EXHIBIT 10.14
MCKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
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AS AMENDED THROUGH MAY 30, 1997
A. PURPOSE
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This Plan is established to enable the Company 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.
B. ERISA PLAN
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This Plan is an unfunded deferred compensation program for a select group
of highly compensated management employees of the Company. The Plan, therefore,
is generally covered by Title I of ERISA, but is exempt from Parts 2, 3, and 4
of Title I of ERISA.
C. PARTICIPATION
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1. SELECTION BY THE BOARD. The Board may select, at its discretion and
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from time to time as it decides, the Key Executives who participate in this
Plan. Participation in the Plan shall be limited to those Executives of the
Company who are selected by the Board. Selection of a Key Executive to
participate in the Plan may be evidenced by the terms of his contract of
employment with the Company.
2. ADDITION AND REMOVAL OF PARTICIPANTS. The Board may, at its discretion
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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 prior to reaching age 65, he shall be entitled to receive
benefits, if any, as specified in Section D or F.
3. NOTIFICATION OF PARTICIPANTS. The Administrator shall annually notify
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each Executive that he is a participant in the Plan and shall notify each
Executive of the estimated amount of benefits which he will receive under the
Plan on Approved Retirement.
4. RELATION TO OTHER PLANS, ETC. If an Executive participates in this
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Plan, he shall not participate in or receive benefits under any other Company-
paid plan, program or agreement that provides Company Executives, or the
individual Executive, with retirement benefits that supplement or are in
addition to the benefits under the Retirement Plan, Profit Sharing Investment
Plan or Supplemental Profit-Sharing Investment Plan, unless otherwise
specifically approved by the Board. For example, any Executive who participates
in this Plan shall not receive any retirement benefits under the McKesson
Executive Benefit Plan or under any Supplemental Retirement Agreement or
Deferred Compensation Agreement that provides
retirement benefits in addition to benefits provided under the Retirement Plan
or Profit-Sharing Investment Plan. 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
him (such as, but not limited to, the Deferred Compensation Administration
Plan).
D. BENEFITS ON APPROVED RETIREMENT
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1. AMOUNT OF BENEFITS.
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a. IN GENERAL. Except as otherwise provided herein, each Executive who
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participates in the Plan and terminates employment by reason of an Approved
Retirement shall be entitled to receive monthly payments equal to (1) reduced by
(2), as follows:
(1) The percentage of Average Final Compensation specified for the
Executive, which shall be as provided herein and no higher than sixty percent
(60%)
reduced by
(2) the Executive's Basic Retirement Benefits.
The percentage stated in clause (1) may be specified by the Board or may be
specified in the Executive's written employment contract with the Company.
Unless otherwise determined by the Board, 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 in no event shall be higher than 60%.
b. SPECIAL RULE. The benefit of an Executive under this Section D. who
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is a participant in the Plan as of August 28, 1996, shall not be less than his
benefit calculated pursuant to Section F.1.a. of the Plan, without regard to any
reduction required by Section D.3. of the Plan.
c. EFFECT OF PLAN TERMINATION. If the Plan is terminated with respect to
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any or all Executives, each affected Executive who later terminates employment
by reason of an Approved Retirement 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 his Pro Rata
Percentage, reduced by (2) his Basic Retirement Benefits. For purposes of this
section, his Pro Rata Percentage and Average Final Compensation shall be
calculated by treating the date of Plan termination as the date that his
employment with the Company terminates.
d. REMOVAL FROM PARTICIPATION. If an Executive is removed from Plan
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participation, and later terminates employment by reason of an Approved
Retirement, he shall be treated as if the Plan were terminated with respect to
him as of the date of his removal, and his benefits shall be determined under
Section D.1.b. above except that his Basic Retirement benefits reduction will be
determined as of the date of his Approved Retirement.
e. CHANGE IN PERCENTAGE.
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(1) If the percentage of Average Final Compensation specified in
Section D.l.a. is reduced, the percentage applied to determine the Executive's
benefit shall be determined by averaging over his period of participation in the
Plan (and in the Executive Benefit Plan) the percentages that have been so
specified. For example, if an Executive's percentage is reduced from 60% to 50%,
and one-half of his Plan participation is at 60% and one-half at 50%, the
percentage used to determine his benefits will be 55%. (See Appendix C.)
In addition, the benefit payable under this Plan after a
reduction in such percentage shall not be less than the benefit that would have
been paid if the Plan had been terminated with respect to the Executive on the
date of such reduction.
(2) If the percentage of Average Final Compensation specified in
Section D.l.a. is increased, such increased percentage shall apply for
determining Plan benefits without averaging it with prior percentages, and all
prior Plan participation shall be treated as having been participation under
that increased percentage.
f. REDUCTION FOR BASIC RETIREMENT BENEFITS. The reduction for the
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Executive's Basic Retirement Benefits shall be applied, unless otherwise
provided herein, by calculating all benefits as if they were payable in the form
of a straight life annuity beginning at the date of Approved Retirement, without
survivor benefits. There is no requirement, however, that the benefits payable
under this Plan and any other plan be paid in the same form or at the same time.
2. TIME OF PAYMENT. The benefits provided on Approved Retirement shall
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commence on the first day of the month following the date of the Executive's
Approved Retirement.
3. EARLY RETIREMENT BENEFIT. If an Executive's Approved Retirement occurs
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before attaining age 62, he shall receive a reduced benefit commencing on the
first day of the month following his Approved Retirement. This benefit shall be
reduced beginning at age 62 at the same rate per year as that specified for
Retirement before Social Security Normal Retirement age under the Retirement
Plan. On Approved Retirement before 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 Approved Retirement before
age 62, without survivor benefits, to determine the net benefit payable under
this Plan. See Appendix A for an example of this calculation.
4. NO ELECTION OF DELAYED RETIREMENT BENEFIT. An Executive may not elect
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to delay the beginning of his retirement benefits under the Plan after the time
for commencement specified in Section D.2. or D.3., as applicable.
E. DEATH BENEFITS
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1. DEATH AFTER APPROVED RETIREMENT. If an Executive dies after Approved
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Retirement, benefits shall be paid after his death only in accordance with the
Method of Payment determined under Section H. For example, if the Executive
received a straight life annuity or a lump sum, no benefits shall be paid under
this Plan after his death.
2. DEATH WHILE EMPLOYED.
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a. BENEFITS PAYABLE TO BENEFICIARY. If an Executive dies while he is
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employed by the Company, his beneficiary shall receive the monthly benefit that
would have been paid to such beneficiary if the Executive had terminated
employment by reason of an Approved Retirement on the last day of the month
before his death, had elected to receive his benefits in the actuarially reduced
form of a joint and 100% survivor annuity with his beneficiary as the contingent
annuitant, had begun to receive such benefits on the day prior to his death, and
died immediately thereafter. Such payment shall be calculated by first
determining the amount payable to the Executive under this Plan without
reduction for Basic Retirement Benefits (applying any early Retirement Benefit
reduction and applying the actuarial reduction for joint and 100% survivor
annuity) and only thereafter making a reduction for Basic Retirement Benefits.
The reduction for Basic Retirement Benefits in connection with the Retirement
Plan in this case shall be in the amount payable, if any, under the Retirement
Plan as a spouse allowance; if any spouse allowance is payable under the
Retirement Plan on account of the Executive, this reduction shall be made even
if the Executive's beneficiary under this Plan is not his surviving spouse. See
Appendix B for an example of this calculation.
b. AVERAGE FINAL COMPENSATION. For purposes of the calculations under
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this Section E.2., the Executive's Average Final Compensation shall be based on
the compensation he actually earned during his employment with the Company.
c. NO DESIGNATED BENEFICIARY. If an Executive dies before Approved
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Retirement without having designated a beneficiary, and was married on the date
of his death, his surviving spouse shall be his beneficiary, unless otherwise
provided by applicable community property or other laws or court order. If he
dies before Approved Retirement, has no surviving spouse and has not designated
a beneficiary, the present value of the benefits that would be paid to a
surviving spouse of the same age as the Executive under a joint and 100%
survivor annuity form (and under the method of calculation provided in Section
E.2.a. and b.) shall be paid to the Executive's estate in two equal amounts in
the 14 months following death. The present value of benefits shall be determined
under factors established and uniformly applied by the Administrator.
3. DESIGNATION OF BENEFICIARY. An executive may designate any natural
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person as his beneficiary, but may not designate more than one person, or any
person that is not a natural person, without the approval of the Administrator.
Designation shall be 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 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.
F. TERMINATION BEFORE APPROVED RETIREMENT
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1. BASIC RULE
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a. TERMINATION BENEFITS. Subject to other applicable provisions in this
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Plan, an Executive who terminates employment with the Company other than on
Approved Retirement or death shall be entitled to receive, beginning at age 65,
monthly payments equal to his Termination Benefits. An Executive's Termination
Benefits are equal to 1) the applicable percentage of Average Final Compensation
under Section D.1.a., multiplied by his Pro Rata Percentage and reduced by 2)
his Basic Retirement Benefits at the later of age 65 or the date of actual
termination.
b. PLAN TERMINATION OR REMOVAL FROM PARTICIPATION. An Executive who
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terminates employment with the Company other than on Approved Retirement or
death and who has been removed from Plan participation ("removal") , or with
respect to whom the Plan has terminated prior to his termination of employment
("termination") shall be entitled to receive, beginning at age 65, monthly
payments determined under this Section F but treating his date of "removal" or
"termination", whichever is applicable, as his date of termination of employment
for purposes of calculating his Pro Rata Percentage and Average Final
Compensation.
c. REDUCTION FOR SUBSEQUENT EMPLOYER BENEFITS. Any amount payable under
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Section F.1.a. or b. shall be reduced by any retirement benefit payable to the
Executive or his beneficiary on account of service rendered to another employer
after his termination of employment with the Company.
2. LIMITATIONS. No benefits shall be paid under this Section F to:
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a. TERMINATION FOR CAUSE. An Executive who is terminated for cause. If
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the Executive has a written employment agreement, "cause" shall be determined in
accordance with that agreement. Otherwise, "cause" shall be determined by the
Administrator.
b. VIOLATION OF EMPLOYMENT AGREEMENT. An Executive who terminates his
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employment in violation of his written employment agreement (if any).
Termination is in violation of an employment agreement if termination occurs
before the end of the term of that contract and is not allowed by the agreement
(e.g., for "good reason").
c. NO VESTED INTEREST. An Executive who has no vested interest in
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benefits under the Retirement Plan at the time of his termination of employment
with the Company; provided, however, that this Section F.2.c. shall not apply to
any Executive who is a participant in this Plan on September 29, 1993. An
Executive who would have such a vested interest 1) if his employment was not
terminated by the Company in violation of his employment agreement
or 2) if his employment was not terminated for "good reason" under such
agreement, shall be treated as having such a vested interest.
3. PRO RATA PERCENTAGE. An Executive's Pro Rata Percentage is the higher
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of the following two percentages (but not greater than 100%). The first
percentage is determined by dividing the number of the Executive's whole months
of employment with the Company by the number of whole months from the date that
the Executive was first hired by the Company to the date that he will reach age
65 and multiplying by 100. The second percentage is determined by multiplying
4.44% by the number of his whole and partial years of completed employment with
the Company.
4. RULES OF APPLICATION.
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a. PERIODS OF EMPLOYMENT. For purposes of determining employment with
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the Company, periods that would be disregarded under the Retirement Plan on
account of breaks in service shall be disregarded under this Section.
b. BASIC RETIREMENT BENEFITS. For purposes of this Section, an
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Executive's Basic Retirement Benefits shall be determined at the time that he
terminates employment with the Company, calculating all benefits 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 termination of employment, without survivor benefits.
c. METHOD OF PAYMENT. Benefits under this section shall be paid in the
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form provided in Section H.
d. DATE BENEFITS BEGIN. Benefits payable under this Section shall begin
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on the first day of the month following the date the Executive reaches age 65.
e. DEATH BENEFITS. For purposes of this Section:
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(1) If an Executive dies after his benefits have begun, benefits
payable thereafter, if any, shall be paid in accordance with the method of
payment determined under Section H.
(2) If an Executive who has terminated employment and is entitled to
receive benefits under this Section F dies before his benefits begin, his
beneficiary shall receive the monthly benefit payable under an actuarially
reduced form of joint and 100% survivor annuity with his beneficiary as the
contingent annuitant, payable beginning on the first day of the month after the
Executive would have reached age 65. The principles of the second and third
sentences of Section E.2.a. and the principles of Section E.2.b. and of this
Section shall apply for calculating these survivor benefits.
(3) The principles of Section E.2.c. and of this Section shall apply
if there is no surviving spouse and no designation of beneficiary. The rules of
Section E.3. concerning designation of beneficiary shall apply.
f. CHANGE IN PERCENTAGE. The principles of Section D.1.d. shall apply to
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benefits calculated under this Section F.
g. EXAMPLE. An Executive whose specified percentage of Average Final
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Compensation under Section D.1.a. is 60% who was hired at age 50, whose
employment is terminated at age 60, and who otherwise qualifies for a benefit
under this Section, will have a vested benefit beginning at age 65 of 2/3's of
60% or 40% of actual Average Final Compensation, less his Basic Retirement
Benefits.
5. OTHER AGREEMENT. If an Executive's written Employment Agreement with
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the Company provides higher benefits on termination of employment before
Approved Retirement than provided under this Section F, such higher benefits
shall be paid.
6. FORFEITURE OF BENEFITS. Except as provided in this Section, and as
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provided elsewhere in this Plan with respect to Approved Retirement or death of
an Executive, an Executive or his beneficiaries shall not be entitled to any
benefits under this Plan, all obligations of the Company to the Executive and
his beneficiaries shall cease, and the Company shall have no further liability
to the Executive or any other person under this Plan.
G. SPECIAL FORFEITURE AND REPAYMENT RULES
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Any other provisions of this Plan to the contrary notwithstanding, if the
Compensation Committee of the Board determines that an Executive has engaged in
any of the actions described in 3. below, the consequences set forth in 1. and
2. below shall result.
1. FORFEITURE OF BENEFITS. To the extent that the benefit that otherwise
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would be payable under this Plan exceeds the benefit, if any, that would have
been payable if the Executive's retirement had occurred on November 1, 1993,
such excess portion shall be forfeited and shall not be payable at any time
under this Plan.
2. REPAYMENT. If the Executive received a payment under this Plan at any
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time within six months prior to the date the Company discovered that the
Executive engaged in any action described in 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 1. above.
3. The consequences described in 1. and 2. above shall apply if the
Executive, either before or after termination of employment with the Company:
a. 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 termination of the Executive's employment;
b. Discloses to others, or takes or uses for his 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 his 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;
c. 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
termination of employment, whether pursuant to an Approved Retirement or
otherwise;
d. 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 Executive's employment with the Company;
e. 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 his
employment with the Company;
f. 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 Executive or any third party; or
g. 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.
The Compensation Committee of the Board shall determine in its sole
discretion whether the Executive has engaged in any of the acts set forth in (a)
through (g) above, and its determination shall be conclusive and binding on all
interested persons.
Any provision of this section which is determined by a court of competent
jurisdiction to be invalid or unenforceable shall be construed or limited in a
manner that is valid and enforceable and that comes closest to the business
objectives intended by such invalid or unenforceable provision, without
invalidating or rendering unenforceable the remaining provisions of this
section.
H. METHOD OF PAYMENT
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1. NORMAL FORM. The Normal Form of Benefit under this Plan shall be a
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straight life annuity of monthly payments over the lifetime of the Executive,
with payments ceasing on the first day of the month in which the Executive dies.
2. JOINT AND SURVIVOR ANNUITY. If the Executive is married at the time
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benefits become payable, then, unless he has elected otherwise (as described
below), his benefits shall be paid in the actuarially reduced form of a joint
and 50% survivor annuity payable to him and his spouse. With the approval of
the Administrator, the Executive may elect, in writing, not to receive this form
of benefit, but any such election which provides a benefit for a beneficiary
other than his spouse must be approved in writing by his spouse to be effective.
Such election shall become effective when filed with the Administrator and must
be filed before the Executive's termination of employment with the Company.
3. LUMP SUM DISTRIBUTION. An Executive whose employment terminates by
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reason of an Approved Retirement on or after June 1, 1997, may elect to have the
actuarial equivalent value of his benefits paid in the form of a lump sum
distribution in cash, where actuarial equivalence is determined using (i) the
interest rate prescribed by the Pension Benefit Guaranty Corporation for
purposes of determining the present value of a lump sum distribution on plan
termination for the month in which the Executive makes the lump sum distribution
election and (ii) the mortality table in use under the Retirement Plan on the
date the Executive makes the lump sum distribution election. An election of a
lump sum form of distribution must be made at least twelve months prior to the
Executive's Approved Retirement (except that an election made prior to January
1, 1997 shall be effective as to any Approved Retirement occurring during
calendar year 1997) and shall be void and of no effect if either of the
following occurs: (a) the Executive's employment with the Company does not
terminate within 24 months after the date on which the Executive made the
election of a lump sum form of distribution; or (b) the Executive makes a new
election under this Section H.3. at least twelve months after the date of the
Executive's previous election under this Section H.3.
An Executive who is married at the time benefits become payable under this
Section H.3. may not receive a lump sum form of distribution unless the
Executive's spouse approves of the election in writing.
An Executive may elect a lump sum form of distribution less than twelve
months prior to his Approved Retirement, but in such event the amount of the
lump sum distribution shall be reduced by ten percent.
4. ADDITIONAL FORMS OF BENEFITS. With the approval of the Administrator,
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the Executive may elect to receive his benefits in one of the actuarially
equivalent benefit forms permitted under the Retirement Plan or such other form
as may be approved by the Administrator. If the Executive is married, any such
election must be approved in writing by
his spouse to be effective, if it would provide the spouse with a benefit less
than that provided under Section H.2.
I. SOURCE OF PAYMENT
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The benefits paid under this Plan shall be paid from the general funds of
the Company, and the Executive and his beneficiaries shall be no more than
unsecured general creditors of the Company with no special or prior right to any
assets of the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any kind for the
benefit of the Executive or any beneficiary, or create any fiduciary
relationship between the Company and the Executive or any beneficiary with
respect to any assets of the Company.
J. WITHHOLDING
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The Executive and any beneficiary shall make appropriate arrangements with
the Company for the satisfaction of any federal, state or local income tax
withholding requirements and social security or other employee tax requirements
applicable to the payment of benefits under this Plan. If no other arrangements
are made, the Company may provide, at its discretion, for such withholding and
tax payments as may be required.
K. ADMINISTRATION OF THE PLAN
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1. IN GENERAL. The Plan shall be administered by the Vice President,
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Human Resources of the Company under the direction of the Compensation Committee
of the Board. If the Vice President, Human Resources, is an Executive
participating in the Plan, then any discretionary action taken as Administrator
which directly affects him as Executive shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have the ultimate
responsibility to interpret the Plan and shall adopt such rules and regulations
for carrying out the Plan as it may deem necessary or appropriate. Decisions of
the Compensation Committee shall be final and binding on all parties who have an
interest in the Plan.
2. ELECTIONS AND NOTICES. All elections and notices made by an Executive
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under this Plan shall be in writing and filed with the Administrator.
3. ACTION BY BOARD OF DIRECTORS. The Board may act under this Plan in
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accordance with its normal procedures and practices, including but not limited
to delegation of its authority to act under the Plan.
4. PLAN YEAR. The Plan Year is the calendar year.
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L. AMENDMENT OR TERMINATION OF THE PLAN
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The Board may at any time amend, alter, modify or terminate the Plan. This
Plan shall be treated as a plan covered by Section 301 of the Retirement Equity
Act for purposes of amendment and termination.
The Compensation Committee of the Board may amend this Plan to make
technical and correcting changes and to make other changes that do not
materially increase the cost of the Plan to the Company or materially change its
design.
M. NO ASSIGNMENT
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The benefits provided under this Plan may not be alienated, assigned,
transferred, pledged or hypothecated by any person, at any time, or to any
person whatsoever. These benefits shall be exempt from the claims of creditors
or other claimants and from all orders, decrees, levies, garnishment or
executions to the fullest extent allowed by law.
N. DEFINITIONS
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For purposes of the Plan, the following terms shall have the meanings
indicated:
1. "Administrator" shall mean the person specified in Section K.
2. "Approved Retirement" shall mean (i) any termination of employment with
the Company after attainment of age 62; (ii) any involuntary termination of
employment after both attainment of age 55 and completion of 15 years of service
(as determined under the Retirement Plan); or (iii) any other termination of
employment before (i) or (ii) above with the approval of the Board.
Notwithstanding the foregoing, "Approved Retirement" shall not include
any termination for cause, which shall be determined as provided in Section
F.2.a. hereof.
3. "Average Final Compensation" shall mean: one-fifth of the sum of the
base salary and annual bonuses under the Management Incentive Plan ("MIP") and
the Performance Award Plan for Key Executives ("PAPKE") or any successor or
replacement plans (including base salary and annual bonuses voluntarily deferred
under a cash or deferred plan or any other tax qualified or non-qualified salary
deferral plan such as the Deferred Compensation Administration Plan) earned by
an Executive for the 5 consecutive years of full-time continuous employment with
the Company which (a) fall within the 15-year period ending on the first day of
the month following his termination of service with the Company and (b) produce
the highest such sum. If the Executive has had less than five years of full
time continuous employment, Average Final Compensation shall be base salary and
annual bonuses, including amounts voluntarily deferred under the plans described
in the previous sentence, for the entire period of such employment with the
Company, divided by the number of whole and partial years of service.
4. "Basic Retirement Benefits" shall mean the monthly annuity benefit
payable under the Retirement Plan and a hypothetical monthly annuity benefit
payable to the Executive under the Profit-Sharing Investment Plan as follows:
a. Benefits from the Executive's interest in the Retirement Plan shall
be calculated on a straight life annuity basis payable (i) to the Executive in
the event of normal retirement, retirement after age 65, early retirement, or
termination allowance as defined in the Retirement Plan, or (ii) as a spouse
allowance in the event of the Executive's death before Approved Retirement
(Section E.2.) or before benefits begin (Section F.4.e.).
b. The hypothetical annuity benefit payable under the Profit-Sharing
Investment Plan shall be calculated by first determining the value of each share
credited to the Executive's Retirement Share Plan account under that Plan as of
the date it was credited and applying an annual rate of twelve percent to such
value from the date such share was credited to such account to the date the
Executive's benefit under this Plan is to commence. The aggregate value of all
of the shares credited to the Executive's Retirement Share Plan account so
determined shall then be converted to a straight life annuity using the factors
for determining actuarial equivalence set forth in Section H.3.
5. "Board" shall mean the Board of Directors of McKesson Corporation, a
Delaware corporation.
6. "Company" shall mean McKesson Corporation, a Delaware Corporation, and
any member of its controlled group as defined by Section 414(b) and 414(c) of
the Internal Revenue Code of 1986, as amended.
7. "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
8. "Executive" shall mean an employee of the Company selected to
participate in this Plan.
9. "Normal Form of Benefit" is that form described in Section G.l.
10. The "Pro Rata Percentage" is defined in Section F.3.
11. "Retirement Plan" shall mean the McKesson Corporation Retirement Plan.
12. "Profit-Sharing Investment Plan" shall mean the McKesson Corporation
Profit-Sharing Investment Plan.
13. "Termination Benefits" is defined in Section F.l.a.
O. MISCELLANEOUS
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1. FIDUCIARY INSURANCE. The Company may purchase insurance for its
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directors, officers, employees and agents to cover potential liability arising
from their acts and omissions concerning this Plan.
2. APPLICABLE LAW; SEVERABILITY. The Plan hereby created shall be construed,
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administered, and governed in all respects in accordance with ERISA and the laws
of the State of California to the extent the latter are not preempted by ERISA.
If any provision of this instrument shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.
3. EFFECTIVE DATE. This Third Amendment and Restatement is effective as
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of October 27, 1993.
4. NO RIGHT TO CONTINUED EMPLOYMENT. Each executive selected to participate
--------------------------------
in the Plan is deemed by the Company to be a bona fide executive or in a high
policy making position for purposes of the Age Discrimination in Employment Act
and state laws of similar effect. Accordingly, the terms of the Plan shall not
confer any legal rights upon any Executive to continued employment or employment
past age 65, nor shall the Plan interfere with the rights of the Company to
discharge any Executive or to treat him without regard to the effect which that
treatment might have upon him as a participant in the Plan.
Executed as of August 28, 1996, in the City and County of San Francisco,
State of California.
McKESSON CORPORATION
By __________________________________
William A. Armstrong
Vice President, Human Resources
and Administration
MCKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX A
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SAMPLE CALCULATION
EARLY RETIREMENT
----------------
Executive retires at age 59, 3 years early
Final Average Compensation: $250,000
Percentage of Average Final Compensation
specified under the Plan: 60%
Income Objective
(60% x $250,000) $150,000
LESS: Early Retirement Reduction
(0.003 per month x 36 months = 10.8%) (16,200)
Adjusted Objective $133,800
LESS: Single Life Value of Retirement
Plan Benefit and Annuitized Value of
Retirement Share Plan (38,000)
--------
Annual Single Life EBRP Benefit $ 95,800
NOTE: Retirement Plan benefits are governed by the terms of that
Plan, and incorporate the appropriate reduction for early
retirement. As intended, the 1984 EBRP provides a retirement
income that, when added to income from the Retirement Plan,
provides the executive with retirement income equal to the
adjusted objective.
MCKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX B
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SAMPLE CALCULATION
SURVIVOR BENEFIT
----------------
Death age 57
Final Average Compensation: $175,000
Percentage of Average Final Compensation
specified under the Plan: 60%
Income Objective
(60% x $175,000) $105,000
LESS: Early Retirement Reduction
(0.003 per month x 60 months = 18%) (18,900)
--------
Subtotal $ 86,100
Application of 100% J&S Factor 80%
--------
Adjusted Objective $ 68,880
LESS: Retirement Plan Spouse Allowance
and Annuitized Value of Retirement
Share Plan (25,000)
--------
Annual EBRP Survivor Benefit $ 43,880
NOTE: As intended, the 1984 EBRP Survivor Benefit provides a
supplement to the Retirement Plan so that the total of
these two sources of Company provided benefits equals
the survivor's adjusted income objective. This method
would apply even if the Retirement Plan Spouse
Allowance were paid to a minor child, and the 1984
EBRP benefit were paid to the spouse.
MCKESSON CORPORATION
1984 EXECUTIVE BENEFIT RETIREMENT PLAN
APPENDIX C
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EFFECTS OF AMENDING PLAN TO ELIMINATE REDUCTION
FOR PROFIT-SHARING INVESTMENT PLAN BENEFITS AND TO
REDUCE THE MAXIMUM AVERAGE COMPENSATION
PERCENTAGE TO 60%
1. AMENDMENT NOT TREATED AS REDUCTION OR INCREASE OF PERCENT OF AVERAGE FINAL
COMPENSATION
The amendment to the Plan as of December 2, 1987 to eliminate the reduction
for benefits from the Profit-Sharing Investment Plan and to reduce the maximum
Average Final Compensation percentage to 60% from 65% is not treated as a
reduction or increase of the percentage of Average Final Compensation under
Section D.1.d. of the Plan. This is the case because the change in the
percentage is coupled with the reduction in the offset and is intended to
provide a better overall benefit to Plan participants.
2. MAINTENANCE OF EXISTING BENEFITS
The amendment to the Plan of December 2, 1987 shall not operate to reduce
the benefit accrued as of that date by any person who is a Plan participant.
Therefore, any Executive who participated in the Plan on December 2, 1987 and
who otherwise is or becomes entitled to benefits under the Plan shall receive
the higher of: 1) the benefits which he had earned and to which he is entitled
under the Plan calculated on December 2, 1987 immediately before the Plan was
amended and taking into account the value of his vested benefit as of that date
under the Profit-Sharing Investment Plan, and 2) the benefits to which he is
entitled under the Plan as amended.
FOR EXAMPLE: Assume that Appendix A shows the benefits to which an Executive
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who participates in the Plan on December 2, 1987 is entitled immediately after
the Plan's amendment (an Annual Single Life EBRP benefit of $95,800). Under the
Plan on December 2, 1987, before amendment his benefits would be calculated as
follows:
Executive retires at age 62, 3 years early
Final Average Compensation: $ 250,000
Percentage of Average Final Compensation
specified under the Plan: 65%
Income Objective
(65% x $250,000) $ 162,500
LESS: Early Retirement Reduction
(0.003 per month x 36 months = 10.8%) (17,550)
---------
Adjusted Objective $ 144,950
LESS: Single Life Value of Retirement
Plan Benefit and Annuitized Value of
Retirement Share Plan (38,000)
---------
Single Life Annuity from Company
contributed funds in PSIP (45,000)
---------
Annual Single Life EBRP Benefit $ 61,950
For this individual, the EBRP benefit from the Plan immediately after the Plan
amendment is higher than the benefit provided before amendment. Since he is
entitled to the higher of the two, his benefit under the Plan would be $95,800.