Western Digital 2006 Annual Report Download - page 93

is credited with additional RSUs as dividend equivalents that are subject to the same vesting requirements as the
underlying RSUs. Shares of common stock issued in respect of the Non-Employee Director Restricted Stock Unit Grant
Program are subject to the applicable share limits specified in our 2004 Performance Incentive Plan.
We also permit non-employee directors to defer receipt of RSUs payable under the Non-Employee Director
Restricted Stock Unit Grant Program pursuant to our Deferred Compensation Plan.
Employment Contracts, Termination of Employment and Change-in-Control Arrangements
Employment Arrangements
Mr. Massengill. On August 25, 2005, we entered into an Employment Agreement with Mr. Massengill pursuant
to which he relinquished the role of Chief Executive Officer, effective October 1, 2005, and agreed to continue to serve as
Chairman of our Board of Directors or in such other executive capacity as the Board of Directors may assign.
Mr. Massengill’s duties as Chairman of the Board include offering assistance to Mr. Shakeel in his new position as
Chief Executive Officer and coordinating investor communications.
In accordance with the agreement, Mr. Massengill will continue to receive base salary at his current annual rate of
$800,000, his target annual bonus under our Incentive Compensation Plan is 100% of his base salary, and Mr. Massengill
will be entitled to participate in our other benefit plans on terms consistent with those generally applicable to our other
senior executives. We have cancelled Mr. Massengill’s outstanding stock options and shares of restricted stock, to the
extent that such options and shares of restricted stock were scheduled to vest after July 31, 2007, pursuant to the
agreement. Provided that Mr. Massengill remains employed by us through January 1, 2007, any of his outstanding stock
options and any of his shares of restricted stock scheduled to vest after January 1, 2007 and on or before July 31, 2007 will
accelerate and become vested on January 1, 2007. With respect to the accelerated options, Mr. Massengill will have until
the later of (i) January 1, 2010, or (ii) the time the options would have otherwise expired or been terminated in accordance
with the termination of employment rules otherwise applicable to the options (but in no event later than the expiration
date of the options) to exercise the options. Also pursuant to the agreement, the entire performance share award granted to
Mr. Massengill in January 2005 has been cancelled.
If we terminate Mr. Massengill’s employment other than for cause (as defined in the agreement) prior to January 1,
2007, Mr. Massengill will be entitled to (i) a lump sum cash payment equal to his base salary and target bonus for the
period between the date his employment terminates and January 1, 2007, and (ii) accelerated vesting of any and all
options and other equity-based awards then outstanding and not otherwise fully vested, but only to the extent such
awards were otherwise scheduled to vest on or before July 31, 2007. The Employment Agreement with Mr. Massengill
expires January 1, 2007, subject to certain termination provisions.
Mr. Shakeel. On August 25, 2005, we also entered into an Employment Agreement with Mr. Shakeel pursuant to
which he became President and Chief Executive Officer on October 1, 2005. We subsequently entered into an
amendment to this agreement with Mr. Shakeel on October 31, 2006. In accordance with the agreement, as amended,
Mr. Shakeel will serve as our President and Chief Executive Officer through January 1, 2007 and as a Special Advisor to
the Chief Executive Officer from January 2, 2007 through June 29, 2007. During such period of employment,
Mr. Shakeel’s annual base salary is $800,000, his target annual bonus under our Incentive Compensation Plan is 100% of
his base salary, and Mr. Shakeel is entitled to participate in our other benefit plans on terms consistent with those
generally applicable to our other senior executives. Pursuant to the agreement, Mr. Shakeel received an award of
1,250,000 shares of restricted stock on August 25, 2005. An aggregate of 500,000 shares subject to this award will vest
on January 1, 2007. The remaining 750,000 shares subject to this award were scheduled to vest on January 1, 2008;
however, in accordance with the amendment to Mr. Shakeel’s Employment Agreement, 90,800 shares subject to this
award were cancelled on October 31, 2006 and the remaining 659,200 shares will instead now vest in full on June 29,
2007 subject to Mr. Shakeel’s employment on that date.
In addition, pursuant to the agreement, we have cancelled Mr. Shakeel’s outstanding stock options and shares of
restricted stock effective August 25, 2005 to the extent that such options and shares of restricted stock were scheduled to
vest after December 31, 2007, as well as the entire performance share award granted to Mr. Shakeel in January 2005. In
accordance with the amendment to Mr. Shakeel’s Employment Agreement, on October 31, 2006, we also cancelled an
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