WDC » Topics » Compensation Philosophy

This excerpt taken from the WDC DEF 14A filed Sep 24, 2007.
Compensation Philosophy
 
Our compensation philosophy for our executive officers is based on the belief that the interests of our executives should be closely aligned with those of our stockholders. To support this philosophy, a large portion of each executive officer’s compensation is placed at risk and linked to the accomplishment of specific results that are expected to lead to the creation of short-term and long-term value for our stockholders. Our compensation policies and programs are designed to:
 
  •  attract, develop, reward and retain highly qualified and talented individuals;
 
  •  motivate executives to improve the overall performance and profitability of our company as a whole as well as the business group for which each executive is responsible, and reward executives when specific measurable results have been achieved;
 
  •  encourage accountability by determining salaries and incentive awards based on each executive’s individual performance and contribution;
 
  •  tie incentive awards to financial and non-financial metrics that drive the performance of our common stock over the long term to further reinforce the linkage between the interests of our stockholders and our executives; and
 
  •  ensure compensation levels are both externally competitive and internally equitable.
 
This excerpt taken from the WDC DEF 14A filed Dec 15, 2006.
Compensation Philosophy
 
Western Digital’s compensation philosophy for executive officers is based on the belief that the interests of the executives should be closely aligned with Western Digital’s stockholders. To support this philosophy, a significant portion of each executive officer’s compensation is placed at risk and linked to the accomplishment of specific results that are expected to lead to the creation of short-term and long-term value for Western Digital’s stockholders. Western Digital’s compensation policies and programs are designed to:
 
  •  attract, develop, reward and retain highly qualified and talented individuals;
 
  •  motivate executives to improve the overall performance and profitability of Western Digital, as well as the business group for which each is responsible, and reward executives when specific measurable results have been achieved;
 
  •  encourage accountability by determining salaries and incentive awards based on each executive’s individual performance and contribution;
 
  •  tie incentive awards to financial and non-financial metrics which drive the performance of Western Digital common stock over the long term to further reinforce the linkage between the interests of Western Digital’s stockholders and the executives; and
 
  •  ensure compensation levels are both externally competitive and internally equitable.
 
In furtherance of these goals, Western Digital’s executive compensation policies, plans and programs consist of base salary, annual incentive compensation, long-term incentive awards, including stock options, restricted stock and/or stock unit awards and long-term cash awards that are conditioned upon the satisfaction of performance goals established by the Committee, a deferred compensation plan, certain severance benefits and other benefits.
 
The Committee considers all elements of compensation and Western Digital’s compensation philosophy when determining individual components of pay. Generally, the Committee does not follow any principles in a formulaic fashion; rather, the members use their experience and judgment in determining the mix of compensation for each individual. In addition to the experience and knowledge of the Committee and Western Digital’s Human Resources staff, the Committee utilizes the services of an independent human resources consultant who provides advice and


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counsel, as well as competitive data from peer companies in competition for similar management talent. The competitive data includes information from direct competitors of Western Digital and from other companies in the high-technology industry with similar size and performance characteristics. Most of the companies included in this analysis are also included in the Dow Jones US Technology, Hardware and Equipment Index (see “Stock Performance Graph” at page 26).
 
While there is no specific formula that is used to set compensation in relation to this market data, executive officer base salary, individual bonus target amounts and equity-based awards, when combined, are generally equivalent to the median total direct compensation level for comparable jobs in the marketplace. However, depending upon Western Digital’s business groups’ and individual performance as measured against predetermined financial and non-financial goals, amounts paid under Western Digital’s performance-based compensation program and/or equity awards granted to individuals may lead to total direct compensation levels that are lower or higher than the median levels for comparable jobs. Western Digital intends to provide a total direct compensation opportunity for executive officers that is above average, but with an above-average amount of the total direct compensation opportunity at risk and dependent upon Western Digital’s performance.
 
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