Western Digital (WDC)

 

In November 2006, we announced Mr. Shakeel’s plans to step down as Chief Executive Officer on January 1, 2007. In connection with this announcement, on October 31, 2006, we entered into an amendment to Mr. Shakeel’s employment agreement pursuant to which Mr. Shakeel agreed to relinquish his position as Chief Executive Officer on January 1, 2007 but to remain employed as a Special Advisor to the Chief Executive Officer through June 29, 2007. As part of this amendment, the Compensation Committee agreed to accelerate to June 29, 2007 the vesting of 817,533 shares of restricted stock previously granted to Mr. Shakeel that were originally scheduled to vest after June 29, 2007. All other stock options and restricted stock awards that were originally scheduled to vest after June 29, 2007 and before January 1, 2008 were cancelled. The Compensation Committee determined that the accelerated vesting of a portion of Mr. Shakeel’s restricted stock awards was appropriate given Mr. Shakeel’s strong track record during his tenure as Chief Executive Officer and the Compensation Committee’s desire to retain his services through June 29, 2007 in order to ensure a smooth transition for Mr. Coyne into the Chief Executive Officer position.

 

As discussed above, on October 31, 2006, we also entered into an employment agreement with Mr. Coyne to provide for his promotion to Chief Executive Officer on January 2, 2007. A significant portion of the overall compensation that the Compensation Committee approved as part of this agreement was long-term incentive compensation in the form of stock options, restricted stock units and long-term performance cash awards. Given the long-term nature of this agreement, the Compensation Committee believed that structuring Mr. Coyne’s compensation in this way would be an effective means of retaining Mr. Coyne for the term of the agreement and of further motivating him towards improving our overall short-term and long-term financial performance in a manner so as to more effectively align his interests with the interests of our stockholders. For more information on these awards, please see the “Grants of Plan-Based Awards — Fiscal 2007” table and accompanying narrative on page 32 below.