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8-K - FORM 8-K - MCKESSON CORP | f54717e8vk.htm |
Exhibit 10.1
McKESSON CORPORATION
EXECUTIVE SURVIVOR BENEFITS PLAN
EXECUTIVE SURVIVOR BENEFITS PLAN
Amended and Restated as of January 20, 2010
Table of Contents
Page | ||||
A. PURPOSE |
1 | |||
B. ERISA PLAN |
1 | |||
C. PARTICIPATION |
1 | |||
D. SURVIVOR BENEFITS |
2 | |||
E. TERMINATION OF EMPLOYMENT OTHER THAN ON APPROVED RETIREMENT OR DEATH |
3 | |||
F. SPECIAL FORFEITURE RULES |
4 | |||
G. SOURCE OF PAYMENT |
6 | |||
H. MISCELLANEOUS |
6 | |||
I. ADMINISTRATION OF THE PLAN |
6 | |||
J. AMENDMENT OR TERMINATION OF THE PLAN |
7 | |||
K. CLAIMS AND APPEALS |
7 | |||
L. DEFINITIONS |
9 | |||
M. SUCCESSORS |
10 | |||
N. EXECUTION |
10 |
i.
McKESSON CORPORATION
EXECUTIVE SURVIVOR BENEFITS PLAN
EXECUTIVE SURVIVOR BENEFITS PLAN
(Amended and Restated as of January 20, 2010)
A. PURPOSE
This Plan was established to enable the Company to attract and retain key executive personnel
by providing survivor benefits to Executives Beneficiaries. This Plan amends, restates and
supersedes the 1988 Executive Survivor Benefits Plan. Since its original effective date, the Plan
has been amended and restated on various occasions. The amendment and restatement has been
approved by the Board as of January 20, 2010 and shall be effective as of such date except as
otherwise set forth below.
B. ERISA PLAN
This Plan is a welfare benefit program intended primarily for a select group of management or
highly compensated employees of the Company. The Plan, therefore, is covered by Title I of ERISA.
C. PARTICIPATION
1. Selection by Compensation Committee. The Compensation Committee may select, at its
discretion and from time to time as it decides, the key Executives who participate in this Plan;
provided, however, that no new Executives may be designated to participate in this Plan after
January 20, 2010. Participation in the Plan shall be limited to those Executives of the Company
who are selected by the Compensation Committee. Selection of a key Executive to participate in the
Plan may be evidenced by the terms of his or her Employment Agreement, if any, with the Company.
2. Election Not to Participate. An Executive may elect not to participate in this
Plan at any time; such election shall be in writing and shall become effective upon its receipt by
the Administrator. No compensation or benefits in lieu of this Plan shall be paid to an Executive
who elects not to participate, unless otherwise specifically approved by the Compensation
Committee. An election not to participate shall be irrevocable unless otherwise determined by the
Compensation Committee.
3. Insurability. Executives selected by the Compensation Committee are not
automatically entitled to the benefits provided under this Plan. Each Executive may be required to
satisfy such requirements for insurability as the Company shall establish from time to time, if
any, before he is entitled to benefits under this Plan.
4. Addition and Removal of Participants. The Compensation Committee may, at its
discretion and at any time, designate additional Executives to participate in the Plan and remove
Executives from participation in the Plan; provided that, effective January 20, 2010, no additional
Executives may be designated to participate in this Plan. When an Executive is removed from
participation in the Plan by the Compensation Committee, his or her benefits, if
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any, shall be determined under Section E; once removed from participation an Executive cannot
subsequently be reinstated to participate in this Plan.
5. Relation to Other Plans. If an Executive participates in this Plan, he or she
shall not participate in any other survivor benefit or life insurance plan or similar program
solely for Company Executives unless otherwise specifically approved by the Administrator in
writing. For example, any Executive who participates in this Plan shall not receive any life
insurance benefits under the McKesson Corporation 1984 Executive Insurance Plan, or its
predecessor, the McKesson Executive Benefit Plan. This provision shall not preclude the
Executives participation in any Company retirement plan, compensation plan, deferred compensation
plan, excess benefit plan, any group life insurance or survivor benefit plan made generally
available by the Company to all employees. This provision shall not preclude the payment of
survivor benefits which are earned and payable under any Company retirement plan.
D. SURVIVOR BENEFITS
1. Death of Executive While Employed. In the event of the death of an Executive while
employed by the Company and except as provided in Sections D.3 and D.4 below, the benefit provided
by the Plan and payable to the Executives Beneficiary as soon as practicable thereafter shall be a
lump sum equal to the lesser of (a) three times the Annual Base Salary of the Executive at the time
of death, or (b) $2,000,000. The benefit shall be provided to the Executives Beneficiary either
through the proceeds of life insurance owned by the Company on the Executives life or as a lump
sum cash payment from the general assets of the Company. In the later case, the benefit amount
shall be increased by multiplying it by the Tax Factor. The application of this Section D.1 is
illustrated in Appendix I to the Plan.
2. Death of Executive After Approved Retirement. In the event of the death of an
Executive after his or her Approved Retirement and except as provided in Sections D.3 and D.4
below, the benefit provided by the Plan and payable to the Executives Beneficiary as soon as
practicable thereafter shall be a lump sum equal to the lesser of (a) 1.5 times the Annual Base
Salary of the Executive at retirement, and (b)(i) $500,000 for an Executive who retires on or
before January 1, 1997, or (ii) $1,000,000 for an Executive who retires after January 1, 1997. The
benefit shall be provided to the Executives Beneficiary either through the proceeds of life
insurance owned by the Company on the Executives life or as a lump sum cash payment from the
general assets of the Company. In the latter case, the benefit amount shall be increased by
multiplying it by the Tax Factor.
3. Limitations on Benefits. No survivor benefits shall be paid under this Section D
in the following circumstances:
a. The Administrator shall determine in his or her discretion that Executive has provided
false or misleading information regarding Executives health or medical history that materially
adversely affects the Company, or
b. The Administrator shall determine in his or her discretion that Executive has committed
suicide.
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For purposes of this Section D.3, the Administrator in his or her discretion may waive in
writing the foregoing limitations in whole or in part, and all determinations by the Administrator
shall be final.
4. Executives Removed from Participation. Except as otherwise approved by the
Administrator in writing and at his or her sole discretion, no survivor benefits shall be paid
under this Section D to any Beneficiary of an Executive (i) who has elected not to participate
under Section C.2, (ii) who has been removed from Plan participation prior to his or her death, or
(iii) subject to Section E below, with respect to whom the Plan has been terminated prior to his or
her death.
5. Designation of Beneficiary. A Participant may designate any person(s) 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 Participants death. A
Participant may change the Beneficiary, from time to time, by filing a new written designation with
the Administrator. Effective January 1, 2003, if the Participant fails to effectively designate a
Beneficiary in accordance with the Administrators procedures or the person designated by the
Participant is not living at the time the distribution is to be made, then the Participants
Beneficiary shall be the Participants surviving spouse, if any, or, if there is no surviving
spouse, the Participants surviving children, if any, in equal shares, or if there are no surviving
children, his or her estate.
E. | TERMINATION OF EMPLOYMENT OTHER THAN ON APPROVED RETIREMENT OR DEATH |
1. Basic Rule.
a. In the event of the death of an Executive after his or her termination of employment with
the Company other than on Approved Retirement and except as provided in Section E.2 below, the
Company shall pay Executives Beneficiary a lump sum equal to (i) an amount calculated using the
formula in Section D.2 above, subject to the limitations of Section D.3 above, (ii) multiplied by
the Executives Pro Rata Percentage, and (iii) reduced by the amount provided in Section E.1.c
below. Except as otherwise approved by the Administrator in writing and at his or her sole
discretion, final Annual Base Salary shall be determined as of the date of the Executives
termination of employment, for purposes of this Section E.1.a. The application of this Section E.
1.a is illustrated in Appendix II to the Plan.
b. In the event of the death of an Executive after the Executive has been removed from Plan
participation in accordance with Section C.4 (removal) or with respect to whom the Plan has been
terminated in accordance with Section E (Plan termination) prior to his or her termination of
employment, and except as provided in Section E.2 below, the Company shall pay Executives
Beneficiary a sum equal to the amount calculated as provided in Section E.1.a above, but treating
the Executives date of removal or the date of the Plan termination, whichever is applicable,
as his or her date of termination of employment for purposes of calculating his or her Pro Rata
Percentage and his or her final Annual Base Salary.
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c. Any amount determined under Section E.1.a or Section E.1.b shall be reduced by any death or
survivor benefit (other than a retirement benefit paid under a tax qualified retirement plan)
payable on account of service rendered by the Executive to another employer after his or her
termination of employment with the Company.
2. Limitations on Benefits. No benefits shall be paid under Section E in the
following circumstances:
a. The Executive is terminated for Cause, or
b. The Executive has terminated his or her employment in violation of his or her Employment
Agreement, if any; termination is in violation of an Employment Agreement if termination occurs
before the end of the term of the Employment Agreement and is not allowed by the Employment
Agreement (e.g., for good reason), or
c. The Executive has not completed five or more years of participation (whether or not
consecutive) in this Plan and its predecessors, the McKesson Corporation 1984 Executive Benefit
Plan and the McKesson Corporation 1984 Management Benefit Plan; an Executive who would have
completed five or more years (i) if his or her employment was not terminated by the Company in
violation of his or her Employment Agreement or (ii) if his or her employment was not terminated
for good reason under such Agreement, shall be treated as having such years of participation.
3. Pro Rata Percentage. An Executives Pro Rata Percentage is the higher of the
following two percentages (but not exceeding 100%): the first percentage is determined by dividing
the number of the Executives 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 multiplied by 100. The second percentage is determined by multiplying 4.44% by
the number of his or her whole and partial years of completed employment with the Company.
4. Periods of Employment. For purposes of determining employment with the Company,
periods that would be disregarded under the Retirement Plan on account of breaks in service shall
be disregarded under this Section E.
5. Other Agreements. If an Executives Employment Agreement provides for higher
survivor benefits than provided under this Section E, such higher benefit shall be paid.
6. Forfeiture on Other Terminations. Except as provided in this Section E, and as
provided elsewhere in this Plan with respect to the death of an Executive, on the death of the
Executive, an Executive or his or her Beneficiary shall not be entitled to any additional benefits
under this Plan, all obligations of the Company to the Executive and his or her Beneficiary under
this Plan shall cease, and the Company shall have no further liability to the Executive or any
other person under this Plan.
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F. SPECIAL FORFEITURE RULES
Any other provisions of this Plan to the contrary notwithstanding, if the Compensation
Committee determines that any Executive engaged in any of the actions described in F.2 below, the
consequence set forth in F.1 below shall result.
1. Forfeiture of Benefits. To the extent that the benefit that otherwise would be
payable under the Plan upon the death of the Executive exceeds the benefit, if any, that would have
been payable if the Executive had died on November 1, 1993, such excess portion shall be forfeited
and shall not be payable under this Plan. In no event shall the amount payable under the Plan with
respect to any Executive who was a participant in the Plan on October 27, 1993 be less than the
amount, if any, determined pursuant to Section J.
2. Events Resulting in Forfeiture. The consequence described in F.1 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 Executives employment.
b. Discloses to others, or takes or uses for the Executives 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 the Executives employment, whether or not
they are the Executives 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 Executives 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 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 or any of its subsidiaries. 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
Executives employment with the Company.
e. Fails to inform any new employer, before accepting employment, of the terms of this section
and of the Executives 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 the Executives employment with the Company.
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f. Induces or attempts to induce, directly or indirectly, any of the Companys 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.
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 shall determine in its sole discretion whether the Executive has
engaged in any of the acts set forth in Sections F.2.a through F.2.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.
G. SOURCE OF PAYMENT
Amounts paid under Section D of this Plan may be paid from insurance policy proceeds on the
life of the Executive or from the general funds of the Company, and each Executive and his or her
Beneficiary shall be no more than an unsecured general creditor 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
Executive or Beneficiary, or create any fiduciary relationship between the Company and any
Executive or Beneficiary with respect to any assets of the Company.
H. MISCELLANEOUS
1. Withholding. The Executive or 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 provision of
benefits under this Plan. If no such 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 and a Beneficiarys rights
may not be alienated, assigned, transferred, pledged, or hypothecated by any person, at any time,
unless such benefits are payable from the proceeds of an insurance policy. Such benefits shall be
exempt from the claims of creditors or other claimants and from all orders, decrees, levies,
garnishments, or executions to the fullest extent allowed by law.
3. Applicable Law and 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. If any provision this amendment and
restatement is deemed to be a material modification of this Plan which would cause
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amounts deferred or accrued under this Plan prior to 2005 to be subject to the deferred
compensation provisions of section 885 of the American Jobs Creation Act of 2004, if such
legislation is enacted into law, such provision shall be null, void and without effect retroactive
to October 28, 2004.
I. | ADMINISTRATION OF THE PLAN |
1. In General. The Plan shall be administered by the Executive Vice President, Human
Resources of McKesson. If the Executive Vice President, Human Resources is an Executive
participating in the Plan, then any discretionary action he or she takes as Administrator which
directly affects him or her as Executive shall be specifically approved by the Compensation
Committee. The Administrator 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 Administrator 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 under this
Plan shall be in writing and filed with the Administrator.
3. Action By Board and Compensation Committee. The Board and Compensation Committee
may act under this Plan in accordance with their normal procedures and practice, including, but not
limited to, delegation of their authority to act under this Plan.
J. | AMENDMENT OR TERMINATION OF THE PLAN |
The Board may at any time amend, alter, modify or terminate the Plan; the Compensation
Committee may at any time amend, alter or modify the Plan. Such action shall not reduce the
benefits provided under this Plan with respect to any Executive whose employment has terminated
before such action. Also, such action shall not reduce the benefits provided under this Plan with
respect to any Executive who is participating in the Plan at the time of such action below the
amount provided in Section E, treating for purposes of Section E the amendment, alteration,
modification, or termination which adversely affects the Executive as though it were a termination
of employment. An illustration of the calculation of benefits in the event of termination of the
Plan under this Section J is attached as Appendix III.
K. | CLAIMS AND APPEALS |
1. Informal Resolution of Questions. Any Participant or Beneficiary who has questions
or concerns about his or her benefits under the Plan is encouraged to communicate with the Human
Resources Department of McKesson. If this discussion does not give the Participant or Beneficiary
satisfactory results, a formal claim for benefits may be made in accordance with the procedures of
this Section K.
2. Formal Benefits Claim Review by Executive Vice President, Human
Resources. A Participant or Beneficiary may make a written request for review of any
matter concerning his or her benefits under this Plan. The claim must be addressed to the
Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco,
California 94104. The Executive Vice President, Human Resources or his or her delegate
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(Executive Vice President) shall decide the action to be taken with respect to any such
request and may require additional information if necessary to process the request. The Executive
Vice President shall review the request and shall issue his or her decision, in writing, no later
than 90 days after the date the request is received, unless the circumstances require an extension
of time. If such an extension is required, written notice of the extension shall be furnished to
the person making the request within the initial 90-day period, and the notice shall state the
circumstances requiring the extension and the date by which the Executive Vice President expects to
reach a decision on the request. In no event shall the extension exceed a period of 90 days from
the end of the initial period.
3. Notice of Denied Request. If the Executive Vice President denies a request in
whole or in part, he or she shall provide the person making the request with written notice of the
denial within the period specified in Section K.2. The notice shall set forth the specific reason
for the denial, reference to the specific Plan provisions upon which the denial is based, a
description of any additional material or information necessary to perfect the request, an
explanation of why such information is required, and an explanation of the Plans appeal procedures
and the time limits applicable to such procedures, including a statement of the claimants right to
bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on
review.
4. Appeal to Executive Vice President.
a. A person whose request has been denied in whole or in part (or such persons authorized
representative) may file an appeal of the decision in writing with the Executive Vice President
within 60 days of receipt of the notification of denial. The appeal must be addressed to:
Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco,
California 94104. The Executive Vice President, for good cause shown, may extend the period during
which the appeal may be filed for another 60 days. The appellant and/or his or her authorized
representative shall be permitted to submit written comments, documents, records and other
information relating to the claim for benefits. Upon request and free of charge, the applicant
should be provided reasonable access to and copies of, all documents, records or other information
relevant to the appellants claim.
b. The Executive Vice Presidents review shall take into account all comments, documents,
records and other information submitted by the appellant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit determination. The
Executive Vice President shall not be restricted in his or her review to those provisions of the
Plan cited in the original denial of the claim.
c. The Executive Vice President shall issue a written decision within a reasonable period of
time but not later than 60 days after receipt of the appeal, unless special circumstances require
an extension of time for processing, in which case the written decision shall be issued as soon as
possible, but not later than 120 days after receipt of an appeal. If such an extension is
required, written notice shall be furnished to the appellant within the initial 60-day period.
This notice shall state the circumstances requiring the extension and the date by which the
Executive Vice President expects to reach a decision on the appeal.
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d. If the decision on the appeal denies the claim in whole or in part written notice shall be
furnished to the appellant. Such notice shall state the reason(s) for the denial, including
references to specific Plan provisions upon which the denial was based. The notice shall state
that the appellant is entitled to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to the claim for benefits.
The notice shall describe any voluntary appeal procedures offered by the Plan and the appellants
right to obtain the information about such procedures. The notice shall also include a statement
of the appellants right to bring an action under Section 502(a) of ERISA.
e. The decision of the Executive Vice President on the appeal shall be final, conclusive and
binding upon all persons and shall be given the maximum possible deference allowed by law.
5. Exhaustion of Remedies. No legal or equitable action for benefits under the Plan
shall be brought unless and until the claimant has submitted a written claim for benefits in
accordance with Section K.2, has been notified that the claim is denied in accordance with Section
K.3, has filed a written request for a review of the claim in accordance with Section K.4, and has
been notified in writing that the Executive Vice President has affirmed the denial of the claim in
accordance with Section K.4.
L. | DEFINITIONS |
For the purposes of the Plan, the following terms shall have the meanings indicated:
1. Administrator shall mean the person specified in Section I.
2. Annual Base Salary shall mean the annualized rate of pay excluding bonuses, incentive
compensation and perquisites.
3. 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; or (iii) any other termination of employment prior to (i)
or (ii) above (but not earlier than the Executives attainment of age 55 and completion of five
Years of Service) with the approval of the Compensation Committee. Notwithstanding the foregoing,
if an Executives written employment agreement so requires or if the Board so decides, the Board
may, in its sole discretion, grant an Approved Retirement at any earlier termination of employment.
Notwithstanding the foregoing, Approved Retirement shall not include any termination for
cause, which shall be determined as provided in Section E.2.a hereof.
4. Beneficiary shall mean the beneficiary or beneficiaries entitled to death benefits under
this Plan, as designated by Executive or otherwise provided in Section D.S.
5. Board shall mean the Board of Directors of McKesson.
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6. Cause shall mean the circumstances prescribed in the Executives Employment Agreement, if
any, or if there is no Employment Agreement, the circumstances determined by the Compensation
Committee.
7. Company shall mean McKesson and any member of its controlled group as defined by Sections
414(b) and Section 414(c) of the Internal Revenue Code of 1986, as amended.
8. Compensation Committee shall mean the Compensation Committee of the Board.
9. Employment Agreement shall mean the written contract of employment, if any, between an
Executive and the Company.
10. Executive shall mean an employee of the Company selected by the Compensation Committee
to participate in this Plan pursuant to Section C.
11. ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.
12. McKesson shall mean McKesson Corporation, a Delaware Corporation.
13. Participant shall mean any Executive who is not otherwise excluded from participation in
the Plan pursuant to Sections C.2, C.3, C.4 or D.4 hereof.
14. Pro Rata Percentage shall mean the percentage determined in Section E.3.
15. Retirement Plan shall mean the McKesson Corporation Retirement Plan.
16. Tax Factor shall mean one divided by one minus the Top Marginal Rate of Tax.
17. Top Marginal Rate of Tax shall be the highest combined marginal individual federal and
state income tax rate, if any (giving effect to any deduction then allowable for federal tax
purposes for the state income tax) for the year survivor benefits are paid to Executives
Beneficiary under this Plan. For example, if the highest marginal individual federal and state
income tax rates are 28% and 10% respectively and the state income tax is deductible for federal
tax purposes, the Top Marginal Rate would be 35.2% as follows: [($1.00 x 10% = $.10 state income
tax)] + [($.90 federal taxable income of $1.00 - $.10 state income tax) x 28% = $.252 federal
income tax] = $.352 total state and federal tax, or 35.2%. For purposes of determining the Top
Marginal Rate of Tax, the Administrator in his or her discretion shall determine the highest
marginal individual federal and state income tax rates to be used (including without limitation
whether, and if so to what extent, surtaxes or similar taxes shall be applicable, and what state
income tax, if any, shall be applicable), and all such determinations and all calculations made by
the Administrator hereunder shall be final.
M. | SUCCESSORS |
This Plan shall be binding on the Company and any successors or assigns thereto.
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N. | EXECUTION |
To record the amendment and restatement of the Plan by the Board of Directors of McKesson
Corporation at a meeting held on January 20, 2010.
McKESSON CORPORATION
By: | /s/ Jorge L. Figueredo | |||
Jorge L. Figueredo | ||||
Executive Vice President, Human Resources | ||||
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McKESSON CORPORATION
EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix I
This Appendix illustrates the calculation of benefits under Section D.1 of the Plan.
A. Assumptions
Executive is subject to California Income Tax.
Executives Annual Base Salary: $350,000
Top Marginal Rate of Tax:
Top Federal Rate: 28.0%
Top California Rate: 10.0%
Top Marginal Rate of Tax:
.10
+ [(1.0 -.10) x .28] =35.2%
Tax Factor:
1/(1
- .352) = 1.543
B. Survivor Benefit on Death Before Approved Retirement
Lesser of (a) $2,000,000 or (b) (3 x $350,000)
multiplied by
Tax Factor
equals
$1,050,000 x 1.543,
which yields a benefit of:
$1,620,150
McKESSON CORPORATION
EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix II
This Appendix illustrates the calculation of benefits under Section E.1.a of the Plan.
An Executive is hired at age 50, his or her employment is terminated at age 60 and after January 1,
1997, and he otherwise qualifies for a benefit under Section E. On the death of this Executive, a
benefit will be paid to his or her Beneficiary equal to the Pro Rata Percentage (see calculation
below) times 1-1/2 times the Executives final Annual Base Salary at the date of his or her
termination of employment (or $1 million, if smaller) multiplied by the Tax Factor, and reduced by
any death or survivor benefit payable to a beneficiary of the Executive on account of service
rendered to another employer as provided in Section E.1.c. If the above Executives Annual Base
Salary was $300,000 at the date of his or her termination of employment and the Tax Factor at the
date the benefit is paid is 1.543, the benefit payable to his or her Beneficiary would be $462,900,
calculated as follows:
The Executives Pro Rata Percentage is 66-2/3%, calculated as follows:
The greater of (a) number of whole months of employment divided by total whole months from
date of hire to age 65, or (b) 4.44% times whole and partial years of completed employment,
or 120 months/180 months = 66-2/3%, which is greater than 4.44% x 10 years = 44.4%.
The Executives benefit is:
Pro Rata Percentage x [1-1/2 of Annual Base Salary (1-1/2 x $300,000 = $450,000) or $1
million, if smaller] x Tax Factor
66-2/3% x $450,000 x 1.543 = $462,900.
McKESSON CORPORATION
EXECUTIVE SURVIVOR BENEFITS PLAN
Appendix III
This Appendix illustrates the calculation of benefits in the event of termination of the Plan under
Section J.
A. Assumptions
Executives age at date of hire: 40
Executives age
at date of termination of the Plan: 55
Executives Annual Base Salary
at date of termination of the Plan: $300,000
Executives Tax Factor for the year
benefits are paid (see Section L
and Appendix I) 1.543
Date of Termination: After January 1, 1997
B. Survivor Benefits Under Section D
Under Section J, benefits are determined under Section D by treating the date the Plan is
terminated as the date the Executive terminated employment, as follows:
Pro Rata Percentage: 66-2/3%
Greater of (a) whole months of service divided by total whole months from hire to age 65 or
(b) 4.44% times whole and partial years of service, a greater of 60% (180/300 = 60%) or
66-2/3% (4.44 x 15 years of service)
Benefit: $452,900
66-2/3% x (1-1/2 of $300,000, or $1 million if smaller) x Tax Factor (1.543)
(66% x $450,000) x 1.543 =
$300,000 x 1.543 =
$462,900