McKesson 2005 Annual Report Download - page 156

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 either with or without the reduction for early commencement of benefits in Section D.3.
Notwithstanding the foregoing, “Approved Retirement” shall not include any termination for “cause,” which shall be determined as
provided in Section F.2.a. hereof.
3. “Average Final Compensation” shall mean one-fifth of the sum of the base salary and annual bonuses under the Management Incentive
Plan (“MIP”) or any successor or replacement plans (including base salary and annual MIP bonuses or portions thereof voluntarily deferred
under a cash or deferred plan or any other tax qualified or non-qualified salary deferral plan such as the Deferred Compensation Administration
Plan II or bonuses relinquished in favor of a stock option grant under the 1994 Stock Option and Restricted Stock Plan) earned by an Executive
for the five consecutive years of full-time continuous employment with the Company which (a) fall within the 15-year period ending on the
first day of the month following the Executive’s termination of service with the Company and (b) produce the highest such sum. If the
Executive has had less than five years of full time continuous employment, Average Final Compensation shall be base salary and annual
bonuses, including amounts voluntarily deferred or relinquished as described in the previous sentence, for the entire period of such
employment with the Company, divided by the number of whole and partial years of service.
4. “Basic Retirement Benefits” shall mean the monthly annuity benefit payable under the Retirement Plan and a hypothetical monthly
annuity benefit payable to the Executive under the Profit-Sharing Investment Plan as follows:
Benefits from the Executive’s interest in the Retirement Plan shall be calculated on a straight life annuity basis payable (i) to the
Executive in the event of normal retirement, retirement after age 65, early retirement, or termination allowance as defined in the Retirement
Plan, or (ii) as a spouse allowance in the event of the Executive’s death before Approved Retirement or before benefits begin (Section F.4.e).
The hypothetical annuity benefit payable under the Profit-Sharing Investment Plan shall be calculated by first determining the value of
each share credited to the Executive’s Retirement Share Plan account under the Profit-Sharing Investment Plan as of the date it was credited
and applying an annual rate of 12% to such value from the date such share was credited to such account to the date the Executive’s benefit
under this Plan is to commence. The aggregate value of all of the shares credited to the Executive’s Retirement Share Plan account so
determined shall then be converted to a straight life annuity using the factors for determining actuarial equivalence set forth in Section H.3.
5. “Board” shall mean the Board of Directors of McKesson.
6. “Break in Service” shall occur when an Executive does not perform any Service during a 12 consecutive month period beginning on a
date after the Executive separates from Service. Separation from Service occurs on the earlier of (i) the date on which the Executive quits,
retires, is discharged or dies, or (ii) he or she fails to return to work as determined at the discretion of the Administrator.
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