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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On March 4, 2020, Western Digital Corporation (the “Company”) appointed David V. Goeckeler as Chief Executive Officer of the Company, effective as of March 9, 2020, succeeding Stephen D. Milligan. Concurrent with Mr. Goeckeler’s appointment as Chief Executive Officer, the Board of Directors of the Company appointed him as a member of the Board of Directors and as chair of the Executive Committee of the Board of Directors.
Mr. Goeckeler, 58, has served as Executive Vice President and General Manager, Networking and Security Business, of Cisco Systems, Inc. since July 2017. Prior to that, he served as Cisco’s Senior Vice President and General Manager, Networking and Security Business, from May 2016 to July 2017, and its Senior Vice President and General Manager, Security Business, from November 2014 to May 2016. He previously served as Cisco’s Vice President, Engineering and Security Business, and in a variety of other leadership positions within Cisco’s engineering organization since joining Cisco in May 2000. Mr. Goeckeler began his career as a software engineer at Bell Laboratories in 1986 before joining BellSouth, LLC in 1991 where he served as Vice President, Product Software, and as a senior member of the technical staff. Mr. Goeckeler holds Master of Business Administration degrees from Columbia University and University of California, Berkeley, through a joint program, a Master of Science degree in Computer Science from University of Illinois, Champaign-Urbana, and a Bachelor of Science degree in Computer Science and Bachelor of Arts degree in Mathematics from University of Missouri–Columbia.
In connection with his appointment as the Company’s Chief Executive Officer, Mr. Goeckeler will receive an annual base salary of $1,250,000 and a target annual award opportunity under the Company’s short-term incentive plan of 175% of annual base salary (payable on a pro rata basis for fiscal year 2020). The actual amount of Mr. Goeckeler’s annual bonus will be determined by the Compensation and Talent Committee of the Board (the “Compensation Committee”) based on the achievement of performance targets and other terms and conditions established by the Compensation Committee for the applicable fiscal year. Mr. Goeckeler will also receive a sign-on cash award of $3,500,000, subject to repayment to the Company if Mr. Goeckeler does not remain employed by the Company through March 9, 2021, unless the Company terminates his employment without cause.
The Company will grant Mr. Goeckeler a restricted stock unit award on his first day of employment with a grant date value of $10,000,000 (with the number of units subject to the award to be determined based on the closing stock price of the Company’s common stock as of the grant date), granted under the Company’s 2017 Amended and Restated Performance Incentive Plan (the “2017 Plan”). The restricted stock unit award will vest, subject to Mr. Goeckeler’s continued employment, in substantially equal annual installments on the first and second anniversaries of the grant date. The Company will also grant Mr. Goeckeler a performance stock unit award on his first day of employment with a grant date value of $20,500,000 (with the number of units subject to the award to be determined based on the closing stock price of the Company’s common stock as of the grant date), granted under the 2017 Plan. The performance stock unit award will vest, subject to Mr. Goeckeler’s continued employment, based on the Company’s relative total stockholder return performance compared to the S&P 500 Index constituents over a three-year performance period. The sign-on restricted stock unit award will vest, and the service-based vesting conditions of the performance stock unit award will be waived, if the Company terminates Mr. Goeckeler’s employment without cause.
Mr. Goeckeler will not be eligible to receive any additional equity awards under the Company’s annual long-term incentive (“LTI”) program until fiscal year 2021. Subject to approval by the Compensation Committee, Mr. Goeckeler is expected to receive an annual LTI award for fiscal year 2021 having a grant date value of $12,000,000, with 40% of such LTI award consisting of a time-based restricted stock unit award and 60% of such LTI award consisting of a performance stock unit award.
In accordance with the Company’s customary practice, the Company will enter into its standard form of indemnity agreement with Mr. Goeckeler, which agreement is filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on November 8, 2002. Mr. Goeckeler will also be eligible to participate in the Company’s Executive Severance Plan, Change of Control Severance Plan and other benefit programs generally available to the Company’s executive officers.
There are no arrangements or understandings between Mr. Goeckeler and any other person pursuant to which Mr. Goeckeler was appointed to serve as Chief Executive Officer of the Company or as a member of the Board of Directors. There are no family relationships between Mr. Goeckeler and any director or executive officer of the Company.
As previously announced, Stephen D. Milligan will remain with the Company in an advisory role until his retirement in September 2020 to ensure a smooth transition. Mr. Milligan will not be eligible to receive any severance benefits from the Company in connection with his retirement.