Document:

exv10w13

 

EXHIBIT 10.13

McKESSON CORPORATION

SEVERANCE POLICY FOR EXECUTIVE EMPLOYEES

(Amended and Restated as of January 1, 2005)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	1.	 	 	ADOPTION AND PURPOSE OF POLICY

	 	 	3	 
	 
	 	2.	 	 	SEVERANCE BENEFITS

	 	 	3	 
	 
	 	3.	 	 	FORM OF BENEFIT

	 	 	4	 
	 
	 	4.	 	 	EFFECT OF DEATH OF EMPLOYEE

	 	 	4	 
	 
	 	5.	 	 	STOCKHOLDER APPROVAL

	 	 	4	 
	 
	 	6.	 	 	AMENDMENT AND TERMINATION

	 	 	4	 
	 
	 	7.	 	 	ADMINISTRATION AND FIDUCIARIES

	 	 	5	 
	 
	 	8.	 	 	CLAIMS AND APPEAL PROCEDURES

	 	 	5	 
	 
	 	9.	 	 	ARBITRATION EXCLUSIVE REMEDY

	 	 	7	 
	 
	 	10.	 	 	GENERAL PROVISIONS

	 	 	7	 
	 
	 	11.	 	 	DEFINITIONS

	 	 	8	 
	 
	 	12.	 	 	EXECUTION

	 	 	11	 
	 

 

 

McKESSON CORPORATION

SEVERANCE POLICY FOR EXECUTIVE EMPLOYEES

(Amended and Restated as of January 1, 2005)

1.     ADOPTION AND PURPOSE OF POLICY.

The McKesson Corporation Severance Policy for Executive Employees (the “Policy”) was adopted
effective September 29, 1993 by McKesson Corporation, a Delaware corporation (the “Company”), to
provide a program of severance payments to certain employees of the Company and its designated
subsidiaries. The Policy is an employee welfare benefit plan within the meaning of Section 3(1) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2510.3-1 of
the regulations issued there under. The plan administrator of the Policy for purposes of ERISA is
the Company. The Policy was last amended and restated to read as set forth herein effective as of
January 1, 2005.

2.     SEVERANCE BENEFITS.

     (a) Basic Severance Benefits. In the event that the Company terminates the employment of a
Participant under circumstances that (i) constitute a Separation from Service for any reason other
than Cause and (ii) do not make the Participant eligible for benefits under the Company’s Change in
Control Termination Policy, that Participant shall be entitled to a severance payment equal to the
lesser of (A) 12 months’ Earnings plus one additional month for each Year of Service or (B) 24
months’ Earnings. In no event shall the number of months’ Earnings a Participant is entitled to
receive hereunder exceed the number of months remaining between the Participant’s termination date
and the date he or she will attain age 62 (rounded to the next higher whole month).

     (b) Mitigation of Damages. The amount of a Participant’s benefits calculated under (a) above
shall be reduced by the amount of compensation, if any, the Participant receives from any
subsequent employer(s) for work performed during a period of time following his or her Separation
from Service equal to the number of months of Earnings the Participant is entitled to receive.

     (c) Effect on Other Plans. Except as provided in Section 3(d) below, nothing in this Policy
shall alter or impair any rights a Participant may have upon Separation from Service under any
other plan or program of the Company.

     (d) No Duplication of Benefits. In no event shall a Participant be entitled to any benefits
under this Policy if his or her employment with the Company terminates under circumstances that
entitle the Participant to receive severance benefits following a change of control of the Company
pursuant to the Company’s Change in Control Policy or the terms of any employment or individual
severance agreement.

 

 

3.      FORM OF BENEFIT.

The benefit described in Section 2(a) shall be paid in biweekly installments over a period
commencing on the date of the Participant’s Separation from Service not to exceed the number of
months determined under said Section; provided, however, that if the Participant is a Key Employee
on the date of his or her Separation from Service, the first payment shall be made as soon as
practicable following the first day of the eighth month following the Participant’s Separation from
Service, but not later than the last day of the month. Any payment that otherwise would have been
made during such eight-month period if the Participant were not a Key Employee will be made in one
lump sum payment not later than the last day of the second month following the month that is six
months from the date of the Participant’s Separation from Service, and such payment shall include
an additional amount representing interest credited at the rate being credited to accounts under
the Company’s Deferred Compensation Administration Plan III during the relevant six-month period.
The determination of which Participants are Key Employees will be made by the Company in its sole
discretion in accordance with this Section 3 and Sections 416(i) and 409A of the Code and the
regulations promulgated thereunder.

4.      EFFECT OF DEATH OF EMPLOYEE.

Should a Participant die after Separation from Service and after becoming eligible to receive the
benefits provided in Section 2(a) but prior to the payment of the entire benefit due hereunder, the
balance of the benefit payable under the Policy shall be paid in a lump sum to the Participant’s
surviving spouse, or, if none, to his or her surviving children or, if none, to his or her estate,
as soon as reasonably practicable after the date of death.

5.      STOCKHOLDER APPROVAL.

The Company shall seek approval or ratification of its stockholders at the Company’s next annual or
special meeting of stockholders for any arrangement whereby the present value of any Severance
Payments for any Participant exceeds 2.99 times such Participant’s Base Salary and Bonus. This
provision will apply to any arrangement or agreement with a Participant entered into after July 30,
2003, including extensions, renewals or modifications (other than modifications based upon
subsequent changes in tax law or other legal requirements) after such date of arrangements or
agreements entered into prior to such date that increase the Severance Payments (other than
increases due to an increase in Base Salary and Bonus) payable to a Participant under such
arrangement or agreement.

6.       AMENDMENT AND TERMINATION.

The Company reserves the right to terminate the Policy at any time by action of its Board of
Directors and to amend the Policy by action of the Compensation Committee of its Board of
Directors; provided, however, that no such action shall have the effect of decreasing the benefit
of a Participant whose Separation from Service occurred prior to the date of the Board of
Directors’ or Compensation Committee’s action.

4

 

7.      ADMINISTRATION AND FIDUCIARIES.

     (a) Plan Sponsor and Administrator. The Company is the “plan sponsor” and the “administrator”
of the Policy, within the meaning of ERISA.

     (b) Administrative Responsibilities. The Company shall be the named fiduciary with the power
and sole discretion to determine who is eligible for benefits under the Policy, to determine the
value of benefits paid in any form other than cash or the present value of any cash or other
benefits paid over time, to interpret the Policy and to prescribe such forms, make such rules,
regulations and computations and prescribe such guidelines as it may determine are necessary or
appropriate for the operation and administration of the Policy and to change the terms of or
rescind such rules, regulations or guidelines. Such determinations of eligibility, rules,
regulations, interpretations, computations and guidelines shall be conclusive and binding upon all
persons. In administering the Policy, the Company shall at all times discharge its duties with
respect to the Policy in accordance with the standards set forth in section 404(a)(1) of ERISA.

     (c) Allocation and Delegation of Responsibilities. The Compensation Committee may allocate
any of the Company’s responsibilities for the operation and administration of the Policy among the
Company’s officers, employees and agents. It may also delegate any of the Company’s
responsibilities under the Policy by designating, in writing, another person to carry out such
responsibilities.

     (d) No Individual Liability. It is declared to be the express purpose and intent of the
Company that no individual liability shall attach to or be incurred by any member of the Board of
Directors of the Company, or by any officer, employee representative or agent of the Company,
under, or by reason of the operation of, the Policy.

8.       CLAIMS AND APPEAL PROCEDURES

     (a) Informal Resolution of Questions. Any Participant who has questions or concerns about his
or her benefits under the Plan is encouraged to communicate with the Human Resources Department of
the Company. If this discussion does not give the Participant satisfactory results, a formal claim
for benefits may be made in accordance with the procedures of this Section 8.

     (b) Formal Benefits Claim – Review by Executive Vice President, Human Resources. A
Participant 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

5

 

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.

     (c) 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 8(b). 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.

     (d) Appeal to Executive Vice President.

          (i) 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
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.

          (ii) 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.

          (iii) 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.

          (iv) 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

6

 

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.

          (v) 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.

     (e) 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 8(b), has been notified that the claim is denied in accordance with Section 8(c), has filed
a written request for a review of the claim in accordance with Section 8(d), and has been notified
in writing that the Executive Vice President has affirmed the denial of the claim in accordance
with Section 8(d).

9.     ARBITRATION EXCLUSIVE REMEDY.

     Any dispute, controversy or claim arising under the Policy, shall be settled exclusively by
final and binding arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association (the “AAA Rules”). A neutral and
impartial arbitrator shall be chosen by mutual agreement of the parties or, if the parties are
unable to agree upon an arbitrator within a reasonable period of time, then a neutral and impartial
arbitrator shall be appointed in accordance with the arbitrator nomination and selection procedure
set forth in the AAA Rules. The arbitrator shall apply the same substantive law, with the same
statures of limitations and remedies, that would apply if the claims were brought in court. The
arbitrator also shall prepare a written decision containing the essential findings and conclusions
upon which the decision containing the essential findings and conclusions upon which the decision
is based. Either party may bring an action in court to compel arbitration under this Agreement or
to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit
in any way related to any claim subject to this agreement to arbitrate. Any arbitration held
pursuant to this paragraph shall take place in San Francisco, California. Each party shall pay its
own costs and attorneys’ fees, unless a party prevails on a statutory claim and the statute
provides that the prevailing party is entitled to payment of its attorneys’ fees. In that case,
the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party as provided
by law. The Company agrees to pay the costs and fees of the arbitrator. THE PARTICIPANTS
UNDERSTAND AND AGREE THAT THIS AGREEMENT CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF
ANY CLAIMS OR CONTROVERSIES COVERED BY THIS AGREEMENT.

10.     GENERAL PROVISIONS.

     (a) Basis of Payments to and from Policy. All benefits under the Policy shall be paid by the
Company. The Policy shall be unfunded and benefits hereunder shall be paid only from the general
assets of the Company. Nothing contained in the Policy shall be deemed to create a trust of any
kind for the benefit of any employee, or create any fiduciary relationship between the Company and
any employee with respect to any assets of the Company. The Company is under no obligation to fund
the benefits provided herein prior to payment, although it may do so if it

7

 

chooses. Any assets which the Company chooses to use for advance funding shall not cause the
Policy to be a funded plan within the meaning of ERISA.

     (b) No Employment Rights. Nothing in the Policy shall be deemed to give any individual the
right to remain in the employ of the Company or a subsidiary or to limit in any way the right of
the Company or a subsidiary to discharge, demote, reclassify, transfer, relocate an individual or
terminate an individual’s employment at any time and for any reason, which right is hereby
reserved.

     (c) Non-alienation of Benefits. No benefit payable under the Policy shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to do shall be void.

     (d) Legal Construction. The Policy shall be governed and interpreted in accordance with
ERISA.

     (e) Section 409A. Notwithstanding any other provision of this Policy, the Company shall
administer and construe this Policy in accordance with Section 409A of the Code, the regulations
promulgated thereunder, and any other published interpretive authority, as issued or amended from
time to time. The Company shall have the authority to delay the payment of any amounts under this
Policy to the extent it deems necessary or appropriate to comply with Section 409A of the Code.

11.     DEFINITIONS.

Whenever used and capitalized in the text of the Policy, the following terms shall have the meaning
set forth below:

     (a) “Base Salary and Bonus” means the Participant’s annual base salary as in effect
immediately prior to the date of such Participant’s termination and the target bonus for such
Participant for the fiscal year in which such Participant’s Separation from Service occurs, in each
case inclusive of any amounts deferred by the intended recipient.

     (b) “Cause” means negligent or willful engagement in misconduct which, in the sole
determination of the Chief Executive Officer, is injurious to the Company, its employees or its
customers. No act, or failure to act, on the part of the Participant shall be considered “willful”
unless done, or omitted to be done, by the Participant not in good faith and without reasonable
belief that the Participant’s action or omission was in the best interest of the Company.

     (c) “Change in Control” shall mean the occurrence of any change in ownership of the Company,
change in effective control of the Company, or change in the ownership of a substantial portion of
the assets of the Company, as defined in Section 409A(a)(2)(A)(v) of the Code, the regulations
thereunder, and any other published interpretive authority, as issued or amended from time to time.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Earnings” means a Participant’s monthly base salary.

8

 

     (f) “Identification Date” means each December 31.

     (g) “Key Employee” means a Participant who, on an Identification Date, is:

          (i) 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 Key Employees as of any Identification Date;

          (ii) A five percent owner of the Company; or

          (iii) A one percent owner of the Company having annual compensation from the Corporation of
more than $150,000.

If a Participant is identified as a Key Employee on an Identification Date, then such Participant
shall be considered a Key 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.

     (h) “Participant” means (i) an individual who is designated to be eligible to participate in
the Policy by the Compensation Committee of the Board of Directors of the Company and (ii) whose
employment is terminated under circumstances that render him or her eligible for the benefits
described in Section 2 of the Policy.

     (i) “Severance Payments” means (i) lump-sum cash payments (including payments in lieu of
medical and other benefits), (ii) the estimated present value of periodic cash payments under
previously established bonus, retirement, deferred compensation, or other Company benefit plans,
(iii) fringe benefits other than those provided under Company programs or arrangements applicable
to one or more groups of employees in addition to Participants, and (iv) consulting fees (including
reimbursable expenses) other than reasonable fees and expenses for bona fide services provided to
the Company after termination, paid or payable by the Company to a Participant pursuant to this
Policy or otherwise upon a termination by the Company of employment of such Participant at any time
other than within two years following a Change in Control, excluding Vested, Accrued or Appropriate
Benefits.

9

 

     (j) “Separate from Service” or “Separation from Service” means termination of employment with
the Company, other than by reason of Disability or death. A Participant shall not be deemed to
have Separated from Service if the Participant continues to provide services to the Company in a
capacity other than as an employee and if the former employee is providing services at an annual
rate that is fifty percent or more of the services rendered, on average, during the immediately
preceding three full calendar years of employment with the Company (or if employed by the Company
less than three years, such lesser period) and the annual remuneration for such services is fifty
percent or more of the annual remuneration earned during the final three full calendar years of
employment (of if less, such lesser period); provided, however, that a Separation from Service will
be deemed to have occurred if a Participant’s service with the Company is reduced to an annual rate
that is less than twenty percent of the services rendered, on average, during the immediately
preceding three full calendar years of employment with the Company (or if employed by the Company
less than three years, such lesser period) or the annual remuneration for such services is less
than twenty percent of the annual remuneration earned during the three full calendar years of
employment with the Company (or if less, such lesser period).

     (k) “Vested, Accrued or Appropriate Benefits” means any benefits paid or payable by the
Company to a Participant upon a termination by the Company of employment of such Participant at any
time other than within two years following a Change in Control that are (i) earned, accrued,
deferred or otherwise received for employment services rendered through the date of Separation from
Service pursuant to bonus, retirement, deferred compensation, or other Company benefit plans, (ii)
approved under the terms of bonus, retirement, deferred compensation, or other Company benefit
plans existing at the time of such termination at the reasonable discretion of the Compensation
Committee taking into consideration the age, length of service and other circumstances of such
termination, (iii) payments or benefits required to be provided by law, and (iv) benefits and
perquisites provided by the Company under plans, programs or arrangements of the Company applicable
to one or more groups of employees in addition to Participants. For the avoidance of doubt,
Vested, Accrued or Appropriate Benefits shall not include benefits payable pursuant to this Policy.

     (l) “Year of Service” means a period of 365 aggregate days of employment (including holidays,
weekends and other non-working days), computed beginning on the Participant’s employment
commencement date. However, if the Participant has not completed a Year of Service on the first
anniversary of his employment commencement date, he or she shall complete a Year of Service on the
date of completion of 365 aggregate days of Service. If a Participant has at any time completed at
least one Year of Service, he or she shall always be given credit for completed Years of Service.
However, a Participant who has five or more consecutive Breaks in Service shall be given such
credit only upon providing reasonable evidence to the Company of his or her previous completion of
such service.

10

 

12.      EXECUTION

This Amended and Restated Severance Policy for Executive Employees was adopted on October 27, 2006,
to be effective as of January 1, 2005.

McKESSON CORPORATION

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Paul E. Kirincic
	 	 
	 

	 	Executive Vice President, Human Resources	 	 

11exv10w14

 

EXHIBIT 10.14

McKESSON CORPORATION

2005 MANAGEMENT INCENTIVE PLAN

Adopted by the Board of Directors May 25, 2005

Approved by the Stockholders July 27, 2005

Amended Effective May 25, 2005

Amended and Restated Effective October 27, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	A.

	 	NAME; EFFECTIVE TIME
	 	 	1	 
	 
	B.

	 	PURPOSE
	 	 	1	 
	 
	C.

	 	ADMINISTRATION
	 	 	1	 
	 
	D.

	 	PARTICIPATION
	 	 	2	 
	 
	E.

	 	INDIVIDUAL TARGET AWARDS FOR PARTICIPANTS
	 	 	2	 
	 
	F.

	 	BASIS OF AWARDS
	 	 	2	 
	 
	G.

	 	AWARD DETERMINATION
	 	 	3	 
	 
	H.

	 	PROCEDURES APPLICABLE TO COVERED EMPLOYEES
	 	 	4	 
	 
	I.

	 	PAYMENT OF AWARDS
	 	 	5	 
	 
	J.

	 	EMPLOYMENT ON PAYMENT DATE
	 	 	5	 
	 
	K.

	 	CHANGE IN CONTROL
	 	 	5	 
	 
	L.

	 	FORFEITURE
	 	 	5	 
	 
	M.

	 	WITHHOLDING TAXES
	 	 	7	 
	 
	N.

	 	EMPLOYMENT RIGHTS
	 	 	7	 
	 
	O.

	 	NONASSIGNMENT; PARTICIPANTS ARE GENERAL CREDITORS
	 	 	7	 
	 
	P.

	 	AMENDMENT OR TERMINATION
	 	 	7	 
	 
	Q.

	 	SUCCESSORS AND ASSIGNS
	 	 	8	 
	 
	R.

	 	INTERPRETATION AND SEVERABILITY
	 	 	8	 
	 
	S.

	 	DEFINITIONS
	 	 	8	 
	 
	T.

	 	EXECUTION
	 	 	10	 

 i 

 

 

McKESSON CORPORATION

2005 MANAGEMENT INCENTIVE PLAN

Adopted by the Board of Directors May 25, 2005

Approved by the Stockholders July 27, 2005

Amended Effective May 25, 2005

Amended and Restated Effective October 27, 2006

	A.	 	NAME; EFFECTIVE TIME

     The name of this plan is the McKesson Corporation 2005 Management Incentive Plan. The Plan
replaces in its entirety the Company’s 1989 Management Incentive Plan. The Plan is effective,
subject to approval by the Company’s stockholders, for fiscal years of the Company commencing on
and after April 1, 2005.

	B.	 	PURPOSE

     The purpose of the Plan is to advance and promote the interests of the Company and its
stockholders by providing performance-based incentives to certain employees and to motivate those
employees to set and achieve above-average financial and non-financial objectives.

	C.	 	ADMINISTRATION

     The Committee shall have full power and authority, subject to the provisions of the Plan, (i)
to designate employees as Participants, (ii) to add and delete employees from the list of
designated Participants, (iii) to establish Individual Target Awards for Participants, (iv) to
establish performance goals upon achievement of which the Individual Target Awards will be based,
and (v) to take all action in connection with the foregoing or in relation to the Plan as it deems
necessary or advisable. Decisions and selections of the Committee shall be made by a majority of
its members and, if made pursuant to the provisions of the Plan, shall be final.

     Notwithstanding the foregoing, the Committee may delegate to the Chief Executive Officer (the
“CEO”) the power and authority, subject to the provisions of the Plan, (i) to designate employees
who are not members of the Officer Group as Participants, (ii) to recommend members of the Officer
Group to the Committee for designation as Participants; provided that the Committee shall review
and approve members of the Officer Group as Plan Participants recommended by the CEO, (iii) to add
and delete employees who are not members of the Officer Group from the list of designated
Participants, (iv) to establish Individual Target Awards for Participants who are not members of
the Officer Group, (v) to establish performance goals upon achievement of which such Individual
Target Awards will be based, and (vi) to review and approve, modify or disapprove, or otherwise
adjust or determine the amount, if any, to be paid to Participants who are not members of the
Officer Group for the applicable Plan Year based on such Participants’ performance goals and
individual performance. In addition to the forgoing, the CEO may further delegate his authority to
other executive offices of the Company, except that the CEO may not delegate his authority to
recommend members of the Officer Group to the Committee for designation as Participants.
References to the Committee herein shall include references to the CEO and his designees to the
extent that the Committee has delegated

1

 

power and authority under the Plan to the CEO and to the extent that the CEO has further
delegated power and authority under the Plan to other executive officers of the Company.

     The Committee may promulgate such rules and regulations as it deems necessary for the proper
administration of the Plan and the CEO (but not his designees) may promulgate rules and regulations
as he deems necessary for the proper administration of the Plan with respect to Participants who
are not members of the Officer Group. The Committee may interpret the provisions and supervise the
administration of the Plan, and take all action in connection therewith or in relation to the Plan
as it deems necessary or advisable. The interpretation and construction by the Committee of any
provision of the Plan or of any award shall be final.

	D.	 	PARTICIPATION

	 	1.	 	Eligibility — Executives, Managers and Professionals

     Only active employees of the Company who are employed in an executive, managerial or
professional capacity may be designated as Participants under the Plan.

	 	2.	 	Designation of Participants

     No person shall be entitled to any award under the Plan for any Plan Year unless he or she is
so designated as a Participant for that Plan Year.

	E.	 	INDIVIDUAL TARGET AWARDS FOR PARTICIPANTS

     At the beginning of each Plan Year, the Committee shall establish an Individual Target Award
for each Participant. An Individual Target Award shall only be a target and the amount of the
target may or may not be paid to the Participant. Establishment of an Individual Target Award for
an employee for any Plan Year shall not imply or require that an Individual Target Award or an
Individual Target Award at any specified level will be set for any subsequent year. The amount of
any actual award paid to any Participant may be greater or less than this target. As set forth in
paragraph G.4 below (but subject to the limitations applicable to Covered Employees contained in
Article H), the actual award may be as much as three times target or as low as zero for any Plan
Year.

	F.	 	BASIS OF AWARDS

	 	1.	 	Performance Goals

     The Committee shall establish measures, which may include financial and non-financial
objectives (“Performance Goals”) for each segment of the Company. These Performance Goals shall be
determined by the Committee in advance of each Plan Year or within such period as may be permitted
by the regulations issued under Section 162(m), and to the extent that awards are paid to Covered
Employees, the performance criteria to be used shall be any of the following, either alone or in
any combination, which may be expressed with respect to the Company or one or more operating units
or groups, as the Committee may determine: cash flow; cash flow from operations; total earnings;
earnings per share, diluted or basic; earnings per share from continuing operations, diluted or
basic; earnings before interest and taxes; earnings before

2

 

interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover;
inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating
margin; debt; working capital; return on equity; return on net assets; return on total assets;
return on investment; return on capital; return on committed capital; return on invested capital;
return on sales; net or gross sales; market share; economic value added; cost of capital; change in
assets; expense reduction levels; debt reduction; productivity; stock price; customer satisfaction;
employee satisfaction; and total shareholder return.

	 	2.	 	Adjustment of Performance Goals

     Performance Goals may be determined on an absolute basis or relative to internal goals or
relative to levels attained in prior years or related to other companies or indices or as ratios
expressing relationships between two or more Performance Goals. In addition, Performance Goals may
be based upon the attainment of specified levels of Company performance under one or more of the
measures described above relative to the performance of other corporations. The Committee shall
specify the manner of adjustment of any Performance Goal to the extent necessary to prevent
dilution or enlargement of any award as a result of extraordinary events or circumstances, as
determined by the Committee, or to exclude the effects of extraordinary, unusual, or non-recurring
items; changes in applicable laws, regulations, or accounting principles; currency fluctuations;
discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset
impairment; or any recapitalization, restructuring, reorganization, merger, acquisition,
divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of
assets, or other similar corporate transaction.

	 	3.	 	Performance Goals related to More than One Segment of the Company

     Awards may be based on performance against objectives for more than one segment of the
Company. For example, awards for corporate management may be based on overall corporate
performance against objectives, but awards for a unit’s management may be based on a combination of
corporate, unit and sub-unit performance against objectives.

	 	4.	 	Individual Performance

     Subject to the limitations set forth in Article H below, individual performance of each
Participant may be measured and used in determining awards under the Plan.

	G.	 	AWARD DETERMINATION

	 	1.	 	Award Determined by Committee

     After any Plan Year for which an Individual Target Award is established for a Participant
under the Plan, the Committee shall review and approve, modify or disapprove the amount, if any, to
be paid to the Participant for the Plan Year. The amount paid shall be the Individual Target Award
adjusted to reflect both the results against the Participant’s Performance Goals and the
Participant’s individual performance. All awards are subject to adjustment at the sole discretion
of the Committee.

3

 

	 	2.	 	Financial and Non-Financial Performance

     Individual Target Award amounts will be modified based on the achievement of financial and
non-financial objectives by the Company and relevant units and/or sub-units. Performance results
against objectives shall be reviewed and approved by the Committee in accordance with paragraph F.2
above, as applicable.

	 	3.	 	Individual Performance

     Any Individual Target Award, adjusted to reflect financial performance, may be further
adjusted with the review and approval of the Committee to give full weight to the Participant’s
individual performance during the Plan Year.

	 	4.	 	Overall Effect

     The combination of any financial performance adjustment and individual performance adjustment
may increase the amount paid under the Plan to a Participant for any Plan Year to as much as three
times the Individual Target Award, and may reduce any amount payable to zero, subject to Article H.

	H.	 	PROCEDURES APPLICABLE TO COVERED EMPLOYEES

     Awards under the Plan to Participants who are Covered Employees shall be subject to
preestablished Performance Goals as set forth in this Article H. Notwithstanding the provisions of
paragraph G.3 above, the Committee shall not have discretion to modify the terms of awards to such
Participants except as specifically set forth in this Article H.

     At the beginning of a Plan Year, the Committee shall establish Individual Target Awards for
such of the Participants who may be Covered Employees, payment of which shall be conditioned upon
satisfaction of specific Performance Goals for the Plan Year established by the Committee in
writing in advance of the Plan Year, or within such period as may be permitted by regulations
issued under Section 162(m). The Performance Goals established by the Committee shall be based on
one or more of the criteria set forth in paragraph F.1 above. The extent, if any, to which an
award will be payable will be based upon the degree of achievement of the Performance Goals in
accordance with a pre-established objective formula or standard as determined by the Committee.
The application of the objective formula or standard to the Individual Target Award will determine
whether the Covered Employee’s award for the Plan Year is greater than, equal to or less than the
Participant’s Individual Target Award. To the extent that the minimum Performance Goals are
satisfied or surpassed, and upon written certification by the Committee that the Performance Goals
have been satisfied to a particular extent, payment of the award shall be made as soon as
reasonably practicable after the Payment Date in accordance with the objective formula or standard
applied to the Individual Target Award unless the Committee determines, in its sole discretion, to
reduce or eliminate the payment to be made.

     Notwithstanding any other provision of the Plan, the maximum award payable to any Participant
who is a Covered Employee for any Plan Year shall not exceed $6,000,000.

4

 

	I.	 	PAYMENT OF AWARDS

     An award under the Plan shall be paid in a single sum to the Participant as soon as reasonably
practicable after Payment Date, unless the Participant elects to defer his or her award pursuant to
the terms and conditions of the Company’s Deferred Compensation Administration Plan III (“DCAP
III”) and in compliance with Section 409A of the Code. No awards may be deferred by a Participant
under DCAP III unless he or she is an active employee of the Company on the date the award is paid
or he or she retired after December 31 of such Plan Year. To the extent that an award is not
deferred under DCAP III, such award shall be paid no later than the later of two and one-half
months following the end of the Company’s fiscal year or the end of calendar year in which the
Payment Date occurs.

	J.	 	EMPLOYMENT ON PAYMENT DATE

     No award shall be made to any Participant who is not an active employee of the Company on the
Payment Date; provided, however, that the Committee, in its sole and absolute discretion, may make
pro-rata awards to Participants in circumstances that the Committee deems appropriate including,
but not limited to, a Participant’s death, disability, retirement or other termination of
employment prior to the Payment Date. Any such pro-rated awards shall be determined by the
Committee in accordance with Article G above after taking into account the portion of the Plan Year
completed.

	K.	 	CHANGE IN CONTROL

     In the event of a Change in Control, the Company or any successor or surviving corporation
shall pay to each Participant an award for the Plan Year in which the Change in Control occurs and
for any previous Plan Year for which awards have been earned but not yet paid or deferred. Each
such award shall be equal to the greatest of the following: (i) the Participant’s Individual
Target Award for the applicable Plan Year; (ii) the Participant’s Individual Target Award for the
applicable Plan Year adjusted based on the actual performance outcome for that Plan Year, provided,
that the Committee may not invoke its discretionary authority to reduce the amount of such an
award; or (iii) the average of awards earned and paid to (or deferred by) the Participant in the
three (or such fewer number of years that the Participant has been eligible for such an award)
completed Plan Years immediately preceding the applicable Plan Year. Such awards shall be paid by
the Company or any successor or surviving corporation at such time as the awards otherwise would be
payable under the Plan; provided, however, that if a Participant is terminated without Cause or
terminates for Good Reason within twelve months after a Change in Control, then such Participant
shall be paid his or her awards determined under this Article K, within thirty days of such
termination. Notwithstanding the foregoing, any award determined pursuant to this Article K shall
be reduced by any corresponding award payable under a Participant’s individually negotiated
agreement, if any.

	L.	 	FORFEITURE

     Any other provision of the Plan to the contrary notwithstanding, if the Committee determines
that a Participant has engaged in any of the actions described below, then upon written notice from
the Company to the Participant (i) the Participant shall not be eligible for any

5

 

award for the year in which such notice is given or for the preceding year, if such award has
not been paid as of the date of the notice, (ii) any payment of an award received by the
Participant within twelve months prior to the date that the Company discovered that the Participant
engaged in any action described below shall immediately be repaid to the Company by the Participant
in cash (including amounts withheld pursuant to Article M) and (iii) any award deferred pursuant to
Article I within twelve months prior to the date that the Company discovered that the Participant
engaged in any action described below shall be forfeited immediately and shall not be distributed
to the Participant under any circumstances.

     The consequences described above shall apply if the Participant, either before or after
termination of employment with the Company:

     1. Discloses to others, or takes or uses for his or her own purpose or the purpose of others,
any trade secrets, confidential information, knowledge, data or know-how or any other proprietary
information or intellectual property belonging to the Company and obtained by the Participant
during the term of his or her employment, whether or not they are the Participant’s work product.
Examples of such confidential information or trade secrets include, without limitation, customer
lists, supplier lists, pricing and cost data, computer programs, delivery routes, advertising
plans, wage and salary data, financial information, research and development plans, processes,
equipment, product information and all other types and categories of information as to which the
Participant knows or has reason to know that the Company intends or expects secrecy to be
maintained; or

     2. Fails to promptly return all documents and other tangible items belonging to the Company in
the Participant’s possession or control, including all complete or partial copies, recordings,
abstracts, notes or reproductions of any kind made from or about such documents or information
contained therein, upon termination of employment, whether pursuant to retirement or otherwise; or

     3. Fails to provide the Company with at least thirty (30) days’ written notice prior to
directly or indirectly engaging in, becoming employed by, or rendering services, advice or
assistance to any business in competition with the Company. As used herein, “business in
competition” means any person, organization or enterprise which is engaged in or is about to become
engaged in any line of business engaged in by the Company at the time of the termination of the
Participant’s employment with the Company; or

     4. Fails to inform any new employer, before accepting employment, of the terms of this section
and of the Participant’s continuing obligation to maintain the confidentiality of the trade secrets
and other confidential information belonging to the Company and obtained by the Participant during
the term of his or her employment with the Company; or

     5. Induces or attempts to induce, directly or indirectly, any of the Company’s customers,
employees, representatives or consultants to terminate, discontinue or cease working with or for
the Company, or to breach any contract with the Company, in order to work with or for, or enter
into a contract with, the Participant or any third party; or

6

 

     6. Engages in conduct which is not in good faith and which disrupts, damages, impairs or
interferes with the business, reputation or employees of the Company; or

     7. Directly or indirectly engages in, becomes employed by, or renders services, advice or
assistance to any business in competition with the Company, at any time during the twelve months
following termination of employment with the Company.

     The Committee shall determine in its sole discretion whether the Participant has engaged in
any of the acts set forth in subsections 1 through 7 above, and its determination shall be
conclusive and binding on all interested persons.

     Any provision of this Article L which is determined by a court of competent jurisdiction to be
invalid or unenforceable should be construed or limited in a manner that is valid and enforceable
and that comes closest to the business objectives intended by such invalid or unenforceable
provision, without invalidating or rendering unenforceable the remaining provisions of this Article
L.

M. WITHHOLDING TAXES

     Whenever the payment of an award is made, such payment shall be net of an amount sufficient to
satisfy federal, state and local income and employment tax withholding requirements and authorized
deductions.

	N.	 	EMPLOYMENT RIGHTS

     Neither the Plan nor designation as a Plan Participant shall be deemed to give any individual
a right to remain employed by the Company. The Company reserves the right to terminate the
employment of any employee at any time, with or without cause or for no cause, subject only to a
written employment contract (if any).

	O.	 	NONASSIGNMENT; PARTICIPANTS ARE GENERAL CREDITORS

     The interest of any Participant under the Plan shall not be assignable either by voluntary or
involuntary assignment or by operation of law (except by designation of a beneficiary or
beneficiaries to the extent allowed under DCAP II with respect to amounts deferred under Article I)
and any attempted assignment shall be null, void and of no effect.

     Amounts paid under the Plan shall be paid from the general funds of the Company, and each
Participant shall be no more than an unsecured general creditor of the Company with no special or
prior right to any assets of the Company for payment of any obligations hereunder. Nothing
contained in the Plan shall be deemed to create a trust of any kind for the benefit of any
Participant, or create any fiduciary relationship between the Company and any Participant with
respect to any assets of the Company.

	P.	 	AMENDMENT OR TERMINATION

     The Board of Directors may terminate or suspend the Plan at any time. The Committee may amend
the Plan at any time; provided that (i) to extent required under Section 162(m), the

7

 

Plan will not be amended without prior approval of the Company’s stockholders, and (ii) no
amendment shall retroactively and adversely affect the payment of any award previously made.
Notwithstanding the foregoing, no amendment adopted following the occurrence of a Change in Control
shall be effective if it (a) would reduce a Participant’s Individual Target Award for the Plan Year
in which the Change in Control occurs, (b) would reduce an award payable to a Participant based on
the achievement of Performance Goals in the Plan Year before the Plan Year in which the Change in
Control occurs, or (c) modify the provisions of this paragraph.

	Q.	 	SUCCESSORS AND ASSIGNS

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

	R.	 	INTERPRETATION AND SEVERABILITY

     The Plan is intended to comply with Section 162(m), and all provisions contained herein shall
be construed and interpreted in a manner to so comply. In case any one or more of the provisions
contained in the Plan shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any other provision of
the Plan, but the Plan shall be construed as if such invalid, illegal or unenforceable provisions
had never been contained herein.

	S.	 	DEFINITIONS

     “Cause” shall mean termination of the Participant’s employment upon the Participant’s
willful engagement in misconduct which is demonstrably and materially injurious to the Company. No
act, or failure to act, on the part of the Participant shall be considered “willful” unless done,
or omitted to be done, by the Participant not in good faith and without reasonable belief that the
Participant’s action or omission was in the best interest of the Company.

     “Change in Control” A Change in Control shall mean the occurrence of any change in
ownership of the Company, change in effective control of the Company, or change in the ownership of
a substantial portion of the assets of the Company, as defined in Section 409A(a)(2)(A)(v) of the
Internal Revenue Code of 1986, as amended, the regulations thereunder, and any other published
interpretive authority, as issued or amended from time to time.

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

     “Committee” shall mean the Compensation Committee of the Board of Directors of
McKesson Corporation; provided, however, that the Committee shall consist solely of two or more
“outside directors”, in conformance with Section 162(m) of the Code.

     “Company” shall mean McKesson Corporation, a Delaware corporation, including its
subsidiaries and affiliates.

     “Covered Employee” shall mean an eligible Participant designated by the Committee who
is, or is expected to be, a “covered employee” within the meaning of Section 162(m) for the Plan
Year in which an award is payable hereunder.

8

 

     “Good Reason” shall mean any of the following actions, if taken without the express
written consent of the Participant:

     a. any material change by the Company in the functions, duties, or responsibilities of the
Participant, which change would cause such Participant’s position with the Company to become of
less dignity, responsibility, importance, or scope from the position and attributes that applied to
the Participant immediately prior to the Change in Control;

     b. any reduction in the Participant’s base salary;

     c. any material failure by the Company to comply with any of the provisions of any employment
agreement between the Company and the Participant;

     d. the requirement by the Company that the Participant be based at any office or location more
than 25 miles from the office at which the Participant is based on the date immediately preceding
the Change in Control, except for travel reasonably required in the performance of the
Participant’s responsibilities and commensurate with the amount of travel required of the
Participant prior to the Change in Control; or

     e. any failure by the Company to obtain the express assumption of this Plan by any successor
or assign of the Company.

     “Individual Target Award” shall mean the target award established for each Participant
under Article E, which shall be a percentage of the Participant’s base salary or a fixed dollar
amount, as determined by the Committee.

     “Officer Group” shall mean the Covered Employees and any other officer of the Company
designated as part of the Officer Group by the Committee.

     “Participants” shall mean those employees specifically designated as Participants for
a Plan Year under Article D.

     “Payment Date” shall mean the date following the conclusion of a Plan Year on which
the Committee certifies that applicable Performance Goals have been satisfied and authorizes
payment of corresponding awards.

     “Performance Goals” shall have the meaning set forth in Article F hereof.

     “Plan” shall mean the McKesson Corporation 2005 Management Incentive Plan.

     “Plan Year” shall mean the fiscal year of the Company.

     “Section 162(m)” shall mean Section 162(m) of the Code and regulations promulgated
thereunder, as may be amended from time to time.

9

 

	T.	 	EXECUTION

This amended and restated 2005 Management Incentive Plan was adopted on October 27, 2006.

McKESSON CORPORATION

	 	 	 	 	 
	By
	 	 	 	 
	 

	 	 

Paul E. Kirincic
	 	 
	 

	 	Executive Vice President, Human Resources	 	 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]