McKESSON CORPORATION
EXECUTIVE BENEFIT RETIREMENT PLAN
Effective January 1,
2009
(Amended and Restated on
October 24, 2008)
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D. BENEFITS UPON SEPARATION FROM
SERVICE
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F. FORFEITURE AND REPAYMENT
RULES
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G. TIME AND FORM OF PAYMENT
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J. ADMINISTRATION OF THE PLAN
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K. AMENDMENT OR TERMINATION OF THE
PLAN
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i
McKESSON CORPORATION
EXECUTIVE BENEFIT RETIREMENT PLAN
Effective January 1,
2009
(Amended and Restated on
October 24, 2008)
This Plan was
established to enable McKesson to attract and retain key executive
personnel by assisting them and their survivors in maintaining
their standards of living on the Executive’s retirement or
earlier death. The Plan has been amended and restated on various
occasions. The Plan as set forth in here is amended and restated on
October 24, 2008, and effective as of January 1, 2009.
The Plan as amended and restated effective January 1, 2009
shall apply to Executives who Separate from Service on or after
January 1, 2009. For Executives who Separate from Service or
terminate employment prior to January 1, 2009, the Plan in
effect at the time of such separation or termination shall
apply.
This Plan is an
unfunded deferred compensation program for a select group of
management or highly compensated employees of McKesson. 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.
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1.
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Selection by the Compensation
Committee . The Compensation Committee may
select, at its discretion and from time to time as it decides, the
Executives who participate in this Plan. Participation in the Plan
shall be limited to those Executives of McKesson who are selected
by the Compensation Committee. Selection of an Executive to
participate in the Plan may be evidenced by the terms of the
Executive’s written employment contract with
McKesson.
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2.
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Addition and Removal of
Participants . The Compensation Committee may, at
its discretion and at any time, designate additional Executives to
participate in the Plan and remove Executives from participation in
the Plan. If an Executive is removed from participation, he or she
may be entitled to receive benefits, if any, as specified in
Section D.1.e or D.2.b.
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3.
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Relation to Other
Plans . If an Executive participates in this
Plan, he or she shall not participate in or receive benefits under
any other Company-sponsored plan, program or agreement that
provides McKesson Executives, or the individual Executive, with
retirement benefits that supplement or are in addition to the
benefits under McKesson’s Retirement Plan, Profit-Sharing
Investment Plan, or any successor or replacement plans unless
otherwise specifically approved by the Compensation Committee. This
paragraph shall not limit an Executive’s participation in or
benefits under any plan or program under which the Executive
voluntarily defers for later payment compensation otherwise
currently payable to
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the Executive
(such as, but not limited to, the Deferred Compensation
Administration Plan III or any successor or replacement
plan).
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D.
BENEFITS UPON SEPARATION FROM SERVICE
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1.
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Separation from Service by Reason of
Approved Retirement or Early Retirement
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a.
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Approved Retirement
.
Except as otherwise
provided herein, each Executive who participates in the Plan and
Separates from Service by reason of an Approved Retirement shall be
entitled to receive a benefit determined with reference to the
value of monthly payments equal to (1) reduced by (2), as
follows:
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(1)
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the
percentage of Average Final Compensation specified for the
Executive, which shall be as provided herein, reduced by
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(2)
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the
Executive’s Basic Retirement Benefits.
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The
percentage stated in clause (1) may be specified by the
Compensation Committee at the time that the Executive is selected
to participate in the Plan or may be specified in the
Executive’s written employment contract with the Company.
Unless otherwise determined by the Compensation Committee at the
time that the Executive is selected to participate in the Plan or
provided in the Executive’s written employment contract, the
percentage of Average Final Compensation specified in clause
(1) shall be 20% plus 0.148 for each completed month (1.77%
per completed year) of the Executive’s full-time continuous
employment with the Company, but such percentage shall not exceed
60%.
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b.
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Early Retirement
.
Unless if provided
otherwise in an Executive’s employment agreement, if the
Compensation Committee grants an Executive, who Separates from
Service by reason of Early Retirement, the Executive shall receive
a benefit in Section D.1.a that is reduced by 0.3% for each
month the Executive’s Early Retirement precedes the date the
Executive will attain age 62. The reduction for Basic Retirement
Benefits shall be applied by calculating all benefits as if they
were payable in the form of a straight life annuity at the date of
Executive’s Early Retirement, without survivor benefits, to
determine the net benefit payable under this Plan. See
Appendix A for an example of this calculation.
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c.
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Special Rule
.
The benefit of an
Executive under this Section D.1 who is a participant in the
Plan as of August 28, 1996, shall not be less than such
Executive’s benefit calculated pursuant to Section D.2.a
of the Plan, without regard to any reduction required by
Section D.1.b of the Plan.
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d.
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Effect of Plan
Termination . If the Plan is terminated in
accordance with Section L, an Executive who has not yet
Separated from Service shall
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receive
benefits calculated as follows on the date of the Plan termination:
(a) if the Executive qualifies for Approved Retirement on the
date of the Plan termination, payments shall be calculated under
Section D.1.a., (b) if the Executive qualifies for Early
Retirement on the date of the Plan termination, payments shall be
calculated under Section D.1.b., or (c) if the Executive
does not qualify for either Approved Retirement or Early Retirement
on the date of the Plan termination, but is vested in the Plan
under Section D.2.a, then payments shall equal to (i) the
applicable percentage of Average Final Compensation under
Section D.1.a multiplied by the Executive’s Pro Rata
Percentage, reduced by (ii) the Executive’s Basic
Retirement Benefits. For purposes of this section, the
Executive’s Pro Rata Percentage, Average Final Compensation
and Basic Retirement Benefits shall be calculated by treating the
date of the Plan termination as the date that the Executive
Separates from Service with the Company.
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e.
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Removal from
Participation.
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(1)
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If
an Executive is removed from Plan participation and later Separates
from Service by reason of an Approved Retirement, such Executive
shall be entitled to receive upon such Approved Retirement monthly
payments equal to (1) the applicable percentage of Average
Final Compensation under Section D.1.a multiplied by the
Executive’s Pro Rata Percentage, reduced by (2) the
Executive’s Basic Retirement Benefits. For purposes of this
section, the Executive’s Pro Rata Percentage and Average
Final Compensation shall be calculated by treating the date of
removal as the date that the Executive Separates from Service by
reason of an Approved Retirement except that the Executive’s
Basic Retirement Benefits reduction shall be determined as of the
date of the Executive’s Approved Retirement.
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(2)
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If
an Executive is removed from Plan participation and later Separates
from Service by reason of an Early Retirement, but prior to an
Approved Retirement, such Executive shall be entitled to receive
upon such Early Retirement monthly payments equal to (1) the
applicable percentage of Average Final Compensation under
Section D.1.b multiplied by the Executive’s Pro Rata
Percentage, reduced by (2) the Executive’s Basic
Retirement Benefits. For purposes of this section, the
Executive’s Pro Rata Percentage and Average Final
Compensation shall be calculated by treating the date of removal as
the date that the Executive Separates from Service by reason of an
Early Retirement except that the Executive’s Basic Retirement
Benefits reduction shall be determined as of the date of the
Executive’s Early Retirement.
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f.
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Reduction for Basic Retirement
Benefits. Unless otherwise provided herein,
the reduction for the Executive’s Basic Retirement Benefits
shall
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be applied as
the lump sum Actuarial Equivalence to the benefits as if they were
payable in the form of a straight life annuity beginning at the
date of Separation from Service or Plan termination, whichever is
applicable, without survivor benefits.
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2.
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Separation From Service Before
Approved Retirement or Early Retirement
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a.
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Termination Benefits
.
Subject to other
applicable provisions in this Plan, an Executive who Separates from
Service with the Company prior to Approved Retirement, Early
Retirement or death shall be entitled to receive a Termination
Benefit equal to (1) the applicable percentage of Average
Final Compensation under Section D.l.a., multiplied by the
Executive’s Pro Rata Percentage and reduced by (2) the
Executive’s Basic Retirement Benefits at the date of
Separation from Service. For purposes of the Plan, Termination
Benefits are expressed as the present value of a benefit payable at
age 65, calculated using the GATT interest rate. See
Appendix C for an example of this calculation.
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b.
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Removal from
Participation . An Executive who Separates from
Service with the Company prior to Approved Retirement, Early
Retirement or death and who has been removed from Plan
participation (“removal”), but would have received the
benefits under Section D.2.a, but for the removal, shall be
entitled to receive the benefits under Section D.2.a, but
treating the date of “removal” as the date of
Separation from Service for purposes of calculating the
Executive’s Pro Rata Percentage and Average Final
Compensation.
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c.
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Limitations
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No benefits shall be
paid under this Section D.2 to an Executive who:
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(1)
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is
involuntarily Separated from Service for Cause;
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(2)
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Separates from Service in violation
of the obligations set forth in Executive’s written
employment agreement (if any); or
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(3)
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has
not at the time of his or her Separation from Service with the
Company (i) either (A) completed five Years of Service,
if such Executive was selected to participate in this Plan prior to
May 22, 2007 or (B) completed five Years of Service as an
Executive, as the Company determines in its sole discretion, if
such Executive was selected to participate in this Plan on or after
May 22, 2007, or (ii) attained age 65 shall have no
vested interest in benefits under the Plan and upon Separation from
Service with the Company shall forfeit any benefit the Executive
had accrued under the Plan. An Executive who would have such a
vested interest, but (1) the Executive was involuntarily
Separated from Service by the Company because of a violation of the
obligations set forth in
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Executive’s employment
agreement or (2) Executive’s Separation from Service was
not for “good reason” under such agreement, shall be
treated as not having a vested interest under this
Section D.2. This Section D.2 shall not apply to any
Executive who was a participant in this Plan on September 29,
1993.
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d.
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Rules of Application
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(1)
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Periods of Employment
.
Effective April 26,
1999, for purposes of determining employment with the Company,
Years of Service before a Break in Service (and, at the discretion
of the Administrator, any other periods of Service that would be
disregarded under the Retirement Plan) shall not be counted under
this Section F if the consecutive one-year Breaks in Service
equal or exceed the greater of five or the aggregate number of the
Executive’s Years of Service before the Break in
Service.
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(2)
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Basic Retirement
Benefits . For purposes of this
Section D.2, an Executive’s Basic Retirement Benefits
shall be determined on the date the Executive’s employment
with the Company Separates from Service. All benefits shall be
calculated as if they were payable in the form of a straight life
annuity beginning at the later of age 65 or the date of actual
Separation from Service, without survivor benefits.
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e.
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Other Agreement
.
If an Executive’s
written employment contract with the Company provides higher
benefits on Separation from Service, such higher benefits shall be
paid.
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3.
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Waiver
.
Notwithstanding the
foregoing, the Executive’s written employment contract or the
Compensation Committee shall have the authority to waive the age
and/or Years of Service requirement for any Executive, such that an
Executive may receive benefits under Section D.1.a, D.1.b, or
D.2.a. Such a determination by the Compensation Committee may occur
at the time of the Executive’s Separation from Service with
the Company or at any earlier time.
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1.
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Death After Separation from
Service . No benefits shall be paid under the
Plan if an Executive dies after Separation from Service, except for
benefits that are payable under Section D, but have not been
paid due to the delay of payment under Section G.1.
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2.
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Death While Employed
.
If an Executive dies
while employed by the Company, the Executive’s beneficiary
shall be paid the benefit calculated as though the Executive
elected to receive his or her benefits in the actuarially reduced
form of a joint and survivor 100% annuity and Executive Separated
from Service due to Early Retirement immediately prior to death;
provided, however, if the
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Executive would
have qualified for Approved Retirement if he or she Separated from
Service immediately prior to death, then the reduced form of
benefit will be calcuated using the benefit that Executive would
have received if he or she Separated from Service immediately prior
to death. If the Executive has a spouse on the date of death, the
joint and survivor 100% annuity shall take into account the age of
such spouse; however, if Executive does not have a spouse on the
date of death, the joint and survivor 100% annuity shall be
calculated as if Executive’s spouse was the same age as
Executive.
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a.
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Designation of
Beneficiary . An Executive may designate any
natural person as his or her beneficiary, but may not designate
more than one person, or any person not a natural person, without
the approval of the Administrator. Designation shall be made in
writing and shall become effective only when filed with the
Administrator. Such filing must occur before the Executive’s
death. An Executive may change his or her beneficiary, from time to
time, by filing a new written designation with the Administrator.
If the Executive is married, any beneficiary designation which does
not designate the Executive’s spouse to receive at least
one-half of the benefit payable on the Executive’s death
shall only become effective when approved in writing by the
Executive’s spouse.
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b.
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No Designated
Beneficiary . If an Executive dies without having
designated a beneficiary, the Executive’s surviving spouse
shall be the Executive’s beneficiary, unless otherwise
provided by applicable community property or other laws or court
order. If an Executive has no surviving spouse and has not
designated a beneficiary, the Executive’s estate shall be the
Executive’s beneficiary.
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F.
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FORFEITURE AND REPAYMENT
RULES
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Any other
provisions of this Plan to the contrary notwithstanding, if the
Compensation Committee determines that an Executive has engaged in
any of the actions described in Section F.3 below, the
consequences set forth in Sections F.1 and 2 below shall
result.
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1.
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Forfeiture of
Benefits . To the extent that the benefit that
otherwise would be payable under the Plan exceeds the benefit, if
any, that would have been payable if the Executive’s
Separation from Service had occurred on November 1, 1993, such
excess portion shall be forfeited and shall not be payable at any
time under this Plan.
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2.
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Repayment
.
If the Executive
received a payment under this Plan at any time within six months
prior to the date the Company discovered that the Executive engaged
in any action described in Section F.3 below, the Executive,
upon written notice from the Company, shall repay to the Company in
cash the excess portion of any such payment, such excess portion to
be calculated in the manner described in Section F.1
above.
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3.
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The
consequences described in Sections F.1 and 2 above shall apply
if the Executive, either before or after Separation from Service
with the Company, engages in any of the following:
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a.
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Accepts a position as a consultant
to or an employee of a business enterprise that is in direct
competition with any line of business engaged in by the Company at
the time of the Executive’s Separation from
Service.
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b.
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Discloses to others, or takes or
uses for the Executive’s own purpose or the purpose of
others, any trade secrets, confidential information, knowledge,
data or know-how belonging to the Company and obtained by the
Executive during the term of the Executive’s employment,
whether or not they are the Executive’s work product.
Examples of such confidential information or trade secrets include
(but are not limited to) customer lists, supplier lists, pricing
and cost data, computer programs, delivery routes, advertising
plans, wage and salary data, financial information, research and
development plans, processes, equipment, product information and
all other types and categories of information as to which the
Executive knows or has reason to know that the Company intends or
expects secrecy to be maintained.
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c.
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Fails to promptly return all
documents and other tangible items belonging to the Company in the
Executive’s possession or control, including all complete or
partial copies, recordings, abstracts, notes or reproductions of
any kind made from or about such documents or information contained
therein, upon Separation from Service.
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d.
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Fails to provide the Company with at
least 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 Executive’s Separation from
Service with the Company.
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e.
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Fails to inform any new employer,
before accepting employment, of the terms of this Section and of
the Executive’s continuing obligation to maintain the
confidentiality of the trade secrets and other confidential
information belonging to the Company and obtained by the Executive
during the term of the Executive’s employment with the
Company.
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f.
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Induces or attempts to induce,
directly or indirectly, any of the Company’s customers,
employees, representatives or consultants to terminate, discontinue
o
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