee employees (who may include such
recommending persons) for selection as Participants. The
Committee shall review and approve Plan Participants recommended
by management from among those employees who are eligible to
participate. The Committee may add to or delete individuals from
the list of designated Participants at any time and from time to
time, at its sole discretion.
3. Notice of Participation
As soon as reasonably practicable, each person who is a
Participant in the Plan for a Year will be notified.
D. INDIVIDUAL TARGET AWARDS FOR PARTICIPANTS
1. Targets, In General
At the beginning of each Year, an Individual Target
Award shall be established for each Participant. An Individual
Target Award shall only be a target and the amount of the target
may or may not be paid to the Participant. Establishment of an
Individual Target Award for an employee for any Year shall not
imply or require that an Individual Target Award be set for any
subsequent year. The amount of any actual award paid to any
Participant may be greater or less than this target. As set
forth in paragraph F4 below, the actual award may be as much as
three times target or as low as zero for any Year. The
establishment of an Individual Target Award for an employee shall
not affect the right of the Company, its subsidiaries or
affiliates to terminate, with or without cause, such employee's
employment at any time.
2. Percentage of Base Salary
Individual Target Awards shall be a percentage of the
Participant's base salary reviewed and approved by the Committee
in its sole discretion. It is contemplated that Individual
Target Awards will vary by Company position and responsibility
and shall range from 10% to 65% of base salary.
E. BASIS OF AWARDS
Awards will be based on contribution to shareholder value
and individual performance. Contribution to shareholder value is
the amount of profit earned on a shareholder's investment
compared to the amount expected from investments of similar risk.
Management of the Company will establish measures to calculate
Page 2
<PAGE>
the shareholder value contribution for each segment of the
Company and review such measures periodically with the Committee
for approval. The measures in use at the outset of this Plan for
corporate officers and corporate staff are profit after-tax at
specified levels of equity investment. The measures for the
Company's units and sub-units will be profit before-tax at
specified levels of capital investment or working capital.
Awards may be based on performance against objectives for
more than one segment of the Company. For example, awards for
corporate management will be based on overall corporate
performance against objectives, but awards for a unit's
management may be based on a combination of corporate, unit and
sub-unit performance against objectives.
Individual performance of each Participant will also be
measured and used in determining awards under this Plan.
F. AWARD DETERMINATION
1. Award Determined by Committee
After any Year for which an Individual Target Award is
established for a Participant under this Plan, the Committee
shall review and approve, modify or disapprove the amount, if
any, to be paid to the Participant for the Year. The amount paid
shall be the Individual Target Award adjusted to reflect both the
Company's financial performance and the Participant's individual
performance. All awards will be subject to the sole discretion
of the Committee.
2. Financial Performance
Individual Target Award amounts will be modified by
achievement of financial objectives by the Company and relevant
units and sub-units. Performance results against financial
objectives shall be reviewed and approved by the Committee. The
Committee may as a result of this review modify or change
objectives or performance results for the Year as it determines
to be necessary or appropriate to take into account changes
during the year including, but not limited to, changes in
accounting methods, acquisitions or divestitures, and unusual or
non-recurring financial or other events.
3. Individual Performance
Any Individual Target Award, adjusted to reflect
financial performance, will be further adjusted with the review
and approval of the Committee to give full weight to the
Participant's individual performance during the Year.
Page 3
<PAGE>
4. Overall Effect
The combination of any financial performance adjustment
and individual performance adjustment may increase the amount
paid under this Plan to a Participant for any Year to as much as
three times the Individual Target Award, and may reduce any
amount payable to zero. All awards will be subject to the review
and approval of the Committee in its sole discretion.
G. ELECTION TO DEFER PAYMENT
At the time established under the Company's Deferred
Compensation Administration Plan ("DCAP"), any Participant who is
eligible to participate in DCAP may irrevocably elect, in writing
and in accordance with DCAP, to defer his or her award under this
Plan so it is paid at the time and in the manner of, and subject to
the terms and conditions provided by, DCAP. If an election to
defer an award is not made, then any award under this Plan shall
be paid in a single sum to the Participant as soon as reasonably
practicable after the amount of the award is determined.
Notwithstanding the above provisions, no amount shall be deferred
for the Year under DCAP unless the actual award under this Plan
for that Year is at least $5,000. No awards may be deferred by a
Participant under DCAP unless he or she is an active employee of
the Company as of the end of the Year.
H. NO MANAGEMENT INCENTIVE FUND
Awards paid under this Plan shall not be based on or payable
from a "pool" or a "Management Incentive Fund".
I. EMPLOYMENT AT YEAR END GENERALLY REQUIRED FOR AWARD
No award shall be made to any Participant who is not an
active employee of the Company or one of its subsidiaries or
affiliates at the end of the Year; provided, however, that the
Committee, in its sole and absolute discretion, may make pro-rata
awards to Participants during a year in circumstances that
Committee deems appropriate including, but not limited to, a
Participant's death, disability, retirement or other termination
of employment during such Year. Any such pro-rated awards shall
be determined by the Committee in accordance with Section F above
after taking into account the portion of the Year then completed.
J. NONASSIGNMENT AND PARTICIPANTS ARE GENERAL CREDITORS
The interest of any Participant under the Plan shall not be
assignable either by voluntary or involuntary assignment or by
operation of law, except by designation of a beneficiary or
beneficiaries to the extent allowed under the Company's DCAP.
Page 4
<PAGE>
K. AMENDMENT OR TERMINATION
While the Company hopes to continue the Plan indefinitely,
it reserves the right in its Board of Directors to amend, suspend
or terminate the Plan or adopt a new plan at any time; provided
that no such amendment shall retroactively and adversely affect
the payment of any award previously made. In case any one or
more of the provisions contained in the Plan shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision of the Plan, but the Plan shall be construed
as if such invalid, illegal or unenforceable provisions had never
been contained herein.
L. DEFINITIONS
"Company" means McKesson Corporation, a Delaware corporation.
"Committee" means the Compensation Committee of the Board of
Directors of McKesson Corporation.
"Individual Target Award" means the target award established
for each Participant under Article D.
"Participants" mean those employees specifically designated as
Participants for a Year under Article C.
"Plan" means the McKesson Corporation 1989 Management
Incentive Plan.
"Year" means the fiscal year of the Company.
Executed as of March 30, 1994 in the City and County of San
Francisco.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
Page 5
<PAGE>
EXHIBIT (10)S
McKESSON CORPORATION
1988 RESTRICTED STOCK PLAN
(As Amended through March 30, 1994)
I. GENERAL
1. Definitions. Whenever used herein, the following terms
shall have the meanings set forth below:
(a) "Approved Retirement" shall mean any termination
of employment with the Corporation after attainment of age 65
(except termination for cause) or any retirement before age 65
with the approval of the Board.
(b) "Board" means the Board of Directors of the
Corporation.
(c) "Committee" means the Compensation Committee of
the Board, which shall consist of not less than three members of
the Board who shall be appointed by and serve at the pleasure of
the Board and who shall be "disinterested" within the meaning of
Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
No person who is a Participant may be a member of said Committee,
and any person who is appointed a member of said Committee and
who accepts such appointment shall, by virtue thereof, be
ineligible thereafter to be granted a Restricted Stock Grant
under the Plan.
(d) "Corporation" means McKesson Corporation, a
Delaware corporation.
(e) "Disability" or "Disabled" shall mean (1) a
physical or mental condition which, in the judgment of the
Committee based on competent medical evidence satisfactory to the
Committee, including, if required by the Committee, medical
evidence obtained by an examination conducted by a physician
selected by the Committee, renders an individual unable to engage
in any substantial gainful activity for the Corporation and which
impairment is likely to result in death or to be of long
continued and indefinite duration, or (2) a judicial declaration
of incompetence.
(f) "Eligible Employee" means any employee of the
Corporation or any Subsidiary (including employees who are
directors and/or officers) who, as determined by the Committee in
its sole discretion, has and exercises management functions and
responsibilities.
<PAGE>
2
(g) "Participant" means an individual to whom a
Restricted Stock Grant is granted under the Plan.
(h) "Plan" means the 1988 Restricted Stock Plan of the
Corporation as described herein.
(i) "Restricted Stock Grant" or "Grant" means a grant
described in Part II of the Plan which is made by the Corporation
and approved by the Committee under and pursuant to the Plan.
(j) "Stock" means the Common Stock, $2.00 par value,
of the Corporation.
(k) "Subsidiary" means a subsidiary of the Corporation or
an unincorporated organization controlled, directly or
indirectly, by either voting or equity control, by the
Corporation, including subsidiaries or unincorporated
organizations which may be created or acquired while the Plan is
in effect.
2. Purpose. The purpose of the Plan is to aid the
Corporation and its Subsidiaries in attracting, retaining and
motivating management employees with outstanding ability,
competence and potential. The Plan provides such employees with
a proprietary interest in the Corporation's success and progress
by granting to them shares of Stock in accordance with the terms
and conditions set forth below.
3. Administration. The Plan shall be administered by the
Committee. Subject to all the applicable provisions of the Plan,
the Committee is authorized to approve Restricted Stock Grants in
accordance with the Plan, to construe and interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to
the Plan, and to make all determinations and to take all actions
necessary or advisable for the Plan's administration. The
Committee shall act by vote or written consent of a majority of
its members. Whenever the Plan authorizes or requires the
Committee to take any action, make any determination or decision,
or form any opinion, then any such action, determination,
decision or opinion by or of the Committee shall be in the
absolute discretion of the Committee and shall be final and
binding upon all persons in interest, including the Corporation,
its shareholders, and all Eligible Employees.
4. Shares of Stock Under the Plan. There may be granted
under the Plan an aggregate of not more than 525,000 shares of
Stock, subject to adjustment as provided in Section 3 of Part III
of the Plan. Shares of Stock granted under the Plan shall be
treasury shares. If, on or before termination of the Plan, any
shares of Stock shall be reacquired by the Corporation pursuant
to the termination provisions described in Section 1 of Part II
of the Plan or in the instruments evidencing the making of
<PAGE>
3
Restricted Stock Grants, such shares may again be granted under
the Plan. Prior to the making of Restricted Stock Grants, the
Corporation shall be under no obligation to reserve or retain in
its treasury any particular number of shares of Stock at any
time, and no particular shares of Stock, whether issued or held
as treasury Stock, shall be identified as being available for
future Restricted Stock Grants under the Plan.
5. Participants. From time to time the Committee shall,
in its sole discretion, but subject to all of the provisions of
the Plan, determine which Eligible Employees will be granted
Restricted Stock Grants under the Plan and the number of shares
of Stock to be granted to each Participant and the terms,
conditions and restrictions of each such Restricted Stock Grant.
In making such determinations, the Committee shall take into
account the nature of services rendered and to be rendered by the
respective recipients, their present and potential contribution
to the Corporation's success and such other factors as the
Committee in its discretion deems relevant to the accomplishment
of the purposes of the Plan. In any year, the Committee may
approve the grant to any Eligible Employee of Restricted Stock
Grants subject to differing terms and conditions. The
Committee's decision to approve the grant of a Restricted Stock
Grant to an employee in any year shall not require the Committee
to approve the grant of a Restricted Stock Grant to that employee
in any other year or to any other employee in any year; nor shall
the Committee's decision with respect to the number of shares of
Stock or the terms, conditions and restrictions applicable to any
Restricted Stock Grant to be made to an employee in any year,
require the Committee to approve the grant of the same number of
shares of Stock or of Restricted Stock Grants with the same
terms, conditions and restrictions to that employee in any other
year or to any other employee in any year. The Committee shall
not be precluded from approving the grant of a Restricted Stock
Grant to any Eligible Employee solely because such employee
previously may have been granted a Restricted Stock Grant under
the Plan.
6. Rights with Respect to Shares of Stock. An Employee to
whom a Restricted Stock Grant has been made shall be notified of
the Grant. Upon written acceptance of the Grant by the Eligible
Employee, including the restrictions and other terms and
conditions described in the Plan and in the instrument evidencing
such Grant, the Corporation shall cause to be issued or
transferred to the name of the Eligible Employee a certificate or
certificates for the number of shares of Stock granted, subject
to the provisions of Part II hereof (including those related to
custody arrangements that may be established). The date of issue
or transfer of such shares of Stock on the books of the
Corporation shall be deemed to be the date of grant (hereinafter,
"date of grant") of the Restricted Stock Grant for all purposes
of the Plan. From and after the date of grant, the Eligible
<PAGE>
4
Employee shall be a Participant and shall have absolute ownership
of such shares of Stock, including the right to vote and to
receive dividends thereon, subject to the terms, conditions and
restrictions described in the Plan and in the instrument
evidencing the grant of such Restricted Stock Grant.
7. Employment. In the absence of any specific agreement
to the contrary, no grant of a Restricted Stock Grant to a
Participant under the Plan shall affect any right of the
Corporation or any Subsidiary to terminate, with or without
cause, the Participant's employment at any time.
II. RESTRICTED STOCK
Each Restricted Stock Grant made under the Plan shall
contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be
determined by the Committee; provided, however, that no
Restricted Stock Grant shall be subject to additional terms,
conditions and restrictions which are more favorable to a
Participant than the terms, conditions and restrictions set forth
elsewhere in this Plan.
1. Restrictions. Until the restrictions imposed on any
Restricted Stock Grant shall lapse, shares of Stock granted to a
Participant pursuant to a Restricted Stock Grant,
(a) shall not be sold, assigned, transferred, pledged,
hypothecated, or otherwise disposed of, and
(b) shall, if the Participant's continuous employment
with the Corporation or any Subsidiary shall terminate for any
reason, except as provided in Section 3 of this Part II, be
returned to the Corporation forthwith, and all the rights of the
Participant to such shares shall immediately terminate; provided,
that if the Committee, in its sole discretion, shall within
ninety (90) days of such termination of employment, notify the
Participant in writing of its decision not to terminate the
Participant's rights in such shares, then the Participant shall
continue to be the owner of shares of Stock subject to such
continuing restrictions as the Committee may prescribe in such
notice. If the Participant's interests in the shares of Stock
granted pursuant to a Restricted Stock Grant shall be terminated,
such Participant shall forthwith deliver or cause to be delivered
to the Secretary or any Assistant Secretary of the Corporation
the certificate(s), if any, previously delivered to the
Participant for such shares of Stock, accompanied by such
endorsement(s) and/or instrument(s) of transfer as may be
required by the Secretary or any Assistant Secretary of the
Corporation.
<PAGE>
5
2. Lapse of Restrictions. Subject to the provisions of
this Plan and the related award agreements, the restrictions
imposed on any Restricted Stock Grant shall commence with the
date of the grant and continue during a period set by the
Committee. Within these limits, the Committee may provide for
the lapse of such restrictions in installments where deemed
appropriate. Notwithstanding the foregoing, the Committee may
accelerate the lapsing of restrictions on a Restricted Stock
Grant under such terms and conditions as may be appropriate.
3. Termination of Employment by Reason of Death,
Disability, or Approved Retirement. Any provisions of Section 1
of this Part II to the contrary notwithstanding, if a Participant
who has been in the continuous employment of the Corporation or a
Subsidiary since the date of grant of a Restricted Stock Grant to
such Participant shall, while in such employment, be terminated
as a result of Death, Disability, or Approved Retirement, then
the restrictions imposed on any Restricted Stock Grant shall
lapse as to all shares of Stock granted to such Participant
pursuant to such Restricted Stock Grant on the date of such
event.
4. Change in Control. In the event of a Change in Control
of the Corporation, all restrictions on outstanding Restricted
Stock Grants shall immediately lapse.
For purposes of this Plan, a "Change in Control" of the
Corporation shall be deemed to have occurred if any of the events
set forth in any one of the following paragraphs shall occur:
(a) any "person" (as defined in Section 3(a)(9)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and as such term is modified in Sections 13(d) and 14(d)
of the Exchange Act), excluding the Corporation or any of its
subsidiaries, a trustee or any fiduciary holding securities under
an employee benefit plan of the Corporation or any of its
subsidiaries, an underwriter temporarily holding securities
pursuant to an offering of such securities or a corporation
owned, directly or indirectly, by stockholders of the Corporation
in substantially the same proportions as their ownership of the
Corporation, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 30% or more of the
combined voting power of the Corporation's then outstanding
securities; or
(b) during any period of not more than two
consecutive years, individuals who at the beginning of such
period constitute the Board and any new director (other than a
director designated by a Person who has entered into an agreement
with the Corporation to effect a transaction described in clause
(a), (c) or (d) of this paragraph) whose election by the Board or
nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
<PAGE>
6
previously so approved, cease for any reason to constitute a
majority thereof; or
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation, at least 50%
of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no person acquires
more than 50% of the combined voting power of the Corporation's
then outstanding securities; or
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement
for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets.
Notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if there is consummated any transaction
or series of integrated transactions immediately following which
the holders of the Corporation's Common Stock immediately prior
to such transaction or series of transactions continue to have
the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Corporation immediately
prior to such transaction or series of transactions.
5. Special Forfeiture and Repayment Rules. Any provisions
of this Plan to the contrary notwithstanding, if the Committee
determines that a Participant has engaged in any of the actions
described in (c) below, the consequences set forth in (a) and (b)
below shall result:
(a) Any Restricted Stock Grant made on or after
October 27, 1993 as to which the restrictions have not lapsed
shall immediately and automatically be forfeited and the shares
representing such Grant shall be returned to the Corporation and
all of the rights of the Participant to such shares shall
immediately terminate;
(b) If the restrictions imposed on any Restricted
Stock Grant made on or after October 27, 1993, lapsed within six
months prior to the date the Corporation discovered that the
Participant engaged in any action described in (c) below, the
Participant, upon written notice from the Corporation, shall
<PAGE>
7
immediately pay to the Corporation the economic value realized or
obtained with respect to such Restricted Stock Grant, measured at
the date the Restricted Stock Grant vested.
(c) The consequences described in (a) and (b) above
shall apply if the Participant, either before or after
termination of employment with the Corporation or any Subsidiary:
(i) Discloses to others, or takes or uses for his
own purpose or the purpose of others, any trade secrets,
confidential information, knowledge, data or know-how belonging
to the Corporation or any Subsidiary and obtained by the
Participant during the term of his employment, whether or not
they are the Participant's work product. Examples of such
confidential information or trade secrets include (but are not
limited to) customer lists, supplier lists, pricing and cost
data, computer programs, delivery routes, advertising plans, wage
and salary data, financial information, research and development
plans, processes, equipment, product information and all other
types and categories of information as to which the Participant
knows or has reason to know that the Corporation or any
Subsidiary intends or expects secrecy to be maintained;
(ii) Fails to promptly return all documents and
other tangible items belonging to the Corporation or any
Subsidiary in the Participant's possession or control, including
all complete or partial copies, recordings, abstracts, notes or
reproductions of any kind made from or about such documents or
information contained therein, upon termination of employment,
whether pursuant to retirement or otherwise;
(iii) Fails to provide the Corporation with at
least thirty (30) days' written notice prior to directly or
indirectly engaging in, becoming employed by, or rendering
services, advice or assistance to any business in competition
with the Corporation or any Subsidiary. As used herein,
"business in competition" means any person, organization or
enterprise which is engaged in or is about to become engaged in
any line of business engaged in by the Corporation or any
Subsidiary at the time of the termination of the Participant's
employment with the Corporation or any Subsidiary;
(iv) Fails to inform any new employer, before
accepting employment, of the terms of this section and of the
Participant's continuing obligation to maintain the
confidentiality of the trade secrets and other confidential
information belonging to the Corporation or any Subsidiary and
obtained by the Participant during the term of his employment
with the Corporation or any Subsidiary;
(v) Induces or attempts to induce, directly or
indirectly, any of the customers of the Corporation or any
<PAGE>
8
Subsidiary, employees, representatives or consultants to
terminate, discontinue or cease working with or for the
Corporation or any Subsidiary, or to breach any contract with the
Corporation or any Subsidiary, in order to work with or for, or
enter into a contract with, the Participant or any third party;
or
(vi) Engages in conduct which is not in good faith
and which disrupts, damages, impairs or interferes with the
business, reputation or employees of the Corporation or any
Subsidiary.
The Committee shall determine in its sole discretion whether
the Participant has engaged in any of the acts set forth in (i)
through (vi) above, and its determination shall be conclusive and
binding on all interested persons.
Any provision of this section which is determined by a court
of competent jurisdiction to be invalid or unenforceable shall be
construed or limited in a manner that is valid and enforceable
and that comes closest to the business objectives intended by
such invalid or unenforceable provision, without invalidating or
rendering unenforceable the remaining provisions of this section.
6. Agreement by Participant Regarding Withholding Taxes.
Each Participant granted a Restricted Stock Grant shall be
subject to the following rules (as modified by the provisions of
Section 7 of this Part II):
(a) No later than the date as to which the
restrictions imposed on any Restricted Stock Grant shall lapse,
such Participant must pay to the Corporation, or make
arrangements satisfactory to the Committee regarding payment of
any federal, state or local taxes of any kind required by law to
be withheld with respect to the shares of Stock subject to the
Restricted Stock Grant.
(b) The Corporation and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Participant any federal,
state or local taxes of any kind required by law to be withheld
with respect to the shares of Stock subject to the Restricted
Stock Grant.
(c) A Participant may make an election to have the
Corporation retain some portion of the Restricted Stock Grant to
satisfy tax withholding requirements. The election must be made
in accordance with the following conditions:
(i) The election is made prior to the date on
which the amount to be withheld is determined;
(ii) The election is irrevocable;
(iii) The election is subject to the approval of
the Committee;
<PAGE>
9
(iv) The election is made on or after August 1,
1992;
(v) If the Participant is an officer of the
Corporation within the meaning of Section 16 of the Securities
Exchange Act of 1934, the election is made during the ten-day
period beginning on the third business day following the date of
release of the Corporation's quarterly and annual summary
statements of sales and earnings.
If a qualifying election is made, then upon the lapse of
restrictions, the Corporation will retain the number of shares of
stock having a value equal to the amount necessary to satisfy any
withholding requirements. Calculation of the number of shares to
be withheld shall be made based on the composite closing price of
the Stock on the New York Stock Exchange on the date that the
restrictions lapse. In no event, however, shall the Corporation
be required to issue fractional shares of Stock.
The Committee shall be authorized to establish such rules,
forms and procedures as it deems necessary to implement the
foregoing.
7. Election to Recognize Gross Income in the Year of
Grant. If any Participant properly elects within thirty (30)
days of the date of grant, to include in gross income for federal
income tax purposes an amount equal to the fair market value of
the shares of Stock granted on the date of grant, such
Participant shall pay to the Corporation, or make arrangements
satisfactory to the Committee to pay to the Corporation in the
year of such grant, any federal, state or local taxes required to
be withheld with respect to such shares. If such Participant
shall fail to make such payments, the Corporation and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to the
Participant any federal, state or local taxes of any kind
required by law to be withheld with respect to such shares of
Stock.
8. Restrictive Legend; Certificates May be Held in
Custody. Each certificate evidencing shares of Stock granted
pursuant to a Restricted Stock Grant may bear an appropriate
legend referring to the terms, conditions and restrictions
described in the Plan and in the instrument evidencing the
Restricted Stock Grant. Any attempt to dispose of such shares of
Stock in contravention of such terms, conditions and restrictions
shall be invalid. As provided in Section 6 of Part I, the
Committee may enact rules which provide that the certificates
evidencing such shares may be held in custody by a bank or other
institution, or that the Corporation may itself hold such shares
in custody, until restrictions thereon shall have lapsed.
<PAGE>
10
9. Assignability. Except as provided in Section 10 of
this Part II, no benefit payable under or interest in the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such
attempted action shall be void and no such benefit or interest
shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements, or torts of any Participant or
beneficiary. If any Participant or beneficiary shall become
bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any benefit payable
under or interest in the Plan, then the Committee in its
discretion may hold or apply such benefit or interests or any
part thereof to or for the benefit of such Participant or his
beneficiary, his spouse, children, blood relatives, or other
dependents, or any of them, in such manner and in such
proportions as the Committee may consider proper.
10. Designation of Beneficiary. Each Participant who shall
be granted a Restricted Stock Grant under the Plan may designate
a beneficiary or beneficiaries and may change such designation
from time to time by filing a written designation of
beneficiaries with the Committee on a form to be prescribed by
it; provided, that no such designation shall be effective unless
received prior to the death of such Participant.
11. Restrictions upon Making of Restricted Stock Grants.
The registration or qualification under any federal or state law
of any shares of Stock to be granted pursuant to Restricted Stock
Grants or the resale or other disposition of any such shares of
Stock by or on behalf of the Participants receiving such shares
may be necessary or desirable as a condition of or in connection
with such Restricted Stock Grants, and, in any such event, if the
Committee in its sole discretion so determines, delivery of the
certificates for such shares of Stock shall not be made until
such registration or qualification shall have been completed.
12. Restrictions Upon Resale of Stock. If the shares of
Stock that have been granted to a Participant pursuant to the
terms of the Plan are not registered under the Securities Act of
1933, as amended ("Securities Act"), pursuant to an effective
registration statement, such Participant, if the Committee shall
deem it advisable, may be required to represent and agree in
writing (i) that any shares of Stock acquired by such Participant
pursuant to the Plan will not be sold except pursuant to an
effective registration statement under the Securities Act, or
pursuant to an exemption from registration under said Act and
(ii) that such Participant is acquiring such shares of Stock for
his or her own account and not with a view to the distribution
thereof.
<PAGE>
11
III. MISCELLANEOUS
1. Effective Date of the Plan. The Plan shall become
effective upon its adoption by the Board, subject to the approval
thereof by the stockholders of the Corporation having at least a
majority of the voting power of all stock of the Corporation
present in person or represented by proxy and entitled to be
voted thereon at the Annual Meeting of Stockholders of the
Corporation to be held on July 27, 1988 or any reconvened
sessions thereof. Notwithstanding the provisions of Section 6 of
Part I, Participants shall not have the right to vote or receive
dividends on shares of Stock granted pursuant to Restricted Stock
Grants until the stockholders of the Corporation have approved
the Plan. Should the stockholders of the Corporation fail to
approve the Plan, the Plan and all outstanding Restricted Stock
Grants thereunder shall be null and void.
2. Duration of Plan. The Plan shall remain in effect from
the effective date until terminated by the Board of Directors of
the Corporation. Termination of the Plan shall not affect any
Restricted Stock Grants previously granted pursuant thereto,
which shall remain in effect until their restrictions shall have
lapsed, all in accordance with their terms.
3. Adjustments Upon Changes in Capitalization. If there
shall be any change in the Stock subject to the Plan or the Stock
subject to any Restricted Stock Grant and/or Restricted Incentive
Stock Grant (as described in Part IV) granted hereunder, through
merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of 2%),
or other change in the corporate structure of the Corporation,
appropriate adjustments shall be made by the Committee in the
aggregate number of shares subject to the Plan and the number of
shares subject to outstanding Restricted Stock Grants and/or
Restricted Incentive Stock Grants in order to preserve, but not
to increase, the benefits of the Participant. If the Corporation
shall not be the surviving corporation in any merger,
consolidation, or reorganization, shares of Stock which are
converted into common stock or other securities of the surviving
corporation shall be subject to the same terms, conditions and
restrictions as applicable to such shares of Stock immediately
prior to conversion, unless such terms, conditions and
restrictions have lapsed pursuant to Section 3 of Part II hereof.
For purposes of the foregoing, a change in the Stock subject
to the Plan or the Common Stock subject to any Restricted Stock
Grant granted hereunder shall include an extraordinary dividend
or other extraordinary distribution (whether in cash, property,
securities or any combination thereof) with respect to such
Stock. Notwithstanding the first sentence of this Section 3, if
the Committee determines that a change (as hereinabove described)
shall have occurred in the Stock subject to the Plan or the Stock
<PAGE>
12
subject to any Restricted Stock Grant granted hereunder, and that
adjustments in the aggregate number of shares subject to the Plan
and in the number of shares subject to outstanding Restricted
Stock Grants will not adequately preserve the benefits of the
Participant, then the Committee shall make such other adjustments
or arrangements (including providing for the issuance of cash,
property and/or securities in addition to or in lieu of shares of
Stock following such change) as in its sole judgment will be
adequate for such purpose.
4. Expenses of Plan. The expenses of the Plan shall be
borne by the Corporation.
5. Amendment or Termination. The Board may, by
resolution, amend or terminate the Plan at any time; provided,
however, that, subject to the provisions of Section 3 of this
Part III, the Board may not, without approval by the holders of a
majority of the shares of Stock represented at a meeting of
stockholders called for that purpose, increase the number of
shares of Stock which may be granted under the Plan, change the
class of management employees eligible to participate in the
Plan, or otherwise materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements
with respect to eligibility for participation in the Plan. In
the event that a Restricted Stock Grant has been made to a
Participant, then no amendment of the Plan after the date as of
which such Restricted Stock Grant was made, shall adversely
affect any right of such Participant with respect to such
Restricted Stock Grant without the written consent of such
Participant.
IV. RESTRICTED INCENTIVE STOCK
The Committee is authorized to approve Restricted Incentive
Stock Grants ("RIS Grants") to Eligible Employees with respect to
nonqualified stock options granted to them by the Corporation on
or after February 3, 1988 ("Stock Options"). The Committee, in
its discretion, shall grant RIS Grants to optionees in order to
encourage them to hold shares of Stock following exercise of
Stock Options. RIS Grants shall be issued in accordance with the
provisions of the Plan applicable to Restricted Stock Grants and
shall have the same terms, conditions and restrictions as
Restricted Stock Grants (except for the provisions of Section 2
of Part II of the Plan). In addition, RIS Grants shall have the
following terms, conditions and restrictions:
1. On the date of exercise of a Stock Option (the
"Exercise Date"), the optionee who is the recipient of an RIS
Grant shall designate to the Secretary or Assistant Secretary of
the Corporation the number of Stock Option shares (the "Option
Shares") with respect to which he or she desires to receive
shares of Stock pursuant to the RIS Grant.
<PAGE>
13
2. On the Exercise Date, an optionee shall be awarded,
pursuant to a RIS Grant, one share of Stock for every ten Option
Shares.
3. The Corporation shall hold certificates evidencing
shares of Stock granted pursuant to an RIS Grant and the related
Option Shares.
4. The restrictions imposed on any RIS Grant shall lapse
on the third anniversary of the Exercise Date provided that the
related Option Shares have not been sold, assigned, transferred,
pledged, hypothecated, or otherwise disposed of prior to such
third anniversary. If the related Option Shares have been so
disposed of, then all rights to the shares granted pursuant to
the RIS Grant shall immediately terminate.
<PAGE>
EXHIBIT (10)U
McKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
Amended as of October 27, 1993
<PAGE>
McKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
AS AMENDED EFFECTIVE OCTOBER 27, 1993
A. PURPOSE
This Plan is established to enable the Company to attract
and retain key executive personnel by assisting them and their
survivors in maintaining their standards of living on the
Executive's retirement or earlier death.
B. ERISA PLAN
This Plan is an unfunded deferred compensation program for a
select group of highly compensated management employees of the
Company. The Plan, therefore, is generally covered by Title I of
ERISA, but is exempt from Parts 2, 3, and 4 of Title I of ERISA.
C. PARTICIPATION
1. Selection by the Board. The Board may select, at its
discretion and from time to time as it decides, the Key
Executives who participate in this Plan. Participation in the
Plan shall be limited to those Executives of the Company who are
selected by the Board. Selection of a Key Executive to
participate in the Plan may be evidenced by the terms of his
contract of employment with the Company.
2. Addition and Removal of Participants. The Board may,
at its discretion and at any time, designate additional
Executives to participate in the Plan and remove Executives from
participation in the Plan. If an Executive is removed from
participation prior to reaching age 65, he shall be entitled to
receive benefits, if any, as specified in Section D or F.
3. Notification of Participants. The Administrator shall
annually notify each Executive that he is a participant in the
Plan and shall notify each Executive of the estimated amount of
benefits which he will receive under the Plan on Approved
Retirement.
4. Relation to Other Plans, Etc. If an Executive
participates in this Plan, he shall not participate in or receive
benefits under any other Company-paid plan, program or agreement
that provides Company Executives, or the individual Executive,
with retirement benefits that supplement or are in addition to
the benefits under the Retirement Plan, Profit Sharing Investment
Plan or Supplemental Profit-Sharing Investment Plan, unless
otherwise specifically approved by the Board. For example, any
Executive who participates in this Plan shall not receive any
retirement benefits under the McKesson Executive Benefit Plan or
under any Supplemental Retirement Agreement or Deferred
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<PAGE>
Compensation Agreement that provides retirement benefits in
addition to benefits provided under the Retirement Plan or
Profit-Sharing Investment Plan. This paragraph shall not limit
an Executive's participation in or benefits under any plan or
program under which the Executive voluntarily defers for later
payment compensation otherwise currently payable to him (such as,
but not limited to, the Deferred Compensation Administration
Plan).
D. BENEFITS ON APPROVED RETIREMENT
1. Amount of Benefits.
a. In General. Except as otherwise provided herein,
each Executive who participates in the Plan and terminates
employment by reason of an Approved Retirement shall be entitled
to receive monthly payments equal to (1) reduced by (2), as
follows:
(1) The percentage of Average Final Compensation
specified for the Executive, which shall be as provided herein
and no higher than sixty percent (60%)
reduced by
(2) the Executive's Basic Retirement Benefits.
The percentage stated in clause (1) may be specified by the Board
or may be specified in the Executive's written employment
contract with the Company. Unless otherwise determined by the
Board, the percentage of Average Final Compensation specified in
clause (1) shall be 20% plus 0.148% for each completed month
(1.77% per completed year) of the Executive's full-time
continuous employment with the Company which the Executive would
have if he were to be so employed until he reaches age 65, or, if
later, the date of his Approved Retirement, but shall not be
higher than 60%.
b. Effect of Plan Termination. If the Plan is
terminated with respect to any or all Executives, each affected
Executive who later terminates employment by reason of an
Approved Retirement shall be entitled to receive upon such
Approved Retirement monthly payments equal to (1) the applicable
percentage of Average Final Compensation under Section D.1.a.
multiplied by his Pro Rata Percentage, reduced by (2) his Basic
Retirement Benefits. For purposes of this section, his Pro Rata
Percentage and Average Final Compensation shall be calculated by
treating the date of Plan termination as the date that his
employment with the Company terminates.
c. Removal from Participation. If an Executive is
removed from Plan participation, and later terminates employment
by reason of an Approved Retirement, he shall be treated as if
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<PAGE>
the Plan were terminated with respect to him as of the date of
his removal, and his benefits shall be determined under
Section D.l.b. above except that his Basic Retirement benefits
reduction will be determined as of the date of his Approved
Retirement.
d. Change in Percentage.
(1) If the percentage of Average Final
Compensation specified in Section D.l.a. is reduced, the
percentage applied to determine the Executive's benefit shall be
determined by averaging over his period of participation in the
Plan (and in the Executive Benefit Plan) the percentages that
have been so specified. For example, if an Executive's
percentage is reduced from 60% to 50%, and one-half of his Plan
participation is at 60% and one-half at 50%, the percentage used
to determine his benefits will be 55%. (See Appendix C.)
In addition, the benefit payable under this
Plan after a reduction in such percentage shall not be less than
the benefit that would have been paid if the Plan had been
terminated with respect to the Executive on the date of such
reduction.
(2) If the percentage of Average Final
Compensation specified in Section D.l.a. is increased, such
increased percentage shall apply for determining Plan benefits
without averaging it with prior percentages, and all prior Plan
participation shall be treated as having been participation under
that increased percentage.
e. Reduction for Basic Retirement Benefits. The
reduction for the Executive's Basic Retirement Benefits shall be
applied, unless otherwise provided herein, by calculating all
benefits as if they were payable in the form of a straight life
annuity beginning at the date of Approved Retirement, without
survivor benefits. There is no requirement, however, that the
benefits payable under this Plan and any other plan be paid in
the same form or at the same time.
2. Time of Payment. The benefits provided on Approved
Retirement shall commence on the first day of the month following
the date of the Executive's Approved Retirement.
3. Early Retirement Benefit. If an Executive's Approved
Retirement occurs before attaining age 62, he shall receive a
reduced benefit commencing on the first day of the month
following his Approved Retirement. This benefit shall be reduced
beginning at age 62 at the same rate per year as that specified
for Retirement before Social Security Normal Retirement age under
the Retirement Plan. On Approved Retirement before age 62, the
reduction for Basic Retirement Benefits shall be applied by
calculating all benefits as if they were payable in the form of a
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<PAGE>
straight life annuity at the date of Approved Retirement before
age 62, without survivor benefits, to determine the net benefit
payable under this Plan. See Appendix A for an example of this
calculation.
4. No Election of Delayed Retirement Benefit. An
Executive may not elect to delay the beginning of his retirement
benefits under the Plan after the time for commencement specified
in Section D.2. or D.3., as applicable.
E. DEATH BENEFITS
1. Death After Approved Retirement. If an Executive dies
after Approved Retirement, benefits shall be paid after his death
only in accordance with the Method of Payment determined under
Section H. For example, if the Executive received a straight
life annuity or a lump sum, no benefits shall be paid under this
Plan after his death.
2. Death While Employed.
a. Benefits Payable to Beneficiary. If an Executive
dies while he is employed by the Company, his beneficiary shall
receive the monthly benefit that would have been paid to such
beneficiary if the Executive had terminated employment by reason
of an Approved Retirement on the last day of the month before his
death, had elected to receive his benefits in the actuarially
reduced form of a joint and 100% survivor annuity with his
beneficiary as the contingent annuitant, had begun to receive
such benefits on the day prior to his death, and died immediately
thereafter. Such payment shall be calculated by first
determining the amount payable to the Executive under this Plan
without reduction for Basic Retirement Benefits (applying any
early Retirement Benefit reduction and applying the actuarial
reduction for joint and 100% survivor annuity) and only
thereafter making a reduction for Basic Retirement Benefits. The
reduction for Basic Retirement Benefits in connection with the
Retirement Plan in this case shall be in the amount payable, if
any, under the Retirement Plan as a spouse allowance; if any
spouse allowance is payable under the Retirement Plan on account
of the Executive, this reduction shall be made even if the
Executive's beneficiary under this Plan is not his surviving
spouse. See Appendix B for an example of this calculation.
b. Average Final Compensation. For purposes of the
calculations under this Section E.2., the Executive's Average
Final Compensation shall be based on the compensation he actually
earned during his employment with the Company.
c. No Designated Beneficiary. If an Executive dies
before Approved Retirement without having designated a
beneficiary, and was married on the date of his death, his
surviving spouse shall be his beneficiary, unless otherwise
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<PAGE>
provided by applicable community property or other laws or court
order. If he dies before Approved Retirement, has no surviving
spouse and has not designated a beneficiary, the present value of
the benefits that would be paid to a surviving spouse of the same
age as the Executive under a joint and 100% survivor annuity form
(and under the method of calculation provided in Section E.2.a.
and b.) shall be paid to the Executive's estate in two equal
amounts in the 14 months following death. The present value of
benefits shall be determined under factors established and
uniformly applied by the Administrator.
3. Designation of Beneficiary. An executive may designate
any natural person as his beneficiary, but may not designate more
than one person, or any person that is not a natural person,
without the approval of the Administrator. Designation shall be
made in writing and shall become effective only when filed with
the Administrator. Such filing must occur before the Executive's
death. An Executive may change his beneficiary, from time to
time, by filing a new written designation with the Administrator.
If the Executive is married, any Beneficiary designation which
does not designate the Executive's spouse to receive at least
one-half of the benefit payable on the Executive's death shall
only become effective when approved in writing by the Executive's
spouse.
F. TERMINATION BEFORE APPROVED RETIREMENT
1. Basic Rule
a. Termination Benefits. Subject to other applicable
provisions in this Plan, an Executive who terminates employment
with the Company other than on Approved Retirement or death shall
be entitled to receive, beginning at age 65, monthly payments
equal to his Termination Benefits. An Executive's Termination
Benefits are equal to 1) the applicable percentage of Average
Final Compensation under Section D.l.a., multiplied by his Pro
Rata Percentage and reduced by 2) his Basic Retirement Benefits
at the later of age 65 or the date of actual termination.
b. Plan Termination or Removal from Participation.
An Executive who terminates employment with the Company other
than on Approved Retirement or death and who has been removed
from Plan participation ("removal") , or with respect to whom the
Plan has terminated prior to his termination of employment
("termination") shall be entitled to receive, beginning at
age 65, monthly payments determined under this Section F but
treating his date of "removal" or "termination", whichever is
applicable, as his date of termination of employment for purposes
of calculating his Pro Rata Percentage and Average Final
Compensation.
c. Reduction for Subsequent Employer Benefits. Any
amount payable under Section F.l.a. or b. shall be reduced by any
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retirement benefit payable to the Executive or his beneficiary on
account of service rendered to another employer after his
termination of employment with the Company.
2. Limitations. No benefits shall be paid under this
Section F to:
a. Termination for Cause. An Executive who is
terminated for cause. If the Executive has a written employment
agreement, "cause" shall be determined in accordance with that
agreement. Otherwise, "cause" shall be determined by the
Administrator.
b. Violation of Employment Agreement. An Executive
who terminates his employment in violation of his written
employment agreement (if any). Termination is in violation of an
employment agreement if termination occurs before the end of the
term of that contract and is not allowed by the agreement (e.g.,
for "good reason").
c. No Vested Interest. An Executive who has no
vested interest in benefits under the Retirement Plan at the time
of his termination of employment with the Company; provided,
however, that this Section F.2.c. shall not apply to any Executive
who is a participant in this Plan on September 29, 1993. An
Executive who would have such a vested interest 1) if his
employment was not terminated by the Company in violation of his
employment agreement or 2) if his employment was not terminated
for "good reason" under such agreement, shall be treated as
having such a vested interest.
3. Pro Rata Percentage. An Executive's Pro Rata
Percentage is the higher of the following two percentages (but
not greater than 100%). The first percentage is determined by
dividing the number of the Executive's whole months of employment
with the Company by the number of whole months from the date that
the Executive was first hired by the Company to the date that he
will reach age 65 and multiplying by 100. The second percentage
is determined by multiplying 4.44% by the number of his whole and
partial years of completed employment with the Company.
4. Rules of Application.
a. Periods of Employment. For purposes of
determining employment with the Company, periods that would be
disregarded under the Retirement Plan on account of breaks in
service shall be disregarded under this Section.
b. Basic Retirement Benefits. For purposes of this
Section, an Executive's Basic Retirement Benefits shall be
determined at the time that he terminates employment with the
Company, calculating all benefits as if they were payable in the
form of a straight life annuity beginning at the later of age 65
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or the date of actual termination of employment, without survivor
benefits.
c. Method of Payment. Benefits under this section
shall be paid in the form provided in Section H.
d. Date Benefits Begin. Benefits payable under this
Section shall begin on the first day of the month following the
date the Executive reaches age 65.
e. Death Benefits. For purposes of this Section:
(1) If an Executive dies after his benefits have
begun, benefits payable thereafter, if any, shall be paid in
accordance with the method of payment determined under Section H.
(2) If an Executive who has terminated employment
and is entitled to receive benefits under this Section F dies
before his benefits begin, his beneficiary shall receive the
monthly benefit payable under an actuarially reduced form of
joint and 100% survivor annuity with his beneficiary as the
contingent annuitant, payable beginning on the first day of the
month after the Executive would have reached age 65. The
principles of the second and third sentences of Section E.2.a. and
the principles of Section E.2.b. and of this Section shall apply
for calculating these survivor benefits.
(3) The principles of Section E.2.c. and of this
Section shall apply if there is no surviving spouse and no
designation of beneficiary. The rules of Section E.3. concerning
designation of beneficiary shall apply.
f. Change in Percentage. The principles of
Section D.l.d. shall apply to benefits calculated under this
Section F.
g. Example. An Executive whose specified percentage
of Average Final Compensation under Section D.l.a. is 60% who was
hired at age 50, whose employment is terminated at age 60, and
who otherwise qualifies for a benefit under this Section, will
have a vested benefit beginning at age 65 of 2/3's of 60% or 40%
of actual Average Final Compensation, less his Basic Retirement
Benefits.
5. Other Agreement. If an Executive's written Employment
Agreement with the Company provides higher benefits on
termination of employment before Approved Retirement than
provided under this Section F, such higher benefits shall be
paid.
6. Forfeiture of Benefits. Except as provided in this
Section, and as provided elsewhere in this Plan with respect to
Approved Retirement or death of an Executive, an Executive or his
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beneficiaries shall not be entitled to any benefits under this
Plan, all obligations of the Company to the Executive and his
beneficiaries shall cease, and the Company shall have no further
liability to the Executive or any other person under this Plan.
G. SPECIAL FORFEITURE AND REPAYMENT RULES
Any other provisions of this Plan to the contrary
notwithstanding, if the Compensation Committee of the Board
determines that an Executive has engaged in any of the actions
described in 3 below, the consequences set forth in 1. and 2.
below shall result.
1. Forfeiture of Benefits. To the extent that the benefit
that otherwise would be payable under this Plan exceeds the
benefit, if any, that would have been payable if the Executive's
retirement had occurred on November 1, 1993, such excess portion
shall be forfeited and shall not be payable at any time under
this Plan.
2. Repayment. If the Executive received a payment under
this Plan at any time within six months prior to the date the
Company discovered that the Executive engaged in any action
described in 3. below, the Executive, upon written notice from the
Company, shall repay to the Company in cash the excess portion of
any such payment, such excess portion to be calculated in the
manner described in 1. above.
3. The consequences described in 1. and 2. above shall
apply if the Executive, either before or after termination of
employment with the Company:
a. Accepts a position as a consultant to or an
employee of a business enterprise that is in direct competition
with any line of business engaged in by the Company at the time
of the termination of the Executive's employment;
b. Discloses to others, or takes or uses for his own
purpose or the purpose of others, any trade secrets, confidential
information, knowledge, data or know-how belonging to the Company
and obtained by the Executive during the term of his employment,
whether or not they are the Executive's work product. Examples
of such confidential information or trade secrets include (but
are not limited to) customer lists, supplier lists, pricing and
cost data, computer programs, delivery routes, advertising plans,
wage and salary data, financial information, research and
development plans, processes, equipment, product information and
all other types and categories of information as to which the
Executive knows or has reason to know that the Company intends or
expects secrecy to be maintained;
c. Fails to promptly return all documents and other
tangible items belonging to the Company in the Executive's
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possession or control, including all complete or partial copies,
recordings, abstracts, notes or reproductions of any kind made
from or about such documents or information contained therein,
upon termination of employment, whether pursuant to an Approved
Retirement or otherwise;
d. Fails to provide the Company with at least thirty
(30) days' written notice prior to directly or indirectly
engaging in, becoming employed by, or rendering services, advice
or assistance to any business in competition with the Company. As
used herein, "business in competition" means any person,
organization or enterprise which is engaged in or is about to
become engaged in any line of business engaged in by the Company
at the time of the termination of the Executive's employment with
the Company;
e. Fails to inform any new employer, before accepting
employment, of the terms of this section and of the Executive's
continuing obligation to maintain the confidentiality of the
trade secrets and other confidential information belonging to the
Company and obtained by the Executive during the term of his
employment with the Company;
f. Induces or attempts to induce, directly or
indirectly, any of the Company's customers, employees,
representatives or consultants to terminate, discontinue or cease
working with or for the Company, or to breach any contract with
the Company, in order to work with or for, or enter into a
contract with, the Executive or any third party; or
g. Engages in conduct which is not in good faith and
which disrupts, damages, impairs or interferes with the business,
reputation or employees of the Company.
The Compensation Committee of the Board shall determine in
its sole discretion whether the Executive has engaged in any of
the acts set forth in (a) through (g) above, and its
determination shall be conclusive and binding on all interested
persons.
Any provision of this section which is determined by a court
of competent jurisdiction to be invalid or unenforceable shall be
construed or limited in a manner that is valid and enforceable
and that comes closest to the business objectives intended by
such invalid or unenforceable provision, without invalidating or
rendering unenforceable the remaining provisions of this section.
H. METHOD OF PAYMENT
1. Normal Form. The Normal Form of Benefit under this
Plan shall be a straight life annuity of monthly payments over
the lifetime of the Executive, with payments ceasing on the first
day of the month in which the Executive dies.
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2. Joint and Survivor Annuity. If the Executive is
married at the time benefits become payable, then, unless he has
elected otherwise (as described below), his benefits shall be
paid in the actuarially reduced form of a joint and 50% survivor
annuity payable to him and his spouse. With the approval of the
Administrator, the Executive may elect, in writing, not to
receive this form of benefit, but any such election which
provides a benefit for a beneficiary other than his spouse must
be approved in writing by his spouse to be effective. Such
election shall become effective when filed with the Administrator
and must be filed before the Executive's termination of
employment with the Company.
3. Lump Sum Distribution. An Executive whose employment
terminates on or after January 1, 1994 may elect to have the
actuarial equivalent value of his benefits paid in the form of a
lump sum distribution in cash, where actuarial equivalence is
determined using the interest rate prescribed by the Pension
Benefit Guaranty Corporation for purposes of determining the
present value of a lump sum distribution on plan termination for
the month in which the Executive's employment terminates. An
election of a lump sum form of distribution must be made at least
twelve months prior to the Executive's termination of employment.
An Executive who is married at the time benefits become payable
may not elect a lump sum form of distribution unless the
Executive's spouse approves of the election in writing. An
Executive may elect a lump sum form of distribution less than
twelve months prior to his termination of employment, but in such
event the amount of the lump sum distribution shall be reduced by
10 percent.
4. Additional Forms of Benefits. With the approval of the
Administrator, the Executive may elect to receive his benefits in
one of the actuarially equivalent benefit forms permitted under
the Retirement Plan or such other form as may be approved by the
Administrator. If the Executive is married, any such election
must be approved in writing by his spouse to be effective, if it
would provide the spouse with a benefit less than that provided
under Section G.2.
I. SOURCE OF PAYMENT
The benefits paid under this Plan shall be paid from the
general funds of the Company, and the Executive and his
beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of the Executive or any beneficiary, or
create any fiduciary relationship between the Company and the
Executive or any beneficiary with respect to any assets of the
Company.
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J. WITHHOLDING
The Executive and any beneficiary shall make appropriate
arrangements with the Company for the satisfaction of any
federal, state or local income tax withholding requirements and
social security or other employee tax requirements applicable to
the payment of benefits under this Plan. If no other
arrangements are made, the Company may provide, at its
discretion, for such withholding and tax payments as may be
required.
K. ADMINISTRATION OF THE PLAN
1. In General. The Plan shall be administered by the Vice
President, Human Resources of the Company under the direction of
the Compensation Committee of the Board. If the Vice President,
Human Resources, is an Executive participating in the Plan, then
any discretionary action taken as Administrator which directly
affects him as Executive shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
the ultimate responsibility to interpret the Plan and shall adopt
such rules and regulations for carrying out the Plan as it may
deem necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have an
interest in the Plan.
2. Elections and Notices. All elections and notices made
by an Executive under this Plan shall be in writing and filed
with the Administrator.
3. Action by Board of Directors. The Board may act under
this Plan in accordance with its normal procedures and practices,
including but not limited to delegation of its authority to act
under the Plan.
4. Plan Year. The Plan Year is the calendar year.
L. AMENDMENT OR TERMINATION OF THE PLAN
The Board may at any time amend, alter, modify or terminate
the Plan. This Plan shall be treated as a plan covered by
Section 301 of the Retirement Equity Act for purposes of
amendment and termination.
The Compensation Committee of the Board may amend this Plan
to make technical and correcting changes and to make other
changes that do not materially increase the cost of the Plan to
the Company or materially change its design.
M. NO ASSIGNMENT
The benefits provided under this Plan may not be alienated,
assigned, transferred, pledged or hypothecated by any person, at
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any time, or to any person whatsoever. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishment or executions to the
fullest extent allowed by law.
N. DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Administrator" shall mean the person specified in
Section J.
2. "Approved Retirement" shall mean (i) any termination of
employment with the Company after attainment of age 62; (ii) any
involuntary termination of employment after both attainment of
age 55 and completion of 15 years of service (as determined under
the Retirement Plan); or (iii) any other termination of
employment before (i) or (ii) above with the approval of the
Board.
Notwithstanding the foregoing, "Approved Retirement" shall
not include any termination for cause, which shall be determined
as provided in Section F.2.a. hereof.
3. "Average Final Compensation" shall mean: one-fifth of
the sum of the base salary and annual bonuses under the
Management Incentive Plan ("MIP") and the Performance Award Plan
for Key Executives ("PAPKE") or any successor or replacement
plans (including base salary and annual bonuses voluntarily
deferred under a cash or deferred plan or any other tax qualified
or nonqualified salary deferral plan such as the Deferred
Compensation Administration Plan) earned by an Executive for the
5 consecutive years of full-time continuous employment with the
Company which (a) fall within the 15-year period ending on the
first day of the month following his termination of service with
the Company and (b) produce the highest such sum. If the
Executive has had less than five years of full time continuous
employment, Average Final Compensation shall be base salary and
annual bonuses, including amounts voluntarily deferred under the
plans described in the previous sentence, for the entire period
of such employment with the Company, divided by the number of
whole and partial years of service.
4. "Basic Retirement Benefits" shall mean the monthly
annuity benefit payable to the Executive under the Retirement
Plan as follows:
a. Benefits from the Executive's interest in the
Retirement Plan shall be calculated on a straight life annuity
basis payable (i) to the Executive in the event of normal
retirement, retirement after age 65, early retirement, or
termination allowance as defined in the Retirement Plan, or
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(ii) as a spouse allowance in the event of the Executive's death
before Approved Retirement (Section E.2.) or before benefits begin
(Section F.4.e.).
b. Service after age 65 shall be taken into account
in determining Basic Retirement Benefits provided by the
Retirement Plan.
5. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
6. "Company" shall mean McKesson Corporation, a Delaware
Corporation, and any member of its controlled group as defined by
Section 414(b) and 414(c) of the Internal Revenue Code of 1986,
as amended.
7. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
8. "Executive" shall mean an employee of the Company
selected to participate in this Plan.
9. "Normal Form of Benefit" is that form described in
Section G.l.
10. The "Pro Rata Percentage" is defined in Section F.3.
11. "Retirement Plan" shall mean the McKesson Corporation
Retirement Plan.
12. "Termination Benefits" is defined in Section F.l.a.
O. MISCELLANEOUS
1. Fiduciary Insurance. The Company may purchase
insurance for its directors, officers, employees and agents to
cover potential liability arising from their acts and omissions
concerning this Plan.
2. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
3. Effective Date. This Third Amendment and Restatement
is effective as of October 27, 1993.
4. No Right to Continued Employment. Each executive
selected to participate in the Plan is deemed by the Company to
be a bona fide executive or in a high policy making position for
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purposes of the Age Discrimination in Employment Act and state
laws of similar effect. Accordingly, the terms of the Plan shall
not confer any legal rights upon any Executive to continued
employment or employment past age 65, nor shall the Plan
interfere with the rights of the Company to discharge any
Executive or to treat him without regard to the effect which that
treatment might have upon him as a participant in the Plan.
Executed on ______________________ 1994, in the City and
County of San Francisco, State of California.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
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McKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX A
SAMPLE CALCULATION
EARLY RETIREMENT
Executive retires at age 59, 3 years early
Final Average Compensation: $250,000
Percentage of Average Final Compensation
specified under the Plan: 60%
Income Objective
(60% x $250,000) $150,000
LESS: Early Retirement Reduction
(0.003 per month x 36 months = 10.8%) (16,200)
Adjusted Objective 133,800
LESS: Single Life Retirement Plan Benefit (38,000)
--------
Annual Single Life EBRP Benefit $ 95,800
NOTE: Retirement Plan benefits are governed by the terms of
that Plan, and incorporate the appropriate reduction
for early retirement. As intended, the 1984 EBRP
provides a retirement income that, when added to
income from the Retirement Plan, provides the
executive with retirement income equal to the adjusted
objective.
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McKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX B
SAMPLE CALCULATION
SURVIVOR BENEFIT
Death age 57
Final Average Compensation: $175,000
Percentage of Average Final Compensation
specified under the Plan: 60%
Income Objective
(60% x $175,000) $105,000
LESS: Early Retirement Reduction
(0.003 per month x 60 months = 18%) (18,900)
Subtotal 86,100
Application of 100% J&S Factor 80%
--------
Adjusted Objective $ 68,880
LESS: Retirement Plan Spouse Allowance (25,000)
Annual EBRP Survivor Benefit $ 43,880
NOTE: As intended, the 1984 EBRP Survivor Benefit provides
a supplement to the Retirement Plan so that the total
of these two sources of Company provided benefits
equals the survivor's adjusted income objective. This
method would apply even if the Retirement Plan Spouse
Allowance were paid to a minor child, and the 1984
EBRP benefit were paid to the spouse.
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McKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX C
EFFECTS OF AMENDING PLAN TO ELIMINATE REDUCTION
FOR PROFIT-SHARING INVESTMENT PLAN BENEFITS AND TO
REDUCE THE MAXIMUM AVERAGE COMPENSATION
PERCENTAGE TO 60%
1. Amendment Not Treated as Reduction or Increase of Percent
of Average Final Compensation
The amendment to the Plan as of December 2, 1987 to
eliminate the reduction for benefits from the Profit-Sharing
Investment Plan and to reduce the maximum Average Final
Compensation percentage to 60% from 65% is not treated as a
reduction or increase of the percentage of Average Final
Compensation under Section D.l.d. of the Plan. This is the case
because the change in the percentage is coupled with the
reduction in the offset and is intended to provide a better
overall benefit to Plan participants.
2. Maintenance of Existing Benefits
The amendment to the Plan of December 2, 1987 shall not
operate to reduce the benefit accrued as of that date by any
person who is a Plan participant. Therefore, any Executive who
participated in the Plan on December 2, 1987 and who otherwise
is or becomes entitled to benefits under the Plan shall receive
the higher of: 1) the benefits which he had earned and to which
he is entitled under the Plan calculated on December 2, 1987
immediately before the Plan was amended and taking into account
the value of his vested benefit as of that date under the
Profit-Sharing Investment Plan, and 2) the benefits to which he
is entitled under the Plan as amended.
For example: Assume that Appendix A shows the benefits to which
an Executive who participates in the Plan on December 2, 1987 is
entitled immediately after the Plan's amendment (an Annual
Single Life EBRP benefit of $95,800). Under the Plan on
December 2, 1987, before amendment his benefits would be
calculated as follows:
Executive retires at age 62, 3 years early
Final Average Compensation: $250,000
Percentage of Average Final Compensation
specified under the Plan: 65%
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Income Objective
(65% x $250,000) $162,500
LESS: Early Retirement Reduction
(0.003 per month x 36 months = 10.8%) (17,550)
Adjusted Objective 144,950
LESS: Single Life Retirement Plan Benefit (38,000)
Single Life Annuity from Company
contributed funds in PSIP (45,000)
--------
Annual Single Life EBRP Benefit $ 61,950
For this individual, the EBRP benefit from the Plan
immediately after the Plan amendment is higher than the benefit
provided before amendment. Since he is entitled to the higher
of the two, his benefit under the Plan would be $95,800.
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EXHIBIT (10)V
MCKESSON CORPORATION
1988 EXECUTIVE SURVIVOR BENEFITS PLAN
Amended as of October 27, 1993
<PAGE>
MCKESSON CORPORATION
1988 EXECUTIVE SURVIVOR BENEFITS PLAN
A. PURPOSE
This Plan amends, restates and supersedes the 1988 Executive
Survivor Benefits Plan in its entirety effective as of March 2,
1988. This Plan is established to enable the Company to attract
and retain key executive personnel by providing survivor benefits
to Executives' Beneficiaries.
B. ERISA PLAN
This Plan is covered by Title I of ERISA as a welfare
benefit plan.
C. PARTICIPATION
1. Selection by Board. The Board may select, at its
discretion and from time to time as it decides, the key
Executives who participate in this Plan. Participation in the
Plan shall be limited to those Executives of the Company who are
selected by the Board. Selection of a key Executive to
participate in the Plan may be evidenced by the terms of his
Employment Agreement, if any, with the Company.
2. Election Not to Participate. An Executive may elect
not to participate in this Plan at any time; such election shall
be in writing and shall become effective upon its receipt by the
Administrator. No compensation or benefits in lieu of this Plan
shall be paid to an Executive who elects not to participate,
unless otherwise specifically approved by the Board. An election
not to participate shall be irrevocable unless otherwise
determined by the Board.
3. Insurability. Executives selected by the Board are
not automatically entitled to the benefits provided under this
Plan. Each Executive may be required to satisfy such
requirements for insurability as the Company shall establish from
time to time, if any, before he is entitled to benefits under
this Plan.
4. Addition and Removal of Participants. The Board may,
at its discretion and at any time, designate additional
Executives to participate in the Plan and remove Executives from
participation in the Plan. When an Executive is removed from
participation in the Plan by the Board, his benefits, if any,
shall be determined under Section E.
5. Notification of Participants. The Administrator shall
annually notify each Executive that he is a participant in the
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Plan and shall notify each Executive of the amount of his
benefits under the Plan.
6. Relation to Other Plans. If an Executive participates
in this Plan, he shall not participate in any other survivor
benefit or life insurance plan or similar program solely for
Company Executives unless otherwise specifically approved by the
Administrator in writing. For example, any Executive who
participates in this Plan shall not receive any life insurance
benefits under the McKesson Corporation 1984 Executive Insurance
Plan, or its predecessor, the McKesson Executive Benefit Plan.
This provision shall not preclude the Executive's participation
in (i) any Company retirement plan, compensation plan, including
but not limited to the Executive Benefit Retirement Plan, the
Deferred Compensation Administration Plan and the 1985 Executives
Elective Deferred Compensation Plan, or (ii) any group life
insurance or survivor benefit plan, made generally available by the
Company to all employees. This provision shall not preclude the
payment of survivor benefits which are earned and payable under
any Company retirement plan such as the plans listed in (i)
above.
D. SURVIVOR BENEFITS
1. Death of Executive While Employed. In the event of the
death of an Executive while employed by the Company and except as
provided in Sections D.3. and D.4. below, Company shall pay
Executive's Beneficiary as soon as practicable thereafter a lump
sum equal to: (i) the lesser of (a) three times the annual base
salary of the Executive, or (b) $1,000,000; multiplied by (ii)
the Tax Factor. The application of this Section D.1. is
illustrated in Appendix I to this Plan.
2. Death of Executive After Approved Retirement. In the
event of the death of an Executive after his Approved Retirement
and except as provided in Sections D.3. and D.4. below, Company
shall pay Executive's Beneficiary as soon as practicable
thereafter a lump sum equal to: (i) the lesser of (a) one and
one-half times the Executive's final annual base salary, or (b)
$500,000; multiplied by (ii) the Tax Factor. The application of
this Section D.2. is illustrated in Appendix I to this Plan.
3. Limitations on Benefits. No survivor benefits shall be
paid under this Section D. in the following circumstances:
a. The Administrator shall determine in his
discretion that Executive has provided false or misleading
information regarding Executive's health or medical history that
materially adversely affects the Company, or
b. The Administrator shall determine in his
discretion that Executive has committed suicide.
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For purposes of this Section D.3., the Administrator in
his discretion may waive in writing the foregoing limitations in
whole or in part, and all determinations by the Administrator
shall be final.
4. Executives Removed from Participation, Etc. Except as
otherwise approved by the Administrator in writing and at his
sole discretion, no survivor benefits shall be paid under this
Section D. to any Beneficiary of an Executive (i) who has elected
not to participate under Section C.2. or (ii) who has been
removed from Plan participation prior to his death, or (iii)
subject to Section L. below, with respect to whom the Plan has
been terminated prior to his death.
E. TERMINATION OF EMPLOYMENT OTHER
THAN ON APPROVED RETIREMENT OR DEATH
1. Basic Rule.
a. In the event of the death of an Executive after
his termination of employment with the Company other than on
Approved Retirement and except as provided in Section E.2. below,
the Company shall pay Executive's Beneficiary a lump sum equal to
(i) an amount calculated using the formula in Section D.2. above,
subject to the limitations of Section D.3. above, (ii) multiplied
by the Executive's Pro Rata Percentage, and (iii) reduced by the
amount provided in Section E.1.c. below. Except as otherwise
approved by the Administrator in writing and at his sole
discretion, final annual base salary shall be determined as of
the date of the Executive's termination of employment, for
purposes of this Section E.1.a. The application of this Section
E.1.a. is illustrated in Appendix II to the Plan.
b. In the event of the death of an Executive after
the Executive has been removed from Plan participation in
accordance with Section C.4. ("removal") or with respect to whom
the Plan has been terminated in accordance with Section L. ("Plan
termination") prior to his termination of employment, and except
as provided in Section E.2. below, the Company shall pay
Executive's Beneficiary a sum equal to the amount calculated as
provided in Section E.1.a. above, but treating the Executive's
date of "removal" or the date of the "Plan termination",
whichever is applicable, as his date of termination of employment
for purposes of calculating his Pro Rata Percentage and his final
annual base salary.
c. Any amount determined under Section E.1.a. or b.
shall be reduced by any death or survivor benefit (other than a
retirement benefit paid under a tax qualified retirement plan)
payable on account of service rendered by the Executive to
another employer after his termination of employment with the
Company.
Page 3
<PAGE>
2. Limitations on Benefits. No benefits shall be paid
under Section E. in the following circumstances:
a. The Executive is terminated for cause; if the
Executive has an Employment Agreement, "cause" shall be
determined in accordance with the Employment Agreement,
otherwise, "cause" shall be determined by the Administrator,
b. The Executive has terminated his employment in
violation of his Employment Agreement, if any; termination is in
violation of an Employment Agreement if termination occurs before
the end of the term of the Employment Agreement and is not
allowed by the Employment Agreement (e.g., for "good reason"), or
c. The Executive has not completed five or more years
of participation (whether or not consecutive) in this Plan and
its predecessors, the McKesson Corporation 1984 Executive Benefit
Plan and the McKesson Corporation 1984 Management Benefit Plan;
an Executive who would have completed five or more years (i) if
his employment was not terminated by the Company in violation of
his employment agreement or (ii) if his employment was not
terminated for "good reason" under such Agreement, shall be
treated as having such years of participation.
3. Pro Rata Percentage. An Executive's Pro Rata
Percentage is the higher of the following two percentages (but
not exceeding 100%): the first percentage is determined by
dividing the number of the Executive's whole months of employment
with the Company by the number of whole months from the date that
the Executive was first hired by the Company to the date that he
will reach age 65, and multiplied by 100. The second percentage
is determined by multiplying 4.44% by the number of his whole and
partial years of completed employment with the Company.
4. Rules of Application.
a. Periods of Employment. For purposes of
determining employment with the Company, periods that would be
disregarded under the Retirement Plan on account of breaks in
service shall be disregarded under this Section E.
5. Other Agreements. If an Executive's Employment
Agreement provides for higher survivor benefits than provided
under this Section E., such higher benefit shall be paid.
6. Forfeiture on Other Terminations. Except as provided
in this Section E., and as provided elsewhere in this Plan with
respect to the death of an Executive, on the death of the
Executive, an Executive or his Beneficiary shall not be entitled
to any benefits under this Plan, all obligations of the Company
to the Executive and his Beneficiary under this Plan shall cease,
and the Company shall have no further liability to the Executive
or any other person under this Plan.
Page 4
<PAGE>
F. SPECIAL FORFEITURE RULES
Any other provisions of this Plan to the contrary
notwithstanding, if the Compensation Committee of the Board
determines that any Executive engaged in any of the actions
described in 2. below, the consequence set forth in 1. below
shall result.
1. Forfeiture of Benefits. To the extent that the benefit
that otherwise would be payable under the Plan upon the death of
the Executive exceeds the benefit, if any, that would have been
payable if the Executive had died on November 1, 1993, such
excess portion shall be forfeited and shall not be payable under
this Plan. In no event shall the amount payable under the Plan
with respect to any Executive who is a participant in the Plan on
October 27, 1993 be less than the amount, if any, determined
pursuant to Section L.
2. Events Resulting in Forfeiture. The consequence
described in 1. above shall apply if the Executive, either before
or after termination of employment with the Company:
a. Accepts a position as a consultant to or an
employee of a business enterprise that is in direct competition
with any line of business engaged in by the Company at the time
of the termination of the Executive's employment.
b. Discloses to others, or takes or uses for his own
purpose or the purpose of others, any trade secrets, confidential
information, knowledge, data or know-how belonging to the Company
and obtained by the Executive during the term of his employment,
whether or not they are the Executive's work product. Examples
of such confidential information or trade secrets include (but
are not limited to) customer lists, supplier lists, pricing and
cost data, computer programs, delivery routes, advertising plans,
wage and salary data, financial information, research and
development plans, processes, equipment, product information and
all other types and categories of information as to which the
Executive knows or has reason to know that the Company intends or
expects secrecy to be maintained;
c. Fails to promptly return all documents and other
tangible items belonging to the Company in the Executive's
possession or control, including all complete or partial copies,
recordings, abstracts, notes or reproductions of any kind made
from or about such documents or information contained therein,
upon termination of employment, whether pursuant to an Approved
Retirement or otherwise;
d. Fails to provide the Company with at least thirty
(30) days' written notice prior to directly or indirectly
engaging in, becoming employed by, or rendering services, advice
or assistance to any business in competition with the Company or
Page 5
<PAGE>
any of its subsidiaries. As used herein, "business in
competition" means any person, organization or enterprise which
is engaged in or is about to become engaged in any line of
business engaged in by the Company at the time of the termination
of the Executive's employment with the Company;
e. Fails to inform any new employer, before accepting
employment, of the terms of this section and of the Executive's
continuing obligation to maintain the confidentiality of the
trade secrets and other confidential information belonging to the
Company and obtained by the Executive during the term of his
employment with the Company;
f. Induces or attempts to induce, directly or
indirectly, any of the Company's customers, employees,
representatives or consultants to terminate, discontinue or cease
working with or for the Company, or to breach any contract with
the Company, in order to work with or for, or enter into a
contract with, the Executive or any third party; or
g. Engages in conduct which is not in good faith and
which disrupts, damages, impairs or interferes with the business,
reputation or employees of the Company.
The Compensation Committee of the Board shall determine in
its sole discretion whether the Executive has engaged in any of
the acts set forth in (a.) through (g.) above, and its
determination shall be conclusive and binding on all interested
persons.
Any provision of this section which is determined by a court
of competent jurisdiction to be invalid or unenforceable shall be
construed or limited in a manner that is valid and enforceable
and that comes closest to the business objectives intended by
such invalid or unenforceable provision, without invalidating or
rendering unenforceable the remaining provisions of this section.
G. WITHHOLDING
The Executive or any Beneficiary shall make appropriate
arrangements with the Company for the satisfaction of any
federal, state or local income tax withholding requirements and
social security or other employee tax requirements applicable to
the provision of benefits under this Plan. If no such
arrangements are made, the Company may provide, at its
discretion, for such withholding and tax payments as may be
required.
H. ADMINISTRATION OF THE PLAN
1. In General. The Plan shall be administered by the Vice
President Human Resources of the Company under the direction of the
Compensation Committee of the Board. If the Vice President,
Page 6
<PAGE>
Human Resources is an Executive participating in the Plan, then
any discretionary action he takes as Administrator which directly
affects him as Executive shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
the ultimate responsibility to interpret the Plan and shall adopt
such rules and regulations for carrying out the Plan as it may
deem necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have an
interest in the Plan.
2. Elections and Notices. All elections and notices made
by an Executive under this Plan shall be in writing and filed
with the Administrator.
3. Action By Board of Directors. The Board may act under
this Plan in accordance with its normal procedures and practice,
including, but not limited to, delegation of its authority to
select key Executives to participate in this plan.
I. BENEFICIARY DESIGNATIONS
Each Executive may designate one or more Beneficiaries and
contingent Beneficiaries entitled to the survivor benefits under
this Plan in a signed writing delivered to the Administrator. An
Executive may designate different Beneficiaries at any time by
delivering a new designation in like manner. Any designation
shall become effective only upon its receipt by the
Administrator, and the last effective designation received by the
Administrator shall revoke and supersede all prior designations.
If an Executive dies without having effectively designated a
Beneficiary, or if no designated Beneficiary survives the
Executive, the survivor benefit provided under this Plan shall be
paid to the Executive's surviving spouse or, if the Executive is
not survived by his or her spouse, such survivor benefit shall be
paid to the following first named persons who survive him or her:
1. the Executive's descendants in equal shares and the
descendants of any deceased descendants by right of
representation;
2. the Executive's parents, in equal shares;
3. the Executive's siblings in equal shares and the
descendants of any deceased siblings by right of representation;
or
4. the executors and/or administrators of the Executive's
estate.
Page 7
<PAGE>
J. SOURCE OF PAYMENT
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Executive and his or her
Beneficiary shall be no more than an unsecured general creditor
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Executive or Beneficiary, or create
any fiduciary relationship between the Company and any Executive
or Beneficiary with respect to any assets of the Company.
K. NO ASSIGNABILITY OF BENEFITS
The benefits provided under this Plan and a Beneficiary's
rights may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. Such benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments, or executions to the
fullest extent allowed by law.
L. AMENDMENT OR TERMINATION OF THE PLAN
The Board may at any time amend, alter, modify or terminate
the Plan. Such action shall not reduce the benefits provided
under this Plan with respect to any Executive whose employment
has terminated before such action. Also, such action shall not
reduce the benefits provided under this Plan with respect to any
Executive who is participating in the Plan at the time of such
action below the amount provided in Section E., treating for
purposes of Section E. the amendment, alteration, modification,
or termination which adversely affects the Executive as though it
were a termination of employment. An illustration of the
calculation of benefits in the event of termination of the Plan
under this Section L. is attached as Appendix III.
M. DEFINITIONS
For the purposes of the Plan, the following terms shall have
the meanings indicated:
1. "Administrator" shall mean the person specified in
Section H.
2. "Approved Retirement" shall mean any termination of
employment with the Company after attainment of age 65 or any
retirement before age 65 with the approval of the Board.
3. "Beneficiary" shall mean the beneficiary or
beneficiaries entitled to death benefits under this Plan, as
designated by Executive or otherwise provided in Section I.
Page 8
<PAGE>
4. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
5. "Company" shall mean McKesson Corporation, a Delaware
corporation, and any member of its controlled group as defined by
Sections 414(b) and 414(c) of the Internal Revenue Code of 1986.
6. "Employment Agreement" shall mean the written contract
of employment, if any, between an Executive and the Company.
7. "Executive" shall mean an employee of the Company
selected by the Board to participate in this Plan pursuant to
Section C.
8. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
9. "Pro Rata Percentage" shall mean the percentage
determined in Section E.3.
10. "Retirement Plan" shall mean the McKesson Corporation
Retirement Plan.
11. "Tax Factor" shall mean one divided by one minus the
Top Marginal Rate of Tax.
12. "Top Marginal Rate of Tax" shall be the highest
combined marginal individual federal and state income tax rate,
if any, (giving effect to any deduction then allowable for
federal tax purposes for the state income tax) for the year
survivor benefits are paid to Executive's Beneficiary under this
Plan. For example, if the highest marginal individual federal
and state income tax rates are 28% and 10% respectively and the
state income tax is deductible for federal tax purposes, the Top
Marginal Rate would be 35.2% as follows: [($1.00 x 10% = $.10
state income tax)] + [($.90 federal taxable income of $1.00 -
$.10 state income tax) x 28% = $.252 federal income tax] = $.352
total state and federal tax, or 35.2%. For purposes of
determining the Top Marginal Rate of Tax, the Administrator in
his discretion shall determine the highest marginal individual
federal and state income tax rates to be used (including without
limitation whether, and if so to what extent, surtaxes or similar
taxes shall be applicable, and what state income tax, if any,
shall be applicable), and all such determinations and all
calculations made by the Administrator hereunder shall be final.
N. MISCELLANEOUS
1. Fiduciary Insurance. The Company may purchase
insurance for its directors, officers, employees and agents to
cover potential liability arising from their acts and omissions
concerning this Plan.
Page 9
<PAGE>
2. Applicable Law; Severability. The Plan hereby created
shall be construed, administered and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
Executed in the City and County of San Francisco, State of
California, effective as of October 27, 1993.
McKESSON CORPORATION
By: ____________________________________________________
William A. Armstrong
Vice President, Human Resources and Administration
Page 10
<PAGE>
MCKESSON CORPORATION
1988 EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix I
This Appendix illustrates the calculation of benefits under
Sections D.1. and D.2. of the Plan.
A. Assumptions
Executive is subject to California Income Tax.
Executive's annual base salary: $350,000
Top Marginal Rate of Tax:
Top Federal Rate: 28.0%
Top California Rate: 10.0%
"Top Marginal Rate of Tax":
.10 + [(1.0 - .10) x .28] 35.2%
"Tax Factor":
1/(1 - .352) 1.543
B. Survivor Benefit on Death Before Approved Retirement
Lesser of (a) $1,000,000 or (b) (3 x $350,000)
multiplied by
Tax Factor
equals
$1,000,000 x 1.543,
which yields a benefit of:
$1,543,000
==========
C. Survivor Benefit on Death After Approved Retirement
Lesser of (a) $500,000 or (b) (1.5 x $350,000)
multiplied by
Tax Factor
equals
$500,000 x 1.543,
which yields a benefit of:
$771,500
========
Page 11
<PAGE>
MCKESSON CORPORATION
1988 EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix II
This Appendix illustrates the calculation of benefits under
Section E.1.a. of the Plan.
An Executive is hired at age 50, his employment is terminated at
age 60, and he otherwise qualifies for a benefit under Section E.
On the death of this Executive, a benefit will be paid to his
Beneficiary equal to the Pro Rata Percentage (see calculation
below) times 1-1/2 times the Executive's final annual base
compensation at the date of his termination of employment (or
$500,000, if smaller) multiplied by the Tax Factor, and reduced
by any death or survivor benefit payable to a beneficiary of the
Executive on account of service rendered to another employer as
provided in Section E.1.c. If the above Executive's annual base
compensation was $300,000 at the date of his termination of
employment and the Tax Factor at the date the benefit is paid is
1.543, the benefit payable to his Beneficiary would be $462,900,
calculated as follows:
The Executive's Pro Rata Percentage is 66-2/3%, calculated as
follows:
The greater of (a) number of whole months of employment
divided by total whole months from date of hire to age
65, or (b) 4.44% times whole and partial years of
completed employment, or 120 months - 180 months = 66-
2/3%, which is greater than 4.44% x 10 years = 44.4%.
The Executive's benefit is:
Pro Rata Percentage x [1-1/2 of final base compensation
(1-1/2 x $300,000 = $450,000) or $500,000, if smaller]
x Tax Factor
66-2/3% x $450,000 x 1.543 = $462,900.
--------
Page 12
<PAGE>
MCKESSON CORPORATION
1988 EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix III
This Appendix illustrates the calculation of benefits in the
event of termination of the Plan under Section L.
A. Assumptions
Executive's age at date of hire: 40
Executive's age
at date of termination of this plan: 55
Executive's annual base salary
at date of termination of this plan: $300,000
Executive's "Tax Factor" for the year
benefits are paid (see Section L.11
and Appendix I) 1.543
B. Survivor Benefits Under Section L
Under Section L., benefits are determined under Section E. by
treating the date the plan is terminated as the date the
Executive terminated employment, as follows:
Pro Rata Percentage: 66-2/3%
-------
Greater of (a) whole months of service divided by total
whole months from hire to age 65 or (b) 4.44% times
whole and partial years of service, a greater of 60%
(180 - 300 = 60%) or 66-2/3% (4.44 x 15 years of
service)
Benefit: $452,900
--------
66-2/3% times (1-1/2 of $300,000, or $500,000 if
smaller) times "Tax Factor" (1.543)
(66% x $450,000) x 1.543 =
$300,000 x 1.543 =
$462,900
========
Page 13
<PAGE>
EXHIBIT (10)X
AMENDED TERMINATION AGREEMENT
THIS AMENDED TERMINATION AGREEMENT, dated as of
February 1, 1994 is made and entered into by and between
McKESSON CORPORATION, a Delaware corporation with its principal
office at One Post Street, San Francisco, California (the
"Company"), and _______________________________ ("Executive").
R E C I T A L S
A. The Company and Executive are currently parties to an
Amended Termination Agreement (the "Termination Agreement")
providing that severance benefits will be paid to Executive on
change in control of the Company and consequent actual or
constructive termination of Executive's employment;
B. The Company and Executive desire to amend the
Termination Agreement in certain respects;
C. This Amended Termination Agreement (the "Agreement")
supersedes and replaces the Termination Agreement and sets forth
the severance benefits which the Company agrees that it will pay
to Executive if Executive's employment with the Company
terminates under one of the circumstances described herein
following a Change in Control of the Company.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants contained herein, the parties hereto
agree as follows:
1. Term of Agreement. This Agreement shall be effective
immediately on the date hereof and shall continue in effect
through December 31, 1994; provided, however, that commencing on
January 1, 1995 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional
year unless not later than September 30 of the preceding year,
the Company shall have given notice that it does not wish to
extend this Agreement; provided, further, that notwithstanding
any such notice by the Company not to extend, this Agreement
shall automatically be extended for 24 months beyond the term
provided herein if a Change in Control, as defined in Section 3
of this Agreement has occurred during the term of this
Agreement.
2. Effect on Employment Rights. This Agreement is not
part of any employment agreement that the Company and Executive
may have entered into. Nothing in this Agreement shall confer
upon Executive any right to continue in the employ of the
Company or interfere with or restrict in any way the rights of
the Company, which are hereby expressly reserved, to terminate
Employee's employment at any time prior to a Change in Control
<PAGE>
for any reason, with or without cause.
Executive agrees that, subject to the terms and conditions
of this Agreement, in the event of a potential change in control
of the Company (as defined below), Executive will remain in the
employ of the Company during the pendency of any such potential
change in control and for a period of one year after the occur-
rence of an actual Change in Control. For this purpose, a
"potential change in control of the Company" shall be deemed to
have occurred if (a) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control, (b) any person (including the Company) publicly
announces an intention to take or consider taking action which
if consummated would constitute a Change in Control or (c) the
Board of Directors of the Company (the "Board") adopts a
resolution to the effect that a potential change in control of
the Company has occurred.
3. Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have
occurred if any of the events set forth in any one of the
following paragraphs shall occur:
(a) any "person" (as defined in section 3(a)(9)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act),
excluding the Company or any of its subsidiaries, a
trustee or any fiduciary holding securities under an
employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding
securities pursuant to an offering of such securities
or a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same
proportions as their ownership of the Company, is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 30% or more
of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of not more than two
consecutive years, individuals who at the beginning of
such period constitute the Board and any new director
(other than a director designated by a Person who has
entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of
this paragraph) whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a
<PAGE>
majority thereof; or
(c) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of
the Company, at least 50% of the combined voting power
of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no
person acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(d) the shareholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets.
4. Termination of Employment Following a Change in
Control. Executive shall be entitled to the benefits provided
in Section 5 hereof upon the subsequent termination of
Executive's employment by the company within two years after a
Change in Control which occurs during the term of this
Agreement, provided such termination is (a) by the Company other
than for Cause, as defined below, or (b) by Executive for Good
Reason, as defined below. Executive shall not be entitled to
the benefits of Section 5, any other provision of the Plan to
the contrary notwithstanding, if Executive's employment
terminates: (i) pursuant to a mandatory retirement policy in
effect prior to the Change in Control, (ii) by reason of
Executive's death or (iii) by reason of Executive's total and
permanent disability. As used herein, "total and permanent
disability" means a condition which prevents Executive from
performing to a significant degree the essential duties of his
or her position and is expected to be of long-term duration or
result in death. A determination of total and permanent
disability must be based on competent medical evidence.
(a) Cause.
(i) Definition. Termination by the Company of
Executive's employment for Cause shall mean
termination upon Executive's willful engaging in
misconduct which is demonstrably and materially
injurious to the Company and its subsidiaries taken as
a whole. No act, or failure to act, on Executive's
<PAGE>
part shall be considered "willful" unless done, or
omitted to be done, by Executive not in good faith and
without reasonable belief that Executive's action or
omission was in the best interest of the Company or
its subsidiaries. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three
quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose
of making a determination of whether Cause for
termination exists (after reasonable notice to
Executive and an opportunity for Executive to be heard
before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of
misconduct as set forth above in this subsection
4(a)(i) and specifying the particulars thereof in
detail.
(ii) Remedy by Executive. If the Company gives
Executive a Notice of Termination which states that
the basis for terminating Executive's employment is
Cause, Executive shall have ten days after receipt of
such Notice to remedy the facts and circumstances
which provided Cause. The Board (or any duly
authorized Committee thereof) shall make a good faith
reasonable determination immediately after such
ten-day period whether such facts and circumstances
have been remedied and shall communicate such
determination in writing to Executive. If the Board
determines that adequate remedy has not occurred, then
the initial Notice of Termination shall remain in
effect.
(b) Good Reason. After a Change in Control,
Executive may terminate employment with the Company at
any time during the term of this Agreement if Execu-
tive has made a good faith reasonable determination
that Good Reason exists for this termination.
(i) Definition. For purposes of this
Agreement, "Good Reason" shall mean any of the
following actions, if taken without the express
written consent of Executive:
A. any material change by the Company in
Executive's functions, duties, or responsi-
bilities which change would cause Executive's
position with the Company to become of less
dignity, responsibility, importance, or scope
from the position and attributes that applied to
Executive immediately prior to the Change in
Control;
<PAGE>
B. any significant reduction in Executive's
base salary, other than a reduction effected as
part of an across-the-board reduction affecting
all executive employees of the Company;
C. any material failure by the Company to
comply with any of the provisions of this
Agreement (or of any employment agreement between
the parties);
D. the Company's requiring Executive to be
based at any office or location more than 25
miles from the office at which Executive is based
on the date immediately preceding the Change in
Control, except for travel reasonably required in
the performance of Executive's responsibilities
and commensurate with the amount of travel
required of Executive prior to the Change in
Control; or
E. any failure by the Company to obtain the
express assumption of this Agreement by any
successor or assign of the Company.
Executive's right to terminate employment
for Good Reason pursuant to this subsection
4(b)(i) shall not be affected by Executive's
incapacity due to physical or mental illnesses.
(ii) Remedy by Company. If Executive gives
the Company a Notice of Termination which states
that the basis for Executive's termination of
employment is Good Reason, the Company shall have
ten days after receipt of such Notice to remedy
the facts and circumstances which provided Good
Reason. Executive shall make a good faith
reasonable determination immediately after such
ten-day period whether such facts and
circumstances have been remedied and shall
communicate such determination in writing to the
Company. If Executive determines that adequate
remedy has not occurred, then the initial Notice
of Termination shall remain in effect.
(iii) Determination by Executive Presumed
Correct. Any determination by Executive pursuant
to this Section 4(b) that Good Reason exists for
Executive's termination of employment and that
adequate remedy has not occurred shall be
presumed correct and shall govern unless the
party contesting the determination shows by a
clear preponderance of the evidence that it was
not a good faith reasonable determination.
<PAGE>
(iv) Severance Payment Made Notwithstanding
Dispute. Notwithstanding any dispute concerning
whether Good Reason exists for termination of
employment or whether adequate remedy has
occurred, the Company shall immediately pay to
Executive, as specified in Section 5., any amounts
otherwise due under this Agreement. Executive
may be required to repay such amounts to the
Company if any such dispute is finally determined
adversely to Executive.
(c) Notice of Termination. Any termination of
Executive's employment by the Company or by Executive
hereunder shall be communicated by a Notice of
Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate the
specific termination provisions in this Agreement
relied upon and which sets forth (i) in reasonable
detail the facts and circumstances claimed to provide
a basis for termination of Executive's employment
under the provision so indicated and (ii) the date of
Executive's termination of employment, which shall be
no earlier than 10 days after such Notice is received
by the other party. Any purported termination of the
Executive's employment by the Company which is not
effected pursuant to a Notice of Termination
satisfying the requirements of this Agreement shall
not be effective. In the case of a termination for
Cause, the Notice of Termination shall also satisfy
the requirements set forth in Section 4(a)(i).
5. Severance Payment Upon Termination of Employment. If
Executive's employment with the Company is terminated during the
term of this Agreement and after a Change in Control (a) by the
Company other than for Cause, or (b) by Executive for Good
Reason, then Executive shall be entitled to the following:
(a) The Company shall immediately pay to
Executive in a cash lump sum an amount equal to
(i) 2.99 multiplied by Executive's "base amount"
determined pursuant to section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), less
(ii) any other amount which constitutes a "parachute
payment" to Executive as defined in Section 280G(b)(2)
of the Code.
(b) The Company shall continue Executive's
coverage in the health and welfare benefit plans in
which Executive was a participant as of the date of
Executive's termination of employment for the period
of time with respect to which Executive would be
entitled to payments under the Company's executive
severance policy if Executive's termination of
<PAGE>
employment were covered by such policy.
(c) Executive shall continue to accrue benefits
under the Executive Benefit Retirement Plan for the
period of time with respect to which Executive would
be entitled to payments under the Company's executive
severance policy if Executive's termination of
employment were covered by such policy. In addition,
if Executive is age 55 or more and has 15 or more
years of service (as determined under such Plan on the
date of Executive's termination of employment), then
such termination shall automatically be deemed to be
an "Approved Retirement" under the terms of such
Executive Benefit Retirement Plan.
6. Section 280G Cap. It is the intent of the parties
hereto that no amount payable pursuant to the terms of this
Agreement shall cause any payment or transfer by the Company to
or for the benefit of Executive, whether paid or payable (or
transferred or transferable) pursuant to the terms of this
Agreement or otherwise (a "Payment"), to be subject to taxation
under Section 4999 of the Code and as an "excess parachute
payment" as defined in Section 280G of the Code. In the event
that the last independent auditors selected by the Board prior
to the termination of Executive under this Agreement (the
"Auditors") determine that any such item constitutes an "excess
parachute payment", and that the limitation of this Section 6
would result in a larger after-tax benefit to Executive, then
Executive may (but is not required to) irrevocably elect to
relinquish or not exercise any payments or benefits available to
Executive under any plan, contract or program before the payment
or enjoyment thereof in order to limit such payments or benefits
for the purpose of (i) eliminating any "excess parachute
payment" or (ii) causing Executive to become eligible to receive
all or any portion of the cash payment that would be made
pursuant to Section 5. of this Agreement if Executive had no
"parachute payments" as defined in Section 280G(b)(2) of the
Code. For purposes of these calculations, (i) all amounts
received in connection with Executive's employment by the
Company or to be received by Executive in connection with a
change in the ownership or effective control of the Company, or
a change in the ownership of a substantial portion of the assets
of the Company (including but not limited to payments or
benefits that Executive becomes entitled to in connection with a
"Change in Control" as defined in Section 3 hereof) shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, except to the extent that such amounts
are (A) relinquished pursuant to the preceding sentence or
(B) identified in the written opinion of independent tax counsel
selected by the Auditors and approved by Executive (which
approval shall not be unreasonably withheld) as not constituting
parachute payments or excess parachute payments (in whole or in
part), or as representing reasonable compensation for personal
services to be rendered or actually rendered before the Change
<PAGE>
in Control in excess of the base amount, within the meaning of
Section 280G(b)(4)(B) of the Code, and (ii) the value of any
non-cash benefit or any deferred cash payment included in the
calculations shall be determined by the Auditors in accordance
with the principles of Section 280G(d)(3) and (4) of the Code.
The Company shall bear the expense of obtaining the opinion of
the independent tax counsel referred to in the preceding
sentence.
7. Damages. Executive shall not be required to mitigate
damages with respect to the amount of any payment provided under
this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided under this Agreement be
reduced by retirement benefits, deferred compensation or any
compensation earned by Executive as a result of employment by
another employer.
8. Successor to Company. The Company shall require any
successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, expressly,
absolutely and unconditionally to assume and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession or assignment had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or
assets as aforesaid which executes and delivers the agreement
provided for in this section or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of
law.
9. Heirs of Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die
while any amounts are still payable to Executive hereunder, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's
devisee, legatee, or other designee or, if there be no such
designee, to Executive's estate.
10. Arbitration. Any dispute, controversy or claim
arising under or in connection with this Agreement, or the
breach hereof, shall be settled exclusively by arbitration in
accordance with the Rules of the American Arbitration
Association then in effect. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court of competent
jurisdiction. Any arbitration held pursuant to this section in
connection with Executive's termination of employment shall take
place in San Francisco, California at the earliest possible
date. If any proceeding is necessary to enforce or interpret
the terms of this Agreement, or to recover damages for breach
<PAGE>
thereof, the prevailing party shall be entitled to reasonable
attorneys fees and necessary costs and disbursements, not to
exceed in the aggregate one percent (1%) of the net worth of the
other party, in addition to any other relief to which he or it
may be entitled.
11. Notice. For purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when
delivered by messenger or in person, or when mailed by United
States registered mail, return receipt requested, postage
prepaid, as follows:
If to
the Company: McKesson Corporation
One Post Street
San Francisco, CA 94104
Attention: Office of the General Counsel
If to
the Executive: ________________________
c/o McKesson Corporation
One Post Street
San Francisco, CA 94104
or such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
12. Legal Costs. The Company shall pay to Executive all
reasonable attorneys' fees and necessary costs and disbursements
incurred by or on behalf of Executive as a result of any dispute
arising out of this Agreement. Such fees shall be either paid
directly by the Company or reimbursed to Executive as soon as
reasonably practicable after Executive has provided the Company
with satisfactory evidence that Executive has incurred liability
for and paid such fees. To the extent of any conflict, this
section shall supersede the last sentence of Section 10 of this
Agreement.
13. General Provisions.
(a) Executive's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise,
nor shall Executive's rights be subject to encumbrance or
subject to the claims of the Company's creditors. Nothing in
this Agreement shall prevent the consolidation of the Company
with, or its merger into, any other corporation, or the sale by
the Company of all or substantially all of its properties or
assets; and this Agreement shall inure to the benefit of, be
binding upon and be enforceable by, any successor surviving or
resulting corporation, or other entity to which such assets
shall be transferred. This Agreement shall not be terminated by
<PAGE>
the voluntary or involuntary dissolution of the Company.
(b) This Agreement constitutes the entire agreement
between the parties hereto in respect to the rights and
obligations of the parties following a Change in Control. This
Agreement supersedes and replaces all prior oral and written
agreements, understandings, commitments, and practices between
the parties (whether or not fully performed by Executive prior
to the date hereof), which shall be of no further force or
effect.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder
of such provisions or parts thereof and the applicability
thereof shall not be affected thereby.
(d) This Agreement may not be amended or modified except
by a written instrument executed by the Company and Executive.
(e) This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with
the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
McKESSON CORPORATION
A Delaware corporation
By ___________________________
William A. Armstrong
Vice President
Attest:
By ___________________________
Secretary
By the authority of the ______________________________
Compensation Committee of Executive
the Board of Directors of
McKesson Corporation
on September 29, 1993.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT (11)
McKESSON CORPORATION - CONSOLIDATED
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE FIVE YEARS ENDED MARCH 31
(in thousands except per share amounts)
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Income after taxes from
continuing operations $157,056 $114,735 $ 39,618 $ 99,977 $ 93,677
Dividend requirements
- convertible preferred stocks - - (7,081)/1/ - -
Interest charges on convertible
debentures - net of tax 18 1,352 - /2/ 3,391 3,628
Contribution adjustment - Series B
ESOP convertible preferred stock/3/ (3,706) (3,758) - /2/ (3,711) (3,273)
------- ------- ------- ------- -------
153,368 112,329 32,537 99,657 94,032
Extraordinary item (4,186) - - - -
Income after taxes from
discontinued operations - - (7,285) (4,650) -
Cumulative effects of
accounting changes (16,660) - (110,500) - -
------- ------- ------- ------- -------
Total $132,522 $112,329 $(85,248) $ 95,007 $ 94,032
======= ======= ======= ======= =======
Fully diluted shares
Common shares outstanding/4/ 40,943 40,025 38,776 38,544 40,493
Convertible securities - dilutive 3,120 4,783 - /2/ 6,060 5,761
------- ------- ------- ------- -------
Total 44,063 44,808 38,776 44,604 46,254
======= ======= ======= ======= =======
Fully diluted earnings per share
Continuing operations $ 3.48 $ 2.51 $ .84 $ 2.23 $ 2.03
Extraordinary item (.10) - - - -
Discontinued operations - - (.19) (.10) -
Cumulative effects of
accounting changes (.38) - (2.85) - -
------- ------- ------- ------- -------
Total $ 3.00 $ 2.51 $ (2.20) $ 2.13 $ 2.03
======= ======= ======= ======= =======
PRIMARY EARNINGS PER SHARE
Income after taxes from
continuing operations $157,056 $114,735 $ 39,618 $ 99,977 $ 93,677
Dividend requirements
- convertible preferred stocks/1/ (7,052) (7,010) (7,081) (6,973) (5,523)
------- ------- ------- ------- -------
150,004 107,725 32,537 93,004 88,154
Extraordinary item (4,186) - - - -
Income after taxes from
discontinued operations - - (7,285) (4,650) -
Cumulative effects of
accounting changes (16,660) - (110,500) - -
------- ------- ------- ------- -------
Total $129,158 $107,725 $(85,248) $ 88,354 $ 88,154
======= ======= ======= ======= =======
Common shares outstanding/4/ 40,789 40,025 38,776 38,539 40,429
======= ======= ======= ======= =======
Primary earnings per share
Continuing operations $ 3.68 $ 2.69 $ .84 $ 2.41 $ 2.18
Extraordinary item (.10) - - - -
Discontinued operations - - (.19) (.12) -
Cumulative effects of
accounting changes (.41) - (2.85) - -
------- ------- ------- ------- -------
Total $ 3.17 $ 2.69 $ (2.20) $ 2.29 $ 2.18
======= ======= ======= ======= =======
/1/ Net of certain related tax benefits.
/2/ 1992 fully diluted earnings per share computation excludes the effect of convertible securities which
were anti-dilutive.
/3/ Represents the assumed additional ESOP contribution expense that the Company would have incurred if the
Series B ESOP convertible preferred stock had been converted at the beginning of the period presented.
/4/ Common shares outstanding have been computed by adding the monthly average (beginning of the month plus
end of the month divided by 2), dividing the aggregate by 12 and adjusting this total for dilutive stock
options using the treasury stock method.
</TABLE>
<PAGE>
EXHIBIT (13)
1994 ANNUAL REPORT
TO SECURITY HOLDERS
PURSUANT TO RULE 14A-3(B)
<PAGE>
EXHIBIT (22)
SUBSIDIARIES OF THE REGISTRANT
There is no parent of the Company. The following is a listing
of the significant subsidiaries of the Company, or if indented,
subsidiaries of the Company under which they are listed:
Jurisdiction of
Organization
---------------
McKesson Corporation . . . . . . . . . . . . . . . Maryland
Armor All Products Corporation . . . . . . . . . Delaware
McKesson Water Products Company . . . . . . . . California
Millbrook Distribution Services Co . . . . . . . Indiana
Medis Health and Pharmaceutical Inc. . . . . . . Canada
PCS Health Systems, Inc. . . . . . . . . . . . . Delaware
<PAGE>
EXHIBIT (23)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in McKesson
Corporation Registration Statements No. 2-59503, 2-65078, 2-73514,
2-86567, 33-10383, 33-27177 and 33-44439 on Form S-8; and
Registration Statements No. 33-36755 and 33-52075 on Form S-3 of
our report dated May 16, 1994 which expresses an unqualified
opinion and includes an explanatory paragraph relating to the
Corporation's change in its method of accounting for postemployment
benefits, postretirement benefits other than pensions and
environmental clean-up costs and our report dated May 16, 1994,
incorporated by reference in and appearing in this Annual Report on
Form 10-K of McKesson Corporation, respectively, for the year ended
March 31, 1994.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
San Francisco, California
June 15, 1994
