Western Digital 2006 Annual Report Download - page 92

The aggregate number of shares of common stock issued to our non-employee directors pursuant to elections under
the Non-Employee Directors Stock-for-Fees Plan in each of the last three fiscal years was: (1) 3,639 shares in fiscal 2006
that were previously deferred under the Deferred Compensation Plan, (2) 15,299 shares in fiscal 2005, which includes
13,454 shares of common stock previously deferred under the Deferred Compensation Plan, and (3) 3,392 shares in fiscal
2004. As of November 10, 2006, an aggregate of 161,162 shares representing deferred stock units were credited to
deferred compensation accounts of our non-employee directors.
We are authorized to issue a maximum of 400,000 shares of our common stock under the Non-Employee Directors
Stock-for-Fees Plan, subject to adjustments for stock splits and similar events. The Board of Directors has the power to
suspend, discontinue or, subject to stockholder approval if required by applicable law or regulation, amend the Non-
Employee Directors Stock-for-Fees Plan at any time.
Non-Employee Director Option Grant Program. Pursuant to the Non-Employee Director Option Grant Program
adopted by our Board of Directors under our 2004 Performance Incentive Plan, effective November 17, 2005, we grant
each non-employee director upon initial election or appointment to the Board of Directors an option to purchase a
number of shares of our common stock that produces an approximate value for the option grant (using a Black-Scholes
valuation as of the time of grant) equal to $300,000 on the grant date. After a non-employee director joins the Board of
Directors, immediately following each annual meeting of stockholders if he or she has been re-elected as a director at that
annual meeting, the non-employee director will receive an option to purchase a number of shares of our common stock
that produces an approximate value for the option grant (using a Black-Scholes valuation as of the time of grant) equal to
$100,000 on the grant date. Prior to November 17, 2005, each newly elected or appointed non-employee director
automatically received an option grant covering 75,000 shares of our common stock, and continuing non-employee
directors automatically received an option grant covering 10,000 shares of our common stock immediately following
each annual meeting of stockholders.
The per-share exercise price of all option grants under the Non-Employee Director Option Grant Program equals
the fair market value of a share of our common stock on the date of grant, and the options vest over a period of four years,
with 25% vesting on the first anniversary of the grant date and 6.25% vesting at the end of each three-month period
thereafter. In addition, all option grants under the Non-Employee Director Option Grant Program will vest only if the
optionee has remained a director for the entire period from the grant date to the vesting date, unless the director retired
after four years of service, in which case all options immediately vest and shall be exercised by the director before the
earlier of (i) three years after the director’s retirement or (ii) the expiration of the original term of the option, provided, in
each case, the director has performed at least twelve months of service for us after the grant of the option and does not
render services to any of our competitors. Shares of common stock that we may issue upon the exercise of stock options
granted under the Non-Employee Director Option Grant Program are subject to the applicable share limits specified in
our 2004 Performance Incentive Plan.
Non-Employee Director Restricted Stock Unit Grant Program. Our Board of Directors has adopted a Non-Employee Director
Restricted Stock Unit Grant Program under our 2004 Performance Incentive Plan pursuant to which we grant restricted stock
units, or RSUs, to our non-employee directors. Pursuant to this program, effective as of January 1, 2006, we award non-
employee directors a number of RSUs each January 1 equal in value (based on the fair market value of an equivalent number of
shares of our common stock on the grant date) to $100,000. We award non-employee directors who are newly elected or
appointed to the Board of Directors after January 1 of a given year a prorated award of RSUs for that year. Prior to calendar year
2006, we granted non-employee directors 2,100 RSUs each January 1 following adoption of the plan through calendar year
2004 and 4,527 RSUs through calendar year 2005.
All RSUs vest 100% on the third anniversary of the grant. However, if a director served as a director for at least 48
continuous months when such director ceases to be a director, all unvested RSUs vest immediately upon the director’s
termination, provided that the director has performed at least twelve months of service for us after the grant of the RSU. If
a director ceases to be a director for any reason (except removal) prior to meeting the eligibility requirements for
accelerated vesting discussed above, then all of the unvested RSUs granted in the first twelve months prior to termination
terminate without vesting, 1/3 of all unvested RSUs granted within the second twelve-month period prior to termination
immediately vest and become payable, and 2/3 of all unvested RSUs granted within the third twelve-month period prior
to termination immediately vest and become payable. These RSUs are generally paid in an equal number of shares of our
common stock following the vesting date. If dividends are paid prior to the vesting and payment of the RSUs, the director
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