Western Digital 2003 Annual Report Download - page 53

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Stock Reserved for Issuance
The following table summarizes all shares of common stock reserved for issuance at June 27, 2003 (in millions):
Number
of Shares
Issuable in connection with:
Exercise of stock options, including options available for grant ÏÏÏÏÏÏÏÏ 33.8
Employee stock purchase plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.5
37.3
Employee Stock Purchase Plan
The Company has an employee stock purchase plan (""ESPP'') that operates in accordance with Section 423 of the
Internal Revenue Code whereby eligible employees may authorize payroll deductions of up to 10% of their salary to
purchase shares of the Company's common stock at 85% of the fair market value of common stock on the date of grant
or the exercise date, whichever is less. Approximately 3.5 million shares of common stock remain reserved for issuance
under this plan. Approximately 2.1 million, 1.3 million and 1.2 million shares were issued under this plan during 2003,
2002 and 2001, respectively.
Stock Option Plans
Western Digital's Employee Stock Option Plan (""Employee Plan'') is administered by the Compensation
Committee of the Board of Directors (""Compensation Committee''), which determines the vesting provisions, the form
of payment for the shares and all other terms of the options. Terms of the Employee Plan require that the exercise price of
options be not less than the fair market value of the common stock on the date of grant. Options granted generally vest
25% one year from the date of grant and in twelve quarterly increments thereafter and have a ten-year term. As of
June 27, 2003, options to purchase 7.7 million shares of common stock were exercisable and 6.5 million shares were
available for grant under this plan. Pursuant to the terms of the Employee Plan, participants are permitted to utilize
previously purchased common stock as consideration to purchase additional common stock upon exercise of options or to
exercise on a cashless basis through the Company designated broker.
The Company has a Broad-Based Stock Incentive Plan (the ""Broad-Based Plan'') under which options to purchase
shares of common stock and stock awards may be granted to employees of the Company and others. This plan is intended
to qualify as ""broadly-based'' under the New York Stock Exchange shareholder approval policy. The Compensation
Committee determines the vesting provisions and other terms of the options and stock. To date, the options granted vest
either one year, two years or four years from the date of grant. As of June 27, 2003, options to purchase 4.7 million
shares of common stock were exercisable and 1.5 million shares were available for grant as options or stock awards, under
this plan.
Under the Broad-Based Plan, the Company issued to certain employees 0.2 million (net of cancellations) and
1.3 million shares of restricted stock during 2002 and 2001, respectively. The stock vests on the second and third
anniversary dates of the grant provided that the recipient is still employed by the Company. The aggregate market value
(net of cancellations) of the restricted stock at the dates of issuance was $1.1 million and $4.4 million for 2002 and
2001, respectively. These amounts have been recorded as deferred compensation, a separate component of shareholders'
equity, and are being amortized over the three-year vesting period. No restricted stock was issued during Ñscal year 2003.
The Company has a Stock Option Plan for Non-Employee Directors (""Director Plan'') and has reserved 2.6 million
shares for issuance thereunder. The Director Plan provides for initial option grants to new directors of 75,000 shares per
director and additional grants of options to purchase 10,000 shares of common stock per director each year upon their
reelection as a director at the annual shareholders' meeting. Terms of the Director Plan require that options have a ten-
year term and that the exercise price of options be not less than the fair market value at the date of grant. Options granted
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