McKesson 2005 Annual Report Download - page 17

McKESSON CORPORATION
Each eligible employee may elect to authorize regular payroll deductions during the next succeeding Purchase Period, the amount of which
may not exceed 15% of a participant’s compensation. At the end of each Purchase Period, the funds withheld by each participant will be used
to purchase shares of the Company’s common stock. The purchase price of each share of the Company’s common stock was the lesser of
(i) 85% of the fair market value of such share on the first day of the Offering Period; or (ii) 85% of the fair market value of such share on the
last day of the applicable Purchase Period. Effective April 1, 2005, the purchase price of each share of the Company’s common stock will be
based on 85% of the fair market value of each share on the last day of the applicable Purchase Period. In general, the maximum number of
shares of common stock that may be purchased by a participant for each Purchase Period is determined by dividing $12,500 by the fair market
value of one share of common stock on the Offering Date.
The following are descriptions of equity plans that have not been submitted for approval by the Company’s stockholders:
1999 Stock Option and Restricted Stock Plan (the “1999 Plan”): The 1999 Plan was adopted by the Board of Directors in 1999. The Plan
provides for the grant to eligible employees of 45.2 million shares in the form of nonqualified stock options, with or without SARs, restricted
stock or restricted stock units. No executive officers or directors participate in this Plan. If the Company’s stockholders approve the new 2005
Stock Incentive Plan at the Annual Meeting on July 27, 2005, this 1999 Plan will be replaced by the 2005 Stock Incentive Plan.
Options are granted at not less than fair market value and have a term of ten years. Options generally become exercisable in four equal
annual installments beginning one year after the grant date, or after four years from the date of grant. Restricted stock granted under the 1999
Plan contains certain restrictions on transferability and may not be transferred until such restrictions lapse (generally two to four years).
Grantees may elect to use stock to satisfy any withholding tax obligation upon the lapsing of restrictions on restricted stock awards.
1998 Canadian Stock Incentive Plan (the “Canadian Plan”): The Canadian Plan was adopted by the Board of Directors in January 1998,
following the Company’s acquisition of a Canadian company, to provide nonqualified stock options, with or without tandem SARs, to eligible
employees of the Canadian company. The Canadian Plan has subsequently been amended to allow for the grant of stock options to employees
of any of the Company’s Canadian subsidiaries. A total of 0.9 million shares have been authorized for issuance under the Canadian Plan.
Options granted under the Canadian Plan are generally subject to the same terms and conditions as those granted under the 1999 Plan,
discussed above, except that (i) options may be granted for less than the fair market value of the Company’s common stock on the date of
grant, and (ii) all options will become immediately exercisable upon an employee’s disability or death and must be exercised within three years
of such date. If the Company’s shareholders approve the new stock incentive plan at the Annual Meeting on July 27, 2005, this plan will be
replaced by the 2005 Stock Incentive Plan.
Stock Option Plans Adopted in January 1999 and August 1999: On January 27, 1999 and August 25, 1999 the Board of Directors adopted
certain stock option plans (the “January 1999 Plan” and the “August 1999 Plan”, or together the “Plans”) to provide stock options to purchase
shares of the Company’s common stock to eligible employees of the Company pursuant to NYSE rules in effect at the time the Plans were
established. A maximum of 5.8 million and 5.2 million shares of common stock were authorized for issuance under the January 1999 and
August 1999 Plans. In each case the Plans state that: (i) under each of the Plans no single officer or director of the Company or any subsidiary
could acquire more than 1% of the Company’s common stock outstanding at the time the Plans were adopted, and (ii) each of the Plans,
together with all stock option or purchase plans, or any other arrangements pursuant to which officers or directors of the Company may acquire
common stock (other than stock plans for which stockholder approval is not required under Section 312.03 of the NYSE rules), does not
authorize the issuance of more than 5% of the Company’s common stock outstanding at the time the Plans were adopted (collectively the
“NYSE Limits”). Options were granted under each of the Plans to eligible employees of the Company. No further grants will be made from
either of the Plans.
Options granted under the Plans are generally subject to the same terms and conditions as those granted under the 1994 Plan and 1999 Plan.
1999 Executive Stock Purchase Plan (the “1999 SPP”): The 1999 SPP was adopted by the Board of Directors in February 1999. The 1999
SPP provided for the grant of rights to purchase a maximum of 0.7 million shares of common stock subject to the NYSE Limits. No further
grants will be made from the 1999 SPP. Rights to purchase shares were granted under the 1999 SPP to eligible employees of the Company.
The purchase price, to be paid in cash or using promissory notes, for the Company common stock subject to rights granted under the 1999 SPP
was
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