Exhibit 10.01
Cardinal Health, Inc.
Long-Term Incentive Cash Program for Fiscal Years 2006-2008
Article 1. Establishment and Purpose
     1.1. Establishment of Program. The Cardinal Health, Inc. Long-Term
Incentive Cash Program for Fiscal Years 2006-2008 (the “Program”) is hereby
established effective as of July 1, 2005, under Section 13 of the Cardinal
Health, Inc. 2005 Long-Term Incentive Plan (the “2005 LTIP”). The Program is
subject to the terms and provisions of the 2005 LTIP and shall remain in effect
until October 31, 2008, or earlier termination by the Administrator of either
this Program or the 2005 LTIP.
     1.2. Purpose. The primary purposes of the Program are to:
     (a) Achieve the Company’s long term growth objectives relative to earnings
per share;
     (b) Focus management on key measures that drive superior financial and
management performance and that result in enhanced value of the Company;
     (c) Provide compensation opportunities that are externally competitive and
internally consistent with the Company’s growth objectives and total
compensation strategies; and
     (d) Provide award opportunities that reward executives with financial and
operating responsibilities that can impact achievement of the Company’s growth
goals.
Article 2. Definitions
     Whenever used in the Program, capitalized terms that are defined in the
2005 LTIP shall have the meanings attributed to them in the 2005 LTIP. In
addition, the following terms shall have the meanings set forth below and, when
the defined meaning is intended, the term is capitalized:
     2.1. “Covered Employee” means any Participant who is, or who is determined
by the Committee to be likely to become, a “covered employee” within the meaning
of Code Section 162(m).
     2.2. “Effective Date” means July 1, 2005.
     2.3. “Final Award” means the actual incentive compensation earned during a
Performance Period by a Participant, as determined by the Administrator
following the end of the Performance Period.
     2.4. “Performance Period” means the three fiscal year period beginning on
the Effective Date and ending on June 30, 2008.
Article 3. Eligibility and Participation
     3.1. Eligibility. The Administrator shall designate the key executive
Employees who are eligible to receive a Cash Award under the Program. In
general, an Employee may be designated as a key Employee if such Employee is a
strategic executive who is responsible for or contributes to the management,
growth, and/or profitability of the business of the Company in a material way.
Only the Committee may determine the eligibility of Employees who are Covered
Employees.

 

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     3.2. Participation. Employees who were chosen to participate in the Program
shall be apprised of the performance criteria and related Cash Awards determined
for them for the Performance Period, as soon as is practicable after such Cash
Awards are established.
     3.3. Partial Performance Period Participation. An Employee who becomes
eligible after the beginning of the Performance Period may participate in the
Program for that Performance Period on a ratable basis. Such situations may
include, but are not limited to (a) new hires; or (b) when an Employee is
promoted from a position which did not previously meet the eligibility criteria.
The Administrator, in its sole discretion, retains the right to prohibit or
allow participation for any of the aforementioned Employees. The performance
criteria previously established under the Program shall apply to any Employees
who become eligible after the beginning of the Performance Period. If an
Employee participates for only a portion of the Performance Period for any
reason, his or her Cash Award will be pro-rated based on the number of days he
or she performed services during the Performance Period over the total days in
the Performance Period, or some similar method adopted by the Committee that
results in a ratable reduction of the Cash Award based on the partial
Performance Period applicable to the Employee. In addition, in the event a
Participant changes job levels during a Performance Period, the Participant’s
Cash Award may be adjusted to reflect the amount of time at each job level
during the Performance Period. Notwithstanding anything in this Section 3.3 or
in the Program to the contrary, the participation in the Program for a Covered
Employee who becomes eligible after the beginning of the Performance Period
shall comply with the provisions of Code Section 162(m), as set forth in
Section 4.1.
     3.4. No Right to Participate. No Participant or other Employee shall at any
time have a right to be selected for participation in the Program for any
Performance Period, whether or not he or she previously participated in this or
any similar Program.
Article 4. Award Determination
     4.1. Qualifying Performance Criteria. The Committee selected and
established in writing performance criteria for the Performance Period, which,
if met, may entitle Participants to the payment of the Cash Awards. To ensure
compliance with the exception from Code Section 162(m) for qualified
performance-based compensation for Participants who are Covered Employees, the
performance criteria established were (and will be for any new Participants who
are Covered Employees) based on one or more Qualifying Performance Criteria
selected by the Committee in writing within 90 days following the first day of
the period of service of such Employee as a Participant under the Program (or,
if earlier, before 25% of that period has elapsed), and at a time when the
outcome relative to the attainment of the performance criteria is not
substantially certain. Subject to the requirements of Code Section 162(m) with
respect to Covered Employees, if a Participant commences participation after the
beginning of a Performance Period, the performance criteria established for the
Performance Period shall apply to that Participant, with the Cash Award amount
adjusted or pro-rated over the remaining balance of the Performance Period to
reflect the partial period of participation in the Program. Once established,
the performance criteria shall not be changed during the Performance Period.
Subject to the requirements of Code Section 162(m) with respect to Covered
Employees, at the time the Cash Awards are made and performance criteria are
established, the Committee is authorized to determine the manner in which the
performance criteria will be calculated or measured to take into account certain
factors over which Participants have no or limited control, including, but not
limited to, market related changes in inventory value, changes in industry
margins, changes in accounting principles, and extraordinary charges to income.
     4.2. Cash Award Targets. The Committee has established in writing a Cash
Award target for each Covered Employee and for all other Participants for the
Performance Period. Participants who are Covered Employees may receive a Cash
Award solely if the Qualifying Performance Criteria are met.

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     4.3. Final Award Determinations. At the end of the Performance Period, the
Committee shall certify in writing the extent to which the Qualifying
Performance Criteria were met during the Performance Period for any Cash Awards
for Covered Employees. If the Qualifying Performance Criteria for the
Performance Period are met, Covered Employees shall be entitled to the payment
of the Cash Awards, subject to the Committee’s exercise of negative discretion
to reduce any Final Award payable to a Covered Employee based on business
objectives established for that Covered Employee or other factors as determined
by the Committee in its sole discretion. As set forth in the 2005 LTIP, the
maximum amount payable to any single Participant pursuant to the portion of a
Cash Award earned with respect to any single fiscal year shall not exceed
$7,500,000. With respect to Participants who are not Covered Employees, the
Committee will determine the Final Award based on the performance criteria and
other business objectives. The Committee may adjust (either up or down) any
Final Award for Participants who are not Covered Employees on the basis of such
further considerations as the Committee shall determine in its sole discretion.
Article 5. Payment of Final Awards
     Each Participant’s Final Award shall be paid in cash, in one lump sum,
subject to applicable tax withholding, on or before the 15th day of the third
month after the end of each Performance Period. If payment is delayed due to an
unforeseeable event or other administrative delays, payment shall in no event be
made later than the 15th day of the third month after the end of the taxable
year of the Participant in which the Final Award was earned. The Administrator
may permit or provide for deferred payment of any Final Award to a specified
date or to a date not less than six (6) months after termination of employment,
in accordance with such conditions and procedures as the Administrator may
specify in compliance with the requirements of Code Section 409A.
Article 6. Termination of Employment; Other Forfeiture Events
     6.1. Termination of Employment Due to Death or Disability. In the event a
Participant’s employment is terminated by reason of death or Disability, the
Final Award determined in accordance with Section 4.3 herein shall be reduced to
reflect participation prior to termination of employment only. The Final Award,
if any, shall be calculated based on a determination of the achievement of the
performance criteria and business objectives as of the end of the fiscal year
quarter in which the Participant’s termination of employment occurred. The Cash
Award so determined shall be further reduced by multiplying the Final Award by a
fraction, the numerator of which is the number of days of employment in the
Performance Period through the date of employment termination, and the
denominator of which is the number of days in the Performance Period. In the
case of a Participant’s Disability, the employment termination shall be deemed
to have occurred as of the date that the Committee determines was the date on
which the definition of Disability was satisfied. The Final Award thus
determined shall be paid as soon as practicable and reasonable following the end
of the Performance Period in which employment termination occurs, but in no
event shall such amount be paid later than the 15th day of the third month after
the end of the taxable year of the Participant in which the Performance Period
ended.
     6.2. Beneficiary Designations.
     (a) General. Each Participant under the Program may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Program is to be paid in case of his
or her death before such Participant receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Administrator, and will be effective only when filed
by the Participant in writing with the Administrator during his or her lifetime.

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     (b) Invalidity of Powers of Attorney. The Program shall not recognize
beneficiary designations made on a Participant’s behalf by the Participant’s
attorney in fact, or by any person acting under a power of attorney or any
instrument by which the Participant has appointed another person as his or her
agent, thereby conferring upon him or her the authority to perform certain
specified acts on the Participant’s behalf.
     (c) Failure of Beneficiary Designation. In the absence of a beneficiary
designation made by the Participant in accordance with Section 6.2(a), or if the
beneficiary named by a Participant predeceases him or her, then the
Administrator shall pay any benefits remaining unpaid at the Participant’s death
to the Participant’s estate.
     6.3. Termination of Employment Following a Change in Control. In the event
of a Change in Control, all Participants shall become vested in and entitled to
their Cash Awards calculated based on their individual target awards times a
fraction, the numerator of which is the number of days from the beginning of the
Performance Period to the date of the Change in Control and the denominator of
which is the total number of days in the Performance Period. The amount so
calculated shall be the minimum amount payable as a Final Award for the
Performance Period in which the Change in Control occurs. If the Participant’s
employment is terminated before the last date of a Performance Period and within
two (2) years of a Change in Control for any reason other than a Termination for
Cause, the Final Award thus determined shall be paid as soon as practicable and
reasonable following the Participant’s Termination of Employment, but in no
event shall such amount be paid later than the 15th day of the third month after
the end of the taxable year of the Participant in which the Termination of
Employment occurred.
     6.4. Termination of Employment for Other Reasons. In the event of a
Participant’s Termination of Employment before the last date of a Performance
Period for any reason other than death or Disability, all of the Participant’s
rights to any Final Award for that Performance Period shall be forfeited. In
addition, the Administrator may also, in its sole discretion, determine and
provide that all or any portion of a Final Award is subject to an obligation of
repayment to the Company in the event of a Termination for Cause of the
Participant within a specified period after a Final Award is earned.
     6.5. Other Forfeiture Events. The Administrator may, in its discretion,
require that all or any portion of a Final Award is subject to an obligation of
repayment to the Company upon the violation of a non-competition and
confidentiality covenant applicable to the Participant. The Administrator may,
in its discretion, also require repayment to the Company of all or any portion
of a Final Award if the amount of the Final Award was calculated based upon the
achievement of certain financial results that were subsequently the subject of a
financial statement restatement, the Participant engaged in misconduct that
caused or contributed to the need for the financial statement restatement, and
the amount of the Final Award would have been lower than the amount actually
awarded to the Participant had the financial results been properly reported.
This Section 6.4 shall not be the Company’s exclusive remedy with respect to
such matters. This Section 6.4 shall not apply after a Change of Control.
Article 7. Nontransferability
     No right or interest of any Participant in the Program shall be assignable
or transferable, other than by will or pursuant to the laws of descent and
distribution, or subject to any lien, directly, by operation of law or
otherwise, including, but not limited to, by execution, levy, garnishment,
attachment, pledge, or bankruptcy.

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Article 8. Administration
     8.1. General. The Program shall be administered in accordance with
Section 4 of the 2005 LTIP.
     8.2. Facility of Payment. If the Administrator deems any person entitled to
receive any amount under the provisions of the Program to be incapable of
receiving or disbursing the same by reason of minority, illness or infirmity,
mental incompetence, or incapacity of any kind, the Administrator may, in its
sole discretion, (i) apply such amount directly for the comfort, support and
maintenance of such person; (ii) reimburse any person for any such support
theretofore supplied to the person entitled to receive any such payment;
(iii) pay such amount to any person selected by the Administrator to disburse it
for such comfort, support and maintenance, including without limitation, any
relative who has undertaken, wholly or partially, the expense of such person’s
comfort, care and maintenance, or any institution in whose care or custody the
person entitled to the amount may be; or (iv) with respect to any amount due to
a minor, deposit such amount to his or her credit in any savings or commercial
bank of the Administrator’s choice, direct that such distribution be paid to the
legal guardian, or if none, to a parent of such person or a responsible adult
with whom the minor maintains his or her residence, or to the custodian for such
person under the Uniform Gift to Minors Act or Gift to Minors Act, if such
payment is permitted by the laws of the state in which the minor resides.
Payment pursuant to this Section 8.2 shall fully discharge the Company, the
Board, the Committee, and the Program from further liability on account thereof.
Article 9. Amendment or Termination
     The Administrator, without notice, at any time and from time to time, may
modify or amend, in whole or in part, any or all of the provisions of the
Program, or suspend or terminate it entirely, in accordance with the provisions
of the 2005 LTIP. No Cash Award may be granted during any period of suspension
of the Program or after termination of the Program, and in no event may any new
Cash Award be granted after the termination or expiration of the 2005 LTIP under
which this Program is established.
Article 10. Miscellaneous
     Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Program. Any reference to a
section (other than to a section of the Program) shall also include a successor
to such section. The Program is governed by the 2005 LTIP and shall be construed
in accordance therewith. In the event any term or provision of the Program
conflicts with any term or provision of the 2005 LTIP, the terms and provisions
of the 2005 LTIP shall control.

             
 
                Cardinal Health, Inc.    
 
           
 
  By:   /s/ Carole S. Watkins    
 
                Title: Chief Human Resources Officer    

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