Exhibit 10.3
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN (DCAP)
Amended as of May 29, 1998
The purpose of this Plan is to provide a select group of
executives employed by McKesson Corporation, a Delaware
corporation ("McKesson"), and its subsidiaries (collectively, the
"Company"), and McKesson directors, an opportunity to defer for
later payment amounts earned as compensation.
1. PARTICIPATION
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a. Employees. An employee of the Company is eligible to
be a Participant in this Plan for any year if (i) it is
reasonably anticipated by the Company that he or she will receive
an award under a Company incentive plan of at least $5,000, or
(ii) he or she is entitled to defer compensation from the Company
pursuant to the terms of an employment contract or incentive
plan. An eligible employee shall become a "Participant" by
making an irrevocable election in writing to participate in this
Plan or, if such employment contract or incentive plan provides
for automatic participation in this Plan, by making an
irrevocable election to defer compensation.
b. Directors. Each member of the Board of Directors of
McKesson may participate in this Plan in accordance with the
terms of the McKesson Directors' Deferred Compensation Plan
("DDCP").
2. COMPENSATION THAT MAY BE DEFERRED
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a. Employees.
(i) Base Salary. Each employee who participates in
this Plan may elect to defer up to fifty percent (50%) of his or
her base salary earned from the Company in any calendar year.
For calendar year 1987, the maximum amount that may be deferred
under this provision is the lesser of fifty percent (50%) of the
employee's 1987 base salary or the amount earned by the employee
from the Company on and after September 1, 1987. In any event,
the Company may limit deferrals as is necessary or appropriate to
provide sufficient current compensation to cover taxes, benefit
payments and other necessary or appropriate deductions.
(ii) Incentive Plans. The Company maintains and
administers various incentive plans for its executives and key
employees. Pursuant to the terms of some of these plans or an
employment contract with the Company, a participating employee
may make an irrevocable election to have the incentive
compensation awarded to him paid on a deferred basis.
b. Directors. A member of the Board of Directors of
McKesson entitled to compensation for service as a director may
make an irrevocable election to defer compensation in accordance
with the terms of the DDCP. To the extent that the terms of the
DDCP conflict with the terms of this Plan, the DDCP shall govern
with respect to all amounts deferred by any such Director.
3. ELECTION TO DEFER
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a. Time and Manner of Election; Election is Irrevocable.
Each Participant shall make an election to defer compensation
under this Plan at the time and in the manner prescribed by the
Management Incentive Plan Committee. All elections to defer
compensation under this Plan shall be irrevocable and shall be
made prior to the year in which the compensation is earned. Once
an election is made, the Participant may alter the timing of
receipt of such deferred compensation, provided that such
alteration is made at least one year prior to the earliest date
the Participant could have received distribution of the deferred
compensation under a previous election and does not provide for
the receipt of such amounts earlier than one year from the date
of the alteration. An election to defer base salary in 1987,
however, shall be made prior to September 1, 1987, which is the
first date with respect to which base salary may be deferred
under this Plan.
b. $5,000 Minimum. The minimum amount that a Participant
may defer under this Plan for any one calendar year is $5,000.
c. No New Deferrals After January 1, 1994.
Notwithstanding paragraphs a. and b., above, no new deferrals
shall be made under this Plan after January 1, 1994.
4. RETAINED ACCOUNT OR STOCK ACCOUNT
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a. Election of Account. Each Participant's deferred
compensation shall be credited to a separate bookkeeping account
of McKesson maintained for such Participant (the "Account"). The
Participant may elect that deferrals be credited either to the
"Retained Account" or the "Stock Account" as defined below. All
such elections shall be irrevocable.
b. Retained Account.
(i) The Retained Account shall accrue interest during
each calendar year equal to the median yield of all
non-convertible debt issues coming to market during the
twelve-month period ending one month prior to the end of the
month in which the election instructions are issued in the prior
fiscal year from companies rated A (includes A- and A+), as
reported by the Standard & Poor's Monthly Bond Guides in its
calendar of new offerings. The rate of interest so determined
shall be applied to each Participant's entire Retained Account
balance. The Retained Account balance shall be compounded at the
end of each calendar year by the annual rate of interest so
determined.
(ii) Notwithstanding paragraph (i), above, beginning
January 1, 1994, all deferrals made by a Participant into his or
her Retained Account after 1992 will earn interest at the same
rate as deferrals to the McKesson Corporation Deferred
Compensation Administration Plan II (DCAP II).
c. Stock Account.
(i) The amount of stock credited to the Stock Account
of the Participant shall be determined by the number of shares of
McKesson Common Stock which could be purchased with the amount of
the deferred compensation using the closing price of McKesson
Common Stock on the New York Stock Exchange on the day coinciding
with each date on which his or her deferred compensation is
credited to his or her Account. If the date of credit is not a
business day, then the closing price referred to in the prior
sentence shall be the closing price on the business day
immediately preceding the date of credit.
(ii) Under this bookkeeping arrangement, no shares of
McKesson Common Stock shall be issued to or held in any Account.
(iii) The total number of shares of McKesson Common
Stock which may be credited during any single year to the Account
of a Participant who is a non-employee Director shall be the
lesser of (I) the number of shares which could be purchased with
the aggregate amount of compensation eligible for deferral under
this Plan which such Participant elects to defer for such year,
or (II) the amount of one thousand (1,000) shares. The total
number of shares of McKesson Common Stock which may be credited
during any single year to the Account of a Participant who is an
employee shall be the number of shares which could be purchased
with the aggregate amount of compensation eligible for deferral
under this Plan which such Participant elects to defer for such
year, provided that such number, when combined with all other
shares of McKesson Common Stock theretofore credited to the
Participant's Account under this Plan, shall not exceed one
percent (1%) of the then outstanding shares of McKesson Common
Stock. For purposes of this subparagraph (iii), the calculation
of the number of shares which a Participant could purchase shall
be determined in accordance with subparagraph (i) above.
5. DISTRIBUTION OF AMOUNTS DEFERRED UNDER THE PLAN
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a. Irrevocable Election Concerning Distribution. Amounts
deferred under the Plan by eligible Directors shall be
distributed as specified by the DDCP. Amounts deferred under the
Plan by other eligible Participants shall be distributed in
whichever of the following forms was irrevocably elected by the
Participant at the time that he or she made an irrevocable
election to defer compensation; provided, however, that any such
distribution must commence no later than the January following
the year in which the Participant reaches age 72.
(i) Installments Beginning Currently. Payment of the
funds in any number of approximately equal annual installments
not in excess of ten designated by the Participant, the first
installment to be paid at the time that the award is made, if
deferral is under an incentive plan or on the January 1 following
the year of deferral, if deferral is of base salary.
(ii) Installments Beginning in Designated Year.
Payment of the funds in any number of approximately equal annual
installments not in excess of ten designated by the Participant,
the first installment to be paid in the year designated by the
Participant.
(iii) Installments Beginning on Retirement, Disability
or Death. Payment of the funds in any number of approximately
equal annual installments not in excess of ten designated by the
Participant, the first installment to be paid at an interval
following the Participant's Retirement, disability or death,
whichever is the first to occur, designated by the Participant.
For purposes of this subparagraph, Retirement shall mean the
Participant's termination of employment after his or her age plus
years of service equals 65.
(iv) Lump Sum. Payment of the funds in one lump sum
in the year designated by the Participant.
b. Payment Upon Termination of Employment. If a
Participant's employment with the Company terminates before
Retirement (as defined in 5.a.(iii)), the Participant shall
receive a distribution of the entire amount credited to his or
her Account in the January following such termination of
employment.
c. Hardship Distributions. The Management Incentive Plan
Committee may in its sole discretion direct payment to a
Participant of all or of any portion of any amounts deferred,
notwithstanding an election under Subparagraphs (i), (ii), (iii)
and (iv) of Paragraph (a) above at any time that it determines
that such Participant has suffered an event of undue hardship
which causes an emergency condition in his financial affairs.
d. Payment to Beneficiary. If a Participant dies after
payments from his or her Account have begun, his or her
beneficiary or beneficiaries shall continue to receive payments
under this Plan in the same form and at the same time as they
would have been paid had the Participant survived. If a
Participant dies before payments from his or her Account have
begun, the amounts credited to the Account shall be paid to the
designated beneficiary or beneficiaries at the time and in the
manner previously irrevocably elected by the Participant.
Benefits shall be paid in one of the forms described in section
5(a)(i), (ii) or (iv) of this Plan. Benefits shall be paid at
the time elected by the Participant and as allowed by the
Management Incentive Plan Committee of McKesson (the
"Committee").
A Participant may designate any person or entity as his
or her Beneficiary. Designation shall be in writing and shall
become effective only when filed with the Committee. Such filing
must occur before the Participant's death. A Participant may
change the Beneficiary, from time to time, by filing a new
written designation with the Committee. If the Participant is
married any Beneficiary designation which does not designate the
Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
e. Time of Payment. Payments of deferred funds shall be
made in the first two weeks of January each year except as
otherwise irrevocably elected at the time of election of
deferral.
f. Method of Payment. Amounts deferred and credited to
the Retained Account shall be paid in cash. Amounts deferred and
credited to the Stock Account shall be paid in shares of McKesson
Common Stock.
g. Change in Control. For purposes of this Plan, a Change
in Control of McKesson, or its operating subsidiary McKesson
Corporation, a Maryland corporation (each of which is referred to
herein as "Corporation"), shall be deemed to have occurred if any
of the events set forth in any one of the following paragraphs
shall occur:
(i) 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 stockholders of the Company 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
(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 Company to effect a transaction described in clause (i),
(iii) or (iv) or of this paragraph) whose election by the Board
or nomination for election by the Company'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 Company approve a merger
or consolidation of the Company with any other corporation, 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
(iv) 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.
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 Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be distributed upon a Change in
Control, if the Participant has so elected.
6. COMPANY PROPERTY
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All amounts credited to the Retained Account and the Stock
Account shall be the property solely of the Company. Each
Participant and beneficiary shall be solely an unsecured general
creditor of the Company with respect to amounts credited to his
or her Retained Account or Stock Account and shall have no
special or prior right to any stock or assets for payment of any
obligations hereunder.
7. NON-ASSIGNABLE
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A Participant's rights in the Account shall be
non-assignable by him or her, except that payments may be made to
his or her estate or beneficiaries designated in accordance with
the terms of this Plan, his or her employment contract, the
applicable incentive plan or the DDCP.
8. ADMINISTRATION
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This Plan shall be administered by the Committee. The
Committee shall have full power and authority to interpret the
provisions and supervise the administration of this Plan and to
take all action in connection therewith as it deems necessary or
advisable. All decisions and interpretations of the Committee
made hereunder shall be final.
9. AMENDMENT AND TERMINATION
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While McKesson hopes to continue this Plan indefinitely, the
Plan may be amended, suspended or terminated at any time by the
Board of Directors of McKesson, provided that no such amendment,
suspension or termination shall adversely affect the
administration of amounts already credited to an Account under
the Plan, with respect to which amounts the Plan shall be
continued until all deferred compensation credited to an Account
under the Plan has been paid.
10. SUCCESSORS
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This Plan shall be binding on the Company and any successors
or assigns thereto.
McKESSON CORPORATION
By _________________________
William A. Armstrong
Vice President, Human Resources and Administration