EXHIBIT 10.5
AMENDED AND RESTATED WESTERN DIGITAL CORPORATION
NON-EMPLOYEE DIRECTORS STOCK-FOR-FEES PLAN
This plan (1) was implemented in 1992, (2) was amended and restated
effective as of January 9, 1997 to require directors to take half their annual
retainer fee in stock, permit deferrals of cash or stock under the plan, and
make certain other changes to conform the plan to the new version of Rule 16b-3
and ease administration, (3) was amended and restated effective as of January
27, 2000, to require directors to take $20,000 of their annual retainer fee in
stock, increase the premium to 25% for deferral of annual retainers or meeting
fees received in the form of common stock and provide a premium of 15% for
deferral of annual retainers or meeting fees received in the form of cash, (4)
was amended and restated effective as of November 14, 2002, to extend the term
of the plan to December 31, 2012, and (5) was amended and restated effective as
of November 18, 2004, to eliminate (i) the requirement that directors receive
half of their annual retainer fee in stock, and (ii) the requirement that the
Company pay non-employee directors a 15% premium on cash annual retainer fees or
cash meeting fees that the director elects to defer under the Company's Deferred
Compensation Plan.
1. PURPOSE.
The purposes of this Western Digital Corporation Non-Employee
Director Stock-For-Fees Plan (the "PLAN") are to advance the interests of
Western Digital Corporation (the "COMPANY") and its stockholders by increasing
ownership by the Company's non-employee directors of the Company's Common Stock,
thereby aligning their interests more closely with the interests of the
Company's other stockholders, and to make available to the Company the cash that
would otherwise have been paid to non-employee directors receiving Common Stock
in lieu of fees hereunder.
2. ADMINISTRATION.
The Plan shall be administered by the Company, which shall have the
power to construe the Plan, to resolve all questions arising under the Plan, to
adopt and amend such rules and regulations for the administration of the Plan as
it may deem desirable, and otherwise to carry out the terms of the Plan, but
only to the extent not contrary to the express provisions of the Plan. The
determinations, interpretations, and other actions of the Company of or under
the Plan or with respect to any Common Stock granted pursuant to the Plan shall
be final and binding for all purposes and on all persons. Neither the Company
nor any officer or employee thereof shall be liable for any action or
determination taken or made under the Plan in good faith. Notwithstanding the
foregoing, the Company shall have no authority or discretion as to the persons
who will receive Common Stock granted pursuant to the Plan, the number of shares
of Common Stock to be issued under the Plan, the time at which such grants are
made, the number of shares of Common Stock to be granted at any particular time,
or any other matters that are specifically governed by the provisions of the
Plan.
3. PARTICIPATION IN THE PLAN.
Directors of the Company who are not employees of the Company or any
subsidiary of the Company ("ELIGIBLE DIRECTORS") shall be eligible to
participate in the Plan. Each Eligible Director shall, if required by the
Company, enter into an agreement with the Company in such form as the Company
shall determine consistent with the provisions of the Plan for purposes of
implementing the Plan or effecting its purposes. In the event of any
inconsistency between the provisions of the Plan and any such agreement, the
provisions of the Plan shall govern.
4. STOCK SUBJECT TO THE PLAN.
(a) Number of Shares. The shares that may be issued under the Plan
shall be authorized and unissued shares or treasury shares of the Company's
Common Stock (the "COMMON STOCK"). The maximum aggregate number of shares that
may be issued under the Plan shall be four hundred thousand (400,000), subject
to adjustment upon changes in capitalization of the Company as provided in
Section 4(b). The maximum aggregate number of shares issuable under the Plan may
be increased from time to time by approval of the Company's Board of Directors,
and by the stockholders of the Company if stockholder approval is required
pursuant to the applicable rules of any stock exchange, or, in the opinion of
the Company's counsel, any other law or regulation binding upon the Company.
(b) Adjustments. If the Company shall at any time increase or
decrease the number of its issued and outstanding shares of Common Stock
(whether by reason of reorganization, merger, consolidation, recapitalization,
stock dividend, stock split, combination of shares, exchange of shares, change
in corporate structure, or otherwise), then the number of shares of Common Stock
still available for issue hereunder shall be increased or decreased
appropriately and proportionately.
5. STOCK ELECTIONS.
Each Eligible Director may make an "ELECTION" to receive Common
Stock in lieu of any or all of (i) the annual retainer fee otherwise payable to
him or her in cash for that calendar year, and/or (ii) the meeting attendance
fees otherwise payable to him or her in cash for that calendar year. Such
Election for any calendar year must be in writing and must be delivered to the
Secretary of the Company not later than the end of the immediately preceding
calendar year. In addition, newly elected or appointed Eligible Directors shall
make an interim Election as of the date they join the board, which interim
Election shall govern until the immediately ensuing calendar year. Separate
Elections must be made for each calendar year; if an Eligible Director does not
make a written Election for any particular calendar year, then such Eligible
Director shall be deemed to have elected to receive all meeting fees and his or
her retainer fee for that calendar year in cash.
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6. ISSUANCE OF COMMON STOCK.
(a) Timing and Amounts of Issuances.
(i) Common Stock issuable to an Eligible Director in lieu of
annual retainer or meeting fees shall be issued not later than ten days after
the date such annual retainer or meeting fees, as the case may be, would have
been paid if paid in cash.
(ii) The number of shares of Common Stock issuable in lieu of
cash annual retainer fees (whether or not deferred) shall be determined by
dividing the amount of cash fees being replaced by Common Stock by the Fair
Market Value (as defined below) of the Common Stock on the first trading day of
the calendar year for which the annual retainer is being paid (or January 27 in
the case of 2000) or, in the case of an annual retainer being paid to a newly
appointed or elected Eligible Director for a partial year, on the date such
Eligible Director joins the board.
(iii) The number of shares of Common Stock issuable in lieu of
cash meeting fees (whether or not deferred) shall be determined by dividing the
amount of cash fees being replaced by Common Stock by the Fair Market Value of
the Common Stock on the date of the meeting for which the fee is paid.
(b) Fractional of Shares. No fractional shares shall be issued under
the Plan. The portion of annual retainer or meeting fees that would be paid in
Common Stock but for the proscription on fractional shares shall be paid in cash
along with any portion of the fee (or the next subsequent fee) that the Eligible
Director has elected to receive in cash. For directors electing no cash for a
particular calendar year, fractional share equivalent cash balances shall be
held by the Company until the end of that calendar year and then distributed in
cash to the Eligible Director without interest.
(c) Fair Market Value. For the purposes of the Plan, the "FAIR
MARKET VALUE" of the Common Stock as of any issuance or deferral date shall be
the closing price of the Common Stock on the New York Stock Exchange (or another
national stock exchange or the NASDAQ National Market System, if the Common
Stock trades thereon but not on the NYSE) as of such date (or, if no such shares
were traded on such date, as of the next preceding day on which there was such a
trade, provided that the closing price on such preceding date is not less than
100% of the fair market value of the Common Stock, as determined in good faith
by the Company, on the date of issuance). If at any time the Common Stock is no
longer traded on a national stock exchange or the NASDAQ National Market System,
the Fair Market Value of the Common Stock as of any issuance date shall be as
determined by the Company in good faith in the exercise of its reasonable
discretion.
(d) Issuance of Certificates. As promptly as practicable following
each issuance of Common Stock hereunder, the Company shall issue to the
recipient Eligible Director a stock certificate or certificates registered in
his or her name representing the number of shares of Common Stock issued.
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7. DEFERRAL.
(a) Election to Defer. An Eligible Director may elect to defer the
receipt of any cash or stock annual retainer or meeting fees payable during the
period to which an Election applies. Any such deferral election by an Eligible
Director shall specify whether the fees to be deferred are fees that the
Eligible Director is required or has elected to receive in Common Stock, and
shall be made and take effect at the times specified in the Company's Deferred
Compensation Plan (the "DEFERRED COMPENSATION PLAN"). The deferral shall not
change the form (cash versus Common Stock) in which the fee is to be paid at the
end of the deferral period, notwithstanding the fact that during the deferral
period fees ultimately payable in Common Stock may be general unsecured
obligations of the Company to the Eligible Director.
(b) Common Stock Premium. The Company shall pay a 25% premium to
each Eligible Director who elects to defer annual retainer or meeting fees to be
received in Common Stock. The number of shares of Common Stock deferred and the
premium thereon shall be calculated by multiplying the amount of cash fees being
replaced by Common Stock and deferred by 1.25, and then dividing that product by
the Fair Market Value of the Common Stock on the date set forth in Section
6(a)(ii) or Section 6(a)(iii) for annual retainer or meeting fees, respectively.
Any premium Common Stock shall be subject to the same deferral election, and
deliverable to the Eligible Director on the same terms, as the Common Stock upon
which the premium is paid.
(c) Plan Shares. All shares issued or issuable under the Plan,
including deferred shares and shares issuable as premiums on deferrals, shall be
deducted from the shares available under the Plan at the time first issued or
deferred, provided that shares deferred and not ultimately issued and delivered
to the Eligible Director shall be returned to the pool of available shares under
the Plan.
(d) Deferred Compensation Plan. Deferral of Eligible Directors'
fees, whether payable in cash or Common Stock and including any premiums, shall
be administered pursuant to the Deferred Compensation Plan.
8. SECURITIES LAWS.
(a) Investment Representations. The Company may require any Eligible
Director to whom an issuance of securities is made or a deferred delivery
obligation is undertaken as a condition of receiving securities pursuant to such
issuance or obligation to give written assurances in substance and form
satisfactory to the Company and its counsel to the effect the such person is
acquiring the securities for his or her own account for investment and not with
any present intention of selling or otherwise distributing the same in violation
of applicable securities laws, and to such other effects as the Company deems
necessary or appropriate to comply with federal and applicable state securities
laws.
(b) Listing, Registration, and Qualification. Anything to the
contrary herein notwithstanding, each issuance of securities shall be subject to
the requirement that, if at any time the Company or its counsel shall determine
that the listing, registration, or qualification of the securities subject to
such issuance upon any securities exchange or under any state or federal
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law, or the consent or approval of any governmental or regulatory body, is
necessary or advisable as a condition of, or in connection with, such issuance
of securities, such issuance shall not occur in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained on conditions acceptable to the Company. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration, or qualification.
(c) Restrictions on Transfer. The securities issued under the Plan
shall be restricted by the Company as to transfer unless the grants are made
under a registration statement that is effective under the Securities Act of
1933, as amended, or unless the Company receives an opinion of counsel
satisfactory to the Company to the effect that registration under state or
federal securities laws is not required with respect to such transfer.
9. WITHHOLDING TAXES.
Whenever shares of Common Stock are to be issued under the Plan, the
Company shall have the right prior to the delivery of any certificate or
certificates for such shares to require the recipient to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax
requirements attributable to the issuance. In the absence of payment by an
Eligible Director to the Company of an amount sufficient to satisfy such
withholding taxes, or an alternative arrangement with the Eligible Director that
is satisfactory to the Company, the Company may make such provisions as it deems
appropriate for the withholding of any such taxes which the Company determines
it is required to withhold.
10. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may suspend or terminate the
Plan or any portion thereof at any time, and may amend the Plan from
time-to-time in any respect the Board of Directors may deem to be in the best
interests of the Company; provided, however, that no such amendment shall be
effective without approval of the stockholders of the Company if stockholder
approval of the amendment is then required pursuant to the applicable rules of
any securities exchange, or, in the opinion of the Company's counsel, any other
law or regulation binding on the Company.
11. EFFECTIVE DATE AND DURATION OF THE PLAN.
The Plan shall, subject to approval by the Company's stockholders at
the Company's 1992 Annual Meeting, be effective January 1, 1993. The Plan shall
terminate at 11:59 p.m. on December 31, 2012, unless sooner terminated by action
of the Board of Directors. Elections may be made under the Plan prior to its
effectiveness, but no issuances under the Plan shall be made before its
effectiveness or after its termination.
12. GOVERNING LAWS.
The Plan and all rights and obligations under the Plan shall be
construed in accordance with and governed by the laws of the State of
California, excluding its conflicts of laws principles.
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