1989 Management Incentive Plan - McKesson HBOC Inc.

                              McKESSON HBOC, INC.
                        1989 MANAGEMENT INCENTIVE PLAN
                        ------------------------------

                        Amended as of January 27, 1999

     The name of this plan shall be the McKesson HBOC, Inc. 1989 Management
Incentive Plan.  This Plan replaces in their entirety both the Company's
Management Incentive Plan and its Performance Award Plan for Key Employees.
This Plan is effective for fiscal years of the Company commencing on and after
April 1, 1989.


A.   PURPOSE
     -------

     The purpose of the Plan is to attract, retain and motivate key employees by
providing cash incentive awards to designated executive, managerial and
professional employees of the Company, its subsidiaries and affiliates.  The
Plan is designed to link managers' interests more closely with the interests of
the Company's shareholders.

     The Plan is established as a single incentive plan to reward designated
executives, managers and professionals who contribute to shareholder value.
Each Participant's award will take into account corporate performance as well
as, where appropriate, his or her own business unit's performance.  The Plan
also provides that awards will reflect individual performance, subject to
Article G.  Incentive awards paid under this Plan are intended to qualify as
performance-based compensation deductible by the Company under the Code.

B.   ADMINISTRATION
     --------------

     The Compensation Committee of the Board of Directors ('Committee') shall
have full power and authority, subject to the provisions of the Plan, to review
and approve the designation of Participants and to promulgate such rules and
regulations as it deems necessary for the proper administration of the Plan, to
interpret the provisions and supervise the administration of the Plan, and to
take all action in connection therewith or in relation to the Plan as it deems
necessary or advisable.  Decisions and selections of the Committee shall be made
by a majority of its members and, if made pursuant to the provisions of the
Plan, shall be final.  Any decision reduced to writing and signed by all of the
members of the Committee shall be fully effective as if it had been made at a
meeting duly held.  The Committee shall consist solely of Disinterested Persons,
in conformance with Section 162(m) of the Code ('Section 162(m)').

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C.   PARTICIPATION
     -------------

     1.   Eligibility - Executives, Managers and Professionals
          ----------------------------------------------------

          Only active employees of the Company, its subsidiaries or affiliates
who are employed in an executive, managerial or professional capacity may be
designated as Participants under the Plan.

     2.   Designation and Removal of Participants
          ---------------------------------------

          No person shall be entitled to any award under this Plan for any Year
unless he or she is so designated as a Participant for that Year.  The Chief
Executive Officer (CEO) of the Company and such other persons as the CEO may
designate, shall recommend to the Committee employees (who may include such
recommending persons) for selection as Participants.  The Committee shall review
and approve Plan Participants recommended by management from among those
employees who are eligible to participate.  The Committee may add to or delete
individuals from the list of designated Participants at any time and from time
to time, at its sole discretion.

     3.   Notice of Participation
          -----------------------

          As soon as reasonably practicable, each person who is a Participant in
the Plan for a Year will be notified.

D.   INDIVIDUAL TARGET AWARDS FOR PARTICIPANTS
     -----------------------------------------

     1.   Targets, In General
          -------------------

          At the beginning of each Year, an Individual Target Award shall be
established for each Participant.  An Individual Target Award shall only be a
target and the amount of the target may or may not be paid to the Participant.
Establishment of an Individual Target Award for an employee for any Year shall
not imply or require that an Individual Target Award be set for any subsequent
year.  The amount of any actual award paid to any Participant may be greater or
less than this target.  As set forth in paragraph F4 below (but subject to the
limitations applicable to Covered Employees contained in Article G), the actual
award may be as much as three times target or as low as zero for any Year.  The
establishment of an Individual Target Award for an employee shall not affect the
right of the Company, its subsidiaries or affiliates to terminate, with or
without cause, such employee's employment at any time.

     2.   Percentage of Base Salary
          -------------------------

          Individual Target Awards shall be a percentage of the Participant's
base salary reviewed and approved by the Committee in its sole discretion.

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E.   BASIS OF AWARDS
     ---------------

     Awards will be based on contribution to shareholder value and individual
performance. The Committee shall establish measures, which may include financial
and non-financial objectives ('Performance Goals'), to calculate the shareholder
value contribution for each segment of the Company.   These Performance Goals
shall be determined by the Committee in advance of each Year or such period as
may be permitted by the regulations issued under Section 162(m), and shall be
based on one or more of the following criteria:  (i) the attainment of a
specified percentage return on total capital employed by the Company (or a
subsidiary or division of the Company); (ii) the attainment of a specified
percentage return on total stockholder equity of the Company; (iii) the
attainment of a specified percentage increase in earnings per share from
continuing operations; (iv) the attainment of a specified percentage increase in
Net Income of the Company; (v) the attainment of a specified percentage increase
in profit before taxation of the Company (or a subsidiary or division of the
Company); (vi) the attainment of a specified percentage increase in revenues of
the Company (or a subsidiary or division of the Company); and (vii) the
attainment of profit after-tax at specified levels of equity investment.  In
addition, such Performance Goals may be based upon the attainment of specified
levels of Company performance under one or more of the measures described above
relative to the performance of other corporations.

     Awards may be based on performance against objectives for more than one
segment of the Company.  For example, awards for corporate management will be
based on overall corporate performance against objectives, but awards for a
unit's management may be based on a combination of corporate, unit and sub-unit
performance against objectives.

     Subject to the limitations set forth in Article G below, individual
performance of each Participant will also be measured and used in determining
awards under this Plan.

F.   AWARD DETERMINATION
     -------------------

     1.   Award Determined by Committee
          -----------------------------

          After any Year for which an Individual Target Award is established for
a Participant under this Plan, the Committee shall review and approve, modify or
disapprove the amount, if any, to be paid to the Participant for the Year.  The
amount paid shall be the Individual Target Award adjusted to reflect both the
Company's financial performance and the Participant's individual performance.
All awards will be subject to the sole discretion of the Committee.

     2.   Financial Performance
          ---------------------

          Individual Target Award amounts will be modified by achievement of
financial objectives by the Company and relevant units and sub-units.
Performance results against financial objectives shall be reviewed and approved
by the Committee.  The Committee may as a result of this review modify or change
objectives or performance results for the Year as it 

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determines to be necessary or appropriate to take into account changes during
the year including, but not limited to, changes in accounting methods,
acquisitions or divestitures, and unusual or non-recurring financial or other
events, to the extent not precluded by Section 162(m).

     3.   Individual Performance
          ----------------------

          Any Individual Target Award, adjusted to reflect financial
performance, will be further adjusted with the review and approval of the
Committee to give full weight to the Participant's individual performance during
the Year.

     4.   Overall Effect
          --------------

          The combination of any financial performance adjustment and individual
performance adjustment may increase the amount paid under this Plan to a
Participant for any Year to as much as three times the Individual Target Award,
and may reduce any amount payable to zero, subject to Article G.

G.   PROCEDURES APPLICABLE TO CERTAIN DESIGNATED PARTICIPANTS
     --------------------------------------------------------
 
     Awards under the Plan to Participants who are Covered Employees shall be
subject to preestablished Performance Goals as set forth herein.
Notwithstanding the provisions of Paragraph F.3 above, the Committee shall not
have discretion to modify the terms of awards to such Participants except as
specifically set forth in this Article G.

     1.   Target Award.  At the beginning of a Year, the Committee shall
          ------------                                                  
establish Individual Target Awards to such of the Participants who may be
Covered Employees, payment of which shall be conditioned upon satisfaction of
specific Performance Goals for the Year established by the Committee in writing
in advance of the Year, or within such period as may be permitted by regulations
issued under Section 162(m) of the Code.  The extent, if any, to which an Award
will be payable will be based upon the degree of achievement of the Performance
Goals; provided, however, that the Committee may, in its sole discretion, reduce
some or all of the amount which would otherwise be payable with respect to an
Award.

     2.   Performance Goals.  The Performance Goals established by the Committee
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shall be the same as those objectives set for all Plan Participants and shall be
based on one or more of the criteria set forth in Article E above.

     3.   Payment of Awards.  At the time the Performance Goals are established,
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the Committee shall prescribe a formula to determine the percentage of the
Individual Target Award which may be payable based upon the degree of attainment
of the Performance Goals during the Year.  If the minimum Performance Goals
established by the Committee are not met, no payment will be made to a
Participant who is a Covered Employee.  To the extent that the minimum
Performance Goals are satisfied or surpassed, and upon written certification by
the Committee that the Performance Goals have been satisfied to a particular
extent, payment of the award shall be made on the Payment Date in accordance
with the prescribed formula based upon a 

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percentage of the Individual Target Award unless the Committee determines, in
its sole discretion, to reduce the payment to be made.

     4.   Maximum Award.  The maximum award payable to any Participant who is a
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Covered Employee for any Year shall not exceed two percent (2%) of the Company's
Net Income for that Year.

H.   ELECTIONS
     ---------

     1.   Election to Defer Payment.  At the time established under the
          -------------------------                                    
Company's Deferred Compensation Administration Plan II ('DCAP II'), any
Participant who is eligible to participate in DCAP II may irrevocably elect, in
writing and in accordance with DCAP II, to defer his or her award under this
Plan so it is paid at the time and in the manner of, and subject to the terms
and conditions provided by, DCAP II.  If an election to defer an award is not
made, then any award under this Plan shall be paid in a single sum to the
Participant as soon as reasonably practicable after the amount of the award is
determined.  Notwithstanding the above provisions, no amount shall be deferred
for the Year under DCAP II unless the actual award under this Plan for that Year
is at least $5,000.  No awards may be deferred by a Participant under DCAP II
unless he or she is an active employee of the Company as of the end of the Year.

     2.   Election to Receive Stock Option Grant in Lieu of Award Under the
          -----------------------------------------------------------------
Plan.  Prior to the end of a calendar year, any Participant may irrevocably
elect, in writing on the form prescribed by the Committee, to receive a stock
option grant under the 1994 Stock Option and Restricted Stock Plan in lieu of
all or a portion of such Participant's award under this Plan for the Year in
which that calendar year ends.  Annually management of the Company shall
determine the rate at which stock option grants will be made in lieu of an award
under the Plan and that conversion rate shall be communicated to Participants
prior to the deadline for making the election described in the preceding
sentence.  The minimum number of option shares that a Participant may elect to
receive pursuant to such election is 500, subject to adjustment in the event of
a stock split, stock dividend, consolidation or other similar recapitalization
involving the capital stock of the Company.  In addition, the Company annually
shall prescribe a maximum portion of a Participant's Target Award that may be
made subject to an election to receive a stock option grant in lieu of an award
under the Plan.  If for any reason the Company does not make the stock option
grant contemplated by the Participant's election, the Participant shall be
deemed to have elected to make a deferral election pursuant to Section H.1 of
the award that was the subject of the election to receive a stock option.

I.   NO MANAGEMENT INCENTIVE FUND
     ----------------------------

     Awards paid under this Plan shall not be based on or payable from a 'pool'
or a 'Management Incentive Fund'.

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J.   EMPLOYMENT AT YEAR END GENERALLY REQUIRED FOR AWARD
     ---------------------------------------------------

     No award shall be made to any Participant who is not an active employee of
the Company or one of its subsidiaries or affiliates at the end of the Year;
provided, however, that the Committee, in its sole and absolute discretion, may
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make pro-rata awards to Participants during a year in circumstances that
Committee deems appropriate including, but not limited to, a Participant's
death, disability, retirement or other termination of employment during such
Year. Any such pro-rated awards shall be determined by the Committee in
accordance with Section F above after taking into account the portion of the
Year then completed.

K.   NONASSIGNMENT AND PARTICIPANTS ARE GENERAL CREDITORS
     ----------------------------------------------------

     The interest of any Participant under the Plan shall not be assignable
either by voluntary or involuntary assignment or by operation of law, except by
designation of a beneficiary or beneficiaries to the extent allowed under the
Company's DCAP.

L.   AMENDMENT OR TERMINATION
     ------------------------

     While the Company hopes to continue the Plan indefinitely, it reserves the
right in its Board of Directors to amend, suspend or terminate the Plan or adopt
a new plan at any time; provided that no such amendment shall (i) without prior
approval of the Company's stockholders, alter the business criteria on which the
Performance Goals may be based, increase the maximum amount set forth in
Paragraph F.4 above, or modify the requirements as to eligibility for
participation in the Plan, or (ii) retroactively and adversely affect the
payment of any award previously made.  In case any one or more of the provisions
contained in the Plan shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Plan, but the Plan shall be
construed as if such invalid, illegal or unenforceable provisions had never been
contained herein.

M.   INTERPRETATION
     --------------

     This Plan is intended to comply with Section 162(m), and all provisions
contained herein shall be construed and interpreted in a manner to so comply.

N.   DEFINITIONS
     -----------

     'Code' shall mean the Internal Revenue Code of 1986, as amended.
      ----                                                           

     'Committee' means the Compensation Committee of the Board of Directors of
      ---------                                                               
McKesson HBOC, Inc..

     'Company' means McKesson HBOC, Inc., a Delaware corporation.
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     'Covered Employees' shall mean eligible Participants designated by the
      -----------------                                                    
Committee who are, or are expected to be, 'covered employees' within the meaning
of Section 162(m) of the Code for the Year in which an award is payable
hereunder.

     'Disinterested Person' shall mean a member of the Board of Directors who
      --------------------                                                   
qualifies as an 'outside director' for purposes of Section 162(m) of the Code.

     'Individual Target Award' means the target award established for each
      -----------------------                                             
Participant under Article D.

     'Net Income' shall mean after tax income from continuing operations before
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special items and the effect of any accounting changes.

     'Participants' mean those employees specifically designated as Participants
      ------------                                                              
for a Year under Article C.

     'Payment Date' shall mean the date following the conclusion of a Year on
      ------------                                                           
which the Committee certifies that applicable Performance Goals have been
satisfied and authorizes payment of corresponding awards.

     'Performance Goals' shall have the meaning set forth in Section E. hereof.
      -----------------                                                        

     'Plan' means the McKesson HBOC, Inc. 1989 Management Incentive Plan.
      ----                                                               

     'Year' means the fiscal year of the Company.
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Executed effective as of January 27, 1999.


McKESSON HBOC, INC.


By  ______________________________________
    E. Christine Rumsey
    Senior Vice President, Human Resources and Administration

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