Exhibit 10.4
McKESSON CORPORATION
1985 EXECUTIVES ELECTIVE DEFERRED COMPENSATION PLAN
Amended as of May 29, 1998
A. PURPOSE
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This Plan is established to further enhance the Company's
ability to attract and retain executive personnel.
B. ERISA PLAN
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This Plan is an unfunded deferred compensation program for
a select group of management employees of the Company. The Plan
therefore is covered by Title I of ERISA except that it is exempt
from Parts 2, 3, and 4 of Title I of ERISA.
C. PARTICIPATION
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1. Eligibility to Participate. The Compensation Committee
may, at its discretion, and at any time, and from time to time,
select Company executives who may elect to participate in this
Plan ("Eligible Executives"). Selection of Eligible Executives
may be evidenced by the terms of the executive's employment
contract with the Company, or by inclusion among the persons
specified by the Compensation Committee.
The Compensation Committee may, at its discretion, and at
any time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Compensation Committee
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such
determination are paid out under the terms of the Plan (or until
death, if earlier).
2. Election to Participate by Eligible Executives. Each
Eligible Executive may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Eligible Executive shall be
deemed to accept all of the terms and conditions of this Plan.
All elections to defer amounts under this Plan shall be
made pursuant to an election executed and filed with the
Administrator before the amounts so deferred are earned. All
elections to defer 1985 compensation shall be executed and filed
with the Administrator no later than September 15, 1985, or on
any later date in 1985 (no later than September 22, 1985) if the
election is to defer 1985 compensation earned after such later
date.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive that he or she may
participate in the Plan for the next Year.
4. Relation to Other Plans.
a. DCAP. An Eligible Executive may participate in
this Plan and may also participate in the McKesson Corporation
Deferred Compensation Administration Plan. No amounts may be
deferred under this Plan which have been deferred under the
McKesson Corporation Deferred Compensation Administration Plan or
any other plan of the Company.
b. Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible
Executive under this Plan shall, to the extent relevant, be
treated in the same manner as amounts deferred under the McKesson
Corporation Deferred Compensation Administration Plan.
D. AMOUNTS OF DEFERRAL
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1. Minimum Deferral. The minimum amount of compensation
that may be deferred by an Eligible Executive under this Plan for
1985 is one month's salary. The minimum amount that an Eligible
Executive may defer for 1986 and later Years is $10,000.
2. Maximum Deferral.
a. 1985. The maximum amount of compensation which an
Eligible Executive
may defer under this Plan for 1985 shall be his or her salary
earned from September 16, 1985
through December 15, 1985.
b. Years After 1985. The maximum amount of
compensation which an
Eligible Executive may defer under this Plan for any Year after
1985 is (i) twenty-five percent
(25%) of the amount of such Eligible Executive's base salary for
such Year, calculated at the
annual base salary rate in effect on January 1 of such Year, and
(ii) the amount of any annual
bonus award and/or any Long-Term Incentive Plan Award determined
and payable to him or her
in such Years.
3. As Deferrals After 1986. Eligible Executives may not
defer compensation under
this Plan for any Year after 1986.
E. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by an Eligible Executive under the Plan shall be
credited to a separate bookkeeping account for such Eligible
Executive (the "Account"). (Separate Accounts or Sub-Accounts
may be established for each Year for which the Eligible Executive
elects to defer compensation.) Interest shall be credited to
each Account for each Year at a rate equal to 6% plus the Moody's
Corporate Bond Yield Average--Monthly Average Corporates as
published by Moody's Investors Service, Inc. (or any successor
thereto) for December of each Year prior to the Year in which
such interest rate is credited. Each Account balance shall be
compounded monthly, in a consistent manner as determined by the
Administrator, at the appropriate rate of interest provided for
under the Plan.
2. Reduced Interest Rate for Participants Who Leave Before
Approved Retirement. If a Participant's employment with the
Company is terminated for any reason whatsoever prior to the date
of his or her Approved Retirement (except on death or
disability), the interest rate which shall be credited to his or
her Account shall be the rate specified in Section E.1, above,
for the period up to and including the date his or her employment
terminates and thereafter shall be the rate specified in Section
E.1, above, less 6 percentage points per annum. Notwithstanding
the foregoing, the Compensation Committee may, in its discretion,
credit the Account of any Participant whose employment is
terminated at an interest rate up to the plan maximum for years
and portions thereof, following the date on which the
Participant's employment terminates. This reduced rate shall not
apply to any amounts which have been distributed under paragraph
b of Section E.3 (relating to interim distributions) prior to
such termination.
3. Length of Deferral.
a. Basic Deferral Period. An Eligible Executive
shall elect in writing, and file with the Administrator, at the
same time as such Eligible Executive makes any election to defer
compensation, the period of deferral with respect to such
election. Once such an election is made, an Eligible Executive
may alter the timing of receipt of benefits under the election,
provided that such alteration is made at least one year prior to
the earliest date the Participant could have received payment of
benefits under the Plan under the previous election and does not
provide for the receipt of such amounts earlier than one year
from the date of the alteration. Payment of amounts deferred and
interest credited thereon must begin no later than the January
following the year in which the Eligible Executive reaches age
72, subject to the minimum required period of deferral, which is
5 years.
b. Interim Distributions. An Eligible Executive may
elect to have up to 100% of the amount of compensation deferred
in any Year, plus credited interest, paid to him or her prior to
age 65. No election made pursuant to this paragraph may provide
for payments of deferred compensation and interest credited
thereon until at least 5 years from the date of the deferral
which is the subject of the election.
Any election under this paragraph shall be made in
writing and filed with the Administrator at the same time as any
election to defer compensation.
c. Benefits Payable on Death. See Section F for the
payment of benefits on death of a Participant.
4. Method of Payment.
a. Election. An Eligible Executive shall elect in
writing, and file with the Administrator, at the same time as any
election to defer compensation, a method of payment of benefits
under the Plan.
b. Alternative Methods Available--Basic Deferral
Period. The following methods of benefit payment may be elected
by an Eligible Executive for amounts payable after deferral under
paragraph a. of Section E.3 relating to the basic deferral
period:
(i) Payment of amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of 10). In the case of
installment payments, interest at the appropriate rate shall be
credited on all amounts remaining in a Participant's Accounts.
(ii) Payment of the amount credited to the
Participant's Account in a single sum.
c. Alternative Methods Available--Interim
Distributions. The following methods of benefit payment may be
elected by an Eligible Executive for interim distributions under
paragraph b of Section E.3:
(i) Payment in any specified number of
approximately equal annual installments (not in excess of 10).
In the case of installment payments, interest at the appropriate
rate shall be credited on all amounts remaining in a
Participant's Accounts.
(ii) Payment in a single sum.
5. Date Payments Begin.
a. After Basic Deferral Period. Payments shall begin
(or, in the case of payments to be made in a single sum, shall
generally be made) on the first day of the month after the basic
deferral period ends under paragraph a. of Section E.3, but, in
any event, must begin no later than the January following the
year in which the Eligible Executive reaches age 72.
b. Interim Distributions. Payments shall begin (or,
in the case of payments to be made in a single sum, shall be
made) on the date previously elected by the Participant for
interim distributions.
c. Upon Termination of Employment. Notwithstanding
paragraphs 5.a. and b., above, if an Eligible Executive's
employment with the Company terminates before Retirement, the
Participant shall receive a single, lump sum payment of the
entire amount credited to the Participant's Account in the
January following such termination of employment.
F. BENEFITS ON DEATH
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1. Death After Payments Have Begun.
a. Basic Deferral. If a Participant dies after
payments from his or her Account have begun (not taking into
account interim distributions under paragraph b of Section E.3),
and if installment payments are being made, the remainder of the
amounts credited to the Participant's Account shall be paid to
his or her Beneficiary at the same time and in the same manner as
they would have been paid had the Participant survived until all
amounts were paid out. If installment payments have not been
elected, amounts shall be paid as provided for under any other
form of benefit payment elected.
b. Interim Distributions. If a Participant dies
after interim distributions
under paragraph b of Section E.3 have begun, the interim
distributions shall be paid to the
Participant's Beneficiary at the same time and in the same manner
as they would have been paid
had the Participant survived.
2. Death Before Payments Have Begun. If a Participant
dies before payments (except interim distributions) have begun,
the amount credited to his or her Account shall be paid to his or
her Beneficiary beginning at the time payments would have been
made under paragraph a. of Section E.3. (relating to basic
deferrals) or at such earlier time as the Participant elected.
Elections shall be made in writing and filed with the
Administrator at the time of any election to defer compensation.
Benefits shall be paid in one of the methods specified in
paragraph b. of Section E.4. If the Participant's employment
with the Company is terminated for any reason whatsoever prior to
the date of Approved Retirement (except on death or disability),
the rate of interest which shall be credited to his or her
Account for the period after such termination shall, of course,
be the lower rate specified in Section E.2., unless the
Compensation Committee otherwise determines as provided in that
Section E.2. The Administrator, at his or her discretion, may
distribute all benefits to a Beneficiary in a single payment if
the present value of the benefits payable to a Participant or
Beneficiary is less than $5,000.
3. Designation of Beneficiary. A Participant may
designate any person or entity as his or her 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 in writing and shall become effective only
when filed with (and, if appropriate, approved by) the
Administrator. 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 (and, if
appropriate, approved by) the Administrator. 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.
G. SOURCE OF PAYMENT
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Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
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 any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
H. MISCELLANEOUS
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1. Withholding. Each Participant and 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 employment
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.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Executive shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Eligible Executive's life, and
shall authorize the Company to purchase life insurance on his or
her life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that 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 hereunder shall continue to be effective.
I. ADMINISTRATION OF THE PLAN
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1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice
President, Human Resources is a Participant, any discretionary
action taken as Administrator which directly affects him or her
as a Participant shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
the authority and 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 or
claim any interest in the Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
J. AMENDMENT OR TERMINATION OF THE PLAN
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The Board may at any time amend the Plan. Such action shall
be prospective only and shall not adversely affect the rights of
any Participant or Beneficiary to any benefit previously earned
under the Plan. The Board may increase or decrease the interest
rate credited to compensation previously deferred but the rate
shall not be reduced for periods prior to such action and shall
not be reduced below the interest rate specified in Section E.l
less 6 percentage points per annum. The Board may at any time
terminate the Plan; thereupon compensation previously deferred
plus interest credited thereon shall promptly be paid, on
termination, in single sums to the respective Participants or
Beneficiaries entitled thereto.
K. DEFINITIONS
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For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Account" means the Account specified in Section E.l.
2. "Administrator" shall mean the person specified in
Section I.
3. "Approved Retirement" shall mean any termination of
employment with the Company at or after attainment of Retirement
or any retirement before age 65 with the approval of the Board.
4. "Beneficiary" shall mean the person or entity described
by Section F.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 subsidiary in which it owns at least 50% of
the issued and outstanding stock (and any subsidiary 50% of the
issued and outstanding stock of which is owned by such a
subsidiary).
7. "Compensation Committee" shall mean the Compensation
Committee of the Board.
8. "Effective Date" shall be September 4, 1985.
9. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in this Plan
under Section C.
10. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
11. "Participant" shall be any company executive for whom
amounts are credited to an Account under this Plan. Upon his or
her death, his or her Beneficiary shall be a Participant until
all amounts are paid out of his or her Account.
12. "Plan" shall mean the McKesson Corporation 1985
Executives Elective Deferred Compensation Plan.
13. "Retirement" shall mean termination of a Participant's
employment after his or her age plus years of service with the
Company reaches 65.
14. "Year" is the calendar year.
Executed as of May 29, 1998, in the City and County of San
Francisco, State of California.
McKESSON CORPORATION
By ____________________________
William A. Armstrong
Vice President, Human Resources and Administration