Corporate Governance

Guidelines

The Mission of the Board of Directors

The Board of Directors (the "Board") of Western Digital Corporation (the "Company") represents the owners' interest in perpetuating a successful business, including optimizing long-term financial returns. The Board is responsible for determining that the Company is managed in such a way as to seek to accomplish this result. This is an active, not a passive, responsibility. The Board has the objective that in good times, as well as difficult ones, management is capably executing its responsibilities. The Board's responsibility is to regularly monitor the effectiveness of management policies and decisions including the execution of its strategies.

These guidelines represent the Board's current thinking with respect to selected corporate governance issues considered to be of significance to stockholders. These guidelines, along with the charters of the committees of the Board, provide the framework for the governance of the Company. The guidelines are only guidelines and not rigid rules. The Governance Committee will continue to assess the appropriateness and efficacy of the guidelines and recommend from time to time changes for approval by the Board as it deems appropriate in the best interests of the Company or as required by applicable laws and regulations.

Selection and Composition of the Board

1. Board Membership Criteria

The Governance Committee periodically reviews (at least annually) the mix of skills, experience levels and backgrounds of present and potential Board members in light of anticipated needs.

2. Selection and Orientation

The Governance Committee reviews qualifications of potential candidates and recommends director nominees to the full Board. The Governance Committee may receive suggestions for candidates from individual Board members, including the Company’s Chief Executive Officer (the “CEO”), as well as from stockholders of the Company. While the Governance Committee has no specific minimum qualifications for director nominees, the Governance Committee has adopted a policy regarding critical factors to be considered in selecting director nominees which include: the nominee’s personal and professional ethics, integrity and values; the nominee’s intellect, judgment, foresight, skills, experience (including understanding of marketing, finance, the Company’s technology and other elements relevant to the success of a company such as the Company) and achievements, all of which are viewed in the context of the overall composition of the Board; the absence of any conflict of interest (whether due to a business or personal relationship) or legal impediment to, or restriction on, the nominee serving as a director; having a majority of independent directors on the Board; and representation of the long-term interests of the shareholders as a whole and a diversity of backgrounds and expertise which are most needed and beneficial to the Board and the Company.

Each of the directors is expected to devote the time and effort necessary to understand the business of the Company and to properly discharge such director’s responsibilities. New directors are required to participate in the Company’s director orientation program to familiarize such directors with, among other things, the Company’s business, and significant financial, accounting and risk management issues, principal executive officers, independent auditors and internal auditors, code of ethics and corporate governance guidelines. The Company encourages its directors to attend at least one continuing education program each year to assist them in performing their Board responsibilities.

3. Extending the Invitation to a Potential Director to Join the Board

The invitation to join the Board should be extended by the Chairman of the Governance Committee or his or her designee, on behalf of the Board.

Board Leadership

4. Selection of Chairman and CEO

The Board is free to make its choice for Chairman and CEO in any way that the Board considers best for the Company at a given point in time. Therefore, the Board does not have a policy on whether or not the role of the CEO and Chairman should be separate and, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee director.

5. Lead Director

The Board will appoint a lead independent director: (1) if the Chairman is not an independent director under the listing standards of The NASDAQ Stock Market LLC (“Applicable Listing Rules”), or (2) if the Board otherwise deems it appropriate. The lead independent director will act as a liaison between the independent directors and the Company’s management and shall be responsible for assisting the Chairman in establishing the agenda for Board meetings, for coordinating the agenda for, and chairing, the executive sessions of the independent directors, and for performing such other duties as may be specified by the Board from time to time.

6. Executive Sessions of Non-Management Directors

The independent directors, as such term is defined under the Applicable Listing Rules, meet at least twice a year without any executive officers or management directors present. These meetings are scheduled in conjunction with regular Board meetings. In addition, any independent director may call for an executive session of the independent directors of the Board to coincide with any regularly scheduled Board meeting. Independent directors may also meet separately, with the CEO, from time to time, as determined by the independent directors and/or the CEO.

7. Access to Independent Advisors

The Board and its Committees have access to such independent advisors as the Board or the relevant Committee (consistent with the provisions of its charter) deem necessary and appropriate.

8. Size of Board

The Board and the Governance Committee have determined that a Board of 7-13 directors is currently the appropriate size.

9. Mix of Inside and Independent Directors

On matters of corporate governance, the practice is to involve the full Board. The Board shall be composed of a majority of independent directors.

10. Independence of Directors

The Board shall annually review the relationships that each director has with the Company. Following such an annual review, only those directors who the Board affirmatively determines do not have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and who otherwise meet the definition of independent director under the Applicable Listing Rules, will be considered independent directors.

Each of the Audit Committee, the Compensation Committee and the Governance Committee shall be composed entirely of independent directors satisfying applicable legal, regulatory and stock exchange requirements necessary for an assignment to any such Committee.

11. Directors Who Change Their Present Job Responsibilities

Any director who has a significant change in occupation, retires from his or her principal employment or is unavailable for active participation due to health, change of residence or similar reason (except for a short duration) shall submit to the Governance Committee an offer of resignation from the Board. Action on such conditional offer of resignation is by Board resolution, upon recommendation of the Governance Committee.

12. Service on Boards and Committees of Other Companies

Directors are encouraged to limit the number of other boards on which they serve, taking into account potential board attendance, participation and effectiveness on these boards. Directors may not serve simultaneously on more than five public company boards, including the Company’s Board; provided; however, that if a director is an executive officer of a public company, he or she may not serve simultaneously on more than two public company boards, including the Company’s Board. Directors should also advise the Chairman of the Board and the Chairman of the Governance Committee in advance of accepting an invitation to serve on another board.

Members of the Audit Committee may not serve simultaneously on more than three public company audit committees, including the Company’s audit committee, except with the prior approval of the Board.

13. Retirement Age and Term Limits

The Board does not believe it should establish term limits. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to term limits, the Governance Committee, in conjunction with the CEO, formally reviews each director’s continuation on the Board every year. This also allows each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board.

The Board has adopted a policy that, unless it is determined in a particular instance that longer tenure is in the best interests of the Board or the Company: (1) no director shall be nominated for re-election at an annual stockholders meeting coinciding with or next following his or her 72nd birthday and (2) inside directors shall retire on the date of their retirement or termination of employment with the Company or its affiliates.

Board Compensation

14. Board Compensation

The form and amount of director compensation is approved by the Board, upon recommendation of the Compensation Committee. In making its recommendation, the Compensation Committee considers: (1) both direct and indirect forms of compensation to the Company’s directors, including any charitable contributions by the Company to organizations in which a director is affiliated and consulting or other similar arrangements between the Company and a director, and (2) the impact on the director’s independence of the amount and form of director compensation. The Company’s Human Resources Department monitors director compensation in relation to other comparable U.S. companies on an ongoing basis and recommends to the Compensation Committee changes in the Company’s director compensation program it deems appropriate. The Compensation Committee may also, in its sole discretion after considering such independence factors as may be required by the Applicable Listing Rules or applicable SEC rules, retain or obtain the advice of a compensation consultant, legal counsel or other advisor to assist it as the Compensation Committee determines necessary or appropriate.

Directors’ fees are the only compensation a member of the Company's Audit Committee may receive from the Company.

Board Performance

15. Assessing the Board's Performance

The form and amount of director compensation is approved by the Board, upon recommendation of the Compensation Committee. In making its recommendation, the Compensation Committee considers: (1) both direct and indirect forms of compensation to the Company’s directors, including any charitable contributions by the Company to organizations in which a director is affiliated and consulting or other similar arrangements between the Company and a director, and (2) the impact on the director’s independence of the amount and form of director compensation. The Company’s Human Resources Department monitors director compensation in relation to other comparable U.S. companies on an ongoing basis and recommends to the Compensation Committee changes in the Company’s director compensation program it deems appropriate. The Compensation Committee may also, in its sole discretion after considering such independence factors as may be required by the Applicable Listing Rules or applicable SEC rules, retain or obtain the advice of a compensation consultant, legal counsel or other advisor to assist it as the Compensation Committee determines necessary or appropriate. Directors’ fees are the only compensation a member of the Company's Audit Committee may receive from the Company.

16. Board Interaction with Institutional Investors, the Press, Customers, etc.

The Board believes that management generally should speak for the Company. While individual Board members may, from time to time, meet or otherwise communicate with various constituencies that are involved with the Company, it is expected that Board members would do this with the knowledge of management and, in most instances, at the request of management. In its discretion, the Board may interact with the Company’s stockholders as appropriate.

Board Relationship to Senior Management

17. Regular Attendance of Non-Directors at Board Meetings

The General Counsel and/or the Secretary are the only non-directors generally present at each Board meeting for its duration. The officers who compose the senior management attend meetings for operational, financial and related presentations. Other officers attend on an invitation basis for presentations or other purposes.

18. Board Access to Senior Management

Board members have complete access to Company management. It is assumed that Board members will use judgment to be sure that this contact is not distracting to the Company and that such contact, if in writing, be copied to the CEO. Furthermore, the Board encourages management to, from time to time, bring managers into Board Meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas, and/or (b) represent managers with future potential that senior management believes should be given exposure to the Board.

Meeting Procedures

19. Board Meetings

Board policy requires at least four Board meetings per year. Board meetings are scheduled a year in advance. Changes to the schedule are made as needed by the Chairman in consultation with other Board members and appropriate members of management. Directors are expected to attend in person and participate in Board and committee meetings, and to participate telephonically when they are unable to attend in person. On occasions when a director is unable to attend a meeting, he or she is expected to notify the Chairman of the Board or appropriate committee in advance of such meeting.

The Chairman, in consultation with other Board members or members of management, as appropriate, establishes the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda.

Any member of the Board may act to convene the Board as necessary or desirable in the event the Chairman is incapacitated.

20. Board Materials

Financial and economic information about the Company is provided to the Board on a regular basis. Generally information and data that is important to the Board’s understanding of the business to be conducted at a meeting will be distributed in writing to the Board an adequate time before the Board meets. Management will make every attempt to see that this material is as brief as possible while still providing the desired information. On those occasions in which the subject matter is too sensitive to put on paper, the Chairman may elect to contact each director by telephone in advance of the meeting to notify them of the principle issues the Board will consider. Directors are expected to review and devote appropriate time to studying Board materials.

21. Board Presentations

As a general rule, presentations on specific subjects are sent to the Board members in advance so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the material.

22. Annual Meeting of Shareholders

Each director is strongly encouraged to attend the Company’s Annual Meeting of Shareholders.

Committee Matters

23. Number of Committees

There are currently four standing Board committees: Audit, Compensation, Executive and Governance. The Board may form, merge or dissolve any Committee the Board determines in the best interests of the Company, to the extent consistent with the Applicable Listing Rules.

24. Committee Assignment and Rotation

The Board has not adopted a specific tenure policy for Committee Chairs. Committee assignments, including Chairs, are evaluated annually and rotated as appropriate. All Committee changes are approved by the Board, upon recommendation of the Governance Committee.

25. Frequency and Length of Committee Meetings

Committee meetings (other than for the Executive Committee) are normally held on the day preceding, or the morning of, each regularly scheduled Board meeting. Committee meetings are scheduled a year in advance. Changes to the schedule are made as needed by the Committee Chair in consultation with, as appropriate, other members of the Committee and members of management. Each Committee Chair makes a report on Committee matters to the Board at the next scheduled Board meeting.

26. Committee Agenda

The Chair of the Committee in consultation with, as appropriate, other members of the Committee and members of management, develops the Committee’s agenda. A preliminary annual schedule of Committee agenda subjects is issued each year. The final agenda is set by the Committee Chair in consultation with, as appropriate, other members of the Committee and members of management prior to each meeting. Each Committee’s agenda is shared with the Board.

27. Committee Charters

The standing Committees operate pursuant to their charters adopted by the Board, which set forth the responsibilities and procedures that the Committee must follow. The Committee charters are set forth in Appendix A attached hereto. Each Committee annually reviews its charter and recommends to the Board any changes it deems necessary.

Leadership Development

28. Formal Evaluation of the CEO

The Compensation Committee will review and approve corporate goals and objectives for CEO compensation, evaluate the CEO’s performance in light of those goals and objectives and determine and approve the CEO’s compensation level. The Board will provide input to the Compensation Committee on the CEO’s performance.

29. Succession Planning and Management Development

The Board of Directors has adopted and shall review at least annually a succession plan for key management personnel, including the position of CEO. To assist the Board in this function, the CEO shall meet at least annually with the Board to report on succession planning.

The CEO has recommended, and the Governance Committee and Board of Directors have approved, an emergency CEO succession plan, which will become effective in the event the CEO becomes unable to perform his or her duties. The emergency CEO succession plan will be reviewed at least annually by the Board and any changes must be approved by the Board.

The Board will oversee the creation and maintenance of a program of management development. The CEO will review the program annually with the Board.

Approved by Board of Directors: February 11, 2016

Equity Award Guidelines

The Board of Directors (the “Board”) of Western Digital Corporation (the “Company”) recognizes that the granting of equity awards presents specific accounting, tax and legal issues and has therefore adopted these guidelines which shall be followed in connection with all grants of equity awards by the Company:

  • All equity awards will be granted by the Compensation Committee of the Board.
  • The Equity Awards Committee of the Board has been eliminated and the authority to grant equity awards to the Company’s non-Section 16 officers cannot be delegated to members of management.
  • All equity awards will be made by the Compensation Committee at telephonic or in-person meetings.
  • The Compensation Committee may not make any equity awards by Unanimous Written Consent.
  • Compensation Committee meetings will be pre-scheduled in advance to take place outside of Company-established blackout periods.
  • All equity grants must be fully documented and the documentation must be provided in advance to the Compensation Committee prior to committee approval.
  • Each stock option award granted to an individual shall clearly define the exercise price and the grant date of such option.
  • The exercise price of a Company stock option shall be the closing price of the Company’s stock on the New York Stock Exchange (or other relevant exchange) on the date of the option grant, unless applicable law requires the selection of a different exercise price.
  • The grant date of a stock option shall be the date on which the Compensation Committee votes to approve the granting of such stock option. Notice of the Compensation Committee’s grant of the stock option shall be provided to the person awarded the stock option as soon as practical, advising the grantee of the material terms of the grant.
  • No changes may be made to any awards made by the Compensation Committee.
  • The Company’s external financial statement auditors will periodically debrief the Compensation Committee regarding any changes to stock grant accounting policies and regulatory guidance.
  • The Company will implement and document routine internal audit and control procedures to ensure the Company’s compliance with generally accepted accounting principles (GAAP), and all applicable policies and procedures in the grant-making process.
  • The Company’s Finance Department will be involved in determining and verifying, and the Audit Committee will review, the financial statement impacts of equity awards.
  • The Compensation Committee will reevaluate these guidelines on an annual basis, or as additional guidance is provided by the SEC or other regulators.
  • All members of the Board will take equity awards training, as will all individuals involved in the grant-making process. The course of instruction will be reviewed and implemented with oversight by the Company’s legal counsel.

*****

As amended and restated by Board of Directors on August 6, 2008

Code of Business Ethics

I. Purpose and Scope

The Board of Directors of Western Digital Corporation (with its subsidiaries, the "Company") has adopted this Code of Business Ethics (this "Code") to:

  • promote honest and ethical conduct, including the ethical handling of conflicts of interest;
  • promote full, fair, accurate, timely and understandable disclosure in Company reports;
  • promote compliance with applicable laws and governmental rules and regulations;
  • promote prompt internal reporting of violations of this Code;
  • ensure the protection of the Company's legitimate business interests, including corporate opportunities, assets and confidential information; and
  • deter wrongdoing.

The Code provides a framework for ethical business conduct and is not intended to establish rules governing every possible instance that could arise. The Code can only set forth general legal and ethical principles, and directors, officers and employees must use good judgment and common sense in applying them, and in deciding when to seek guidance from others as to the appropriate course of conduct.

The Company's more detailed policies and procedures set forth in the Western Digital Corporation Global Code of Conduct are separate requirements applying to officers and employees of the Company and are not part of this Code. This Code does not terminate or amend any other policies of the Company.

If any individual has questions about this Code, or about the appropriate course of conduct under the Code, he or she should contact his or her supervisor, the Human Resources Department or the Legal Department.

II. Honest and Ethical Conduct

Each director, officer and employee must demonstrate honest and ethical conduct in fulfilling his or her duties, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

III. Fair Dealing

Each director, officer and employee should endeavor to deal fairly with the Company's customers, suppliers, competitors and employees. No one should take unlawful and unfair advantage of the Company's customers, suppliers, competitors and employees through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice.

IV. Conflicts of Interest

A "conflict of interest" occurs when an individual's private interest interferes or appears to interfere with the interests of the Company. A conflict of interest can arise when a director, officer or employee takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. For example, a conflict of interest may arise if a director, officer or employee, or a member or his or her family, receives improper personal benefits as a result of his or her position in the Company. Conflicts of interest must, whenever possible, be avoided.

V. Corporate Opportunity

Directors, officers and employees are prohibited from (a) taking for themselves or diverting to others any opportunities that properly belong to the Company or are discovered through the use of corporate property, information or positions; (b) using corporate property, information or position for improper personal gain; and (c) competing with the Company. Directors, officers and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

VI. Confidentiality

Directors, officers and employees must maintain the confidentiality of confidential information entrusted to them by the Company, its customers and suppliers, except when disclosure is authorized by the Company or legally mandated.

Confidential information includes all non-public information that might be of use to the Company’s competitors, or that could be harmful to the Company, its customers or suppliers, if disclosed.

VII. Disclosure

Each director, officer or employee involved in the Company's disclosure process, including the chief executive officer, the chief financial officer, the chief accounting officer and the controller (the "Senior Financial Officers"), is required to be familiar with and comply with the Company's disclosure controls and procedures and internal control over financial reporting, to the extent relevant to his or her area of responsibility, so that the Company's public reports and documents filed with the Securities and Exchange Commission (the "SEC") comply in all material respects with the applicable federal securities laws and SEC rules. In addition, each such person having direct or supervisory authority regarding these SEC filings or the Company's other public communications concerning its general business, results, financial condition and prospects should, to the extent appropriate within his or her area of responsibility, consult with other Company officers and employees and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

VIII. Protection and Proper Use of Company Assets

Directors, officers and employees must, in all practicable ways, protect the Company's assets and ensure their efficient use. All Company assets must be used for legitimate business purposes.

IX. Compliance with Laws

It is the Company's policy to comply with all applicable laws and governmental rules and regulations. It is the personal responsibility of each director, officer and employee to adhere to the standards and restrictions imposed by those laws, rules and regulations. Employees located outside of the United States must comply with applicable local laws in addition to the applicable laws and governmental rules and regulations of the United States.

It is against Company policy and a violation of federal securities laws for a director, officer or employee to trade in securities (or to advise others to trade) while in possession of "inside information" about the Company. Inside information is any information (either positive or negative) which a reasonable investor would likely consider important in deciding whether to buy or sell the Company's securities, that has not been adequately publicly disclosed. This Company policy also applies to trading in securities of any companies that a director, officer or employee is familiar with by virtue of his or her work for the Company while in possession of inside information concerning such companies.

X. Reporting of Illegal or Unethical Behavior

The Company's commitment to its values includes ensuring that any person with a good-faith concern about potentially unethical conduct can report it in the way in which they feel most comfortable. This includes reports of conduct that would violate this Code, the Company's Global Code of Conduct, or applicable laws. Concerns may be reported by anyone, and they may be reported to a supervisor (for employees), the Human Resources Department, the Legal Department, the Ethics and Compliance team, or directly to the Company's Ethics Hotline.

The Company's Ethics Hotline can be reached by web at http://www.wdchotline.com, or at the phone numbers listed below. Both options allow people reporting concerns to remain anonymous, and the Company does not permit retaliation against any individual for raising a good-faith concern. Retaliation is considered a violation of our Global Code of Conduct and is subject to discipline.

Ethics Hotline phone numbers:

  • United States: 877-548-6716
  • China: 4008810209
  • Japan: 0066-33-830444 (Softbank); or 00531-11-0214 (KDD); or 0034-800-600069 (NTT)
  • Malaysia: 1-800-81-6497
  • Philippines: Dial 105-11 (English) or 105-12 (Taglog), then dial 855-216-6129 at the prompt
  • Thailand: 001-800-11-0027437
  • All other countries: Dial your country's AT&T Direct Access Code from this list, then dial 877-548-6716 at the prompt

XI. Accountability and Adherence to Code

All directors, officers and employees of the Company are expected to be familiar with the Code and to adhere to those principles and procedures set forth in the Code that apply to them.

The Audit Committee shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code and may include written notices to the individual involved that the Audit Committee has determined that there has been a violation, censure by the Audit Committee, demotion or re-assignment of the individual involved, suspension with or without pay or benefits, and/or termination of the individual's employment or services. The Audit Committee or its designee shall determine what action is appropriate and in a particular case may take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question has committed other violations in the past.

XII. Amendment, Modification and Waiver

This Code may be amended, modified or waived by the Board of Directors and waivers also may be granted by the Audit Committee subject to the disclosure and other provisions of the Securities Exchange Act of 1934, and the rules thereunder, and the applicable rules of the New York Stock Exchange ("NYSE"). Any changes to or waivers of this Code will, to the extent required, be promptly disclosed as provided by SEC or NYSE rules.

XIII. Applicable Law

The Code is subject to all applicable law. Nothing in the Code is intended to require any action contrary to law. In the event that the Code conflicts with any law, directors, officers and employees must comply with the law. Nothing in the Code is intended or will be considered (1) to amend the Certificate of Incorporation or By-laws of the Company, (2) to change the legal duties imposed upon directors, officers or employees under state, federal and other applicable statutes, rules and regulations, (3) to expand the liabilities of directors, officers or employees beyond applicable law, or (4) to affect any rights available to directors, officers or employees under state and other applicable law or the Company's Certificate of Incorporation or By-laws. Directors and officers shall also be entitled to the benefits of indemnification to the fullest extent permitted by law, the Company's Certificate of Incorporation and By-laws, and to exculpation as provided by state law and the Company's Certificate of Incorporation.

Approved by Board of Directors: February 4, 2015

Ethics Hotline

The Hotline is managed by Global Compliance Services, Inc., a leading provider of customized hotline services, and is staffed 24 hours a day, 365 days a year. While primarily intended for current Western Digital employees, the hotline may be used by other interested parties, including vendors, customers and former employees.

To make a report via telephone, dial 1-877-548-6716.

To make a report via the web, access the web-based Ethics Hotline reporting system at: http://www.wdchotline.com/.

Employees are encouraged to report suspected instances of ethical misconduct within Western Digital, including:

  • Trading on inside information or providing illegal tips
  • Workplace harassment or discrimination
  • Illegal gifts or bribes to or from government officials, vendors or customers
  • Fraud, embezzlement or theft
  • Questionable accounting or auditing matters
  • Conflict mineral sourcing

The Ethics Hotline is intended to provide employees with another avenue for reporting suspected misconduct. Employees may use the Hotline if they believe that a problem cannot be addressed through their supervisors or the human resources staff, and employees may remain completely anonymous when they communicate with the Hotline’s operators. Western Digital will not allow any retaliation against an employee who contacts the Hotline and reports suspected misconduct in good faith.

Global Code of Conduct

Western Digital Corporation’s Global Code of Conduct provides information about the minimum standards of integrity that Western Digital Corporation expects all of its employees worldwide (including those of WDC’s subsidiaries) to follow and takes into account varying practices due to cultural differences in international locations. The standards set forth in the Global Code of Conduct are supported by more detailed Company policies and procedures, which are issued in various geographic regions to supplement or implement those standards. These policies and procedures provide clear, specific directions concerning many of the business practices and behaviors discussed in the Code.

A copy of the Global Code of Conduct in the appropriate language is given, or is available online, to all employees of Western Digital Corporation (including employees of domestic and foreign subsidiaries). In addition, new employees are given a copy of the Code of Conduct on their first day of employment. All employees are informed that they are expected to comply with the provisions of the Code of Conduct and that failure to do so is regarded as misconduct that can result in disciplinary action.

Each year, senior members of management and several hundred key designated employees worldwide are required to complete an online questionnaire certifying that they have complied with the provisions of the Global Code of Conduct. This certification process is required by the Audit Committee and is managed by the Corporation’s General Counsel.

Anti-Corruption

Western Digital Corporation believes it is essential that its employees and business partners comply with global anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, and the anti-bribery laws of the countries in which the Company operates.

Western Digital prohibits any of its or its subsidiaries’ employees, consultants, agents or representatives from corruptly seeking to obtain or retain business by offering, paying or offering to pay money or provide other things of value to foreign or commercial officials for the purposes of:

  • Influencing any act or decision of such official in his/her official capacity, or
  • Inducing such official to do or omit to do any act in violation of his/her official duty, or
  • Inducing such official to use his/her influence with a foreign government or instrumentality thereof to affect or influence a governmental act or decision, or
  • Securing an improper advantage

Western Digital has published a comprehensive policy relating to Anti-Corruption, which is published on the Company’s internal website. In addition, compliance with the provisions of global anti-corruption laws is discussed in both the Company’s Global Code of Conduct and Employee Handbook.

Director Stock Ownership Guidelines

The Board of Directors of the Company believes that directors should own and hold common stock of the Company to further align their interests and actions with the interests of the Company’s stockholders.  Therefore, the Board of Directors has adopted the following Director Stock Ownership Guidelines.

1. Participation

The Director Stock Ownership Guidelines apply to the non-employee directors of the Company (each, a “Non-Employee Director”).  In the event that a director also serves as an executive of the Company, the director will be subject to any executive stock ownership guidelines covering the executive in lieu of these Director Stock Ownership Guidelines.

2. Qualifying Shares for Executive Stock Ownership Guidelines

Stock that counts toward satisfaction of these Director Stock Ownership Guidelines includes (“Qualifying Shares”):

  • stock purchased on the open market;
  • stock obtained through stock option exercises or pursuant to the Company’s Employee Stock Purchase Plan;
  • restricted stock and restricted stock units;
  • deferred stock units; and
  • stock beneficially owned in a trust, by a spouse and/or minor children.

Shares of stock that Non-Employee Directors have the right to acquire through the exercise of stock options (whether or not vested) are not included as Qualifying Shares for Director Stock Ownership Guideline purposes.

3. Director Stock Ownership Guidelines

Directors of the Company must own Qualifying Shares with a market value equal to $375,000.    Non-Employee Directors are prohibited from selling any shares of Company stock unless such Non-Employee Director is in compliance with these Guidelines.  Notwithstanding the preceding sentence, Non-Employee directors may sell or otherwise dispose of shares of Company stock (i) in connection with a same-day-sale stock option transaction, (ii) to pay the exercise price of Company stock options in a net-share stock option transaction and/or (iii) to satisfy any applicable tax withholding obligations due in connection with the exercise of options or the vesting or payment of any restricted shares, restricted stock units or deferred stock units.

4. Exceptions

There may be instances where these Director Stock Ownership Guidelines would place a severe hardship on a Non-Employee Director.  In such instances, the Governance Committee will make the final decision as to developing an alternative stock ownership guideline for the Non-Employee Director that reflects both the intention of these Director Stock Ownership Guidelines and the personal circumstances of the Non-Employee Director.

(Amended and Restated Effective August 4, 2014)

Executive Stock Ownership Guidelines

The Board of Directors of the Company believes that certain executives should own and hold common stock of the Company to further align their interests and actions with the interests of the Company’s stockholders. Therefore, the Board of Directors has adopted the following Executive Stock Ownership Guidelines, effective February 6, 2008.

1. Participation

The Company’s Executive Stock Ownership Guidelines apply to the following executives (each a “Covered Executive”):

  • Chief Executive Officer;
  • President and Division Presidents;
  • Executive Vice Presidents; and
  • Senior Vice Presidents.

In the event that a Covered Executive also serves as a member of the Board of Directors, the Covered Executive will be subject to these Executive Stock Ownership Guidelines in lieu of any stock ownership guidelines applicable to members of the Board of Directors.

2. Qualifying Shares for Executive Stock Ownership Guidelines

Stock that counts toward satisfaction of these Executive Stock Ownership Guidelines includes (“Qualifying Shares”):

  • stock purchased on the open market;
  • stock obtained through stock option exercises or pursuant to the Company’s Employee Stock Purchase Plan;
  • restricted stock and restricted stock units;
  • deferred stock units; and
  • stock beneficially owned in a trust, by a spouse and/or minor children.

Shares of stock that Covered Executives have the right to acquire through the exercise of stock options (whether or not vested) are not included as Qualifying Shares for Executive Stock Ownership Guideline purposes.

3. Executive Stock Ownership Guidelines

Achievement of Required Market Value

The Company’s Executive Stock Ownership Guidelines require each Covered Executive to achieve ownership of a number of Qualifying Shares with a market value equal to a multiple of the Covered Executive’s base salary (in effect upon the later of February 6, 2008 or the date he or she first becomes a Covered Executive). The market value of the Qualifying Shares each Covered Executive is required to own or hold (the Covered Executive’s “Required Market Value”) is as follows:

  • Chief Executive Officer: A multiple of five (5) times the executive’s base salary
  • President and Division Presidents:  A multiple of three (3) times the executive’s base salary.
  • Executive Vice Presidents:  A multiple of two (2) times the executive’s base salary.
  • Senior Vice Presidents:  A multiple of one (1) times the executive’s base salary.

Covered Executives are required to achieve ownership of a number of Qualifying Shares meeting the Required Market Value within the later of February 6, 2013 or three (3) years after first being designated as a Covered Executive. As explained in more detail below, a Covered Executive's Required Market Value will be re-calculated as a result of a change in base salary and, if applicable, a change in title. Otherwise, once established, a Covered Executive's Required Market Value will not change as a result of any fluctuations in the market price of the Company's common stock or in the event of a stock split, reverse stock split, stock dividend or similar change in the Company's capital structure.

Ownership of Required Share Level

On the trading day the Covered Executive achieves ownership of Qualifying Shares meeting his or her Required Market Value (the Covered Executive’s “Achievement Date”), the Covered Executive’s Required Market Value will be converted into a number of shares based on the closing market price of a share of common stock on the Achievement Date. The resulting number of shares is referred to as the Covered Executive’s “Required Share Level.” Once a Covered Executive’s Required Share Level is determined, the Covered Executive must maintain ownership of a number of Qualifying Shares meeting the Required Share Level for so long as he or she remains a Covered Executive. The Covered Executive’s Required Share Level will not increase except in connection with a change in the Covered Executive’s Required Market Value as a result of a change in title or change in base salary after determination of the Required Share Level.

In the event of a stock split, reverse stock split, stock dividend or other similar change in the Company’s outstanding capital stock, the Governance Committee will evaluate whether to adjust the Required Share Level for any Covered Executive whose Required Share Level has been established as of the date of the change in capital structure. Otherwise, once established, a Covered Executive’s Required Share Level will not change as a result of fluctuations in the market price of the Company’s common stock.

Change in Title or Base Salary

If a Covered Executive’s Required Market Value increases because of a change in title or increase in base salary, a three (3) year period to achieve share ownership meeting the incremental increase in the applicable Required Market Value begins with the date of the title change or base salary increase.  On the Achievement Date with respect to the incremental increase in the Covered Executive’s Required Market Value, the incremental Required Market Value will be converted into a number of shares based on the closing market price of a share of common stock on the Achievement Date.  The resulting number of shares will be added to the Covered Executive’s then-current Required Share Level.

If, after a Covered Executive’s Achievement Date, the Covered Executive’s Required Market Value decreases because of a change in title or decrease in base salary, the Covered Executive’s Required Share Level will be reduced by a number of shares equal to the applicable decrease in Required Market Value, divided by the closing market price of a share of common stock on the effective date of the title change or base salary reduction.  A decrease in Required Market Value as a result of a change in title or decrease in base salary prior to a Covered Executive’s Achievement Date will not affect the period of time in which the Covered Executive must meet the revised Required Market Value.

4. Exceptions

There may be instances where these Executive Stock Ownership Guidelines would place a severe hardship on a Covered Executive. In such instances, the Governance Committee will make the final decision as to developing an alternative stock ownership guideline for the Covered Executive that reflects both the intention of these Executive Stock Ownership Guidelines and the personal circumstances of the Covered Executive.

(Amended and Restated Effective August 7, 2012)

Article I : Offices

1.01 Registered Office.

The registered office of Western Digital Corporation (this "Corporation") in the State of Delaware shall be at 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, and the name of the registered agent in charge thereof shall be Corporation Service Company.

1.02 Principal Office.

The principal office for the transaction of the business of this Corporation shall be 3355 Michelson Drive, in the City of Irvine, County of Orange, State of California. The Board of Directors (the "Board") is hereby granted full power and authority to change said principal office from one location to another.

1.03 Other Offices.

This Corporation may also have such other offices at such other places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of this Corporation may require.

Article II : Meetings Of Stockholders

2.01 Annual Meetings.

If required by applicable law, annual meetings of the stockholders of this Corporation shall be held for the purpose of electing directors and for the transaction of such proper business as may come before such meetings.

2.02 Special Meetings.

Special meetings of the stockholders may be called at any time by the Board, the Chairman of the Board or the President.

2.03 Place of Meetings.

All meetings of the stockholders shall be held at such time, date and place, if any, within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. This Corporation may postpone, reschedule or cancel any meeting of stockholders previously scheduled by the Board.

2.04 Notice of Meetings.

Whenever stockholders are required or permitted to take any action at a meeting, a notice of the meeting shall be given that shall state the place, if any, the date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these By-laws, the notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of this Corporation. Notice to stockholders hereunder may be given by a form of electronic transmission in accordance with applicable law if consented to by the stockholders to whom the notice is given.

2.05 Adjournments.

Any meeting of stockholders, annual or special, may be adjourned from time to time for any reason, whether or not a quorum is present, to reconvene at the same or some other place, if any, by either

  1. the chairman of the meeting or
  2. a majority in voting power of the stockholders present in person or by proxy and entitled to vote thereon.

Notice need not be given of any such adjourned meeting if the time and place, if any, or means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting at which a quorum shall be present or represented, this Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

2.06 Quorum.

Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, at each meeting of stockholders the presence in person or by proxy of the holders of a majority in voting power of the outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum for the transaction of business thereat. In the absence of a quorum, then either

  1. the chairman of the meeting or
  2. a majority in voting power of the stockholders present in person or by proxy and entitled to vote thereon,

shall have power to adjourn the meeting from time to time in the manner provided in Section 2.05 of these By-laws until a quorum shall be present or represented.

 

2.07 Voting.

  1. Except as otherwise provided by or pursuant to the provisions of the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question and which shall have been held by and registered in the name of the stockholder on the books of this Corporation on the date fixed pursuant to Section 2.10 of these By-laws as the record date for the determination of stockholders entitled to notice of and to vote at a meeting.
  2. Shares of its own stock belonging to this Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by this Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of this Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of this Corporation the pledgor shall have expressly empowered the pledgee to vote thereon. Stock having voting power that is held of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants in common, tenants by entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware (the "General Corporation Law").
  3. Any such voting rights may be exercised by the stockholder entitled thereto in person or by the stockholder's proxy; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. The attendance at any meeting of a stockholder who may theretofore have given a proxy which is not irrevocable shall not have the effect of revoking the same, unless the stockholder shall attend the meeting and vote in person or deliver to the Secretary prior to the voting of the proxy a revocation of the proxy or a new proxy bearing a later date. At any meeting of the stockholders at which a quorum is present all matters, except as otherwise provided in the Certificate of Incorporation, these By-laws, the rules or regulations of any stock exchange applicable to this Corporation, or applicable law or pursuant to any regulation applicable to this Corporation or its securities, shall be decided by the vote of a majority in voting power of the stockholders present in person or by proxy and entitled to vote thereon. The vote at any meeting of the stockholders on any question need not be by written ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his or her proxy, if there be such proxy, and it shall state the number of shares voted.

2.08 List of Stockholders.

The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting at least ten (10) days prior to the meeting

  1. on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or
  2. during ordinary business hours at the principal place of business of this Corporation.

The list of stockholders must also be open to examination at the meeting as required by applicable law. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.08 or to vote in person or by proxy at any meeting of stockholders.

 

2.09 Inspector of Elections.

This Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of this Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. This Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector is so appointed or designated or any inspector so appointed or designated is unable to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall

  1. ascertain the number of shares of capital stock of this Corporation outstanding and the voting power of each such share,
  2. determine the shares of capital stock of this Corporation represented at the meeting and the validity of proxies and ballots,
  3. count all votes and ballots,
  4. determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and
  5. certify their determination of the number of shares of capital stock of this Corporation represented at the meeting and such inspectors' count of all votes and ballots. Such certification and report shall specify such other information as may be required by law.

In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of this Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

 

2.10 Fixing Date for Determination of Stockholder of Record.

In order that this Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date:

  1. in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and
  2. in the case of any other action, shall not be more than sixty (60) days prior to such other action.

If no record date is fixed:

  1. the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and
  2. the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

2.11 Stockholder Proposals and Nominations.

  1. Annual Meetings of Stockholders.
    1. Nominations of persons for election to the Board and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only
      1. pursuant to this Corporation's notice of meeting (or any supplement thereto),
      2. by or at the direction of the Board or
      3. by any stockholder of this Corporation who was a stockholder of record of this Corporation at the time the notice provided for in this Section 2.11 is delivered to the Secretary of this Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.11.
    2. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of paragraph (a)(i) of this Section 2.11, the stockholder must have given timely notice thereof in writing to the Secretary of this Corporation and any such proposed business other than the nominations of persons for election to the Board must constitute a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of this Corporation not later than the close of business on the ninetieth day nor earlier than the close of business on the one hundred twentieth day prior to the first anniversary of the preceding year's annual meeting (provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth day prior to such annual meeting and not later than the close of business on the later of the ninetieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by this Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth:
      1. as to each person whom the stockholder proposes to nominate for election as a director
        1. all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder,
        2. such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and
        3. include a completed and signed questionnaire, representation and agreement required by Section 2.11(c) of these Bylaws;
      2. as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the By-laws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and
      3. as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made
        1. the name and address of such stockholder, as they appear on this Corporation's books, and of such beneficial owner,
        2. the class or series and number of shares of capital stock of this Corporation which are owned beneficially and of record by such stockholder and such beneficial owner as of the date of the notice, and a representation that the stockholder will notify this Corporation in writing within five (5) business days after the record date for such meeting of the class or series and number of shares of capital stock of this Corporation owned of record by the stockholder and such beneficial owner as of the record date for the meeting,
        3. a description of any agreement, arrangement or understanding, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner), with respect to the nomination or proposal between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing (including, in the case of a nomination, the nominee), and a representation that the stockholder will notify this Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting,
        4. a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) involving such stockholder or beneficial owner that is in effect as of the date of the stockholder's notice, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of this Corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit from share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to securities of this Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of the shares of capital stock of this Corporation, and the class or series and number of shares of this Corporation's capital stock that relate to such agreements, arrangements or understandings and a representation that the stockholder will notify this Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding of this nature in effect as of the record date for the meeting,
        5. a description of any proxy (other than a revocable proxy or consent given in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), agreement, arrangement, understanding or relationship in effect as of the date of the notice pursuant to which such stockholder or such beneficial owner has or shares a right to vote or direct any third party to vote any shares of capital stock of this Corporation and a representation that the stockholder will notify this Corporation in writing within five (5) business days after the record date for such meeting of any proxy, agreement, arrangement, understanding or relationship of this nature in effect as of the record date for the meeting,
        6. a representation that the stockholder is a holder of record of stock of this Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination,
        7. a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of this Corporation's outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination, and
        8. any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.
        The foregoing notice requirements of this paragraph (a)(ii) of this Section 2.11 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified this Corporation of his or her intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder's proposal has been included in a proxy statement that has been prepared by this Corporation to solicit proxies for such annual meeting. This Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of this Corporation.
    3. Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 2.11 to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is increased effective after the time period for which nominations would otherwise be due under paragraph (a)(ii) of this Section 2.11 and there is no public announcement by this Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 2.11 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of this Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by this Corporation.
  2. Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to this Corporation's notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to this Corporation's notice of meeting
    1. by or at the direction of the Board or
    2. provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of this Corporation who is a stockholder of record at the time the notice provided for in this Section 2.11 is delivered to the Secretary of this Corporation, who is entitled to vote at the meeting upon such election and who complies with the notice procedures set forth in this Section 2.11.
    In the event this Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in this Corporation's notice of meeting, if the stockholder's notice required by paragraph (a)(ii) of this Section 2.11 shall be delivered to the Secretary at the principal executive offices of this Corporation not earlier than the close of business on the one hundred twentieth day prior to such special meeting and not later than the close of business on the later of the ninetieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above.
  3. Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee for election or reelection as a director of this Corporation, the candidate for nomination must have previously delivered (in accordance with the time periods prescribed for delivery of notice under this Section 2.11), to the Secretary at the principal executive offices of this Corporation,
    1. a completed written questionnaire (in a form provided by this Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and
    2. a written representation and agreement (in form provided by this Corporation) that such candidate for nomination
      1. is not and, if elected as a director during his or her term of office, will not become a party to
        1. any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of this Corporation, will act or vote on any issue or question (a "Voting Commitment") or
        2. any Voting Commitment that could limit or interfere with such proposed nominee's ability to comply, if elected as a director of this Corporation, with such proposed nominee's fiduciary duties under applicable law,
      2. is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than this Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed therein and
      3. if elected as a director of this Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of this Corporation applicable to directors and in effect during such person's term in office as a director (and, if requested by any candidate for nomination, the Secretary of this Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
  4. General.
    1. Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 2.11 shall be eligible to be elected at an annual or special meeting of stockholders of this Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.11. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty
      1. to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.11 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder's nominee or proposal in compliance with such stockholder's representation as required by clause (a)(ii)(C)(7) of this Section 2.11) and
      2. if any proposed nomination or business was not made or proposed in compliance with this Section 2.11, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted.
      Notwithstanding the foregoing provisions of this Section 2.11, unless otherwise required by law, if the stockholder does not provide the information with respect to which such stockholder represented under clause (a)(ii)(C) of this Section 2.11 it would notify this Corporation in writing within five (5) business days after the record date for the meeting of stockholders or if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of this Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by this Corporation. For purposes of this Section 2.11, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders prior to the making of such nomination or proposal at such meeting.
    2. For purposes of this Section 2.11, "public announcement" shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by this Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
    3. Notwithstanding the foregoing provisions of this Section 2.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11; provided however, that any references in these By-laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 2.11 (including paragraphs (a)(i)(C) and (b) hereof), and compliance with paragraphs (a)(i)(C) and (b) of this Section 2.11 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the penultimate sentence of (a)(ii), business other than nominations brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time). Nothing in this Section 2.11 shall be deemed to affect any rights
      1. of stockholders to request inclusion of proposals or nominations in this Corporation's proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act or
      2. of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.

2.12 Conduct of Meetings.

The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to postpone, convene and (for any reason or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding person over the meeting, may include, without limitation, the following:

  1. the establishment of an agenda or order of business for the meeting;
  2. rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting);
  3. limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall, in his or her discretion, determine;
  4. restrictions on entry to the meeting after the time fixed for the commencement thereof; and
  5. limitations on the time allotted to questions or comments by participants.

The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

2.13 Orqanization

Meetings of stockholders shall be presided over by the Chairman of the Board, or in his or her absence by the Vice Chairman, if any, or in his or her absence, by the Chief Executive Officer or, in his or her absence, by a person designated by the Board, or in the absence of such designation by a person chosen by a majority vote of the stockholders present in person or represented by proxy at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the person presiding over the meeting may appoint any person to act as secretary of the meeting.

 

Article III : Board of Directors

3.01 General Powers.

Subject to the requirements of the General Corporation Law, the property, business and affairs of this Corporation shall be managed by the Board.

3.02 Number and Term of Office.

The Board shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board. Directors need not be stockholders. Each of the directors of this Corporation shall hold office until his or her successor shall have been duly elected and shall qualify or until he or she shall resign or shall have been removed in the manner provided in these By-laws.

3.03 Election of Directors.

  1. The directors shall be elected annually by the stockholders of this Corporation. Except as otherwise provided in Section 3.05 below, each director shall be elected by the vote of a majority of the votes cast with respect to such director's election at any annual or special meeting for the election of directors at which a quorum is present. If, however, as of the tenth (10th) day preceding the date the notice of the meeting is first mailed for such meeting to the stockholders of this Corporation, the number of nominees exceeds the number of directors to be elected (a "Contested Election"), the nominees receiving the greatest number of votes of the shares represented in person or by proxy at the meeting and entitled to vote on the election of directors, up to the number of directors to be elected, shall be the directors. For purposes of this Section 3.03, a "majority of the votes cast" means that the number of shares voted "for" a nominee must exceed the number of votes cast "against" that nominee (with "abstentions" and "broker non-votes" not counted as a vote cast either "for" or "against" that director's election).
  2. If an incumbent director is not reelected but would otherwise remain in office until his or her successor is elected and qualified, the director shall offer to tender his or her resignation to the Board, which may be conditioned upon acceptance of such resignation by the Board. If a resignation is so conditioned, the Governance Committee of the Board, or such other committee designated by the Board pursuant to Section 3.15 below, will evaluate any such resignation in light of the best interests of this Corporation and its stockholders and will make a recommendation to the Board on whether to accept or reject such resignation or whether other action should be taken with respect thereto. In making its recommendation, such committee may consider any factors it deems relevant, including the director's qualifications, the director's past and expected future contributions to this Corporation, the overall composition of the Board and whether accepting the tendered resignation would cause this Corporation to fail to satisfy or otherwise comply with any applicable rule or regulation (including listing requirements of The NASDAQ Stock Market LLC and the federal securities laws). The Board will act on the resignation, taking into account the recommendation of such committee, and this Corporation will publicly disclose (by a press release and filing an appropriate disclosure with the Securities and Exchange Commission) the Board's decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety (90) days from the date of the certification of the election results. The director who tenders his or her resignation will not participate in the decision of the Board or Board committee.
  3. If the Board accepts a director's resignation pursuant to this By-law, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board may fill the resulting vacancy in accordance with the provisions of these By-laws or may decrease the size of the Board in accordance with the provisions of these By-laws.
  4. If no directors receive the requisite majority vote at an annual or special meeting held for the election of directors that is not a Contested Election, the incumbent Board will nominate a new slate of directors and hold a special meeting for the purpose of electing those nominees within one hundred eighty (180) days after the certification of the stockholder vote at the prior meeting. In this circumstance, the incumbent Board will continue to serve until new directors are duly elected and qualified.

3.04 Resignations.

Any director of this Corporation may resign at any time by giving notice in writing or by electronic transmission to the Board or to the Secretary of this Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt by the Board or the Secretary; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

3.05 Vacancies.

Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, may be filled by vote of the majority of the remaining directors, although less than a quorum, or by a plurality of the votes cast at a meeting of stockholders. Each director so chosen to fill a vacancy shall hold office until his or her successor shall have been elected and shall qualify or until he or she shall resign or shall have been removed in the manner provided in these By-laws. If there are no directors in office, then an election of directors may be held in the manner provided by the General Corporation Law.

3.06 Place of Meeting, Etc.

The Board may hold any of its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board by means of conference telephone or similar communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting.

3.07 Annual Meeting.

The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required, provided a quorum shall be present; or such meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board, or as shall be specified in a waiver given by each person entitled to notice.

3.08 Regular Meetings.

Regular meetings of the Board shall be held at such times and places as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same time and place on the next succeeding business day not a legal holiday.

3.09 Special Meetings.

Special meetings of the Board for any purpose or purposes may be called at any time by the Chairman of the Board, the Chief Executive Officer, the President, the Secretary or any two directors. Notice of a special meeting of the Board shall be given by the person or persons calling the meeting at least twenty-four (24) hours before the special meeting.

3.10 Quorum and Manner of Acting.

Except as otherwise provided in these By-laws, the Certificate of Incorporation or by law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such.

3.11 Action by Consent.

Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board or committee.

3.12 Removal of Directors.

Except as otherwise provided by the Certificate of Incorporation or applicable law, any director may be removed at any time, either with or without cause, by the affirmative vote of the stockholders then entitled to vote at an election of directors having a majority of the voting power of this Corporation given at an annual meeting or a special meeting of the stockholders called for such purpose.

 

3.13 Compensation.

The directors shall receive only such compensation for their services as directors as may be allowed by resolution of the Board. The Board may also provide that this Corporation shall reimburse each such director for any expense incurred by such director on account of his or her attendance at any meetings of the Board or committees of the Board. Neither the payment of such compensation nor the reimbursement of such expenses shall be construed to preclude any director from serving this Corporation or its subsidiaries in any other capacity and receiving compensation therefor.

3.14 Chairman and Vice Chairman of the Board of Directors.

This Corporation shall have a Chairman of the Board and, at its discretion, a Vice Chairman of the Board. Any such Chairman of the Board or Vice Chairman of the Board may be an officer of this Corporation if determined by the Board in its discretion. The Chairman of the Board, and in his or her absence the Vice Chairman of the Board, shall preside at all meetings of the stockholders and of the Board. The Chairman of the Board and the Vice Chairman of the Board shall have such other powers and duties as may from time to time be assigned to him or her by the Board or as may be prescribed by the By-laws.

3.15 Committees.

  1. The Board may appoint one or more committees, each consisting of one or more directors, and delegate to such committees any of the authority of the Board permitted by law except with respect to:
    1. the approval or adoption, or the making of a recommendation to the stockholders with respect to, any action or matter that is required under the General Corporation Law to be submitted to the stockholders;
    2. the filling of vacancies on the Board or on any committee;
    3. except as otherwise required by law or the rules and regulations of any nationally recognized securities exchange on which shares of this Corporation's stock are traded, the fixing of compensation of the directors for serving on the Board or on any committee;
    4. the amendment or repeal of these By-laws or the adoption of new By-laws;
    5. the amendment or repeal of any resolution of the Board which by its express terms is not amendable or repealable;
    6. distribution to the stockholders of this Corporation except at a rate or in a periodic amount or within a price range determined by the Board; or
    7. the appointment of other committees of the Board or the members thereof.
  2. Any such committee must be appointed by resolution adopted by the Board and may be designated an Executive Committee or by such other name as the Board shall specify. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The Board shall have the power to prescribe the manner in which proceedings of any such committee shall be conducted. In the absence of any such prescription, such committee shall have the power to prescribe the manner in which its proceedings shall be conducted. Unless the Board or such committee shall provide, the regular and special meetings of any such committee shall be governed by the provisions of this Article applicable to meetings and actions of the Board. Minutes shall be kept of each meeting of such committee and filed with the Secretary of this Corporation.

3.16 Executive Committee.

The passage of any resolution of the committee designated by the Board as the Executive Committee shall, in addition to any other limitations prescribed by the Board in accordance with the provisions of Section 3.15, require the affirmative vote of a majority of directors present and voting on such resolution who are not employees of this Corporation.

3.17 Rights of Inspection.

Every director shall have the right to any reasonable time to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of this Corporation and also of its subsidiaries, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and includes the right to copy and obtain extracts.

3.18 Organization.

Meetings of the Board shall be presided over by the Chairman of the Board, or in his or her absence by the Vice Chairman of the Board, if any, or in his or her absence by the Chief Executive Officer if such person is a member of the Board, or in his or her absence by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

Article IV: Officers

4.01 Corporate Officers.

  1. The officers of this Corporation shall consist of a Chief Executive Officer, a President, a Secretary and a Chief Financial Officer. At the discretion of the Board, the Chairman of the Board may be an officer of this Corporation.
  2. In addition to the officers specified in Section 4.01(a), the Board may appoint such additional officers as the Board may deem necessary or desirable, including one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers, each of whom shall hold office for such period, have such authority and perform such duties as the Board may from time to time determine. The Board may delegate to any officer of this Corporation or any committee of the Board the power to appoint, remove and prescribe the term and duties of any officer provided for in this Section 4.01(b).
  3. One person may hold two or more offices, except that the Secretary may not hold the office of President.

4.02 Appointment and Term of Office.

Each officer shall serve at the pleasure of the Board and shall hold office until a successor shall have been appointed or until such officer's death, disqualification, resignation or removal. Any officer may be removed, either with or without cause, by the Board or, except in case of an officer appointed by the Board, by any officer upon whom such power of removal may be conferred by the Board.

4.03 Resignations.

Any officer may resign at any time by giving written notice of such officer's resignation to this Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof by this Corporation. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

4.04 Vacancies.

A vacancy in any office because of death, resignation, removal or disqualification or other event, may be filled in the manner prescribed in these By-laws for regular appointments to such office.

4.05 Chairman of the Board.

The Chief Executive Officer shall have, subject to the control of the Board, general and active supervision, direction and control of the business of this Corporation and its officers, agents and employees, and shall perform all duties as may from time to time be assigned to him or her by the Board.

4.06 President.

The President of this Corporation shall have the general powers and duties of management usually vested in the office of president and general manager of a corporation and shall have such other authority and shall perform such other duties as may from time to time be assigned to him or her by the Board or Chief Executive Officer.

4.07 Secretary.

The Secretary shall keep or cause to be kept, at the principal executive office of this Corporation or at such other place as the Board may order, a book of minutes of all meetings of the stockholders, the Board and its committees, the time and place, if any, of holding such meetings, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at Board and committee meetings, the number of shares present or represented at stockholder meetings and the proceedings thereof. The Secretary shall keep, or shall cause to be kept, at the principal executive office or at the office of this Corporation's transfer agent or registrar, a share register, or a duplicate share register, showing the names of stockholders and their addresses, the number and classes of shares of stock held by each, the number and date of certificates representing such shares and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or shall cause to be given, in conformity with these By-laws, notice of all meetings of the stockholders and of the Board and of any committees thereof requiring notice. The Secretary shall keep the seal of this Corporation in safe custody and shall have such other powers and shall perform such other duties as may from time to time be assigned to him or her by the Board.

4.08 Chief Financial Officer.

The Chief Financial Officer shall keep and maintain, or shall cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of this Corporation, and shall send or shall cause to be sent to the stockholders of this Corporation such financial statements and reports as are by law or by these By-laws required to be sent to them. The books of account shall at all reasonable times be open to inspection by any director. The Chief Financial Officer shall render to the Chief Executive Officer and directors, whenever they request it, an account of all transactions as Chief Financial Officer and of the financial condition of this Corporation, and shall have such other powers and perform such other duties as may from time to time be assigned to him or her by the Board.

4.09 Compensation.

The compensation of those officers appointed by the Board pursuant to Section 4.01(a) or (b) of these By-laws shall be fixed from time to time by the Board or a committee of the Board delegated with such authority. No officer shall be prevented from receiving compensation by reason of the fact that such officer is also a director of this Corporation or any of its subsidiaries. Nothing contained herein shall preclude any officer from serving this Corporation or any of its subsidiaries, in any other capacity and receiving compensation therefor.

Article V : Contracts, Checks, Drafts, Bank Accounts, Etc.

5.01 Execution of Contracts.

The Board, except as in these By-laws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of this Corporation, and such authority may be general or confined to specific instances. Unless so authorized by the Board or by these By-laws, no officer, agent or employee shall have any power or authority to bind this Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

5.02 Checks, Drafts, Etc.

All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to this Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each authorized person shall give such bond, if any, as the Board may require.

5.03 Deposits.

All funds of this Corporation not otherwise employed shall be deposited from time to time to the credit of this Corporation in such banks, trust companies and other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of this Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of this Corporation, the Chief Executive Officer, the President, the Chief Financial Officer and any Treasurer appointed in accordance with Section 4.01(b) (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of this Corporation who shall from time to time be determined by the Board) may each endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of this Corporation.

5.04 General and Special Bank Accounts.

The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of this Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these By-laws, as it may deem expedient.

 

Article VI : Shares and Their Transfer

6.01 Certificates of Stock; Uncertificated Shares.

  1. The shares of stock of this Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to this Corporation. Notwithstanding the adoption of any resolution providing for uncertificated shares, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate, in such form as the Board shall prescribe, signed by, or in the name of this Corporation by the Chairman or Vice Chairman of the Board, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of this Corporation representing the number of shares registered in certificate form. Any of or all of the signatures on the certificates may be by facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by this Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue.
  2. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by certificates or registered in uncertificated form, the number and class of shares represented by such certificates or registered in uncertificated form, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to this Corporation for exchange or transfer shall be cancelled, and, where the shares are to be represented by certificates, no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04. Uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of this Corporation.

6.02 Transfers of Stock.

Shares of capital stock of this Corporation shall be transferable in the manner prescribed by law and in these By-laws. Shares of capital stock of this Corporation shall only be transferred on the books of this Corporation by the holder of record thereof or by such holder's attorney duly authorized in writing, upon surrender to this Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or, with respect to uncertificated shares, by delivery of duly executed instructions or in any other manner permitted by applicable law), with such evidence of the authenticity of such endorsement or execution, transfer, authorization, and other matters as this Corporation may reasonably require, and accompanied by all necessary stock transfer stamps.

6.03 Regulations.

Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board may make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the stock of this Corporation or uncertificated shares.

6.04 Lost, Stolen, Destroyed, and Mutilated Certificates.

In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to this Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper to do so.

Article VII: Indemnification

7.01 Scope of Indemnification.

This Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a "Covered Person") who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of this Corporation or, while a director or officer of this Corporation, is or was serving at the request of this Corporation as a director, officer, member, manager, partner, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust, other enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) actually and reasonably incurred by such Covered Person in connection with such proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.06, this Corporation shall be required to indemnify a Covered Person pursuant to this Article VII in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board.

7.02 Advance of Expenses.

This Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys' fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article VII or otherwise.

7.03 Other Rights and Remedies.

The rights conferred on any Covered Person by this Article VII shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-laws, agreement, vote of stockholders or disinterested directors or otherwise.

7.04 Continuation of Indemnification and Advancement of Expenses.

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

7.05 Insurance.

Upon resolution passed by the Board, this Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of this Corporation or, while a director, officer, employee or agent of this Corporation, is or was serving at the request of this Corporation as a director, officer, member, manager, partner, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not this Corporation would have the power to indemnify such person against such liability under the provisions of this Article.

7.06 Claims.

If a claim for indemnification (following the final disposition of such action, suit or proceeding) under this Article VII is not paid in full within forty-five (45) days after a written claim therefor by the Covered Person has been received by this Corporation or if a claim for any advancement of expenses under this Article VII is not paid in full within thirty (30) days after this Corporation has received a statement or statements requesting such amounts to be advanced, the Covered Person shall thereupon (but not before) be entitled to file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action, this Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

7.07 Amendment or Repeal.

Any right to indemnification and advancement of expenses of any person covered by the provisions of this Article VII arising hereunder shall not be eliminated or impaired by an amendment to or repeal of these By-laws after the occurrence of the act or omission that is the subject of the proceeding for which indemnification or advancement of expenses is sought.

7.08 Other Indemnification and Prepayment of Expenses.

This Article VII shall not limit the right of this Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.

 

Article VIII: Miscellaneous

8.01 Fiscal Year.

The fiscal year of this Corporation shall be determined by resolution of the Board.

8.02 Seal.

The Board shall adopt a corporate seal, which shall be in the form of a circle and shall bear the name of this Corporation and words and figures showing that this Corporation was incorporated in the State of Delaware and the year of incorporation.

8.03 Manner of Notice; Waiver of Notices.

Except as otherwise provided herein or permitted by applicable law, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of this Corporation. Notice to directors may be given by telecopier, telephone or other means of electronic transmission. Any waiver of notice, given by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting (whether in person or by proxy in the case of a meeting of stockholders) shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in a waiver of notice.

8.04 Form of Records.

Any records maintained by this Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time.

8.05 Amendments.

These By-laws, or any of them, may be altered, amended or repealed, and new By-laws may be adopted,

  1. by the Board, by vote of a majority of the number of directors then in office as directors, acting at any duly called and held meeting of the Board, or
  2. by the stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting.

To the extent permitted by law, any By-laws made or altered by the stockholders may be altered or repealed by either the Board or the stockholders.

 

8.06 Representation of Other Corporations.

The President, any Vice President, or the Secretary of this Corporation are each authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of or other equity interests in any other corporation or entity standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all shares or equity interests held by this Corporation in any other corporation or entity may be exercised either by such officers in person or by any person authorized so to do by proxy or power of attorney duly executed by said officers.

Corporate Governance Q&A

The following Questions and Answers address the Company’s responses to many of the criteria interested shareholders consider when evaluating a Company's governance practices.

 

Board Issues

Q. Does the Company’s Board have a majority of independent outsiders?

A. Yes, the Board is composed of 7 independent outsiders and 1 current member of management.

Q. Does the Board have a Compensation Committee composed of independent directors?

A. Yes, the Compensation Committee is composed of 3 independent directors.

Q. Does the Board have an Audit Committee composed of independent directors?

A. Yes, the Audit Committee is composed of 3 independent directors.

Q. Does the Board have a Governance Committee composed of independent directors?

A. Yes, the Governance Committee, which among other things performs functions similar to a nominating committee, is composed of 3 independent directors.

Q. How often do members of the Board of Directors stand for election?

A. The full Board of Directors is elected annually.

Q. How large is the Board of Directors?

A. There are currently 8 directors serving on the Board.

Q. Does the Company have corporate governance guidelines and, if so, has the Company publicly disclosed them?

A. Yes, the Company has adopted corporate governance guidelines which are available on the Company’s website in its corporate governance section.

Q. Does the Company have a lead director?

A. Yes, the Company currently has a lead independent director. Our corporate governance guidelines provide that our Board of Directors will appoint a lead independent director if the Chairman is not an independent director or as the Board deems appropriate. Although the Board has determined that our Chairman is independent under the NASDAQ Stock Market listing standards, because he is a former Chairman, President and Chief Executive Officer of our Company, the Board determined it appropriate to appoint a lead independent director.

Q. How are vacancies on the Board of Directors filled?

A. Vacancies are filled by a vote of the remaining directors.

Q. Can shareholders communicate directly with the Board of Directors?

A. Yes, shareholders can communicate directly with the Board by writing to the Company’s Secretary at the address listed below. The name of any specific intended Board recipient should be noted in the communication, including whether the communication is intended only for the Company’s lead director or non-management directors. The Secretary will forward the communication only to the intended recipient unless he determines that it is of a commercial or frivolous nature or otherwise inappropriate for the intended Board recipient’s consideration.

Michael Ray, Secretary 
Western Digital Corporation 
3355 Michelson Drive, Suite 100 
Irvine, California 92612

Q. Does the Company consider director candidates suggested by shareholders?

A. Yes, a shareholder may recommend a candidate to the Governance Committee by following the procedures described in the Company’s proxy statement on file with the Securities and Exchange Commission.


Charter and Bylaws

Q. Can shareholders amend the Company’s bylaws?

A. Yes, a simple majority vote of the Company’s shareholders is sufficient to amend the Company’s bylaws. The Board may also amend the bylaws without shareholder approval.


State of Incorporation

Q. Where is the Company incorporated?

A. The Company is incorporated in Delaware.


Executive Compensation

Q. Have stock options been repriced during the past three years without shareholder approval?

A. No, the Company has not repriced its stock options during the past three years.

Q. Are there any interlocks between members of the Compensation Committee?

A. No, there are no interlocks.

Q. Do directors receive all or a portion of their compensation in the form of equity?

A. Yes, they do.

Q. Do non-employee directors participate in the Company’s pension plan?

A. No, they do not.


Qualitative Factors

Q. Does the Company have a mandatory retirement age for directors?

A. Yes, the mandatory retirement age for directors is 72, unless it is determined in a particular instance that longer tenure is in the best interests of the Board or the Company.

Q. Does the Board review its performance regularly?

A. Yes. At least annually, the Board asks its members to complete a Self-Appraisal Questionnaire developed by the Governance Committee and approved by the Board and facilitated by a third party. In addition, each of the Board’s committees conducts an annual self-evaluation.

Q. Do outside directors meet without the Chief Executive Officer present?

A. Yes, non-management directors meet at least twice a year without any executive officers or management directors present. In addition, any non-management director may call for an executive session of the non-management directors of the Board to coincide with any regularly scheduled Board meeting.

Q. Does the Board regularly approve a CEO succession plan?

A. The Governance Committee, on the Board’s behalf, adopts a succession plan for the position of Chief Executive Officer. The Chief Executive Officer meets at least annually with the Governance Committee to assist the Committee, and the succession plan is reviewed at least annually by the Board.

Q. Has the Company adopted a code of ethics which satisfies Section 406 of the Sarbanes-Oxley Act and the New York Stock Exchange listing requirements?

A. Yes, the Company has adopted a code of business ethics, which is available on the Company’s website in its corporate governance section.

 

Governance Committee Charter

I. Purposes

The purposes of the Governance Committee (the “Committee”) are to (a) develop and recommend to the Board of Directors (the “Board”) a set of corporate governance principles applicable to the Company, (b) identify individuals qualified to become members of the Board and, consistent with criteria approved by the Board, recommend that the Board select the Director nominees for the next annual meeting of stockholders, and (c) oversee the evaluation of the Board and management.

II. Membership

The Committee shall be composed of three or more Directors, all of whom shall be independent Directors as determined by the Board pursuant to the rules of The NASDAQ Stock Market LLC (“Applicable Listing Rules”) (subject to any exceptions allowed by such rules and any waivers granted by such authorities). The Chair and members of the Committee shall be appointed annually by the Board. Vacancies shall be filled by election by the Board, and any member of the Committee may be removed by the Board. The Committee shall have the power and authority to delegate any of its duties or responsibilities herein to a subcommittee comprised of one or more members of the Committee.

III. Meetings

  1. The Committee shall meet in accordance with the annual meeting schedule or at the call of the Chair or a majority of the members. A majority of the members of the Committee shall constitute a quorum for the transaction of business.
  2. Procedures fixed by the Committee shall be subject to any applicable provision of the Company’s By-laws. Written minutes of each meeting shall be duly filed in the Company records, and reports of meetings of the Committee shall be made to the Board at its next regularly scheduled meeting following the Committee meeting and shall be accompanied by any recommendations to the Board approved by the Committee.

IV. Key Responsibilities

  1. Evaluate and recommend to the Board the size and composition of the Board and the size, composition and functions of the Board committees.
  2. Develop and recommend for approval by the Board a set of criteria for Board membership. Identify, evaluate and attract qualified individuals to become Directors who satisfy such criteria. Make recommendations to the Board regarding Director candidates for membership on the Board, including the slate of Director nominees to be proposed by the Board for election by the stockholders at the annual meeting of stockholders and any director nominees to be elected by the Board to fill interim director vacancies. Establish and follow procedures for the recommendation of Director candidates by the Company’s stockholders and the consideration by the Governance Committee of Director candidates so recommended.
  3. Assess the contributions and independence of incumbent Directors in determining whether to recommend them for re-election to the Board at the annual meeting of stockholders.
  4. Make recommendations to the Board on such matters as the retirement age, tenure and removal of Directors.
  5. Manage the Board performance review process and review the results with the Board on an annual basis.
  6. Develop and recommend to the Board a set of corporate governance principles and review and recommend changes to these principles, as necessary.
  7. Review and make recommendations to the Board regarding proposals of stockholders that relate to corporate governance.
  8. Recommend to the Board candidates for appointment to Board committees and consider periodically rotating Directors among the committees.
  9. Review directorships in other public or private companies (excluding charitable or non-profit organizations) held by or offered to Directors and executive officers of the Company.
  10. Review and assess the channels through which the Board receives information and the quality and timeliness of information received.
  11. Take such steps as the Committee deems necessary or appropriate with respect to assessments of the performance of the Board, each other Board committee, and itself, at least annually. Review and reassess the adequacy of this Charter at least annually.
  12. Oversee the evaluation of the Chief Executive Officer by the Board and the Compensation Committee.
  13. Develop and oversee the Chief Executive Officer succession planning process.
  14. Perform such other duties and responsibilities as are consistent with the purpose of the Committee and as the Board or the Committee deems appropriate.

V. Outside Advisors

The Committee shall have the authority to retain such outside counsel, experts and other advisors as it determines appropriate to assist it in the full performance of its functions, including the sole authority to retain and terminate search firms used to identify Director candidates, and to approve any such search firm’s fees and other retention terms.

Approved by Board of Directors: May 4, 2016

Executive Committee Charter

I. Purpose

The purpose of the Executive Committee (the "Committee") is to act on behalf of the Board of Directors (the "Board") between Board meetings.

II. Membership

The Committee shall be composed of three or more Directors, a majority of whom shall be independent Directors as determined by the Board pursuant to The NASDAQ Stock Market LLC ("NASDAQ") definition of independence. The Chief Executive Officer shall be the Chair of the Committee. The other members of the Committee shall be appointed annually by the Board on the recommendation of the Governance Committee. Vacancies shall be filled by approval of the Board on the recommendation of the Governance Committee, and any member of the Committee may be removed by the Board.

III. Meetings

  1. The Committee shall meet at the call of the Chair or a majority of the members. A majority of the members of the Committee shall constitute a quorum for the transaction of business. The passage of any resolution of the Committee shall require the affirmative vote of a majority of Committee members present and voting on such resolution who are not employees of the Company.
  2. Procedures fixed by the Committee shall be subject to any applicable provision of the Company's By-laws. Written minutes of each meeting shall be duly filed in the Company records, and reports of meetings of the Committee shall be made to the Board at its next regularly scheduled meeting following the Committee meeting. Actions taken by the Committee shall be promptly communicated to the Directors who are not members of the Committee.

IV. Key Responsibilities

The Committee shall have all the authority of the Board, except that it shall not have authority to:

  1. approve or adopt, or make a recommendation to the stockholders with respect to, any action or matter that is required under the Delaware General Corporation Law to be submitted to the stockholders;
  2. appoint any other committee of the Board or the members thereof;
  3. fill vacancies in the Board or in any committee thereof;
  4. amend or repeal the By-Laws, or adopt new By-Laws;
  5. amend or repeal any resolution of the Board that, by its express terms, shall not be so amended or repealed;
  6. fix the compensation of Directors for serving on the Board or any committee thereof;
  7. fix or amend the compensation, benefits or perquisites of the Chief Executive Officer;
  8. authorize a distribution to the stockholders of the Company except at a rate or in a periodic amount or within a price range determined by the Board;
  9. take any action that the Delaware General Corporation Law or the Company's By-Laws prohibit the Board from delegating to a committee; or
  10. take any action required by the rules or regulations of the Securities and Exchange Commission or NASDAQ to be approved by the full Board or by another committee of the Board.

Approved by Board of Directors: February 4, 2015

Compensation Committee Charter

I. Purposes

The purposes of the Compensation Committee (the “Committee”) are to (a) carry out responsibilities of the Board of Directors (the “Board”) relating to compensation of the Company’s executives and (b) produce the Compensation Committee Report for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations. The Committee shall communicate to the Company’s stockholders the Company’s compensation philosophy, policy and programs.

II. Membership

The Committee shall be composed of three or more Directors, all of whom, in the business judgment of the Board, shall (1) be independent directors as determined pursuant to the rules of The NASDAQ Stock Market LLC (“Applicable Listing Rules”) (subject to any exceptions allowed by such rules and any waivers granted by such authorities), (2) satisfy such additional eligibility requirements for membership on the Committee as may be required from time to time by the Applicable Listing Rules and (3) qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Act”). In order to qualify any compensation as “performance-based” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), at least two members of the Committee must qualify as “outside directors” within the meaning of Section 162(m) of the Code. The Chair and members of the Committee shall be appointed annually by the Board on recommendation of the Governance Committee. Vacancies shall be filled by approval of the Board on recommendation of the Governance Committee, and any member of the Committee may be removed by the Board.

The Committee shall have the power and authority to delegate any of its duties or responsibilities herein to a subcommittee comprised of one or more members of the Committee.

III. Meetings

  1. The Committee shall meet in accordance with the annual meeting schedule or at the call of the Chair or a majority of the members. A majority of the members of the Committee shall constitute a quorum for the transaction of business.
  2. Procedures fixed by the Committee shall be subject to any applicable provision of the Company’s By-laws. Written minutes of each meeting shall be duly filed in the Company records, and reports of meetings of the Committee shall be made to the Board at its next regularly scheduled meeting following the Committee meeting and shall be accompanied by any recommendations to the Board approved by the Committee.

IV. Key Responsibilities

  1. In consultation with management and the Board, define an executive compensation policy that is designed to (a) attract, retain and appropriately reward key executives of the Company, (b) link compensation with achievement of the Company’s business objectives and (c) align the interests of key executives with the goal of long-term stockholder value creation.
  2. Annually (or, in the case of bonus amounts, such other measurement period, as applicable) review and approve corporate goals and objectives relevant to the base salary, bonus amount and other compensation of the Chief Executive Officer (“CEO”) and the Company’s other officers (as defined in Rule 16a-1(f) of the Act).
  3. Evaluate the performance of each of the CEO and the Company’s other officers (as defined in Rule 16a-1(f) of the Act) in light of those goals and objectives, and determine and approve the compensation level, including base salary, bonus amount and other compensation, if any, of each such officer based on this evaluation and other relevant factors. Evaluation of the CEO’s performance shall be made in consultation with the Governance Committee. The CEO shall not be present during voting or deliberations on the CEO’s compensation.
  4. Make recommendations to the Board with respect to incentive compensation plans and equity-based plans that require Board approval, including overseeing the development of new compensation plans and the revision of old plans.
  5. Administer the Company’s equity-based plans, and serve as the committee of the Board authorized to approve restricted stock awards, stock option grants and other equity-based or incentive awards under these plans, including any performance criteria relating to these plans or any awards.
  6. Where required by the terms of the plans, review the Company’s employee benefit plans and, if Board approval is required to amend any such plans, either recommend plan changes to the Board or amend such plans, subject to stockholder approval where required.
  7. Recommend to the Board retainer, other compensation, and attendance fees, including Board committee attendance fees, for non-employee Directors.
  8. Annually (a) review and discuss with the Company’s management the Compensation Disclosure and Analysis (CD&A) to be included in the Company’s annual proxy statement and determine whether to recommend to the Board of Directors that the CD&A be included in the proxy statement and (b) produce the Compensation Committee Report for inclusion in the Company’s proxy statement as required by and in compliance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The Committee’s review may include, to the extent the Committee deems appropriate and without limiting other factors the Committee may consider relevant in the circumstances, the results of say-on-pay advisory votes by the Company’s stockholders.
  9. Periodically review and approve any compensation clawback policy or stock ownership guidelines of the Company, or any amendment thereto, that is applicable to the Company’s executive officers.
  10. Periodically review the Company’s compensation policies and practices in order to assess whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. In connection with such review, the Committee may, as it considers appropriate, consult with, or receive a report from, the Company’s management concerning compensation practices and policies for the Company’s non-executive officers.
  11. Evaluate annually the performance of the Committee and the adequacy of this Charter.
  12. Perform such other duties and responsibilities as are consistent with the purpose of the Committee and as the Board or the Committee deems appropriate.

The foregoing does not limit any authority conferred on the Committee pursuant to the terms of any compensation or benefit plan or, to the extent the Committee is the administrator of any compensation or benefit plan, as the administrator of such plan in accordance with the terms of the plan.

V. Outside Advisors

The Committee may, in its sole discretion after considering such independence factors as may be required by the Applicable Listing Rules or applicable SEC rules, retain or obtain the advice of a compensation consultant, legal counsel or other advisor as it determines necessary or appropriate to assist it in the full performance of its functions, including the sole authority to retain and terminate compensation consultants to assist in the evaluation of Director, CEO or other senior executive compensation. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel or other advisor retained by the Committee, including sole authority to approve the consultant’s, legal counsel’s or advisor’s fees and other retention terms. The Company shall provide appropriate funding, as determined by the Committee, for payment of reasonable compensation to any consultant, legal counsel or other advisor retained by the Committee.

Approved by Board of Directors: February 11, 2016

Audit Committee Charter

I. Purposes

The purposes of the Audit Committee (the "Committee") shall be to:

  • assist the Company’s Board of Directors (the “Board”) in discharging its oversight responsibility relating to: (i) the accounting and financial reporting processes of the Company and its subsidiaries and the audit of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the independent accountants’ qualifications and independence; and (iv) the performance of the Company’s internal audit function and the Company’s independent accountants; and
  • prepare the report required by the rules of the Securities and Exchange Commission (the “SEC”) to be included in the Company’s annual proxy statement.

 

II. Membership

  1. The Committee shall be composed of three or more directors, all of whom shall be independent Directors, as defined by the rules of The NASDAQ Stock Market LLC (“Applicable Listing Rules”) and applicable rules of the SEC in effect from time to time (subject to any exceptions allowed by such rules and any waivers granted by such authorities). The Chair and members of the Committee shall be appointed annually by the Board on recommendation of the Governance Committee. Vacancies shall be filled by approval of the Board on recommendation of the Governance Committee, and any member of the Committee may be removed by the Board.
  2. Each member of the Committee must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement, and at least one member shall be an “audit committee financial expert,” as determined by the Board pursuant to rules promulgated by the SEC. Additionally, no member of the Committee shall have participated in the preparation of the financial statements of the Company in the past three years.
  3. No member of the Committee shall serve simultaneously on the audit committee of more than three public companies (including the Company) except with the prior approval of the Board.

III. Meetings

  1. The Committee shall meet at least four times a year in accordance with the annual meeting schedule or at the call of the Chair or a majority of the members. A majority of the members of the Committee shall constitute a quorum for the transaction of business.
  2. The Committee shall meet separately in executive session, periodically, with management, the Company’s principal internal auditor (or other personnel responsible for the internal audit function) and the independent accountants.
  3. Procedures fixed by the Committee shall be subject to any applicable provision of the Company’s By-laws. Written minutes of each meeting shall be duly filed in the Company records, and reports of meetings of the Committee shall be made to the Board no later than the next regularly scheduled Board meeting following the Committee meeting and shall be accompanied by any recommendations to the Board approved by the Committee.

IV. Key Responsibilities

1. Independent Accountants

  1. Be solely and directly responsible for the appointment, compensation, retention and oversight of the work of the independent accountants (including resolution of disagreements between management and the independent accountants regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company and, where appropriate, the termination and replacement of the independent accountants. The independent accountants shall report directly to the Committee.
  2. At least annually, evaluate the independent accountants’ qualifications, performance and independence, including a review and evaluation of the lead partner of the independent accountant. Confirm that the lead or coordinating audit partner having primary responsibility for the audit or review and the concurring or reviewing audit partner of the independent accountants are rotated at least every five years and that other audit partners (as defined by the SEC) are rotated at least every seven years in accordance with rules promulgated by the SEC. Consider whether there should also be a regular rotation of the independent accountants. As part of the Committee’s annual evaluation of the independent accountants, discuss with the Company’s internal auditor (or other personnel responsible for the internal audit function) and management their views as to the competence, performance and independence of the independent accountant.
  3. Review, evaluate and approve the annual engagement proposal of the independent accountants (including the proposed scope, procedures and timing of the annual audit).
  4. Pre-approve all auditing services and all non-audit services permitted to be performed by the independent accountants. Such pre-approval may be given as part of the Committee’s approval of the scope of the engagement of the independent accountants or on an engagement-by-engagement basis or pursuant to pre-established policies. In accordance with Section 5 of this Charter, the Chairman of the Audit Committee is hereby delegated authority to pre-approve audit and permitted non-audit and tax services and associated fees up to a maximum for any one audit or non-audit service of $50,000. The Chairman shall report such approval decisions to the full Committee at its next regularly scheduled meeting.
  5. Obtain and review, at least annually, a report by the independent accountants describing: (i) the independent accountants’ internal quality-control procedures; and (ii) any material issues raised by the most recent internal quality-control review, or peer review, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the independent accountants, and any steps taken to deal with any such issues.
  6. Ensure the independence of the independent accountants pursuant to all applicable laws and regulations. Be responsible for (i) ensuring the Committee’s receipt from the independent accountants of a formal written statement delineating all relationships between the independent accountants and the Company, consistent with the applicable requirements of the Public Company Accounting Oversight Board, (ii) actively engaging in a dialogue with the independent accountants with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent accountants and (iii) taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent accountants.
  7. Obtain and review prior to the filing of any audit report by the Company’s independent accountants a report from the independent accountants regarding: (i) all critical accounting policies and procedures to be used by the Company; (ii) all alternative treatments within generally accepted accounting principles (“GAAP”) for policies and practices related to material items that have been discussed with the Company’s management, including ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountants; and (iii) all other material written communications between the independent accountants and management, including any management letter or schedule of unadjusted differences.
  8. Review and discuss with the independent accountants any difficulties the independent accountants encountered in the course of their audit work, including any restrictions on the scope of the independent accountants’ activities or on access to requested information, and any significant disagreements with management and management’s response to such problems or difficulties.
  9. Establish policies for the hiring of any current or former employee of the independent accountants to ensure the independence of the independent accountants pursuant to all applicable laws and regulations.

2. Financial Reporting and Reporting Processes

  1. Review and discuss with management and the independent accountants the annual audited and quarterly financial statements of the Company and the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” prior to filing such financial statements with the SEC or public distribution thereof, including (as appropriate): (i) major issues regarding accounting principles and financial statement presentations, any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; (ii) analyses prepared by management and/or the independent accountants setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative accounting methods on the financial statements in accordance with GAAP; and (iii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company.
  2. Discuss with the independent accountant the independent accountant’s judgment about the quality, not just acceptability, of the accounting principles applied in the Company’s financial reporting.
  3. Review and discuss generally with management the general types of information to be disclosed and the type of presentation to be made in the Company’s earnings press releases, as well as financial information and earnings guidance, if any, provided to analysts and ratings agencies.
  4. Review periodically the adequacy of the Company’s accounting and financial personnel resources.
  5. Periodically review and discuss the Company’s internal control over financial reporting (with particular emphasis on the scope and performance of the internal audit function), and review and discuss with the principal internal auditor of the Company the scope and results of the internal audit program, including deficiencies and significant changes in internal controls reported to the Committee by the independent accountant or management.
  6. Discuss with the independent accountant the independent accountant’s judgment about the performance of the internal audit function and the responsibilities, budget and staffing of the internal audit function.
  7. Review and discuss with the Company’s independent accountants any other matters required to be communicated to the Committee by the independent accountants pursuant to applicable rules of the Public Company Accounting Oversight Board.
  8. Review reports to management prepared by the independent accountant or the principal internal auditor (or other personnel responsible for the internal audit function) and any responses to the same by management.
  9. Review and consider any other matters relative to the audit of the Company’s accounts and the preparation of its financial statements and reports that the Committee, in its discretion, deems appropriate.
  10. Make a recommendation to the Board as to whether the annual audited financial statements should be included in the Company’s Annual Report on Form 10-K.

3. Legal and Regulatory Compliance

  1. Review and discuss the Company’s policies with respect to risk assessment and risk management.
  2. Prepare an audit committee report as required by the SEC to be included in the Company’s annual proxy statement.
  3. Provide oversight of the Company’s Ethics and Compliance Program. Regularly receive reports from the Chief Compliance Officer detailing the activities of the Ethics and Compliance Program and reporting on significant allegations of misconduct, violations of law, and any significant investigations that may involve the Company.
  4. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting and auditing matters.
  5. Review material pending legal proceedings involving the Company and other material contingent liabilities.
  6. Review reports and disclosures of significant conflicts of interest and related-party transactions, and consider for waiver, ratification or approval, as applicable, any such conflicts of interest or related party transactions, to the extent required by the Company’s Code of Business Ethics, Global Code of Conduct or Related Person Transactions Policy.
  7. Periodically review and discuss with management the Company's policies and procedures for and use of swaps or other derivative instruments for hedging risks and for other purposes and, in connection with such responsibility, review and approve, at least annually, decisions by the Company and its subsidiaries to enter into swaps that are subject to clearing and exchange trading and execution requirements in reliance on the “end-user exception” under the Commodity Exchange Act or regulations of the Commodity Futures Trading Commission promulgated thereunder; provided, however, that such review and approval may occur annually on a general basis and need not occur on a swap-by-swap basis.

4. Evaluations; Investigations; Advisers

  1. Evaluate annually the performance of the Committee and the adequacy of this Charter, and recommend to the Board any proposed changes to this Charter.
  2. The Committee may also, from time to time or as directed by the Board, direct and review special investigations, receive periodic reports on legal and tax matters, review the Company’s legal compliance policies and practices, including its Global Code of Conduct, and report to the Board as appropriate concerning these reviews, investigations and reports.
  3. The Committee shall have the authority to retain such outside counsel, accountants, experts and other advisors as it determines appropriate to assist the Committee in the performance of its functions. The Committee is specifically empowered to retain these advisors without seeking approval from the Board, and in connection therewith to receive appropriate funding, determined by it, from the Company.
  4. The Committee has the power to determine the level and cost of ordinary administrative expenses necessary or appropriate in carrying out its duties, with such costs to be borne by the Company.

5. Delegation of Authority

The Committee may form and delegate authority to subcommittees consisting of one or more members when it deems appropriate, including the authority to grant pre-approvals of audit and permitted non-audit and tax services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Committee at its next regularly scheduled meeting.

Approved by Board of Directors: May 4, 2016

Contact WD Board

Write The Board

*Michael Ray, Secretary
Western Digital Corporation
3355 Michelson Drive, Suite 100
Irvine, CA 92612

*The name of any specific intended Board recipient should be noted in the communication, including whether the communication is intended only for the Company's lead director or non-management directors.