Western Digital 2006 Annual Report Download - page 97

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Stock Incentive Plans and Deferred Compensation Plan
Subject to certain conditions or restrictions as described in our stock incentive plans, these stock incentive plans
generally provide for the acceleration of the vesting of awards granted thereunder in the event of certain change of control
events described in the plans. In these circumstances, each option may become immediately exercisable and each
restricted stock or stock unit award may immediately vest. Further, under our Deferred Compensation Plan, in the event
of certain change of control events described in the plan, contribution and deferral amounts will immediately vest (to the
extent unvested) and will become payable to the participants as provided in the plan.
Broad-Based Stock Incentive Plan
On September 30, 1999, our Board of Directors approved the Broad-Based Stock Incentive Plan under which
options to purchase 2,578,753 shares of our common stock were outstanding as of June 30, 2006 and 220,956 shares of
restricted stock remained unvested as of June 30, 2006. This plan was intended to qualify as “broadly-based” under the
New York Stock Exchange stockholder approval policy at the time of its adoption and was not submitted to our
stockholders for approval. Following approval of the 2004 Performance Incentive Plan by our stockholders in November
2004, no new awards are permitted under the Broad-Based Incentive Plan after such date and, therefore, no shares remain
available for grant under the plan.
None of the stock options that we granted under the plan are incentive stock options under Section 422 of the
Internal Revenue Code and the term of each outstanding option granted under the plan will not exceed ten years from the
date of its grant. All unvested shares of restricted common stock that we awarded under the plan are subject to time-based
vesting requirements. All of such shares of restricted stock will vest on or before September 21, 2008 unless such shares
are earlier forfeited as required by the plan or by an agreement evidencing the award made under the plan.
The Compensation Committee of our Board of Directors administers the Broad-Based Stock Incentive Plan. The
committee has broad discretionary authority to construe and interpret the plan. The committee may in its discretion
provide financing to a participant in a principal amount sufficient to pay the purchase price of any award and/or to pay the
amount of taxes required by law to be withheld with respect to any award. Any such loan must be subject to all applicable
legal requirements and restrictions pertinent thereto. Further, the committee may, through the terms of the award or
otherwise, provide for lapse of restrictions on an option or restricted stock award, either immediately upon a change of
control of Western Digital (as defined in the plan), or upon termination of the eligible employee’s employment within
24 months following a change of control. The committee may also provide for the exercise, payment or lapse of
restrictions on an award that is only effective if no provision is made in the change of control transaction.
The Board of Directors or the Compensation Committee, subject to rules of the New York Stock Exchange requiring
stockholder approval, may amend, alter or discontinue agreements evidencing an award made under the plan. These
amendments may include: (i) reducing the exercise price of outstanding options; or (ii) after the date of a change of
control, impairing the rights of any award holder, without such holder’s consent, under any award granted prior to the
date of any change of control. No award, or any interest in an award may be transferred in any manner, other than by will
or the laws of descent and distribution, unless the agreement evidencing an award expressly states that it is transferable.
Compensation Committee Interlocks and Insider Participation
During fiscal 2006, the Compensation Committee consisted of Messrs. Behrendt, Lambert and Moore. All members
of the Compensation Committee during fiscal 2006 were independent directors and none of them were our employees or
former employees or had any relationship with us requiring disclosure under rules of the Securities Exchange Commission
requiring disclosure of certain relationships and related party transactions. There are no Compensation Committee
interlocks between us and other entities in which one of our executive officers served on the compensation committee (or
equivalent) or the board of directors of another entity whose executive officer(s) served on our Compensation Committee
or Board of Directors.
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