8-KLeadership ChangesShareholder MattersExhibits & Filings

WESTERN DIGITAL CORP 8-K Report, Executive Changes (Nov 7, 2018)

Filed November 7, 2018For Securities:WDC

Summary

This 8-K filing from Western Digital Corp. (WDC) on November 7, 2018, primarily details the results of their annual stockholder meeting held on the same date. The key outcomes include the stockholder approval of amendments to the 2017 Performance Incentive Plan and the Amended and Restated 2005 Employee Stock Purchase Plan (ESPP). These amendments significantly increase the number of shares available for future equity awards and employee stock purchases, respectively, which is a crucial consideration for long-term equity-based compensation and employee incentives. Additionally, the filing confirms the election of nine directors to the Board and the ratification of KPMG LLP as the independent registered public accounting firm for the upcoming fiscal year. The advisory vote on named executive officer compensation was also approved. For investors, the approval of the incentive plans suggests a continued commitment to using equity as a component of executive and employee compensation, potentially influencing future share dilution and company valuation.

Key Highlights

  • 1Stockholder approval granted for amendments to the Western Digital Corporation 2017 Performance Incentive Plan, increasing available shares by 6,000,000.
  • 2Stockholder approval for the Amended and Restated 2005 Employee Stock Purchase Plan (ESPP), increasing authorized shares by 10,000,000.
  • 3Nine directors were elected to the Board of Directors at the annual stockholder meeting.
  • 4An advisory vote on the compensation of named executive officers was approved by stockholders.
  • 5The appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending June 28, 2019, was ratified.
  • 6Amendments to the 2017 Plan remove limits on performance-based awards related to Section 162(m) deductibility due to the Tax Cuts and Jobs Act of 2017.
  • 7Certain shares used for full value awards and tax withholdings will no longer count against the 2017 Plan's share limit.

Frequently Asked Questions

The main outcomes include the stockholder approval of amendments to the 2017 Performance Incentive Plan and the 2005 Employee Stock Purchase Plan (ESPP), the election of nine directors, an advisory approval of executive compensation, and the ratification of KPMG LLP as the independent auditor.

The increase in shares for both the 2017 Performance Incentive Plan and the ESPP allows Western Digital to grant more equity-based compensation to employees and offer more shares for purchase under the ESPP. This can be used for employee retention and motivation but may also lead to future share dilution.

The Tax Cuts and Jobs Act of 2017 removed the exception for performance-based compensation to be deductible under Section 162(m). The amendment reflects this change in tax law, indicating that future performance-based awards may not be subject to the same deductibility considerations as before.

The amended 2017 Plan stipulates that shares repurchased or withheld after November 7, 2018, for payment of 'full value awards' or to satisfy tax withholding obligations for these awards, will not be counted against the overall share limit. This effectively makes more shares available for future grants.