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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 25, 2005
WESTERN DIGITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 001-08703 33-0956711
(State or Other Jurisdiction of (Commission File Number) I.R.S. Employer
Incorporation or Organization) Identification No.)
20511 Lake Forest Drive
Lake Forest, California 92630
(Address of Principal Executive Offices) (Zip Code)
(949) 672-7000
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
240.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On August 25, 2005, Western Digital Corporation ("Western
Digital") entered into (i) an Employment Agreement with Arif Shakeel (the
"Shakeel Employment Agreement"), pursuant to which Mr. Shakeel will become Chief
Executive Officer of Western Digital, effective October 1, 2005, and (ii) an
Employment Agreement with Matthew E. Massengill (the "Massengill Employment
Agreement"), pursuant to which Mr. Massengill will relinquish the role of Chief
Executive Officer of Western Digital, effective October 1, 2005, and will
continue to serve as Chairman of the Board of Directors.
Pursuant to the Shakeel Employment Agreement, a copy of which
is attached hereto as Exhibit 10.1 and incorporated herein by reference, Mr.
Shakeel will continue to serve as President and Chief Operating Officer until
September 30, 2005. Effective October 1, 2005, Mr. Shakeel will become Chief
Executive Officer and President. The Shakeel Employment Agreement runs through
January 1, 2008, subject to certain termination provisions.
The Shakeel Employment Agreement provides for Mr. Shakeel to
receive base salary at the annual rate of $700,000 until October 1, 2005, at
which time the annual rate of Mr. Shakeel's base salary will increase to
$800,000. Mr. Shakeel's target annual bonus will be 100% of his base salary, and
he will be entitled to participate in Western Digital's other benefit plans on
terms consistent with those generally applicable to Western Digital's other
senior executives.
Pursuant to the agreement, Mr. Shakeel has been granted an
award of 1,250,000 restricted shares of Western Digital's common stock. Subject
to Mr. Shakeel's continued employment by Western Digital, 500,000 of these
restricted shares will vest on January 1, 2007, and the remaining 750,000 of
these restricted shares will vest on January 1, 2008. Mr. Shakeel's outstanding
stock options and restricted shares, to the extent that such options and such
restricted shares were scheduled to vest after December 31, 2007, have been
cancelled pursuant to the agreement. Also pursuant to the agreement, the entire
performance share award granted to Mr. Shakeel on or about January 20, 2005, has
been cancelled.
If Western Digital terminates Mr. Shakeel's employment other
than for cause (as defined in the agreement) prior to January 1, 2008, Mr.
Shakeel will be entitled to (i) a lump sum cash payment equal to his base salary
and target bonus for the period between the date his employment terminates and
January 1, 2008, and (ii) accelerated vesting of any and all options and other
equity-based awards granted by Western Digital that are then outstanding and not
otherwise fully vested, but only to the extent such awards were otherwise
scheduled to vest before January 1, 2008.
Pursuant to the Massengill Employment Agreement, a copy of
which is attached hereto as Exhibit 10.2 and incorporated herein by reference,
Mr. Massengill will continue to serve as Chairman of the Board and Chief
Executive Officer until September 30, 2005. Effective October 1, 2005, Mr.
Massengill will relinquish the role of Chief Executive Officer and will continue
employment as Chairman of the Board or in such other executive capacity as may
be assigned by the Board. Mr. Massengill's duties as Chairman of the Board will
include offering assistance to Mr. Shakeel in his new position as Chief
Executive Officer and coordinating investor communications. The Massengill
Employment Agreement runs through January 1, 2007, subject to certain
termination provisions.
The Massengill Employment Agreement provides for Mr.
Massengill to continue to receive base salary at his current annual rate of
$800,000. Mr. Massengill's target annual bonus will be 100% of his base salary,
and he will be entitled to participate in Western Digital's other benefit plans
on terms consistent with those generally applicable to Western Digital's other
senior executives.
Mr. Massengill's outstanding stock options and restricted
shares, to the extent that such options and such restricted shares were
scheduled to vest after July 31, 2007, have been cancelled pursuant to the
agreement. Provided that Mr. Massengill remains employed by Western Digital
through January 1, 2007, any of his outstanding stock options and any of his
restricted shares that are scheduled to vest after January 1, 2007 and on or
before July 31, 2007 will accelerate and become vested on January 1, 2007. With
respect to the accelerated options, Mr. Massengill will have until the later of
(i) January 1, 2010, or (ii) the time the options would have otherwise expired
or been terminated in accordance with the termination of employment rules
otherwise applicable to the options (but in no event later than the expiration
date of the options) to exercise those options. Also pursuant to the agreement,
the entire performance share award granted to Mr. Massengill on or about January
20, 2005, has been cancelled.
Page 2
If Western Digital terminates Mr. Massengill's employment
other than for cause (as defined in the agreement) prior to January 1, 2007, Mr.
Massengill will be entitled to (i) a lump sum cash payment equal to his base
salary and target bonus for the period between the date his employment
terminates and January 1, 2007, and (ii) accelerated vesting of any and all
options and other equity-based awards granted by Western Digital that are then
outstanding and not otherwise fully vested, but only to the extent such awards
were otherwise scheduled to vest on or before July 31, 2007.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
Effective October 1, 2005, Arif Shakeel, age 50, currently
Western Digital's President and Chief Operating Officer, will become Western
Digital's Chief Executive Officer and President. In connection with Mr.
Shakeel's appointment, Western Digital and Mr. Shakeel entered into the Shakeel
Employment Agreement, dated as of August 25, 2005, as described under Item 1.01
of this Form 8-K. Such description is incorporated herein by reference.
Mr. Shakeel has been a director of Western Digital since
September 2004. Mr. Shakeel joined Western Digital in 1985 as Product Manager,
Integrated Drive Electronics. He served in various executive capacities,
including Vice President, Materials -- Asia, until October 1997. Mr. Shakeel
became Senior Vice President of Worldwide Operations in July 1999. In February
2000, he became Executive Vice President and General Manager of Hard Drive
Solutions. He was promoted to Executive Vice President and Chief Operating
Officer in April 2001, and served in that position until promoted to his current
position of President and Chief Operating Officer in January 2002.
Effective October 1, 2005, Matthew E. Massengill, age 44, will
relinquish the role of Chief Executive Officer of Western Digital and will
continue employment as Chairman of the Board of Directors or in such other
executive capacity as may be assigned by the Board. In connection with Mr.
Massengill's continued employment as Chairman of the Board, Western Digital and
Mr. Massengill entered into the Massengill Employment Agreement, dated as of
August 25, 2005, as described under Item 1.01 of this Form 8-K. Such description
is incorporated herein by reference.
Mr. Massengill has been a director of Western Digital since
January 2000 and became Chairman of the Board of Directors in November 2001. Mr.
Massengill has also served as Chief Executive Officer since January 2000. From
October 1999 until that time he was Chief Operating Officer, and from August
1999 to October 1999, he was Co-Chief Operating Officer. Prior to that time he
served for more than five years in various executive capacities within Western
Digital.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 Employment Agreement, dated as of August 25, 2005, between
Western Digital Corporation and Arif Shakeel.
10.2 Employment Agreement, dated as of August 25, 2005, between
Western Digital Corporation and Matthew E. Massengill.
99.1 Press Release, dated August 25, 2005, issued by Western
Digital Corporation.
Page 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTERN DIGITAL CORPORATION
(Registrant)
By: /s/ RAYMOND M. BUKATY
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Date: August 25, 2005 Raymond M. Bukaty
-------------------- Senior Vice President, Administration,
General Counsel and Secretary
EX. 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Western Digital Corporation (the "Company") and Arif Shakeel
("Executive"), as of the 25th day of August, 2005 ("Effective Date").
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from the
Effective Date to and including January 1, 2008 ("Employment Period").
2. DUTIES.
A. President. From the Effective Date until September 30, 2005, Executive
shall continue to serve as President and Chief Operating Officer of the Company,
and shall report to the Company's Chief Executive Officer.
B. President and Chief Executive Officer. From October 1, 2005 through
January 1, 2008, Executive shall serve as President and Chief Executive Officer
of Western Digital Corporation. In this capacity, Executive shall report to the
Board of Directors, and shall have such duties and responsibilities consistent
with his position as President and Chief Executive Officer as the Board of
Directors of the Company shall determine from time to time.
C. Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company, subject to paragraph E of Section 3.
3. COMPENSATION.
A. Base Salary. From the Effective Date through September 30, 2005, the
Company will pay to Executive a base salary at the rate of $700,000 per year.
From October 1, 2005 through January 1, 2008, the Company will pay to Executive
a base salary at the rate of $800,000 per year. Such salary shall be earned
monthly and shall be payable in periodic installments in accordance with the
Company's customary practices. Amounts payable shall be reduced by standard
withholding and other authorized deductions.
B. Bonus. Executive's target annual bonus each fiscal year during the
Employment Period (including with respect to the first half of fiscal 2006) for
purposes of the Company's semi-annual bonus program for such fiscal period shall
be 100% of his base salary from the Company in effect on the last day of such
fiscal period.
C. Retirement and Welfare Benefit Plans; Fringe Benefits. Executive (and,
in the case of welfare benefit plans, his eligible dependents, as the case may
be), shall be eligible for participation in the retirement, welfare, and fringe
benefit plans, practices, policies and programs provided by the Company on terms
consistent with those generally applicable to the Company's other senior
executives and approved by the Compensation Committee of the Board of Directors.
D. Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by him in accordance with the
policies, practices and procedures as in effect generally with respect to other
executives of the Company.
E. Vacation and Other Leave. During the Employment Period, Executive shall
receive eight (8) weeks paid vacation per year. Such vacation shall be scheduled
and taken in accordance with the Company's standard vacation policies applicable
to Company executives. Executive shall also be entitled to all other holiday and
leave pay generally available to other executives of the Company.
F. Modification. The Company reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs at
any time without recourse by Executive so long as such action is taken generally
with respect to other senior executives of the Company and does not single out
Executive.
4. RESTRICTED STOCK; OTHER EQUITY AWARDS.
A. The Company shall grant Executive an award of 1,250,000 restricted
shares of Common Stock of the Company (of this total, 500,000 shares shall vest
on January 1, 2007 and 750,000 shares shall vest on January 1, 2008, subject to
Executive's continued employment by the Company through such vesting date, or
except as otherwise expressly provided in Section 5.C(ii) or the restricted
stock award agreement), such award evidenced by and subject to the terms and
conditions of a restricted stock award agreement in substantially the form
attached hereto.
B. The following awards are hereby terminated and Executive shall have no
further rights with respect thereto or in respect thereof: (i) the stock options
previously granted by the Company to Executive that are currently outstanding
but only to the extent that such options are scheduled (without giving effect to
any accelerated vesting provision) to vest after December 31, 2007; (ii) the
restricted shares of Company Common Stock previously granted by the Company to
Executive (for purposes of clarity, other than those granted pursuant to Section
4.A above) that are currently outstanding but only to the extent that such
restricted shares are scheduled (without giving effect to any accelerated
vesting provision) to vest after December 31, 2007 (which shares are hereby
transferred from the Executive to the Company); and (iii) the entire Performance
Share Award granted by the Company to Executive on or about January 20, 2005.
Executive shall promptly deliver to the Company any share certificates
evidencing the shares of restricted stock covered by clause (ii) of the
preceding sentence and shall timely provide the Company with such additional
documents of transfer that the Company may reasonably request to confirm the
transfer of such shares to the Company.
C. Other than the bonus opportunity contemplated by Section 3.B and the
restricted stock award contemplated by Section 4.A, Executive shall have no
right to any other annual or long-term incentive compensation or option,
restricted stock, equity or other awards with respect to his employment during
the Employment Period.
5. TERMINATION.
A. Cause. The Company may terminate Executive's employment for Cause. For
purposes of this Agreement, "Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Executive has engaged in or committed: (i) willful misconduct, (ii) fraud, (iii)
failure or refusal to perform the duties of President and Chief Executive
Officer, or (iv) a conviction of or a plea of nolo contendre to a felony.
B. Other than Cause. The Company may terminate Executive's employment at
any time, with or without cause, upon 30 days' written notice.
C. Obligations of the Company Upon Termination.
(i) Cause. If Executive's employment is terminated by the Company for
Cause, this Agreement shall terminate without further obligations to Executive
other than for the timely payment of the sum of (i) Executive's annual base
salary through the date of termination to the extent not theretofore paid and
(ii) any compensation previously deferred by Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"). If
it is subsequently determined that the Company did not have Cause for
termination under this Section 5.C(i), then the Company's decision to terminate
shall be deemed to have been made under Section 5.C(ii), and the amounts payable
thereunder shall be the only amounts Executive may receive for his termination.
(ii) Other than Cause. If the Company terminates Executive's employment for
other than Cause, this Agreement shall terminate without further obligations to
Executive other than:
(a) a lump sum cash payment equal to the base salary and target
bonus (at 100% of target) for the remainder of the Employment Period; and
(b) accelerated vesting of any and all options and other equity-based
awards granted by the Company that are then outstanding and not otherwise fully
vested, but only to the extent such awards would have otherwise become vested
had Executive remained employed by the Company through January 1, 2008.
Executive's rights as to any options and other equity-based awards granted by
the Company that are outstanding at the time Executive's employment with the
Company terminates, to the extent such awards are then vesting (after giving
effect to any accelerated vesting contemplated by this clause), shall be
governed by the terms and conditions of the applicable award agreement and
incentive plan under which the option or other award, as applicable, was
granted.
D. Exclusive Remedy. Executive agrees that the payments contemplated by
this Agreement shall constitute the exclusive and sole remedy for any
termination of his employment, and Executive covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any termination of
employment.
6. CONFIDENTIALITY AND INVENTION.
Executive has previously executed an Employee Invention and Confidentiality
Agreement ("Invention Agreement"), dated June 4, 1999, which is incorporated
herein as if fully set forth. In the event of an inconsistency between a
provision of this Agreement and a provision of the Invention Agreement, the
provision of this Agreement controls.
7. LITIGATION ASSISTANCE.
Executive agrees to cooperate with the Company in any actual or threatened
litigation that arises against or brought by the Company at any time during or
after the Employment Period, including but not limited to participating in
interviews with the Company's counsel to assist the Company in any such
litigation.
8. ARBITRATION.
Any controversy arising out of or relating to Executive's employment, this
Agreement, its enforcement or interpretation, or because of an alleged breach,
default, or misrepresentation in connection with any of its provisions, shall be
submitted to arbitration 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 Civil Procedure Code ss.ss. 1280 et seq. as the exclusive remedy of
such dispute; provided, however, that provisional injunctive relief may, but
need not, be sought 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. 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. The parties agree that
they are hereby waiving any rights to trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in connection
with any matter whatsoever arising out of or in any way connected with this
Agreement or Executive's employment.
9. SUCCESSORS.
A. This Agreement is personal to Executive and shall not, without the prior
written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
10. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving the
breach.
11. MODIFICATION.
This Agreement shall not be modified by any oral agreement, either express
or implied, and all modifications hereof shall be in writing and signed by the
parties hereto.
12. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
13. COMPLETE AGREEMENT.
This Agreement (and all other agreements, exhibits, and schedules referred
to in this Agreement, including without limitation the Invention Agreement)
constitutes and contains the entire agreement and final understanding concerning
Executive's employment with the Company and the other subject matters addressed
herein between the parties. It is intended by the parties as a complete and
exclusive statement of the terms of their agreement. It supersedes and replaces
all prior negotiations and all agreements proposed or otherwise, whether written
or oral, concerning the subject matter hereof. Any representation, promise or
agreement not specifically included in this Agreement shall not be binding upon
or enforceable against either party. This is a fully integrated agreement.
14. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within
the County of Orange, State of California and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with, and
governed by, by the laws of the State of California without regard to principles
of conflict of laws.
15. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
16. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if mailed
by registered or certified mail, postage prepaid, addressed to Executive at
Western Digital Corporation, 20511 Lake Forest Drive, Lake Forest, California
92630, or addressed to the Company at: Western Digital Corporation, Attn.
Corporate Secretary, 20511 Lake Forest Drive, Lake Forest, California 92630.
Either party may change the address at which notice shall be given by written
notice given in the above manner.
17. EXECUTION.
This Agreement is being executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Photographic copies of such signed counterparts may be used
in lieu of the originals for any purpose.
[This section has been intentionally left blank.]
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
By: /s/ RAYMOND M. BUKATY
-------------------------------------
Name: Raymond M. Bukaty
Title: Senior Vice President,
Administration,
General Counsel and Secretary
EXECUTIVE:
/s/ ARIF SHAKEEL
----------------------------------------
Arif Shakeel
EX. 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Western Digital Corporation (the "Company") and Matthew E. Massengill
("Executive") as of the 25th day of August, 2005 ("Effective Date").
RECITALS
WHEREAS, Executive is currently employed by the Company as its Chief
Executive Officer;
WHEREAS, Executive desires to transition from the position of Chairman
and Chief Executive Officer to the position of Chairman of the Board of
Directors ("Chairman of the Board") of the Company.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained below, the parties agree as follows:
AGREEMENT
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from the
Effective Date to and including January 1, 2007. ("Employment Period").
2. DUTIES.
A. Chief Executive Officer. From the Effective Date through September 30,
2005, Executive shall continue to serve as Chairman and Chief Executive Officer
of the Company, and shall report to the Company's Board of Directors.
B. Chairman of the Board. From October 1, 2005 through January 1, 2007,
Executive shall serve as Chairman of the Board or in such other executive
position or capacity as the Board of Directors may assign Executive. Executive
shall report to the Board of Directors, and shall have such duties and
responsibilities as the Board of Directors shall determine from time to time,
including, but not limited to, offering assistance to the Company's new Chief
Executive Officer as may be requested and coordinating investor communications.
C. Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company.
3. COMPENSATION.
A. Base Salary. From the Effective Date through January 1, 2007, the
Company will continue to pay to Executive a base salary at the rate of $800,000
per year. Such salary shall be earned monthly and shall be payable in periodic
installments in accordance with the Company's customary practices. Amounts
payable shall be reduced by standard withholding and other authorized
deductions.
B. Bonus. Executive's target annual bonus each fiscal year during the
Employment Period (including with respect to fiscal 2006) for purposes of the
Company's semi-annual bonus program for such fiscal period shall be 100% of his
base salary from the Company for such fiscal period.
C. Retirement and Welfare Benefit Plans; Fringe Benefits. Executive (and,
in the case of welfare benefit plans, his eligible dependents, as the case may
be), shall be eligible for participation in the retirement, welfare, and fringe
benefit plans, practices, policies and programs provided by the Company on terms
consistent with those generally applicable to the Company's other senior
executives and approved by the Compensation Committee of the Board of Directors.
D. Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by him in accordance with the
policies, practices and procedures as in effect generally with respect to other
executives of the Company.
E. Modification. The Company reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs at
any time without recourse by Executive so long as such action is taken generally
with respect to other senior executives of the Company and does not single out
Executive; provided, however, that the Company may not eliminate or materially
diminish Executive's opportunity to earn a bonus pursuant to Section 3.B. or
receive expense reimbursement pursuant to Section 3.E.
4. RESTRICTED STOCK; OTHER EQUITY AWARDS.
A. The following awards are hereby terminated and Executive shall have no
further rights with respect thereto or in respect thereof: (i) the stock options
previously granted by the Company to Executive that are currently outstanding
but only to the extent that such options are scheduled (without giving effect to
any accelerated vesting provision) to vest after July 31, 2007; (ii) the
restricted shares of Company Common Stock previously granted by the Company to
Executive that are currently outstanding but only to the extent that such
restricted shares are scheduled (without giving effect to any accelerated
vesting provision) to vest after July 31, 2007 (which shares are hereby
transferred from the Executive to the Company); and (iii) the entire Performance
Share Award granted by the Company to Executive on or about January 20, 2005.
Executive shall promptly deliver to the Company any share certificates
evidencing the shares of restricted stock covered by clause (ii) of the
preceding sentence and shall timely provide the Company with such additional
documents of transfer that the Company may reasonably request to confirm the
transfer of such shares to the Company.
B. The stock options previously granted by the Company to Executive that
are currently outstanding, to the extent that such options are otherwise
scheduled to vest (without giving effect to any accelerated vesting provision)
after January 1, 2007 and on or before July 31, 2007, are hereby amended such
that such portion of the options is scheduled to vest on January 1, 2007
(subject to Executive's continued employment by the Company through that date
other than as expressly provided in Section 5.C(ii)). In the event that
Executive remains continuously employed by the Company through January 1, 2007,
Executive will have until the later of the following two dates to exercise his
stock options granted by the Company to the extent that such stock options are
outstanding and otherwise unvested on January 1, 2007: (i) January 1, 2010, and
(ii) the time such options would have otherwise expired or been terminated in
accordance with the termination of employment rules otherwise applicable to such
options; provided that in all cases the options remain subject to earlier
termination upon the maximum term of such options and earlier termination in
connection with a change in control or similar event affecting the Company as
provided for in the applicable stock option agreement or plan under which such
options were granted.
C. The restricted shares of Company Common Stock previously granted by the
Company to Executive that are currently outstanding, to the extent that such
restricted shares are otherwise scheduled to vest (without giving effect to any
accelerated vesting provision) after January 1, 2007 and on or before July 31,
2007, are hereby amended such that such restricted shares are scheduled to vest
on January 1, 2007 (subject to Executive's continued employment by the Company
through that date other than as expressly provided in Section 5.C(ii)).
D. Other than the bonus opportunity contemplated by Section 3.B, Executive
shall have no right to any other annual or long-term incentive compensation or
awards with respect to his employment during the Employment Period.
5. TERMINATION.
A. Cause. The Company may terminate Executive's employment for Cause. For
purposes of this Agreement, "Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Executive has engaged in or committed: (i) willful misconduct, (ii) fraud, (iii)
failure or refusal to perform the duties assigned by the Board of Directors, or
(iv) a conviction of or a plea of nolo contendre to a felony.
B. Other than Cause. The Company may terminate Executive's employment at
any time, with or without cause, upon 30 days' written notice.
C. Obligations of the Company Upon Termination.
(i) Cause. If Executive's employment is terminated by the Company for
Cause, this Agreement shall terminate without further obligations to Executive
other than for the timely payment of the sum of (i) Executive's annual base
salary through the date of termination to the extent not theretofore paid and
(ii) any compensation previously deferred by Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"). If
it is subsequently determined that the Company did not have Cause for
termination under this Section 5-C(i), then the Company's decision to terminate
shall be deemed to have been made under Section 5-C(ii), and the amounts payable
thereunder shall be the only amounts Executive may receive for his termination.
(ii) Other than Cause. If the Company terminates Executive's employment for
other than Cause, this Agreement shall terminate without further obligations to
Executive other than:
(a) a lump sum cash payment equal to the base salary and target bonus (at
100% of target) for the remainder of the Employment Period; and
(b) accelerated vesting of any and all options and other equity-based
awards granted by the Company that are then outstanding and not otherwise fully
vested, but only to the extent such awards would have otherwise become vested
had Executive remained employed by the Company through July 31, 2007. Any
portion of such awards that do not so vest shall automatically terminate upon
termination of Executive's employment with the Company and Executive shall have
no rights with respect thereto or in respect thereof. Executive's rights as to
any options and other equity-based awards granted by the Company that are
outstanding at the time Executive's employment with the Company terminates, to
the extent such awards are then vesting (after giving effect to any accelerated
vesting contemplated by this clause), shall be governed by the terms and
conditions of the applicable award agreement and incentive plan under which the
option or other award, as applicable, was granted.
D. Exclusive Remedy. Executive agrees that the payments contemplated by
this Agreement shall constitute the exclusive and sole remedy for any
termination of his employment, and Executive covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any termination of
employment.
6. CONFIDENTIALITY AND INVENTION.
Executive has previously executed an Employee Invention and
Confidentiality Agreement ("Invention Agreement"), which is incorporated herein
as if fully set forth. In the event of an inconsistency between a provision of
this Agreement and a provision of the Invention Agreement, the provision of this
Agreement controls.
7. LITIGATION ASSISTANCE.
Executive agrees to cooperate with the Company in any actual or
threatened litigation that arises against or brought by the Company at any time
during or after the Employment Period, including but not limited to
participating in interviews with the Company's counsel to assist the Company in
any such litigation.
8. ARBITRATION.
Any controversy arising out of or relating to Executive's employment,
this Agreement, its enforcement or interpretation, or because of an alleged
breach, default, or misrepresentation in connection with any of its provisions,
shall be submitted to arbitration 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 Civil Procedure Code ss.ss. 1280 et seq. as the
exclusive remedy of such dispute; provided, however, that provisional injunctive
relief may, but need not, be sought 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. 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. The
parties agree that they are hereby waiving any rights to trial by jury in any
action, proceeding or counterclaim brought by either of the parties against the
other in connection with any matter whatsoever arising out of or in any way
connected with this Agreement or Executive's employment.
9. SUCCESSORS.
A. This Agreement is personal to Executive and shall not, without the prior
written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
10. WAIVER.
No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
11. MODIFICATION.
This Agreement shall not be modified by any oral agreement, either
express or implied, and all modifications hereof shall be in writing and signed
by the parties hereto.
12. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
13. COMPLETE AGREEMENT.
This Agreement (and all other agreements, exhibits, and schedules
referred to in this Agreement, including without limitation the Invention
Agreement) constitutes and contains the entire agreement and final understanding
concerning Executive's employment with the Company and the other subject matters
addressed herein between the parties. It is intended by the parties as a
complete and exclusive statement of the terms of their agreement. It supersedes
and replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
14. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered
within the County of Orange, State of California and the rights and obligations
of the parties hereunder shall be construed and enforced in accordance with, and
governed by, by the laws of the State of California without regard to principles
of conflict of laws.
15. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
16. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or if
mailed by registered or certified mail, postage prepaid, addressed to Executive
at: Western Digital Corporation, 20511 Lake Forest Drive, Lake Forest,
California 92630, or addressed to the Company at: Western Digital Corporation,
Attn. Corporate Secretary, 20511 Lake Forest Drive, Lake Forest, California
92630. Either party may change the address at which notice shall be given by
written notice given in the above manner.
17. EXECUTION.
This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Photographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.
[This section has been intentionally left blank.]
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
By: /s/ RAYMOND M. BUKATY
----------------------------------------
Name: Raymond M. Bukaty
Title: Senior Vice President,
Administration, General Counsel and
Secretary
EXECUTIVE:
/s/ MATTHEW E. MASSENGILL
------------------------------------------
Matthew E. Massengill
EX. 99.1
Company contacts:
Bob Blair
Investor Relations
949.672.7834
robert.blair@wdc.com
Steve Shattuck
Public Relations
949.672.7817
steve.shattuck@wdc.com
FOR IMMEDIATE RELEASE:
ARIF SHAKEEL TO BECOME WESTERN DIGITAL CEO EFFECTIVE OCTOBER 1;
MATT MASSENGILL TO REMAIN AS EXECUTIVE CHAIRMAN OF THE BOARD
LAKE FOREST, Calif., August 25, 2005--Western Digital Corp. (NYSE: WDC) today
announced that Arif Shakeel will become chief executive officer of the company
on October 1, 2005. Mr. Shakeel, 50, currently president and chief operating
officer, will retain the title of president when he becomes CEO. Chairman Matt
Massengill will relinquish the CEO title but remain actively engaged as
executive chairman of the board and in relationships with shareholders and other
strategic constituents.
The Board implemented its succession plan and selected Mr. Shakeel as the
next CEO after Mr. Massengill had indicated his desire to have the Board
consider his moving into the executive chairman role, having served as CEO since
2000.
After both beginning their WD careers in the mid 1980s, Mr. Massengill and
Mr. Shakeel have spent the last six years building the company into one of the
world's leading manufacturers of hard drives for the computing and consumer
electronics markets. Under their stewardship, WD has relentlessly focused on
quality and reliability in its products, efficiency in its manufacturing
operations and asset management, and excellence in its customer and supply chain
relationships.
Arif Shakeel to Become Western Digital CEO Effective October 1;
Matt Massengill to Remain as Executive Chairman of the Board
Page 2
Under the leadership of Mr. Massengill and Mr. Shakeel, WD has almost
doubled its revenue from $2.0 billion in fiscal 2000 to $3.6 billion in fiscal
2005, substantially increased its profitability, dramatically improved the
company's balance sheet, and posted the hard drive industry's leading returns on
invested capital.
Mr. Shakeel was elected to the board of directors in September 2004, and
as named president in January 2002, and chief operating officer in April 2001.
He joined the company in 1985 as a product marketing manager, then held
positions as vice president of marketing, vice president of business
development, vice president of Far East sales, and vice president of materials,
Asia.
Mr. Shakeel holds a Bachelor of Science degree in mechanical engineering
from Memphis State University and an MBA from Pepperdine University.
About WD
WD, one of the storage industry's pioneers and long-time leaders, provides
products and services for people and organizations that collect, manage and use
digital information. The company produces reliable, high-performance hard drives
that keep users' data close-at-hand and secure from loss.
WD was founded in 1970. The company's storage products are marketed to
leading systems manufacturers and selected resellers under the Western Digital
and WD brand names. Visit the Investor section of the company's Web site
(www.westerndigital.com) to access a variety of financial and investor
information.
###
Western Digital is a registered trademark and WD and the Western Digital logo
are trademarks of Western Digital Technologies, Inc. All other trademarks herein
are property of their respective owner.