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This excerpt taken from the WDC DEF 14A filed Sep 23, 2008. Summary
Description of the 2005 Employee Stock Purchase Plan
The principal terms of the ESPP are summarized below. The
following summary is qualified in its entirety by the full text
of the ESPP (as proposed to be amended), which has been filed as
Exhibit A to the copy of this Proxy Statement that was
filed electronically with the Securities and Exchange Commission
and can be reviewed on the Securities and Exchange
Commission’s website at www.sec.gov or on our website at
www.westerndigital.com/investor.
A copy of the ESPP may also be obtained without charge by
writing the company’s Secretary at Western Digital
Corporation, 20511 Lake Forest Drive, Lake Forest, California
92630-7741.
Purpose. The purpose of the ESPP is to provide
eligible employees with an opportunity to purchase shares of the
company’s common stock at a favorable price and upon
favorable terms in consideration of the participating
employees’ continued services. The ESPP is intended to
provide an additional incentive to participating eligible
employees to remain in the company’s employ and to advance
the best interests of the company and its stockholders.
Operation of the 2005 Employee Stock Purchase
Plan. The ESPP operates in a series of periods
referred to as “Offering Periods.” The company will
establish the duration of each Offering Period in advance of
that Offering Period. However, an Offering Period may not be
longer than 24 months. The company may provide for a new
Offering Period to start before an Offering Period in progress
has ended, but no one participant may participate in more than
one Offering Period at the same time.
On the first day of each Offering Period (referred to as the
“Enrollment Date”), each eligible employee who has
timely filed a valid election to participate in the ESPP for
that Offering Period is granted an option to purchase shares of
the company’s common stock. A participant may designate in
his or her election the percentage of his or her compensation to
be withheld from his or her pay during that Offering Period for
the purchase of stock under the ESPP. The participant’s
contributions under the ESPP are credited to a bookkeeping
account in his or her name. A participant generally may elect to
terminate his or her contributions to the ESPP at any time
during an Offering Period. A participant also generally may
elect to increase or decrease the rate of his or her
contributions to the ESPP up to four times in a calendar year.
Amounts contributed to the ESPP constitute general corporate
assets of the company and may be used for any corporate purpose.
An Offering Period may consist of one or more periods referred
to as “Exercise Periods.” The last day of each
Exercise Period is referred to as an “Exercise Date.”
Each option granted under the ESPP for an Offering Period is
automatically exercised on each Exercise Date that occurs within
that Offering Period. The number of shares acquired by a
participant upon exercise of his or her option is determined by
dividing the participant’s account balance under the ESPP
as of the Exercise Date by the Exercise Price for that Offering
Period. The company establishes the methodology for setting the
Exercise Price in an Offering Period in
advance of that Offering Period, except that in no event may the
Exercise Price be lower than the lesser of (i) 85% of the
fair market value of a share of the company’s common stock
on the applicable Enrollment Date, or (ii) 85% of the fair
market value of a share of the company’s common stock on
the applicable Exercise Date. A participant’s account is
reduced upon exercise of his or her option by the amount used to
pay the Exercise Price of the shares acquired by the
participant. No interest is paid to any participant or credited
to any account under the ESPP.
Eligibility. Only certain employees are
eligible to participate in the ESPP. To be eligible to
participate in an Offering Period, on the Enrollment Date of
that period an individual must:
As of September 17, 2008, approximately 50,054 employees of
the company and its subsidiaries, including all of the named
executive officers, were eligible to participate in the ESPP.
Limits on Authorized Shares; Limits on
Contributions. Currently, a maximum of
5,000,000 shares of the company’s common stock are
available for delivery under the plan. If stockholders approve
this proposal, the number of shares available for issuance under
the ESPP will be increased by an additional
8,000,000 shares.
Participation in the ESPP is also subject to the following
limits:
The company has the flexibility to change the 10%-contribution
referred to above and the maximum limit on the number of shares
that may be acquired by any individual during an Exercise Period
under the ESPP from time to time without stockholder approval.
However, the company cannot increase the aggregate share limit
under the ESPP without stockholder approval, other than to
reflect stock splits and similar adjustments as described below.
The $25,000 and the 5% ownership limitations referred to above
are required under the Code.
Antidilution; Adjustments. As is customary in
stock incentive plans of this nature, the number and kind of
shares available under the ESPP, as well as purchase prices and
share limits under the ESPP, are subject to adjustment in the
case of certain corporate events. These events include
reorganizations, mergers, combinations, consolidations,
recapitalizations, reclassifications, stock splits, stock
dividends, asset sales or other similar unusual or extraordinary
corporate events, or extraordinary dividends or distributions of
property to the company’s stockholders.
Termination of Participation. A
participant’s election to participate in the ESPP will
generally continue in effect for all Offering Periods until the
participant files a new election that takes effect or the
participant ceases to participate in the ESPP. A
participant’s participation in the ESPP generally will
terminate if, prior to the applicable Exercise Date, the
participant ceases to be employed by the company or one of its
participating subsidiaries or the participant is no longer
scheduled to work more than 20 hours per week or more than
5 months in a calendar year.
If a participant’s participation in the ESPP terminates
during an Offering Period for any of the reasons discussed in
the preceding paragraph, he or she will no longer be permitted
to make contributions to the ESPP for that Offering Period and,
subject to limited exceptions, his or her option for that
Offering Period will automatically terminate and his or her
account balance will be paid to him or her in cash without
interest. However, a participant’s termination from
participation will not have any effect upon his or her ability
to participate in any succeeding Offering Period, provided that
the applicable eligibility and participation requirements are
again then met.
Transfer Restrictions. A participant’s
rights with respect to options or the purchase of shares under
the ESPP, as well as contributions credited to his or her
account, may not be assigned, transferred, pledged or otherwise
disposed of in any way except by will or the laws of descent and
distribution.
Administration. The ESPP is administered by
the Board of Directors or by a committee appointed by the Board
of Directors. The Board of Directors has appointed the
Compensation Committee of the Board of Directors as the current
administrator of the ESPP. The administrator has full power and
discretion to adopt, amend or rescind any rules and regulations
for carrying out the ESPP and to construe and interpret the
ESPP. Decisions of the administrator with respect to the ESPP
are final and binding on all persons.
No Limit on Other Plans. The ESPP does not
limit the ability of the Board of Directors or any committee of
the Board of Directors to grant awards or authorize any other
compensation, with or without reference to the company’s
common stock, under any other plan or authority.
Amendments. The Board of Directors generally
may amend or suspend the ESPP at any time and in any manner. No
amendment, suspension or termination of the ESPP may have a
material adverse effect on the then-existing rights of any
participant during an Exercise Period without the
participant’s written consent, but the Board of Directors
may amend, suspend or terminate the ESPP as to any outstanding
options granted under the ESPP for an Offering Period, effective
as of any Exercise Date within that Offering Period, without the
consent of the participants to whom such options were granted.
Stockholder approval for an amendment to the ESPP will only be
required to the extent necessary to meet the requirements of
Section 423 of the Code or to the extent otherwise required
by law or applicable stock exchange rules.
Termination. The Board of Directors may
terminate the ESPP at any time. The ESPP will also terminate
earlier if all of the shares authorized under the ESPP have been
purchased.
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