EXHIBIT 10.35.1
ICP
WESTERN DIGITAL CORPORATION
INCENTIVE COMPENSATION PROGRAM (ICP)
PURPOSE
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The purpose of this program is to focus participants
on achieving key financial and strategic objectives
at the corporate and business group levels that will
lead to the creation of value for the Company's
shareholders and provide participants the opportunity
to earn significant awards, commensurate with
performance.
ELIGIBILITY
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Program eligibility is for the Hard Drive Solutions
group of Western Digital and the Corporate employees
supporting them who are in, or who are hired into,
any of the engineering salary grades or other
management personnel.
Eligibility may also be granted to employees who have
an authorized written agreement that grants them
eligibility.
Employees of Western Digital and its domestic
subsidiaries who are not eligible may receive a
discretionary (spot bonus) award but do not generate
any budget.
DESCRIPTION OF THE PROGRAM
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The Incentive Compensation Program will pay as cash
awards to participants for the achievement of
predetermined performance goals. Each participant
will be assigned a pool or target bonus percentage,
which when multiplied by the participant's
semi-annual base salary, will determine the pool or
target bonus semi-annual payout.
Predetermined performance goals were established and
approved by the Compensation Committee of the Board
of Directors.
The actual performance achieved will determine the
percentage used to calculate the award at the end of
the program year. The size of the actual award can
vary between 0% and 200% of the pool or target award.
In addition, individual and pool awards may be
adjusted upward or downward by the Chief Executive
Officer from the amount generated by the formula. The
Chief Executive Officer's award may be adjusted
upward or downward by the Compensation Committee.
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OPERATION OF THE PROGRAM
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Program Period: The two semi-annual periods July 1 to December 31 and
January 1 to June 30
Award Opportunities: The award for participants will be expressed as a
percentage of salary, and determined according to
salary grade.
Performance Measures: Performance will be measured at the corporate and
business group levels. Performance measures that will
be used Incentive Compensation Program are as
follows:
- EBITDA less CapEx -- Earnings Before Income-Taxes
Depreciation and Amortization less Capital
Expenditures for the Hard Drive Solutions
business group.
- Other Financial Metrics which may be deemed
appropriate including:
- Gross Margin
- Cash Flow
- Time to Market
- Time to Volume
- Time to Quality
Goals and Weighting: Each team will have goals at the corporate, business
group and/or team level, and each goal will have an
assigned weighting.
The percentage of target bonus opportunity earned
(before discretionary adjustments) will vary from the
target bonus opportunity based on actual performance
achieved relative to the performance goals.
ADDITIONAL PROVISIONS
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Award Thresholds: EBITDA must be at a minimum level for incentives to
be paid under any aspect of the Program.
In addition, each team may have a predetermined
thresholds below which no incentives will be paid for
that business group.
Total Award Cap: Total awards paid under this Program may not exceed a
preset percentage of corporate operating profit as
determined by the Compensation Committee. Any award
reductions attributable to the preset percentage cap
will be made by the Chief Executive Officer.
Award Adjustment: Group award levels may be adjusted upward or downward
by up to 25% by the Chief Executive Officer provided
that total awards do not exceed the amounts generated
by formula.
After application of the group performance,
individual awards may be adjusted upward or downward
based on the adjustment table below.
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Approval from the Chief Executive Officer is required
for adjustments outside of these limits. The Chief
Executive Officer's award may be adjusted upward or
downward by the Compensation Committee. The
adjustments by salary grade level (or equivalent) are
as follows:
Salary Grade Upward Downward
(or equivalent) Adjustment Adjustment
--------------- ---------- ------------
All Participants +100% -100%
All awards under this program are discretionary. The
amount of the award including adjustments is
determined by Western Digital in its sole discretion.
No employee has any contractual right to receive an
award pursuant to this program due to his/her
employment at Western Digital.
Extraordinary Events: The Compensation Committee, in its discretion, may
adjust the basis upon which performance is measured
to reflect the effect of significant changes that
include, but are not limited to, unbudgeted
acquisitions/ divestitures, unusual or extraordinary
accounting items, or significant, unplanned changes
in the economic or regulatory environment.
Termination: Participants must be employed by the Company at the
end of the semi-annual period to receive an award. If
a participant terminates for reason of retirement,
total and permanent disability, or death, the
Compensation Committee has the discretion to pay
prorated awards based upon the percentage of the
period worked.
Partial Year The Compensation Committee, in its discretion, may
Participation: pay prorated awards to people hired or promoted into
eligible positions. In general, awards will be
prorated for participants who begin before employment
more than 3 months into the period.
Deferred Payout: Before the end of the calendar year, the participant
may elect to defer payout of all or part of the award
in accordance with Western Digital's Deferred
Compensation Plan. The deferred amount will be
credited with a rate as specified in the Western
Digital's Deferred Compensation Plan.
Payout of Award: Awards will be paid in cash as soon as possible
following the end of the semi-annual period or
according to the participant's deferral election.
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