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Exhibit 10.16
WESTERN DIGITAL LONG-TERM RETENTION PLAN
Purpose
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The purpose of the plan is to retain participants by
providing a significant incremental opportunity for capital
accumulation and to focus participants on increasing the
value of Western Digital (the "Company") stock.
Eligibility
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Plan eligibility is extended to a limited group of
employees who are considered to be critical to the future
success of the Company.
Description of the Plan
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A "base amount" will be established for each participant.
The base amount will fluctuate with Western Digital's stock
price and awards will vest and be paid out over a four year
period from the date the base amount is established, as
follows (subject to continued employment):
Anniversary Percent of Cumulative Percent
Following Date of Base Amount of Base Amount
Establishment Vesting Vested
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First 0% 0%
Second 10% 10%
Third 25% 35%
Fourth 65% 100%
Operation of the Plan
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Effective Date of July 1, 1995. Initial base amounts will be established and
the Plan: vesting will begin as of this date.
Award Pool: The Board of Directors, without the participation or vote
of any Directors who are or who during the past twelve
months have been employees of the Company or any of its
subsidiaries, will establish an overall amount that is
available for awards.
Establishment of The initial base amount for elected officers of the Company
Base Amount: will be recommended by the Compensation Committee of the
Board of Directors and approved by the Board of Directors
without the participation or vote of any Directors who are
or during the previous twelve months have been employees of
the Company or
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any of its subsidiaries. The base amounts for all other
participants will be determined by the Chief Executive
Officer. These base amounts will be subject to the overall
amount available in the award pool. The value of the
unvested portions of the base amounts will vary based on the
Company's stock price performance.
Valuation Date: The valuation date will be the date on which the Company's
stock price performance will be measured for payout
purposes. A new valuation date will occur on January 1 and
July 1 of each year.
Crediting Rate: The value of the unvested portion of the base amount will
increase or decrease semi-annually on the plan's valuation
date in accordance with the changes in the Company's stock
price.
To desensitize the plan from the effects of short-term highs
or lows in the stock price, the stock price used to
determine the crediting rate will be an average of the daily
closing stock prices over the 12 months immediately prior to
the valuation date, compared to the previous valuation
date's average 12-month stock price.
Example:
July 1, 1995, Account Balance $400,000
July 1, 1995, Average 12 Month Stock Price $15.00
January 1, 1996, Average 12 Month Stock Price $16.50
Stock Price Change = ($16.50 - $15.00/$15.00 +10%
January 1, 1996, Account Balance =
$500,000 + ($400,000 x 10%) $440,000
Additional Provisions
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Additional Any additional base amounts that are established for a
Awards: participant will vest over four years in accordance with the
previously described schedule, commencing as of the date the
additional base amount is determined provided that if the
additional base amount is determined on any date other than
July 1 or January 1, the additional base amount will
commence vesting as of the most recent valuation date, and
will be valued as if the additional base amount had been
determined on the most recent valuation date.
New Hires: Any base amounts for newly hired employees will vest over
four years in accordance with the previously described
schedule, commencing as of the date of the base amount is
determined provided that if the base amount is determined on
any date other than July 1 or January 1, the additional base
amount will commence vesting as of the most recent valuation
date, and will be valued as if the base amount had been
determined on the most recent valuation date.
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Charge in Control: In the event of a "Change of Control" (as defined in
the Company's Deferred Compensation Plan, all unvested
base amounts will be vested immediately prior to the
effectiveness thereof.
Deferred Payout: Within one year of the establishment of any base
amounts under the plan, the participant may elect to
defer payout of any or all of the three individually
vesting portions of the base amount in accordance with
the Company's Deferred Compensation Plan. After each
portion of any base amount vests and if the participant
has elected to defer payout of that vested portion, it
will be credited to the participant's account under the
Company's Deferred Compensation Plan and administered
pursuant thereto.
Payout of Award: The payout will be in cash only upon vesting of each
portion of any base amount or in accordance with the
participant's deferral election. No vesting will occur
after termination of a participant's employment for any
reason.
If the Company's tax deduction for any payout under
this plan would be disallowed under Internal Revenue
Code Section 162(m), the Company may, in its sole
discretion, defer payment of the excess amount, but
only to the extent that, and for so long as, the
Company's tax deduction for the payment would be
disallowed under Internal Revenue Code Section 162(m).
Amounts that are deferred for this reason will accrue
interest at a rate in accordance with the Company's
Deferred Compensation Plan.
Administration: The Plan will be administered by the Compensation
Committee of the Company's Board of Directors, which
shall have the power to construe the Plan and to
delegate ministerial responsibilities to the Company.