McKESSON CORPORATION
SEVERANCE POLICY FOR EXECUTIVE EMPLOYEES
Effective January 1,
2009
(Amended and Restated
October 24, 2008)
McKESSON CORPORATION
SEVERANCE POLICY FOR EXECUTIVE EMPLOYEES
Effective January 1,
2009
(Amended and Restated
October 24, 2008)
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1.
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ADOPTION AND PURPOSE OF
POLICY.
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The McKesson
Corporation Severance Policy for Executive Employees (the
“Policy”) was adopted effective September 29, 1993
by McKesson to provide a program of severance payments to certain
employees of McKesson 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 thereunder. This document constitutes both
the plan document and the summary plan description of the Policy.
The plan administrator of the Policy for purposes of ERISA is
McKesson. The Policy was amended and restated effective as of
January 1, 2005 and last amended and restated to read as set
forth herein effective as of January 1, 2009.
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(a)
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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 McKesson’s
Change in Control Policy for Selected Executive Employees, 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
date of Participant’s Separation from Service and the date he
or she will attain age 62 (rounded to the next higher whole
month).
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(b)
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Mitigation of Benefits. 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.
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(c)
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Effect on Other Plans. Except as
provided in Section 3 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.
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(d)
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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 McKesson’s Change in
Control Policy for Executive Employees or the terms of any
individual
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written employment or severance
agreement; provided, however, to the extent that the benefits
provided in this Policy are greater than the benefits provided in
such written employment agreement, the benefits shall be paid under
this Policy in lieu of the benefits provided in the individual
written employment agreement.
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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 Section 2(a)(ii); provided, however, that if
the Participant is a Specified Employee on the date of his or her
Separation from Service, any payment that is scheduled to be made
in the six-month period following the Participant’s
Separation from Service shall be made in the seventh month
following the month in which the Participant’s Separation
from Service occurs. Any payment that is subject to the delay shall
include an additional amount representing interest credited at the
rate being credited to accounts under the McKesson’s Deferred
Compensation Administration Plan III during the relevant period of
delay and such interest shall be paid in a lump sum at the same
time that the delayed payments are made. All subsequent payment or
benefits will be payable in accordance with the payment schedule
applicable to each such payment or benefits. Each installment
payment provided for in this Policy is a separate
“payment” within the meaning of Treasury Regulation
section 1.409A-2(b)(2)(i).
Notwithstanding
the foregoing, no payment under this Policy shall be made later
than the last day of the second calendar year following the year in
which the Separation from Service occurs.
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4.
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EFFECT OF DEATH OF
EMPLOYEE.
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Should a
Participant die after Separation from Service and 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, but no later than 90 days, after the
date of Participant’s death. If a Participant dies prior to
Separation from Service, no benefits will be paid under this
Policy.
McKesson shall
seek approval or ratification of its stockholders at
McKesson’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.
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6.
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AMENDMENT AND
TERMINATION.
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McKesson
reserves the right to amend the Policy by action of the
Compensation Committee of the Board; 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’s or Compensation Committee’s
action.
The Board in
its discretion may at any time terminate the Policy in accordance
with Treasury Regulation section 1.409A-3(j)(4)(ix).
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7.
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ADMINISTRATION AND
FIDUCIARIES.
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(a)
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Plan Sponsor and Administrator.
McKesson is the “plan sponsor” and the
“Administrator” of the Policy, within the meaning of
ERISA.
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(b)
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Administrative Responsibilities.
McKesson shall be the named fiduciary within the meaning of ERISA,
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, McKesson
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.
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(c)
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Allocation and Delegation of
Responsibilities. The Compensation Committee may allocate any of
McKesson’s responsibilities for the operation and
administration of the Policy among McKesson’s officers,
employees and agents. It may also delegate any of McKesson’s
responsibilities under the Policy by designating, in writing,
another person to carry out such responsibilities.
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(d)
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No
Individual Liability. It is declared to be the express purpose and
intent of McKesson that no individual liability shall attach to or
be incurred by any member of the Board of McKesson, or by any
officer, employee representative or agent of the Company, under, or
by reason of the operation of, the Policy.
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(e)
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Employer Identification Number and
Policy Number. The employer identification number
(EIN) assigned to McKesson by the Internal Revenue Service is
94-3207296. The plan number (PIN) assigned to the Policy by
McKesson is ___.
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(f)
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Policy Year. All records with
respect to the Policy are kept on a calendar year basis.
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(g)
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Legal Actions. No lawsuit can be
brought to recover a benefit under the Policy
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until an
individual or his or her representative has done all of the
following: (i) filed a written claim as required by the Policy,
(ii) received a written denial of the claim (or the claim is
deemed denied as described below), (iii) filed a written
request for a review of the denied claim with the Administrator,
and (iv) received written notification that the denial of the
claim has been affirmed (or the denial is deemed to be affirmed as
described below).
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(h)
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Agent for Service of Legal Process.
If an individual wish to take legal action after exhausting the
Policy’s claims and appeal procedures, legal process should
be served on: Senior Vice President, Human Resources, McKesson
Corporation, One Post Street, San Francisco, California 94104. The
individual may also serve process on the Policy by serving the
Administrator at the address shown above.
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(i)
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ERISA Rights.
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(i)
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Participant’s are entitled to
certain rights and protections under Title I of ERISA.
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(ii)
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Participant’s may examine
without charge all official Policy documents during business hours
in the McKesson Benefits Department. These documents include the
legal texts of the plans, Policy descriptions and annual reports
that McKesson files with the U.S. Department of Labor.
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(iii)
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Participant’s may also obtain
a copy of any of these documents by writing to the Administrator,
and may be charged a reasonable fee for copies.
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(iv)
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Participant’s have the right
to receive a summary of the Policy’s annual financial report.
The Administrator is required by law to furnish each Participant
with a copy of this summary annual report.
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(v)
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Questions about this Policy should
be directed to the
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