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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

Western Digital Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


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Our strategy across five major
strategic pillars

Drive Differentiated Leadership in Flash

Capitalize on market transition to solid state drives
Focus on gross margin leadership
Manage capital investment tactfully

Create what’s next

Western Digital is on a mission to unlock the potential of data by harnessing the possibility to use it. With both flash and hard disk drive (“HDD”) franchises, underpinned by groundbreaking advancements in memory technologies, we create breakthrough innovations and powerful data storage solutions that enable the world to actualize its aspirations. Our broad portfolio provides powerful data storage solutions for everyone, from the smallest, intelligent devices to the largest public clouds.

Through our innovation, we strive to fuel the potential for what’s possible and create a world where data is an accessible asset that leads to deeper connections, new breakthroughs and smarter decisions. Quality products, exceptional customer service and industry-leading solutions all come from a culture that’s inclusive, forward-thinking and bold.

Building global trust for over 50 years, we proudly offer solutions via our portfolio of brands – Western Digital®, WD®, SanDisk®, SanDisk® Professional and WD_BLACK™. Recognized as one of the World’s Most Ethical Companies (Ethisphere) and America’s Most Responsible Companies (Newsweek), Western Digital operates in 35+ countries with approximately 65,000 employees and maintains approximately 13,500 active patents.

Capitalize on the HDD opportunity in the cloud

Ensure reliable capacity growth and improved total cost of ownership
Enhance customers’ ability to generate value from data
Develop new technologies across the storage landscape

Grow through innovation across the entire portfolio

Lead in areal density
Reimagine every subsystem for HDD
Drive capital-efficient bit growth in flash
Maintain leadership in high performance charge trap cell

Deliver Customer Value

Expand relationships at our largest customers to enrich our value
Increase long-term engagement and through-cycle agreements with key hyperscalers
Establish ourselves as “The Supplier” for storage in retail, e-tail and distribution channels, while developing our online store as a preferred channel

Accelerate Operational Excellence

Achieve operational excellence to translate technology into stockholder value
Meet quarter-to-quarter cost down target to improve gross margin while improving inventory
Focus on sustainability and digital innovation of our manufacturing processes

Our Purpose
To be the world’s iconic data storage company



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    1
 

Letter from Our Chair and
Lead Independent Director

Dear Fellow Stockholders:

On behalf of the entire Board, thank you for your continued support and trust in Western Digital. We are proud of our achievements and performance during fiscal 2022 as we continue to navigate challenging market dynamics and disruptions. This year, our team has taken steps to further align our long-term strategy with our stockholders’ interests and to undergo a comprehensive and thorough review of strategic alternatives.

As we approach our 2022 Annual Meeting, our Board would like to take the opportunity to share how we are addressing key topics of stockholder interest.

Review of Strategic Options and Continued Focus on Strong Execution

Our Board prioritizes effective oversight of Western Digital’s corporate strategy and execution to drive long-term value for our stockholders. During fiscal 2022, our team delivered strong revenue and earnings growth driven by a focus on execution, innovation, and product development. This strong operational performance is underscored by our management team’s navigation of ongoing macro environment dynamics and continued supply chain challenges. Despite this strong operating performance, the Board believed it was important to review other alternatives for unlocking

      

stockholder value. As a result, we announced a review of strategic alternatives aimed at further optimizing long-term value for our stockholders.

Our Board’s Executive Committee oversees the strategic review process, while our full Board carefully considers feedback from our dialogues with stockholders. We are fully evaluating a range of alternatives, including options for separating our flash and HDD franchises.

Our intention is that the decisions yielded from this review will generate even greater stockholder value.

Commitment to Leading Corporate Governance and Oversight

Our Board is committed to maintaining the highest standards of corporate governance. This year, our routine evaluation of our governance practices prompted changes to further enhance our Board’s oversight, including adding political activity oversight to our Governance Committee’s formal responsibilities. As Western Digital evolves, we continue to evaluate our corporate governance practices to foster comprehensive and best-practice oversight.

Also, as part of our commitment to best governance practices, we maintain a robust Board evaluation and refreshment process. Since 2020, we have welcomed three

      

new independent directors to our Board, each of whom brings extensive experience and a new perspective. Our Board continues to value diversity; four of our last six independent director appointments were women and two were from underrepresented communities.

Board-driven Stockholder Engagement

In the past fiscal year, we maintained our year-round engagement with stockholders. Our stockholders’ feedback is a key input to our Board’s decision-making and our conversations have given us a greater understanding of a range of topics including business and strategy, board composition and diversity, executive compensation, people management and corporate responsibility matters. Directors, along with key members of our management team, participate in these discussions.

Over the past year, we reached out to stockholders representing approximately 59% of shares outstanding and our engagement team conducted calls with 15 stockholders representing 33% of shares outstanding. These engagements continue to provide us with valuable feedback that allows our Board to better understand our stockholders’ priorities and perspectives and to incorporate them into our deliberations and decision making.



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2    Western Digital
2022 Proxy Statement

Corporate Responsibility and Sustainability

At Western Digital, we are deeply committed to corporate responsibility in all aspects of our business, which includes transparency through robust disclosures. In the past year, we published our 2021 Sustainability Report. The report aligns with the Sustainability Accounting Standards Board (SASB) standards, Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, UN Sustainable Development Goals (UN SDGs) and Global Reporting Initiative (GRI) standards.

Within this report, we share key updates related to our commitment to emissions and energy intensity reductions, and initiatives to minimize our environmental impact and strengthen our supply chain, among others.

      

We Ask for Your Support

Thank you for your ongoing support and investment in Western Digital. We are grateful for the opportunity to serve the Company as we continue to strategically focus on sustainable and long-term growth. We welcome and appreciate your input and support for our voting recommendations at our Annual Meeting on November 16, 2022.

Sincerely,

MATTHEW E. MASSENGILL
Independent Chair of the Board

STEPHANIE A. STREETER
Lead Independent Director

      



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    3
 

Notice of Annual Meeting
of Stockholders

 

Western Digital Corporation
5601 Great Oaks Parkway, San Jose,
California 95119

Date
November 16, 2022
   

Time
Online check-in begins:
7:45 a.m. Pacific Time
Meeting begins:
8:00 a.m. Pacific Time

   

Location
As in 2021, our annual meeting will be a completely virtual meeting of stockholders that will provide stockholders comparable rights and opportunities to participate as they would have at an in-person meeting. To participate, vote or submit questions during the annual meeting via live webcast, please visit: www.virtualshareholdermeeting.com/ WDC2022. Please see the section entitled “Additional Information—General Information About the Annual Meeting —Virtual Annual Meeting” for additional information.

   

Who Can Vote
Stockholders of record at the close of business on September 19, 2022 will be entitled to notice of and to vote at our annual meeting and any postponements or adjournments of the meeting.

A list of stockholders as of the record date for the annual meeting may be accessed during the virtual annual meeting at www.virtualshareholdermeeting. com/WDC2022 by using the control number on your Notice of Internet Availability of Proxy Materials, or on your proxy card or voting instruction form that accompanied your proxy materials.

Matters to be Voted on

Proposal

Board Recommendation

01 Election of the eight director nominees named in the attached Proxy Statement to serve until our next annual meeting of stockholders and until their respective successors are duly elected and qualified

VOTE FOR

02 Approval on an advisory basis of the named executive officer compensation disclosed in the attached Proxy Statement

VOTE FOR

03 Approval of the amendment and restatement of our 2021 Long-Term Incentive Plan to increase by 2.75 million the number of shares of our common stock available for issuance under that plan

VOTE FOR

04 Approval of the amendment and restatement of our 2005 Employee Stock Purchase Plan to increase by 6 million the number of shares of our common stock available for issuance under that plan VOTE FOR
05 Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2023

VOTE FOR

At the meeting, we will also consider any other business that may properly come before our annual meeting and any postponements or adjournments of the meeting.

By Order of our Board of Directors,


MICHAEL C. RAY
Executive Vice President, Chief Legal Officer and Secretary
October 3, 2022

 
Voting Shares in Advance of the Meeting
Your vote is very important. Please submit your proxy as soon as possible via the Internet, telephone or mail. Submitting your proxy by one of these methods will ensure your vote will be counted regardless of whether you attend the annual meeting.

Via the Internet
Visit the website listed on your notice, proxy card or voting instruction form

    

By Phone
Call the phone number listed on your proxy card or voting instruction form

    

By Mail
Complete, sign, date and return your proxy card or voting instruction form in the envelope provided


 

Important notice regarding the availability of proxy materials for our annual meeting of stockholders to be held on November 16, 2022:
On or about October 3, 2022, proxy materials for the annual meeting, including the attached Proxy Statement and our Annual Report for the fiscal year ended July 1, 2022, are being furnished to stockholders entitled to vote at the annual meeting. The Proxy Statement and 2022 Annual Report are available on our Investor Relations website at investor.wdc.com. You can also view these materials at www.proxyvote.com by using the control number provided on your proxy card or Notice of Internet Availability of Proxy Materials.



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4    Western Digital
2022 Proxy Statement

Disclaimers

Cautionary Note Regarding
Forward-Looking Statements

This Proxy Statement contains forward-looking statements, including but not limited to, statements concerning our product and technology portfolio, views with respect to the growth of digital data, our business strategy and strategic priorities, including our review of strategic alternatives, our ability to execute our strategy, our future financial performance, our expectations regarding the impact of COVID-19 and other global events, our director succession plans and plans for our corporate responsibility and sustainability program, including our science-based emissions reduction targets, policies and reporting in the area of human rights and diversity and inclusion efforts. These forward-looking statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including: volatility in global economic conditions; future responses to and effects of the COVID-19 pandemic; impact of business and market conditions; the outcome and impact of our ongoing strategic review, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management’s attention from ongoing business operations and opportunities; impact of competitive products and pricing; our development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; our level of debt and other financial obligations; changes to our relationships with key customers; disruptions in operations from cybersecurity incidents or other system security risks; actions by competitors; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in our 2022 Annual Report on Form 10-K and our other reports filed with the Securities and Exchange Commission (the “SEC”), to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Website References

You may also access additional information about Western Digital at investor.wdc.com. References to our website throughout this Proxy Statement are provided for convenience only and the content on our website does not constitute a part of this Proxy Statement.


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    5
 

Table of Contents

Letter from Our Chair and Lead Independent Director 1
Notice of Annual Meeting of Stockholders 3
Proxy Summary 6
Corporate Governance Matters 10
PROPOSAL 1:  Election of Directors 10
Nominees for Election 11
Director Skills and Expertise 15
Director Nominations, Board Refreshment and Diversity 18
Board’s Role and Responsibilities 21
Stockholder Engagement 21
Corporate Responsibility and Sustainability 22
Risk Oversight and Compensation Risk Assessment 26
Board Structure 28
Lead Independent Director 28
Board Processes and Policies 31
Board and Committee Evaluations 33
Director Compensation 35
Executive Officers 38
Executive Compensation 40
PROPOSAL 2: Advisory Vote on Named Executive Officer Compensation 40
Report of the Compensation and Talent Committee 41
Compensation Discussion and Analysis 42
Fiscal 2022 Overview 43
Fiscal 2022 Philosophy, Objectives and Process 45
Fiscal 2022 Decisions and Outcomes 49
Fiscal 2023 Decisions 58
Other Program Features and Policies 60
Executive Compensation Tables and Narratives 62
Fiscal 2020—2022 Summary Compensation Table 62
Fiscal 2022 Grants of Plan-Based Awards Table 64
Description of Compensation Arrangements for Named Executive Officers 65
Outstanding Equity Awards at Fiscal 2022 Year-End Table 66
Fiscal 2022 Option Exercises and Stock Vested Table 68
Fiscal 2022 Non-Qualified Deferred Compensation Table 68
Potential Payments upon Termination or Change in Control 69
CEO Pay Ratio 73
Equity Compensation Plan Information 74
Stock Ownership Information 75
Equity Plan Proposal 77
PROPOSAL 3: Approval of the Amendment and Restatement of our 2021 Long-Term Incentive Plan 77
 
ESPP Proposal 88
PROPOSAL 4:  Approval of the Amendment and Restatement of our 2005 Employee Stock Purchase Plan 88
 
Audit Committee Matters 94
PROPOSAL 5: Ratification of Appointment of Our Independent Registered Public Accounting Firm 94
Report of the Audit Committee 95
Additional Information 97
General Information About the Annual Meeting 97
Virtual Annual Meeting 97
Availability of Annual Report 102
Communication with the Company 102
Appendix A—Non-GAAP Financial Measures A-1
Appendix B—Amended and Restated 2021 Long-Term Incentive Plan B-1
Appendix C—Amended and Restated 2005 Employee Stock Purchase Plan C-1


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6    Western Digital
2022 Proxy Statement

Proxy Summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. We encourage you to read this entire Proxy Statement for more information about these topics prior to voting.

Our Director Nominees



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Proxy Summary
 
   7  
 

Board Nominee Highlights

INDEPENDENCE GENDER AGE TENURE
88%
Independent
38%
Women
62 Years
Average Age
6 Years
Average Tenure

WOMEN IN BOARD LEADERSHIP ROLES

     
Lead Independent Director Audit Committee Chair Governance Committee Chair

Corporate Governance Highlights

Our Board of Directors is committed to maintaining the highest standards of corporate governance. We believe our strong corporate governance practices help promote the long-term interests of our stockholders and build public trust in us.

Corporate Governance Developments

Below is a description of some recent developments in our corporate governance practices:

Delegation of political and lobbying activity oversight, including strategy, activities and expenditures, to the Governance Committee following the establishment of our Government Affairs function
Delegation of oversight responsibility to the Audit Committee of the legal and regulatory requirements regarding public disclosure of topics covered by our corporate responsibility and sustainability programs
Clarification of committee and full Board roles in succession planning for our CEO and the executive team
Implementation of quarterly assessments by the Governance Committee of actions taken in response to Board evaluations


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  8    Western Digital
2022 Proxy Statement

CORPORATE GOVERNANCE BEST PRACTICES

   
Robust year-round Board-led stockholder engagement program that informs Board decisions
Independent Board leadership, including a Lead Independent Director with clearly defined roles and responsibilities
Commitment to Board diversity, with our Corporate Governance Guidelines requiring the Governance Committee to include, and instruct any search firm it engages to include, women and members of underrepresented communities in the director selection pool
Four of our last six independent director appointments were women and two were from underrepresented communities
Women serve in key Board leadership positions as our Lead Independent Director and Chairs of the Audit Committee and Governance Committee
All directors elected annually by a simple majority of votes cast
Seven of eight director nominees are independent
Director retirement policy upon reaching age 72
Active Board refreshment resulting in three new independent non-employee directors being appointed since 2020
Overboarding policy for additional public company directorships by directors
Active Board oversight of strategic planning and risk management
Board committee oversight of corporate responsibility, sustainability and human capital management
Annual sustainability reporting via standalone Sustainability Report aligned with leading frameworks and standards
Succession planning for directors, our CEO and other key officers
Board committee oversight of political and lobbying activities and expenditures
Annual Board and committee self-evaluations
Annual individual assessments of directors
Anti-hedging, anti-pledging and clawback policies
All non-employee directors comply with our stock ownership guidelines
All executive officers achieved stock ownership requirements pursuant to our guidelines

Year-Round Stockholder Engagement

As a continuation of our robust Board-driven stockholder engagement program, over the past year, we reached out to stockholders representing approximately 59% of shares outstanding and conducted calls with stockholders representing approximately 33% of shares outstanding, composed of investors with a variety of investment styles and geographic locations. Please see the section entitled “Corporate Governance Matters—Stockholder Engagement—Year-Round Stockholder Engagement and Feedback” on page 21 for a description of the topics discussed and stockholder feedback during our summer 2022 stockholder engagement.

We reached out to stockholders representing approximately 59% of shares outstanding and conducted calls with stockholders representing approximately 33% of shares outstanding



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Proxy Summary
 
   9  
 

Corporate Responsibility and Sustainability

We believe responsible and sustainable business practices support the long-term success of our company. The practices help keep our communities and our environment vibrant and healthy. They also lead us to more efficient and resilient business operations, help us meet our customers’ efficiency targets, reduce risks of misconduct and legal liability, enhance the reliability of our supply chain and improve the health, well-being, engagement and productivity of our employees. We believe that being an industry leader is not just about having talented employees or innovative products. It is also about doing business the right way, every day. That is why our commitment to corporate responsibility is deeply embedded throughout our business.

From fiscal 2020 to fiscal 2021, we reduced aggregate Scope 1 and market-based Scope 2 emissions by more than 6%. We were also recognized as one of the World’s Most Ethical Companies for the fourth consecutive year in 2022 by Ethisphere and one of America’s Most Responsible Companies by Newsweek in 2021 and 2022.

Additionally, we thrive on the power and potential of diversity. By taking into account various perspectives, we get the best outcomes for our employees, our company, our customers and the world around us. We are committed to promoting an inclusive environment where every individual can thrive through a sense of belonging, respect and contribution. In fiscal 2022, we were once again recognized by Human Rights Campaign Best Places to Work for LGBTQ+ Equality 2022. We also received the Above and Beyond Award and the Pro Patria Award from the Employer Support of the Guard and Reserve for our support of employees who serve in the U.S. National Guard and Reserve.

Our 2021 Sustainability Report is located on our Corporate Responsibility – Overview page at www.westerndigital.com. The topics covered were selected based on a detailed materiality assessment completed by a third party, which incorporated input from investors, customers and other stakeholders, as well as strategic priorities, and the report aligns with the Sustainability Accounting Standards Board (“SASB”) standards, Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations, UN Sustainable Development Goals (“UN SDGs”) and Global Reporting Initiative (“GRI”) standards. The Governance Committee oversees our corporate responsibility and sustainability policies and programs pursuant to its charter. For more information, please refer to the section entitled “Corporate Responsibility and Sustainability” on page 22. We plan to release our 2022 Sustainability Report later this calendar year.


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  10    Western Digital
2022 Proxy Statement

Corporate Governance Matters

   

PROPOSAL 1
ELECTION OF DIRECTORS

We are asking our stockholders to elect eight directors to our Board of Directors at the 2022 annual meeting of stockholders. Defining attributes of our Board include:

All directors elected annually by a simple majority of votes cast
Independent Board leadership, including a Lead Independent Director with clearly defined roles and responsibilities
Women serve in key Board leadership positions as our Lead Independent Director and Chairs of the Audit Committee and the Governance Committee
Seven of eight director nominees are independent
Three new independent director nominees appointed since 2020

Our Board of Directors recommends a vote FOR each of the eight director nominees named in this Proxy Statement

Our Board of Directors is presenting eight nominees for election as directors at our 2022 annual meeting of stockholders (“Annual Meeting”). Each of the nominees is currently a member of our Board and was elected to our Board at the 2021 annual meeting of stockholders. Each director elected at the Annual Meeting will serve until our 2023 annual meeting of stockholders and until a successor is duly elected and qualified. Each of the nominees has consented to be named in this Proxy Statement and to serve as a director if elected. If any nominee is unable or unwilling for good cause to stand for election or serve as a director if elected, the persons named as proxies may vote for a substitute nominee designated by our existing Board of Directors, or our Board may choose to reduce its size.

Ms. Price has not been nominated for re-election at the Annual Meeting and her term of service will end immediately prior to the Annual Meeting. Our Board intends to reduce the size of our Board to eight directors immediately following the Annual Meeting. Stockholders may not vote their shares for more than eight director nominees.

Vote Required for Approval

Each director nominee will be elected as a director if the nominee receives the affirmative vote of a majority of the votes cast with respect to his or her election (in other words, the number of votes “FOR” a director must exceed the number of votes cast “AGAINST” that director). You may vote FOR, AGAINST or ABSTAIN with respect to each director nominee. Proxies received by our Board of Directors will be voted FOR each director nominee unless specified otherwise.

Under our By-laws, any incumbent director who fails to be elected must offer to tender his or her resignation to our Board. If the director conditions his or her resignation on acceptance by our Board, the Governance Committee will then make a recommendation to our Board on whether to accept or reject the resignation or whether other action should be taken. Our Board will act on the resignation and publicly disclose and explain its decision within 90 days from the date the election results are certified. The director who tenders his or her resignation will not participate in our Board’s or the committee’s decision.


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Corporate Governance Matters
 
   11  
 

Nominees for Election

Below is information about the experience and other key qualifications and attributes of each of our Board’s eight director nominees.

KIMBERLY E. ALEXY, 52
INDEPENDENT
Director Since: November 2018
Committees: 

QUALIFICATIONS

Ms. Alexy brings to our Board deep expertise in finance, securities and corporate governance at several financial institutions and publicly held companies, with more than 25 years of experience in capital markets, corporate finance and investments. Ms. Alexy has a CFA designation and also contributes her specialized knowledge of cybersecurity issues, which includes a CERT Certificate in Cybersecurity Oversight for corporate directors issued by the CERT Division of the Software Engineering Institute at Carnegie Mellon University.

Her financial skills and prior experience qualify her as an audit committee financial expert under SEC rules. In addition, her service on numerous public company boards of directors, including having served as a chair of the audit or governance committees of many of those boards, provides our Board with valuable insights and perspectives.

 
OTHER PUBLIC BOARDS

Current

Five9, Inc.

Past Five Years

Mandiant, Inc.
Alteryx, Inc.
CalAmp Corporation
Microsemi Corporation

CAREER HIGHLIGHTS

Alexy Capital Management, a private investment fund

Founder and principal (2005-present)

Prudential Securities

Senior vice president and managing director (1998-2003)

Lehman Brothers

Vice president of equity research (1995-1998)
                                            

THOMAS CAUFIELD, 63
INDEPENDENT
Director Since: July 2021
Committees: 

QUALIFICATIONS

Dr. Caulfield brings to our Board many years of experience in the semiconductor industry, spanning engineering, management and global operational leadership, and expertise in business leadership, corporate strategy, manufacturing and marketing experience. He also brings prior public company board experience.

 
OTHER PUBLIC BOARDS

Current

GlobalFoundries Inc.

Past Five Years

None

CAREER HIGHLIGHTS

GlobalFoundries, Inc., a multinational semiconductor contract manufacturing and design company

CEO (March 2018-present)
Senior vice president and general manager, Fab 8 semiconductor wafer manufacturing facility (2014-March 2018)

Soraa, Inc.

President and chief operating officer (2012-2014)

Caitin Inc.

CEO (2010-2012)
                                            

    Audit Compensation and Talent Governance Executive Committee Chair    


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  12    Western Digital
2022 Proxy Statement

MARTIN I. COLE, 66
INDEPENDENT
Director Since: December 2014
Committees: 

QUALIFICATIONS

Mr. Cole brings to our Board extensive senior executive leadership experience across a variety of business sectors and geographies. This demonstrates his ability to provide strategic advice and lead multiple teams across a variety of business sectors, and provides him with wide-ranging insights, including relating to technology solutions, which are an important part of our business.

Mr. Cole has significant experience establishing and overseeing executive compensation programs as a former executive, CEO and as a board and compensation committee member at other public companies. His former executive and board roles, along with his financial experience, qualify him as an audit committee financial expert under SEC rules.

 
OTHER PUBLIC BOARDS

Current

The Western Union Company

Past Five Years

Cloudera, Inc.

CAREER HIGHLIGHTS

3i Group plc, a private equity firm

Senior adviser (January 2017-present)

Cloudera, Inc., an enterprise data management systems company

Interim CEO (August 2019-January 2020)

Accenture plc

Chief executive – technology (2012-2014)
Chief executive – communications, media and technology group (2006-2012)
Chief executive – government operating group (2004-2006)
Managing partner, outsourcing and infrastructure group (2002-2004)
                                            

TUNÇ DOLUCA, 64
INDEPENDENT
Director Since: August 2018
Committees: 

QUALIFICATIONS

Mr. Doluca brings to our Board 40 years of executive leadership and technical experience in the semiconductor industry, which provides our Board with valuable perspectives directly relevant to our business. As a seasoned CEO and director of a large public technology company, he has expertise in corporate strategy, financial management, operations, marketing and research and development, and significant experience establishing and overseeing executive compensation programs, all which are critical to achieving our strategic objectives.

 
OTHER PUBLIC BOARDS

Current

Analog Devices, Inc.

Past Five Years

Maxim Integrated

CAREER HIGHLIGHTS

Maxim Integrated (acquired by Analog Devices, Inc. in August 2021), an integrated circuits manufacturing company

President and CEO (2007- August 2021)
Group president (2005-2007)
Senior vice president (2004-2005)
Vice president (1994-2004)
                                            

    Audit Compensation and Talent Governance Executive Committee Chair    


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Corporate Governance Matters
 
   13  
 

DAVID V. GOECKELER, 60
CHIEF EXECUTIVE OFFICER
Director Since: March 2020
Committees: 

QUALIFICATIONS

Mr. Goeckeler brings to our Board indispensable knowledge and expertise developed during his 20 years of experience in technical and leadership positions at Cisco, including more than six years in senior management positions there, and his current position as our CEO.

 
OTHER PUBLIC BOARDS

Current

Automatic Data Processing, Inc.

Past Five Years

None

CAREER HIGHLIGHTS

Western Digital Corporation

CEO (March 2020-present)

Cisco Systems, Inc., a multinational technology company

Executive vice president and general manager, networking and security (July 2017-March 2020)
Senior vice president and general manager, networking and security business group (2016-2017)
Senior vice president and general manager, security business (2014-2016)
                                            

MATTHEW E. MASSENGILL, 61
INDEPENDENT CHAIR OF THE BOARD
Director Since: January 2000
Committees: 

QUALIFICATIONS

Mr. Massengill brings to our Board extensive and significant experience directly relevant to our business developed during his many years of service to Western Digital as an executive and Board member. As our former CEO, President and Chief Operating Officer, he has a deep understanding of our operations, provides valuable knowledge to our Board on the issues we face to achieve our strategic objectives and has extensive international experience. His prior service on numerous other public company boards of directors also provides our Board with important board-level perspective.

 
OTHER PUBLIC BOARDS

Current

None

Past Five Years

Microsemi Corporation

CAREER HIGHLIGHTS

Western Digital Corporation

Chair of the Board (2001-2007)
CEO (2000-2005)
President (2000-2002)
Chief Operating Officer (1999-2000)
                                            

    Audit Compensation and Talent Governance Executive Committee Chair    


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  14    Western Digital
2022 Proxy Statement

STEPHANIE A. STREETER, 65
LEAD INDEPENDENT DIRECTOR
Director Since: November 2018
Committees: 

QUALIFICATIONS

Ms. Streeter brings to our Board extensive senior executive leadership experience overseeing companies with manufacturing and operations across the globe. She has served on several public company boards of directors, with substantial governance experience as a director and former governance committee member of several public companies such as Goodyear and Kohl’s. She also has significant experience establishing and overseeing executive compensation programs as a former CEO and as a board and compensation committee member at other public companies.

 
OTHER PUBLIC BOARDS

Current

Kohl’s Corporation

Past Five Years

Olin Corporation
Goodyear Tire & Rubber Company

CAREER HIGHLIGHTS

Libbey Inc.

CEO (2011-2016)

U.S. Olympic Committee

Acting CEO (2009-2010)
Board member (2004-2009)

Banta Corporation

President and CEO (2001-2007)
                                            

MIYUKI SUZUKI, 62
INDEPENDENT
Director Since: July 2021
Committees: 

QUALIFICATIONS

Ms. Suzuki brings to our Board extensive leadership experience in the technology and telecommunications industries. She has deep global operations experience across the Asia Pacific region, including substantial governance experience as a director of two-Japanese based companies (MetLife Japan and Jera Co., Inc.).

 
OTHER PUBLIC BOARDS

Current

Twilio Inc.

Past Five Years

None

CAREER HIGHLIGHTS

Cisco Systems, Inc.

President, Asia Pacific, Japan and China (January 2018-February 2021)
President and general manager, Japan (2015-January 2018)

Jetstar Japan

President and CEO (2011-2015)

KVH (now Colt Technology Services)

President and vice chairman (2007-2011)

Lexis Nexis Asia Pacific

President and CEO (2004-2006)

Japan Telecom

Executive vice president and head of consumer business (2002-2004)
                                            

    Audit Compensation and Talent Governance Executive Committee Chair    


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Corporate Governance Matters
 
    15
 

Director Meeting Attendance

During fiscal 2022, our Board of Directors met 12 times. Each of the directors who served during fiscal 2022 attended 75% or more of the aggregate number of Board meetings and meetings of our Board committees on which he or she served during fiscal 2022.

Our Board strongly encourages each director to attend our annual meeting of stockholders. All directors standing for election at the 2021 annual meeting of stockholders were in attendance.

STRONG DIRECTOR ENGAGEMENT

Average director attendance at fiscal 2022 Board and committee meetings:

       
Board Audit Compensation and Talent Governance
97% 96% 97% 91%

Over 95% Board and committee meeting aggregate average attendance in fiscal 2022.

Director Skills and Expertise

Our Board of Directors believes our nominees’ breadth of experience, diversity and mix of qualifications, attributes, tenure and skills strengthen our Board’s independent leadership and effective oversight of management.

INDEPENDENCE GENDER AGE TENURE
88%
Independent
38%
Women
62 Years
Average Age
6 Years
Average Tenure

WOMEN IN BOARD LEADERSHIP ROLES

     
Lead Independent Director Audit Committee Chair Governance Committee Chair
     

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16    Western Digital
2022 Proxy Statement

DIRECTOR NOMINEE SKILLS, EXPERIENCE AND BACKGROUNDS

     
EXECUTIVE EXPERIENCE
Experience in executive-level positions is important to gain a practical understanding of complex organizations, corporate governance, operations, talent development, strategic planning and risk management
SEMICONDUCTOR EXPERIENCE
Experience in the semiconductor industry is important in understanding our technology, products and operations, which is critical for our future growth
DATA INFRASTRUCTURE EXPERIENCE
Experience in data infrastructure, including related software, hardware and data centers, storage, protection and management is important to understanding the issues and opportunities facing our business
STRATEGIC TRANSACTIONS EXPERIENCE
Experience leading a company through a large transition, transformation, integration, merger or acquisition is key to our Board’s review of strategic alternatives aimed at further optimizing long-term value for our stockholders
MANUFACTURING
Experience with sophisticated, large-scale manufacturing increases our Board’s understanding of our distribution, supply chain and manufacturing facilities
OPERATIONS AND INFRASTRUCTURE
Experience with complex, global operations assists our Board in fostering our operational excellence and adapting to evolving market conditions
TECHNOLOGY/INNOVATION
Experience in researching, developing or designing leading-edge technologies is critical for the continued growth and innovation of our business
GLOBAL EXPERIENCE
Experience with businesses with substantial international operations provides critical business and cultural perspectives to our Board and is important in understanding the strategic opportunities and risks relating to our business
FINANCE AND ACCOUNTING
Experience overseeing accounting and financial reporting is key to our Board’s oversight of our financial reporting process and internal controls
CYBERSECURITY
Experience understanding and managing information technology and cybersecurity threats is increasingly important to mitigate risks to our business
RISK MANAGEMENT
Experience in assessing and managing enterprise risks is critical to our Board’s role in overseeing our enterprise risk management program
CORPORATE SUSTAINABILITY AND RESPONSIBILITY
Experience in assessing environmental, sustainability, climate-related risks and social responsibility initiatives is critical to our Board’s role in overseeing our corporate responsibility and sustainability policies and programs
HUMAN CAPITAL MANAGEMENT
Experience in human capital management in large organizations assists our Board in overseeing succession planning, talent development and our executive compensation program
MEMBER OF AN UNDERREPRESENTED COMMUNITY
Self-identifies as racially or ethnically diverse, or as a member of the LGBTQ+ community
GENDER
Self-identified gender
Male = M; Female = F; Nonbinary, third gender or other = O
F M M M M M F F

Indicates “Technical or Managerial Expertise” (expertise derived from direct and hands-on experience or direct managerial experience with the subject matter during his/her career)
Indicates “Working Knowledge” (experience derived through: (i) board or relevant committee membership at our company or another public company; (ii) executive leadership or board membership of a public company in the relevant industry; or (iii) consulting, investment banking, private equity investing or legal experience)

OUR BOARD IS HIGHLY ENGAGED AND WELL QUALIFIED, AND ALL DIRECTOR NOMINEES POSSESS THE SKILLS AND EXPERIENCES NECESSARY TO OVERSEE OUR EVOLVING AND GROWING BUSINESS.


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Corporate Governance Matters
 
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Board Diversity Matrix (As of October 3, 2022)

Our Board of Directors believes that having a mix of directors with diverse and complementary qualifications, expertise and attributes is fundamental to meeting its oversight responsibility. The table below reflects certain diversity information for our current Board based on self-identification by each director.(1)

Total Number of Directors 9
Did Not Disclose
     Female      Male      Non-Binary      Gender
Part 1: Gender Identity
Directors 4 5
Part II: Demographic Background
African American or Black 1
Asian 1
White 2 5

(1) Includes information for Paula A. Price, who has not been nominated for reelection at the Annual Meeting and her term of service will end immediately prior to the Annual Meeting.

Director Independence

Our Board of Directors has reviewed and discussed information provided by the directors and our company with regard to each director’s business and personal activities, as well as those of the director’s immediate family members, as they may relate to our company or our management. The purpose of this review is to determine whether there are any transactions or relationships that would be inconsistent with a determination that a director is independent under the listing standards of the Nasdaq Stock Market. Based on its review, our Board has affirmatively determined that, except for serving as a member of our Board, none of our current non-employee directors (Messrs. Caulfield, Cole, Doluca or Massengill, or Mses. Alexy, Price, Streeter or Suzuki) has any relationship that, in the opinion of our Board, would interfere with such director’s exercise of independent judgment in carrying out his or her responsibilities as a director, and that each such director qualifies as “independent” as defined by the listing standards of the Nasdaq Stock Market. Our Board also previously determined that Kathleen A. Cote, who served as a non-employee director until her retirement from our Board in November 2021, qualified as “independent” as defined by the listing standards of the Nasdaq Stock Market during the period of her service in fiscal 2021. Mr. Goeckeler is currently a full-time, executive-level employee of our company and, therefore, is not “independent” as defined by the listing standards of the Nasdaq Stock Market.


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2022 Proxy Statement

Director Nominations, Board Refreshment
and Diversity

Key Director Criteria

The Governance Committee has adopted a policy regarding critical factors to be considered in selecting director nominees, which include: the nominee’s personal and professional ethics, integrity and values; the nominee’s intellect, judgment, foresight, skills, experience and achievements, all of which are viewed in the context of the overall composition of our Board of Directors; the absence of any conflict of interest or legal impediment to, or restriction on, the nominee serving as a director; having a majority of independent directors on our Board; and representation of the long-term interests of our stockholders as a whole and a diversity of backgrounds and expertise, which are most needed and beneficial to our Board and our company.

The Governance Committee is committed to Board diversity and takes into account the personal characteristics, experience and skills of current and prospective directors, including gender, race, ethnicity and membership in another underrepresented community, to ensure that a broad range of perspectives is represented on our Board to effectively perform its governance role and oversee the execution of our strategy.

As further detailed below, the Governance Committee annually evaluates the size and composition of our Board and assesses whether the composition appropriately aligns with our evolving business and strategic needs. Through this process, our Board, upon the recommendation of the committee, develops a list of qualifications, skills and attributes sought in director candidates. Specific director criteria evolve over time to reflect our strategic and business needs and the changing composition of our Board.

Diverse Director Candidate Pool Provision

Our Corporate Governance Guidelines require the Governance Committee to include, and instruct any search firm it engages to include, women and members of underrepresented communities in the pool from which the committee selects director nominees. The diverse director candidate pool provision reflects our Board’s continued commitment to diversity in the boardroom. Of the last six independent directors to join our Board, four were women, including two from underrepresented communities.


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Director Nomination Process

ASSESS

Our Board of Directors, led by the Governance Committee, evaluates the size and composition of our Board at least annually, considering the evolving skills, perspectives and experience needed on our Board to perform its governance and oversight role as our business transforms and the underlying risks change over time. Among other factors, the committee considers our strategy and needs, as well as our directors’ skills, expertise, experiences, tenure, age and backgrounds, including gender, race, ethnicity and membership in another underrepresented community. After assessing these factors, our Board develops criteria for potential candidates to be additive and complementary to the overall composition of our Board. Specific director criteria evolve over time to reflect our strategic and business needs and the changing composition of our Board.

IDENTIFY

The Governance Committee is authorized to use any methods it deems appropriate for identifying candidates for membership on our Board of Directors, including considering recommendations from incumbent directors, management or stockholders and engaging the services of an outside search firm to identify suitable potential director candidates. The committee will include, and instruct any search firm it engages to include, women and members of underrepresented communities in the pool of director candidates.

EVALUATE

The Governance Committee has established a process for evaluating director candidates that it follows regardless of who recommends a candidate for consideration. Through this process, the committee considers a candidate’s skills and experience, outside commitments and other available information regarding each candidate. For incumbent director candidates, this process includes consideration of the results of the annual Board and committee evaluations. See the section entitled “Board Processes and Policies—Board Evaluation” below. Following the evaluation, the committee recommends nominees to our Board.

NOMINATE

Our Board of Directors considers the Governance Committee’s recommended nominees, analyzes their independence and qualifications and selects nominees to be presented to our stockholders for election to our Board.

Stockholder Recommendations and Nominations of Director Candidates

The Governance Committee may receive recommendations for director candidates from our stockholders. Additionally, our stockholders may nominate director candidates for inclusion in our proxy materials pursuant to the proxy access right set forth in our By-laws or may nominate directors for election at future annual meetings of our stockholders pursuant to the advance notice provisions set forth in our By-laws, in each case as described further below.

Stockholder Recommendations of Director Candidates

A stockholder may recommend a director candidate to the Governance Committee by delivering a written notice to our Secretary at our principal executive offices and including the following in the notice: the name and address of the stockholder as they appear on our books or other proof of share ownership; the class and number of shares of our common stock beneficially owned by the stockholder as of the date the stockholder gives written notice; a description of all arrangements or understandings between the stockholder and the director candidate and any other person(s) pursuant to which the recommendation or nomination is to be made by the stockholder; the name, age, business address and residence address of the director candidate and a description of the director candidate’s business experience for at least the previous five years; the principal occupation or employment of the director candidate; the class and number of shares of our common stock beneficially owned by the director candidate; the consent of the director candidate to serve as a member of our Board of Directors if appointed or elected; and any other information required to be disclosed with respect to a director nominee in solicitations for proxies for the election of directors pursuant to applicable rules of the SEC.


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2022 Proxy Statement

The committee may require additional information as it deems reasonably required to determine the eligibility of the director candidate to serve as a member of our Board of Directors. Stockholders recommending candidates for consideration by our Board in connection with the next annual meeting of stockholders should submit their written recommendation no later than June 1 of the year of that meeting.

The committee will evaluate director candidates recommended by stockholders for election to our Board in the same manner and using the same criteria as it uses for any other director candidate. If the committee determines that a stockholder-recommended candidate is suitable for membership on our Board, it will include the candidate in the pool of candidates to be considered for nomination upon the occurrence of the next vacancy on our Board or in connection with the next annual meeting of stockholders.

Proxy Access

Our By-laws provide for proxy access, a means for our stockholders to include stockholder-nominated director candidates in our proxy materials for annual meetings of stockholders. A stockholder, or group of not more than 20 stockholders (collectively, an “eligible stockholder”), meeting specified eligibility requirements is generally permitted to nominate the greater of: (i) two director nominees; and (ii) 20% of the number of directors on our Board. In order to be eligible to use the proxy access process, an eligible stockholder must, among other requirements, have owned 3% or more of our outstanding common stock continuously for at least three years and deliver written notice of the nomination to our Secretary in the manner described in Section 2.14 of our By-laws and within the time periods set forth in this Proxy Statement in the section entitled “Additional Information—General Information About the Annual Meeting—Submission of Stockholder Proposals and Director Nominations.” Use of the proxy access process to submit stockholder nominees is subject to additional eligibility, procedural and disclosure requirements set forth in Section 2.14 of our By-laws.

Other Director Nominations

Stockholders who wish to nominate a person for election as a director in connection with an annual meeting of stockholders (as opposed to making a recommendation to the Governance Committee as described above) and who do not intend for the nomination to be included in our proxy materials pursuant to the proxy access process described above must comply with the advance notice requirement set forth in our By-laws. To comply, a stockholder must deliver written notice of the nomination to our Secretary in the manner described in Section 2.11 of our By-laws and within the time periods set forth in this Proxy Statement in the section entitled “Additional Information—General Information About the Annual Meeting—Submission of Stockholder Proposals and Director Nominations.”

Board Refreshment

Our Board of Directors believes that periodic Board refreshment can provide new experiences and fresh perspectives to our Board and is most effective if it is sufficiently balanced to maintain continuity among Board members that will allow for the sharing of historical perspectives and experiences relevant to our company. Our Board seeks to achieve this balance through its director succession planning process and director retirement policy described below. Our Board also utilizes the annual Board and individual director assessment process discussed below under “Board Processes and Policies—Board Evaluation” to help inform its assessment of our Board’s composition and Board refreshment needs. In keeping with our commitment to Board refreshment, we have currently engaged an executive search firm to assist us in identifying and evaluating potential independent director nominees to join our Board.

Seven New Directors Elected in the Past Five Years

Succession Planning

Our Board of Directors is focused on ensuring that it has members with diverse skills, expertise, experience, tenure, age and backgrounds, including gender, race and ethnicity, because a broad range of perspectives is critical to effective corporate governance and overseeing the execution of our strategy. The Governance Committee has developed a long-range succession plan to identify and recruit new directors, and three independent non-employee directors have been appointed since 2020. The committee also plans for the orderly succession of the Chairs of our Board’s committees.


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Additional Information
 
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Retirement Policy

To help facilitate the periodic refreshment of our Board of Directors, our Corporate Governance Guidelines provide that no director shall be nominated for re-election after the director has reached the age of 72. Three members of our Board have retired pursuant to this retirement policy since 2019.

Board’s Role and Responsibilities

Stockholder Engagement

Our Board of Directors and management are committed to regular engagement with our stockholders and soliciting their views and input on important performance, executive compensation, governance, environmental, social, human capital management and other matters.

Board-Driven Engagement. In addition to the Governance Committee’s oversight of the stockholder engagement process and the periodic review and assessment of stockholder input, our directors also engage directly with our stockholders by periodically participating in stockholder outreach.

Year-Round Engagement and Board Reporting. Our executive management members and directors, together with our investor relations and legal teams, conduct outreach to stockholders throughout the year to obtain their input on key matters and keep our management and Board informed about the issues that our stockholders tell us matter most to them.

Transparency and Informed Compensation Decisions and Governance Enhancements. The Compensation and Talent and Governance Committees routinely review our executive compensation design and governance practices and policies, respectively, with an eye towards continual improvement and enhancements. Stockholder input is regularly shared with our Board, its committees and management, facilitating a dialogue that provides stockholders with transparency into our executive compensation design and governance practices and considerations, and informs our company’s enhancement of those practices.

Year-Round Stockholder Engagement

Over the past year, we reached out to stockholders representing approximately 59% of shares outstanding and conducted calls with stockholders representing approximately 33% of shares outstanding, composed of investors with a variety of investment styles and geographic locations.

Our Chair of the Compensation and Talent Committee, an independent director, led many of these stockholder calls.


Summer 2022 Stockholder Engagement and Feedback

In our recent summer 2022 stockholder engagement, we discussed a variety of topics. Key areas of focus included the following topics:

Our strategic review process, the evolution of our business and product strategy and resulting performance

Executive compensation philosophy and actions taken in light of the strategic review process, ongoing stockholder feedback and further refinement in aligning pay with performance

Executive leadership team composition and alignment with our long-term strategy

Board composition, skills, experience and diversity

Corporate responsibility and sustainability, including recent highlights related to our energy and emissions, human rights and lifecycle impacts work

Diversity, equity and inclusion (“DE&I”) initiatives, reporting and oversight



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2022 Proxy Statement

Given the significance of the strategic review that was underway during these engagements, investors appreciated Board dialogue on prioritizing long-term value creation, maintaining the leadership team during this period and evolving our incentive structures to be durable into the future. Investors also appreciated the progress we made in the areas of sustainability disclosure and DE&I initiatives.

We share all feedback received as part of our engagement program with our Board to help inform dialogue and future decisions. In the past year, for example, stockholder feedback influenced changes in how we manage our dilution and the incorporation of environmental, social and governance (“ESG”) goals into our incentive compensation program. Specifically, we took action to manage our equity burn rate and dilution by introducing cash awards for mid-level employees in lieu of equity under our long-term incentive (“LTI”) program. As the Compensation and Talent Committee made adjustments to the fiscal 2023 compensation program, the committee approved the addition of ESG goals for the fiscal 2023 short-term incentive (“STI”) plan as part of the individual performance component (“IPC”), which include emissions reduction goals and DE&I goals for our named executive officers.

Corporate Responsibility and Sustainability

We believe responsible and sustainable business practices support our long-term success as a company. Those practices help keep our communities and our environment vibrant and healthy. They also lead us to more efficient and resilient business operations, help us meet our customers’ efficiency targets, reduce risks of misconduct and legal liability, enhance the reliability of our supply chain and improve the health, well-being, engagement and productivity of our employees. We believe that being an industry leader is not just about having talented employees or innovative products. It is also about doing business the right way, every day. That is why our commitment to sound corporate responsibility is deeply rooted in all aspects of our business.

Oversight by Our Board of Directors

Sound corporate responsibility in all aspects of our business is a focus of our Board of Directors. The Governance Committee is responsible for assisting our Board in overseeing the development and maintenance of our corporate responsibility and sustainability policies, practices and programs, including our public sustainability reporting. The committee has specific responsibility for periodically reviewing our policies and practices related to human rights, environmental and climate change and other topics as may be designated by our Board from time to time. The committee receives updates from our sustainability group and management regularly, including progress towards our sustainability initiatives or established targets or goals, and reviews trends, priorities and implementation of new sustainability initiatives.

The Audit Committee is responsible for reviewing the implementation of legal or regulatory requirements regarding public disclosure of topics covered by our corporate responsibility and sustainability programs and management’s controls and procedures with respect to these disclosures.

In addition, the Compensation and Talent Committee periodically reviews our people policies and programs, including those focusing on talent attraction, engagement and retention, DE&I and other topics as may be designated by our Board from time to time.


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2021 Sustainability Report

Our 2021 Sustainability Report is located on our Corporate Responsibility – Overview page at www.westerndigital.com. The topics covered were selected based on a detailed materiality assessment completed by a third party, which incorporated input from investors, customers and other stakeholders, as well as strategic priorities, and the report aligns with SASB standards, TCFD recommendations, UN SDGs and GRI standards. Below are notable highlights from our 2021 Sustainability Report, which covered our fiscal 2021:

 

Human Rights and Labor

Energy and Emissions

Lifecycle Impacts

Respecting human rights is a foundational aspect of how we do business. We work diligently to foster a working environment where Western Digital employees and employees of our suppliers can be treated with respect and dignity and are provided with fair and safe working conditions.

Completed a global human rights impact assessment
Expanded our disclosure of human rights and labor management practices in our Modern Slavery Compliance Statement
Enhanced human rights-related training to our supply chain

We aim to do our part in helping build an environmentally sustainable future by reducing our energy consumption, investing in conservation projects and managing our impacts on the environment.

Set science-based emissions reduction targets, which were approved by the Science Based Targets initiative
Achieved a year-over-year 3.8% reduction in energy use and a 25% reduction in energy intensity
Completed a climate-scenario analysis aligned with TCFD recommendations
Completed a robust Scope 3 emissions data analysis to support emissions reduction targets

We care for our world at every step, everywhere we operate. Because our products are used widely throughout the world, we are committed to delivering products designed and manufactured with long-term sustainability in mind.

Enabled the diversion of over six metric tons of waste from landfills since the launch of our product takeback program in April 2020
Completed several ISO-conformant lifecycle assessments to evaluate the impacts of our products
Kicked off new initiatives to reduce packaging and increase use of recycled materials
 

 

Diversity, Equity and Inclusion

Health and Safety/COVID-19

Integrity

Our people are Western Digital’s most valuable resource. We believe we can achieve the best business outcomes by empowering our diverse and talented employees to make an impact, together.

Disclosed pay equity results and Employment Information Report (EEO-1) data
Recognized for the third consecutive year by Women’s Choice Award as a Best Company for Millennials, and received a perfect score from Human Rights Campaign in their Corporate Equality Index
Promoted a Global Anti-Harassment and Discrimination Policy with associated training worldwide

As a company that has positioned itself to be the world’s leading data infrastructure company, we remain committed to providing essential infrastructure to support our world community during this worldwide pandemic. We do so with the health and safety of our employees as our first priority.

Phased return-to-site plan based on local guidance and global best practice
Facilitated vaccinations, including through vaccine drives in India, Thailand, Malaysia and the Philippines
Provided paid leave for employees impacted by COVID-19

As a global company operating across a wide range of geographies, Western Digital is committed to doing business fairly and legally. We set a consistent tone across our organization to form our global culture of integrity.

Recognized by Ethisphere Institute for the fourth consecutive year as one of the World’s Most Ethical Companies
100% of operations assessed for risks related to corruption since 2016
Zero reportable breaches of personal data in 2020 or in 2021

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2022 Proxy Statement

Our People Strategy

Our employees are paramount to our journey to transform our company and redefine the data storage market. To this end, our people strategy is grounded in the intention to hire, engage and retain the best talent to support our vision of creating breakthrough innovation that enables the world to actualize its aspirations. We hired a new Chief People Officer in fiscal 2022 to help accelerate the transformation of our human resources function to be more people-centric and to drive better outcomes for the business.


Diversity, Equity and Inclusion

We aim to leverage the power and potential of diversity. We are committed to promoting an inclusive environment where every individual can thrive through a sense of belonging, respect and contribution. We are committed to hiring inclusively, providing training and development opportunities, ensuring equitable pay for all employees and we continue to focus on increasing diverse representation at every level of our company.

Racial/Ethnic Diversity(1)

Gender Diversity

U.S. Management

Management

Technical Staff

We saw percentage point increases among our new college graduate hires in fiscal 2022 of 2.5 for women, 1.4 for Hispanic/Latinx and 1.0 for multiracial representation.

(1) As of July 1, 2022. Racially/ethnically diverse U.S. Management group consists of members of Asian, Black/African American, Hispanic/Latinx or other racially or ethnically diverse communities.

Our employee resource groups (“ERGs”) help create an inclusive culture that embraces the uniqueness of our employees. We have several ERG communities, focusing on women, LGBTQ+, racial and ethnic minorities, military and people with disabilities. In fiscal 2022, we launched a self-identification initiative that invited employees to share more about who they are across dimensions of gender, gender identity, veteran status and disabilities. Participation was optional, data was protected and the results were anonymized. We believe an in-depth understanding of our employee population will enable us to better engage and retain our talent.


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Compensation and Benefits

We believe in the importance of investing in our people, and we do that through a robust total rewards program. Some achievements and initiatives of our compensation program include:

Benchmarked our compensation and benefits programs using market data from reputable third-party consultants
Conducted internal focus groups and employee surveys to inform programs and identify opportunities
Expanding our annual pay equity assessment to cover 100% of our employee population globally to ensure that men and women receive equal pay for equal work
Implemented a global recognition program as part of compensation to celebrate the contributions of employees who bring our core values and cultural attributes to life
Expanded benefits access for our employees to caregivers and enhanced behavioral health benefits for dependent children in the U.S.
Enhanced medical coverage in our larger countries and offered flexible benefits in India

Talent Attraction, Development and Engagement

Foundational to our people strategy is the attraction, development and engagement of our employees. In fiscal 2022, we continued to enhance our people strategy with the following achievements and initiatives:

Adopted a skills-based philosophy that screens and hires employees based on capabilities and potential, and we plan to continue the implementation of these practices in fiscal 2023
Conducted a pilot program that aimed to remove potential for bias from our talent sourcing process and broaden our diverse talent pool, and tested technology to make sure that job descriptions utilize inclusive language
Delivered unconscious bias training to leaders, equipping them to lead inclusively and identify unconscious bias
Invested in leadership development through our flagship program, “leader essentials,” to help people at all levels cultivate skills, such as effective communication, creating an inclusive culture and building effective relationships
Conducted employee surveys with an overall employee survey participation rate of 90%, allowing employees to voice their opinion on topics related to our culture and human capital management initiatives


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26    Western Digital
2022 Proxy Statement

Risk Oversight and Compensation Risk Assessment

Board’s Role in Risk Oversight

Our Board of Directors’ role in risk oversight involves both our full Board and its committees. Individual committees are charged with ensuring that reasonable information and reporting systems exist to identify potential risks to our company encountered through their respective committee work and with exercising appropriate oversight of those risks. Potential risks are raised to the Audit Committee and full Board for inclusion in our enterprise risk management (“ERM”) process. Our Board believes that the processes it has established for overseeing risk would be effective under a variety of leadership frameworks, and therefore such processes do not materially affect its choice of leadership structure as described in the section entitled “Board Structure—Board Leadership Structure” below.


     

BOARD OF DIRECTORS
Our Board meets periodically with our Chief Audit Executive to review our overall ERM program and policies. Throughout the year, our Board receives updates on specific risks and mitigating measures in the course of its review of our strategy and business plan, and through reports to our Board by its respective committees and senior members of management.

     



 
AUDIT
COMMITTEE
Oversees ERM, internal audit and internal controls processes and policies and our Chief Audit Executive
Oversees the following risk topics:
Financial reporting, accounting, internal controls, fraud and capital structure
Legal and regulatory compliance, including our Ethics and Compliance program
Legal and regulatory requirements regarding public disclosure of topics covered by our corporate responsibility and sustainability programs
Cybersecurity (receives quarterly updates from our Chief Information Security Officer)
Tax and transfer pricing matters
General business risks
COMPENSATION AND
TALENT COMMITTEE
Oversees the following risk topics:
Compensation programs, policies and practices
Equity and other incentive plans
Recruiting, engagement and retention
Human capital management, including DE&I
CEO succession planning and senior leadership development
GOVERNANCE
COMMITTEE
Oversees the following risk topics:
Board and committee composition, including Board leadership structure
Director succession planning
Corporate governance policies and practices
Corporate responsibility and sustainability policies and programs, including related to human rights, environmental and climate change
Corporate political and lobbying activities and expenditures
 


MANAGEMENT

Each of our major business unit and functional area heads, with the assistance from their staff, work with our internal audit and ERM functions to identify risks that could affect achievement of business strategies or objectives and develop risk mitigation measures, contingency plans and a consolidated risk profile that is reviewed and discussed with our CEO and CFO before presentation to the Audit Committee. On a regular basis, our ERM function reviews with senior management and the committee the risk profile and action plan progress, which are also made available to our Board. Our Chief Audit Executive also develops a risk-based internal audit plan utilizing the ERM consolidated risk profile.

    


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Compensation Risk Assessment

Consistent with SEC disclosure requirements, we reviewed our fiscal 2022 compensation policies and practices to determine whether they encourage excessive risk taking. We concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on our company.

Chief Executive Officer Evaluation and Succession Planning

Evaluation

The Compensation and Talent Committee reviews and approves our CEO’s goals and objectives. Our Compensation and Talent Committee Chair leads the evaluation of our CEO’s performance in light of those goals and objectives by seeking input from each non-employee director, which is then discussed with our Board of Directors. Following the evaluation of our CEO’s performance, the committee determines and approves our CEO’s compensation.

Succession Planning

The Compensation and Talent Committee oversees CEO and key management personnel succession planning. Our Board of Directors periodically reviews the succession plan for key management personnel, including the CEO’s and key management’s development plans. Directors engage with potential CEO and key management personnel successors at Board and committee meetings and in less formal settings to allow directors to personally assess candidates. Furthermore, our Board periodically reviews the overall composition of our key management personnel’s qualifications, tenure and experience.

Emergency Succession

Our Board of Directors has also adopted an emergency CEO succession plan. The plan will become effective in the event our CEO becomes unable to perform his or her duties in order to minimize potential disruption or loss of continuity to our business and operations. Our emergency CEO succession plan is reviewed annually by the Governance Committee and our Board.


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28    Western Digital
2022 Proxy Statement

Board Structure

Board Leadership Structure

Our Board of Directors does not have a policy with respect to whether the roles of Chair of the Board and CEO should be separate and, if they are to be separate, whether our Chair of the Board should be selected from our directors who are not our employees (referred to in this Proxy Statement as our “non-employee directors”) or should be an employee.

Current Leadership Structure

DAVID V. GOECKELER       MATTHEW E. MASSENGILL       STEPHANIE A. STREETER
Chief Executive Officer Independent Chair of the Board Lead Independent Director

We currently separate the roles of CEO and Chair of the Board, with Mr. Massengill currently serving as Chair of the Board. Our Board believes this is the appropriate leadership for our company at this time because it permits Mr. Goeckeler, as our CEO, to focus on setting our strategic direction, day-to-day leadership and our performance, while permitting our Chair of the Board to focus on providing guidance to our CEO and setting the agenda for Board meetings. Our Board also believes that the separation of our CEO and Chair of the Board roles assists our Board in providing robust discussion and evaluation of strategic goals and objectives.

Our Corporate Governance Guidelines provide that our Board will appoint a Lead Independent Director if our Chair of the Board is not an independent director under the Nasdaq Stock Market listing standards or if our Board otherwise deems it appropriate. Although our Board has determined that Mr. Massengill is independent under the Nasdaq Stock Market listing standards, because he is a former executive Chair of the Board, President and CEO of our company, our Board determined it was appropriate to appoint Ms. Streeter as our Lead Independent Director. Ms. Streeter’s leadership roles on our prior special CEO search committee, in successful director searches and as our Governance Committee Chair qualify her to serve as our Lead Independent Director.

Our Board of Directors acknowledges that no single leadership model is right for all companies at all times. As such, our Board periodically reviews its leadership structure and may, depending on the circumstances, choose a different leadership structure in the future.

Lead Independent Director

The duties of our Lead Independent Director include:

Acting as a liaison between our independent directors and management
Assisting our Chair of the Board in establishing the agenda for Board meetings
Coordinating the agenda for, and chairing, the executive sessions of our independent directors
Presiding at any Board meeting at which our Chair is not present
Overseeing our Board evaluation process
Overseeing our stockholder engagement efforts and being available for engagement with stockholders as appropriate
Performing such other duties as may be specified by our Board of Directors from time to time

Our independent directors also meet regularly in executive sessions without management to review, among other things, our strategy, financial performance, management effectiveness and succession planning.


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Committees

Our Board of Directors has standing Audit, Compensation and Talent, Governance and Executive Committees. Each of the standing committees operates pursuant to a written charter that is available on our website under “Leadership & Governance” at investor.wdc.com. Our Board has affirmatively determined that all members of the Audit, Compensation and Talent and Governance Committees are independent as defined under the listing standards of the Nasdaq Stock Market and applicable SEC rules.

Audit Committee Meetings Held in Fiscal 2022: 8 | Committee Report: page 95
   

COMMITTEE MEMBERS

KEY RESPONSIBILITIES

Kimberly E.
Alexy
(Chair)
Paula A. Price(1)
Martin I. Cole

Directly responsible for appointing, compensating and overseeing independent accountants, with input from management
Pre-approves all audit and non-audit services
Reviews annual and quarterly financial statements
Reviews adequacy of accounting and financial personnel resources
Oversees and appoints our chief audit executive and reviews our internal audit plan and internal controls
Reviews and discusses with management risk assessment and enterprise risk management policies, including risks related to financial reporting, accounting, internal controls, fraud, capital structure, legal and regulatory compliance and cybersecurity
Reviews and discusses with management the implementation of legal and regulatory requirements regarding public disclosure of topics covered by our corporate responsibility and sustainability programs
Oversees ethics and compliance program
Our Board has affirmatively determined that each member is an “audit committee financial expert” as defined by rules of the SEC.
(1) Ms. Price has not been nominated for reelection at the Annual Meeting and her term of service will end immediately prior to the Annual Meeting. Our Board intends to appoint an additional member to the Audit Committee to be effective immediately following the Annual Meeting.


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2022 Proxy Statement

Compensation and Talent Committee

Meetings Held in Fiscal 2022: 11 | Committee Report: page 41

   

COMMITTEE MEMBERS

KEY RESPONSIBILITIES

Martin I.
Cole 
(Chair)
Stephanie A.
Streeter
Tunç Doluca

Evaluates and approves executive officer compensation
Reviews our people programs and initiatives, including DE&I
Reviews and makes recommendations on non-employee director compensation
Reviews and approves corporate goals and objectives for our CEO’s compensation and evaluates our CEO’s performance in light of those goals and objectives
Oversees incentive and equity-based compensation plans
Reviews and recommends changes to benefit plans requiring Board approval
Reviews and approves any compensation recovery (clawback) policy or stock ownership guidelines applicable to executive officers
Oversees the CEO succession plan and senior leadership development program

Governance Committee

Meetings Held in Fiscal 2022: 14

   

COMMITTEE MEMBERS

KEY RESPONSIBILITIES

Stephanie A.
Streeter
(Chair)
Thomas
Caulfield
Kimberly E.
Alexy
Miyuki Suzuki

Develops and recommends a set of corporate governance principles
Evaluates and recommends the size and composition of our Board and committees and functions of committees
Develops and recommends Board membership criteria
Identifies, evaluates and recommends director candidates
Reviews corporate governance issues and practices
Manages the annual Board and committee evaluation process
Assists our Board in overseeing corporate responsibility and sustainability policies and programs and public reporting
Reviews and oversees responses regarding stockholder proposals relating to corporate governance, corporate responsibility or sustainability matters
Oversees our political and lobbying strategy, activities and expenditures


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Executive Committee Meetings Held in Fiscal 2022: 7
   

COMMITTEE MEMBERS

KEY RESPONSIBILITIES

David V.
Goeckeler
(Chair)
Matthew E.
Massengill
Kimberly
E. Alexy
Stephanie
A. Streeter

Has powers of our Board in management of our business affairs in between meetings of our Board, subject to applicable law or the rules and regulations of the SEC or the Nasdaq Stock Market and specific directions given by our Board
Beginning in June 2022, oversees the assessment process and evaluates potential strategic alternatives for our company

Employee Awards Committee

Our Board of Directors has also established an Employee Awards Committee as a Board committee with limited delegated authority to approve and establish the terms of equity and cash awards granted to eligible participants. Mr. Goeckeler is currently the sole director serving on the committee.

Board Processes and Policies

Corporate Governance Guidelines and Code of
Business Ethics

Our Board of Directors has adopted Corporate Governance Guidelines, which provide the framework for governance of our company and represent our Board’s current views with respect to selected corporate governance issues considered to be of significance to stockholders, including:

The role and responsibilities of our Lead Independent Director

Director nomination procedures and qualifications

Director independence

Policies related to board refreshment and limitations on other board service

Director orientation and continuing education

Annual performance evaluations of our Board and committees

Succession planning and management development

Our Board of Directors has also adopted a Code of Business Ethics that applies to all of our directors, employees and officers. The current versions of the Corporate Governance Guidelines and the Code of Business Ethics are available on our website under “Leadership & Governance” at investor.wdc.com.

We intend to promptly disclose future amendments to certain provisions of the Code of Business Ethics, or waivers of such provisions granted to executive officers and directors, on our website under “Leadership & Governance” at investor.wdc.com, to the extent required by applicable rules and regulations of the SEC or the Nasdaq Stock Market.


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2022 Proxy Statement

Director Overboarding Policy

Our Board of Directors encourages directors to limit the number of other boards on which they serve to ensure that they are able to devote sufficient time and effort to properly discharge their duties and responsibilities as a member of our Board. In determining the appropriate number of outside directorships, directors should consider potential board attendance, participation and effectiveness on these boards.

The table below summarizes the limits on the number of outside directorships under our overboarding policy set forth in our Corporate Governance Guidelines.

     
Directors CEO

A director may not serve on the boards of more than 5 public companies (including Western Digital)

Our CEO may not serve on the boards of more than 2 public companies (including Western Digital)

All incumbent directors are in compliance with our overboarding policy.

Before accepting an invitation to serve on another board, a director must notify our Chair of the Board and our Chair of the Governance Committee. The Governance Committee reviews whether the position would affect the director’s ability to serve on our Board (including potential conflicts of interest, independence, related person transactions and time commitments).

Communication with Management

We have the following practices to promote clear, timely and regular communication between directors and management.

Business Updates. Between Board meetings, our Board receives regular updates from our CEO, including on key company developments.

Communications with Management. Our Board regularly interacts with our CEO and management during and between Board meetings through meetings, presentations and dinners between our Board and management.

Meeting Agendas and Presentations. Our Chair of the Board and committee Chairs regularly communicate with management to discuss the development of meeting agendas and presentations.

Reference Materials. Directors also regularly receive securities analysts’ reports, investor communications, company publications, news articles and other reference materials.

Director Orientation and Education

All incoming directors participate in a director orientation program, which includes engagement with members of the executive team and senior management to review matters relevant to our business. When directors accept new or additional responsibilities on our Board or on committees, they are provided additional orientation and educational opportunities on relevant topics.

Because our Board believes that ongoing director education is vital to the ability of directors to fulfill their roles, directors are encouraged to participate in external continuing director education programs, and we reimburse directors for their expenses associated with this participation. We also invite speakers to present at least annually during Board meetings on director education topics, such as emerging and evolving issues related to corporate governance, the geopolitical environment and cybersecurity.


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Board and Committee Evaluations

Our Board of Directors engages in a comprehensive annual Board and Board committee evaluation process. Our Board believes that a thorough evaluation process that encourages director engagement will foster constructive feedback and enhance our Board’s overall effectiveness. Accordingly, the Governance Committee oversees an annual performance evaluation process that includes the following:

     
Thorough
Evaluation
Questionnaires

Each director completes a written questionnaire soliciting feedback on various topics, including:

Board meetings and materials
Board composition
Board committee performance
Relationships with management
Communications among and between our Board and management
Our Board’s strategic oversight role
Management and Board succession planning
Overall Board effectiveness
     

Discussions with
Each Director

An outside firm compiles and analyzes the results of each written evaluation, and summarizes the results on an aggregated and anonymous basis, which our Governance Committee Chair discusses with each director to solicit further feedback on issues raised.

     

Results Discussed
with the Full
Board and
Each Committee

The full Board and each respective committee discusses the performance evaluation results, and, if determined appropriate, acts on the feedback received.

     

Individual
Director
Assessments

As part of the annual performance evaluation process, each director also completes a written self-evaluation covering various topics, including:

Meeting attendance, preparation and participation
Understanding of our business and strategy
Relationships with management and other directors

Our Chair of the Board discusses individual self-evaluation responses with each director.

     

Evaluation
Results

The information collected during our Board evaluation process is utilized by our Board to make decisions regarding Board structure, Board committees and their responsibilities, agendas and meeting schedules, changes in the performance or function of our Board and continued service of individual directors.

Specific actions taken in response to the most recent annual Board evaluation process included:

Updated our Governance and Compensation and Talent Committee charters and Governance Guidelines to clarify committee
and full Board roles in succession planning for our CEO and the executive team
Reinstated in-person Board meetings, as well as Board dinners with the executive team

The Governance Committee oversees and monitors the actions taken as a result of the Board evaluations at each of their regular meetings.

 


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2022 Proxy Statement

Communicating with Directors

Our Board of Directors provides a process for stockholders to send communications to our Board or to individual directors or groups of directors. In addition, interested parties may communicate with our Chair of the Board or Lead Independent Director (who presides over executive sessions of our independent directors) or with our independent directors as a group. Our Board recommends that stockholders and other interested parties initiate any communications with our Board (or individual directors or groups of directors) in writing. These communications should be sent by mail to our Secretary (please see page 102 for contact information). The name of any specific intended Board recipient or recipients should be clearly noted in the communication (including whether the communication is intended only for our non-executive Chair of the Board, Lead Independent Director or for the non-management directors as a group). Our Board has instructed our Secretary to forward such correspondence to the intended recipients unless such correspondence is purely commercial or frivolous in nature (such as spam), or otherwise obviously inappropriate for consideration.

Transactions with Related Persons

Policies and Procedures for Approval of Related Person Transactions

Our Board of Directors has adopted a written Related Person Transactions Policy. The purpose of this policy is to describe the procedures used to identify, review, approve and disclose, if necessary, any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which: (i) we were, are or will be a participant; (ii) the aggregate amount involved exceeds or is expected to exceed $120,000 in any fiscal year; and (iii) a related person has or will have a direct or indirect material interest. For purposes of the policy, a related person is: (i) any person who is, or at any time since the beginning of our last fiscal year was, one of our directors or executive officers or a nominee to become a director; (ii) any person who is known to be the beneficial owner of more than 5% of our common stock; or (iii) any immediate family member of any of the foregoing persons.

Under the policy, once a related person transaction has been identified, the Audit Committee must review the transaction for approval or ratification. In determining whether to approve or ratify a related person transaction, the committee is to consider all relevant facts and circumstances of the related person transaction available to the committee. The committee may approve only those related person transactions that are in, or not inconsistent with, our best interests and the best interests of our stockholders, as the committee determines in good faith. No member of the committee will participate in any consideration of a related party transaction with respect to which that member or any member of his or her immediate family is a related person.

Certain Transactions with Related Persons

We have not participated in any transaction with a related person since the beginning of fiscal 2022.


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Director Compensation

Fiscal 2022 Director Compensation Program

We believe that it is important to attract and retain exceptional and experienced directors who understand our business, and to offer compensation opportunities that further align the interests of our directors with those of our stockholders. The Compensation and Talent Committee, with the assistance of an independent compensation consultant, regularly reviews our non-employee director compensation and market trends in director compensation (including non-employee director compensation practices at a group of peer companies) and evaluates the competitiveness and reasonableness of the compensation program in light of general trends and practices. The committee makes recommendations based on such review to our Board of Directors, which determines whether any changes should be made to our non-employee director compensation program.

We established a compensation program for fiscal 2022 for each of our non-employee directors that consisted of a combination of annual cash retainers and restricted stock units (“RSUs”).

For the first time since fiscal 2018, our Board approved compensation enhancements to directors in fiscal 2022 after considering the results of a compensation review and benchmarking completed by its independent compensation consultant at the time, Willis Towers Watson. The annual cash retainer for directors increased to $85,000 from $75,000; the Governance Chair cash retainer increased to $15,000 from $12,500 and the Lead Independent Director annual RSU award increased in value to $280,000 from $270,000. No other changes were made to the director compensation program for fiscal 2022.

The following section describes the elements and other features of our director compensation program for fiscal 2022 for non-employee directors.

Non-Employee Director Cash Retainer Fees

Cash retainer fees are paid to our non-employee directors based on Board and committee service from annual meeting to annual meeting and are paid in a lump sum immediately following the annual meeting marking the start of the year. The following table sets forth the schedule of annual cash retainer and committee membership fees for non-employee directors for fiscal 2022.

Type of Fee       Current Annual Fee
($)
Annual Retainer 85,000
Additional Non-Executive Chair of the Board Retainer 100,000
Additional Committee Member Retainers
Audit Committee 15,000
Compensation and Talent Committee 12,500
Governance Committee 10,000
Additional Committee Chair Retainers
Audit Committee 25,000
Compensation and Talent Committee 22,500
Governance Committee 15,000

A non-employee director serving as Chair of a Board committee receives both the Additional Committee Chair Retainer and the Additional Committee Member Retainer for that committee. Directors who are appointed to our Board, a Board committee, or to one of our Chair positions noted above during the year are paid a pro rata amount of the annual retainer fees for that position based on service to be rendered for the remaining part of the year after appointment.

Non-employee directors do not receive a separate fee for each Board or committee meeting they attend. We reimburse our non-employee directors for reasonable out-of-pocket expenses incurred to attend each Board or committee meeting.


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2022 Proxy Statement

Non-Employee Director Equity Awards

Under our Non-Employee Director Restricted Stock Unit Grant Program, each of our non-employee directors automatically received for fiscal 2022 an award of RSUs equal in value to $240,000 (or, in the case of our non-employee director serving as Chair of the Board, $290,000, or, in the case of our Lead Independent Director, $280,000). Non-employee directors receive the awards immediately following the annual meeting of stockholders if he or she has been re-elected as a director at that meeting. In the case of a non-employee director who is newly elected or appointed after the date of the annual meeting, we grant a prorated award of RSUs for the year in which he or she is elected or appointed.

The RSUs granted in fiscal 2022 vest 100% upon the earlier of: (i) November 16, 2022 (the first anniversary of the grant date); and (ii) immediately prior to the first annual meeting of stockholders held after the grant date.

Deferred Compensation Plan for Non-Employee Directors

We permit each non-employee director to defer payment of up to 80% of his or her annual cash compensation in accordance with our Deferred Compensation Plan. We also permit non-employee directors to defer payment of any RSUs awarded under our Non-Employee Director Restricted Stock Unit Grant Program beyond the vesting date of the award. RSUs and other amounts deferred in cash by a director are generally credited and payable in the same manner as amounts deferred by our executive officers and other participants in our Deferred Compensation Plan as further described in the “Fiscal 2022 Non-Qualified Deferred Compensation Table.”

Director Compensation Table for Fiscal 2022

The table below summarizes the compensation for fiscal 2022 for each of our non-employee directors serving on our Board of Directors in fiscal 2022. Mr. Goeckeler was a named executive officer for fiscal 2022 and did not receive any additional compensation for his services as a director during fiscal 2022. Information regarding his compensation for fiscal 2022 is presented in the “Fiscal 2020–2022 Summary Compensation Table” and the related explanatory tables.

Name       Fees Earned or
Paid in Cash
($)
      Stock
Awards
($)(1)
      Total
($)
Kimberly E. Alexy         135,000 239,943 374,943
Thomas Caulfield 128,790 (2) 383,291 512,081
Martin I. Cole 135,000 239,943 374,943
Kathleen A. Cote(3)
Tunç Doluca 97,500 239,943 337,443
Matthew E. Massengill 185,000 289,944 474,944
Paula A. Price(4) 100,000 239,943 339,943
Stephanie A. Streeter 125,117 (2) 279,944 405,061
Miyuki Suzuki 125,879 (2) 383,291 509,170
(1) The amounts shown reflect the aggregate grant date fair value of equity awards granted in fiscal 2022 computed in accordance with Accounting Standards Codification 718 (“ASC 718”) using the closing price of our common stock on the grant date. On the date of our 2021 annual meeting of stockholders (November 16, 2021), each non-employee director at that time was automatically granted 4,103 RSUs (4,958 RSUs for our Chair of the Board and 4,787 RSUs for our Lead Independent Director). Dr. Caulfield and Ms. Suzuki’s equity awards also include a prorated number of RSUs (2,073) granted to them in connection with their appointments to our Board in July 2021.


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The following table presents the aggregate number of shares of our common stock covered by stock awards (and corresponding dividend equivalents that may be settled in stock) held by each of our non-employee directors on July 1, 2022:

      Name       Aggregate
Number of Unvested
Restricted Stock Units
      Aggregate
Number of Deferred
Stock Units
Kimberly E. Alexy 4,103
Thomas Caulfield 4,103
Martin I. Cole 4,103
Kathleen A. Cote
Tunç Doluca 4,103
Matthew E. Massengill 4,958
Paula A. Price 4,103
Stephanie A. Streeter 4,787
Miyuki Suzuki 4,103
(2) Dr. Caulfield’s cash fees include prorated annual retainers totaling $33,790, paid in connection with his appointments to our Board and Compensation and Talent Committee in July 2021 and our Governance Committee in September 2021. Ms. Streeter’s cash fees include a prorated annual retainer of $2,617, paid in connection with her appointment to our Compensation and Talent Committee in September 2021. Ms. Suzuki’s cash fees include prorated annual retainers totaling $30,879 in connection with her appointments to our Board and Governance Committee in July 2021.
(3) Ms. Cote retired from our Board according to our Board retirement policy at our 2021 annual meeting.
(4) Ms. Price has not been nominated for reelection at the Annual Meeting, immediately prior to which her term as a director will end.

Director Stock Ownership Guidelines

Under our director stock ownership guidelines, directors are generally prohibited from selling any shares of our common stock unless they own “qualifying shares” with a market value of at least $375,000, which include common stock, RSUs, deferred stock units and common stock beneficially owned by the director by virtue of being held in a trust, by a spouse or by the director’s minor children. Shares the director has a right to acquire through the exercise of stock options (whether or not vested) do not count towards the stock ownership requirement. All of our non-employee directors comply with our director stock ownership guidelines.


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2022 Proxy Statement

Executive Officers

Listed below are our executive officers, followed by a brief account of their business experience. Executive officers are normally appointed annually by our Board of Directors at a meeting immediately following the annual meeting of stockholders. There are no family relationships among these officers nor any arrangements or understandings between any officer and any other person pursuant to which an officer was selected.

David V. Goeckeler       60, Chief Executive Officer
                            
Mr. Goeckeler has served as our CEO since March 2020. Biographical information regarding Mr. Goeckeler is set forth in the section entitled “Corporate Governance Matters—Proposal 1: Election of Directors.”
 

Wissam G. Jabre       52, Executive Vice President and Chief Financial Officer
                      
Mr. Jabre has served as our Executive Vice President and CFO since February 2022.
Prior to that, Mr. Jabre served as senior vice president and chief financial officer of Dialog Semiconductor, PLC, a provider of semiconductor-based system solutions, from March 2016 until it was acquired by Renesas Electronics Corporation in August 2021. Mr. Jabre previously served as corporate vice president of finance at Advanced Micro Devices, Inc., from 2014 to 2016. Prior to 2014, Mr. Jabre served in various finance positions of increasing responsibility at Freescale Semiconductor, Inc. (now NXP Semiconductors), Motorola, Inc. and Schlumberger Ltd.
 

Srinivasan Sivaram       62, President, Technology and Strategy
                            
Dr. Sivaram has served as our President, Technology and Strategy, since August 2019, having previously served as our Executive Vice President, Silicon Technology and Manufacturing, from November 2017 to August 2019 and our Executive Vice President, Memory Technology, from May 2016 to November 2017.
Prior to that, Dr. Sivaram served as SanDisk’s executive vice president, memory technology, from February 2015 until our acquisition of SanDisk in May 2016, senior vice president, memory technology, from June 2013 to February 2015 and vice president, technology, from January 2006 to March 2007. Dr. Sivaram previously served as chief operating officer for Matrix Semiconductor, Inc. from November 1999 until it was acquired by SanDisk in January 2006. From July 1986 to October 1999, Dr. Sivaram held various engineering and management positions at Intel Corporation. Dr. Sivaram also served as CEO of Twin Creeks Technologies, Inc. from January 2008 to December 2012.
 


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Robert W. Soderbery       56, Executive Vice President and General Manager, Flash Business
                           
Mr. Soderbery has served as our Executive Vice President and General Manager, Flash Business, since September 2020.
Prior to that, Mr. Soderbery served as president and board member of UpLift, Inc., a travel finance company, from May 2017 to September 2020. He has also served as managing member of Acclimate Ventures LLC, a consulting, advisory and investment firm, since October 2016. Mr. Soderbery previously served as senior vice president and general manager, enterprise products, and in other senior leadership roles at Cisco Systems from October 2009 to October 2016. Prior to that, he served as senior vice president, storage and availability management group, and in other leadership roles at Symantec Corporation. Mr. Soderbery currently serves on the board of directors of Rockwell Automation, Inc., and previously served as an advisor to such board from May 2017 to February 2022.
 

Michael C. Ray       55, Executive Vice President, Chief Legal Officer and Secretary
                      
Mr. Ray has served as our Executive Vice President, Chief Legal Officer and Secretary since November 2015, having previously served as our Senior Vice President, General Counsel and Secretary from April 2011 to November 2015, our Vice President, General Counsel and Secretary from October 2010 to April 2011, and in a number of positions in our legal department, ranging from Senior Counsel to Vice President, Legal Services, from September 2000 to October 2010.
Prior to that, Mr. Ray served as corporate counsel for Wynn’s International, Inc. from September 1998 to September 2000. Mr. Ray previously served as a judicial clerk to the U.S. District Court, Central District of California, and practiced law at O’Melveny & Myers LLP.
 


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40    Western Digital
2022 Proxy Statement

Executive Compensation

     

PROPOSAL 2

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

The Compensation and Talent Committee designed an executive compensation program that provides:

Strong linkage between management and stockholders’ interests
Pay for performance alignment and rewards for long-term value creation
Robust oversight by our Board and the Compensation and Talent Committee

Our Board of Directors recommends a vote FOR this Proposal 2 to approve on an advisory basis the executive compensation program for our named executive officers

Proposal Details

You have the opportunity to cast a non-binding, advisory “Say on Pay” vote every year.

Please read the section entitled “Executive Compensation—Compensation Discussion and Analysis” (and the various compensation tables and narratives accompanying those tables included under “Executive Compensation Tables and Narratives”) for information necessary to inform your vote on this Proposal 2.

Board Recommendation and Vote
Required for Approval

Board Recommendation

Our Board of Directors recommends that you vote FOR approval, on a non-binding advisory basis, of our executive compensation program for our named executive officers as disclosed in this Proxy Statement: RESOLVED, that the compensation paid to the named executive officers, as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby approved.

The next advisory vote on the compensation of our named executive officers will occur at our 2023 annual meeting of stockholders.

Vote Required for Approval

The affirmative vote of a majority of the shares of our common stock represented in person or by proxy at the Annual Meeting and entitled to vote on this proposal is required to approve this Proposal 2. You may vote FOR, AGAINST or ABSTAIN on this proposal. Proxies received by our Board of Directors will be voted FOR this Proposal 2 unless specified otherwise.

While this vote is nonbinding on our company and our Board of Directors, our Board and the Compensation and Talent Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers under our executive compensation program.


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Report of the Compensation and Talent Committee

The Compensation and Talent Committee, comprised of independent directors, reviewed and discussed the following Compensation Discussion and Analysis with management. Based on that review and discussion, the committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement for our 2022 annual meeting of stockholders.

THE COMPENSATION AND TALENT COMMITTEE

                 
MARTIN I. COLE TUNÇ DOLUCA STEPHANIE A. STREETER
Chair      

Compensation and Talent Committee Interlocks
and Insider Participation

Each of the committee members whose names appear on the Compensation and Talent Committee Report above, other than Ms. Streeter, were members of the committee during all of fiscal 2022. Ms. Streeter was appointed to the committee in September 2021. Ms. Cote was also a member of the committee during fiscal 2022 until her retirement from our Board in November 2021. All members of the committee during fiscal 2022 were independent directors and none of them were our employees or former employees or had any relationship with us requiring disclosure of certain transactions with related persons under SEC rules. There are no compensation committee interlocks between us and other entities in which one of our executive officers served on the compensation committee (or equivalent body) or the board of directors of another entity whose executive officer(s) served on the committee or our Board.


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2022 Proxy Statement

Compensation Discussion and Analysis

Our Named Executive Officers

When we refer to our “named executive officers,” we mean:

                             

DAVID V. GOECKELER
Chief Executive
Officer

WISSAM G. JABRE
Executive Vice
President and
Chief Financial Officer

SRINIVASAN
SIVARAM
President,
Technology
and Strategy

ROBERT W.
SODERBERY
Executive Vice
President and
General Manager,
Flash Business

MICHAEL C. RAY
Executive Vice
President, Chief
Legal Officer
and Secretary

In addition to the individuals listed above, Mr. Eulau, who ceased serving as our CFO in February 2022, is also a named executive officer for fiscal 2022 and is listed in the “Fiscal 2020—2022 Summary Compensation Table” per SEC rules.

Contents

Fiscal 2022 Overview 43
Fiscal 2022 Philosophy, Objectives and Process 45
Fiscal 2022 Decisions and Outcomes 49
Fiscal 2023 Decisions 58
Other Program Features and Policies 60


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    43
 

Fiscal 2022 Overview

Business Highlights

Our executive team performed well in the context of a difficult fiscal 2022 environment that included supply chain challenges and a contamination of certain material used in manufacturing processes at our joint venture NAND fabs in Japan. Our financial and operational performance materially exceeded our fiscal 2021 performance in the key metrics summarized below, but was lower than the robust targets set by the Compensation and Talent Committee for fiscal 2022 in our annual STI plan. In June 2022, we announced that we were reviewing potential strategic alternatives for our company to maximize stockholder value and our strategic review continued into fiscal 2023. The summary below outlines our fiscal 2022 performance and associated payouts under our executive incentive plans, as well as compensation-related actions taken by the committee in connection with the strategic review of our business.

NON-GAAP OPERATING INCOME(1)       FLASH EXABYTES SHIPPED       HDD EXABYTES SHIPPED
($M) (Exabytes) (Exabytes)
         

(1) See Appendix A to this Proxy Statement for a reconciliation of GAAP operating income to non-GAAP operating income.

Paying for Performance: Fiscal 2022 Performance Results and Payouts

Payouts under our incentive compensation plans reflect our financial and market performance. The fiscal 2022 STI paid out at an average of 92% of target for our named executive officers, reflecting our strong, but below target, performance in the context of a challenging market environment. In contrast, our total stockholder return (“TSR”) was low relative to many of our technology peers, and our long-term revenue and non-GAAP earnings per share (“EPS”) performance were below projected targets. The payout on the fiscal 2020–2022 performance stock units (“PSUs”) under our LTI program reflects this lower performance, with our named executive officers receiving a payout at 15% of target. The incentive compensation plan payouts align with the Compensation and Talent Committee’s pay-for-performance philosophy.

Award       Fiscal 2022
Payouts
      Page
STI Payout for Fiscal 2022
Fiscal 2022 STI(1) 92% 53
LTI Payout for Fiscal 2022
Fiscal 2020–2022 PSUs 15% 57
(1) STI payout represents average payout for our named executive officers based on our corporate performance and each named executive officer’s individual performance component payout.


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2022 Proxy Statement

Fiscal 2022 Retention Awards; Amendment to CEO’s Sign-On PSU Award

The Compensation and Talent Committee believes it is important to retain the executive team through our strategic review process and to focus the executive team on enhancing stockholder value during a period of uncertainty for that team. In this context and working with its independent consultant, in June 2022, the committee evaluated holding power associated with outstanding equity awards for our named executive officers through the end of fiscal 2024. Based on that assessment and to ensure strong equity hold through the end of fiscal 2024, the committee approved a retention RSU award for each named executive officer that vests over two years.

In evaluating potential equity retention gaps for our named executive officers over the next two fiscal years, the committee also evaluated our CEO’s sign-on PSU award granted in March 2020 that served in part to replace an award that our CEO forfeited upon terminating employment with his prior employer. Our CEO’s sign-on PSU award was subject to a relative TSR performance metric, comparing our stock-price performance relative to S&P 500 constituents’ stock price performance over a three-year period. To avoid potential distortions with the PSU outcomes and to eliminate a potential distraction for our CEO while evaluating our best long-term path, in June 2022 the committee amended our CEO’s sign-on PSU award to eliminate the performance metric and to provide that the award will vest with respect to the target number of stock units, subject to his continued service through the vesting date. At the time of the amendment, the CEO’s sign-on PSU was tracking between threshold and target payout. See the section entitled “Fiscal 2022 Retention RSU Awards; Amendment to CEO’s Sign-On PSU Award” for additional details on the retention awards and PSU amendment.

Our Compensation Policies and Practices

WHAT WE DO WHAT WE DON’T DO
Pay for performance by tying a substantial portion of executive compensation to the achievement of pre-established performance goals
Actively engage with our stockholders and consider their feedback in the future design of our executive compensation program
Link our executive compensation program to our long-term corporate strategy and sustainable stockholder value creation
Use a mix of performance measures, cash- and equity-based vehicles, and short-and long-term incentive opportunities that hold our executive officers accountable for executing on our long-term corporate strategy
Cap maximum vesting or payout levels under our incentive awards, which are aligned with competitive market practices
Engage an independent compensation consultant to evaluate and advise the Compensation and Talent Committee on our executive compensation program design and pay decisions
Evaluate executive compensation data and practices of our proxy peer group companies as selected annually by the Compensation and Talent Committee with guidance from its independent compensation consultant
Maintain executive stock ownership guidelines
Maintain a compensation recovery (“clawback”) policy applicable in the event an officer’s misconduct leads to an accounting restatement and provide for forfeiture of incentives in the event of an officer’s termination of employment due to misconduct
Provide limited executive perquisites
No tax gross-up payments in connection with severance or change in control payments
No single trigger vesting of equity awards upon a change in control
No repricing of stock options without stockholder approval (other than equitable adjustments permitted under our equity compensation plans)
No hedging, pledging or short-sale or derivative transactions by executive officers or directors
No dividend equivalent payments on equity awards until they are earned and vested


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Fiscal 2022 Philosophy, Objectives and Process

Our compensation philosophy is designed to accomplish three goals: (i) attract, retain and motivate premier talent, (ii) pay for performance and (iii) align the interests of our executive officers with our stockholders. The summary below provides the key objectives of our program:

     

Attract, retain and motivate premier talent necessary to accelerate our growth and drive financial and market performance

Provide competitive target compensation relative to the technology industry in which we compete for business and talent

Encourage accountability by tying a substantial portion of each executive officer’s compensation opportunity to individual, corporate and market-based performance objectives that we expect to create long-term value for our stockholders

Pay for performance by providing a substantial portion of compensation in the form of “at-risk,” variable incentive awards that reward superior individual, corporate and market-based performance and that reduce pay for underperformance

Align the interests of our executive officers with our stockholders through our pay-for-performance compensation design and by granting long-term equity awards that include multi-year performance and/or service requirements



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2022 Proxy Statement

Elements of Our Fiscal 2022 Executive Compensation Program

We believe our emphasis on variable compensation is aligned with our focus on operating excellence, allowing our executive compensation levels to reflect our performance. After evaluating our variable compensation plans with its independent compensation consultant, the Compensation and Talent Committee retained the incentive design that it approved in fiscal 2021, as summarized below.

Our actual pay positioning varies by executive officer, considering proxy peer group and survey market data, competitive pay levels, each executive officer’s role, past performance, scope of responsibility and expected contributions.

In addition to the elements reflected below, we also provide our executive officers with limited perquisites and certain other indirect benefits, as described in the section below entitled “Other Program Features and Policies.”

Elements of Fiscal 2022 Target Total Direct Compensation

CEO Other Named
Executive
Officers
(1)
Characteristics Purpose Performance Link/Key
Benchmark
BASE SALARY
 
Fixed compensation
Attracts, retains and motivates premier executive talent
Compensates executive officers for sustained individual performance
Competitive with market and industry practices
Adjusted for experience, responsibility, potential and performance
STI
 
Annual performance-based cash incentive compensation
Motivates executive officers to accelerate our growth and drive financial performance
Encourages accountability by rewarding achievement of individual and corporate objectives
Non-GAAP operating income (50% weighting)
Flash exabytes shipped (12.5% weighting)
HDD exabytes shipped (12.5% weighting)
Individual Performance (25% weighting)
LTI
PSUs
 
 
Performance-based equity compensation
3-year performance period for 100% of award
60% of our CEO’s LTI are PSUs; 50% of our other named executive officers’ LTI are PSUs
Encourages accountability by rewarding achievement of corporate and market-based objectives
Focuses executive officers on value creation through financial objectives
Revenue and non-GAAP EPS goals are each weighted at 25%; financial metrics are subject to automatic adjustment pursuant to a relative market performance adjustment (“MPA”) factor (as described on page 55 below)
Relative TSR goal is weighted at 50%; for PSUs based on relative TSR, payout capped at 100% if absolute TSR is negative
RSUs
 
Variable long-term equity compensation
Vests ratably over 4 years
Provides alignment with stockholder interests by focusing executive officers on long-term value creation
Provides retention value
Value based on stock price performance
(1) Includes target total direct compensation for Mr. Eulau, but excludes Mr. Jabre because Mr. Jabre did not participate in our annual LTI program in fiscal 2022.


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Process for Determining Executive Compensation

The Compensation and Talent Committee reviews and determines compensation for our executive officers. The committee reviews the performance and compensation of our executive officers on an annual basis and at the time of hiring, promotion or other change in responsibilities. The committee’s annual review typically occurs near the end of the prior fiscal year and beginning of the new fiscal year.

The committee considers stockholders’ views and input received from our stockholder engagement efforts when making determinations regarding our executive compensation program. Stockholders supported our fiscal 2021 executive compensation program last year with our Say-on-Pay proposal on named executive officer compensation receiving the support of 82% of the votes cast.

The committee’s executive compensation decisions are informed by several factors, including:

 

EXTERNAL AND INTERNAL FACTORS

Our compensation philosophy and objectives
Our pay positioning relative to our proxy peer group and broad compensation survey market data
The executive officer’s role, experience, performance and contributions
Internal pay equity
Our retention objectives
Succession planning
Current and historical company performance and strategic and financial goals
Market performance and general economic conditions

COMPENSATION CONSULTANT

Views from the committee’s independent compensation consultant
Broad compensation survey and proxy peer group company market data prepared by the independent compensation consultant
 

MANAGEMENT

Our CEO’s recommendations for our other executive officers (not including himself)
Our CFO’s (or designee’s) input on financial targets for our performance-based executive compensation program, data regarding the impact of the program on our financial results and actual results against our pre-established performance targets
Internal and external compensation data provided by our Chief People Officer (or designee)
 

STOCKHOLDERS

Feedback received during stockholder engagement (see the section entitled “Corporate Governance Matters—Year-Round Stockholder Engagement” for additional information)

In April 2022, the Compensation and Talent Committee transitioned from Willis Towers Watson (“WTW”) to Compensia, Inc. (“Compensia”) as its independent compensation consultant. WTW and Compensia each reported directly to the committee and each consultant communicated with management to gather information and review management proposals as needed. WTW and Compensia, as applicable, attended all regularly-scheduled meetings of the committee during fiscal 2022 and their collective responsibilities for fiscal 2022 generally included:

Reviewing and advising on executive compensation, including the performance measures to be used under the executive compensation program
Providing recommendations regarding the composition and selection of our proxy peer group companies
Analyzing compensation survey data
Providing advice regarding executive compensation practices and trends
Advising on the Compensation and Talent Committee’s charter
Advising on the compensation-related items approved by the committee in connection with the strategic review of our business

The committee assessed the independence of WTW and Compensia pursuant to applicable rules and regulations of the SEC and the Nasdaq Stock Market and concluded that the engagement of WTW and Compensia did not raise any conflicts of interest during fiscal 2022 and currently does not raise any conflicts of interest with respect to Compensia (the committee’s current compensation consultant).


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48    Western Digital
2022 Proxy Statement

Comparative Market Data

The Compensation and Talent Committee determines the composition of our proxy peer group and reevaluates this group on an annual basis with input from its independent compensation consultant.

For fiscal 2022, market data was collected from the Radford Executive Survey, an independently published survey, and WTW’s High-Tech Compensation Survey. The survey data was filtered for high-technology companies and adjusted to screen for revenue size. With input from the independent compensation consultant, the committee uses market data and industry practices during its annual review of the competitiveness of compensation levels and the appropriate mix of compensation elements for our named executive officers. This market data provided the committee a reference point, which was one of several factors that it used to make compensation decisions during its fiscal 2022 annual compensation review.

Fiscal 2022 Proxy Peer Group Companies for Benchmarking Pay and Incentive Design

The proxy peer group companies that the Compensation and Talent Committee uses for benchmarking pay and incentive design for fiscal 2022 consisted of technology companies that compete with us for talent and have the size (primarily based on revenue) and business characteristics that we believe are comparable to ours. Like us, most companies included in our proxy peer group were included in the Dow Jones U.S. Technology Hardware & Equipment Index.

In choosing proxy peer group companies, the Compensation and Talent Committee focused primarily on industry, talent market and revenue size. Revenue is a commonly used proxy for organizational size and complexity and is relatively stable from year-to-year, making it a valuable metric when selecting peers for compensation purposes. As part of its decision process, the committee also referenced other metrics for informational purposes.

WESTERN DIGITAL COMPARED TO PROXY PEER GROUP

 

Advanced Micro Devices, Inc.
Analog Devices, Inc.
Applied Materials, Inc.
Broadcom Inc.
Cisco Systems, Inc.
Hewlett Packard Enterprise Company

HP Inc.
Lam Research Corporation
Micron Technology, Inc.
Motorola Solutions, Inc.
NetApp, Inc.
NVIDIA Corporation

ON Semiconductor Corporation
QUALCOMM Incorporated
Seagate Technology plc
Texas Instruments Incorporated

(1)

Represents annual revenue for the most recent fiscal year for which data was available through SEC filings as of August 31, 2022.



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Fiscal 2022 Decisions and Outcomes

Base Salary

Named Executive Officer      Base Salary Level(1)
($)
     Increase from
Fiscal 2021
David V. Goeckeler 1,250,000 0%
Wissam G. Jabre 625,000
Srinivasan Sivaram 750,000 0%
Robert W. Soderbery 710,000 0%
Michael C. Ray 625,000 0%
Robert K. Eulau 715,000 0%
(1)

Table reflects annualized base salary in effect at the end of fiscal 2022 for each named executive officer, other than with respect to Mr. Eulau, whose employment with our company terminated prior to the end of fiscal 2022.

Short-Term Incentives

Fiscal 2022 Target Incentive Award Opportunities

In August 2021, the Compensation and Talent Committee approved an increase in Mr. Ray’s target incentive opportunity from 85% of base salary to 100% of base salary. This increase reflects the committee’s determination that Mr. Ray is a strong performer and the adjustment aligns with the external market and internal equity among other company executive officers, and also reflects the strong market competition for executive talent.

Named Executive Officer      Annual Target
Incentive Opportunity(1)
(as Percentage of
Base Salary)
     Increase from
Fiscal 2021
David V. Goeckeler 175% 0%
Wissam G. Jabre 120%
Srinivasan Sivaram 120% 0%
Robert W. Soderbery 120% 0%
Michael C. Ray 100% 18%
Robert K. Eulau 110% 0%
(1)

Table reflects annual target incentive opportunity at the end of fiscal 2022 for each named executive officer. Mr. Eulau’s actual payout was prorated in connection with his termination prior to the end of fiscal 2022. Please see the section entitled “Potential Payments Upon Termination or Change in Control” on page 72 below for additional details relating to such prorated payment.

Fiscal 2022 Design and Performance

Fiscal 2022 Design

For fiscal 2022, the Compensation and Talent Committee retained the STI plan design it approved in fiscal 2021, which included operational metrics and an individual performance component to recognize performance in support of our core operations, as reflected below.

                         

Non-GAAP
Operating Income

50% Weighting

+

Flash Exabytes
Shipped

12.5% Weighting

+

HDD Exabytes
Shipped

12.5% Weighting

+

Individual
Performance

25% Weighting

=

Individual
Final Payout

(Capped at
200%)



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2022 Proxy Statement

In retaining the STI plan design for fiscal 2022, the committee considered the following factors:

Non-GAAP operating income reflects our core operating results.
Exabytes shipped provides the executive team with tangible operational goals and the metric aligns with our short-term strategy. This metric is a primary driver for maintaining our market share and, given our fixed assets, shipping more exabytes improves our utilization of those assets. The inclusion of profit metrics in both the STI plan and LTI plan helps ensure that management does not ship exabytes unprofitably to maximize this metric.
The IPC provides the committee with the ability to differentiate performance among executive officers and reward our strongest contributors. Weighting the metric at 25% ensures that the majority of each executive officer’s incentive opportunity is tied to financial and corporate objectives.

Fiscal 2022 Corporate Performance

The STI corporate performance target levels approved by the Compensation and Talent Committee for fiscal 2022 were materially higher than our fiscal 2021 performance results for each metric, reflecting the committee’s philosophy that our STI targets should be robust and challenging. Our fiscal 2022 non-GAAP operating income target was 78% higher than our fiscal 2021 actual performance ($3,394M versus $1,906M); our fiscal 2022 flash exabyte target was 28% higher than our fiscal 2021 actual performance (93.8 versus 73.4); and our fiscal 2022 HDD exabyte target was 22% higher than our fiscal 2021 actual performance (572 versus 467).

NON-GAAP OPERATING INCOME(1)
($M)


Non-GAAP Operating Income(1) (50% Weighting)
Performance Achievement      Performance
(% Target)
     STI Payout
(% Target)
     Performance
($ millions)
Maximum 130% 200% 4,412
Target 100% 100% 3,394
Threshold 75% 50% 2,546
Actual 94% 88% 3,186
(1) See Appendix A to this Proxy Statement for a reconciliation of GAAP operating income to non-GAAP operating income.

FLASH EXABYTES SHIPPED

Flash Exabytes Shipped (12.5% Weighting)
Performance Achievement      Performance
(% Target)
     STI Payout
(% Target)
     Performance
(Exabytes)
Maximum 105% 200% 98.5
Target 100% 100% 93.8
Threshold 95% 50% 89.1
Actual 94% 0% 88.5


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HDD EXABYTES SHIPPED




HDD Exabytes Shipped (12.5% Weighting)
Performance Achievement       Performance
(% Target)
      STI Payout
(% Target)
      Performance
(Exabytes)
Maximum 110% 200% 629
Target 100% 100% 572
Threshold 90% 50% 517
Actual 97% 87% 557

The weighted average payout for the corporate metrics was 73% of the target performance levels:

Non-GAAP Operating
Income Payout %
(50% Weighting)
Flash Exabytes
Shipped Payout %
(12.5% Weighting)
HDD Exabytes
Shipped Payout %
(12.5% Weighting)
Aggregate Corporate
Payout %
(75.0%)
88% 0% 87% 73%

Fiscal 2022 Individual Performance Component

Performance Goal Setting
The IPC, weighted at 25% of each named executive officer’s target award opportunity, was split between leadership and execution measures with equal weighting. Our named executive officers (other than Mr. Jabre, who became our CFO in February 2022) worked with our CEO to prepare individual performance goals in early fiscal 2022 and management submitted those goals for review by the committee. Our CEO separately submitted his fiscal 2022 performance goals for the committee’s review, with input from our Board of Directors.

Performance Assessment and IPC Payout Percentage Determination

CEO
Our Compensation and Talent Committee Chair met with each non-employee member of our Board of Directors to solicit input on Mr. Goeckeler’s fiscal 2022 performance relative to his performance goals for the year. During an executive session without participation of any members of our executive team, the committee assessed our CEO’s fiscal 2022 performance and discussed the IPC payout percentage for our CEO. Our CEO’s fiscal 2022 performance and proposed IPC payout percentage were then discussed with our full Board. Based on feedback received during those discussions, the committee set Mr. Goeckeler’s IPC payout percentage at 150% of target, consistent with our Board’s view of his execution and leadership during fiscal 2022. In determining the fiscal 2022 IPC payout percentage for our CEO, the committee focused on the following factors:

Our 67% increase in non-GAAP operating income and 81% increase in non-GAAP EPS relative to fiscal 2021(1)

Mr. Goeckeler’s strong leadership in navigating operational challenges associated with the contamination of certain material used in manufacturing processes at our joint venture facilities in Japan, delivering a 21% increase in flash exabytes shipped despite the contamination

Mr. Goeckeler’s continued strong management through a global pandemic, supply chain challenges and a more complex geopolitical environment

Mr. Goeckeler attracted and retained top talent within the executive team, including the appointment of our new CFO and new Executive Vice President of Global Operations, who are key strategic partners to our CEO

Strong management of the relationship with our joint venture partner, Kioxia Corporation

Leading the strategic review to enhance stockholder value

(1) See Appendix A to this Proxy Statement for reconciliations of GAAP operating income and EPS to non-GAAP operating income and EPS, respectively.


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2022 Proxy Statement

In making a final decision on the IPC payout percentage, the committee also considered the impact the IPC has on the overall STI payout to align the final STI amount with the committee’s assessment of overall company performance and expectations of CEO performance.

OTHER NAMED EXECUTIVE OFFICERS

Our CEO submitted recommended IPC payout percentages to the committee for each named executive officer, excluding himself. Our CEO’s recommendations included his assessment of each named executive officer’s fiscal 2022 performance relative to his goals for the year. For Mr. Jabre, our CEO’s assessment was based on Mr. Jabre’s performance relative to goals established for our prior CFO at the beginning of fiscal 2022. The committee reviewed and discussed with our CEO the proposed IPC payout percentage for each named executive officer, excluding our CEO. The committee then approved the IPC payout percentages set forth below for those executive officers in executive session without participation of any members of our executive team. In determining the fiscal 2022 IPC payout percentages for our other named executive officers, the committee focused on the following factors:

Wissam G. Jabre:

Improved our close processes and accelerated visibility to financial data for the executive team

Positive early engagement with our investors

Demonstrated leadership with finance and executive leadership teams

Enhanced business unit segment reporting

Srinivasan Sivaram:

Significant contributions to external forums, including investor events, webinars and government engagement

Substantial technical and leadership impact with respect to our joint venture with Kioxia Corporation

Material progress in restructuring our memory technology organization to support the business

Demonstrated leadership with memory technology and executive leadership teams

Robert W. Soderbery:

Demonstrated leadership in strengthening our flash product strategy to expand gross margins

Material progress in restructuring our flash organization to align with strategy

Disciplined capital and operating expenditures to align with market conditions

Michael C. Ray:

Key leader in developing overall corporate strategy and strong partner to our CEO and peers

Strong legal acumen in supporting the business in both routine and complex matters

Strong focus on developing next generation of legal talent within our company

Positive results with respect to material outstanding litigation matters

Fiscal 2022 IPC Payout Percentages

Based on the CEO’s recommendations for each named executive officer, excluding himself, and the Compensation and Talent Committee deliberations, the committee approved the IPC payouts as follows:

Named Executive Officer       IPC Target Weighting       IPC Payout %(1)
David V. Goeckeler 25% 150.0%
Wissam G. Jabre 25% 137.5%
Srinivasan Sivaram 25% 162.5%
Robert W. Soderbery 25% 112.5%
Michael C. Ray 25% 175.0%
(1) Each named executive officer’s IPC payout could range from 0% to 200% of the target IPC weighting.


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Fiscal 2022 STI Payouts

Named Executive Officer       Corporate Payout %
(75% Weighting)
      IPC Payout %
(25% Weighting)
      Aggregate
Payout
%
      STI Payout
($)
David V. Goeckeler 73% 150.0% 92% 2,017,559
Wissam G. Jabre(1) 73% 137.5% 89% 279,994
Srinivasan Sivaram 73% 162.5% 95% 857,700
Robert W. Soderbery 73% 112.5% 83% 705,456
Michael C. Ray 73% 175.0% 98% 615,156
(1) Mr. Jabre participated in the fiscal 2022 STI plan on a prorated basis.

Long-Term Incentives: Fiscal 2022 Equity Awards

Fiscal 2022 LTI Awards

Our named executive officers, other than Mr. Jabre, received LTI awards in August 2021 consisting of a mix of PSUs and RSUs; Mr. Jabre received sign-on RSUs in February 2022. The named executive officers’ RSUs (other than Mr. Jabre’s sign-on RSUs) are scheduled to vest with respect to 25% on the first anniversary of the grant date and 6.25% quarterly thereafter for three years; Mr. Jabre’s sign-on RSUs are scheduled to vest ratably over three years. The vesting provisions of the PSUs are described below under the section entitled “Fiscal 2022-2024 PSU Awards”.

Named Executive Officer       Total Awarded
Grant Value
($)(1)
      LTI Vehicle Mix
PSUs         RSUs
David V. Goeckeler 15,000,000 60% 40%
Wissam G. Jabre 4,500,000 (2) 0% 100%
Srinivasan Sivaram 3,750,000 50% 50%
Robert W. Soderbery 3,550,000 50% 50%
Michael C. Ray 2,187,500 50% 50%
Robert K. Eulau 3,575,000 50% 50%
(1) The differences between the target grant values approved by the Compensation and Talent Committee (as reflected in the table above) and the grant date fair values of the awards as determined for financial reporting purposes (as reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table below) are attributable to the use of a Monte Carlo simulation to determine the grant date fair value of the relative TSR PSUs for financial reporting purposes.
(2) Reflects the target grant value of Mr. Jabre’s sign-on RSU award. In approving Mr. Jabre’s sign-on RSU award, the Compensation and Talent Committee intended to accelerate Mr. Jabre’s transition into our equity program and provide equity holding power through his first three years with our company before his PSU awards begin to vest.

Fiscal 2022 Retention RSU Awards; Amendment to CEO’s Sign-On PSU Award

In June 2022, we announced that we would conduct a review of strategic alternatives for our business, including the potential option of splitting our HDD and flash businesses. Given the uncertainty that accompanies such a significant strategic review, the Compensation and Talent Committee believed it was important to take action to retain the executive team through this process and to focus the team on enhancing stockholder value during this important period. Working with its independent consultant, the committee evaluated equity vesting values for each named executive officer in fiscal 2023 and fiscal 2024 to determine potential gaps in the retentive value of equity over that period to help ensure continuity in the team through the strategic review. The committee also requested our CEO’s input for our other named executive officers in evaluating potential retention awards to retain the executive team and ensure sufficient equity holdings to achieve our retention goals over the next two fiscal years. The committee separately worked with its independent compensation consultant to assess a potential retention RSU award for our CEO.


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Following that review, on June 15, 2022, the committee approved a retention RSU award for each named executive officer in the amounts set forth in the table below. Our CEO’s RSU award will vest with respect to 30% of the award on the first anniversary of the grant date and the remaining 70% of the award will vest on the second anniversary of the grant date. The RSUs granted to the other named executive officers will vest as to 50% of the award on each of the first two anniversaries of the grant date. The vesting period for the RSUs aligns with the time horizon for our company’s strategic review into fiscal 2023 and potential execution on that strategic review thereafter and helps ensure continuity in the executive team over the next two years.

In evaluating potential equity retention gaps for our named executive officers over the next two fiscal years, the committee also evaluated our CEO’s sign-on PSU award granted in March 2020 that served in part to replace an award that our CEO forfeited upon terminating employment with his prior employer. Our CEO’s sign-on PSU award was subject to a relative TSR performance metric, comparing our stock-price performance relative to S&P 500 constituents’ stock price performance over a three-year period. As we explore and potentially execute on strategic alternatives for our business, this performance metric, which is tied to our stock price, may be influenced by factors unrelated to our underlying performance or general market dynamics.

To avoid potential distortions with the PSU outcomes and to eliminate a potential distraction for our CEO while evaluating our best long-term path, the committee amended our CEO’s sign-on PSU award to eliminate the performance metric and provide that it will vest at target payout in March 2023 (the original vesting date), subject to our CEO’s continued service through that date. The award otherwise retains its original terms, including treatment upon a termination without Cause (as defined in the award) or a Change in Control (as defined in the award). On the date that the committee approved this amendment, our CEO’s sign-on PSU award was tracking between threshold and target payout, although actual payout under the award would have been based on stock price performance during the last 45 days of the performance period relative to the beginning stock price average established at grant. The incremental accounting expense related to this amendment is reflected in the Fiscal 2020–2022 Summary Compensation Table below. The committee has not amended any other outstanding PSUs granted to our CEO or other employees.

In approving the amendment to our CEO’s sign-on PSU award and granting our CEO’s retention RSU, the committee considered his accomplishments in orienting our business to maximize stockholder value by substantially reducing our debt and reorganizing our company to drive agility and business results for our flash and HDD businesses. The committee also considered our CEO’s continued importance in executing these initiatives and navigating our company through the strategic review. The committee believes that retaining and motivating our CEO and the executive team through and beyond the strategic review will help optimize value for our stockholders.

Retention RSUs

Named Executive Officer       Total Awarded
Grant Value
($)
David V. Goeckeler 5,000,000
Wissam G. Jabre 4,000,000
Srinivasan Sivaram 4,000,000
Robert W. Soderbery 1,000,000
Michael C. Ray 3,000,000


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Long-Term Incentives: PSU Design and Performance

Fiscal 2022–2024 PSU Awards

The fiscal 2022–2024 PSU awards include the following performance metrics, each of which is measured over a three-year period covering fiscal 2022 through fiscal 2024.

The Compensation and Talent Committee selected these performance metrics because revenue focuses our executive officers on sustainable long-term corporate growth and non-GAAP EPS measures the effectiveness of our capital allocation strategy; the relative TSR metric was intended to align the interests of our executive officers with our stockholders by rewarding our named executive officers based on our stock performance relative to the broader equities market. We do not disclose our revenue and non-GAAP EPS targets prospectively due to competitive considerations, but will disclose the targets for each metric at the end of the performance period so that our investors may evaluate the rigor of our design in the context of any payouts under these awards.

Financial Metrics. The PSU financial metrics are cumulative annual targets established at grant and measured over the three-year performance period. The cumulative PSU financial goals are subject to a pre-established, objective adjustment at the end of the performance period in a relative proportion (up or down) by which the total market for our products (measured by revenue) during the period exceeds or falls short of the total market forecast approved by the committee at the time the goals are established, as reported by industry analysts. We refer to the relative market performance adjustment in this Proxy Statement as “relative MPA.”

Relative MPA is a pre-established modifier approved at the time the performance goals were set by the committee and not subject to discretion as to whether the adjustment should be applied.

Rationale: The committee approved relative MPA to help ensure we are paying for performance relative to the market demand and opportunity available to us and not due to unforeseen swings in the market. For example, if there is a significant demand in the market that was not forecasted at the beginning of the performance period when the committee approved the performance goals, the adjustment factor would automatically increase the goals – and make them harder to achieve – to ensure that our executive officers are not benefitting from the unforeseen upswing in demand.

Relative TSR Metric. The relative TSR metric measures our stock performance, assuming reinvestment of dividends to the extent there are any distributed during the period, relative to S&P 500 constituent companies as of the beginning of the performance period. The percentage of relative TSR PSUs that can be earned at the end of the three-year performance period is set forth below.

Rationale: The committee believed the S&P 500 constituent companies was a better TSR peer group for the fiscal 2022–2024 PSUs because it compares our performance relative to the broader equity market; our company’s stock price does not correlate well with industry-specific indices given our unique business model.


Western Digital’s Relative TSR Results for the Measurement Period       Portion of the PSUs Subject to the
Award that Become Eligible to Vest
75th percentile or greater 200%
50th percentile 100%
25th percentile 25%
Less than the 25th percentile 0%

Straight-line interpolation is used if performance falls between two points. Additionally, if our absolute TSR is negative during the performance period, the relative TSR PSUs will be capped at a target payout (100%).


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56    Western Digital
2022 Proxy Statement

Performance of Fiscal 2020-2022 PSUs

The PSUs granted in fiscal 2020 reflected the following design:

Financial Performance Metrics (50% Weighting)

The fiscal 2020–2022 PSUs included a mix of two-year and three-year performance periods for the financial metrics (revenue and non-GAAP EPS), with a three-year service period to vest in the award.

The financial metrics were subject to the relative MPA modifier, similar to the fiscal 2022–2024 PSUs.

The actual market for our products was slightly higher than forecast when the fiscal 2020–2022 PSU goals were established, thus applying the relative MPA modifier resulted in a modest increase in the target level of performance for both revenue and non-GAAP EPS metrics relative to the targets established at grant for the PSU performance period that ended in fiscal 2022.

Relative TSR Metric (50% Weighting)

The fiscal 2020-2022 PSUs included a three-year TSR metric that measured our stock performance, assuming reinvestment of dividends, relative to a bespoke TSR peer group consisting of the constituents of the PHLX Semiconductor Sector Index and the S&P 500 Technology Hardware & Equipment Index. In each case, the constituents were as of the beginning of the performance period.

Performance Periods and Payouts


Fiscal 2020 Fiscal 2021 Fiscal 2022

Fiscal
2020-2022
PSUs

2-Year Performance Period (12.5%)
Performance period ended in fiscal 2021 and the Compensation and Talent Committee certified payout at 40% of target, as described in our 2021 proxy statement.

3-Year Performance Period (87.5%) Performance Period Ended in Fiscal 2022
The Compensation and Talent Committee certified payout in August 2022 for financial metrics at 26% of target and the relative TSR metric at 0%, as described below.



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FISCAL 2020-2022 PERFORMANCE PERIOD ACHIEVEMENT

Three-Year Financial Metrics


Financial Metrics
(37.5% Weighting)
      Threshold
(50%)
($)
       Original
Target
(100%)
($)
      Maximum
(200%)
($)
      Target After
Applying
Relative
MPA Modifier
(100%)
($)
      Actual
Performance
($)
      Achievement
Rate
      Payout %
3-Year Revenue
(18.75%) (in millions)
52,009 61,187 70,365 61,333 52,451 86% 52%
3-Year Non-GAAP EPS (18.75%)(1) 20.60 27.46 35.70 27.70 15.82 57% 0%
Weighted Payout: 26%
(1) See Appendix A to this Proxy Statement for a reconciliation of GAAP EPS to non-GAAP EPS.

Three-Year Relative TSR Metric


Relative TSR
(50% Weighting)
      Custom TSR
Peer Group
Relative TSR(1)
      Relative
TSR Units
Payout %
      WDC 3-Year
Relative TSR
      WDC Percentile
Relative to Custom
TSR Peer Group
      Payout %
75th percentile 142.81% 200%
50th percentile 61.41% 100% 38.31% 24th percentile 0%
25th percentile 39.43% 25%
(1) The custom TSR peer group included constituents of the PHLX Semiconductor Sector Index and the S&P 500 Technology Hardware & Equipment Index, each as constituted at the beginning of fiscal 2020. The TSR peer group included 47 companies as of the grant date.

FISCAL 2020-2022 PSUs: PAYOUTS

Fiscal 2020–2022 PSUs       2-Year
Financial Metrics
(1)
      3-Year
Financial Metrics(2)
      3-Year
Relative TSR(2)
      Aggregate
Award Payout
Weighting 12.5% 37.5% 50% 100%
Payout % 40% 26% 0% 15%
(1) The Compensation and Talent Committee certified performance for the two-year financial metrics in August 2021, following the end of fiscal 2021. Our named executive officers who received those awards generally remained subject to a one-year service period during fiscal 2022 to vest in that portion of the award.
(2) The Compensation and Talent Committee certified performance for the three-year financial and TSR metrics in August 2022, following the end of fiscal 2022.

NAMED EXECUTIVE OFFICER PAYOUTS FOR FISCAL 2020-2022 PSUs

Named Executive Officer(1)       Target Payout
(100%)
(# of Shares)
      Actual Payout
(# of Shares)(2)
Srinivasan Sivaram 33,708 4,971
Michael C. Ray 26,334 3,883
(1) Dr. Sivaram and Mr. Ray were the only named executive officers who received fiscal 2020–2022 PSUs.
(2) Pursuant to the terms of the award, the named executive officers also received dividend equivalents accrued with respect to the number of shares issued for the stock units earned.


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58    Western Digital
2022 Proxy Statement

Chief Financial Officer Transition

Mr. Eulau ceased serving as our CFO in February 2022 and remained with our company during an advisory period until May 2022. In connection with our termination of Mr. Eulau’s employment without cause, we entered into a Separation Agreement and General Release with Mr. Eulau, pursuant to which he received Tier I severance benefits as required under our Executive Severance Plan. Please see the section entitled “Potential Payments upon Termination or Change in Control” for additional details relating to payments under Mr. Eulau’s Separation Agreement. Mr. Eulau did not receive any additional compensation outside of what he was entitled to under our Executive Severance Plan or the applicable award agreement.

Mr. Jabre commenced serving as our Executive Vice President and CFO in February 2022. In connection with his appointment, he received a cash sign-on award of $500,000, with the first half paid in fiscal 2022 and the second half paid upon the six-month anniversary of his start date, in fiscal 2023, and was subject to Mr. Jabre’s continued employment with us through that date. Mr. Jabre also received a sign-on RSU award in the amount of $4,500,000 that vests ratably over three years. Please see the section entitled “Fiscal 2022 LTI Awards” for additional details relating to Mr. Jabre’s sign-on RSU award.

Fiscal 2023 Decisions

Fiscal 2023 STI – ESG Goals in IPC

In August 2022, the Compensation and Talent Committee approved the addition of objective ESG goals for our named executive officers as part of the IPC under the fiscal 2023 STI plan. The ESG goals include an emissions reduction goal and DE&I goals, such as increasing underrepresented individuals in new college graduate hires and decreasing attrition of underrepresented groups. The IPC remains weighted at 25%, and is comprised of three equally weighted categories: leadership, execution and ESG.

Fiscal 2023-2025 PSUs

In August 2022, the Compensation and Talent Committee granted Fiscal 2023-2025 PSUs to our named executive officers, with a revised design. The table below summarizes the changes adopted for the Fiscal 2023-2025 PSUs compared to the Fiscal 2022-2024 PSUs and the committee’s rationale in adopting those changes. The committee evaluated the changes to our LTI design in multiple meetings before approving the design summarized below. In updating our LTI design, the committee concluded that the new design will (i) better align our named executive officer’s compensation with our financial and operational performance and incentivize the high-performing team assembled by our CEO over the past few years to execute on our strategy, (ii) provide better line of sight for our named executive officers with respect to our LTI program and (iii) align our named executive officers with our investors by rewarding sustained financial and operational performance that the committee believes will result in strong market performance.

PSU Terms Fiscal 2022-2024 PSUs Fiscal 2023-2025 PSUs Rationale For Change

Metrics

25% Revenue
25% Non-GAAP EPS
50% Relative TSR
50% Revenue
50% Non-GAAP EPS
Revenue and non-GAAP EPS represent long-term value drivers for our stockholders
The Compensation and Talent Committee believes that focusing on strong operational performance is the best path to long-term value creation
The committee determined that relative TSR is not preferable during this period due to the lack of a suitable TSR peer group


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PSU Terms Fiscal 2022-2024 PSUs Fiscal 2023-2025 PSUs Rationale For Change
Performance
Periods
3-year targets
MPA modifier to reflect market conditions
3x1-year annual targets
Payout determined by average at end of three years
No MPA modifier
Limited visibility in setting 3-year targets in a highly cyclical industry
MPA modifier mitigated market cyclicality, but executives lacked line of sight to final targets
Payout average in updated design ensures performance in all three years impacts payouts
Upside
Incentive
N/A
Upside incentive of 10%-50% of the underlying 3-year average financial metric payout
3-year stock price compound annual growth rate (“CAGR”)
No upside incentive if the 3-year average financial metric payout is zero
Links incentive opportunity to sustained share price performance over three years


The Compensation and Talent Committee granted the following LTI awards to our named executive officers in fiscal 2023 as part of our regular annual LTI program. Each executive’s PSU award reflects the updated design discussed above.

Total Awarded
Grant Value
($)
LTI Vehicle Mix
Named Executive Officer              PSUs          RSUs
David V. Goeckeler       15,000,000 60% 40%
Wissam G. Jabre 4,500,000 (1) 50% 50%
Srinivasan Sivaram 3,750,000 50% 50%
Robert W. Soderbery 3,550,000 50% 50%
Michael C. Ray 2,500,000 50% 50%
(1)

Mr. Jabre’s fiscal 2023 LTI award amount was set forth in his offer letter.




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60    Western Digital
2022 Proxy Statement

Other Program Features and Policies

Perquisites      We provide our executive officers with few perquisites, consisting principally of a $5,000 annual allowance for financial planning services (net of taxes) and, in very limited circumstances, tax gross-ups for certain payments. Any tax gross-ups paid to named executive officers are disclosed in our Summary Compensation Table.
401(k) Plan
Benefits
We provide retirement benefits to our executive officers and other eligible employees under the terms of our 401(k) Plan. Eligible employees may contribute up to 75% of their annual cash compensation up to a maximum amount allowed by the Internal Revenue Code, and are also eligible for matching contributions, which vest over a two-year service period. Our executive officers participate in our 401(k) Plan on substantially the same terms as our other participating employees. We do not maintain any defined benefit supplemental retirement plans for our executive officers.
Deferred
Compensation
Opportunities
Our executive officers and certain other key employees who are subject to U.S. federal income taxes are eligible to participate in our Deferred Compensation Plan. Participants can elect to defer certain compensation without regard to the tax code limitations applicable to tax-qualified plans. We did not make any company matching or discretionary contributions to our Deferred Compensation Plan on behalf of participants in fiscal 2022.
Severance
Protections

Outside a change in control context, we view severance protections as only appropriate in the event an executive officer is involuntarily terminated without “cause.” These severance benefits are appropriate considering severance protections available to executive officers at our proxy peer group companies and are an important component of each executive officer’s overall compensation.

Please see the section entitled “Executive Compensation Tables and Narratives—Potential Payments upon Termination or Change in Control” for a description and quantification of the potential payments that may be made to our named executive officers in connection with their termination of employment or a change in control.

Change in Control
Protections

A change in control transaction creates uncertainty regarding the continued employment of our executive officers. To encourage our executive officers to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide our executive officers with additional severance protections under our Change in Control Severance Plan. We also provide these severance protections to help ensure that our executive officers can objectively evaluate change in control transactions that may be in the best interests of our stockholders despite the potential negative consequences such transactions may have on them personally.

Please see the section entitled “Executive Compensation Tables and Narratives—Potential Payments upon Termination or Change in Control” for a description and quantification of the potential payments that may be made to our named executive officers in connection with their termination of employment or a change in control.

Employment
Agreements
None of our executive officers is currently party to an employment agreement with us.


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Compensation
Recovery
(Clawback) Policy
     Our Board of Directors previously adopted by resolution a compensation recovery (clawback) policy where in the event of a restatement of our audited financial statements involving misconduct by an executive officer, a Board committee will consider whether such officer engaged in intentional financial accounting misconduct such that the officer should disgorge any equity award proceeds (including PSUs, RSUs and stock options) or cash bonuses attributable to such misconduct.
Misconduct
Policies
We maintain several policies relating to employee misconduct. In the event an executive officer’s employment is terminated for cause due to their misconduct or violation of company policy, among other reasons, they will forfeit all outstanding incentives, including unearned or unvested LTI and STI awards. In addition, the executive officer would not be eligible for severance benefits.
Policies Prohibiting
Hedging, Pledging
and Short Sale
or Derivative
Transaction
Our insider trading policy prohibits our executive officers (as well as our other employees and members of our Board of Directors) from engaging in hedging transactions or speculative transactions involving our company’s securities and from pledging company securities. Prohibited transactions include hedging or monetization transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds that are designed to hedge or offset any decrease in the market value of our company’s securities, shorts sales, transactions in derivative securities, such as publicly traded options, related to our company’s securities and margining our company’s securities in a margin account or otherwise pledging company securities as collateral for a loan.
Executive Stock
Ownership
Guidelines
We established executive stock ownership guidelines covering our executive officers, including our named executive officers, to help link the interests of our stockholders with those of our executive officers. The guidelines provide that each officer must achieve ownership of a number of “qualifying shares” with a market value equal to the specified multiple of the officer’s base salary in effect upon the date he or she first becomes subject to the guidelines shown below.
                                                    Position      Multiple
Chief Executive Officer 6 x Salary
President, Chief Financial Officer and Division Presidents 3 x Salary
Executive Vice Presidents 2 x Salary
Senior Vice Presidents 1 x Salary
 
Each executive officer must achieve ownership of the required market value of shares within three years of becoming subject to the guidelines. Common stock, RSUs, PSUs, deferred stock units and common stock beneficially owned by the officer all count towards the requirement, but shares the officer has a right to acquire through exercising stock options (whether or not vested) are not counted. All of our current officers who are subject to these guidelines have achieved their required ownership level as of the date of this Proxy Statement.


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2022 Proxy Statement

Executive Compensation Tables and Narratives

Fiscal 2020—2022 Summary Compensation Table

The following table presents information regarding compensation earned for fiscal 2022, 2021 and 2020 by our named executive officers.

Name and Principal
Position
     Fiscal
Year
     Salary
($)
     Bonus
($)
     Stock
Awards
($)(1)
     Non-Equity
Incentive Plan
Compensation
($)(2)
     All Other
Compensation
($)(3)
     Total
($)
David V. Goeckeler 2022 1,250,000 28,860,629 2,017,559 9,150 32,137,338
Chief Executive Officer 2021 1,250,000 12,487,789 3,346,875 8,700 17,093,364
2020 408,654 3,500,000 31,140,040 673,077 1,605 35,723,376
Wissam G. Jabre 2022 262,019 250,000 (4) 8,499,981 279,994 20,295 9,312,289
Executive Vice President
and Chief Financial Officer
Srinivasan Sivaram 2022 750,000 7,962,155 857,700 28,391 9,598,246
President, Technology 2021 744,231 7,876,938 1,366,408 26,741 10,014,318
and Strategy 2020 719,712 4,667,943 776,875 22,432 6,186,962
Robert W. Soderbery 2022 710,000 4,750,802 705,456 9,150 6,175,408
Executive Vice President 2021 546,154 1,000,000 9,215,426 994,546 8,700 11,764,826
and General Manager,
Flash Business
Michael C. Ray 2022 625,000 500,000 (5) 5,311,230 615,156 23,612 7,074,998
Executive Vice President, 2021 625,000 500,000 (5) 3,761,581 789,570 7,603 5,683,754
Chief Legal Officer 2020 631,250 500,000 (5) 3,646,792 526,346 7,491 5,311,879
and Secretary
Robert K. Eulau 2022 605,000 3,777,265 6,000,973 10,383,238
Former Executive Vice 2021 715,000 3,696,053 1,070,623 8,686 5,490,362
President and Chief 2020 721,135 250,000 4,667,943 778,123 25,564 6,442,765
Financial Officer
(1)

The amounts shown reflect the aggregate grant date fair value of stock awards granted in the applicable fiscal year computed in accordance with ASC 718. These amounts were calculated based on the assumptions described in Note 13 in the Notes to Consolidated Financial Statements included in our 2022 Annual Report on Form 10-K.

 

The sign-on PSU award granted to Mr. Goeckeler in fiscal 2020 was amended on June 15, 2022 to remove the performance conditions, such that the amended award will vest at 100% of the target number of stock units on March 8, 2023. The Compensation and Talent Committee approved the amendment to the PSU in the context of our strategic review to facilitate retention of our CEO and eliminate potential distortions in the award performance that may result from the strategic review. At the time of the amendment, the PSU was tracking between threshold and target payout. See the section entitled “Fiscal 2022 Retention RSU Awards; Amendment to CEO’s Sign-On PSU Award” for additional details on the amendment. This column also reflects the incremental accounting expense resulting from such sign-on PSU award amendment computed as of the amendment date in accordance with ASC 718.



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Executive Compensation
 
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The following amounts represent the grant date fair value of PSU awards granted to our named executive officers during fiscal 2020, 2021 and 2022 assuming the probable outcome of the awards on the grant date (which we considered the target level of performance for PSUs other than relative TSR PSUs, and determined using a Monte Carlo simulation in the case of relative TSR PSUs) and assuming maximum performance under the awards for fiscal 2022. The dollar value of the awards included in the Summary Compensation Table for the year of grant is based on the probable outcome of the awards on the grant date and do not reflect actual payouts.

Named Executive Officer       Grant Date Fair Value of PSU
Awards Based on Probable Outcome
on the Grant Date for:
      Grant Date Fair Value of
PSU Awards at Maximum
Performance for:
2020
($)
      2021
($)
      2022
($)
2022
($)
David V. Goeckeler(a)  21,140,062 7,687,796 10,018,906 14,518,874
Wissam G. Jabre
Srinivasan Sivaram 2,667,988 2,001,976 2,087,219 3,024,689
Robert W. Soderbery 1,940,476 1,975,846 2,863,293
Michael C. Ray 2,084,336 1,167,846 1,217,498 1,764,334
Robert K. Eulau 2,667,988 1,908,561 1,989,786 2,883,493
(a)  These amounts do not reflect the incremental fair value resulting from the amendment of Mr. Goeckeler’s sign-on PSU award.
(2)  Reflects each named executive officer’s STI payment for the corresponding fiscal year.
(3)  The table below summarizes all other compensation to each of our named executive officers for fiscal 2022:

Name       Perquisites
($)
      401(k) Plan
Company
Matching
Contributions
($)
      Payments made
in connection
with Termination
($)
David V. Goeckeler 9,150
Wissam G. Jabre      13,083 (a)  7,212
Srinivasan Sivaram 17,441 (b)  10,950
Robert W. Soderbery 9,150
Michael C. Ray 14,768 (c)  8,844
Robert K. Eulau 7,750           5,993,223 (d) 
(a)  The amount shown reflects a taxable life insurance benefit of $1,008 and a temporary accommodation benefit (including tax gross up) provided to Mr. Jabre of $12,075.
(b) The amount shown reflects a taxable life insurance benefit of $7,524 and reimbursed financial planning services of $9,917.
(c)  The amount shown reflects a taxable life insurance benefit of $3,762 and reimbursed financial planning services of $11,006.
(d) As part of his separation agreement, Mr. Eulau received a separation payment of $1,430,000, a cash payment of $25,692 in lieu of COBRA benefits, a payment of $654,696 representing his target fiscal 2022 STI payout and vesting of certain equity awards as described in the section below entitled “Potential Payments upon Termination or Change in Control — Robert K. Eulau Separation” (having a fair value of $3,882,835 at the date of his termination).
(4)  In connection with his appointment as Executive Vice President and CFO, in February 2022, Mr. Jabre received a sign-on cash award of $250,000.
(5)  To induce Mr. Ray to remain with our company after receiving an employment offer from another large technology company, Mr. Ray received a cash retention award in the amount of $2,000,000, payable with respect to $500,000 in each of fiscal 2020–2023.


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64    Western Digital
2022 Proxy Statement

Fiscal 2022 Grants of Plan-Based Awards Table

The following table presents information regarding all grants of plan-based awards made to our named executive officers during fiscal 2022.

Name    Award
Type
   Grant
Date
   Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
   Estimated Future Payouts
Under Equity Incentive
Plan Awards
   All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)
   Date Fair
Grant Value
of Stock and
Option
Awards
($)(1) 
Threshold
($)
   Target
($)
   Maximum
($)
Threshold
(#)
   Target
(#)
   Maximum
(#)
David V.
Goeckeler
STI 1,093,750 2,187,500  4,375,000
PSUs — Financial(2)  8/27/21 35,579 71,157 142,314 4,499,969
PSUs — TSR(3)  8/27/21 17,789 71,157 142,314 5,518,937
RSUs(4)  8/27/21 94,876 5,999,958
PSUs(5)  6/15/22 437,599 7,841,770
RSUs(6)  6/15/22 100,100 4,999,995
Wissam G.
Jabre
STI 157,212 314,423 628,846
RSUs(7)  2/20/22 81,037 4,499,985
RSUs(8)  6/15/22 80,080 3,999,996
Srinivasan
Sivaram
STI 450,000 900,000 1,800,000
PSUs — Financial(2)  8/27/21 7,412 14,824 29,648 937,470
PSUs — TSR(3)  8/27/21 3,706 14,824 29,648 1,149,749
RSUs(4)  8/27/21 29,648 1,874,940
RSUs(8)  6/15/22 80,080 3,999,996
Robert W.
Soderbery
STI 426,000 852,000 1,704,000
PSUs — Financial(2)  8/27/21 7,017 14,033 28,066 887,447
PSUs — TSR(3)  8/27/21 3,508 14,033 28,066 1,088,399
RSUs(4)  8/27/21 28,067 1,774,957
RSUs(8)  6/15/22 20,020 999,999
Michael C.
Ray
STI 312,500 625,000 1,250,000
PSUs — Financial(2)  8/27/21 4,324 8,647 17,294 546,836
PSUs — TSR(3)  8/27/21 2,162 8,647 17,294 670,661
RSUs(4)  8/27/21 17,295 1,093,736
RSUs(8)  6/15/22 60,060 2,999,997
Robert K.
Eulau
STI 393,250 786,500 1,573,000
PSUs — Financial(2)  8/27/21 7,066 14,132 28,264 893,708
PSUs — TSR(3)  8/27/21 3,533 14,132 28,264 1,096,078
RSUs(4)  8/27/21 28,265 1,787,479
(1)  The amounts shown reflect the grant date fair value of the award computed in accordance with ASC 718. These amounts were calculated based on the assumptions described in Note 13 in the Notes to Consolidated Financial Statements included in our 2022 Annual Report on Form 10-K. The grant date fair value for such PSU awards subject to financial goals, at the target level, is based on the closing price of our common stock on August 27, 2021 ($63.24) for all named executive officer awards. The grant date fair value for such PSU awards subject to relative TSR performance, at the probable outcome, is based on the value of our common stock on August 27, 2021 using a Monte Carlo simulation, which resulted in a simulated award value of $77.56 per share based on certain assumptions.
(2)  Represents an annual LTI PSU award granted to the named executive officer for the three-year performance period covering fiscal 2022 through 2024, subject to cliff vesting at August 27, 2024, based on our achievement of specified revenue and non-GAAP EPS performance goals that correspond to specific payout percentages ranging between 0% and 200% of the target number of stock units subject to the award.
(3)  Represents an annual LTI PSU award granted to the named executive officer for the three-year performance period covering fiscal 2022 through 2024, subject to cliff vesting at August 27, 2024, based on our relative TSR performance that corresponds to specific payout percentages ranging between 0% and 200% of the target number of stock units subject to the award and capped at 100% if our absolute TSR is negative over the three-year performance period.


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(4)  Represents an annual LTI RSU award granted to the named executive officer, which is scheduled to vest with respect to 25% on the first anniversary of the grant date and 6.25% quarterly thereafter for three years.
(5)  The amount disclosed for Mr. Goeckeler’s sign-on PSU award represents the incremental fair value of such award as of the date the award was amended, determined in accordance with ASC Topic 718. The award was originally granted on March 9, 2020 and modified on June 15, 2022. See the section entitled “Fiscal 2022 Retention RSU Awards; Amendment to CEO’s Sign-On PSU Award” for additional details on the amendment.
(6)  Represents a retention RSU award granted to the named executive officer, which is scheduled to vest with respect to 30% on the first anniversary of the grant date and 70% on the second anniversary of the grant date.
(7)  Represents sign-on RSUs that are scheduled to vest ratably over three years.
(8)  Represents a retention RSU award granted to the named executive officer, which is scheduled to vest ratably over two years.

Description of Compensation Arrangements for Named Executive Officers

Non-Equity Incentive Plan Compensation and Awards

Our named executive officers are eligible to receive cash incentive awards on an annual basis under the STI plan. See the section entitled “Executive Compensation—Compensation Discussion and Analysis” for a more detailed description of the STI plan.

Equity-Based Awards

Each RSU and PSU award reported in the “Fiscal 2022 Grants of Plan-Based Awards Table” was granted by the Compensation and Talent Committee under, and is subject to, the terms of our prior 2017 Performance Incentive Plan.

Our named executive officers are not entitled to voting rights with respect to their stock units (PSUs and RSUs). However, if we pay an ordinary cash dividend on our outstanding shares of common stock, the named executive officer will have the right to receive a dividend equivalent with respect to any unpaid stock unit (whether vested or not) held as of the record date for the dividend payment.

Additional information regarding the vesting acceleration provisions applicable to equity awards granted to our named executive officers is included in the section entitled “Potential Payments upon Termination or Change in Control” below.


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2022 Proxy Statement

Outstanding Equity Awards at Fiscal 2022 Year-End Table

The following table presents information regarding the current holdings of stock options and stock awards (and corresponding dividend equivalents) held by each of our named executive officers as of July 1, 2022. The amount shown for the market value of the stock awards is based on the closing price of our common stock on July 1, 2022 ($43.42).

Name    Grant
Date
   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Option Awards    Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Option
Exercise
Price
($)
   Option
Expiration
Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
   Market
Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
   Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
   Equity
Incentive Plan
Awards:
Market or
Payout Value
 of Unearned
Shares,
Units or
Other Rights
That Have Not
Vested
($)
David V. Goeckeler 3/9/2020  437,599 (1)  19,000,549
9/3/2020 95,465 (2)  4,145,090     95,465 (3)  4,145,090
95,465 (4)  4,145,090
8/27/2021 94,876 (5)  4,119,516 17,789 (6)  772,398
71,157 (7)  3,089,637
6/15/2022 100,100 (8)  4,346,342
Wissam G. Jabre 2/20/2022 81,037 (9)  3,518,627
6/15/2022 80,080 (10)  3,477,074
Srinivasan Sivaram 8/3/2016 32,606 44.78 8/3/2023
8/30/2018 6,609 (2)  286,963
9/4/2019 17,323 (2)  752,165
5,109 (11)  221,833
9/3/2020 37,290 (2)  1,619,132 24,860 (3)  1,079,421
24,860 (4)  1,079,421
4/22/2021 30,184 (10)  1,310,589
8/27/2021 29,648 (5)  1,287,316 3,706 (6)  160,915
14,824 (7)  643,658
6/15/2022 80,080 (10)  3,477,074
Robert W.
Soderbery
9/21/2020 76,198 (10)  3,308,517 24,591 (3)  1,067,741
36,886 (2)  1,601,590 24,591 (4)  1,067,741
8/27/2021 28,067 (5)  1,218,669 3,508 (6)  152,317
14,033 (7)  609,313
6/15/2022 20,020 (10)  869,268
Michael C. Ray 8/4/2015 6,460 84.39 8/4/2022
11/3/2015 7,248 68.53 11/3/2022
8/30/2018 4,256 (2)  184,796
9/4/2019 13,533 (2)  587,603
3,991 (11)  173,289
9/3/2020 21,753 (2)  944,515 14,502 (3)  629,677
14,502 (4)  629,677
4/22/2021 11,319 (10)  491,471
8/27/2021 17,295 (5)  750,949 2,162 (6)  93,874
8,647 (7)  375,453
6/15/2022 60,060 (10)  2,607,805


Table of Contents

Executive Compensation
 
    67
 

Option Awards Stock Awards
Name     Grant
Date
    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
    Market
Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
    Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have Not
Vested
($)
Robert K. Eulau 9/4/2019     5,687 (12) 246,930
4,921 (11) 213,670
9/3/2020 7,796 (12) 338,502  14,476 (3)(13) 628,548
14,476 (4)(13) 628,548
8/27/2021 980 (6)(13) 42,552
3,921 (7)(13) 170,250
(1)

This PSU award is scheduled to vest on March 8, 2023 and was originally based on achievement of specified relative TSR for the three-year performance period from March 9, 2020 to March 8, 2023. The PSU award was amended on June 15, 2022 to remove the performance conditions, such that the amended award will vest at 100% of the target number of stock units on March 8, 2023. The Compensation and Talent Committee approved the amendment to the PSU in the context of our strategic review to facilitate retention of our CEO and eliminate potential distortions in the award performance that may result from the strategic review. At the time of the amendment, the PSU was tracking between threshold and target payout. See the section entitled “Fiscal 2022 Retention RSU Awards; Amendment to CEO’s Sign-On PSU Award” for additional details on the amendment.

(2)

These RSU awards are scheduled to vest in substantially equal annual installments over four years.

(3)

These PSU awards are scheduled to vest on September 3, 2023 based on achievement of specified relative TSR for the three-year performance period covering fiscal 2021 through 2023. The awards will be payable in shares of our common stock on the vesting date based on our achievement of the specified goals that correspond to specific payment percentages ranging between 0% and 200% of the target number of stock units subject to the awards. The numbers above reflect payment at the target level, which is 100% of the target number of stock units.

(4)

These PSU awards are scheduled to vest on September 3, 2023 based on achievement of specified revenue and non-GAAP EPS goals for the three-year performance period covering fiscal 2021 through 2023. The awards will be payable in shares of our common stock on the vesting date based on our achievement of the specified goals that correspond to specific payment percentages ranging between 0% and 200% of the target number of stock units subject to the awards. The numbers above reflect payment at the target level, which is 100% of the target number of stock units.

(5)

This RSU award is scheduled to vest as to 25% of the underlying shares on the first anniversary of the grant date, and as to an additional 6.25% of the underlying shares at the end of each three-month period thereafter until the award is fully vested on the fourth anniversary of the grant date.

(6)</