Western Digital (WDC)

executive’s experience level and scope of responsibility, and the overall need and desire to retain the executive in light of current performance, future performance, future potential and the overall contribution of the executive. The Compensation Committee exercises its judgment based on all of these factors in making its decisions. No specific formula is applied to determine the weight of each criterion.

 

For fiscal 2009, the Compensation Committee reviewed the base salaries paid to all continuing executive officers during its annual review in August and September 2008. In August 2008, the Compensation Committee approved an increase in the annual base salary for Mr. Bukaty and Dr. Moghadam from $400,000 to $410,000. The Compensation Committee, based on a review of composite market data and Mr. Leyden’s continued contributions to our performance, also approved an increase in the annual base salary for Mr. Leyden from $450,000 to $550,000. In September 2008, the Compensation Committee reviewed the annual base salary for Mr. Coyne. After considering the significant increases in revenue, operating income, net income and unit shipments achieved in fiscal 2008 and a review of peer group data provided by Mercer, the Compensation Committee approved an increase in Mr. Coyne’s annual base salary from $800,000 to $900,000.

 

In December 2008, in an aggressive response to the worldwide economic downturn, we adopted a restructuring plan designed to realign our cost structure with a softer demand environment. As part of the restructuring plan, the Compensation Committee approved management-recommended base salary reductions for our named executive officers as follows:

 

 

These base salary reductions were not intended to be for a fixed period of time. Base salaries for executive officers will continue to be reviewed by the Compensation Committee on a periodic basis. As indicated above, the company generally targets base salaries at the median level based on composite market data.

 

executive’s experience level and scope of responsibility, and the overall need and desire to retain the executive in light of current performance, future performance, future potential and the overall contribution of the executive. The Compensation Committee exercises its judgment based on all of these factors in making its decisions. No specific formula is applied to determine the weight of each criterion.

 

For fiscal 2008, the Compensation Committee reviewed the base salaries paid to all continuing executive officers during its annual review in August 2007. In light of the composite market data and the other factors discussed above, the Compensation Committee determined that no change would be made to the base salaries paid to Messrs. Coyne and Bukaty and Dr. Moghadam (which were $800,000, $400,000 and $400,000, respectively) for fiscal 2008. Effective September 1, 2007, Mr. Leyden assumed the role of Chief Financial Officer from Mr. Milligan, who terminated employment with us on August 31, 2007. Mercer advised the Compensation Committee that Mr. Leyden’s salary prior to the promotion was below the median base salary for Chief Financial Officers based on our composite market data. The Compensation Committee also noted that Mr. Milligan’s base salary at the time of his separation from service was $450,000. In light of these considerations and the Compensation Committee’s recognition that Mr. Leyden had demonstrated significant leadership, especially in regards to our acquisition of Komag, Inc., the Compensation Committee determined to increase Mr. Leyden’s base salary from $409,000 to $450,000, effective with his promotion to the Chief Financial Officer position on September 1, 2007. In its fiscal 2009 annual review, which commenced in August 2008, the Compensation Committee, based on a review of composite market data and Mr. Leyden’s continued contributions to our performance, approved an increase in the annual base salary paid to Mr. Leyden from $450,000 to $550,000.

 

The Compensation Committee reviewed the base salaries paid to all other continuing executive officers during its annual review in August 2006. Consistent with the compensation objectives described above, the Compensation Committee believes that, absent other factors, a substantial proportion of total direct compensation for our executive officers should be performance-based, equity-based and/or long-term in nature, in order to more effectively motivate and reward the executive for achieving specific financial and non-financial results and to further reinforce the linkage between the interests of our executives and our stockholders. As a result, in connection with its annual review, the Compensation Committee determined that no change would be made to the base salaries paid to Mr. Bukaty and Dr. Moghadam. After reviewing market and peer group data, the Compensation Committee approved a 12.5% increase that raised Mr. Milligan’s base salary from $400,000 to $450,000 effective November 2006.

 

In addition, in March 2007, the Compensation Committee established the base salary of Mr. Leyden, who joined us on May 7, 2007 as Executive Vice President, Finance and succeeded Mr. Milligan as Chief Financial Officer on September 1, 2007. Following a review of appropriate market and benchmarking data, a consideration of Mr. Leyden’s experience level, expected responsibilities and future potential contributions and consistent with the Compensation Committee’s overall compensation objectives, the Compensation Committee determined that it was appropriate to establish Mr. Leyden’s base salary at $409,000.