McKesson 2005 Annual Report Download - page 177

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 Executive’s 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 Executive’s 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 Executive’s 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 Executive’s 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.
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