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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant | [x] | |
Filed by a Party other than the Registrant | [ ] |
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[ ] | Preliminary Proxy Statement | |
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
[x] | Definitive Proxy Statement | |
[ ] | Definitive Additional Materials | |
[ ] | Soliciting Material under Rule 14a-12 |
McKesson Corporation |
(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant) |
Payment of Filing Fee (Check the appropriate box)
[x] | No fee required. | |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |
1. | Title of each class of securities to which transaction applies: | |
2. | Aggregate number of securities to which transaction applies: | |
3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | |
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[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
6. | Amount Previously Paid: | |
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9. | Date Filed: |
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![(MCKESSON LOGO)](https://capedge.com/proxy/DEF 14A/0000950134-05-012038/f09835f0983502.gif)
• | Elect three directors to three-year terms; | |
• | Approve our 2005 Stock Plan; | |
• | Approve our 2005 Management Incentive Plan; | |
• | Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2006; | |
• | Act on a stockholder proposal, if properly presented at the meeting; and | |
• | Conduct such other business as may properly be brought before the meeting. |
By Order of the Board of Directors | |
![]() | |
Ivan D. Meyerson | |
Executive Vice President, General Counsel | |
and Secretary |
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• | The election of three directors to three-year terms; and | |
• | The approval of the 2005 Stock Plan; and | |
• | The approval of the 2005 Management Incentive Plan; and | |
• | Ratifying the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2006; and |
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Item 1. | Election of Directors |
![]() | Marie L. Knowles Executive Vice President, Chief Financial Officer, Retired ARCO |
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![]() | Jane E. Shaw Chairman of the Board and Chief Executive Officer Aerogen, Inc. |
![]() | Richard F. Syron Chairman of the Board and Chief Executive Officer Freddie Mac |
![]() | Wayne A. Budd Senior Counsel Goodwin Procter LLP |
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![]() | Alton F. Irby III Partner Tricorn Partners LLP |
![]() | David M. Lawrence, M.D. Chairman of the Board and Chief Executive Officer, Retired Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals |
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![]() | James V. Napier Chairman of the Board, Retired Scientific-Atlanta, Inc. |
![]() | John H. Hammergren Chairman of the Board, President and Chief Executive Officer |
![]() | M. Christine Jacobs President and Chief Executive Officer Theragenics Corporation |
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![]() | Robert W. Matschullat Vice Chairman and Chief Financial Officer, Retired The Seagram Company Ltd. |
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Corporate | ||||||||||||||||
Director | Audit | Compensation | Governance | Finance | ||||||||||||
Wayne A. Budd | X | X | ||||||||||||||
Alton F. Irby III | Chair | X | ||||||||||||||
M. Christine Jacobs | X | X | ||||||||||||||
Marie L. Knowles | Chair | X | ||||||||||||||
David M. Lawrence | X | |||||||||||||||
Robert W. Matschullat | X | Chair | ||||||||||||||
James V. Napier | X | |||||||||||||||
Jane E. Shaw | X | X | ||||||||||||||
Richard F. Syron | X | Chair | ||||||||||||||
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a) The director receives, or whose immediate family member receives, more than $100,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); | |
b) The director is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company; | |
c) The director is employed, or whose immediate family member is employed, as an executive officer of another company where any of the Company’s present executives serve on that company’s compensation committee; | |
d) The director is an executive officer or an employee, or whose immediate family member is an executive officer, of another company (A) that accounts for at least 2% of the Company’s consolidated gross revenues, or (B) for which the Company accounts for at least 2% or $1 million, whichever is greater, of such other company’s consolidated gross revenues; | |
e) The director is an executive officer of another company that is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other is more than 2% of the respective company’s total assets measured as of the last completed fiscal year; | |
f) The director serves as an officer, director or trustee of a charitable organization, and the Company’s discretionary charitable contributions are more than 5% of that organization’s total annual charitable receipts. (The Company’s matching of employee charitable contributions will not be included in the amount of the Company’s contributions for this purpose). | |
g) For relationships not covered by the guidelines above, or for relationships that are covered, but as to which the Board believes a director may nonetheless be independent, the determination of independence shall be made by the directors who satisfy the NYSE independence rules and the guidelines set forth above. However, any determination of independence for a director who does not meet these standards must be specifically explained in the Company’s proxy statement. |
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Amount and Nature | ||||||||
of Beneficial | ||||||||
Name and Address of Beneficial Owner | Ownership | Percent of Class* | ||||||
Wellington Management Company, LLP 75 State Street Boston, MA 02109 | 41,106,420 | (1) | 13.92 | |||||
Legg Mason Funds Management, Inc. Legg Mason Capital Management, Inc. Legg Mason Focus Capital, Inc. 100 Light Street Baltimore, MD 21202 | 29,304,691 | (2) | 9.93 | |||||
FMR Corp. 82 Devonshire Street Boston, MA 02109 | 16,800,468 | (3) | 5.69 | |||||
Vanguard Specialized Funds — Vanguard Health Care Fund 100 Vanguard Boulevard Malvern, PA 19355 | 16,207,750 | (4) | 5.49 |
* | Based on 295,198,740 common shares outstanding as of December 31, 2004. |
(1) | This information is based on a Schedule 13G filed with the SEC by Wellington Management Company, LLP, as investment adviser, and reports shared voting power with respect to 21,716,498 shares and shared dispositive power with respect to 41,106,420 shares. |
(2) | This information is based on a Schedule 13G filed with the SEC by Legg Mason Funds Management, Inc., Legg Mason Capital Management, Inc., and Legg Mason Focus Capital, Inc. As a group, they report shared voting power and dispositive power with respect to 29,304,691 shares. |
(3) | This information is based upon a Schedule 13G filed with the SEC by FMR Corp. and reports voting and dispositive power as follows: Fidelity Management & Research Company (“Fidelity”), a wholly owned subsidiary of FMR Corp. is the beneficial owner of 14,522,130 shares; Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp. is the beneficial owner of 1,429,734 shares; and Strategic Advisors, Inc., a wholly owned subsidiary of FMR Corp. is the beneficial owner of 404 shares. Edward C. Johnson 3d, and FMR Corp. through their control of Fidelity and the Fidelity Funds, each has sole dispositive power with respect to 14,522,130 shares and Fidelity carries out the voting of the shares under written guidelines established by the Funds’ Board of Trustees. Edward C. Johnson 3d and FMR Corp., through their control of Fidelity Management Trust Company, each has sole dispositive power and sole voting power with respect to 1,429,734 shares. Fidelity International Limited, Pembroke Hall, 42 Crowe Lane, Hamilton, Bermuda is the beneficial owner of 848,200 shares. |
(4) | This information is based on a Schedule 13G filed with the SEC by Vanguard Specialized Funds — Vanguard Health Care Fund and reports sole voting power and shared dispositive power with respect to 16,207,750 shares. |
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Shares of Common Stock | ||||||||
Name of Individual | Beneficially Owned(1) | Percent of Class | ||||||
Wayne A. Budd | 11,380 | (2)(4)(5) | * | |||||
Jeffrey C. Campbell | 142,490 | (4) | * | |||||
John H. Hammergren | 6,958,967 | (4) | 2.3 | % | ||||
Alton F. Irby III | 127,171 | (2)(4)(5) | * | |||||
M. Christine Jacobs | 82,923 | (2)(4) | * | |||||
Paul C. Julian | 2,392,708 | (4) | * | |||||
Marie L. Knowles | 25,553 | (2)(4) | * | |||||
David M. Lawrence | 9,752 | (2)(4) | * | |||||
Robert W. Matschullat | 26,656 | (2)(4) | * | |||||
Ivan D. Meyerson | 1,178,790 | (4)(6) | * | |||||
James V. Napier | 127,488 | (2)(4) | * | |||||
Pamela J. Pure | 520,299 | (4)(7) | * | |||||
Jane E. Shaw | 97,380 | (2)(3)(4)(5) | * | |||||
Richard F. Syron | 30,358 | (2)(4) | * | |||||
All Directors and Executive Officers as a group (16 Persons) | 12,428,637 | (2)(3)(4)(5)(6)(7) | 4.11 | % |
* | Less than 1% |
(1) | Represents shares held as of May 31, 2005 directly and with sole voting and investment power (or with voting and investment power shared with a spouse) unless otherwise indicated. The number of shares of common stock owned by each director or executive officer represents less than 1% of the outstanding shares of such class, with the exception of Mr. Hammergren who owns 2.3%. All directors and executive officers as a group own 4.11% of the outstanding shares of common stock. |
(2) | Includes RSUs accrued under the 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan as follows: Mr. Budd, 1,905 units; Mr. Irby, 1,918 units; Ms. Jacobs, 4,721 units; Ms. Knowles, 1,649 units; Dr. Lawrence, 2,252 units; Mr. Matschullat, 961 units; Mr. Napier, 2,417 units; Dr. Shaw, 14,361 units; Mr. Syron, 2,957 units; and all non-employee directors as a group, 33,141 units. Directors have neither voting nor investment power in respect of such units. |
(3) | Includes 5,281 common stock units accrued under the Directors’ Deferred Compensation Plan for Dr. Shaw. Dr. Shaw has neither voting nor investment power in respect of such units. |
(4) | Includes shares that may be acquired by exercise of stock options within 60 days of May 31, 2005 as follows: Mr. Budd, 9,375; Mr. Campbell, 95,000; Mr. Hammergren, 6,513,516; Mr. Irby, 115,453; Ms. Jacobs, 77,202; Mr. Julian, 2,245,000; Ms. Knowles, 23,904; Mr. Lawrence, 7,500; Mr. Matschullat, 25,695; Mr. Meyerson, 1,034,000; Mr. Napier, 107,071; Ms. Pure, 497,500; Dr. Shaw, 66,706; Mr. Syron, 27,401; and all directors and executive officers as a group, 11,485,323. |
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(5) | Includes shares held by family trusts as to which each of the following named directors and their respective spouses have shared voting and investment power: Mr. Budd, 100 shares; Mr. Irby, 1,500 shares; Dr. Shaw, 11,032 shares; and those directors as a group, 12,632 shares. |
(6) | Includes 1,400 shares held by Mr. Meyerson as custodian for his minor child and for which beneficial ownership is disclaimed. |
(7) | Includes 681 shares owned by Ms. Pure’s spouse. |
Item 2. | Approval of 2005 Stock Plan |
• | Significantly reduce its annual stock compensation grant rate so that at standard grant levels the grant rate is about 1.5% of total shares outstanding. |
• | Increase the use of performance shares and RSUs, and allow for the use of other equity vehicles as determined by the Compensation Committee to be the most appropriate to attract, retain and motivate employees, and at the same time significantly reduce the use of options. |
• | Eliminate the non-stockholder-approved 1999 Plan and the Canadian Plan as well as the stockholder-approved Directors’ Plan. Upon approval of the 2005 Plan, the Currently Available Shares will be cancelled and no further grants will be made from these plans; however the terms and conditions governing existing grants will continue to apply to the outstanding grants under those plans. |
• | A maximum of 13,000,000 shares will be available for grants of all equity awards, which, after the cancellation of the Currently Available Shares, will result in a net increase of only 2.3 million new shares. |
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• | The Company intends to use “flexible share counting”. That is, for each share of stock issued in connection with a restricted stock award, restricted stock unit award, performance share, stock-settled stock appreciation right or other similar awards, the Company will reduce the number of shares available for future issuance by two shares, and for each share of stock issued in connection with an option, by one share. |
• | A reduction in the maximum aggregate number of shares or share-equivalents that may be subject to restricted stock awards, RSUs, performance shares or other share-based awards granted to a participant in any plan year from 600,000 under the prior plans to 500,000. |
• | Performance against goals will be used to determine a substantial portion of the equity and equity-based awards granted to officers. When option expensing is required, a majority of all equity-based awards will be based on performance against goals. |
• | Vesting of restricted stock and RSUs would generally be a three-year cliff vest and options generally vest over four years. |
• | Repricing and option exchange programs are prohibited without stockholder approval. |
• | Discounted options and reload options are prohibited. |
• | Options and stock appreciation rights will have a seven-year life, reduced from a maximum of ten years under the prior plans. |
• | Non-employee directors will receive annual grants of RSUs rather than options. |
• | Shares of common stock that are tendered to the Company to pay the exercise price of any stock option or stock appreciation right or to satisfy tax withholding cannot be restored to the 13,000,000 pool of shares. |
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Eligible participants: | Employees and directors of the Company and its affiliates are eligible to receive stock awards under the 2005 Plan, including all of our executive officers and directors and approximately 2,000 – 3,000 other employees. | |
Types of awards: | Incentive stock options Restricted stock awards Nonstatutory stock options Restricted stock unit awards Stock appreciation rights Performance shares Other share-based awards | |
Share reserve: | Subject to capitalization adjustments, 13,000,000 shares of common stock are reserved under the 2005 Plan. If any outstanding option or stock appreciation right expires or is terminated or any restricted stock or other share-based award is forfeited, then the shares allocable to the unexercised or forfeited portion of the stock award may again be available for issuance under the 2005 Plan. The reserve of 13,000,000 shares constitutes 4.3% of the Company’s shares outstanding as of the Record Date. After the cancellation of the Currently Available Shares, the result is a net increase of only 2.3 million new shares or less than 1% of the Company’s shares outstanding as of the Record Date. | |
Limitations: | For any one share of common stock issued in connection with a stock-settled stock appreciation right, restricted stock award, restricted stock unit award, performance share or other share-based award, two shares shall be deducted from the shares available for future grants. | |
Shares of common stock not issued or delivered as a result of the net exercise of a stock appreciation right or option, shares used to pay the withholding taxes related to a stock award, or shares repurchased on the open market with proceeds from the exercise of options shall not be returned to the reserve of shares available for issuance under the 2005 Plan. | ||
Subject to capitalization adjustments, the maximum aggregate number of shares or share equivalents that may be subject to restricted stock awards, restricted stock units, performance shares or other share-based awards granted to a participant in any fiscal year is 500,000 and the maximum aggregate number of shares or share equivalents that may be subject to the options or share appreciation rights in any fiscal year is 1,000,000. | ||
Term of the Plan: | The Board adopted the 2005 Plan on May 25, 2005. The 2005 Plan is effective immediately subject to approval by the Company’s stockholders under this Proposal, and will terminate on May 24, 2015, unless the Board terminates it earlier. |
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Capitalization adjustments: | The share reserve, the limitations described above, and the purchase price and number of shares subject to outstanding stock awards may be adjusted (as applicable) in the event of a stock split, reverse stock split, stock dividend, merger, consolidation, reorganization, recapitalization, or similar transaction. | |
Repricing and option exchange programs: | Not permitted without stockholder approval. | |
Reload options: | Not permitted. |
Term: | Not more than 7 years from the date of grant as compared to 10 years under the prior plans. | |
Exercise price: | Not less than 100% of the fair market value of the underlying stock on the date of grant. | |
Method of exercise: | Cash Net exercise Delivery of common stock Any other form of legal (including delivery by attestation) consideration |
Purchase price: | Determined by the administrator at time of grant; may be zero. | |
Consideration: | Determined by the administrator at the time of grant; may be in any form permissible under applicable law. |
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Performance objectives: | The administrator may condition the grant or vesting of stock awards upon the attainment of one or more of the performance objectives listed below, or upon such other factors as the administrator 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 interest, taxes, depreciation and amortization • Earnings from operations • Net or gross sales | • Market share • Economic value added • Cost of capital • Change in assets • Expense reduction levels • Customer satisfaction • Employee satisfaction • Total shareholder return • 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 • Debt reduction • Productivity • Stock price |
To the extent that stock awards (other than stock options and stock appreciation rights) are intended to qualify as “performance-based compensation” under Section 162(m), the performance objectives will be one or more of the objectives listed above. | ||
Adjustment of performance goals: | The administrator may adjust performance goals to prevent dilution or enlargement of awards as a result of extraordinary events or circumstances or to exclude the effects of extraordinary, unusual or nonrecurring items including, but not limited to, merger, acquisition or other reorganization. | |
Non-employee director awards: | Each director who is not an employee of the Company may be granted a restricted stock unit on the date of each annual stockholders meeting for up to 5,000 shares (subject to capitalization adjustments) as determined by the Board. Each restricted stock unit award granted to a non-employee director will be fully vested on the date of grant; provided, however, that payment of any shares is delayed until the director is no longer performing services for the Company. | |
Dividend equivalents: | Dividend equivalents may be credited in respect of shares of common stock equivalents underlying restricted stock unit awards and performance shares as determined by the administrator. | |
Deferral of award payment: | The administrator may establish one or more programs to permit selected participants to elect to defer receipt of consideration upon |
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vesting of a stock award, the satisfaction of performance objectives, or other events which would entitle the participant to payment, receipt of common stock or other consideration. |
Vesting | Determined by the administrator at time of grant. The administrator may accelerate vesting at any time. Generally, the vesting schedule is expected to be a three year cliff. | |
Termination of service: | The unvested portion of the stock award will be forfeited immediately upon a participant’s termination of service with the Company. A limited post-termination exercise period may be imposed on the vested portion of options and stock appreciation rights. | |
Payment: | Stock appreciation rights and other share-based awards may be settled in cash, stock, or in a combination of cash and stock. Options, restricted stock, restricted stock units and performance shares may be settled only in shares of common stock. | |
Transferability: | Stock awards are transferable as provided in the applicable stock award agreement. | |
Other terms and conditions: | The stock award agreement may contain other terms and conditions, including a forfeiture provision as determined by the administrator, that are consistent with the 2005 Plan. |
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Item 3. | Approval of the 2005 Management Incentive Plan |
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2005 Management Incentive Plan | ||||||||
Individual Target Award as a | Dollar Value of Individual | |||||||
Name and Position | Percentage of Base Salary | Target Award(1) | ||||||
John Hammergren, Chairman, President and Chief Executive Officer | 135% | $1,721,250 | ||||||
Jeffrey C. Campbell, Executive Vice President and Chief Financial Officer | 80% | $ 484,800 | ||||||
Paul C. Julian, Executive Vice President and Group President | 90% | $ 675,000 | ||||||
Ivan D. Meyerson, Executive Vice President, General Counsel and Secretary | 75% | $ 354,000 | ||||||
Pamela J. Pure, Executive Vice President, President, McKesson Provider Technologies | 75% | $ 413,250 | ||||||
Executive Group | 60% – 135% | $242,400 – $1,721,250 | ||||||
Non-Executive Officer Employee Group | 10% – 60% | $5,000 – $240,000 |
(1) | The amount of awards actually payable, if any, under the MIP to any individual in any given year is not determinable as awards may vary (either upward or downward) from target awards based upon both individual performance levels and the degree to which pre-established performance objectives are met. MIP awards paid to the Named Executive Officers for FY ’05 are set forth in the Summary Compensation Table on page 32. |
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(a) | (b) | (c) | ||||||||||
Number of Securities | ||||||||||||
Number of | Remaining Available for | |||||||||||
Securities | Future Issuance Under | |||||||||||
to be Issued Upon | Weighted-Average | Equity Compensation | ||||||||||
Exercise of | Exercise Price of | Plans (Excluding | ||||||||||
Outstanding Options, | Outstanding Options, | Securities Reflected in | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Column (a)) | |||||||||
Equity compensation plans approved by security holders(1) | 22,835,097 | $ | 48.17 | 6,098,620 | (2) | |||||||
Equity compensation plans not approved by security holders(3),(4) | 32,751,755 | $ | 33.20 | 10,438,910 |
(1) | Includes the 1973 Stock Purchase Plan, the 1994 Stock Option and Restricted Stock Plan, the 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan, and the Employee Stock Purchase Plan (“ESPP”). |
(2) | Includes 3,077,678 shares which remained available for purchase under the ESPP at March 31, 2005. |
(3) | Includes the broad-based 1999 Stock Option and Restricted Stock Plan, the 1998 Canadian Stock Incentive Plan, the 1999 Executive Stock Purchase Plan, a small assumed sharesave scheme (similar to the ESPP) in the United Kingdom, and two stock option plans. |
(4) | As a result of acquisitions, the Company currently has 17 assumed option plans under which options are exercisable for 3,968,478 shares of Company common stock. No further awards will be made under any of the assumed plans and information regarding the assumed options is not included in the table above. |
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• | Reallocation of long-term compensation among various forms of equity; | |
• | Reduction in the target amount of long-term incentive (“LTI”) delivered by stock options and an increase in the portion of LTI delivered by full-value performance-based shares and cash; | |
• | A direct relationship between the number of full-value shares being granted and specific competitive and performance criteria. | |
• | A significant reduction in share utilization to a run rate closer to 1.5%. |
• | CEO: Four times base annual salary | |
• | Other executive officers: three times base annual salary. |
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• | Reducing the maximum payment to any one individual from 2% of Net Income — approximately $13.1 million for FY 2005 — to $6 million. | |
• | Broadening the possible performance measures to provide management and the Committee more flexibility to establish “line of sight” goals that drive short and long term stockholder value. |
• | Participants are granted nonstatutory stock options to purchase shares of the Company’s common stock at fair market value. | |
• | The Committee establishes a target cash award for each participant under the Long-Term Incentive Plan (“LTIP”). The cash component of the long-term incentive program is designed to reflect actual achievement against financial targets. | |
• | The Committee reviewed the performance against goals for the Fiscal Year (“FY”) 2003 to FY 2005 performance period and authorized payment of awards which are reflected in the Summary Compensation Table. | |
• | The Committee set target awards and performance measures for the FY 2005 to FY 2007 performance period. |
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• | In FY 2005, the Committee introduced restricted stock units as a formal component of the long-term compensation for executive officers, reducing the reliance on stock options. |
• | Stock options will continue to be an important component of long term compensation for employees, but share utilization is expected to decline significantly. | |
• | For executive officers, where stock options were the principle vehicle for delivering long-term compensation, reliance on options will be reduced with more LTI value delivered by grants of performance-based restricted stock units. Actual grants of performance-based restricted stock units will vest three years after the close of the performance period. Performance will be based on Company and/or business unit performance. | |
• | Based on the Company’s performance during FY 2005, awards of performance RSUs were granted to certain of the Named Executive Officers in May 2005, subject to stockholder approval of the proposed 2005 Stock Plan, and are reflected in the Summary Compensation Table. | |
• | Below the highest levels of the organization, grants of stock options will continue but will be reduced. | |
• | The cash LTI program will be extended from the historical participation at the executive officer level and their direct reports, to the next two levels of senior executives, further reducing the reliance on stock options. |
• | The current MIP, previously approved by stockholders in 2000 has met the requirement of a performance-based pay program within the meaning of Section 162(m). Awards for FY 2005 as displayed in the Summary Compensation Table, are governed by this Plan. As previously noted, a new plan is being submitted for stockholder approval. Approval is necessary to maintain the tax deductibility of short-term cash awards under Section 162(m) for FY 2006 and thereafter. | |
• | Proceeds from stock options granted under the 1994 Stock Option and Restricted Stock Plan (the “1994 Plan”), which was also approved by stockholders, are also considered “performance-based” and are eligible for an exception to the deduction limitation. The 1994 Plan expired in October 2004 and a new equity plan (the “2005 Stock Plan”) is being submitted to stockholders for approval. Approval is necessary if the Committee is to be permitted to make grants of equity to executive officers. | |
• | The restricted stock unit component of the long-term incentive program also meets the requirement of being performance-based and, when granted under the 1994 Plan, is eligible for an exception to the deduction limitation. As stated above, approval of the 2005 Stock Plan is necessary to maintain the status of the restricted stock component of the long-term incentive program as performance-based pay under Section 162(m). | |
• | The performance awards under the LTIP that became payable in 2005 meet the requirements of performance-based pay within the meaning of Section 162(m). |
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Compensation Committee of the Board | |
Alton F. Irby III, Chairman | |
M. Christine Jacobs | |
David M. Lawrence, M.D. | |
Richard F. Syron |
Long-Term Compensation | |||||||||||||||||||||||||||||||||
Annual Compensation | Awards | Payouts | |||||||||||||||||||||||||||||||
Other | Securities | ||||||||||||||||||||||||||||||||
Annual | Restricted | Underlying | All Other | ||||||||||||||||||||||||||||||
Compen- | Stock | Options/ | LTIP | Compen- | |||||||||||||||||||||||||||||
Salary | Bonus | sation | Award(s) | SARs | Payouts | sation | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | ($)(3) | (#) | ($) | ($)(4) | |||||||||||||||||||||||||
John H. Hammergren | 2005 | 1,058,077 | 2,200,000 | 250,127 | 7,389,209 | 400,000 | 3,697,200 | 306,524 | |||||||||||||||||||||||||
Chairman, President and | 2004 | 995,000 | 2,250,000 | 189,376 | 5,357,700 | 600,000 | 2,500,000 | 1,462,028 | |||||||||||||||||||||||||
Chief Executive Officer | 2003 | 991,260 | 2,500,000 | 131,512 | 1,250,000 | 550,000 | 4,125,000 | 345,915 | |||||||||||||||||||||||||
Jeffrey C. Campbell | 2005 | 558,615 | 550,000 | 202,189 | 882,128 | 95,000 | 513,500 | 7,380 | |||||||||||||||||||||||||
Executive Vice President | 2004 | 148,077 | 150,000 | 203,000 | 804,739 | 300,000 | — | 300,000 | |||||||||||||||||||||||||
and Chief Financial Officer(5) | |||||||||||||||||||||||||||||||||
Paul C. Julian | 2005 | 630,769 | 775,000 | 207,111 | 2,833,299 | 175,000 | 1,437,800 | 191,904 | |||||||||||||||||||||||||
Executive Vice President | 2004 | 600,000 | 680,000 | 144,891 | 2,077,882 | 350,000 | 750,000 | 203,352 | |||||||||||||||||||||||||
and Group President | 2003 | 595,542 | 850,000 | 126,290 | 425,000 | 300,000 | 2,000,000 | 123,731 | |||||||||||||||||||||||||
Ivan D. Meyerson | 2005 | 430,523 | 400,000 | — | 482,730 | 65,000 | 410,800 | 40,979 | |||||||||||||||||||||||||
Executive Vice President, | 2004 | 420,000 | 400,000 | — | 1,323,108 | 75,000 | 750,000 | 60,685 | |||||||||||||||||||||||||
General Counsel and | 2003 | 419,018 | 420,000 | — | 134,000 | 60,000 | 1,110,000 | 65,139 | |||||||||||||||||||||||||
Secretary | |||||||||||||||||||||||||||||||||
Pamela J. Pure | 2005 | 488,654 | 525,000 | 75,360 | 699,115 | 60,000 | 410,800 | 30,086 | |||||||||||||||||||||||||
Executive Vice President | 2004 | 430,000 | 310,000 | — | 164,218 | 130,000 | — | 29,791 | |||||||||||||||||||||||||
and President, McKesson Provider Technologies(5) |
(1) | Represents the Named Executive Officers’ bonus awards under the MIP for FY 2005 that were either paid in cash or deferred at the executive’s election under DCAP II. |
(2) | Under the category “Other Annual Compensation” we include the following: For Mr. Hammergren, in FY 2005, includes $124,946 for use of the Company’s aircraft for personal travel, valued at the estimated incremental cost to the Company. Mr. Hammergren uses the Company aircraft for both business and personal travel for security reasons. For Mr. Julian in FY 2005, includes $160,000 for housing assistance payments. For Mr. Campbell in FY 2005 and FY 2004, includes $87,883 and $200,000, respectively, in connection with the Company’s relocation program. |
(3) | The number and value of the aggregate restricted stock holdings, including RSUs of the Named Executive Officers on March 31, 2005 were as follows: Mr. Hammergren — 376,487 shares, $14,212,384; Mr. Campbell — 47,275 shares, $1,784,631; Mr. Julian — 144,415 shares, $5,451,666; Mr. Meyerson — 52,650 shares, $1,987,538; and Ms. Pure — |
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19,700, $743,675. The executives receive dividends on their shares of restricted stock and dividend equivalents on RSUs, the receipt of which is deferred until the RSUs vest. Subject to the approval of the 2005 Stock Plan, on May 24, 2005, Mr. Hammergren was granted 27,919 RSUs; Mr. Campbell was granted 4,653 RSUs; Mr. Julian was granted 9,835 RSUs; Mr. Meyerson was granted 3,384 RSUs; and Ms. Pure was granted 4,442 RSUs as a result of the Company having met or exceeded financial targets under the Company’s MIP for FY 2005, as described above in the Compensation Committee Report on Executive Compensation. | |
(4) | For FY 2005, includes the aggregate value of (i) the Company’s stock contributions under the PSIP, a plan designed to qualify as an employee stock ownership plan under the Internal Revenue Code (the “Code”), allocated to the accounts of the Named Executive Officers as follows: Mr. Hammergren — $5,850; and for each of Messrs. Campbell, Julian and Meyerson and Ms. Pure — $7,380; (ii) employer matching contributions under the Supplemental PSIP, an unfunded nonqualified plan established because of limitations on annual contributions contained in the Code, as follows: Mr. Hammergren — $113,240; Mr. Julian — $39,807; Mr. Meyerson — $22,518; and Ms. Pure — $15,791; (iii) above market interest accrued on deferred compensation as follows: Mr. Hammergren — $187,433; Mr. Julian — $144,716; Mr. Meyerson — $11,080 and Ms. Pure — $6,914. |
(5) | Mr. Campbell became an executive officer of the Company effective January 28, 2004 and Ms. Pure became an executive officer of the Company effective July 28, 2004. |
Number of | % of Total | |||||||||||||||||||
Securities | Options/SARs | |||||||||||||||||||
Underlying | Granted to | Exercise or | Grant Date | |||||||||||||||||
Options | Employees in | Base Price | Expiration | Present Value | ||||||||||||||||
Name | Granted(#)(1)(2) | Fiscal 2005 | ($/Sh) | Date | ($)(3) | |||||||||||||||
John H. Hammergren | 400,000 | 6.35 | % | 34.94 | 5/25/11 | 5,146,720 | ||||||||||||||
Jeffrey C. Campbell | 95,000 | 1.51 | % | 34.94 | 5/25/11 | 1,222,346 | ||||||||||||||
Paul C. Julian | 175,000 | 2.78 | % | 34.94 | 5/25/11 | 2,251,690 | ||||||||||||||
Ivan D. Meyerson | 65,000 | 1.03 | % | 34.94 | 5/25/11 | 836,342 | ||||||||||||||
Pamela J. Pure | 60,000 | 0.95 | % | 34.94 | 5/25/11 | 772,008 |
(1) | No options were granted with SARs and no freestanding SARs have ever been granted. Optionees may satisfy the exercise price by submitting currently owned shares and/or cash. Income tax withholding obligations may be satisfied by electing to have the Company withhold shares otherwise issuable under the option with a fair market value equal to such obligations. |
(2) | The option exercise price of the indicated options was 100% of the fair market value on the date of grant. They became 100% exercisable on March 31, 2005, and expire seven years after the date of the grant. |
(3) | In accordance with SEC rules, a Black-Scholes option-pricing model was chosen to estimate the grant date present value of the options set forth in this table. The assumptions used in calculating the reported value included: an expected life of 7 years; a dividend yield of 0.67%; stock volatility of 28.4%; and a risk-free interest rate of 4.3%. The Company does not believe that the Black-Scholes model, or any other model can accurately determine the value of an employee option. Accordingly, there is no assurance that the value, if any, realized by an executive, will be at or near this estimated value. Future compensation resulting from option grants is based solely on the performance of the Company’s stock price. |
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Number of Securities | ||||||||||||||||
Underlying Unexercised | Value of Unexercised In-the- | |||||||||||||||
Shares | Options/SARs at | Money Options/SARs at | ||||||||||||||
Acquired | Value | March 31, 2005(#) | March 31, 2005($)(1) | |||||||||||||
on Exercise | Realized | |||||||||||||||
Name | (#) | ($) | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||||||||
John H. Hammergren(2) | 80,000 | 964,008 | 6,513,516/0 | 32,143,750/ 0 | ||||||||||||
Jeffrey C. Campbell | 0 | 0 | 95,000/300,000 | 266,950/2,622,000 | ||||||||||||
Paul C. Julian | 0 | 0 | 2,245,000/0 | 12,775,500/ 0 | ||||||||||||
Ivan D. Meyerson(3) | 20,000 | 270,000 | 1,034,000/0 | 5,308,263/0 | ||||||||||||
Pamela J. Pure | 0 | 0 | 497,500/37,500 | 3,070,150/300,000 |
(1) | Calculated based upon the fair market value share price of $37.75 on March 31, 2005, less the price to be paid upon exercise. There is no guarantee that if and when these options are exercised they will have this value. |
(2) | Mr. Hammergren exercised stock options on 80,000 shares approaching expiration by means of same day sales. |
(3) | Mr. Meyerson exercised expiring stock options and purchased the underlying 20,000 shares by means of a cash exercise. |
Performance | Estimated Future Payouts Under Non-Stock | |||||||||||||||
or Other | Price-Based Plans(1) | |||||||||||||||
Period Until | ||||||||||||||||
Maturation or | Threshold | Target | Maximum | |||||||||||||
Name | Payout | ($) | ($) | ($) | ||||||||||||
John H. Hammergren | Three Years | $ | 0 | $ | 1,800,000 | $ | 5,400,000 | |||||||||
Jeffrey C. Campbell | Three Years | $ | 0 | $ | 500,000 | $ | 1,500,000 | |||||||||
Paul C. Julian | Three Years | $ | 0 | $ | 700,000 | $ | 2,100,000 | |||||||||
Ivan D. Meyerson | Three Years | $ | 0 | $ | 200,000 | $ | 600,000 | |||||||||
Pamela J. Pure | Three Years | $ | 0 | $ | 200,000 | $ | 600,000 |
(1) | The table above represents potential payouts of cash awards, if earned, upon completion of the three-year incentive period beginning April 1, 2004 and ending March 31, 2007. The amounts, if any, paid under the plan will be determined based on the Company’s performance against goals established by the Compensation Committee for cumulative growth in EPS and 12 month trailing Return on Committed Capital. No awards will be paid if the specified minimum performance objectives are not met. |
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![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950134-05-012038/f09835f0983515.gif)
03/31/00 | 03/31/01 | 03/31/02 | 03/31/03 | 03/31/04 | 03/31/05 | ||||||||||||||||||||||||||
McKesson Corporation | $ | 100.00 | $ | 129.02 | $ | 181.73 | $ | 122.22 | $ | 148.69 | $ | 187.92 | |||||||||||||||||||
S&P 500 Index | $ | 100.00 | $ | 78.32 | $ | 78.51 | $ | 59.07 | $ | 79.82 | $ | 85.16 | |||||||||||||||||||
Value Line HealthCare Sector Index | $ | 100.00 | $ | 114.28 | $ | 116.28 | $ | 95.48 | $ | 111.76 | $ | 116.71 | |||||||||||||||||||
* | Assumes $100 invested in McKesson Common Stock and in each index on March 31, 2000 and that all dividends are reinvested. |
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Five Year | ||||||||||||||||||||||
Average | ||||||||||||||||||||||
Compensation | 5 | 10 | 15 | 20 | 25 | |||||||||||||||||
$ | 1,000,000 | $ | 288,500 | $ | 377,000 | $ | 465,500 | $ | 554,000 | $ | 600,000 | |||||||||||
$ | 1,500,000 | 432,750 | 565,500 | 698,250 | 831,000 | 900,000 | ||||||||||||||||
$ | 2,000,000 | 577,000 | 754,000 | 931,000 | 1,108,000 | 1,200,000 | ||||||||||||||||
$ | 2,500,000 | 721,250 | 942,500 | 1,163,750 | 1,385,000 | 1,500,000 | ||||||||||||||||
$ | 3,000,000 | 865,500 | 1,131,000 | 1,396,500 | 1,662,000 | 1,800,000 | ||||||||||||||||
$ | 3,500,000 | 1,009,750 | 1,319,500 | 1,629,250 | 1,939,000 | 2,100,000 | ||||||||||||||||
$ | 4,000,000 | 1,154,000 | 1,508,000 | 1,862,000 | 2,216,000 | 2,400,000 | ||||||||||||||||
$ | 4,500,000 | 1,298,250 | 1,696,500 | 2,094,750 | 2,493,000 | 2,700,000 | ||||||||||||||||
$ | 5,000,000 | 1,442,500 | 1,885,000 | 2,327,500 | 2,770,000 | 3,000,000 |
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Largest | ||||||||
Aggregate | Amount of | |||||||
Amount of | Indebtedness at | |||||||
Executive Officer | Indebtedness | March 31, 2005 | ||||||
John H. Hammergren | $ | 500,000 | $ | 500,000 | ||||
Paul C. Julian | 1,499,693 | 1,250,000 | ||||||
Paul E. Kirincic | 500,000 | 500,000 |
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Audit Committee of the Board | |
Marie L. Knowles, Chairman | |
Wayne A. Budd | |
Robert W. Matschullat | |
Jane E. Shaw |
Item 4. | Ratification of Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for 2006 |
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2005 | 2004 | ||||||||
Audit Fees | $ | 8,025,827 | $ | 4,148,456 | |||||
Audit-Related Fees | 1,342,835 | 1,345,905 | |||||||
Total Audit and Audit-Related Fees | 9,368,662 | 5,494,361 | |||||||
Tax Fees | 782,167 | 1,003,460 | |||||||
All Other Fees | 0 | 0 | |||||||
Total | $ | 10,150,829 | $ | 6,497,821 |
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Item 5. | Stockholder Proposal |
1 | SEC Litigation Release No. 17189, October 15, 2001. |
2 | Id. |
3 | “McKesson Settles Suit for $960 Million”, New York Times, Jan. 14, 2005. |
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By Order of the Board of Directors | |
![]() | |
Ivan D. Meyerson | |
Executive Vice President, General Counsel and | |
Secretary |
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1. | Purpose. |
2. | Effective Date. |
3. | Administration. |
(a) | Administration with respect to Outside Directors. |
(b) | Administration with respect to Employees. |
(c) | Delegation of Authority to an Officer of the Corporation. |
(i) The Board may delegate to a Director the authority to administer the Plan with respect to Awards made to Employees who are not subject to Section 16 of the Exchange Act. | |
(ii) The Board may delegate to an officer or officers of the Corporation the authority to administer the Plan with respect to Options granted to Employees who are not subject to Section 16 of the Exchange Act. |
(d) | Powers of the Administrator. |
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4. | Eligibility. |
(a) | Ten Percent Stockholders. |
(b) | Number of Awards. |
5. | Stock. |
(a) | Share Reserve. |
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(b) | Limitation. |
6. | Options. |
(a) | Number of Shares. |
(b) | Exercise Price. |
(c) | Method of Payment. |
(d) | Term and Exercise of Options. |
(e) | Limitations on Transferability. |
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(f) | Termination of Employment. |
(g) | Rights as a Stockholder. |
(h) | Limitation of Incentive Stock Option Awards. |
(i) | Other Terms and Conditions. |
7. | Stock Appreciation Rights. |
(a) | Number of Shares. |
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(b) | Calculation of Appreciation; Exercise Price. |
(c) | Term and Exercise of Stock Appreciation Rights. |
(d) | Payment. |
(e) | Limitations on Transferability. |
(f) | Termination of Employment. |
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(g) | Rights as a Stockholder. |
(h) | Other Terms and Conditions. |
8. | Restricted Stock. |
(a) | Grants. |
(b) | Restrictions and Conditions. |
(i) During a period set by the Administrator commencing with the date of such Award (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, assign or encumber shares of Restricted Stock, other than pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act. Within these limits, the Administrator, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance, a Change in Control or such other factors or criteria as the Administrator may determine in its sole discretion. | |
(ii) Except as provided in this paragraph (ii) and paragraph (i) above, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the |
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Corporation, including the right to vote the shares and the right to receive any cash dividends. The Administrator, in its sole discretion, as determined at the time of Award, may provide that the payment of cash dividends shall or may be deferred and, if the Administrator so determines, invested in additional shares of Restricted Stock to the extent available under Section 5, or otherwise invested. Stock dividends issued with respect to Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the same restrictions and other terms and conditions that apply to the shares with respect to which such dividends are issued. | |
(iii) The Administrator shall specify the conditions under which shares of Restricted Stock may be forfeited and such conditions shall be set forth in the Restricted Stock Agreement. | |
(iv) If and when the Restriction Period applicable to shares of Restricted Stock expires without a prior forfeiture of the Restricted Stock, an appropriate book entry recording the Participant’s interest in unrestricted Shares shall be entered on the records of the Corporation’s transfer agent or, if appropriate, certificates for an appropriate number of unrestricted Shares shall be delivered promptly to the Participant, and the certificates for the shares of Restricted Stock shall be canceled. |
9. | Restricted Stock Units. |
(a) | Grants. |
(i) At the time of grant of a Restricted Stock Unit Award, the Administrator may impose such restrictions or conditions on the vesting of the Restricted Stock Units, as the Administrator deems appropriate. During such vesting period, the Participant shall not be permitted to sell, transfer, pledge, assign or encumber the Restricted Stock Units, other than pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act. Within these limits, the Administrator, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance, a Change in |
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Control or such other factors or criteria as the Administrator may determine in its sole discretion. | |
(ii) Dividend equivalents may be credited in respect of Restricted Stock Units, as the Administrator deems appropriate. Such dividend equivalents may be credited on behalf of the Participant to a deferred cash account (in a manner prescribed by the Administrator and in compliance with Code section 409A) or converted into additional Restricted Stock Units by dividing (1) the aggregate amount or value of the dividends paid with respect to that number of Shares equal to the number of Restricted Stock Units then credited by (2) the Fair Market Value per Share on the payment date for such dividend. The additional Restricted Stock Units credited by reason of such dividend equivalents will be subject to all of the terms and conditions of the underlying Restricted Stock Unit Award to which they relate. | |
(iii) The Administrator shall specify the conditions under which Restricted Stock Units may be forfeited and such conditions shall be set forth in the Restricted Stock Unit Agreement. |
10. | Outside Director Awards. |
11. | Performance Shares. |
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(i) The Performance Shares awarded pursuant to this Section 11 shall be subject to the following restrictions and conditions: The Administrator may condition the grant of Performance Shares upon the attainment of specified performance objectives established by the Administrator pursuant to Section 13 or such other factors as the Administrator may determine, in its sole discretion or the Administrator may, at the time of grant of a Performance Share Award, set performance objectives in its discretion which, depending on the extent to which they are met, will determine the number of Performance Shares that will be paid out to the Participant. In either case, the time period during which the performance objectives must be met is called the “Performance Period.” After the applicable Performance Period has ended, the recipient of the Performance Shares will be entitled to receive the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives have been achieved, and which shares may be subject to additional vesting. After the grant of Performance Shares, the Administrator, in its sole discretion, may reduce or waive any performance objective for such Performance Shares. |
12. | Other Share-Based Awards. |
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(i) Any Other Share-Based Award may not be sold, assigned, transferred, pledged or otherwise encumbered, other than pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act, prior to the date on which the Shares are issued or the Award becomes payable, or, if later, the date on which any applicable restriction, performance or deferral period lapses. | |
(ii) The Other Share-Based Award Agreement shall contain provisions dealing with the disposition of such Award in the event of termination of the Employee’s employment or the Director’s service prior to the exercise, realization or payment of such Award, and the Administrator in its sole discretion may provide for payment of the Award in the event of the Participant’s termination of employment or service with the Corporation or a Change in Control, with such provisions to take account of the specific nature and purpose of the Award. |
13. | Performance Objectives. |
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14. | Acceleration of Vesting and Exercisability. |
15. | Change in Control. |
(i) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act), excluding the Corporation or any of its affiliates, a trustee or any fiduciary holding securities under an employee benefit plan of the Corporation or any of its affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities or a Corporation owned, directly or indirectly, by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation’s then outstanding securities; or | |
(ii) During any period of not more than two consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Corporation to effect a transaction described in clause (i), (iii) or (iv) of this paragraph) whose election by the Board or nomination for election by the Corporation’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or | |
(iii) The shareholders of the Corporation approve a merger or consolidation of the Corporation with any other Corporation, other than (A) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, at least 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no person acquires more than 50% of the combined voting power of the Corporation’s then outstanding securities; or | |
(iv) The shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets. | |
Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the holders of the Stock immediately prior to such transaction or series of |
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transactions continue to have the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately prior to such transaction or series of transactions. |
16. | Recapitalization. |
17. | Term of Plan. |
18. | Securities Law Requirements and Limitation of Rights. |
19. | Awards in Foreign Countries. |
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20. | Beneficiary Designation. |
21. | Amendment of the Plan. |
(a) Increase the number of Shares available for issuance under the Plan or increase the number of Shares available for issuance pursuant to Incentive Stock Options under the Plan; | |
(b) Materially expand the class of persons eligible to receive Awards; | |
(c) Expand the types of awards available under the Plan; | |
(d) Materially extend the term of the Plan; | |
(e) Materially change the method of determining the Exercise Price or purchase price of an Award; | |
(f) Delete or limit the requirements of Section 22; | |
(g) Remove the administration of the Plan from the Administrator; or | |
(h) Amend this Section 21 to defeat its purpose. |
22. | No Authority to Reprice. |
23. | Use of Proceeds From Stock. |
24. | No Obligation to Exercise Option or Stock Appreciation Right. |
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25. | Approval of Stockholders. |
26. | Governing Law. |
27. | Interpretation. |
28. | Withholding Taxes. |
29. | Definitions. |
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(i) if the Common Stock is listed or admitted to trading on any stock exchange, the closing price on the date the Award is granted as reported by such stock exchange (for example, on its official web site, such as www.nyse.com), or | |
(ii) if the Common Stock is not listed or admitted to trading on a stock exchange, the mean between the lowest reported bid price and highest reported asked price of the Common Stock on the date the Award is granted in the over-the-counter market, as reported by such over-the-counter market (for example, on its official web site, such as www.otcbb.com), or if no official report exists, as reported by any publication of general circulation selected by the Corporation which regularly reports the market price of the Shares in such market. |
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30. | Execution. |
MCKESSON CORPORATION |
By |
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A. | Name; Effective Time |
B. | Purpose |
C. | Administration |
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D. | Participation |
2. | Designation of Participants |
E. | Individual Target Awards for Participants |
F. | BASIS OF AWARDS |
2. | Adjustment of Performance Goals |
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3. | Performance Goals Related to More Than One Segment of the Company |
4. | Individual Performance |
G. | Award Determination |
2. | Financial and Non-Financial Performance |
3. | Individual Performance |
4. | Overall Effect |
H. | Procedures Applicable to Covered Employees |
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I. | Payment of Awards |
J. | Employment on Payment Date |
K. | Change in Control |
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L. | Forfeiture |
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 |
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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. |
M. | Withholding Taxes |
N. | Employment Rights |
O. | Nonassignment; Participants Are General Creditors |
P. | Amendment or Termination |
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Q. | Successors and Assigns |
R. | Interpretation and Severability |
S. | Definitions |
a. any “person” (as defined in section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as such term is modified in sections 13(d) and 14(d) of the Exchange Act), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities; or | |
b. during any period of not more than two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new members of the Board of Directors (other than a member designated by a “person” who has entered into an agreement with the Company to effect a transaction described in Sections a, c and d of this definition) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the members of the Board of Directors then still in office who either were members of the Board of Directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or | |
c. consummation of a merger or consolidation of the Company with any other corporation, which has been approved by the shareholders of the Company, other than (I) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the combined voting power of the Company’s then outstanding securities; or |
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d. the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets. |
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. |
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T. | Execution |
McKESSON CORPORATION |
By |
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ANNUAL MEETING OF STOCKHOLDERS
OF
McKESSON CORPORATION
8:30 a.m.
Wednesday, July 27, 2005
A.P. Giannini Auditorium
555 California Street
San Francisco, CA 94104
Please present this ADMISSION TICKET at the Annual
Meeting of Stockholders as verification of your
McKesson Corporation share ownership.
McKESSON CORPORATION | ||||
Proxy for Annual Meeting | ||||
8:30 A.M., July 27, 2005 | ||||
Solicited on Behalf of the Board of Directors of the Corporation |
The undersigned, whose signature appears on the reverse side, hereby constitutes and appoints John H. Hammergren and Ivan D. Meyerson, and each of them, with full power of substitution, proxies to vote all stock of McKesson Corporation which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at the A.P. Giannini Auditorium, 555 California Street, San Francisco, California on July 27, 2005 at 8:30 a.m. and any adjournment or postponement thereof, as specified upon the matters indicated on the reverse side, and in their discretion upon any other matter that may properly come before said meeting.
Your shares will not be voted unless you (1) vote by telephone, (2) vote via the Internet, as described on the reverse side, or (3) sign and return this card.
This proxy, when properly executed, will be voted as directed, but if no direction is given, this proxy will be voted FOR proposals 1, 2, 3 and 4, and AGAINST proposal 5.
Continued on the reverse side.
McKESSON CORPORATION
P.O. BOX 11181
NEW YORK, NY 10203-0181
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![]() | YOUR VOTE IS IMPORTANT VOTE BY INTERNET / TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK |
INTERNET
https://www.proxyvotenow.com/mck
• | Go to the website address listed above. | |||
• | Have your proxy card ready. | |||
• | Follow the simple instructions that appear on your computer screen. |
OR
TELEPHONE
1-866-233-5390
• | Use any touch-tone telephone. | |||
• | Have your proxy card ready. | |||
• | Follow the simple recorded instructions. |
OR
• | Mark, sign and date your proxy card. | |||
• | Detach your proxy card. | |||
• | Return your proxy card in the postage-paid envelope provided. |
Please cast your vote by telephone or via the internet as instructed below, or complete, date, sign and mail this proxy promptly in the enclosed business reply envelope. You can vote by phone or via the Internet anytime prior to July 27, 2005. If you do so, you do not need to mail in your proxy card.
ON LINE DELIVERY OF PROXY MATERIAL
If you vote using the Internet, you may elect to receive proxy materials electronically next year in place of receiving printed materials. You will save the Company printing and mailing expenses, reduce the impact on the environment and obtain immediate access to the annual report, proxy statement and voting form when they become available. If you used a different method to vote, sign up anytime using your Stockholder Account Number at the Internet website:https//www.giveconsent.com/mck.
1-866-233-5390
o | â DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET â |
Please Sign, Date and Return
the Proxy Card Promptly
Using the Enclosed Envelope.
x
Votes must be indicated
(x) in Black or Blue ink.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ITEMS NUMBERED 1, 2, 3 AND 4, AND “AGAINST” ITEM NUMBER 5.
1. | ELECTION OF DIRECTORS — NOMINEES FOR ELECTION FOR THREE-YEAR TERMS EXPIRING IN 2008 |
FOR o WITHHELD o EXCEPTIONS o
Nominees: 01 — Marie L. Knowles, 02 — Jane E. Shaw
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name and check the “Exceptions” box above.)
FOR | AGAINST | ABSTAIN | ||||||||
2. | The approval of the 2005 Stock Plan. | o | o | o | ||||||
3. | The approval of the 2005 Management Incentive Plan. | o | o | o |
Note: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give title as such.
FOR | AGAINST | ABSTAIN | ||||||||
4. | Ratifying of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm. | o | o | o | ||||||
5. | Stockholder proposal relating to Chairmanship of Board. | o | o | o | ||||||
Please check the box to the right if you plan to attend the Annual Meeting | o | |||||||||
To change your address, please mark this box. | o | |||||||||
To include any comments, please mark this box. | o |
S C A N L I N E |
Date | Share Owner sign here | Co-Owner sign here |