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EXHIBIT 10.16.2
WESTERN DIGITAL CORPORATION
EXECUTIVE RETENTION PLAN
1. PURPOSE.
The purpose of the Western Digital Corporation Executive Retention Plan
(the "PLAN") is to provide additional incentive compensation to a select
group of employees who are considered critical to the management and
successful operation of Western Digital Corporation (the "COMPANY").
2. DEFINITIONS.
As used herein, the following terms shall have the meanings ascribed
thereto below:
(a) "ACCOUNT" means a bookkeeping account maintained by the Company
for each Award to track vesting and value pursuant to Sections 5
and 6.
(b) "AWARD" means the commitment of the Company to make payments
under the Plan to an Eligible Employee selected pursuant to
Section 4 in amounts determined in accordance with Sections 5
and 6.
(c) "BASE AMOUNT" means the amount of an Award at the time of its
grant, denominated in U.S. Dollars.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CHANGE IN CONTROL" has the meaning set forth in the Deferred
Compensation Plan.
(f) "COMMITTEE" means a committee of the Board consisting solely of
two (2) or more Non-employee Directors.
(g) "COMMON STOCK" means the common stock of the Company.
(h) "DEFERRED COMPENSATION PLAN" means the Company's Deferred
Compensation Plan as amended or restated.
(i) "ELIGIBLE EMPLOYEE" means an employee who is part of management
or highly compensated (within the meaning of Title I of the
Employee Retirement Income Security Act of 1974) regularly
employed by the Company or any of its subsidiaries.
(j) "EMPLOYEE STOCK OPTION PLAN" means the Company's Employee Stock
Option Plan as amended or restated.
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(k) "NON-EMPLOYEE DIRECTOR" means a director who is both a
"non-employee director" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and an "outside
director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended.
(l) "PARTICIPANT" means any Eligible Employee to whom an Award is
granted.
(m) "UPSIDE OPTIONS" means the options awarded, if any, pursuant to
the Employee Stock Option Plan, to a Participant to give them the
opportunity to increase the value of the award.
3. ADMINISTRATION OF THE PLAN.
3.1 ADMINISTRATOR. The Plan shall be administered by the Board, which
shall have complete discretion and authority to interpret and
construe the Plan and any Awards issued thereunder, decide all
questions of eligibility and benefits (including underlying
factual determinations), and adjudicate all claims and disputes.
3.2 ADMINISTRATIVE RULES. The Board may (a) adopt, amend, and rescind
rules and regulations relating to the Plan; (b) determine the
Base Amount and any other terms and provisions of Awards not
inconsistent with the Plan, (c) construe the provisions of the
Plan and Awards; and (d) make all determinations necessary or
advisable for administering the Plan. Any such actions by the
Board shall be consistent with the provisions of the Plan. The
Board may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to
the extent it shall deem expedient to carry the Plan or Award
into effect, and it shall be the sole and final judge of such
expediency. The determinations of the Board on the matters
referred to in this Section 3.2 shall be final and binding on all
interested parties.
3.3 DELEGATION. The Board may delegate any of its responsibilities
with respect to the Plan to the Committee.
4. AWARDS.
4.1 ELIGIBILITY AND GRANTS OF AWARDS. Subject to the express
provisions of the Plan, Awards may be granted to Eligible
Employees by the Board or the Committee. Upon the date of any
such grant, or any effective date of such grant specified by the
Board or Committee different from the date the grant decision is
made, the Award shall be effective and the recipient thereof
shall be a Participant with respect to that Award. Each Award
granted pursuant to the Plan shall be evidenced by a memorandum
from the Company to the recipient specifying the Base Amount of
the Award and such other terms as the Board or Committee shall
deem necessary or desirable.
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4.2 Awards may consist of all cash or Upside Options but will, in
general, consist of both a cash portion and Upside Options. All
Upside Option grants will be made at the fair market value of the
stock on the date of grant pursuant to the Employee Stock Option
Plan.
4.2 CONTINUED EMPLOYMENT. The grant of an Award to an Eligible
Employee pursuant to the Plan shall not give the Eligible
Employee any right to be retained in the employ of the Company;
and the right and power of the Company to dismiss or discharge
any Eligible Employee or Participant, with or without cause, for
any reason or no reason, is specifically reserved.
4.3 NO PROPERTY RIGHTS. The grant of an Award to an Eligible Employee
pursuant to the Plan shall not be deemed the grant of a property
interest in any assets of the Company. Each Award evidences only
a general obligation of the Company to comply with the terms and
conditions of the Plan and make payments in accordance with the
Plan from the assets of the Company that are available for the
satisfaction of obligations to creditors. The Company shall not
segregate any assets in respect of any Awards or Accounts. The
rights of a Participant to benefits under this Plan shall be
solely those of a general, unsecured creditor of the Company.
4.4 NO RIGHTS AS A SHAREHOLDER. A Participant shall have no dividend,
voting, or any other rights as a shareholder with respect to any
Award.
5. CREDITS TO ACCOUNTS.
5.1 CREDITS
(a) The Company will not increase or decrease the value of the
Award.
(b) The potential increase or decrease in the value of the
overall Award will be reflected in the Upside Options
granted to the Participant.
6. VESTING AND PAYMENT.
6.1 VESTING. Except as provided below, Participants will have no
vested interest in any Award prior to vesting thereof or in
excess of the amount thereof vested. Each Award shall vest in a
manner described by the Board of Directors. The Upside Options
shall vest according to the same schedule as the Award.
Notwithstanding the foregoing, however, vesting shall immediately
cease upon termination of the Participant's employment with the
Company for any reason, and no vesting credit shall be given for
partial years, regardless of the reason for termination of the
Participant's employment with the Company. If a participant's
employment with the Company terminates for any reason , he or she
shall immediately forfeit all nonvested Awards and account
balances.
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6.2 CHANGE IN CONTROL. Notwithstanding the foregoing, all Awards
shall vest in their entirety immediately prior to any Change in
Control.
6.3 PAYMENTS. Within sixty (60) days of vesting, the Company shall
pay to the Participant an amount equal to the product of the cash
portion of the Award and the applicable vesting percentage.
6.4 PAYMENTS ONLY TO PARTICIPANT. Payments pursuant to any Award
shall be made only to the Participant recipient of that Award or
his or her survivors.
6.5 TAX LIMITS. Notwithstanding anything herein to the contrary, if
the Company's tax deduction for any payment under the Plan would
be disallowed under Section 162(m) or 280G of the Internal
Revenue Code of 1986, as amended, or for any other reason, the
Company may, in its 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.
Amounts that are deferred for this reason will accrue interest at
the rate described in the Deferred Compensation Plan.
6.6 DEFERRAL.
(a) A Participant may elect prior to beginning of the calendar
year during which a portion of the Award will vest to
defer receipt of any or all cash payments due in the
following calendar year under the Plan. Such election
shall be made, and any such deferral shall be effected and
administered, in accordance with the Deferred Compensation
Plan.
(b) The value derived from the Upside Options are not eligible
for deferral under the Deferred Compensation Plan.
7. TAXES.
7.1 WITHHOLDING. The amounts payable to a Participant under the Plan
shall be reduced by any amount that the Company is required to
withhold with respect to such payments under applicable law.
7.2 PARTICIPANT TAXES. The Company is not responsible for, and makes
no representation or warranty whatsoever in connection with, the
tax treatment hereunder, and each Participant should consult his
or her own tax advisor.
8. AMENDMENT OR TERMINATION.
The Board may, from time to time, amend, modify, change, suspend, or
terminate, in whole or in part, any or all provisions of the Plan,
except that no amendment, modification, change, suspension, or
termination may affect any right of any Participant, without his or her
consent, with respect to any Award granted prior to the effective date
of such amendment, modification, change, suspension, or termination.
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9. ASSIGNMENT.
No right or interest to or in any Award, payment or benefit to a
Participant shall be assignable by such Participant except by will or
the laws of descent and distribution. No right, benefit or interest of a
Participant hereunder shall be subject to anticipation, alienation,
sale, assignment, encumbrance, charge, pledge, hypothecation or set off
in respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process or assignment by operation of law.
Any attempt, voluntarily or involuntarily, to effect any action
specified in the immediately preceding sentences shall, to the full
extent permitted by law, be null, void and of no effect; provided,
however, that this provision shall not preclude a Participant from
designating one or more beneficiaries to receive any amount that may be
payable to such Participant under the Plan after his or her death and
shall not preclude the legal representatives of the Participant's estate
from assigning any right hereunder to the person or persons entitled
thereto under his or her will, or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy
applicable to his or her estate.
10. GENERAL.
10.1 LAWS GOVERNING. The substantive laws of the State of California
shall govern the validity, construction, enforcement and
interpretation of the Plan and all Awards, unless otherwise
specified therein.
10.2 GOOD FAITH DETERMINATIONS. No member of the Committee or the
Board shall be liable, with respect to the Plan or any Award, for
any act, whether of commission or omission, taken by any other
member or by any officer, agent, or employee of the Company, nor,
excepting circumstances involving his or her own bad faith, for
anything done or omitted to be done by himself or herself. The
Company shall indemnify and hold harmless each member of the
Committee and Board from and against any liability or expense
hereunder, except in the case of such member's own bad faith.
10.3 EFFECT OF HEADINGS. Section headings contained in the Plan are
for convenience only and shall not affect the construction or
interpretation of the Plan.
10.4 INVALID PROVISIONS. If any provision of the Plan or any Award
granted hereunder is held to be illegal, invalid or unenforceable
under present or future laws effective during the term of the
Plan, such provision shall be fully severable; the Plan or such
Award shall be construed and enforced as if such illegal, invalid
or unenforceable provision had never been a part of the Plan or
such Award; and the remaining provisions of the Plan or such
Award shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or
severance from the Plan or such Award. Furthermore, in lieu of
such illegal, invalid or unenforceable provision there shall be
added automatically as part of the Plan or such Award a provision
as similar in terms to such illegal, invalid or unenforceable
provision as is possible and still be legal, valid and
enforceable.
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10.5 SET-OFF. The Company shall be entitled, at its option and not in
lieu of any other remedies to which it may be entitled, to set
off any amounts due the Company or any affiliate of the Company
against any amount due and payable by the Company or any
affiliate of the Company to a Participant pursuant to this Plan
or otherwise.
10.6 WAIVERS. No waiver of any term or condition hereof shall be
binding unless it is in writing and signed by the Company and the
affected Participant. The waiver by any party of a breach of any
provision of this Plan shall not operate or be construed as a
waiver of any subsequent breach by any party.
10.7 INUREMENT. The rights and obligations under the Plan and any
related agreements shall inure to the benefit of, and shall be
binding upon the Company, its successors and assigns, and the
Participants and their beneficiaries and legal representatives.
10.8 ENTIRE AGREEMENT. This Plan constitutes the entire agreement
between the Company and the Participants concerning the subject
matter hereof, and supersedes all other agreements, whether
written or oral, with respect to such subject matter.
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