AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the “Agreement”) is entered into by and between Western Digital Corporation (the “Company”) and Xxxxxxx Xxxxxx Xxxxxxxx (“Executive”), as of the 6th day of September, 2012 (the “Effective Date”).
1. EMPLOYMENT.
The Company hereby agrees to continue to employ Executive and Executive hereby agrees to accept such continued employment, upon the terms and conditions hereinafter set forth including but not limited to provisions governing early termination, from the Effective Date to and including the fifth anniversary of the CEO Appointment Date, as defined below (“Employment Period”). Unless Executive’s employment is terminated pursuant to any early termination provision hereof or the parties mutually agree otherwise in writing, Executive’s employment with the Company shall terminate without further action by either party on the fifth anniversary of the Effective Date.
2. DUTIES.
A. President and Chief Executive Officer. Beginning on the Effective Date and continuing through January 2, 2013 (the “CEO Appointment Date”), Executive shall continue to serve as President of the Company and shall report to the Company’s Chief Executive Officer. Executive’s duties during such period shall continue to include overall responsibility for sales, business units, manufacturing, materials and engineering activities of the Company. Beginning on the CEO Appointment Date and continuing through the remainder of the Employment Period, Executive shall serve as President and Chief Executive Officer of the Company. In this capacity, Executive shall report to the Board of Directors of the Company, and shall have such duties and responsibilities consistent with his position as President and Chief Executive Officer of the Company as the Board of Directors of the Company shall determine from time to time. Executive’s principal place of employment shall be the Company’s principal executive office in Irvine, California. Executive shall also be appointed as a member of the Board of Directors of the Company effective upon the retirement of the Company’s current Chief Executive Officer from the Board of Directors, which shall occur on the CEO Appointment Date.
B. Executive Commitment. During the Employment Period, Executive agrees to devote substantially all of his time, energy and ability to the business of the Company, subject to paragraph E of Section 3.
3. COMPENSATION.
A. Base Salary. From the Effective Date through the CEO Appointment Date, the Company will continue to pay to Executive a base salary at the rate of $800,000 per year. Beginning on the CEO Appointment Date, the Company will pay to Executive a base salary at the rate of $1,000,000 per year. Executive’s salary shall be earned monthly and shall be payable in periodic installments in accordance with the Company’s customary practices. Amounts payable shall be reduced by standard withholding and other authorized deductions. Executive’s base salary may be increased in the sole discretion of the Compensation Committee of the Board of Directors (the “Compensation Committee”).
B. Bonus. Executive’s target bonus for purposes of the Company’s semi-annual Incentive Compensation Plan (ICP) bonus program for the first fiscal 2013 semi-annual performance period shall continue to be 125% of his semi-annual base salary from the Company in effect on the last day of such fiscal period. Beginning with the second fiscal 2013 semi-annual performance period and during the remainder of the Employment Period, Executive’s target bonus for purposes of the ICP shall be 150% of his semi-annual base salary from the Company in effect on the last day of such fiscal period. Executive’s actual bonus under the ICP may range from 0% to 200% of his target bonus based on the level of attainment of the applicable performance objectives established under the ICP. Executive’s target bonus may be increased in the sole discretion of the Compensation Committee.
C. Retirement and Welfare Benefit Plans; Fringe Benefits. During the Employment Period, Executive (and, in the case of welfare benefit plans, his eligible dependents, as the case may be) shall be eligible for participation in the retirement, welfare, and fringe benefit plans, practices, policies and programs provided by the Company on terms consistent with those generally applicable to the Company’s other senior executives and approved by the Compensation Committee.
D. Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses (including the relocation and commuting expenses provided for in paragraph F below) incurred by him in accordance with the policies, practices and procedures as in effect generally with respect to other senior executives of the Company.
E. Vacation and Other Leave. During the Employment Period, Executive shall receive paid vacation in an amount determined by the Company’s then-existing policies based upon Executive’s years of service with the Company (and for these purposes, Executive’s service with Viviti Technologies Ltd. shall be recognized as service with the Company). Such vacation shall be scheduled and taken in accordance with the Company’s standard vacation policies applicable to Company executives. Executive shall also be entitled to all other holiday and leave pay generally available to other executives of the Company.
F. Relocation Benefits. Executive shall continue to be entitled to receive prompt reimbursement (and in any event within seventy days after the expense is incurred) for all reasonable moving or other relocation related expenses incurred by him at any time prior to January 2, 2015, including reasonable commuting expenses from Executive’s residence in the San Francisco area to the Company’s Irvine headquarters. In order to be eligible for reimbursement for any such expenses, Executive must remain employed on the date the expense is incurred.
G. Modification. The Company reserves the right to modify, suspend or discontinue any and all of the above plans, practices, policies and programs at any time without recourse by Executive so long as such action is taken generally with respect to other senior executives of the Company and does not single out Executive.
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4. LONG-TERM INCENTIVE COMPENSATION.
A. Long-Term Incentive Awards. During the Employment Period, the Executive shall be eligible to receive long-term incentive awards on a basis commensurate with the Executive’s position and in accordance with the long-term incentive guidelines applicable to the Executive’s position established by the Compensation Committee. Any long-term incentive awards will generally be granted by the Compensation Committee as part of its normal annual grant cycle applicable to other senior executives of the Company. Executive’s long-term incentive award for the Company’s 2013 fiscal year was granted on September 6, 2012 in connection with the entry into this Agreement and took into account Executive’s appointment as President and Chief Executive Officer of the Company on the CEO Appointment Date. As a result, Executive’s long-term incentive award for the Company’s 2013 fiscal year has an approximate grant value of $7,000,000 and consists of a grant of 83,652 performance shares, 41,826 restricted stock units and 98,618 stock options. Any long-term incentive awards granted to the Executive will be subject to the Company’s customary terms and conditions.
B. Performance Units. At the first regularly scheduled Compensation Committee meeting occurring after the CEO Appointment Date, the Company will grant Executive an award of performance restricted stock units equal to that number of units having a target value on the grant date equal to $2,000,000 (the “Performance Units”). Fifty percent (50%) of the target number of Performance Units shall become earned and payable based on performance during the period from June 30, 2012 through June 28, 2013, while the remaining fifty percent (50%) of the target number of Performance Units shall become earned and payable based on performance during the period from June 29, 2013 through June 27, 2014. The Performance Units to be granted to the Executive will be granted pursuant to the Company’s form of notice of grant of performance stock units that was used for the performance restricted stock units granted to Executive in May of 2012, and will be subject to the terms and conditions of such form.
5. TERMINATION.
A. Death. This Agreement and Executive’s employment shall terminate automatically on the death of Executive.
B. Disability. The Company, at its option, may terminate Executive’s employment upon the Disability of Executive. For purposes of this Agreement, “Disability” shall mean physical or mental incapacity that renders Executive unable to perform the normal and customary duties of employment of Executive even with a reasonable accommodation for (A) 120 days in any twelve (12) month period or (B) for a period of ninety (90) successive days.
C. Cause. The Company may terminate Executive’s employment for Cause. For purposes of this Agreement, “Cause” shall mean that the Company, acting in good faith based upon the information then known to the Company, determines that Executive has engaged in or committed: (i) willful misconduct, (ii) fraud, (iii) failure or refusal to perform Executive’s duties specified in this Agreement or (iv) a conviction of or a plea of nolo contendre to a felony.
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D. Other than Cause, Death, or Disability. The Company may terminate Executive’s employment at any time, with or without cause, upon 30 days’ written notice.
E. Obligations of the Company Upon Termination.
(i) Termination for any Reason. If Executive’s employment is terminated for any reason during the Employment Period, Executive shall be entitled to receive timely payment of the sum of (i) Executive’s annual base salary through the date of termination to the extent not theretofore paid and (ii) any compensation previously deferred by Executive in accordance with the Company’s deferred compensation plans (together with any accrued interest or earnings thereon pursuant to the terms of the applicable plan) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall be hereinafter referred to as the “Accrued Obligations”).
(ii) Executive Severance Plan and Change of Control Severance Plan. During the Employment Period, Executive shall be entitled to participate in the Company’s Executive Severance Plan and Amended and Restated Change of Control Severance Plan in accordance with the terms of such plans and as each may be amended from time to time. Subject to the preceding sentence, the Executive shall be entitled to receive “Tier I” benefits under each of the Severance Plan and the Amended and Restated Change of Control Severance Plan. Any benefits becoming payable under the Severance Plan or the Amended and Restated Change of Control Severance Plan as a result of the termination of the Executive’s employment shall be in addition to the Accrued Obligations, provided that to the extent Executive becomes entitled to receive payments or benefits included within the Accrued Obligations under either such plan, Executive shall not be entitled to any duplication of benefits.
F. Exclusive Remedy. Executive agrees that the payments and benefits contemplated by this Agreement shall constitute the exclusive and sole remedy for any termination of his employment, and Executive covenants not to assert or pursue any other remedies, at law or in equity, with respect to any termination of employment.
6. CONFIDENTIALITY AND INVENTION.
Executive has previously executed an Employee Invention and Confidentiality Agreement (“Invention Agreement”), which is incorporated herein as if fully set forth. In the event of an inconsistency between a provision of this Agreement and a provision of the Invention Agreement, the provision of this Agreement controls.
7. NON-INTERFERENCE.
Executive promises and agrees that during the term of this Agreement, and for a period of twenty-four (24) months thereafter, he will not influence or attempt to influence any customer, supplier, or distributor of the Company to alter or reduce its business relationship with the Company.
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8. LITIGATION ASSISTANCE.
Executive agrees to cooperate with the Company in any actual or threatened litigation that arises against or brought by the Company at any time during or after the Employment Period, including but not limited to participating in interviews with the Company’s counsel to assist the Company in any such litigation.
9. ARBITRATION.
Any controversy arising out of or relating to Executive’s employment, this Agreement, its enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of its provisions, shall be submitted to arbitration in Orange County, California, before a sole arbitrator selected from Judicial Arbitration and Mediation Services, Inc., Orange County, California, or its successor (“JAMS”), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from ADR Services, Inc., and shall be conducted in accordance with the provisions of California Civil Procedure Code Sections 1280 et seq. as the exclusive remedy of such dispute; provided, however, that provisional injunctive relief may, but need not, be sought in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. Final resolution of any dispute through arbitration may include any remedy or relief which the arbitrator deems just and equitable. Any award or relief granted by the arbitrator hereunder shall be final and binding on the parties hereto and may be enforced by any court of competent jurisdiction. The parties agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with this Agreement or Executive’s employment.
10. SUCCESSORS.
A. This Agreement is personal to Executive and shall not, without the prior written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and any such successor or assignee shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “successor” and “assignee” shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the stock of the Company or to which the Company assigns this Agreement by operation of law or otherwise.
11. WAIVER.
No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.
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12. MODIFICATION.
This Agreement shall not be modified by any oral agreement, either express or implied, and all modifications hereof shall be in writing and signed by the parties hereto.
13. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
14. COMPLETE AGREEMENT.
This Agreement (and all other agreements, exhibits, and schedules referred to in this Agreement, including without limitation the Invention Agreement) constitutes and contains the entire agreement and final understanding concerning Executive’s employment with the Company and the other subject matters addressed herein between the parties. It is intended by the parties as a complete and exclusive statement of the terms of their agreement. It supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matter hereof. Any representation, promise or agreement not specifically included in this Agreement shall not be binding upon or enforceable against either party. This is a fully integrated agreement.
15. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered within the County of Orange, State of California and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and governed by, the laws of the State of California without regard to principles of conflict of laws.
16. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
17. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or if mailed by registered or certified mail, postage prepaid, addressed to Executive at Western Digital Corporation, 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, or addressed to the Company at: Western Digital Corporation, Attn. Corporate Secretary, 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000. Either party may change the address at which notice shall be given by written notice given in the above manner.
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18. SECTION 409A.
To the extent that any reimbursements pursuant to paragraph D of Section 3 are taxable to Executive, any reimbursement payment due to Executive pursuant to such provision shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred. The reimbursements pursuant to paragraph D of Section 3 are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that Executive receives in one taxable year shall not affect the amount of such reimbursements that Executive receives in any other taxable year.
19. EXECUTION AND EFFECTIVE DATE.
This Agreement is being executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose. This Agreement shall become effective on the Effective Date. Effective on the Effective Date, this Agreement shall amend and restate Executive’s existing Employment Agreement with the Company entered into as of March 7, 2011.
[Signatures on the following page.]
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In witness whereof, the parties hereto have executed this Agreement as of the date first above written.
| THE COMPANY: | ||
| By: |
/s/ Xxxx X. Xxxxx | |
| Name: Xxxx X. Xxxxx | ||
| Title: Chief Executive Officer | ||
| EXECUTIVE: | ||
| By: |
/s/ Xxxxxxx Xxxxxx Xxxxxxxx | |
| Name: Xxxxxxx Xxxxxx Xxxxxxxx | ||
| Title: President | ||
