WESTERN DIGITAL
CORPORATION
EXECUTIVE SEVERANCE PLAN
The purpose of the
Plan is to provide severance benefits to certain Executives whose
employment with the Company or a Subsidiary terminates under
certain circumstances as described more fully herein.
All of the
policies and practices of the Company and its Subsidiaries
regarding severance benefits or similar payments upon employment
termination with respect to Executives in the United States, other
than written employment, separation or equity award agreements with
the Company or a Subsidiary that provide severance benefits or the
Company’s Amended and Restated Change of Control Severance
Plan, are hereby superseded by the Plan, which shall be known as
the Western Digital Corporation Executive Severance Plan, effective
as of the Effective Date. The Plan was initially approved by the
Board on February 16, 2006 and subsequently amended and
restated on
November 6, 2008.
“Administrator”
means the Committee or any delegate of such committee acting within
the authority delegated to it pursuant to
Section 9.1.
“Base
Pay” means the employee’s wages earned on a monthly
basis, determined as of the employment termination date, excluding
bonuses and commissions.
“Board”
means the Board of Directors of the Company.
“Cause”
means the occurrence or existence of any of the following with
respect to an Executive:
(a) the
Executive’s conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent jurisdiction for
any crime involving moral turpitude or any felony punishable by
imprisonment in the jurisdiction involved;
(b) whether prior
or subsequent to the Effective Date, the Executive’s willful
engaging in dishonest or fraudulent actions or
omissions;
(c) failure or
refusal to perform his or her duties as reasonably required by the
Company and/or a Subsidiary that employs the Executive;
(d) negligence,
insubordination, violation by the Executive of any duty (of loyalty
or otherwise) owed to the Company and/or a Subsidiary, or any other
misconduct on the part of the Executive;
(e) repeated
non-prescription use of any controlled substance, or the repeated
use of alcohol or any other non-controlled substance which in the
Administrator’s (or its delegate’s or delegates’)
reasonable determination interferes with the Executive’s
service as an officer or employee of the Company and/or a
Subsidiary;
(f) sexual
harassment by the Executive that has been reasonably substantiated
and investigated;
(g) involvement in
activities representing conflicts of interest with the Company
and/or a Subsidiary;
(h) improper
disclosure of confidential information;
(i) conduct
endangering, or likely to endanger, the health or safety of another
employee;
(j) falsifying or
misrepresenting information on the records of the Company and/or a
Subsidiary;
(k) the
Executive’s physical destruction or theft of substantial
property or assets of the Company and/or a Subsidiary;
(l) breach of any
policy of, or agreement with, the Company and/or a Subsidiary
applicable to the Executive or to which the Executive is otherwise
bound.
Review of any
determination that a termination is for Cause shall be by the
Administrator, in its sole and exclusive judgment and discretion,
in accordance with the provisions of Section 8
herein.
“Code”
means the United States Internal Revenue Code of 1986, as
amended.
“Committee”
means the Compensation Committee of the Board of Directors of the
Company.
“Company”
means Western Digital Corporation, a Delaware
corporation.
“Effective
Date” means February 16, 2006.
“Eligible
Employee” means any person classified by the Company or a
Subsidiary, in its sole discretion, as a non-temporary, full-time
or part-time, salaried or hourly employee (specifically excluding
any individual who is not classified by the Company or a Subsidiary
as a common law employee, such as an independent contractor or an
individual working through a third-party provider, such as Kelly
Services, without regard to the characterization or
recharacterization of such individual’s status by any court
or governmental agency), who is paid from the United States payroll
of the Company or a Subsidiary; provided, however, that in no event
shall any employee who as of the Effective Date is a party to a
written employment agreement with the Company or a Subsidiary
(other than an agreement providing for at-will
employment by
the Company or a Subsidiary and for no specified term) be an
Eligible Employee.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Executive”
means an Eligible Employee who has been designated by the Board or
the Committee as a Tier I Executive, Tier II Executive or Tier III
Executive for purposes of participation in the Plan.
“Participant”
means an Executive who is entitled, based on the provisions hereof,
to severance benefits under Section 6.
“Plan”
means this Western Digital Corporation Executive Severance Plan, as
set forth in this instrument as it may be amended from time to
time.
“Separation
from Service,” with respect to an Executive, shall mean that
the Executive dies, retires, or otherwise has a termination of
employment with the Company that constitutes a “separation
from service” within the meaning of Treasury
Regulation Section 1.409A-1(h)(1), without regard to the
optional alternative definitions available thereunder.
“Subsidiary”
means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
The Plan shall
commence on the Effective Date and shall continue in effect through
December 31, 2008; provided, however, that on December 31,
2006 and each anniversary of such date thereafter, the term of the
Plan shall extend automatically for one additional year, unless the
Committee (or the Board) causes the Company to deliver written
notice prior to the end of such term (or extended term, as
applicable) to each Executive then covered by the Plan that the
term of the Plan will not be extended (or further extended, as the
case may be), and if such notice is timely given the Plan shall
terminate at the end of the term then in progress.
Upon approval of
the Plan, the Committee shall designate the Executives initially
covered by the Plan. The Committee may, from time to time,
designate additional Eligible Employees as Executives for purposes
of participation in the Plan; provided that the Committee shall
limit the group of all persons eligible to participate in the Plan
to a “select group of management or highly compensated
employees” within the meaning of 29 C.F.R. 2520-104-23 or any
similar successor provision. The Committee may, in its sole
discretion, remove an Executive from participation in the Plan and
from time to time approve modifications to the Tier to which one or
more Executives have been designated.
6.1 Severance
Benefits to Executives . An Executive whose employment with the
Company or a Subsidiary is terminated by the Company or such
Subsidiary, as applicable,
without Cause
shall become, subject to the conditions set forth in
Section 7, a Participant under the Plan and entitled to the
benefits set forth in this Section 6. The severance benefits
provided under Sections 6.2, 6.3, 6.5 and 6.6 of the Plan
shall be the obligations of, and shall be provided to the Executive
by, the entity (the Company or a Subsidiary, as applicable) that
employs the Executive immediately prior to the Executive’s
termination of employment. For avoidance of doubt, in no event
shall an Executive become entitled to or receive any payment
hereunder if the Executive’s employment with the Company or a
Subsidiary is terminated voluntarily by the Executive (for any
reason), by the Company or a Subsidiary, as applicable, for Cause,
or on account of the Executive’s death or disability (as
defined in Section 22(e)(3) of the Code). Notwithstanding
anything else contained herein to the contrary, an Executive shall
not be deemed to have terminated employment if his or her
employment by the Company or a Subsidiary terminates but he or she
continues as an employee of the Company or another
Subsidiary.
6.2 Cash
Severance Payment . A Participant shall receive a severance
payment equal to the Participant’s monthly rate of Base Pay
multiplied by the number of months set forth below:
(a) Tier I
Executive: 24 months
(b) Tier II
Executive: 18 months
(c) Tier III
Executive: 12 months
Subject to
Section 6.7, the severance payment shall be paid in one
lump-sum cash payment in the month following the month in which the
Participant’s Separation from Service occurs.
6.3 Bonus .
A Participant shall receive a payment equal to a pro-rata portion
of the Participant’s bonus opportunity under the
Company’s (or a Subsidiary’s) bonus program in which
the Participant participates for the bonus cycle in which the
Participant’s date of termination occurs (with such pro-rata
portion based on the number of days in the applicable bonus cycle
during which the Participant was employed (not to exceed six
(6) months) and assuming 100% of the performance target(s)
subject to the bonus award are met regardless of actual funding by
the Company or a Subsidiary). The payment shall be paid in one
lump-sum cash payment in the month following the month in which the
Participant’s Separation from Service occurs.
6.4 Equity
Awards . Notwithstanding anything in the applicable stock
incentive plan and/or award agreement to the contrary, upon a
Participant’s termination of employment, the
Participant’s then outstanding stock options and restricted
stock or stock unit awards that are subject to time-based vesting
will vest and become exercisable or payable, as applicable, as if
the Participant had remained employed with the Company or a
Subsidiary for an additional six (6) months. For avoidance of
doubt, the foregoing is not intended to apply to any equity awards
held by the Participant that are subject to performance-based
vesting (which shall continue to be governed by the plan and/or
award agreement applicable to such awards) or to supersede any more
favorable provision in any stock incentive plan and/or award
agreement regarding
accelerated
vesting in the event of the Participant’s termination of
employment. Notwithstanding anything to the contrary herein, the
post-termination exercisability of the Participant’s then
outstanding stock options shall continue to be governed by the
stock incentive plan and stock option agreement applicable to such
options.
6.5
Outplacement Services . A Participant shall be eligible for
outplacement services, provided by a vendor chosen by the Company
or applicable Subsidiary and at the Company’s or applicable
Subsidiary’s expense, after the Participant’s
termination of employment for up to the number of months set forth
below:
(a) Tier I
Executive: 12 months
(b) Tier II
Executives: 12 months
(c) Tier III
Executive: 12 months
6.6 Continued
Health Care Coverage . If the Participant elects COBRA
continuation coverage within the applicable election period, the
Company or applicable Subsidiary shall make the applicable COBRA
premium payments following the expiration of the
Participant’s company-provided medical, dental, and/or vision
coverage existing as of the Participant’s termination date
for the number of months set forth below:
(a) Tier I
Executive: 18 months
(b) Tier II
Executives: 12 months
(c) Tier III
Executive: 12 months
Notwithstanding
anything in the Plan to the contrary, there shall be no obligation
to make such COBRA premium payments on behalf of any Participant if
the Participant otherwise becomes eligible for equivalent coverage
under another employer’s plan. To the extent that the payment
or reimbursement of any benefits pursuant to Section 6.5 or
this Section 6.6 is taxable to the Participant, any such
payment or reimbursement shall be made to the Participant on or
before the last day of the Participant’s taxable year
following the taxable year in which the related expense was
incurred. The Participant’s right to payment of such benefit
is not subject to liquidation or exchange for another benefit and
the amount of such benefits that the Participant receives in one
taxable year shall not affect the amount of such benefits that the
Participant receives in any other taxable year.
6.7 Specified
Employees . The provisions of this Section 6.7 shall apply
if any severance payments hereunder constitute “deferred
compensation” (within the meaning of Section 409A of the
Code) payable upon the Participant’s Separation from Service
and, in such event, such provisions shall apply only to the extent
required to avoid the imputation of any tax, penalty or interest
pursuant to Section 409A of the Code. It is the
Company’s intent that severance payments hereunder should not
constitute “deferred compensation” payable upon a
Separation from Service (because such payments should constitute a
“short-term deferral” within the meaning of Code
Section 409A or otherwise) based on the guidance available as of
the date
hereof and,
accordingly, should not be subject to the delayed-payment
provisions set forth in this Section 6.7. Notwithstanding any
other provision of the Plan to the contrary, if the
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