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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by
and
between Western Digital Corporation (the "Company") and John
Coyne
("Executive"), as of the 31st day of October, 2006 ("Effective
Date").
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
such
employment, upon the terms and conditions hereinafter set forth
including but
not limited to provisions governing early termination, from the
Effective Date
to and including January 1, 2012 ("Employment Period"). Unless
Executive's
employment is terminated pursuant to any early termination
provision hereof or
the parties mutually agree otherwise in writing, Executive's
employment with the
Company shall terminate without further action by either party on
January 1,
2012.
2. DUTIES.
A. President and Chief Operating Officer. From the Effective
Date until January 1, 2007, Executive shall continue to serve as
President and
Chief Operating Officer of the Company, and shall report to the
Company's Chief
Executive Officer.
B. President and Chief Executive Officer. From January 2, 2007,
through January 1, 2012, Executive shall serve as President and
Chief Executive
Officer of the Company. In this capacity, Executive shall report to
the Board of
Directors of the Company, and shall have such duties and
responsibilities
consistent with his position as President and Chief Executive
Officer as the
Board of Directors of the Company shall determine from time to
time.
C. Executive Commitment. Executive agrees to devote
substantially all of his time, energy and ability to the business
of the
Company, subject to paragraph E of Section 3.
3. COMPENSATION.
A. Base Salary. From the Effective Date through January 1,
2007,
the Company will pay to Executive a base salary at the rate of
$650,000 per
year. Effective January 2, 2007, the Company will pay to Executive
a base salary
at the rate of $800,000 per year. Such salary shall be earned
monthly and shall
be payable in periodic installments in accordance with the
Company's customary
practices. Amounts payable shall be reduced by standard withholding
and other
authorized deductions.
B. Bonus. Executive's target annual bonus each fiscal year
during the Employment Period for purposes of the Company's
semi-annual Incentive
Compensation Plan (ICP) bonus program for such fiscal period shall
be 100% of
his semi-annual base salary from the Company in effect on the last
day of such
fiscal period. In addition, concurrent with the execution of this
Agreement,
Executive shall receive a Performance Cash Award, in the form
attached hereto as
Exhibit "A" that provides an opportunity for
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a bonus with a target amount of $1,000,000 for the July 1, 2006,
through June
29, 2007, performance period and shall receive a Performance Cash
Award in the
form attached hereto as Exhibit "B" that provides an opportunity
for a bonus
with a target amount of $1,000,000 for the July 1, 2006 through
June 27, 2008
performance period, the corresponding performance objectives to be
determined by
the Compensation Committee of the Board of Directors in its good
faith
discretion. In addition, while employed by the Company under this
Agreement,
Executive shall be eligible for and shall receive a Performance
Cash Award
annually under the Company's Long Term Incentive award program with
a target
amount of no less than $2,000,000. Each such award will be based on
a 24-month
performance period. The first such Performance Cash Award will be
awarded in
August or September 2007, and will be based on the performance
period commencing
on the first day of fiscal year 2008 and ending on the last day of
fiscal year
2009. The parties intend that the performance objectives for such
annual awards
will be determined each year by mutual agreement between Executive
and the
Compensation Committee of the Board of Directors following good
faith
discussions and consideration of the Company's strategic and
operational
initiatives. In the event that the parties cannot reach mutual
agreement, the
performance objectives for the applicable award will be determined
by the
Compensation Committee in its good faith discretion. The other
terms and
conditions of such awards will be in the Company's standard form
attached hereto
as Exhibit "A".
C. Retirement and Welfare Benefit Plans; Fringe Benefits.
Executive (and, in the case of welfare benefit plans, his eligible
dependents,
as the case may be) shall be eligible for participation in the
retirement,
welfare, and fringe benefit plans, practices, policies and programs
provided by
the Company on terms consistent with those generally applicable to
the Company's
other senior executives and approved by the Compensation Committee
of the Board
of Directors.
D. Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by
him in
accordance with the policies, practices and procedures as in effect
generally
with respect to other senior executives of the Company.
E. Vacation and Other Leave. From the Effective Date through
December 31, 2009, Executive shall receive paid vacation in an
amount determined
by the Company's then-existing policies based upon Executive's
years of service
with the Company. For each of calendar year 2010 and 2011,
Executive shall
receive eight (8) weeks paid vacation. Such vacation shall be
scheduled and
taken in accordance with the Company's standard vacation policies
applicable to
Company executives. Executive shall also be entitled to all other
holiday and
leave pay generally available to other executives of the
Company.
F. Modification. The Company reserves the right to modify,
suspend or discontinue any and all of the above plans, practices,
policies and
programs at any time without recourse by Executive so long as such
action is
taken generally with respect to other senior executives of the
Company and does
not single out Executive.
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4. RESTRICTED STOCK; OTHER EQUITY AWARDS.
A. Restricted Stock Units. On January 31, 2007, the Company
shall grant to Executive an award of 1,100,000 restricted stock
units
("RESTRICTED UNITS") in the form attached hereto as Exhibit "C"
provided that
Executive is then employed as the President and Chief Executive
Officer of the
Company. Such Restricted Units shall vest as follows: (i) Ten
percent of such
Restricted Units shall vest on January 1, 2008; (ii) Ten percent of
such
Restricted Units shall vest on January 1, 2009; (iii) Thirty
percent of such
Restricted Units shall vest on January 1, 2010; (iv) Ten percent of
such
Restricted Units shall vest on January 1, 2011; and (v) Forty
percent of such
Restricted Units shall vest on January 1, 2012; provided, in the
case of each
such vesting installment and except as expressly provided otherwise
in Section 5
below, that Executive has remained continuously employed by the
Company through
such vesting date. In the event of Executive's death after January
31, 2007,
while employed by the Company, an additional number of Restricted
Units shall
accelerate and become vested on the date of Executive's death, with
such number
of additional Restricted Units equal to: (1) the total number of
Restricted
Units multiplied by a fraction (not greater than one), the
numerator of which is
the total number of calendar days during the period commencing with
January 31,
2007, through and including the date of Executive's death, (but not
less than
182 days) and the denominator of which is the total number of
calendar days
during the period commencing with January 31, 2007, through and
including
January 1, 2012, less (2) the total number of Restricted Units that
otherwise
vested on or before the date of Executive's death. The Restricted
Units will be
evidenced by and subject to such other and further terms and
conditions as are
set forth in a written restricted stock unit award agreement in the
form
attached hereto as Exhibit "C".
B. Stock Options. On January 31, 2007, and in each of the four
fiscal years commencing with fiscal year 2008, the Company shall
grant to
Executive a nonqualified stock option (the "Option(s)") to purchase
a number of
shares of Common Stock in the form attached hereto as Exhibit "D".
The date of
the Option grants subsequent to January 2007 shall be at the same
time as the
Company's annual grant of options to other members of senior
management. If the
Company is in a blackout period (pursuant to the Company's policies
on trading
Company securities applicable to the Company's executive officers
generally) on
the applicable date, the Compensation Committee of the Board of
Directors may,
in its discretion, delay the date of grant of the applicable Option
until after
such blackout period ends, in which case the Compensation Committee
shall
approve the grant promptly following the end of such blackout
period (and the
date of grant of the Option shall be the date of such approval).
The number of
shares of Common Stock subject to the January 31, 2007 Option will
equal 120,000
(such number subject to proportionate and equitable adjustments for
stock
splits, stock dividends, reverse stock splits, and similar changes
in
capitalization). The number of shares of Common Stock subject to
the subsequent
Options will be determined in the good faith discretion of the
Compensation
Committee of the Board of Directors based on (among such other
facts and
circumstances the Compensation Committee may determine to be
relevant in the
circumstances) Executive's individual performance, the Company's
performance,
and market benchmark comparisons of compensation data for chief
executive
officers aga
