EXHIBIT 10.13
McKESSON HBOC, INC.
MANAGEMENT DEFERRED COMPENSATION PLAN
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Amended as of January 27, 1999
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A. PURPOSE
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This Plan is established to further enhance the Company's ability to
attract and retain executive personnel and Directors.
B. ERISA PLAN
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This Plan is an unfunded deferred compensation program for a select group
of management employees and Directors 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
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a. Eligible Executives. The Compensation Committee may, at its
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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).
b. Eligible Directors. Each Director who is not a Company employee
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may participate in this Plan ("Eligible Directors").
2. Election to Participate. An Eligible Executive or an Eligible
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Director 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 Participant shall be deemed to accept all of the terms and conditions
of this Plan.
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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 compensation for any Year shall be
executed and filed with the Administrator no later than (i) November 30 of the
immediately preceding Year for Eligible Executives whose salaries are paid
monthly and (ii) December 15 of the immediately preceding Year for all other
Eligible Executives and Eligible Directors.
3. Notification of Participants. The Administrator shall annually notify
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each Eligible Executive and each Eligible Director that he or she may
participate in the Plan for the next Year. Such notice shall also set forth the
Declared Rate for the next Year.
4. Relation to Other Plans. An Eligible Executive or a Director may
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participate in this Plan and may also participate in any other benefit plan of
the Company in effect from time to time for which he or she is eligible, unless
the other plan may otherwise exclude participation on the basis of eligibility
for, or participation in, this Plan. No amounts may be deferred under this Plan
which have been deferred under any other plan of the Company. Deferrals under
this Plan may result in a reduction of benefits payable under the Social
Security Act, the Company's Retirement Plan and the Company's Profit-Sharing
Investment Plan.
D. AMOUNTS OF DEFERRAL
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1. Minimum Deferral. The minimum amount that an Eligible Executive may
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defer under this Plan for any Year is $5,000 of base salary, or any annual
bonuses and/or any Long-Term Incentive Plan award. The minimum amount of
compensation that an Eligible Director may defer for any Year is $5,000.
2. Maximum Deferral for Eligible Executives. The maximum amount of
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compensation which an Eligible Executive may defer under this Plan for any Year
is (i) fifty percent (50%) of the amount of such Eligible Executive's base
salary for such Year, and (ii) the entire amount of any annual bonus award
and/or any Long-Term Incentive Plan Award determined and payable to him or her
in such Year.
3. Maximum Deferral for Eligible Directors. The maximum amount of
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compensation which an Eligible Director may defer under this Plan for any Year
is the amount of any annual retainer and other fees from the Company earned by
him or her in any such Year.
4. No New Deferrals After January 1, 1994. Notwithstanding paragraphs 1,
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2 and 3 of this Section D., no new deferrals under this Plan shall be made after
January 1, 1994.
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E. PAYMENT OF DEFERRED COMPENSATION
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1. Book Account and Interest Credit. Compensation deferred by a
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Participant under the Plan shall be credited to a separate bookkeeping account
for such Participant (the "Account"). (Sub-Accounts may be established for each
Year for which the Participant elects to defer compensation.) Interest shall be
credited to each Account (including Sub-Accounts established thereunder) for
each Year at a rate equal to a rate declared by the Compensation Committee
acting in its sole discretion after taking into account, among other things, the
following factors: the Company's cost of funds, corporate tax brackets, expected
amount and duration of deferrals, number and age of eligible Participants,
expected time and manner of payment of deferred amounts, and expected
performance of available fixed-rate insurance contracts covering the lives of
Participants (the "Declared Rate"). Each Account balance shall be compounded
monthly at the twelfth root of the annual Declared Rate of interest provided for
under this Plan. In the case of installment payments as provided in Section E.3
below, interest shall be credited on all amounts remaining in a Participant's
Account until all amounts are paid out.
2. Length of Deferral. An Eligible Executive or Eligible Director shall
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elect in writing, and file with the Administrator, at the same time as such
Eligible Executive or Eligible Director makes any election to defer
compensation, the period of deferral with respect to such election, subject to
the minimum required period of deferral, which is five years after the end of
the Year for which compensation is deferred, except as otherwise provided in
this Section E. Payment must commence no later than the end of the maximum
period of deferral, which is the January following the year in which the
Eligible Executive reaches age 72, or, in the case of an Eligible Director, the
January after the Company's annual meeting of stockholders next following the
Eligible Director's 72nd birthday. Once such an election has been made, the
Eligible Executive or Eligible Director may alter the period of deferral,
provided that:
a. such alteration is made at least one year prior to the earliest
date the Participant could have received distribution of the amounts credited to
his or her Account under the earlier election, and
b. such alteration does not provide for the receipt of such amounts
earlier than one year from the date of the alteration, subject to the five-year
minimum deferral rule stated above.
3. Election of Methods of Payment. A Participant shall elect in writing,
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and file with the Administrator, at the same time as any election to defer
compensation, a method of payment of benefits under this Plan from the following
methods:
a. Payment of amounts credited to the Participant's Account in any
specified number of approximately equal annual installments (not in excess of
10), the first installment to be paid in the Year designated by the Participant.
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b. Payment of the amounts credited to the Participant's Account in
any specified number of approximately equal annual installments (not in excess
of ten), the first installment to be paid at a designated interval following the
earlier of Participant's Retirement or one continuous year of disability.
c. Payment of the amount credited to the Participant's Account in a
single sum.
4. Date Payments Begin. Single sum payments to be made following
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Retirement shall be made as soon as practicable following such Retirement. In
the case of a Participant's death, single sum or installment payments may begin
as soon as practicable after such death. All other payments shall begin (or, in
the case of payments to be made in a single sum, shall be made) in January
following the deferral period under Section E.2, but, in any event, must begin
no later than the January following the year in which the Eligible Executive
reaches age 72, or, in the case of an Eligible Director, the January after the
Company's annual meeting of stockholders next following the Eligible Director's
72nd birthday.
5. Payments on Termination. If for any reason other than Retirement or
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Death, an Eligible Executive terminates employment with the Company or an
Eligible Director ceases to be a Director, the entire undistributed amount of
his or her deferred compensation will be paid in the form of a lump sum as soon
as practicable after such termination or cessation.
6. Payments on Death.
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a. Death After Payments Have Begun. If a Participant dies after
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payments from his or her Account have begun, 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.
b. Death Before Payments Have Begun. If a Participant dies before
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payments from his or her Account have begun, the amount credited to his or her
Account shall be paid to his or her Beneficiary at the time and in the manner
elected by the Participant. Such election 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 paragraphs a. and c.
of Section E.3. and at the time specified in Section E.4. 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.
7. Payments on Hardship. The Compensation Committee may in its sole
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discretion direct payment to a Participant of all or of any portion of any
amounts deferred, notwithstanding an election under Section E.3 above at any
time that it determines that such Participant has suffered an event of undue
hardship which causes an emergency condition in his or her financial affairs.
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8. Effect of Change in Control on Minimum Deferral Period. The five-year
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minimum deferral period described in Section E.2. shall not apply in the event
of a Change in Control of the Company.
For purposes of this Plan, a Change in Control of the Company shall be
deemed to have occurred if any of the events set forth in any one of the
following paragraphs shall occur:
a. any "person" (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as such term is
modified in Sections 13(d) and 14(d) of the Exchange Act), excluding the Company
or any of its subsidiaries, a trustee or any fiduciary holding securities under
an employee benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an offering of such
securities or a corporation owned, directly or indirectly, by 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
b. 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 a., c.,
or d. 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
c. 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
d. the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
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
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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.
9. Designation of Beneficiary. A Participant may designate any person(s)
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or any entity as his or her Beneficiary. Designation shall be in writing and
shall become effective only when filed with 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 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.
F. 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.
G. MISCELLANEOUS
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1. Withholding. Each Participant and Beneficiary shall make appropriate
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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
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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,
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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
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the Participant'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
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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.
H. ADMINISTRATION OF THE PLAN
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1. In General. The Plan Administrator shall be the Senior Vice
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President, Human Resources and Administration of the Company. If the Senior
Vice President, Human Resources and Administration 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
this Plan and shall adopt such rules and regulations for carrying out this 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 this Plan.
2. Elections and Notices. All elections and notices made under this Plan
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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.
I. AMENDMENT OR TERMINATION OF THE PLAN
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The Board may at any time amend this 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 this Plan. The Board may at
any time terminate this Plan; thereupon compensation previously deferred plus
interest credited thereon shall promptly be paid, on termination, in single lump
sums to the respective Participants or Beneficiaries entitled thereto.
J. EFFECTIVENESS
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This Plan is effective as of November 1, 1989, the date on which this Plan
was approved by the Board; provided, however, that deferrals of compensation
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under this Plan shall not commence unless and until the Company has received a
favorable no-action letter regarding this Plan from the Securities and Exchange
Commission.
K. DEFINITIONS
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For purposes of this Plan, the following terms shall have the meanings
indicated:
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1. "Account" means the Account specified in Section E.1.
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2. "Administrator" shall mean the person specified in Section H.
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3. "Beneficiary" shall mean the person or entity described by Section
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E.9.
4. "Board" shall mean the Board of Directors of McKesson HBOC, Inc., a
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Delaware corporation.
5. "Company" shall mean McKesson HBOC, Inc., a Delaware corporation and
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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).
6. "Compensation Committee" shall mean the Compensation Committee of the
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Board.
7. "Declared Rate" shall have the meaning described in Section E.1.
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8. "Eligible Director" shall mean a Director described by Section C.1.b.
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9. "Eligible Executive" shall mean an employee of the Company selected as
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being eligible to participate in this Plan under Section C.
10. "ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended.
11. "Participant" shall be any Company executive or member of the Board
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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 HBOC, Inc. Management Deferred
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Compensation Plan.
13. "Retirement" shall mean termination of a Participant's employment
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after his or her age plus years of service with the Company reaches 65.
14. "Year" is the calendar year.
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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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