exv10w2






EXHIBIT 10.2




McKESSON CORPORATION

DEFERRED COMPENSATION ADMINISTRATION PLAN III (“DCAP III”)




Effective January 1, 2009




(Amended and Restated October 24, 2008)




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	A.
	 	PURPOSE	 	 	1	 
	 
	B.
	 	ERISA PLAN	 	 	1	 
	 
	C.
	 	PARTICIPATION	 	 	1	 
	 
	D.
	 	AMOUNTS OF DEFERRAL	 	 	3	 
	 
	E.
	 	PAYMENT OF DEFERRED COMPENSATION	 	 	4	 
	 
	F.
	 	SOURCE OF PAYMENT	 	 	7	 
	 
	G.
	 	MISCELLANEOUS	 	 	7	 
	 
	H.
	 	ADMINISTRATION OF THE PLAN	 	 	8	 
	 
	I.
	 	AMENDMENT OR TERMINATION OF THE PLAN	 	 	8	 
	 
	J.
	 	CLAIMS AND APPEALS	 	 	9	 
	 
	K.
	 	DEFINITIONS	 	 	10	 
	 
	L.
	 	SUCCESSORS	 	 	13	 
	 
	M.
	 	EXECUTION	 	 	13	 






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McKESSON CORPORATION

DEFERRED COMPENSATION ADMINISTRATION PLAN III




Effective January 1, 2009




(Amended and Restated October 24, 2008)




A. PURPOSE




     1. This Plan was established to enhance McKesson’s ability to attract and retain executive
personnel and members of the Board who are not otherwise employees of McKesson.



     2. This Plan is the successor plan to the Deferred Compensation Administration Plan II, as
amended through October 28, 2004 (the “Prior Plan”). Effective December 31, 2004, the Prior Plan
was frozen and no new allocations or deferrals are to be made to it; provided, however, that any
vested allocations and deferrals made under the Prior Plan before January 1, 2005 shall continue to
be governed by the terms and conditions of the Prior Plan as in effect on December 31, 2004.



     3. Any allocations and deferrals made under the Prior Plan after December 31, 2004 and any
allocations that were unvested on December 31, 2004 shall be deemed to have been made under this
Plan and all such contributions, accruals and deferrals shall be governed by the terms and
conditions of this Plan as it may be amended from time to time.



     4. This Plan is intended to comply with the requirements of Section 409A of the Code.



     5. Capitalized terms used in this Plan shall have the meaning set forth in Section K hereof.



B. ERISA PLAN




     This Plan is an unfunded deferred compensation program intended primarily for a select group
of management or highly compensated employees of the Company and members of the Board who are not
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.



          a. Eligible Executives. The Administrator may, at his or her discretion, and at any
time, and from time to time, select executives of the Company 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.




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          The Administrator may, at his or her 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 individual who is a member of the Board of McKesson and
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 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.



          a. Annual Election. Subject to the provisions of Sections 2(b) and 2(c) below, an
election to defer compensation must be made and become irrevocable at the time that the
Administrator prescribes, but in no event later than the last day of the Year preceding the Year in
which the compensation being deferred is earned. A Participant’s election to defer compensation
shall be suspended during the Year only if such Participant is faced with an Unforeseeable
Emergency. Such suspension shall continue through the end of the Year in which the Participant is
faced with an Unforeseeable Emergency and the Participant must submit a new election to defer
compensation, effective the Year after the Year in which the Unforeseeable Emergency occurs, to
resume participation in the Plan.



          b. Initial Election. A newly Eligible Executive or a newly Eligible Director may be
permitted by the Administrator to elect to participate in the Plan by submitting an election to
defer compensation in a form and by a time as McKesson prescribes; provided that such election is
made and becomes irrevocable not later than thirty days following the date such newly Eligible
Employee or Eligible Director first becomes eligible to participate in the Plan and provided
further that such election to defer compensation applies only to compensation earned after the date
the deferral election becomes irrevocable or at such later time that the Administrator prescribes.
In compliance with this Section 2(b), only a prorated portion of an Eligible Executive’s bonus
(other than a bonus that is performance-based compensation as defined in Section 2(c) below) may be
deferred if the Eligible Executive’s initial deferral election is made after the performance period
applicable to the bonus has begun.



          c. Election to Defer Performance-Based Compensation. To the extent that compensation
paid under the Management Incentive Plan, the Long-Term Incentive Plan or any other
Company-sponsored incentive plan is “performance-based compensation” as defined in Treasury
Regulation section 1.409A-1(e), an election to defer payments made pursuant to the Management
Incentive Plan, Long-Term Incentive Plan or other Company-sponsored bonus plan may be made not
later than six months prior to the end of the applicable performance period or



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such earlier time as the Administrator may prescribe; provided, however, that such election
shall be made prior to the date that compensation paid under the Management Incentive Plan
compensation, Long-Term Incentive Plan or other Company-sponsored incentive plan, whichever is
applicable, is substantially certain to be paid or readily ascertainable.



          d. Election to Defer Other Compensation. The Administrator, in its sole discretion,
may permit other types of compensation to be deferred under the Plan; provided, however, the
Administrator terms and conditions of such deferrals shall be included in the applicable deferral
election form and in accordance with Code Section 409A and the regulations promulgated and guidance
issued thereunder.



     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 an Eligible 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 and
the Administrator may modify or render invalid a Participant’s election prior to such election
becoming irrevocable to accommodate deferrals made under other plan(s). Deferrals under this Plan
may result in a reduction of benefits payable under the Social Security Act, the Retirement Plan
and the PSIP.



          b. Automatic Deferral. An Eligible Executive’s base salary deferrals and annual bonus
award deferrals (but not DCAP housing deferrals, sign-on and retention bonus deferrals and
Long-Term Incentive Plan award deferrals) shall be credited, in a separate Account under the Plan
with an amount calculated to be the Matching Employer Contribution percentage that would have been
credited to the Eligible Executive’s PSIP account if five percent (5%) of such deferrals under DCAP
III had been made under the PSIP. For these purposes, Matching Employer Contribution shall have
the meaning defined in the PSIP.



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 bonus award(s) 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.



     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) 75% of the amount of such
Eligible Executive’s base salary for such Year, and (ii) 90% of any annual bonus award and/or any
Long-Term Incentive Plan award determined and payable to him or her in such Year. Additionally,
the Administrator may change the maximum amount (expressed as a percentage limit) of base salary
that Eligible Executives as a group may defer under the Plan for
any Year. Notwithstanding these limits, deferrals may be reduced by the Company as permitted
under Treasury Regulation section 1.409A-3(j)(4).



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     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
(other than the portion of the annual retainer subject to Mandatory Deferral under and as defined
in the 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan) and other fees from
McKesson 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 or earnings shall be credited to each Account for each Year at a rate
equal to a rate declared or any other measurement device (the “Declared Rate”) approved by the
Compensation Committee acting in its sole discretion after taking into account, among other things,
the following factors: McKesson’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. Notwithstanding the foregoing, if a Change in Control occurs, the
Declared Rate for the balance of the calendar year in which the Change in Control occurs and for
the two calendar years immediately following the year in which the Change in Control occurs shall
not be less than the Declared Rate as in effect on the day before the Change in Control occurs.
Interest or earnings on each Account balance shall be compounded daily on each business day within
the Year to yield the Declared Rate for the Year. Interest or earnings shall be credited to each
Account as of the end of each business day.



     2. 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: McKesson’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”). Notwithstanding the foregoing, if a Change in Control (as defined in Section K.5
below) occurs, the Declared Rate for the balance of the calendar year in which the Change in
Control occurs and for the two calendar years immediately following the year in which the Change in
Control occurs shall not be less than the Declared Rate as in effect on the day before the Change
in Control occurs. Interest on each Account balance shall be compounded daily on each business day
within the Year to yield the Declared Rate for the Year. In the case of installment payments as
provided in Section E.4 below, interest shall be credited on all amounts remaining in a
Participant’s Account until all amounts are paid out. Interest shall be credited to each Account
as of the end of each business day .



     3. 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



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election, subject to the minimum required period of deferral and the maximum permissible
period of deferral. The minimum required period of deferral 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,
Separation from Service, a Change in Control or Unforeseeable Emergency. Payment must commence no
later than the end of the maximum period of deferral, which is the January following the year in
which the Eligible Executive reaches age 72 or, in the case of an Eligible Director, the January
after McKesson’s annual meeting of stockholders next following the Eligible Director’s 72nd
birthday; provided, however, no payment shall be paid or commence which will cause an impermissible
acceleration of such payment under Treasury Regulation section 1.409A-(3)(j).



     4. Election of Form and Time of Payment. A Participant shall elect in writing, and
file with the Administrator, at the same time as any election to defer compensation, a form and
time of payment of benefits under this Plan from the following:



          a. Form.



               i. Payment of the amount credited to the Participant’s Account in a single sum.



               ii. Payment of amounts credited to the Participant’s Account in any specified number of
approximately equal annual installments (not in excess of ten). For purposes of this Plan,
installment payments shall be treated as a single distribution under Section 409A of the Code.



          b. Time.



               i. The lump sum or first installment to be paid in the earlier of the first January or June
that is at least six months following the Year of Participant’s Retirement, Disability or death.



               ii. Subject to Section E.3, the lump sum or first installment to be paid in January of the
year designated by the Participant; provided, however, Participant shall elect a payment date, or
payment commence date, which is no later than the end of the Maximum Period of Deferral and if
Participant elects a distribution date which is subsequent to the Maximum Period of Deferral, the
election as to the time of distribution shall be deemed void immediately prior to the time such
election is irrevocable and distributions shall be made under paragraph i. above.



               iii. Subject to Section E.3, the lump sum or first installment to be paid in two or more
Januarys designated by the Participant following the Year of Participant’s Retirement, Disability
or death.


The Participant may elect a different time and/or form of distribution for Retirement, Disability
or death.




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     5. Modification of Elections. Once such an election has been made, the Eligible
Executive or Eligible Director may modify the the time and/or form of distributions made under the
Plan, 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 five years
from the originally scheduled distribution date. A change to the time and form of a distribution
may be modified or revoked until 12 months prior to the time a distribution is originally scheduled
to be made, at which time such change shall become irrevocable. The last valid election accepted
by the Administrator shall govern the payout; provided, however, if a modification under this
Section E.5 is determined immediately prior to such modification becoming irrevocable to cause a
payment date to be, or payment commence date begin, after later than the end of the Maximum Period
of Deferral such modification shall be deemed to be revoked immediately prior to the time such
modification become irrevocable and distributions shall be made as if Participant had not modified
his or her election.



     6. Default Form of Distribution. If no valid election is made with respect to Section
E.4, then payment of the amount credited to the Participant’s Account shall be made in a single sum
to be paid in the earlier of the first January or June that is at least six months following the
earlier of the Participant’s Retirement, Disability or death.



     7. Payments on Separation from Service. If a Participant Separates from Service for
any reason other than Retirement, Disability or death, then, notwithstanding the election made by
the Participant pursuant to Section E.4 above, the entire undistributed amount credited to his or
her Account shall be paid in the form of a lump sum in the earlier of the first January or June
that is at least six months following the date the Participant Separates from Service.



     8. Delayed Distribution to Specified Employees. Notwithstanding any other provision
of this Section E to the contrary, a distribution scheduled to be made upon Separation from Service
to a Participant who is identified as a Specified Employee as of the date he Separates from Service
shall not be paid within the time that is six months following the Participant’s Separation from
Service. Any payment that otherwise would have been made pursuant to this Section E during such
six-month period, if any, shall be made in the seventh month following the month in which
Participant’s Separation from Service occurs. The identification of a Participant as a Specified
Employee shall be made by the Administrator in his or her sole discretion in accordance with
Section K.25 of the Plan and Sections 416(i) and 409A of the Code and the regulations promulgated
thereunder.



     9. Payments on Death. An election made as to the the payment of the Participant’s
Account pursuant to Participant’s death shall be paid to his or her Beneficiary if such Participant
has not yet received or begun receiving a distribution under the Plan. If, however, a Participant
is in-pay status at the time of death, distribution of the Account, or portion of the Account, that
is in-pay shall continue to be distributed to the Beneficiary as Participant elected to receive
such
distribution. The Beneficiary shall have to right to elect a different time or form of
payment of distributions made under the Plan.



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     10. Deminimis Cashout. Notwithstanding the Participant’s election, the Administrator
in its sole discretion may distribute an Account to a Participant or a Beneficiary in a single
payment if the value of the Account, and any other plan or arrangement with respect to which
deferrals of compensation are treated as having been deferred under a single nonqualified deferred
compensation plan under Treasury Regulation section 1.409A-1(c)(2), is less than the Code Section
401(g)(1)(B) limit.



     11. 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 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 the Participant’s Beneficiary shall be the
Participant’s surviving spouse, if any, or, if there is no surviving spouse, the Participant’s
surviving children, if any, in equal shares, or if there are no surviving children, the
Participant’s estate.



     12. Payments Due to an Unforeseen Emergency. The Administrator may, in his or her
sole discretion, cancel Participant’s deferral election and direct payment to a Participant of all
or of any portion of the Participant’s Account balance, if necessary, notwithstanding an election
under Section E.4 above, at any time that the Administrator determines that such Participant has
suffered an Unforeseeable Emergency and requires action to be taken under this Section E.12.



     13. Prohibition on Acceleration. Notwithstanding any other provision of the Plan to
the contrary, no distribution will be made from the Plan that would constitute an impermissible
acceleration of payment as defined in Section 409A(a)(3) of the Code and the regulations
promulgated thereunder.



F. SOURCE OF PAYMENT




     Amounts paid under this Plan shall be paid from the general funds of McKesson, and each
Participant and his or her Beneficiaries shall be no more than unsecured general creditors of
McKesson 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 McKesson 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, McKesson may
provide, at its discretion, for such withholding and tax payments as may be required.



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     2. No Assignment.



     a. Other than as provided in Section G.2.b below, the benefits provided under this Plan may
not be alienated, assigned, transferred, pledged or hypothecated by any person, at 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, garnishments or executions to the fullest extent
allowed by law.



     b. If a court of competent jurisdiction determines pursuant to a judgment, order or approval
of a marital settlement agreement that all or any portion of the benefits payable hereunder to a
Participant constitute community property of the Participant and his or her spouse or former spouse
(hereafter, the “Alternate Payee”) or property which is otherwise subject to division by the
Participant and the Alternate Payee, a division of such property shall not constitute a violation
of Section G.2.a, and any portion of such property may be paid or set aside for payment to the
Alternate Payee. The preceding sentence of this Section G.2.b, however, shall not create any
additional rights and privileges for the Alternate Payee (or the Participant) not already provided
under the Plan; in this regard, the Administrator shall have the right to refuse to recognize any
judgment, order or approval of a martial settlement agreement that provides for any additional
rights and privileges not already provided under the Plan, including without limitation, with
respect to form and time of payment.



     3. Applicable Law and 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 Administrator of the Plan shall be the Executive Vice President,
Human Resources, of McKesson. If the Executive 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 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
filed with the Administrator at the time and in the manner specified by him or her. All elections
to defer compensation under this Plan shall be irrevocable.



I. AMENDMENT OR TERMINATION OF THE PLAN




     1. Amendment. The Compensation Committee may at any time amend this Plan. Such
action shall be prospective only and shall not adversely affect the rights of any Participant



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or Beneficiary to any benefit previously earned under this Plan. The foregoing
notwithstanding, no amendment adopted following the occurrence of a Change in Control shall be
effective if it (a) would reduce the Declared Rate for the balance of the calendar year in which
the Change in Control occurs or for the two calendar years immediately following the year in which
the Change in Control occurs to a rate lower than the Declared Rate as in effect on the day before
the Change in Control occurred or (b) modify the provisions of (a) above.



     2. Termination. The Board in its discretion may at any time terminate the Plan in
accordance with Treasury Regulation section 1.409A-3(j)(4)(ix).



J. CLAIMS AND APPEALS




     1. Informal Resolution of Questions. Any Participant or Beneficiary who has questions
or concerns about his or her benefits under the Plan is encouraged to communicate with the Human
Resources Department of McKesson. If this discussion does not give the Participant or Beneficiary
satisfactory results, a formal claim for benefits may be made in accordance with the procedures of
this Section J.



     2. Formal Benefits Claim – Review by Executive Vice President, Human Resources. A
Participant or Beneficiary may make a written request for review of any matter concerning his or
her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human
Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive
Vice President, Human Resources or his or her delegate (“Executive Vice President”) shall decide
the action to be taken with respect to any such request and may require additional information if
necessary to process the request. The Executive Vice President shall review the request and shall
issue his or her decision, in writing, no later than 90 days after the date the request is
received, unless the circumstances require an extension of time. If such an extension is required,
written notice of the extension shall be furnished to the person making the request within the
initial 90-day period, and the notice shall state the circumstances requiring the extension and the
date by which the Executive Vice President expects to reach a decision on the request. In no event
shall the extension exceed a period of 90 days from the end of the initial period.



     3. Notice of Denied Request. If the Executive Vice President denies a request in
whole or in part, he or she shall provide the person making the request with written notice of the
denial within the period specified in Section J.2. The notice shall set forth the specific reason
for the denial, reference to the specific Plan provisions upon which the denial is based, a
description of any additional material or information necessary to perfect the request, an
explanation of why such information is required, and an explanation of the Plan’s appeal procedures
and the time limits applicable to such procedures, including a statement of the claimant’s right to
bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on
review.



     4. Appeal to Executive Vice President.



          a. A person whose request has been denied in whole or in part (or such person’s authorized
representative) may file an appeal of the decision in writing with the Executive Vice President
within 60 days of receipt of the notification of denial. The appeal must



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be addressed to: Executive Vice President, Human Resources, McKesson Corporation, One Post
Street, San Francisco, California 94104. The Executive Vice President, for good cause shown, may
extend the period during which the appeal may be filed for another 60 days. The appellant and/or
his or her authorized representative shall be permitted to submit written comments, documents,
records and other information relating to the claim for benefits. Upon request and free of charge,
the applicant should be provided reasonable access to and copies of, all documents, records or
other information relevant to the appellant’s claim.



          b. The Executive Vice President’s review shall take into account all comments, documents,
records and other information submitted by the appellant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit determination. The
Executive Vice President shall not be restricted in his or her review to those provisions of the
Plan cited in the original denial of the claim.



          c. The Executive Vice President shall issue a written decision within a reasonable period of
time but not later than 60 days after receipt of the appeal, unless special circumstances require
an extension of time for processing, in which case the written decision shall be issued as soon as
possible, but not later than 120 days after receipt of an appeal. If such an extension is
required, written notice shall be furnished to the appellant within the initial 60-day period.
This notice shall state the circumstances requiring the extension and the date by which the
Executive Vice President expects to reach a decision on the appeal.



          d. If the decision on the appeal denies the claim in whole or in part written notice shall be
furnished to the appellant. Such notice shall state the reason(s) for the denial, including
references to specific Plan provisions upon which the denial was based. The notice shall state
that the appellant is entitled to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to the claim for benefits.
The notice shall describe any voluntary appeal procedures offered by the Plan and the appellant’s
right to obtain the information about such procedures. The notice shall also include a statement
of the appellant’s right to bring an action under Section 502(a) of ERISA.



          e. The decision of the Executive Vice President on the appeal shall be final, conclusive and
binding upon all persons and shall be given the maximum possible deference allowed by law.



     5. Exhaustion of Remedies. No legal or equitable action for benefits under the Plan
shall be brought unless and until the claimant has submitted a written claim for benefits in
accordance with Section J.2, has been notified that the claim is denied in accordance with Section
J.3, has filed a written request for a review of the claim in accordance with Section J.4, and has
been notified in writing that the Executive Vice President has affirmed the denial of the claim in
accordance with Section J.4.



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.



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     2. “Administrator” shall mean the person specified in Section H.



     3. “Beneficiary” shall mean the person or entity described by Section E.11.



     4. “Board” shall mean the Board of Directors of McKesson.



     5. “Change in Control” shall mean the occurrence of any change in ownership of
McKesson, change in effective control of McKesson, or change in the ownership of a substantial
portion of the assets of McKesson, as defined in Treasury Regulation section 1.409A-3(i)(5), the
regulations thereunder, and any other published interpretive authority, as issued or amended from
time to time..



     6. “Code” shall mean the Internal Revenue Code of 1986, as amended.



     7. “Company” shall mean McKesson and any affiliate that would be considered a service
recipient for purposes of Treasury Regulation section 1.409A-1(g).



     8. “Compensation Committee” shall mean the Compensation Committee of the Board.



     9. “Declared Rate” shall have the meaning described in Section E.1.



     10. “Disabled” or “Disability” shall mean that an individual is determined by
the Social Security Administration to be totally disabled.



     11. “Eligible Director” shall mean a member of the Board described by Section C.1.b.



     12. “Eligible Executive” shall mean an employee of the Company selected as being
eligible to participate in this Plan under Section C.1.a.



     13. “Employer” shall mean McKesson and any other affiliate that would be considered a
service recipient or employer for purposes of Treasury Regulation section 1.409A-1(h)(3).



     14. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.



     15. “Identification Date” shall mean each December 31.



     16. “Maximum Period of Deferral” shall mean the January following the year in which
the Eligible Executive reaches age 72 or, in the case of an Eligible Director, the January after
McKesson’s annual meeting of stockholders next following the Eligible Director’s 72nd birthday.



     17. “McKesson” shall mean McKesson Corporation, a Delaware corporation.



     18. “Participant” shall be any executive of the Company or member of the Board for
whom amounts are credited to an Account under this Plan. Upon the Participant’s death, the
Participant’s Beneficiary shall be a Participant until all amounts are paid out of the
Participant’s Account.



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     19. “Plan” shall mean the McKesson Corporation Deferred Compensation Administration
Plan III (“DCAP III”).



     20. “PSIP” shall mean the McKesson Corporation Profit-Sharing Investment Plan.



     21. “Prior Plan” shall mean the McKesson Corporation Deferred Compensation
Administration Plan II (“DCAP II”)



     22. “Retirement” shall mean Separation from Service after the date in which the
Participant attains age 50 and has at least five Years of Service with the Company.
Notwithstanding the foregoing, for purposes of this Plan, Retirement for an Eligible Director shall
mean cessation of service as a member of the Board on or after the completion of at least six
successive years as a member of the Board.



     23. “Retirement Plan” shall mean the McKesson Corporation Retirement Plan.



     24. “Separation from Service” or “Separates from Service” shall mean
termination of employment with the Employer, except in the event of death or Disability. A
Participant shall be deemed to have had a Separation from Service if the Participant’s service with
the Employer is reduced to an annual rate that is equal to or less than twenty percent of the
services rendered, on average, during the immediately preceding three years of service with the
Employer (or if providing service to the Employer less than three years, such lesser period).



     25. “Specified Employee” shall mean a Participant who, on an Identification Date, is:



          a. An officer of the Company having annual compensation greater than the compensation limit in
Section 416(i)(1)(A)(i) of the Code, provided that no more than fifty officers of the Company shall
be determined to be Specified Employees as of any Identification Date;



          b. A five percent owner of the Company; or



          c. A one percent owner of the Company having annual compensation from the Company of more than
$150,000.


For purposes of determining whether a Participant is a Specified Employee, Treasury Regulation
section 1.415(c)-2(d)(11)(ii) shall be used to calculate compensation. If a Participant is
identified as a Specified Employee on an Identification Date, then such Participant shall be
considered a Specified Employee for purposes of the Plan during the period beginning on the first
April 1 following the Identification Date and ending on the next March 31.




     26. “Unforeseeable Emergency” shall have the same meaning as provided in Section
409A(a)(2)(B)(ii) of the Code.



     27. “Year” shall mean the calendar year.



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     28. “Year of Service” shall have the same meaning as “Year of Service” as defined in
the PSIP.



L. SUCCESSORS




     This Plan shall be binding on McKesson and any successors or assigns thereto.



M. EXECUTION




     To
record the adoption of the Plan by the Compensation Committee of the Board of Directors of McKesson Corporation at a
meeting held on October 24, 2008, effective as of January 1, 2009.



McKESSON CORPORATION




	 	 	 	 	 	 	 
	By:

	 	/s/ Jorge L. Figueredo
 

	 	 	 	 
	 

	 	Jorge L. Figueredo	 	 	 	 
	 	 	Executive Vice President, Human Resources	 	 







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