What is the primary purpose of the 2005 Stock Plan?

The primary purpose of the 2005 Stock Plan is to provide McKesson Corporation with a flexible vehicle to grant equity-based compensation to its employees and directors. This includes stock options, restricted stock, restricted stock units, and other share-based awards, intended to attract, retain, and motivate key personnel by aligning their interests with those of shareholders.

How are executive compensation targets set under these plans?

For FY2006, target awards under both the 2005 Stock Plan (in the form of restricted stock units) and the 2005 Management Incentive Plan (cash bonuses) are primarily based on the company's projected earnings per share (EPS) for FY2006. The actual number of units or the bonus amount awarded may vary based on actual company performance against these targets.

What happens to executive bonuses if there is a change in control of McKesson?

In the event of a change in control of McKesson Corporation, bonuses under the 2005 Management Incentive Plan are guaranteed to be paid at least at their target rates, providing a level of security for executive participants.

What is the total number of shares authorized under the 2005 Stock Plan?

The 2005 Stock Plan authorizes a total of 13,000,000 shares of McKesson Corporation common stock for issuance. There are also limits on the number of shares that can be granted as full value awards (500,000 per participant annually) or options/SARs (1,000,000 per participant annually).

MCK 8-K: Material Agreements

Summary

McKesson Corporation (MCK) filed an 8-K on August 1, 2005, detailing the approval of two key compensation plans by its stockholders at the July 27, 2005, Annual Meeting: the 2005 Stock Plan and the 2005 Management Incentive Plan (MIP). The 2005 Stock Plan authorizes the issuance of up to 13,000,000 shares of common stock for various equity-based awards, including stock options, restricted stock, and restricted stock units, to employees and directors. The MIP is a performance-based bonus program for employees, with bonuses tied to company performance goals and guaranteed at target levels in the event of a change in control. These plans represent a significant component of McKesson's executive and employee compensation strategy, designed to align incentives with company performance and shareholder value. The filing also outlines specific target awards for executive officers under both plans for Fiscal Year 2006, with earnings per share identified as a key performance metric. Investors should note the substantial equity pool authorized under the stock plan and the performance-driven nature of both the equity and cash-based incentive programs.

Key Highlights

1Stockholders approved the 2005 Stock Plan, reserving 13,000,000 shares for equity awards.
2The 2005 Stock Plan allows for various awards including stock options, restricted stock, and restricted stock units for employees and directors.
3Stockholders also approved the 2005 Management Incentive Plan (MIP), a performance-based bonus program for employees.
4Bonuses under the MIP are guaranteed at target levels in the event of a change in control.
5Target performance restricted stock unit awards for FY2006 for executive officers were determined, with FY2006 earnings per share as the performance measure.
6Target bonus awards for FY2006 under the MIP for executive officers were also established, with FY2006 earnings per share as the performance measure.
7Specific target award amounts and performance metrics for key executives under both plans for FY2006 are detailed.

MCKESSON CORP 8-K Report, Material Agreement (Aug 1, 2005)

Summary

Key Highlights

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