Western Digital 2011 Annual Report Download - page 68

The types of awards that may be granted under the 2004 Performance Incentive Plan include stock options, stock
appreciation rights, restricted stock units (“RSUs”), stock bonuses and other forms of awards granted or denominated in
the Company’s common stock or units of the Company’s common stock, as well as cash bonus awards. Persons eligible to
receive awards under the 2004 Performance Incentive Plan include officers or employees of the Company or any of its
subsidiaries, directors of the Company and certain consultants and advisors to the Company or any of its subsidiaries. The
vesting of awards under the Performance Incentive Plan is determined at the date of grant. Each award expires on a date
determined at the date of grant; however, the maximum term of options and stock appreciation rights under the 2004
Performance Incentive Plan is ten years after the grant date of the award. RSUs granted under the 2004 Performance
Incentive Plan typically vest over periods ranging from one to five years from the date of grant.
As of July 1, 2011, the maximum number of shares of the Company’s common stock that was authorized for award
grants under the 2004 Performance Incentive Plan was 37.2 million shares. Any shares subject to awards under the Prior
Stock Plans that are canceled, forfeited or otherwise terminate without having vested or been exercised, as applicable, will
become available for other award grants under the 2004 Performance Incentive Plan. Shares issued in respect of stock
options and stock appreciation rights granted under the 2004 Performance Incentive Plan count against the plan’s share
limit on a one-for-one basis, whereas shares issued in respect of any other type of award granted under the plan count
against the plan’s share limit as 1.35 shares for every one share actually issued in connection with such award. The 2004
Performance Incentive Plan will terminate on September 20, 2014 unless terminated earlier by the Company’s Board of
Directors.
Employee Stock Purchase Plan
The Company maintains an ESPP. Under the ESPP, eligible employees may authorize payroll deductions of up to
10% of their eligible compensation during prescribed offering periods to purchase shares of the Company’s common
stock at 95% of the fair market value of common stock on either the first day of that offering period or on the applicable
exercise date, whichever is less. A participant may participate in only one offering period at a time, and a new offering
period generally begins each June 1st and December 1st. Each offering period is generally 24 months and consists of four
exercise dates (each, generally six months following the start of the offering period or the preceding exercise date, as the
case may be). If the fair market value of the Company’s common stock is less on a given exercise date than on the date of
grant, employee participation in that offering period ends and participants are automatically re-enrolled in the next new
offering period.
Stock-based Compensation Expense
The Company recognized in expense $37 million, $37 million and $24 million for stock-based compensation
related to the vesting of options granted by the Company under the Stock Plans and the ESPP in 2011, 2010 and 2009,
respectively. As of July 1, 2011, total compensation cost related to unvested stock options granted under the Stock Plans
and ESPP rights issued to employees but not yet recognized was $60 million and will be amortized on a straight-line
basis over a weighted average service period of approximately 2.2 years.
The Company recognized in expense $32 million, $23 million and $23 million related to restricted stock and
restricted stock unit awards granted under the Stock Plans that vested during 2011, 2010 and 2009, respectively. As of
July 1, 2011, the aggregate unamortized fair value of all unvested restricted stock unit awards granted under the Stock
Plans was $41 million, which will be recognized on a straight-line basis over a weighted average vesting period of
approximately 1.3 years.
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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)