McKesson 2013 Annual Report Download - page 114

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McKESSON CORPORATION
2005 Stock Plan: The 2005 Stock Plan was adopted by the Board of Directors on May 25, 2005 and approved by the
Company's stockholders on July 27, 2005. The 2005 Stock Plan permits the granting of up to 42.5 million shares in the form
of stock options, restricted stock (“RS”), RSUs, performance-based restricted stock units (“PeRSUs”) and other share-based
awards. For any one share of common stock issued in connection with a RS, RSU, PeRSU or other share-based award, two
shares shall be deducted from the shares available for future grants. Shares of common stock not issued or delivered as a
result of the net exercise of a stock option, shares used to pay the withholding taxes related to a stock award or shares
repurchased on the open market with proceeds from the exercise of options shall not be returned to the reserve of shares
available for issuance under the 2005 Stock Plan.
Stock options are granted at no less than fair market value and those options granted under the 2005 Stock Plan generally
have a contractual term of seven years. Prior to 2005, stock options typically had a contractual term of ten years. Options
generally become exercisable in four equal annual installments beginning one year after the grant date. The vesting of RS or
RSUs is determined by the Compensation Committee at the time of grant. RS and RSUs generally vest over four years. RSUs
granted under a PeRSU award generally vest three years following the end of the performance period.
Non-employee directors may be granted an award on the date of each annual meeting of the stockholders for up to 5,000
RSUs, as determined by the Board. Such non-employee director award is fully vested on the date of the grant.
1997 Non-Employee Directors' Equity Compensation and Deferral Plan: The 1997 Non-Employee Directors' Equity
Compensation and Deferral Plan was approved by the Company's stockholders on July 30, 1997; however, stockholder
approval of the 2005 Stock Plan on July 27, 2005 had the effect of terminating the 1997 Non-Employee Directors' Equity
Compensation and Deferral Plan such that no new awards would be granted under the 1997 Non-Employee Directors' Equity
Compensation and Deferral Plan.
2000 Employee Stock Purchase Plan (the “ESPP”): The ESPP is intended to qualify as an “employee stock purchase
plan” within the meaning of Section 423 of the Internal Revenue Code. In March 2002, the Board amended the ESPP to allow
for participation in the plan by employees of certain of the Company's international and other subsidiaries. As to those
employees, the ESPP does not qualify under Section 423 of the Internal Revenue Code. Currently, 16 million shares have
been approved by stockholders for issuance under the ESPP.
The ESPP is implemented through a continuous series of three-month purchase periods (“Purchase Periods”) during
which contributions can be made toward the purchase of common stock under the plan.
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 is 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 calendar
year is determined by dividing $25,000 by the fair market value of one share of common stock on the offering date.
The following includes descriptions of equity plans that have not been submitted for approval by the Company's stockholders:
On July 27, 2005, the Company's stockholders approved the 2005 Stock Plan which had the effect of terminating the
1999 Stock Option and Restricted Stock Plan, the 1998 Canadian Stock Incentive Plan and certain 1999 one-time stock option
plan awards, which plans had not been submitted for approval by the Company's stockholders, and, as noted above, the 1997
Non-Employee Directors' Equity Compensation and Deferral Plan, which had previously been approved by the Company's
stockholders. Prior grants under these plans include stock options, RS and RSUs. Stock options under the terminated plans
generally have a ten year life and vest over four years. RS contains certain restrictions on transferability and may not be
transferred until such restrictions lapse. The 1999 Stock Option and Restricted Stock Plan and the 1997 Non-Employee
Directors' Equity Compensation and Deferral Plan are the only terminated plans that have outstanding equity grants, which
are subject to the terms and conditions of their respective plans, but no new grants will be made under these terminated plans.