SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Definitive Proxy Statement [X] Definitive Additional Materials [_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12 WESTERN DIGITAL CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) WESTERN DIGITAL CORPORATION - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (check the appropriate box): [_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ________________________________________________________________________ (2) Aggregate number of securities to which transaction applies: ________________________________________________________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:* ________________________________________________________________________ (4) Proposed maximum aggregate value of transaction: ________________________________________________________________________ - -------- *Set forth the amount on which the filing fee is calculated and state how it was determined. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount previously paid:_________________________________________________ (2) Form, Schedule or Registration Statement No.:___________________________ (3) Filing Party:___________________________________________________________ (4) Date Filed:_____________________________________________________________ Notes: THE NEED FOR AUTHORIZING ADDITIONAL SHARES FOR THE WESTERN DIGITAL EMPLOYEE STOCK OPTION PLAN (2,250,000 SHARES OR APPROXIMATELY 5% OF SHARES OUTSTANDING) Western Digital last went to its shareholders to authorize additional options for its key employee stock option plan in 1990. It then obtained authorization to grant an additional 2.8 million shares. Due primarily to this additional authorization and to the cancellation in 1991 of 4.4 million(1) previously granted option shares, we have not required an authorization of additional shares until now. Our present request for additional shares will take the number of authorized option shares above certain guideline levels of some of the funds owning our shares. The funds focus particularly on columns E, F, and G in Attachment 1 showing the total shares authorized and unissued under the various plans. Whenever the percentages in these columns exceed 10%, the funds require acceptable explanations or will probably vote against the proposals.(2) It is necessary, therefore, that we meet with those holders prior to the shareholder meeting so as to gain their input and support. There are two bases that strongly support the need for additional option authorizations. One is industry practice. The other is the Company's overall compensation philosophy. The data shown on Attachement 1 compares our option history with the history of our major competitors in the disk drive industry. As with most statistical comparisons, it is impossible to draw hard and fast conclusions. What is apparent, however, is that our option program and history is essentially aligned with that of our competitors. None of these competitors meets the so called guidelines. Our requested additional authorization does not move us outside the limits of the competitive set. It instead places us more or less at the low end of them. Attachment 2 provides data __________ (1) In 1991, the Company canceled approximately 3.4 million underwater option shares and "regranted" 60% of those shares at then current market prices to employees who accepted the cancellation. They were required to take the 40% haircut in the number of shares granted in order to take advantage of the regrant price. An additional one million plus shares were canceled by reason of employee terminations. The regrants in 1991 were considered essential to the Company's survival during its major restructuring. (2) Actually the formula calls for computing the percentage on the basis of all employee and director option plans. 1 from a broader industry perspective and demonstrates that we are also essentially aligned with the practices of customers and other industry participants. There are only five or six significant players in our industry, and there is a limited supply of technical and support talent for which we must compete. Industry practice, therefore, is critical. If we cannot match industry practice, we will not be able to attract or retain employees. Equally important, however, are the philosophical compensation factors that translate directly into earnings. To a measurable extent, what occurred in our fiscal years 1991, 1992 and 1993 has had the greatest effect on our statistical history and present employee stock option plan status. Going from option exercises of only 455 shares in 1991 to 1,772,682 shares in 1994 (most of this latter number occurring in the first six months of calendar 1994) demonstrates the presence of unusual circumstances. See Attachment 3. The options outstanding at the end of 1990 were all underwater. The important thing to remember during this period, however, is that our compensation philosophy went hand-in-hand with shareholders' interests. Our fundamental compensation philosophy is to pay for performance. Although this remains one of the practiced arts rather than a science, we institutionalized pay for performance as the accepted practice. The keystone of that practice has been to hold base salaries at the 50th percentile level and thereby avoid the higher "fixed" cash compensation costs that accompany higher pay levels. Higher fixed compensation costs would have meant lower earnings. We were able to hold fixed compensation costs at the 50th percentile even when there was virtually no chance of incremental performance awards within a foreseeable time frame. Western Digital's employee stock option program was the critical factor in maintaining the Company's compensation philosophy. In the three fiscal years 1991 through 1993, when there were no short term performance awards, stock options were the only element of potential compensation (other than commissions to the sales force) that served as a true performance incentive. To retain employees and at the same time maintain pay at the 50th percentile level demanded that at least potential rewards for performance be perceived. Stock options served as the only perceived performance carrot. Actually, fixed cash compensation was reduced because of reductions in benefits. For a period, the Company even abandoned vacation accruals so as to avoid loan covenant defaults. The Company really had no choice. Although theoretically it could have absorbed additional losses associated with higher compensation costs (what's another $7 million or so when you have already written off or lost $225 million), the spectre of loan defaults and cash shortages did not permit additional cash expenditures for compensation. 2 Primarily for the reasons set out above, option grants in the lean years tended to exceed more normal levels as evidenced by the nine-year history shown in Attachments 1 and 2. Even in the lean years, however, both the gross and net grant levels were consistent with those of our competitors. There are a number of reasons why the stock option practices of our industry differ from many others. One factor is that the industry offers only modest retirement benefits to employees and relatively little in the way of job security. Stock options serve to fill, in some respects, these gaps. More importantly, the attractiveness of the industry, volatile as it is, is the opportunity it presents for significant rewards through (i) equity participation in the long term, and (ii) cash bonuses in the short term. With the cyclical nature of the business, however, counting on annual cash bonuses and profit sharing is a dicey proposition. In summary, stock options represent the only consistently credible pay for performance program that the Company has. In good times it serves as a key consideration in retention and in retirement planning. In lean times it serves as the prime motivator. At all times it aligns the interests of employees and shareholders as well as being the industry norm. We intend to continue the use of options on a basis consistent with our industry because it is consistent with our compensation philosophy and, we believe, with shareholder interests. If we are required to change this philosophy and practice, we will have to substitute or add additional cash items of compensation. There are several additional factors that also may need to be addressed. The guidelines of the funds to not allow for additional authorizations if there has been a significant (in terms of numbers of shares) regrant within the last two years. In fiscal year 1994, the Board authorized a regrant of 75,000 shares to Ken Hendrickson. Hendrickson is the Executive Vice President responsible for the Company's microcomputer products business segments who joined the Company in March 1994. His initial grant was made at a price in excess of $19.00 per share. This grant was canceled two months later and the 75,000 shares were regranted at a price of $13.875. Mr. Hendrickson was viewed as so critical to recovery of the MCP business that this unusual action was taken. The number of shares to which the regrant applied does not reach a level to which the regrant concerns of the funds are directed, and the committee administering the plan consists of all outside directors. The regrant does, however, require the inclusion of extensive additional information in our 1994 proxy material. The Company, nonetheless, meets all of the conditions set out to alleviate or to exempt it from the more generalized constraints of the funds' guidelines relating to regrants. Additionally, the new employee plan restricts overall regrants in the future to 5% of the option shares. We will be asking for what we consider minor amendments to the plan. They include the right to extend the exercise period in particular instances at the direction of the Compensation Committee 3 of the Board, provided that no extension may exceed the ten-year term of the option. Presently options must be exercised within six months of termination of employment for any reason. The stock option plan for outside directors (a separate plan) expires on May 15, 1995. We propose to extend it for ten years without changing any features of the plan as previously approved by shareholders. There are still approximately 465,000 shares authorized for issuance under the directors' plan. 4 COMPARISON OF WESTERN DIGITAL STOCK OPTION DATA WITH DATA OF MAJOR DISK DRIVE COMPETITORS (MOST RECENT AVAILABLE DATA) (1) All percentages are in relation to total shares issued and outstanding. (2) If the requested additional shares are authorized, these percentages become 16.4%, 17.2% and 20.6%. (3) Precisely accurate percentages for Column G are not available, because exercises by general employee populations are not published. These percentages reflect a maximum using the additional option share authorization percentages requested by other companies as shown in Attachment 2. (4) A 423 is a plan which all employees are eligible to purchase a company's stock at a 15% discount. The "423" designation refers to the IRS provision covering such plans. 5
A. B. C. D. E. F. G. ANNUAL OUT- SHARES GROSS GRANTS AVAILABLE ADD ADD STANDING AVAILABLE ANNUAL LESS PLUS OUT- DIRECTOR 423 OPTIONS FOR GRANT GRANTS CANCELLED STANDING PLAN PLAN % (1) % (1) % (1) % (1) % (1) % (1) % (1),(2),(3) -------- --------- ------ --------- --------- -------- ------------- Western Digital 6/30/94 9.7 1.7 3.6 2.5 11.4(2) 12.2(2) 15.6(2) Average 92-94 12.3 6.2 5.1 3.9 18.4 Average 86-94 4.4 2.7 Conner 1993 16.9 10.4 6.5 2.5 27.3 - 33.2 Average 91-93 14.7 7.2 5.6 3.8 21.9 Maxtor 1994 19.2 9.2 5.1 (0.6) 28.4 - 34.3 Average 92-94 25.5 4.9 12.2 6.6 30.1 Quantum 1994 13.3 1.0 3.7 2.1 14.3 - 22.9 Average 92-94 14.4 2.1 4.8 3.4 16.5 Seagate 1993 14.4 2.1 2.1 1.3 16.5 - 23.5 Average 91-93 15.2 2.5 5.4 3.7 17.7 WESTERN DIGITAL ================================================================================ -------------------------------------- STOCK OPTION PRACTICES SHARE ALLOCATIONS TO STOCK OPTION PLANS and EMPLOYEE STOCK PURCHASE PLANS -------------------------------------- April 11, 1994 RADFORD ASSOCIATES ALEXANDER & ALEXANDER CONSULTING GROUP 2540 North First Street San Jose, CA 95131 (408) 954-0900 - -------------------------------------------------------------------------------- SHARE ALLOCATIONS TO STOCK OPTION PLANS Explanatory Notes - ---------------------------------------------------------------------------- Data Source Data originates from each company's 3 most recent annual reports and proxy statements, except for 2 companies (Compaq Computer and Sun Microsystems) requiring additional research due to the fact that either company made no request for option reloads during the 3 most recent fiscal years. Specifically, we obtained the requested data on the following 19 select group companies: 3Com Maxtor Adaptec Micropolis Advanced Micro Devices (AMD) National Semiconductor Analog Devices Quantum AST Research Seagate Technology Cirrus Logic Silicon Graphics Compaq Computer Storage Technology Conner Peripherals Sun Microsystems Dell Computer VLSI Technology LSI Logic - ------------------------------------------------------------------------------- Notes regarding subsequent pages: "Some companies did not segregate grants made to non-employee directors from grants made to employees in the footnotes (annual grant tables) to their annual return, even though separate plans exited for non-employee directors. However, these companies did distinguish between option reloads requested for non-employee directors and employees in the proposals made in their respective proxy statements. **Other companies had stock option plans that provided for grants to employees as well as non-employee directors; no separate plans existed for non-employee directors. ***2 companies reported requesting no options reloads within the 3 most recent fiscal years. Consequently, we reviewed earlier proxy statements to obtain this information. - ------------------------------------------------------------------------------- SHARE ALLOCATIONS TO STOCK OPTION PLANS Company by Company Basis - -------------------------------------------------------------------------------- *Companies that include annual grants to directors **Companies that include both annual grants and reloads to directors ***Reloads requested after the 12/90 FYE - -------------------------------------------------------- WESTERN DIGITAL ------- 2
Annual Unexercised Available Gross Options Net Options Report Stock Options for Future Grant Granted Company Name Date O/S # % # % # % # % - ------------------------------------------------------------------------------------------------------------------------------- Group A (5 Companies: Conner Peripherals, Maxtor, Micropolis, Quantum, and Seagate Technology)) Median 43,322 6,821 15.5% 1,031 2.7% 1,637 5.1% 972 2.5% Average 41,084 6,449 15.7% 1,627 3.8% 2,407 6.1% 1,547 3.8% - ------------------------------------------------------------------------------------------------------------------------------- Group B (All Companies) Median 43,322 5,870 13.5% 1,416 3.3% 1,853 3.7% 1,357 2.3% Average 50,754 7,013 14.1% 2,510 4.4% 2,114 4.7% 1,452 3.1% - ------------------------------------------------------------------------------------------------------------------------------- 3Com* 5/93 30,850 5,870 19.0% 2,280 7.1% 2,055 6.7% 1,734 5.6% 3Com* 5/92 27,594 5,968 21.6% 1,710 6.2% 1,836 6.7% 1,163 4.2% 3Com* 5/91 27,196 5,713 21.0% 2,544 9.4% 1,852 6.8% 130 0.5% Adaptec 3/94 52,291 4,695 9.0% 2,714 5.3% 1,838 3.5% 1,507 2.9% Adaptec 3/93 25,357 2,284 9.0% 1,140 4.5% 851 3.4% 713 2.8% Adaptec 3/92 20,668 2,347 11.4% 353 1.7% 983 4.8% 463 2.2% AMD 12/93 92,444 10,961 11.9% 963 1.0% 2,068 2.3% 1,783 1.9% AMD 12/92 88,226 11,927 13.5% 2,921 3.3% 2,102 2.4% 1,860 2.1% AMD 12/91 84,031 13,186 15.7% 829 1.0% 3,406 4.1% 2,683 3.2% Analog Devices** 10/93 50,925 3,362 6.6% 3,873 7.6% 116 0.2% (140) -0.3% Analog Devices** 10/92 50,192 4,213 6.4% 199 0.4% 1,157 2.3% 903 1.8% Analog Devices** 10/91 49,840 3,478 7.0% 1,177 2.4% 791 1.6% 574 1.2% Annual Requested Employee Stock Purchase Plan Report Reload Options Author. Shares Req. Reloads Company Name Date # % # % # % - ---------------------------------------------------------------------------------------------------------- Group A (5 Companies: Conner Peripherals, Maxtor, Micropolis, Quantum, and Seagate Technology)) Median 2,250 6.2% 2,850 5.1% 1,200 3.1% Average 2,829 7.3% 2,636 5.9% 1,278 3.7% - ---------------------------------------------------------------------------------------------------------- Group B (All Companies) Median 2,000 5.4% Average 2,644 6.0% - ---------------------------------------------------------------------------------------------------------- 3Com* 5/93 1,500 4.9% 3,500 11.3% 3Com* 5/92 2,000 7.2% 3,500 12.7% 3Com* 5/91 1,500 5.5% 2,000 7.4% Adaptec 3/94 2,500 4.8% 2,800 5.4% 1,500 5.5% Adaptec 3/93 1,000 3.9% 1,400 Adaptec 3/92 1,500 7.3% 1,400 1,400 5.5% AMD 12/93 4,600 5.0% 2,750 3.0% AMD 12/92 2,750 3.1% AMD 12/91 4,185 5.0% 2,750 3.3% 2,750 3.3%*** Analog Devices** 10/93 1,100 2.2% Analog Devices** 10/92 3,500 7.0% 1,100 2.2% Analog Devices** 10/91 1,600 3.2% 1,100 2.2% SHARE ALLOCATIONS TO STOCK OPTION PLANS Company by Company Basis - -------------------------------------------------------------------------------- *Companies that include annual grants to directors **Companies that include both annual grants and reloads to directors ***Reloads requested after the 12/90 FYE - -------------------------------------------------------- WESTERN DIGITAL ------- 3
Annual Unexercised Available Gross Options Net Options Report Stock Options for Future Grant Granted Granted Company Name Date O/S # % # % # % # % - ------------------------------------------------------------------------------------------------------------------------------- AST Reasearch** 7/93 31,579 3,504 11.1% 2,082 6.5% 1,033 3.3% 741 2.3% AST Reasearch** 6/92 30,787 3,632 11.8% 1,471 4.8% 767 2.5% 490 1.6% AST Reasearch** 6/91 30,228 3,749 12.4% 1,662 5.5% 1,399 4.6% 1,239 4.1% Cirrus Logic* 4/94 28,313 4,815 17.0% 321 1.1% 1,943 6.9% 1,788 6.3% Cirrus Logic* 3/93 23,963 3,707 15.5% 176 0.7% 1,555 6.5% 1,480 6.2% Cirrus Logic* 3/92 18,210 2,277 12.5% 369 2.0% 688 9.8% 604 3.3% Compaq Computer 12/93 34,348 10,914 12.9% 7,518 8.9% 2,152 2.6% 1,434 1.7% Compaq Computer 12/92 79,830 13,970 17.5% 9,041 11.3% 2,746 3.4% 2,043 2.6% Compaq Computer 12/91 84,201 14,534 17.3% 11,083 13.2% 4,416 5.2% 2,753 3.3% Conner Peripherals** 12/93 50,565 8,530 16.9% 5,255 10.4% 3,292 6.5% 1,267 2.5% Conner Peripherals** 12/92 48,317 8,592 17.8% 1,675 3.5% 3,214 6.7% 2,892 6.0% Conner Peripherals** 12/91 58,089 5,510 9.5% 4,567 7.9% 2,074 3.6% 1,684 2.9% Dell Computer** 1/94 37,929 5,618 14.8% 4,279 11.3% 2,506 6.6% 1,301 3.4% Dell Computer** 1/93 36,857 5,043 13.7% 1,087 2.9% 2,642 7.2% 2,166 5.9% Dell Computer** 1/92 35,802 3,727 10.4% 3,296 9.2% 1,854 5.2% 1,711 4.8% LSI Logic 1/94 49,728 4,409 8.9% 578 1.2% 1,275 2.6% 984 2.0% LSI Logic 12/92 45,410 6,662 14.7% 683 1.5% 1,412 3.1% 408 0.9% LSI Logic 12/91 43,727 6,911 15.8% 2,296 5.3% 3,014 6.9% 751 1.7% Maxtor** 3/94 30,425 5,152 19.2% 2,806 9.2% 1,566 5.1% (176) 0.6% Maxtor** 3/93 28,809 6,821 23.7% 1,031 3.6% 1,604 5.6% 795 2.8% Maxtor** 3/92 24,012 8,101 33.7% 438 1.8% 6,196 25.8% 4,202 17.5% Annual Requested Employee Stock Purchase Plan Report Reload Options Author. Shares Req. Reloads Company Name Date # % # % # % - ------------------------------------------------------------------------------------------------------- AST Reasearch** 7/93 632 2.0% AST Reasearch** 6/92 616 2.0% AST Reasearch** 6/91 Cirrus Logic* 4/94 2,248 7.9% 700 2.5% 300 1.1% Cirrus Logic* 3/93 2,125 8.9% 500 2.1% 200 0.8% Cirrus Logic* 3/92 980 5.4% 450 2.5% 50 0.3% Compaq Computer 12/93 Compaq Computer 12/92 Compaq Computer 12/91 10,000 11.6%*** Conner Peripherals** 12/93 3,000 5.9% 1,500 3.0% Conner Peripherals** 12/92 5,000 10.3% 2,000 4.1% 1,000 2.1% Conner Peripherals** 12/91 2,000 3.4% Dell Computer** 1/94 Dell Computer** 1/93 4,500 12.2% Dell Computer** 1/92 LSI Logic 1/94 1,500 3.0% 6,275 12.6% 700 1.4% LSI Logic 12/92 1,000 2.2% 5,275 11.6% 1,000 2.2% LSI Logic 12/91 1,500 3.4% 3,775 8.6% 1,500 3.4% Maxtor** 3/94 2,000 6.6% 2,900 5.9% Maxtor** 3/93 1,700 5.9% 1,200 4.2% 1,700 5.9% Maxtor** 3/92 4,725 19.7% 1,200 5.0% SHARE ALLOCATIONS TO STOCK OPTION PLANS Company by Company Basis - -------------------------------------------------------------------------------- *Companies that include annual grants to directors **Companies that include both annual grants and reloads to directors ***Reloads requested after the 12/90 FYE - -------------------------------------------------------- WESTERN DIGITAL ------- 4
Annual Unexercised Available Gross Options Net Options Report Stock Options for Future Grant Granted Granted Company Name Date O/S # % # % # % # % - ------------------------------------------------------------------------------------------------------------------------------- Micropolis* 12/93 14,881 1,317 8.8% 300 2.0% 552 3.7% 333 2.2% Micropolis* 12/92 14,532 1,160 8.0% 218 1.5% 285 2.0% 152 1.0% Micropolis* 12/91 14,219 1,227 8.6% 382 2.7% 260 1.8% 168 1.2% National Semi 5/94 122,800 13,200 10.7% 5,500 4.5% 3,300 2.7% 2,700 2.2% National Semi 5/93 109,730 15,200 13.9% 8,200 7.5% 2,900 2.6% 2,200 2.0% National Semi 5/92 106,296 16,400 15.4% 10,400 9.8% 4,500 4.2% 3,300 3.1% Quantum** 3/94 44,604 5,914 13.3% 435 1.0% 1,687 3.7% 957 2.1% Quantum** 3/93 43,322 6,945 16.1% 934 2.2% 3,201 7.4% 2,466 5.7% Quantum** 3/92 42,892 5,968 13.9% 1,360 3.2% 1,450 3.4% 972 2.3% Seagate Technology* 7/93 68,155 9,829 14.4% 1,416 2.1% 1,399 2.1% 899 1.3% Seagate Technology* 6/92 68,288 10,811 15.8% 2,573 3.8% 5,023 7.4% 3,357 4.9% Seagate Technology* 6/91 65,142 10,122 15.5% 1,018 1.6% 4,348 6.7% 3,240 5.0% Silicon Graphics* 6/93 65,787 14,962 22.7% 1,656 2.5% 2,670 4.1% 1,777 2.7% Silicon Graphics* 6/92 61,779 16,225 26.3% 940 1.5% 5,416 8.8% 3,158 5.1% Silicon Graphics* 6/91 20,694 7,093 14.3% 206 1.0% 2,741 13.2% 1,412 6.8% Storage Technology* 12/93 43,098 3,065 7.1% 603 1.4% 1,066 2.5% 987 2.3% Storage Technology* 12/92 41,313 1,964 4.8% 1,073 2.6% 294 0.7% 237 0.6% Storage Technology* 12/91 40,576 2,178 5.4% 41 0.1% 409 1.0% 353 0.9% Sun Microsystems* 6/93 106,445 10,330 9.7% 4,675 4.4% 2,552 2.4% 2,266 2.1% Sun Microsystems* 6/93 101,192 11,281 11.1% 6,941 6.9% 1,611 1.6% 1,452 1.4% Sun Microsystems* 6/92 101,409 12,468 12.3% 8,393 8.3% 2,097 2.1% 2,068 2.0% Annual Requested Employee Stock Purchase Plan Report Reload Options Author. Shares Req. Reloads Company Name Date # % # % # % - ----------------------------------------------------------------------------------------------------------------------------------- Micropolis* 12/93 800 5.4% 600 4.0% 800 5.4% Micropolis* 12/92 400 2.8% 600 4.1% Micropolis* 12/91 300 2.1% 300 2.1% 300 2.1% National Semi 5/94 5,000 4.1% 14,950 12.2% 5,000 4.5% National Semi 5/93 14,950 13.6% National Semi 5/92 14,950 14.1% Quantum** 3/94 1,714 4.0% 4,300 9.6% 2,000 4.5% Quantum** 3/93 3,733 8.6% 4,300 7.7% Quantum** 3/92 2,500 5.8% 3,300 7.0% 1,000 2.3% Seagate Technology* 7/93 6,080 8.8% 4,800 7.0% Seagate Technology* 6/92 4,800 7.0% Seagate Technology* 6/91 5,000 7.7% 2,800 4.3% 2,000 3.1% Silicon Graphics* 6/93 2,306 3.5% 3,280 5.0% 3,200 4.9% Silicon Graphics* 6/92 2,500 4.0% 3,280 5.3% Silicon Graphics* 6/91 1,250 6.0% 1,640 7.9% 1,640 7.9% Storage Technology* 12/93 1,250 2.9% 1,700 3.9% 1,250 2.9% Storage Technology* 12/92 1,700 4.1% Storage Technology* 12/91 1,500 3.7% 1,700 4.2% Sun Microsystems* 6/93 9,532 9.0% Sun Microsystems* 6/93 9,532 9.4% Sun Microsystems* 6/92 7,007 7.6%*** 9,532 9.4% 3,232 3.2%*** SHARE ALLOCATIONS TO STOCK OPTION PLANS Company by Company Basis - -------------------------------------------------------------------------------- *Companies that include annual grants to directors **Companies that include both annual grants and reloads to directors ***Reloads requested after the 12/90 FYE - -------------------------------------------------------- WESTERN DIGITAL ------- 5
Annual Unexercised Available Gross Options Net Options Report Stock Options for Future Grant Granted Granted Company Name Date O/S # % # % # % # % - ------------------------------------------------------------------------------------------------------------------------------- VLSI Technology 12/93 35,256 3,538 10.0% 829 2.4% VLSI Technology 12/92 33,301 4,000 12.0% 1,740 5.2% VLSI Technology 12/91 26,492 3,604 13.6% 847 3.2% Annual Requested Employee Stock Purchase Plan Report Reload Options Author. Shares Req. Reloads Company Name Date # % # % # % - ------------------------------------------------------------------------------------------------------- VLSI Technology 12/93 6,600 18.7% VLSI Technology 12/92 4,600 13.8% 2,000 6.0% VLSI Technology 12/91 2,000 7.5% 4,600 17.4% METHODOLOGY Explanation of Definitions - -------------------------------------------------------------------------------- Shares Outstanding: Shares outstanding as of the report date Unexercised Options Number: Options outstanding as of the report date Unexercised Options: Options outstanding as a percentage of Issued Shares ------------------------------------------------------------------------- Formula: Example (A Company): (Options outstanding) (5,900,704 Options outstanding) =19.5% --------------------- ------------------------------ (Shares outstanding) (30,286,864 Shares outstanding) -------------------------------------------------------------------------- Shares Available Number: Shares available for future option grant as of the report date Available %: Shares reserved as a percentage of Issued Shares -------------------------------------------------------------------------- Formula: Example (A Company): (Shares reserved for future grant) (2,738,628 Shares reserved) =9.0% ---------------------------------- --------------------------- (Shares outstanding) (30,286,864 Shares outstanding) ------------------------------------------------------------------------- Net option Grant Number: Options granted (net of cancellations) each year Net Option Grant %: Options granted (net of cancellations) each year, as a percentage of Issued Shares ------------------------------------------------------------------------- Formula (Net Options Granted (Gross Options granted less cancellations and/or forfeitures) ------------------------------------------- (Shares outstanding) -------------------------------------------------------------------------- Requested Reload Options Number: The increase to options available (reserved) for future grants that the directors have approved but the shareholders have not yet approved. Requested Reload Option %: The increase to options available expressed as a percentage of shares outstanding. -------------------------------------------------------------------------- Formula Example (A Company): (Requested reload options) (2,738,628 Requested Options) =9.0% -------------------------- ----------------------------- (Shares outstanding) (30,286,864 Shares outstanding) -------------------------------------------------------------------------- - -------------------------------------------------------- WESTERN DIGITAL ------- 6 ATTACHMENT 3 WD STOCK OPTION HISTORY
TOTAL TOTAL TOTAL GRANTS COMMON TOTAL GRANTS GRANTS LESS "NET 1 SHARES" LESS CANCELLED "NET 2 SHARES" FISCAL SHARES SHARES AS % OF CANCELLED AS % OF AND EXERCISED AS % OF YEAR OUTSTANDING GRANTED COMMON CANCELLED ("NET 1 SHARES") COMMON EXERCISED ("NET 2 SHARES") COMMON - ------ ----------- --------- ------ ---------- ---------------- ------------ --------- --------------- ------------ 1986 19,076,561 697,618 3.7% 332,392 365,226 1.9% 549,381 (184,155) (0.9%) 1987 25,800,943 1,042,818 4.0% 218,484 824,334 3.2% 901,736 (77,402) (0.3%) 1988 27,530,582 1,408,963 5.1% 369,421 1,039,554 3.8% 270,684 768,858 2.8% 1989 29,151,320 1,288,294 4.4% 627,180 661,114 2.3% 213,374 447,740 1.5% 1990 29,206,818 1,454,155 5.0% 578,782 875,373 3.0% 53,725 821,648 2.8% 1991 29,208,395 674,650 2.3% 1,040,573 (365,923) (1.3%) 455 (365,468) (1.3%) 1992 29,212,144 1,862,707 6.4% 474,784 1,387,923 4.8% 3,749 1,384,174 4.7% 1993 35,337,459 1,878,520 5.3% 302,785 1,575,735 4.5% 384,111 1,191,624 3.4% 1994 44,895,277 1,677,785 3.7% 643,073 1,034,712 2.3% 1,809,019 (774,307) (1.7%) YTD (Proposed)