Western Digital 2006 Annual Report Download - page 96

or stock units awards would have vested and become exercisable or payable, as applicable, if the participant had
remained employed for an additional six months;
(4) outplacement services provided by a vendor chosen by us and at our expense for 12 months following the
participant’s termination of employment; and
(5) payment by us of applicable COBRA premium payments following expiration of the participant’s
company-provided medical, dental and/or vision coverage existing as of the participant’s termination date for a
number of months ranging from 12 months to 24 months depending upon the participant’s status as a Tier 1, Tier 2
or Tier 3 Executive, unless and until the participant otherwise becomes eligible for equivalent coverage under
another employer’s plan.
Payment of severance benefits under the Executive Severance Plan is conditioned upon the participant’s execution of
a valid and effective release. In addition, no participant is entitled to a duplication of benefits under the Executive
Severance Plan or any other severance plan of ours or our subsidiaries.
Change of Control Severance Plan
Effective March 29, 2001, our Board of Directors adopted a Change of Control Severance Plan covering certain of
our executives and our subsidiaries’ executives, including each of the currently employed Named Executive Officers. The
Change of Control Severance Plan provides for payment of severance benefits to each participating executive officer in the
event of termination of his or her employment in connection with a change of control of Western Digital. The plan
provides for two levels of severance benefits. The severance benefits are payable if we or our subsidiaries terminate the
employment of the executive officer without cause or the employee voluntarily terminates his or her employment for
good reason (generally consisting of adverse changes in responsibilities, compensation, benefits or location of work place,
or breach of the plan by us or any successor) within one year after a change of control or prior to and in connection with, or
in anticipation of, such a change. The plan was amended in February 2006 to extend its term until March 29, 2011.
For each of the Named Executive Officers and certain other officers subject to Section 16 of the Securities Exchange
Act, the severance benefits generally consist of the following:
(1) a lump sum payment equal to two times the officer’s annual base compensation plus the target bonus as in
effect immediately prior to the change in control or as in effect on the date of notice of termination of the executive
officer’s employment with us, whichever is higher;
(2) 100% vesting of any unvested stock options granted to the officer by us;
(3) extension of the period during which the officer may exercise his or her stock options to the longer of
(a) 90 days after the date of termination of his or her employment and (b) the period specified in the plan or
agreement governing the options;
(4) continuation for a period of 24 months of the same or equivalent life, health, hospitalization, dental and
disability insurance coverage and other employee insurance or welfare benefits, including equivalent coverage for
the officer’s spouse and dependent children, and a car allowance equal to what the officer was receiving immediately
prior to the change in control, or a lump sum payment equal to the cost of obtaining coverage for 24 months if the
officer is ineligible to be covered under the terms of our insurance and welfare benefit plans;
(5) a lump sum payment equal to the amount of in-lieu payments that the officer would have been entitled to
receive during the 24 months after termination of his or her employment if prior to the change in control, the officer
was receiving any cash-in-lieu payments designed to enable the officer to obtain insurance coverage of his or her
choosing; and
(6) acceleration of all awards granted to the officer under our Executive Retention Plan adopted in 1998 or any
similar plan.
Any health and welfare benefits will be reduced to the extent of the receipt of substantially equivalent coverage by
the officer from any successor employer. Generally, the benefits will be increased to the extent the officer has to pay taxes
associated with “excess parachute payments” under the Internal Revenue Code, such that the net amount received by the
officer is equal to the total payments he or she would have received had the tax not been incurred.
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