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H&Q Computer Hardware |
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Western Digital Corp. |
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Index |
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S&P 500 Index |
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6/30/94 |
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100.00 |
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100.00 |
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100.00 |
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7/1/95 |
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137.22 |
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175.51 |
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126.73 |
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6/29/96 |
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204.85 |
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207.14 |
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159.41 |
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6/28/97 |
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496.12 |
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317.35 |
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214.85 |
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6/27/98 |
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185.44 |
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450.00 |
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279.21 |
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7/3/99 |
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105.09 |
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776.59 |
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346.00 |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the directors and
executive officers of the Company and persons who own more than
ten percent (10%) of the Company’s Common Stock are required
to report their initial ownership of the Company’s equity
securities and any subsequent changes in that ownership to the
Securities and Exchange Commission and the New York Stock
Exchange. Specific due dates for these reports have been
established, and the Company is required to disclose in this
Proxy Statement any late filings during fiscal year 1999. To the
Company’s knowledge, based solely on its review of the
copies of such reports required to be furnished to the Company
during fiscal year 1999 and the responses to annual directors and
officers questionnaires, all of these reports were timely filed.
14
CERTAIN TRANSACTIONS AND OTHER MATTERS
The Company made a loan to Mr. Haggerty of $375,000 on
June 10, 1998, which Mr. Haggerty repaid in full
(including interest at 7 1/2%) on August 18, 1998.
The Company made a loan to Mr. Stern of $200,000 on
March 19, 1999, which Mr. Stern repaid in full
(including interest at 5%) on July 1, 1999.
PROPOSAL 2
APPROVAL OF THE AMENDMENT TO THE
1993 EMPLOYEE STOCK PURCHASE PLAN
General
The Company seeks shareholder approval of an amendment to its
1993 Employee Stock Purchase Plan to authorize issuance of an
additional 4,000,000 shares of the Company’s Common
Stock. The ESPP was adopted with shareholder approval in 1993 and
amended by the shareholders in 1996 and 1997 to authorize
issuance of an additional 1,500,000 shares and
2,000,000 shares, respectively, of Common Stock. The ESPP,
and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of Sections 421 and
423 of the Internal Revenue Code of 1986, as amended (the
“Code”).
As of July 31, 1999, employees had purchased 5,990,346
shares of the Company’s Common Stock under the ESPP.
Approximately 2,400 employees are currently enrolled in the ESPP.
The purpose of the ESPP is to maintain competitive equity
compensation programs and to provide an incentive for employees
of the Company to acquire a proprietary interest in the Company
through the purchase of Common Stock and, therefore, more closely
align the interests of the employees and the shareholders. The
Board believes that the proposed increase in the number of shares
issuable under the ESPP is necessary and appropriate at this
time, in order for the Company to continue offering the ESPP to
its current and future employees.
The following is a brief summary of the principal features of the
ESPP. The summary is qualified by and subject to the full text
of the ESPP (as proposed to be amended) attached hereto as
Exhibit A.
Summary
The Board of Directors has appointed the Compensation Committee
of the Board (the “Committee”) which consists of not
less than three non-employee directors, as the administrator of
the ESPP. The Board may at any time amend or terminate the ESPP,
except that no amendment may be made that would cause the ESPP to
fail to meet the requirements for employee stock purchase plans
as defined in Section 423 of the Code. Subject to certain
limitations imposed by Section 423 of the Code, any person
who is employed by the Company (or any of its majority-owned
subsidiaries that are not excluded from participation by the
Committee) for at least 20 hours per week and more than five
months in a calendar year is eligible to participate in the
ESPP, provided that the employee is employed on the first day of
an offering period. The ESPP has a series of 24-month offering
periods (each, an “Offering Period”) commencing on each
February 1 and August 1. The last day of each six-month
exercise period during each Offering Period under the ESPP, i.e.,
each July 31 and January 31, is an exercise date under
the ESPP. The purchase price per share is equal to the lower of
85% of the fair market value of the Company’s Common Stock
on the date of commencement of a 24-month Offering Period or 85%
of the fair market value of the Common Stock on the exercise date
of the option. The fair market value of the Common Stock on a
given date is the closing price of the Common Stock on the New
York Stock Exchange on said date.
The purchase price of the shares is accumulated by payroll
deductions during an Offering Period. The deductions may be any
whole percentage amount between 1% and 10% of a participants
eligible compensation on each payroll date during the Offering
Period. A participant may discontinue his or her participation in
the ESPP at any time during the Offering Period. In addition, a
participant may, no more than four times in any calendar year,
reduce or increase the rate of payroll deductions.
On the first day of each Offering Period, each eligible employee
enrolled in the ESPP is granted an option to purchase on each
exercise date during the Offering Period up to the number of
shares of Common Stock
15
determined by dividing the amount of the participants total
payroll deductions to be accumulated during each exercise period
during the Offering Period by 85% of the lower of the fair market
value of the Common Stock at the beginning of the Offering
Period or on the exercise date, subject to certain limitations
specified in the ESPP. Options to purchase Common Stock under the
ESPP may not be transferred by a participant other than by will
or under the laws of descent and distribution and may be
exercised during a participants lifetime only by the participant.
A participants interest in a given offering may be terminated in
whole, but not in part, at any time prior to the end of the
applicable Offering Period. Failure to remain in the continuous
employ of the Company or its majority-owned subsidiaries for at
least 20 hours per week during an Offering Period will be deemed
to be a withdrawal from that offering.
In the event any change is made in the Company’s
capitalization, such as a reorganization, restructuring,
reclassification, stock split or stock dividend, which results in
an increase or decrease in the number of outstanding shares of
Common Stock or a change of Common Stock into or an exchange of
Common Stock for a different number or kind of shares,
appropriate adjustments will be made to the shares subject to
purchase under the ESPP and in the purchase price per share. In
the event of a dissolution or liquidation of the Company, any
options outstanding under the ESPP will terminate unless the
Committee determines otherwise. If all or substantially all of
the assets of the Company are sold or if the Company is merged
with or into another corporation, outstanding options under the
ESPP will be assumed or equivalent options will be substituted
unless the Committee elects to permit all outstanding options
(including those not then otherwise exercisable) to be exercised
immediately prior to the sale or merger.
Since the ESPP is designed to qualify under Sections 421 and
423 of the Code, no income will be taxable to a participant at
the time of the grant of the option or purchase of the shares.
Upon disposition of the shares, the participant will generally be
subject to tax; the amount of the tax will depend upon the
participants holding period. The Company is not entitled to a
deduction for amounts taxed as ordinary income or capital gain to
a participant except to the extent of ordinary income reported
by participants upon disposition of shares.
The foregoing is a brief description of the federal income tax
treatment that will generally apply to shares purchased under the
ESPP, based on federal income tax laws in effect on the date of
this Proxy Statement. The exact federal income tax treatment of
shares purchased under the ESPP will depend on the specific
circumstances of the participant. No information is provided
herein with respect to estate, inheritance, gift, state or local
tax laws, although there may be certain tax consequences upon the
disposition of any acquired shares under those laws.
Vote Required and Board of Directors Recommendation
The affirmative vote of a majority of the shares of the
Company’s Common Stock represented in person or by proxy at
the Meeting and entitled to vote is required for approval of the
amendment to the Company’s 1993 Employee Stock Purchase
Plan. Abstentions and broker non-votes will each be counted
present for purposes of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR” PROPOSAL 2 TO APPROVE THE AMENDMENT TO THE
COMPANY’S 1993 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
By selection of the Company’s Board of Directors, the
international accounting firm of KPMG LLP, certified public
accountants, has served the Company as its auditors since its
incorporation in 1970. The Board of Directors has again selected
KPMG LLP to serve as the Company’s independent accountants
for the fiscal year ending July 1, 2000. Their selection is
not required to be submitted for shareholder approval, but the
Board of Directors has elected to seek ratification of its
selection of the independent accountants by the affirmative vote
of a majority of the shares represented and voted at the Meeting.
If the shareholders do not ratify this selection, the Board of
Directors will reconsider its selection of KPMG LLP and will
either continue to retain this firm or appoint new auditors upon
recommendation of the Audit Committee.
16
One or more representatives of KPMG LLP are expected to be
present at the Meeting and will have an opportunity to make a
statement if they so desire and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
“FOR” PROPOSAL 3 TO RATIFY THE SELECTION OF KPMG
LLP AS THE INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING JULY 1, 2000.
SHAREHOLDER PROPOSALS FOR 2000
Shareholder proposals which are intended to be presented by such
shareholders at the Company’s 2000 Annual Meeting of
Shareholders must be received by the Secretary of the Company at
the Company’s principal executive offices no later than
Monday, June 12, 2000, in order to be considered for
inclusion in the proxy statement and form of proxy/voting
instruction card relating to that meeting pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Pursuant to
Rule 14a-4 under the Exchange Act, the Company may exercise
discretionary voting authority at the 2000 Annual Meeting under
proxies it solicits to vote on a proposal made by a shareholder
that the shareholder does not seek to include in the
Company’s proxy statement pursuant to Rule 14a-8,
unless the Company is notified about the proposal between
July 12, 2000 and September 10, 2000 (assuming that the
Company’s 2000 Annual Meeting will be held on
November 9, 2000) and the shareholder satisfies the other
requirements of Rule 14a-4(c). In addition, the
Company’s Bylaws require that, among other things, such
shareholders give written notice of any proposal or the
nomination of a director to the Secretary of the Company not less
than 60 days nor more than 120 days prior to scheduled
Annual Meeting of Shareholders. Shareholder proposals or the
nominations for director that do not meet the notice requirements
of the Company’s Bylaws will not be acted upon at the 2000
Annual Meeting.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the Meeting.
Should any other matters come before the Meeting or any
adjournments and postponements thereof, the persons named in the
enclosed proxy will have the discretionary authority to vote all
proxies received with respect to such matters in accordance with
their judgment. The Company believes that the Internet voting
procedures that have been made available through ADP Investor
Communications Services are consistent with the requirements of
applicable law.
ANNUAL REPORTS
The Company’s 1999 Annual Report on Form 10-K has been
mailed to shareholders and posted on the Internet concurrently
with this Proxy Statement, but such report is not incorporated
herein and shall not be deemed to be a part of this proxy
solicitation material.
17
EXPENSES OF SOLICITATION
The cost of preparing, assembling and mailing the Notice of
Annual Meeting of Shareholders, Proxy Statement and form of
proxy/ voting instruction card, the cost of making such materials
available on the Internet and the cost of soliciting proxies
will be paid by the Company. Shareholders voting via the Internet
should understand that there may be costs associated with
electronic access, such as usage charges from Internet access
providers and telephone companies, that must borne by the
shareholder. Proxies may be solicited in person or by telephone,
facsimile or other means of communication by certain of the
directors, officers, and regular employees of the Company who
will not receive any additional compensation for such
solicitation. The Company will reimburse brokers or other persons
holding stock in their names or the names of their nominees for
the expenses of forwarding soliciting material to their
principals.
Irvine, California
October 8, 1999
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND, DATE,
SIGN AND RETURN THE ENCLOSED PROXY/ VOTING INSTRUCTION CARD IN
THE ENCLOSED ENVELOPE. SHAREHOLDERS MAY ALSO VOTE BY TELEPHONE OR
VIA THE INTERNET. A PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
18
EXHIBIT A
WESTERN DIGITAL CORPORATION
AMENDED AND RESTATED
1993 EMPLOYEE STOCK PURCHASE PLAN
The Western Digital Corporation 1993 Employee Stock Purchase Plan
(the “Plan”) shall be established and operated in
accordance with the following terms and provisions.
1. Definitions.
As used in the Plan the following terms shall have the meanings
set forth below:
(a) “Board” means the Board of Directors of the
Company.
(b) “Code” means the Internal Revenue Code of
1986, as amended.
(c) “Committee” means the committee appointed by
the Board to administer the Plan as described in Section 4
below.
(d) “Common Stock” means the Common Stock, $0.01
par value, of the Company.
(e) “Company” means Western Digital Corporation,
a Delaware corporation.
(f) “Continuous Employment” means the absence of
any interruption or termination of service as an Employee with
the Company and/or its Participating Subsidiaries. Continuous
Employment shall not be considered interrupted in the case of a
leave of absence agreed to in writing by the Company, provided
that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by
contract or statute.
(g) “Eligible Compensation” means, with respect
to each Participant for each pay period, the full salary and
wages paid to such Participant by the Company or a Participating
Subsidiary, including commissions, bonuses (to the extent not
excluded below), overtime pay and shift differentials. Except as
otherwise determined by the Committee, “Eligible
Compensation” does not include
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(i) any amounts contributed by the Company or a
Participating Subsidiary to any pension plan or plan of deferred
compensation, |
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(ii) any automobile or relocation allowances (or
reimbursement for any such expenses), |
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(iii) any amounts paid as a starting bonus or finders fee, |
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(iv) any amounts realized from the exercise of qualified or
non-qualified stock options, or |
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(v) any amounts paid by the Company or a Participating
Subsidiary for other fringe benefits, such as health and welfare,
hospitalization and group life insurance benefits, or
perquisites, or paid in lieu of such benefits, such as cash-out
of credits generated under a plan qualified under Code
Section 125. |
(h) “Eligible Employee” means an Employee who is
eligible to participate in the Plan as described in
Section 5 below.
(i) “Employee” means any person, including an
officer, who is customarily employed for at least twenty
(20) hours per week and more than five (5) months in a
calendar year by the Company or one of its Participating
Subsidiaries.
(j) “Enrollment Date” means the first day of each
Offering Period.
(k) “Exercise Date” means each July 31 and
January 31 during each Offering Period.
(l) “Exercise Period” means a period commencing
on February 1 and terminating on the following July 31 or
commencing on August 1 and terminating on the following
January 31.
(m) “Exercise Price” means the price per share of
shares offered in a given Offering Period determined as provided
in Section 10 below.
(n) “Fair Market Value” means, with respect to a
share of Common Stock as of any Enrollment Date or Exercise Date,
the closing price of such Common Stock on the New York Stock
Exchange on such date, as
A-1
reported in The Wall Street Journal. In the event that such a
closing price is not available for an Enrollment Date or an
Exercise Date, the Fair Market Value of a share of Common Stock
on such date shall be the closing price of a share of the Common
Stock on the New York Stock Exchange on the last business day
prior to such date or such other amount as may be determined by
the Committee by any fair and reasonable means.
(o) “Offering Period” means a period of
twenty-four (24) months during which an option granted
pursuant to the Plan may be exercised. A new Offering Period
shall begin on each February 1 and August 1.
(p) “Participant” means an Eligible Employee who
has elected to participate in the Plan by filing an enrollment
agreement with the Company as provided in Section 7 below.
(q) “Participating Subsidiary” means any
Subsidiary other than a Subsidiary excluded from participation in
the Plan by the Committee, in its sole discretion.
(r) “Plan” means this Western Digital Corporation
1993 Employee Stock Purchase Plan.
(s) “Subsidiary” means any corporation, domestic
or foreign, of which the Company owns, directly or indirectly,
not less than 50% of the total combined voting power of all
classes of stock or other equity interests and that otherwise
qualifies as a “subsidiary corporation” within the
meaning of Section 424(f) of the Code or any successor
thereto.
2. Purpose of the Plan.
The purpose of the Plan is to provide an incentive for present
and future employees of the Company and its Participating
Subsidiaries to acquire a proprietary interest (or increase an
existing proprietary interest) in the Company through the
purchase of Common Stock. It is the intention of the Company that
the Plan qualify as an “employee stock purchase plan”
under Section 423 of the Internal Revenue Code of 1986.
Accordingly, the provisions of the Plan shall be administered,
interpreted and construed in a manner consistent with the
requirements of that section of the Code.
3. Shares Reserved for the Plan.
There shall be reserved for issuance and purchase by Employees
under the Plan an aggregate of 11,000,000 shares of Common
Stock, subject to adjustment as provided in Section 15
below. Shares of Common Stock subject to the Plan may be newly
issued shares or shares reacquired in private transactions or
open market purchases. If and to the extent that any right to
purchase reserved shares shall not be exercised by any Employee
for any reason or if such right to purchase shall terminate as
provided herein, shares that have not been so purchased hereunder
shall again become available for the purposes of the Plan unless
the Plan shall have been terminated, but all shares sold under
the Plan, regardless of source, shall be counted against the
limitation set forth above.
4. Administration of the Plan.
(a) The Plan shall be administered by a Committee appointed
by, and which shall serve at the pleasure of, the Board. The
Committee shall consist of not less than 3 members of the Board
who are not officers or employees of the Company or of any of its
Subsidiaries and who are disinterested persons within the terms
of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934. The Committee shall have authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan, all of
which actions and determinations shall be final, conclusive and
binding on all persons.
(b) The Committee may request advice or assistance or
employ such other persons as it in its absolute discretion deems
necessary or appropriate for the proper administration of the
Plan, including, but not limited to employing a brokerage firm,
bank or other financial institution to assist in the purchase of
shares, delivery of reports or other administrative aspects of
the Plan.
5. Eligibility to Participate in the Plan.
Subject to limitations imposed by Section 423(b) of the
Code, any Employee who is employed by the Company or a
Participating Subsidiary on an Enrollment Date shall be eligible
to participate in the Plan for the Offering Period beginning on
that Enrollment Date.
A-2
6. Offering Periods.
The Plan shall be implemented by consecutive Offering Periods
with a new Offering Period commencing on each February 1 and
August 1 during the term of the Plan. The first such
Offering Period shall commence on February 1, 1994, or as
otherwise determined by the Committee. The Committee shall have
the power to change the duration of Offering Periods with respect
to future offerings without shareholder approval if such change
is announced at least fifteen (15) days prior to the
scheduled beginning of the first Offering Period to be affected.
7. Election to Participate in the Plan.
(a) Each Eligible Employee may elect to participate in the
Plan by completing an enrollment agreement in the form provided
by the Company and filing such enrollment agreement with the
Company prior to the applicable Enrollment Date, unless another
time for filing the enrollment form is set by the Committee for
all eligible Employees with respect to a given Offering Period.
An Eligible Employee may participate in an Offering Period only
if, as of the Enrollment Date of such Offering Period, such
Employee is not participating in any prior Offering Period which
is continuing at the time of such proposed enrollment.
(b) Payroll deductions for a Participant shall commence on
the first payroll date following the Enrollment Date and shall
end on the last payroll date in the Offering Period to which such
authorization is applicable, unless sooner terminated by the
Participant as provided in Section 12.
(c) Unless a Participant elects otherwise prior to the
Enrollment Date of the immediately succeeding Offering Period, an
Eligible Employee who is participating in an Offering Period as
of the last Exercise Date of such Offering Period (the
“Prior Offering Period”) shall be deemed (i) to
have elected to participate in the immediately succeeding
Offering Period and (ii) to have authorized the same payroll
deduction for such immediately succeeding Offering Period as was
in effect for such Participant immediately prior to the
expiration or termination of the Prior Offering Period.
(d) The Committee, in its discretion, may terminate the
participation of all Participants in any Offering Period as of
the last day of any Exercise Period (a “Termination
Date”) and enroll such Participants in the new Offering
Period commencing immediately following such Termination Date if
the Exercise Price determined as of the Enrollment Date for such
new Offering Period is lower than the Exercise Price determined
as of the Enrollment Date of the Offering Period for which the
Participants participation is being terminated. In such event,
each of such Participants shall be deemed for purposes of this
Plan (i) to have elected to participate in such new Offering
Period and (ii) to have authorized the same payroll
deduction for such new Offering Period as was in effect for such
Participant immediately prior to the Termination Date.
8. Payroll Deductions.
(a) All Participant contributions to the Plan shall be made
only by payroll deductions. At the time a Participant files the
enrollment agreement with respect to an Offering Period, the
Participant shall authorize payroll deductions to be made on each
payroll date during the Offering Period in an amount of from 1%
to 10% of the Eligible Compensation which the Participant
receives on each payroll date during such Offering Period. The
amount of such payroll deductions shall be a whole percentage
(i.e., 1%, 2%, 3%, etc.) of the Participants Eligible
Compensation.
(b) All payroll deductions made for a Participant shall be
deposited in the Company’s general corporate account and
shall be credited to the Participants account under the Plan. No
interest shall accrue or be credited with respect to the payroll
deductions of a Participant under the Plan. A Participant may not
make any additional payments into such account. All payroll
deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such payroll deductions.
(c) A Participant may discontinue participation in the Plan
as provided in Section 12. A Participant may at any time
during an Offering Period (but no more than four times in any
calendar year) reduce or increase (subject to the limitations of
Section 8(a) above) the rate of his or her payroll
deductions by completing and filing with the Company a change
notice in the form provided by the Company. Any such reduction in
the rate of a Participants payroll deductions shall be effective
as of the pay period specified by the Participant in the
A-3
Participants change notice, but in no event sooner than the first
pay period ending more than fifteen (15) days after the
Participant files the change notice with the Company. Any such
increase in the rate of a Participant’s payroll deductions
shall be effective as of the first date of the next Exercise
Period within such Offering Period.
9. Grant of Options.
(a) On the Enrollment Date of each Offering Period, subject
to the limitations set forth in Sections 3 and 9(b) hereof,
each Eligible Employee shall be granted an option to purchase on
each Exercise Date during such Offering Period (at the Exercise
Price determined as provided in Section 10 below) up to a
number of shares of the Company’s Common Stock determined by
dividing such Employees payroll deductions accumulated during
the Exercise Period ending on such Exercise Date by 85% of the
fair market value of a share of the Company’s Common Stock
on the Enrollment Date or on the Exercise Date, whichever is
lower, provided that the number of shares subject to the option
shall not exceed five (5) times the number of shares
determined by dividing 10% of the Employees Eligible Compensation
over the Offering Period (determined based upon the Eligible
Employees rate of Eligible Compensation in effect as of the
Enrollment Date) by 85% of the Fair Market Value of a share of
the Company’s Common Stock on the Enrollment Date.
(b) Notwithstanding any provision of the Plan to the
contrary, no Employee shall be granted an option under the Plan
(i) if, immediately after the grant, such Employee (or any
other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock
and/or hold outstanding options to purchase stock possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary of the
Company, or (ii) which permits such Employees rights to
purchase stock under all employee stock purchase plans of the
Company and its Subsidiaries to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the
time such option is granted) for each calendar year in which such
option is outstanding at any time.
10. Exercise Price.
The Exercise Price of each of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the Fair
Market Value of a share of the Common Stock of the Company on the
Enrollment Date; or (ii) 85% of the Fair Market Value of a
share of the Common Stock of the Company on the applicable
Exercise Date.
11. Exercise of Options.
Unless a Participant withdraws from the Plan as provided in
Section 12, the Participants option for the purchase of
shares will be exercised automatically on each Exercise Date of
the Offering Period, and the maximum number of full shares
subject to option will be purchased for the Participant at the
applicable Exercise Price with the accumulated payroll deductions
in the Participants account. Any amount remaining in the
Participants account after an Exercise Date shall be held in the
account until the next Exercise Date in such Offering Period,
unless the Offering Period has been over-subscribed or has
terminated with such Exercise Date, in which event such amount
shall be refunded to the Participant.
12. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all but not less than all of
the payroll deductions credited to the Participants account
under the Plan at any time by giving written notice to the
Company. All of the Participants payroll deductions credited to
the Participants account will be paid to him promptly after
receipt of the Participants notice of withdrawal, the
Participants participation in the Plan will be automatically
terminated, and no further payroll deductions for the purchase of
shares will be made. Payroll deductions will not resume on
behalf of a Participant who has withdrawn from the Plan unless
written notice is delivered to the Company within the open
enrollment period preceding the commencement of an Exercise
Period directing the Company to resume payroll deductions.
(b) Upon termination of the Participants Continuous
Employment prior to the Exercise Date of an Offering Period for
any reason, including retirement or death, the payroll deductions
credited to the Participants account will be returned to the
Participant or, in the case of death, to the Participants estate,
and the Participants options to purchase shares under the Plan
will be automatically terminated.
A-4
(c) In the event an Employee fails to maintain Continuous
Employment for at least twenty (20) hours per week during an
Offering Period in which the Employee is a Participant, the
Employee will be deemed to have elected to withdraw from the
Plan, the payroll deductions credited to the Employees account
will be returned to the Employee, and the Employees options to
purchase shares under the Plan will be terminated.
(d) A Participants withdrawal from an Offering Period will
not have any effect upon the Participants eligibility to
participate in a succeeding Offering Period or in any similar
plan which may hereafter be adopted by the Company.
13. Transferability.
Options to purchase Common Stock granted under the Plan are not
transferable by a Participant other than by will or the laws of
descent and distribution and are exercisable during a
Participants lifetime only by the Participant.
14. Reports.
Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating
Employees semi-annually promptly following each Exercise Date,
which statements will set forth the amounts of payroll
deductions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
15. Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are increased
or decreased, or are changed into or are exchanged for a
different number or kind of shares, as a result of one or more
reorganizations, restructurings, recapitalizations,
reclassifications, stock splits, reverse stock splits, stock
dividends or the like, appropriate adjustment shall be made in
the number and/or kind of shares, and the per-share option price
thereof, which may be issued in the aggregate and to any
Participant upon exercise of options granted under the Plan.
(b) In the event of the proposed dissolution or liquidation
of the Company, each Offering Period will terminate immediately
prior to the consummation of such proposed action, unless
otherwise provided by the Committee. In the event of a proposed
sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Committee
determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, that the Participant shall have
the right to exercise the option as to all of the optioned
stock, including shares as to which the option would not
otherwise be exercisable. If the Committee makes an option fully
exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Committee shall notify the
Participant that the option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and
the option will terminate upon the expiration of such period.
(c) In all cases, the Committee shall have full discretion
to exercise any of the powers and authority provided under this
Section 15, and the Committees actions hereunder shall be
final and binding on all Participants. No fractional shares of
stock shall be issued under the Plan pursuant to any adjustment
authorized under the provisions of this Section 15.
16. Amendment of the Plan.
The Board may at any time, or from time to time, amend the Plan
in any respect; provided, however, that the Plan may not be
amended in any way that will cause rights issued under the Plan
to fail to meet the requirements for employee stock purchase
plans as defined in Section 423 of the Code or any successor
thereto, including, without limitation, shareholder approval if
required.
17. Termination of the Plan.
The Plan and all rights of Employees hereunder shall terminate:
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(a) on the Exercise Date that Participants become entitled
to purchase a number of shares greater than the number of
reserved shares remaining available for purchase under the Plan;
or |
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(b) at any time, at the discretion of the Board. |
A-5
In the event that the Plan terminates under circumstances
described in Section 17(a) above, reserved shares remaining
as of the termination date shall be sold to Participants on a pro
rata basis.
18. Notices.
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the
Company for the receipt thereof.
19. Shareholder Approval.
Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve months before or after
the date the Plan is adopted. If such shareholder approval is
obtained at a duly held shareholders meeting, it may be obtained
by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and
entitled to vote thereon.
20. Conditions Upon Issuance of Shares.
(a) The Plan, the grant and exercise of options to purchase
shares of Common Stock under the Plan, and the Company’s
obligation to sell and deliver shares upon the exercise of
options to purchase shares shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to
such approvals by any regulatory or governmental agency as may,
in the opinion of counsel for the Company, be required.
(b) The Company may make such provisions as it deems
appropriate for withholding by the Company pursuant to federal or
state income tax laws of such amounts as the Company determines
it is required to withhold in connection with the purchase or
sale by a Participant of any Common Stock acquired pursuant to
the Plan. The Company may require a Participant to satisfy any
relevant tax requirements before authorizing any issuance of
Common Stock to such Participant.
A-6
October 8, 1999
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| TO: |
Participants in the Western Digital Corporation |
Retirement Savings and Profit Sharing Plan
As a participant in the Western Digital Corporation Retirement
Savings and Profit Sharing Plan, you have the right to vote the
shares of Western Digital common stock allocated to your account.
To allow you to do this, we are enclosing a proxy/voting
instruction card, which when completed will give instructions to
the trustee of the plan, T. Rowe Price Trust Company, on how you
wish your shares to be voted. Also enclosed are an Annual Report
on Form 10-K and Proxy Statement which explains the issues
being presented for shareholder approval at the Annual Meeting of
Shareholders to be held on November 18, 1999.
In addition to the election of directors and the ratification of
the selection of KPMG LLP as independent accountants, the Company
is asking for your approval of the following proposal:
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Approval of the amendment to the Company’s 1993 Employee
Stock Purchase Plan to authorize and reserve for issuance an
additional 4,000,000 shares as described in the proxy statement. |
Your Board of Directors unanimously recommends that you vote FOR
each of these proposals.
As a stock owner in Western Digital, ONLY YOU (through the
trustee) CAN VOTE YOUR SHARES. No one else has that right. If you
do not provide the trustee with voting instructions, your shares
will not be voted unless you attend the Annual Meeting and vote
in person. Therefore, it is important that your shares, no matter
how large or small the amount, be represented at the Annual
Meeting of Shareholders.
Please take the time to complete the enclosed card and return it
in the enclosed, pre-addressed envelope as soon as possible.
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Thank you for your cooperation. |
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Michael A. Cornelius |
[WESTERN DIGITAL CORPORATION LETTERHEAD]
[Date]
[Name]
[Address]
Dear [Name]:
Since your organization is a substantial investor in the Common
Stock of Western Digital Corporation, I am enclosing with this
letter a copy of the Notice of Annual Meeting, Proxy Statement,
Proxy/ Voting Instruction Cards and Annual Report on
Form 10-K for the upcoming Annual Meeting of Shareholders,
to be held on Thursday, November 18, 1999. Knowing that your
shares are held through a custodian bank and that the normal
path of distribution of these items could result in some delay, I
thought you would appreciate receiving your personal copy of
these materials at the same time they are being sent to holders
of record.
Any comments or questions you may have concerning the proposals
described in the Proxy Statement are welcome and I would very
much appreciate the opportunity to discuss them with you
personally. Please feel free to call me at [phone number].
On behalf of our Board of Directors and all the people at Western
Digital Corporation, thank you for your continued interest and
support.
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Sincerely, |
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/s/ ROBERT J. BLAIR |
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Robert J. Blair |
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Vice President, Investor Relations |
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| WAIT! THERE’S AN EASIER WAY TO SUBMIT YOUR PROXY. |
[LOGO] |
24 Hours a Day — 7 Days a Week
SUBMIT YOUR PROXY BY TELEPHONE
It’s fast, convenient, and your submission is
immediately confirmed and posted
CALL TOLL-FREE ON A TOUCH-TONE PHONE
1-800-690-6903
JUST FOLLOW THESE FOUR EASY STEPS:
1. Read the accompanying Proxy Statement and proxy card.
2. Call the toll-free number 1-800-690-6903.
3. Enter your 12-digit Control Number located on your proxy card.
4. Follow the simple recorded instructions.
YOUR VOTE IS IMPORTANT!
CALL 1-800-690-6903
24-HOURS A DAY
SUBMIT YOUR PROXY BY INTERNET
It’s fast, convenient, and your submission is
immediately confirmed and posted
GO TO WEBSITE:
www.proxyvote.com
JUST FOLLOW THESE FOUR EASY STEPS:
1. Read the accompanying Proxy Statement and proxy card.
2. Go to website: www.proxyvote.com.
3. Enter your 12-digit Control Number located on your proxy card.
4. Follow the simple instructions.
YOUR VOTE IS IMPORTANT!
Go to www.proxyvote.com.
24-HOURS A DAY
IF YOU SUBMIT YOUR PROXY BY TELEPHONE OR INTERNET, DO NOT
RETURN YOUR
PROXY CARD.
THANK YOU FOR YOUR PROXY SUBMISSION
[Western Digital Logo]
Proxy Services
P.O. Box 9079
Farmingdale, NY 11735
VOTE BY PHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions. Have your proxy/ voting instruction card in
hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple
instructions the Vote Voice provides you.
VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting
instructions. Have your proxy/ voting instruction card in hand
when you access the web site. You will be prompted to enter your
12-digit Control Number which is located below to vote your
proxy.
VOTE BY MAIL
Mark, sign and date your proxy/voting instruction
card and return it in the postage-paid envelop we have provided
or return to Western Digital Corporation, c/o ADP,
51 Mercedes Way, Edgewood, NY 11717.
Please sign your name exactly as it appears
herein. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in full
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY/
VOTING INSTRUCTION CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK
AS FOLLOWS.
WESDIG KEEP
THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY/ VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED
AND DATED
WESTERN DIGITAL CORPORATION
The Board of Directors recommends a vote FOR the
following proposals:
1. Election of Directors
01) CHARLES A. HAGGERTY,
02) I.M. BOOTH, 03) ANDRE R. HORN,
04) ANNE O. KRUEGER, 05)
THOMAS E. PARDUN, 06)
JAMES A. ABRAHAMSON
AND 07) PETER D. BEHRENDT
For All [ ]
Withheld All [ ]
For All
Except: [ ]
To withhold authority to vote, mark “For All
Except” and write the nominee’s number on the line
below:
Vote on Proposals
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2. |
APPROVAL OF THE AMENDMENT TO THE COMPANY’S
1993 EMPLOYEE STOCK PURCHASE PLAN TO AUTHORIZE AND RESERVE FOR
ISSUANCE AN ADDITIONAL 4,000,000 SHARES AS DESCRIBED IN THE PROXY
STATEMENT. |
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
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3. |
RATIFICATION OF THE SELECTION OF KPMG LLP AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY. |
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
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4. |
In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before the
meeting. |
Signature (PLEASE SIGN WITHIN BOX)
Date
Signature (Joint Owners)
Date
WESTERN DIGITAL CORPORATION
8105 Irvine Center Drive
Irvine, CA 92618
THIS PROXY/ VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF
THE
BOARD OF DIRECTORS
The undersigned hereby appoints Charles A. Haggerty and Michael
A. Comelius, and each of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent
and to vote as designated on the other side all the shares of
Common Stock of Western Digital Corporation held of record by the
undersigned on September 22, 1999, at the Annual Meeting of
Shareholders to be held on November 18, 1999, and at any
postponements or adjournments thereof. The proposals referred to
on the other side are described in the Proxy Statement, dated as
of October 8, 1999, which is being delivered in connection
with the Annual Meeting.
THIS PROXY/ VOTING INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREBY BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY/ VOTING
INSTRUCTION CARD WILL BE VOTED FOR THE NOMINEES NAMED IN PROPOSAL
1 AND FOR PROPOSAL 2 AND 3. IF YOU HAVE A BENEFICIAL INTEREST IN
SHARES HELD BY THE WESTERN DIGITAL RETIREMENT SAVINGS AND PROFIT
SHARING PLAN, THEN THIS CARD ALSO CONSTITUTES YOUR VOTING
INSTRUCTIONS TO THE TRUSTEE OF SUCH PLAN. IF YOU DO NOT SIGN AND
RETURN THIS CARD, OR ATTEND THE MEETING AND VOTE BY BALLOT, SUCH
SHARES WILL NOT BE VOTED BY THE TRUSTEE.
(Important, please sign on other side)
