Exhibit 10.54
[WESTERN DIGITAL LETTERHEAD]
October 19, 2001
Mr. D. Scott Mercer
848 Nash Road
Los Altos CA 94024
Dear Scott:
It is with great pleasure that we at Western Digital Corporation (the "Company")
extend this offer of employment to you. Your position will be Senior Vice
President and Chief Financial Officer, reporting to me. As you know, this is an
interim position, as we are conducting a search for a Chief Financial Officer
and you will assist us in that search. This is an exempt, at-will position and
will pay an annualized base salary of $337,500.00 paid bi-weekly.
Contingent upon approval by the Board of Directors, we will recommend a stock
option grant amount of 225,000 shares, subject to the provisions of Western
Digital's Stock Option Agreement and stock option plan. This grant will have our
customary three (3) year vesting schedule, which is 25% after six months, 25%
after 12 months, 25% after 24 months and 25% after 36 months. Vesting will cease
upon termination of your service as Senior Vice President and Chief Financial
Officer of the Company.
In addition to the above stock option grant, we will also recommend to our Board
of Directors a restricted stock grant of 150,000 shares. As with the above stock
option grant, this grant is contingent upon Board approval and will be subject
to the Western Digital Broad Based Stock Incentive Plan and agreement. Forty
percent (40%) or 60,000 of these restricted shares will vest on 1/31/03. The
remaining sixty percent (60%) or 90,000 shares will vest the following year on
1/31/04. Vesting will cease upon termination of your service as Senior Vice
President and Chief Financial Officer of the Company.
You will be eligible to participate in-full for first half of Fiscal Year 2002,
July through December, Incentive Compensation Plan (ICP). Funding will be based
on corporate business results. Your participation and potential pay out will be
based on your individual accomplishments and is contingent upon approval by the
Western Digital Compensation Committee. Your potential ICP payout will be 65% of
base salary.
Mr. D. Scott Mercer
Page 2
October 19, 2001
You will be eligible for participation in the Company's Change in Control
Severance Plan and will be covered by the Company's customary indemnification
policies for elected officers. In addition to your Incentive Compensation Plan
participation, you will be eligible to receive a one- time Chief Financial
Officer transition bonus in the amount of up to $120,000. You will be paid this
bonus at the time you and the Company transition you out of your Chief Financial
Officer role and install a new full-time employee status Chief Financial
Officer. Payment of this bonus will be at the sole discretion of the President
and Chief Executive Officer. Your eligibility for this bonus requires your
employee status as Chief Financial Officer during the entire time of transition
to a new Chief Financial Officer.
The Company will provide you with furnished apartment style housing in the
Orange County, California area, where the Company's headquarters is located, for
the period of your employment, but not to exceed twelve months from your start
date.
If you are not replaced as Chief Financial Officer prior to the twelve month
period, this housing provision may be renegotiated or extended upon mutual
agreement depending on the circumstances at that time. Cost considerations
associated with this provision, such as apartment rent, furniture rental, etc.
will be mutually agreed upon by you and the Company.
During the period of your employment, but not to exceed 12 months, the Company
will reimburse you for reasonable travel expenses between your home in Los
Altos, California and Orange County, California on a weekly basis. Reimbursement
of these expenses will follow the guidelines outlined in the Company's travel
and expense policy. This offer is contingent upon successful completion of all
pre-employment criteria as outlined on Western Digital's Application for
Employment, which is enclosed for completion and your signature.
As a condition of employment, immediately upon date of hire, you will be
required to sign an Employee Agreement governing the inventions, proprietary
information and such other subject matter that the company considers vital to
protect its operation. Your employment will be "at will," which means that there
will be no fixed duration to your employment relationship. You can terminate
your employment at any time and for any reason, and the Company can terminate
your employment at any time for any reason.
You will be eligible on your first day of employment for Beneflex, our flexible
benefits plan that allows you to choose the coverage that fits your needs. As a
Senior Vice President, you will receive an additional $5,000 medical expense
allowance per benefit year. This allowance can be used to cover out-of-pocket
expenses not covered in the medical plan you choose. You will be eligible to
join the Western Digital Savings (401k) Plan immediately. You will receive a
complete benefits summary during your orientation on your first day of
employment.
Your vacation and sick leave accruals will be at the fifty percent (50%) level.
As a rehired employee, a calculation will be performed taking into account your
original start date and your break in service. This will result in creation of
an "affiliation date" that will give you credit for time served in relation to
your vacation accrual.
Mr. D. Scott Mercer
Page 3
October 19, 2001
Additionally, as a Senior Vice President, you will be eligible to receive
reimbursement of up to $5,000 for financial planning services provided to you by
a service provider of your choice. This allowance is subject to federal and
state supplemental tax rates.
On your first day of employment, at 8:00 a.m. at 20511 Lake Forest Drive, in
Lake Forest, you will be required to provide authentic documents that establish
identity and employment eligibility. Please refer to the attached List of
Acceptable Documents. We are required by law to verify this information and will
need one document from List A or two documents, one from List B and one from
List C.
Please return the signed and dated original indicating your acceptance within
one week from the date of this letter. A copy has been enclosed for your
records. If you have any questions, please do not hesitate to call.
Sincerely,
/s/ Matthew E. Massengill
Matthew E. Massengill
President & CEO
ACCEPTANCE: /s/ Scott Mercer
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Signature Date
DATE YOU PLAN TO START WORK:
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