Exhibit 10.22
WESTERN DIGITAL CORPORATION
EXECUTIVE SEVERANCE PLAN
1. PURPOSE
The purpose of the Plan is to provide severance benefits to certain
Executives whose employment with the Company or a Subsidiary terminates under
certain circumstances as described more fully herein.
2. EFFECTIVE DATE
All of the policies and practices of the Company and its Subsidiaries
regarding severance benefits or similar payments upon employment termination
with respect to Executives in the United States, other than written employment,
separation or equity award agreements with the Company or a Subsidiary that
provide severance benefits or the Company's Amended and Restated Change of
Control Severance Plan, are hereby superseded by the Plan, which shall be known
as the Western Digital Corporation Executive Severance Plan, effective as of the
Effective Date.
3. DEFINITIONS
3.1 "Administrator" means the Committee or any delegate of such
committee acting within the authority delegated to it pursuant to Section 9.1.
3.2 "Base Pay" means the employee's wages earned on a monthly basis,
determined as of the employment termination date, excluding bonuses and
commissions.
3.3 "Cause" means the occurrence or existence of any of the following
with respect to an Executive:
(a) the Executive's conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent jurisdiction for any crime
involving moral turpitude or any felony punishable by imprisonment in
the jurisdiction involved;
(b) whether prior or subsequent to the Effective Date, the
Executive's willful engaging in dishonest or fraudulent actions or
omissions;
(c) failure or refusal to perform his or her duties as
reasonably required by the Company and/or a Subsidiary that employs the
Executive;
(d) negligence, insubordination, violation by the Executive of
any duty (of loyalty or otherwise) owed to the Company and/or a
Subsidiary, or any other misconduct on the part of the Executive;
(e) repeated non-prescription use of any controlled substance,
or the repeated use of alcohol or any other non-controlled substance
which in the Administrator's (or its
delegate's or delegates') reasonable determination interferes with the
Executive's service as an officer or employee of the Company and/or a
Subsidiary;
(f) sexual harassment by the Executive that has been reasonably
substantiated and investigated;
(g) involvement in activities representing conflicts of interest
with the Company and/or a Subsidiary;
(h) improper disclosure of confidential information;
(i) conduct endangering, or likely to endanger, the health or
safety of another employee;
(j) falsifying or misrepresenting information on the records of
the Company and/or a Subsidiary;
(k) the Executive's physical destruction or theft of substantial
property or assets of the Company and/or a Subsidiary;
(l) breach of any policy of, or agreement with, the Company
and/or a Subsidiary applicable to the Executive or to which the
Executive is otherwise bound.
Review of any determination that a termination is for Cause shall be by
the Administrator, in its sole and exclusive judgment and discretion, in
accordance with the provisions of Section 8 herein.
3.4 "Code" means the United States Internal Revenue Code of 1986, as
amended.
3.5 "Committee" means the Compensation Committee of the Board of
Directors of the Company.
3.6 "Company" means Western Digital Corporation, a Delaware corporation.
3.7 "Effective Date" means February 16, 2006.
3.8 "Eligible Employee" means any person classified by the Company or a
Subsidiary, in its sole discretion, as a non-temporary, full-time or part-time,
salaried or hourly employee (specifically excluding any individual who is not
classified by the Company or a Subsidiary as a common law employee, such as an
independent contractor or an individual working through a third-party provider,
such as Kelly Services, without regard to the characterization or
recharacterization of such individual's status by any court or governmental
agency), who is paid from the United States payroll of the Company or a
Subsidiary; provided, however, that in no event shall any employee who as of the
Effective Date is a party to a written employment agreement with the Company or
a Subsidiary (other than an agreement providing for at-will employment by the
Company or a Subsidiary and for no specified term) be an Eligible Employee.
3.9 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
3.10 "Executive" means an Eligible Employee who has been designated by
the Board or the Committee as a Tier I Executive, Tier II Executive or Tier III
Executive for purposes of participation in the Plan.
3.11 "Participant" means an Executive who is entitled, based on the
provisions hereof, to severance benefits under Section 6.
3.12 "Plan" means this Western Digital Corporation Executive Severance
Plan, as set forth in this instrument as it may be amended from time to time.
3.13 "Service Date" means the first date of employment or adjusted date
of employment if rehired with the Company or a Subsidiary.
3.14 "Subsidiary" means any corporation or other entity a majority of
whose outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
4. TERM
The Plan shall commence on the Effective Date and shall continue in
effect through December 31, 2008; provided, however, that on December 31, 2006
and each anniversary of such date thereafter, the term of the Plan shall extend
automatically for one additional year, unless the Committee (or the Board)
causes the Company to deliver written notice prior to the end of such term (or
extended term, as applicable) to each Executive then covered by the Plan that
the term of the Plan will not be extended (or further extended, as the case may
be), and if such notice is timely given the Plan shall terminate at the end of
the term then in progress.
5. PARTICIPATION
Upon approval of the Plan, the Committee shall designate the Executives
initially covered by the Plan. The Committee may, from time to time, designate
additional Eligible Employees as Executives for purposes of participation in the
Plan; provided that the Committee shall limit the group of all persons eligible
to participate in the Plan to a "select group of management or highly
compensated employees" within the meaning of 29 C.F.R. 2520-104-23 or any
similar successor provision. The Committee may, in its sole discretion, remove
an Executive from participation in the Plan and from time to time approve
modifications to the Tier to which one or more Executives have been designated.
6. SEVERANCE BENEFITS
6.1 Severance Benefits to Executives. An Executive whose employment with
the Company or a Subsidiary is terminated by the Company or such Subsidiary, as
applicable, without Cause and who meets the departure conditions described in
Section 7 shall become a Participant under the Plan and entitled to the benefits
set forth in this Section 6. The severance
benefits provided under Sections 6.2, 6.3, 6.5 and 6.6 of the Plan shall be the
obligations of, and shall be provided to the Executive by, the entity (the
Company or a Subsidiary, as applicable) that employs the Executive immediately
prior to the Executive's termination of employment. For avoidance of doubt, in
no event shall an Executive become entitled to or receive any payment hereunder
if the Executive's employment with the Company or a Subsidiary is terminated
voluntarily by the Executive (for any reason), by the Company or a Subsidiary,
as applicable, for Cause, or on account of the Executive's death or disability
(as defined in Section 22(e)(3) of the Code). Notwithstanding anything else
contained herein to the contrary, an Executive shall not be deemed to have
terminated employment if his or her employment by the Company or a Subsidiary
terminates but he or she continues as an employee of the Company or another
Subsidiary.
6.2 Salary Continuation Payments. A Participant shall receive a
severance payment equal to the Participant's monthly rate of Base Pay multiplied
by the number of months set forth below:
(a) Tier I Executive: 24 months
(b) Tier II Executive: 18 months
(c) Tier III Executive: 12 months
The severance payment shall be paid in one lump-sum cash payment within
thirty (30) days of the Participant's compliance with all provisions of Section
7.
6.3 Bonus. A Participant shall receive a payment equal to a pro-rata
portion of the Participant's bonus opportunity under the Company's (or a
Subsidiary's) bonus program in which the Participant participates for the bonus
cycle in which the Participant's date of termination occurs (with such pro-rata
portion based on the number of days in the applicable bonus cycle during which
the Participant was employed (not to exceed six (6) months) and assuming 100% of
the performance target(s) subject to the bonus award are met regardless of
actual funding by the Company or a Subsidiary). The payment shall be paid in one
lump-sum cash payment within thirty (30) days of the Participant's compliance
with all provisions of Section 7.
6.4 Equity Awards. Notwithstanding anything in the applicable stock
incentive plan and/or award agreement to the contrary, upon a Participant's
termination of employment, the Participant's then outstanding stock options and
restricted stock or stock unit awards that are subject to time-based vesting
will vest and become exercisable or payable, as applicable, as if the
Participant had remained employed with the Company or a Subsidiary for an
additional six (6) months. For avoidance of doubt, the foregoing is not intended
to apply to any equity awards held by the Participant that are subject to
performance-based vesting or to supersede any more favorable provision in any
stock incentive plan and/or award agreement regarding accelerated vesting in the
event of the Participant's termination of employment. Notwithstanding anything
to the contrary herein, the post-termination exercisability of the Participant's
then outstanding stock options shall continue to be governed by the stock
incentive plan and stock option agreement applicable to such options.
6.5 Outplacement Services. A Participant shall be eligible for
outplacement services, provided by a vendor chosen by the Company or applicable
Subsidiary and at the Company's or applicable Subsidiary's expense, after the
Participant's termination of employment for up to the number of months set forth
below:
(a) Tier I Executive: 12 months
(b) Tier II Executives: 12 months
(c) Tier III Executive: 12 months
6.6 Continued Health Care Coverage. If the Participant elects COBRA
continuation coverage within the applicable election period, the Company or
applicable Subsidiary shall make the applicable COBRA premium payments following
the expiration of the Participant's company-provided medical, dental, and/or
vision coverage existing as of the Participant's termination date for the number
of months set forth below:
(a) Tier I Executive: 18 months
(b) Tier II Executives: 12 months
(c) Tier III Executive: 12 months
Notwithstanding anything in the Plan to the contrary, there shall be no
obligation to make such COBRA premium payments on behalf of any Participant if
the Participant otherwise becomes eligible for equivalent coverage under another
employer's plan.
7. CONDITIONS TO SEVERANCE BENEFITS
7.1 Release. Notwithstanding anything to the contrary contained herein,
the Company's or applicable Subsidiary's obligation to pay benefits to a
Participant under Section 6 is subject to the condition precedent that the
Participant execute a valid and effective release of any and all claims in a
form and manner acceptable to the Company, and such release is received by the
Company no earlier than, and no later than fourteen (14) days (or such other
period as required by law) after, the Participant's termination date and is not
revoked by the Participant (pursuant to any revocation rights afforded by
applicable law) or otherwise rendered unenforceable by the Participant.
Notwithstanding anything else contained herein to the contrary, the Company or
applicable Subsidiary will have no obligation to pay any benefit to the
Participant under the Plan unless and until that Participant's release (in such
form) has been fully executed by the Participant (and the Participant's spouse,
to the extent required by the Company), has been received by the Company, and
has become effective and irrevocable by the Participant.
7.2 Departure and Entitlement Procedure. As a condition to becoming a
Participant and receiving the severance benefits described in Section 6, the
Executive must return and deliver to the Administrator or his or her designee
all Company and Subsidiary property within seven (7) days of the Executive's
termination date. In addition, except as otherwise provided by
the Company, if an Executive resigns prior to his/her scheduled termination
date, then he/she shall not be entitled to any severance payments or any other
severance benefits provided herein.
7.3 Offsets. Except as expressly provided below, a Participant shall not
be required to mitigate the amount of any payments provided for by the Plan by
seeking employment or otherwise, nor shall the amount of any cash payments or
benefits provided under the Plan be reduced by any compensation or benefits
earned by the Participant after his or her termination of employment with the
Company or applicable Subsidiary. All severance payments under the Plan shall be
subject to legal deductions, and the Company and/or applicable Subsidiary
reserves the right to offset the benefits payable under the Plan by any advanced
monies the Participant owes the Company or a Subsidiary. The benefits and
amounts payable under the Plan shall be reduced (but not below zero) by any
severance pay or benefits to which a Participant is or becomes entitled under
any other severance pay plan, policy, agreement or arrangement. In addition, in
no event shall a Participant become entitled to a duplication of benefits under
the Plan and any other severance plan or program of the Company or a Subsidiary.
Without limiting the generality of the foregoing, in no event shall a
Participant receive benefits under the Plan in connection with his or her
termination of employment if such Participant is entitled to benefits under the
Company's Amended and Restated Change of Control Severance Plan in connection
with such termination of employment. Notwithstanding any provision of the Plan
to the contrary, to the extent that any Participant is entitled to any period of
paid notice under Federal or state law including, but not limited to, the Worker
Adjustment Retraining Notification Act, 29 U.S.C. Sections 2101 et seq., the
benefits and amounts payable under the Plan shall be reduced (but not below
zero) by the Base Pay received by the Participant during the period of such paid
notice.
7.4 Limitation On Employee Rights. The Plan shall not give any employee
the right to be retained in the service of the Company or to interfere with or
restrict the right of the Company or applicable Subsidiary to discharge any
employee at any time, with or without Cause.
8. RESOLUTION OF DISPUTES
8.1 Claim. If a Participant or any other individual (herein referred to
as a "Claimant") believes that benefits under the Plan are being wrongfully
denied, that the Plan is not being operated properly, that fiduciaries of the
Plan have breached their duties, or that the Claimant's legal rights are being
violated with respect to the Plan, the Claimant must file a formal claim with
the Administrator. Any such claim for benefits must be filed in writing within
90 days of the date upon which the Participant first knew or should have known
the facts upon which the claim is based.
8.2 Claim Decision. If any claim for benefits under the Plan is denied,
in whole or in part, the Claimant shall be so notified by the Administrator
within thirty (30) calendar days of the date such person's claim is delivered to
the Administrator. At the same time, the Administrator shall notify the Claimant
of his or her right to a review by the Administrator and shall set forth, in a
manner calculated to be understood by the Claimant, specific reasons for such
decision, specific references to pertinent Plan provisions on which the decision
is based, a
description of any additional material or information necessary for the Claimant
to perfect his or her request for review, an explanation of why such material or
information is necessary, and an explanation of the Plan's review procedure.
8.3 Request for Review. Any Claimant or duly authorized representative
may appeal from such decision by submitting to the Administrator within sixty
(60) calendar days after the date of such notice of its decision a written
statement:
(a) requesting a review of the claim for benefits by the
Administrator;
(b) setting forth all of the grounds upon which the request for
review is based and any facts in support thereof; and
(c) setting forth any issues or comments which the Claimant
deems relevant to the claim.
The Administrator shall act upon such appeal within sixty (60) calendar
days after the latter of receipt of the Claimant's request for review by it or
receipt of all additional materials reasonably requested by it from such
Claimant.
8.4 Review of Decision. The Administrator shall make a full and fair
review of an appeal and all written materials submitted by the Claimant in
connection therewith and may require the Claimant to submit, within ten (10)
calendar days of written notice by the Administrator, such additional facts,
documents or other evidence as the Administrator, in its sole discretion, deems
necessary or advisable in making such a review. On the basis of its review, the
Administrator shall make an independent determination of the Claimant's
eligibility for an allowance and the amount of such allowance, if any, under
this Plan. The decision of the Administrator on any appeal shall be final and
conclusive upon all persons if supported by substantial evidence in the record.
8.5 Denial on Review. If on review of a decision, the Administrator
denies a claim in whole or in part, it shall give written notice of its decision
to the Claimant setting forth, in a manner calculated to be understood by the
Claimant, the specific reasons for such denial and specific references to the
pertinent Plan provisions on which its decision was based. If a Claimant
believes that the Administrator's determination on appeal is incorrect, the
Claimant or duly authorized representative may invoke the arbitration procedures
described in Section 8.6 or file suit related to such determination; provided
that any legal action must be taken by the Claimant within ninety (90) days
after the date upon which the Administrator's written decision on review was
sent to the Claimant.
8.6 Arbitration. A Claimant who has followed the procedures in Sections
8.1 through 8.5, but who has not obtained full relief on his or her claim for
benefits, may, within ninety (90) days following his or her receipt of the
Administrator's written decision on review pursuant to Section 8.5, apply in
writing to the Administrator for expedited and binding arbitration of his or her
claim in Orange County, California, before a sole arbitrator selected from
Judicial Arbitration and Mediation Services, Inc., Orange County, California, or
its successor ("JAMS"), or if JAMS is no longer able to supply the arbitrator,
such arbitrator shall be selected from the
American Arbitration Association, and shall be conducted in accordance with the
provisions of California Code of Civil Procedure Sections 1280 et seq. as the
exclusive forum for the resolution of such dispute. Pursuant to California Code
of Civil Procedure Section 1281.8, provisional injunctive relief may, but need
not, be sought by the Company, a Subsidiary or an Executive in a court of law
while arbitration proceedings are pending, and any provisional injunctive relief
granted by such court shall remain effective until the matter is finally
determined by the Arbitrator. Final resolution of any dispute through
arbitration may include any remedy or relief which the Arbitrator deems just and
equitable, including any and all remedies provided by applicable state or
federal statutes. At the conclusion of the arbitration, the Arbitrator shall
issue a written decision that sets forth the essential findings and conclusions
upon which the Arbitrator's award or decision is based. Any award or relief
granted by the Arbitrator hereunder shall be final and binding on the parties
hereto and may be enforced by any court of competent jurisdiction. Any rights to
trial by jury in any action, proceeding or counterclaim brought by any of the
Company, a Subsidiary or an Executive in connection with any matter whatsoever
arising out of or in any way connected with the Plan are hereby waived. The
Company or applicable Subsidiary shall be responsible for payment of the forum
costs of any arbitration hereunder, including the Arbitrator's fee. In any
proceeding to enforce the terms of the Plan, the prevailing party shall be
entitled to its or his reasonable attorneys' fees and costs (other than forum
costs associated with the arbitration) incurred by it or him in connection with
resolution of the dispute in addition to any other relief granted.
8.7 Legal Fees and Expenses. If any dispute arises between the parties
with respect to the interpretation or performance of the Plan, the prevailing
party in any arbitration or proceeding shall be entitled to recover from the
other party its attorneys' fees, arbitration or court costs and other expenses
incurred in connection with any such proceeding. Amounts, if any, paid to the
Executive under this Section 8.7 shall be in addition to all other amounts due
to the Executive pursuant to the Plan.
9. ADMINISTRATION
9.1 Administrator. Except as provided herein, the Plan shall be
administered and operated by the Administrator. The Administrator is empowered
to construe and interpret the provisions of the Plan and to decide all questions
of eligibility for benefits under the Plan and shall make such determinations in
its sole and absolute discretion. The Administrator may at any time delegate to
any other named person or body, or reassume therefrom, any of its
responsibilities or administrative duties with respect to the Plan.
9.2 Experts; Rules. The Administrator may contract with one or more
persons to render advice with regard to any responsibility it has under the
Plan. Subject to the limitations of the Plan, the Administrator shall from time
to time establish such rules for the administration of the Plan as it may deem
desirable.
9.3 Indemnity. The Company shall, to the extent permitted by law, by the
purchase of insurance or otherwise, indemnify and hold harmless the
Administrator and each other fiduciary with respect to the Plan for liabilities
or expenses they and each of them incur in carrying out their respective duties
under the Plan, other than for any liabilities or expenses arising out of such
fiduciary's gross negligence or willful misconduct.
10. AMENDMENT
The Committee (or the Board) reserves the right to amend, suspend and/or
terminate the Plan at any time in its sole discretion. No amendment, suspension
or termination shall diminish benefits to which a Participant is currently
entitled under the Plan. Any modification or other amendment of the Plan shall
be in writing, signed by either the Company's Chief Executive Officer or Vice
President, Human Resources.
11. GENERAL
11.1 Assignment by Participants. None of the benefits, payments,
proceeds or claims of any Executive or Participant shall be subject to any claim
of any creditor and, in particular, the same shall not be subject to attachment
or garnishment or other legal process by any creditor, nor shall any such
Executive have any right to alienate, anticipate, commute, pledge, encumber or
assign any of the benefits or payments or proceeds that he or she may expect to
receive, contingently or otherwise, under the Plan. Notwithstanding the
foregoing, benefits that are in pay status may be subject to a court order of
garnishment or wage assignment, or similar order, or a tax levy. The Plan shall
inure to the benefit of and be enforceable by each Participant's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If a Participant dies while any amount
would still be payable to him or her hereunder had he or she continued to live,
all such amounts, unless otherwise provided herein, shall be paid to the
Participant's beneficiary in accordance with the terms of the Plan.
11.2 Binding Effect. The Company or applicable Subsidiary will require
any successor (whether by purchase of assets, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company or applicable Subsidiary to expressly assume and agree to perform all of
the obligations of the Company or applicable Subsidiary under the Plan
(including the obligation to cause any subsequent successor to also assume the
obligations of the Plan) unless such assumption occurs by operation of law. For
avoidance of doubt, in the event that a successor of a Subsidiary (whether by
purchase of assets, merger, consolidation or otherwise) assumes the Subsidiary's
obligations under the Plan, the Company will have no obligations under the Plan
with respect to the Executives employed by such Subsidiary.
11.3 No Waiver. No waiver of any term, provision or condition of the
Plan, whether by conduct or otherwise, in any one or more instances shall be
deemed or be construed as a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision or condition
of the Plan.
11.4 Expenses; Unsecured General Creditor. The benefits and costs of the
Plan shall be paid by the Company and/or a Subsidiary out of its general assets.
The status of a claim against the Company or a Subsidiary with respect to the
benefits provided hereunder shall be same as the status of a claim against the
Company or applicable Subsidiary by any general or unsecured creditor.
11.5 ERISA. The Plan is an unfunded compensation arrangement for a
select group of management or highly compensated employees of the Company or a
Subsidiary and any exemptions under ERISA applicable to such an arrangement
shall be applicable to the Plan.
11.6 Section 409A. The Plan shall be construed and interpreted so as to
avoid the imputation of any tax liability (penalty or otherwise) pursuant to
Section 409A of the Code. The Company may suspend the payment of any benefit
pursuant to the Plan to any "specified employee" (within the meaning of Section
409A of the Code) to a date no earlier than the date that is six months after
the employee's separation of service to the extent, if any, the Administrator
determines that such suspension is reasonably necessary to satisfy Code Section
409A(a)(2)(B)(i) (in which case the benefits that would have otherwise been paid
during such six month period shall be paid, without interest, as soon as
practical following the end of such six month period).
11.7 WARN Act. Benefits payable under the Plan are intended to satisfy,
where applicable, any Company obligations under the Federal Worker Adjustment
and Retraining Notification Act and any similar obligations that the Company or
its Subsidiaries may have under any successor or other severance pay statute.
11.8 Construction. The masculine pronoun shall include the feminine
pronoun and the feminine pronoun shall include the masculine pronoun and the
singular pronoun shall include the plural pronoun and the plural pronoun shall
include the singular pronoun, unless the context clearly indicates otherwise.
11.9 Governing Law. The Plan shall be construed according to the laws of
the State of California, except to the extent such laws are preempted by federal
law.
11.10 Severability. If any provision of the Plan is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under the Plan will not be materially and
adversely affected hereby, (i) such provision will be fully severable, (ii) the
Plan will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (iii) the remaining provisions of
the Plan will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom and
(iv) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of the Plan a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
11.11 Notices. Any notice required or permitted by the Plan shall be in
writing, delivered by hand, or sent by registered or certified mail, return
receipt requested, or by recognized courier service (regularly providing proof
of delivery), addressed as follows:
(a) if to the Company or, where applicable, the Administrator:
Western Digital Corporation
20511 Lake Forest Drive
Lake Forest, California 92630
Attention: Vice President, Human Resources
With a copy to:
Western Digital Corporation
20511 Lake Forest Drive
Lake Forest, California 92630
Attention: General Counsel
(b) if to the Executive or Participant, at the address set forth
on the records of the Company or applicable Subsidiary, as the case may be, or
to such other address or addresses most recently communicated to the Company or
applicable Subsidiary by the Executive or Participant.
Each such notice shall be effective (i) if given by mail, three
days after being deposited in the mails or (ii) if given personally or by other
means when actually delivered at such address.
IN WITNESS WHEREOF, this instrument, evidencing the terms of the Western
Digital Corporation Executive Severance Plan, is executed as of February 16,
2006.
WESTERN DIGITAL CORPORATION
By: /s/ Jackie DeMaria
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Jackie DeMaria
Vice President, Human Resources