EXHIBIT 10.8
McKESSON HBOC, INC.
DEFERRED COMPENSATION ADMINISTRATION PLAN (DCAP)
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Amended as of January 27, 1999
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The purpose of this Plan is to provide a select group of executives
employed by McKesson HBOC, Inc., a Delaware corporation ("McKessonHBOC"), and
its subsidiaries (collectively, the "Company"), and McKessonHBOC 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
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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 McKessonHBOC may
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participate in this Plan in accordance with the terms of the McKessonHBOC
Directors' Deferred Compensation Plan ("DDCP").
2. COMPENSATION THAT MAY BE DEFERRED
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a. Employees.
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(i) Base Salary. Each employee who participates in this Plan may
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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
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incentive plans for its executives and key employees. Pursuant to the terms of
some of these
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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 McKessonHBOC
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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
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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
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this Plan for any one calendar year is $5,000.
c. No New Deferrals After January 1, 1994. Notwithstanding paragraphs a.
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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
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be credited to a separate bookkeeping account of McKessonHBOC 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.
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(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
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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 HBOC, Inc.
Deferred Compensation Administration Plan II (DCAP II).
c. Stock Account.
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(i) The amount of stock credited to the Stock Account of the
Participant shall be determined by the number of shares of McKessonHBOC Common
Stock which could be purchased with the amount of the deferred compensation
using the closing price of McKessonHBOC 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 McKessonHBOC
Common Stock shall be issued to or held in any Account.
(iii) The total number of shares of McKessonHBOC 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
McKessonHBOC 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 McKessonHBOC
Common Stock theretofore credited to the Participant's Account under this Plan,
shall not exceed one percent (1%) of the then outstanding shares of McKessonHBOC
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
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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
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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
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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
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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.
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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
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designated by the Participant.
b. Payment Upon Termination of Employment. If a Participant's employment
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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
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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
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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 McKessonHBOC (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.
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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
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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
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Account shall be paid in cash. Amounts deferred and credited to the Stock
Account shall be paid in shares of McKessonHBOC Common Stock.
g. Change in Control. For purposes of this Plan, a Change in Control of
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the Company 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
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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.
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9. AMENDMENT AND TERMINATION
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While McKessonHBOC hopes to continue this Plan indefinitely, the Plan may
be amended, suspended or terminated at any time by the Board of Directors of
McKessonHBOC, 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.
Executed effective as of January 27, 1999.
McKESSON HBOC, INC.
By _______________________________________________
E. Christine Rumsey
Senior Vice President, Human Resources and Administration
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