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This excerpt taken from the WDC DEF 14A filed Sep 24, 2007. Long-Term
Incentive Program
In February 2006, following a review and analysis by Mercer, the
Compensation Committee established a long-term incentive program
pursuant to which a combination of stock options, restricted
stock units and long-term performance cash awards are awarded to
our executive officers and other key employees. As part of this
long-term incentive program, the Compensation Committee has
established long-term incentive guidelines expressed as a
percentage of annual salary ranging from a minimum, midpoint and
maximum value. The midpoint value of these guidelines is
intended to target the executive’s total direct
compensation at the median to the 75th percentile of the
total direct compensation levels for comparable jobs in the
marketplace based on market and peer group data.
These long-term incentive guidelines provide a framework for the
Compensation Committee when determining the amount of the awards
to each executive under the long-term incentive program. For
each of our executive officers other than Mr. Coyne, the
actual dollar value of the executive’s long-term incentive
awards is determined by the Compensation Committee based upon
the recommendation of Mr. Coyne after reviewing the
executive’s responsibilities, individual performance,
current compensation package, value of unvested equity awards
and expected future contributions and value to the company. The
Compensation Committee undertakes a similar analysis to
determine the dollar value of any long-term incentive award to
Mr. Coyne. Once this dollar value is set, approximately 40%
is awarded in the form of stock options, 30% is awarded in the
form of restricted stock units, and 30% is awarded in the form
of a long-term performance cash award. Awards under the
long-term incentive program are generally granted on an annual
basis.
On November 27, 2006, as part of our long-term incentive
program, the Compensation Committee awarded stock options,
restricted stock units and long-term performance cash awards to
three of our executives and other key employees. Payment of each
long-term performance cash award is determined based on our
achievement of specified operating income and revenue goals that
correspond to specific payment percentages ranging between 0%
and 200% for the performance period beginning July 1, 2006
and ending June 27, 2008. Depending upon our achievement of
these predetermined performance goals, the cash awards will be
paid within a reasonable period of time following the end of our
2008 fiscal year based on a percentage of the target award
(ranging from 0% to 200%).
In accordance with the terms of their employment agreements with
us, Mr. Massengill, Mr. Shakeel and Mr. Coyne did
not participate in our long-term incentive program during fiscal
2007. The long-term incentive awards granted to our other
executives in fiscal 2007 are set forth below:
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