exv10w1






EXHIBIT 10.1




McKESSON CORPORATION

SUPPLEMENTAL PSIP II




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.
	 	COMPANY MATCH	 	 	3	 
	 
	F.
	 	PAYMENT OF DEFERRED COMPENSATION	 	 	4	 
	 
	G.
	 	BENEFICIARY DESIGNATION	 	 	7	 
	 
	H.
	 	SOURCE OF PAYMENT	 	 	8	 
	 
	I.
	 	MISCELLANEOUS	 	 	8	 
	 
	J.
	 	ADMINISTRATION OF THE PLAN	 	 	9	 
	 
	K.
	 	AMENDMENT OR TERMINATION OF THE PLAN	 	 	9	 
	 
	L.
	 	CLAIMS AND APPEALS	 	 	10	 
	 
	M.
	 	DEFINITIONS	 	 	12	 
	 
	N.
	 	SUCCESSORS	 	 	14	 
	 
	O.
	 	EXECUTION	 	 	14	 
	 
	APPENDIX A EXAMPLE OF DEFERRALS UNDER PLAN	 	 	A-1	 






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McKESSON CORPORATION

SUPPLEMENTAL PSIP II




Effective January 1, 2009





	A.	 	PURPOSE






	 	1.	 	This Plan is established to allow certain executives of the Company to elect to
defer compensation which cannot be deferred under the McKesson Corporation Profit
Sharing Investment Plan (“PSIP”) because of limitations of tax laws and to provide for
a Monthly Company Match and an Additional Company Match on those deferrals at a rate
equivalent to the PSIP’s “Matching Employer Contribution” and “Additional Matching
Employer Contribution.”
	 
	 	2.	 	This Plan is the successor plan to the Supplemental PSIP, as in effect on
December 31, 2004 (the “Prior Plan”). Effective December 31, 2004, the Prior Plan was
frozen and no new deferrals shall be made to it nor shall any matching contributions be
allocated or vested under it after such date; provided, however, that any deferrals
that were made to the Prior Plan or matching contributions that were allocated and
vested 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 deferrals made to or matching contributions that were allocated or vested
under the Prior Plan after December 31, 2004 are deemed to have been made or allocated
under this Plan and all such deferrals and matching contributions 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 Code Section 409A.
	 
	 	5.	 	Capitalized terms used in this Plan shall have the meaning set forth in Section
M hereof.






	B.	 	ERISA PLAN




This Plan is an unfunded deferred compensation program for a select group of management or highly
compensated 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 or her
discretion, and at any time, and from time to time, select executives of an Employer
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




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	 	 	 	contract with the Company, or by inclusion among the persons specified in writing by
the Administrator. The Administrator may, at his or her discretion, and at any
time, and from time to time, provide that executives previously designated as
Eligible Executives 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. 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 Eligible
Executive shall be deemed to accept all other terms and conditions of this Plan.






	 	(a)	 	Timing of Elections. 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. An election to defer Compensation shall be made prior to the beginning
of the Plan Year in which it is earned and shall become irrevocable on the
December 31 preceding such Plan Year.
	 
	 	(b)	 	Newly Eligible Executive Elections. However, if an
executive becomes an Eligible Executive after the beginning of a Plan Year, he
or she may make an election to defer Compensation for that Plan Year no later
than 30 days after the date he or she becomes an Eligible Executive, which
election shall become irrevocable at the end of the 30-day period or an earlier
date that the Administrator prescribed; provided, however, such election shall
apply only to Compensation earned after the election becomes irrevocable or at
such later time the Administrator prescribes.
	 
	 	(c)	 	Modification of Elections. An election filed in
accordance with the provisions of the preceding paragraphs (a) and (b) shall be
applicable to the Plan Year with respect to which it is made and shall continue
for subsequent Plan Years until suspended or modified in a writing delivered by
the Participant to the Administrator, as described in this paragraph (c). An
election to suspend further deferrals or to increase or decrease the amount
deferred under the Plan shall apply only to Compensation otherwise payable to
the Participant after the end of the Plan Year in which the election is
delivered to the Administrator and such election shall become irrevocable on
the date that the Administrator prescribes, but in no event later than December
31 of the Plan Year in which such election is made.






	 	3.	 	Relation to Other Plans.




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	 	(a)	 	Other Plans. An Eligible Executive may participate in
this Plan and may also participate in DCAP III or any successor 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).
	 
	 	(b)	 	Effect on Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible Executive under this
Plan may result in a reduction of benefits payable under the Social Security
Act, the McKesson Corporation Retirement Plan, the PSIP and the McKesson
Corporation 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 Monthly Company Match and Additional Company
Match, to the extent that such deferrals (and corresponding Monthly Company Match and
Additional Company Match) cannot be made under the PSIP because of the limitations in
Code Section 401(a)(17) (limiting the amount of annual compensation to be taken into
account under the PSIP to $210,000 in 2005, as adjusted from time to time under the
Code).
	 
	 	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 Section 401(a)(17).






	E.	 	COMPANY MATCH






	 	1.	 	Eligibility.






	 	(a)	 	Monthly Company Match. A Monthly Company Match shall
be credited, with respect to each calendar month, to the Accounts of Eligible
Executives who actually defer Compensation under this Plan for such calendar
month.
	 
	 	(b)	 	Additional Company Match. An Additional Company Match
may be credited, with respect to each PSIP plan year, to the Accounts of
Eligible Executives who actually defer Compensation under this Plan.




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	 	2.	 	Amount of Match.






	 	(a)	 	Monthly Company Match. The amount of the Monthly
Company Match to be credited to the Account of an Eligible Executive for any
calendar month shall be a percentage of the Eligible Executive’s deferrals
under this Plan for the calendar month. 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 the Eligible Executive’s deferrals under this Plan had been made
under the PSIP. In determining this amount, the Administrator shall take into
account the different “Matching Employer Contribution” rates that may apply.
	 
	 	(b)	 	Additional Company Match. The amount of the Additional
Company Match to be credited to the Account of an Eligible Executive for any
PSIP plan year shall be a percentage of the Eligible Executive’s deferrals
under this Plan for the PSIP plan year. This percentage shall be the same
percentage as the “Additional Matching Employer Contribution” (as defined in
the PSIP) percentage that would have been credited to the Eligible Executive’s
PSIP account if the Eligible Executive’s deferrals under this Plan had been
made under the PSIP. In determining this amount, the Administrator shall take
into account the different “Additional Matching Employer Contribution” rates
that may apply.






	F.	 	PAYMENT OF DEFERRED COMPENSATION






	 	1.	 	Book Account and Interest Credit. Both Compensation deferred by a
Participant and any Monthly Company Match or Additional Company Match for the benefit
of a Participant shall be credited to a separate bookkeeping account maintained for
such Participant (the “Account”). Interest or earnings shall be credited to each
Account for each Plan 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 Plan
Year to yield the Declared Rate for the Plan Year. Interest or earnings shall be
credited to each Account as of the end of each business day.




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	 	2.	 	Vesting.






	 	(a)	 	A Participant shall be 100% vested at all times in the value of
the Participant’s elective deferrals and earnings thereon credited to the
Participant’s Account.
	 
	 	(b)	 	A Participant shall vest in the amounts of Monthly Company
Match and the Additional Company Match and earnings thereon credited to the
Participant’s Account at the same time and in the same manner as if these
amounts were “Matching Employer Contributions” or “Additional Matching Employer
Contributions” under the PSIP and as if the rules of the PSIP concerning
vesting applied to such amounts. For this purpose, any Monthly Company Match
shall be deemed to be credited to an Account as of the last day of the calendar
month with respect to which such Monthly Company Match is determined and any
Additional Company Match shall be deemed to be credited to an Account as of the
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” or “Additional Matching Employer Contributions” under
the PSIP shall be forfeited hereunder. Any forfeiture under this Plan of any
portion of the Monthly Company Match or the Additional 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. This election must
be made no later than the later of (i) December 31, 2007 or (ii) 30 days after the date
the Participant first becomes an Eligible Executive.






	 	(a)	 	Retirement or Disability. If the Payment Event is due
to the Participant’s Retirement or Disability, 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 Retirement or Disability 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. For purposes of the Plan, installment payments shall be treated
as a single distribution under Code Section 409A.
	 
	 	(ii)	 	Payment of the vested amounts credited to the
Participant’s Account in a single lump sum upon the occurrence of the
Retirement or Disability.




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	 	(iii)	 	If a Participant does not make any election
with respect to the payment of the Participant’s Account, then such
benefit shall be payable in a lump sum upon the occurrence of
Participant’s Retirement or Disability, whichever is applicable.






	 	 	 	Payment under this paragraph (a) pursuant to Participant’s Retirement, is
subject to Section 5.
	 
	 	(b)	 	Death. Each Participant shall make an election of the
manner in which any amount remaining in the Participant’s Account at the time
of the 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. At the election of the Participant, benefits shall be paid in a lump sum
or in up to ten annual installments; provided, however, if 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. A Beneficiary may not
elect to accelerate, change the form of the payments pursuant to the
Participant’s election, or further defer the payment of the Participant’s
Account as described in Section F.4.
	 
	 	(c)	 	Separation from Service Not Due to Retirement or Death.
If the Payment Event occurs as a result of the Participant’s Separation from
Service, and such separation is not due to the Participant’s death or
Retirement, payment of the vested amounts credited to the Participant’s Account
shall be made in a single lump sum upon the occurrence of the Participant’s
Separation from Service, subject to Section 5.
	 
	 	 	 	(If any Monthly Company Match or Additional Company Match is payable under
Section E hereunder, that amount or first installment amount, whichever is
applicable, may be paid separately and at a later date as provided in such
section but not later than the end of the calendar year in which the Monthly
Company Match or Additional Company Match is credited to the Participant’s
Account.)






	 	4.	 	Subsequent Change in Form of Payment. Once an election is made as to
the form of payment upon a Payment Event, a Participant may alter the form of payment
of amounts deferred under the Plan by a writing filed with the Administrator; provided
that such alteration is made at least one year prior to the earliest Payment Event and
does not provide for the receipt of such amounts earlier than five years from the
previously scheduled Payment Event. A change to the form of a distribution may be
modified or revoked until one year 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. A change to the
form of distribution may be modified or revoked until 12 months prior to the earliest
scheduled Payment Event, at which
time any such modification or revocation shall become irrevocable. The last valid
election accepted by the Administrator shall govern the form of payment.




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	 	5.	 	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.
	 
	 	6.	 	Special Distribution Election on or before December 31, 2006.
Participants who are identified by the Compensation Committee, in its sole discretion,
may make a special distribution election to receive a distribution of their Account in
calendar year 2007 or later; provided that the distribution election is made at least
twelve months in advance of the newly elected distribution date (and the previously
scheduled distribution date, if any) and the election is made no later than December
31, 2006. An election made pursuant to this Section F.6 shall be subject to any
special administrative rules imposed by the Compensation Committee including rules
intended to comply with Code Section 409A. No election under this Section F.6 shall
(i) change the payment date of any distribution otherwise scheduled to be paid in 2006
or cause a payment to be paid in 2006, or (ii) be permitted after December 31, 2006.
	 
	 	7.	 	Date Payment Occurs. Payment shall be made or commence not later than
ninety (90) days following the date the earliest Payment Event occurs. Notwithstanding
the foregoing, 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 or she
Separates from Service shall be delayed for a minimum of six months following the
Participant’s Separation from Service. Any payment that otherwise would have been made
pursuant to this Section F during such six-month period, if any, shall be paid on the
first day of the seventh month following the Participant’s Separation from Service.
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 M.26 of the Plan
and Code Sections 416(i) and 409A and the regulations promulgated thereunder.
	 
	 	8.	 	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 Code Section
409A(a)(3) and the regulations promulgated thereunder.






	G.	 	BENEFICIARY DESIGNATION




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


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McKesson. Such filing must occur before the Participant’s death. A Participant may change the
Beneficiary, from time to time, by filing a completed beneficiary designation with McKesson in the
manner prescribed by McKesson in its sole discretion. 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 or her beneficiary under the PSIP.





	H.	 	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 an Employer 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 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.
	 
	 	2.	 	No Assignment. Except as otherwise provided in this Section I.2. or by
applicable law, 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.
	 
	 	 	 	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
Alternative Payee, a division of such property shall not constitute a violation of
this Section I.2, and any portion of such property may be paid or set aside for
payment to the Alternate Payee. The preceding sentence, 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 already
not already provided under the Plan, including without limitation with respect to
form and time of payment.




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	 	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 an Employer or shall affect the
right of an Employer to terminate any executive’s employment or change any terms of any
executive’s employment at any time.






	J.	 	ADMINISTRATION OF THE PLAN






	 	1.	 	In General. The Plan Administrator 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 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. The Plan Administrator or Compensation Committee shall have the
authority to delegate its authority under the Plan to an officer or group of officers
of McKesson.
	 
	 	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.






	K.	 	AMENDMENT OR TERMINATION OF THE PLAN






	 	1.	 	Amendment. The Compensation Committee may at any time, and from time
to time, amend the Plan. Unless otherwise specified, 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.
	 
	 	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).




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	L.	 	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 L.
	 
	 	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 L.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 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




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	 	 	 	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 L.2, has been notified that the claim is
denied in accordance with Section L.3, has filed a written request for a review of the
claim in accordance with Section L.4, and has been notified in writing that the
Executive Vice President has affirmed the denial of the claim in accordance with
Section L.4.




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	M.	 	DEFINITIONS




For purposes of the Plan, the following terms shall have the meanings indicated:





	 	1.	 	“Account” shall mean the Account specified in Section F.l.
	 
	 	2.	 	“Additional Company Match” shall mean, with respect to any Plan Year, the
amount credited to the Account of an Eligible Employee in accordance with Section
E.1(b).
	 
	 	3.	 	“Administrator” shall mean the person specified in Section J.1.
	 
	 	4.	 	“Beneficiary” shall mean the person or entity described by Section G.
	 
	 	5.	 	“Board” shall mean the Board of Directors of McKesson.
	 
	 	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” shall mean “Compensation” as defined in Section 15.17 of the
PSIP; provided, however, that Compensation for purposes of this Plan shall be
determined without regard to the limit of Code Section 401(a)(17).
	 
	 	9.	 	“Compensation Committee” shall mean the Compensation Committee of the Board.
	 
	 	10.	 	“DCAP III” shall mean the McKesson Corporation Deferred Compensation
Administration Plan III and predecessor or successor plans, if applicable.
	 
	 	11.	 	“Disability” shall mean that an individual is determined to be totally disabled
by the Social Security Administration.
	 
	 	12.	 	“Eligible Executive” shall mean an employee of the Employer, or its affiliate
or subsidiary, who is eligible to participate in this Plan under Section C.
	 
	 	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.	 	“McKesson” shall mean McKesson Corporation, a Delaware corporation.




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	 	17.	 	“Monthly Company Match” shall mean, with respect to a calendar month, the
amount credited to the Account of an Eligible Executive in accordance with Section
E.1(a).
	 
	 	18.	 	“Participant” shall be any Eligible Executive or former Eligible Executive for
whom amounts are credited to an Account under this Plan. Upon a Participant’s death
his or her Beneficiary shall be a Participant until all amounts are paid out of the
decedent-Participant’s Account.
	 
	 	19.	 	“Payment Event” shall mean the earliest of the following: Retirement, death,
Separation from Service other than due to Retirement or death, or Disability.
	 
	 	20.	 	“Plan” shall mean the McKesson Corporation Supplemental PSIP II.
	 
	 	21.	 	“Plan Year” shall mean the calendar year.
	 
	 	22.	 	“Prior Plan” shall mean the McKesson Corporation Supplemental PSIP.
	 
	 	23.	 	“PSIP” shall mean the McKesson Corporation Profit-Sharing Investment Plan, as
amended from time to time.
	 
	 	24.	 	“Retirement” shall mean Separation from Service from the Employer after the
date on which the Participant has attained age 50 and has at least five Years of
Service.
	 
	 	25.	 	“Separation 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).
	 
	 	26.	 	“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




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	 	 	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.






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






	N.	 	SUCCESSORS




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





	O.	 	EXECUTION




To record
the adoption of the Plan by the Compensation Committee of the Board 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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APPENDIX A




EXAMPLE OF DEFERRALS UNDER PLAN



The following example illustrates the extent to which a Participant could make deferrals under this
Plan. The example assumes that the applicable compensation limit under Code Section 401(a)(17) is
$210,000.



E’s Compensation is $350,000. E elects to make Basic Contributions under PSIP at the rate of 5% of
his Compensation. Because Code Section 401(a)(17) limits the amount of E’s compensation which may
be considered by PSIP to $210,000, E’s Basic Contributions for the year are limited to $10,500 (5%
of $210,000). Accordingly, E may defer $7,000 (5% of his Compensation in excess of $210,000) into
this Plan. This deferral will then be eligible for a Monthly Company Match and an Additional
Company Match based on the PSIP’s “Matching Employer Contribution” and “Additional Matching
Employer Contribution” for the relevant PSIP calendar months and plan year.





A-1