Western Digital Corporation 2012 Notice and Proxy Statement Page 39

impairment and other expenses. As such, the actual adjusted earnings per share for the second half of fiscal 2012
was $5.87, which resulted in an achievement rate significantly above the maximum 200% permitted by the plan.

Bonus Calculation and Discretionary Adjustments.

Actual bonus amounts to the executive officers for

each semi-annual performance period under the ICP are calculated by multiplying the executive's target semi-
annual bonus opportunity by the achievement percentage approved by the Compensation Committee based on
achievement of the applicable performance metrics. Following determination of the individual ICP bonus
amounts for the applicable semi-annual period, the Compensation Committee reserves the discretion to further
adjust the individual bonus payment to an executive officer based upon a subjective evaluation of his individual
and business group performance.

For the first half of fiscal 2012, the Compensation Committee noted the exceptional performances of

Messrs. Nickl and Murphy in responding to the unanticipated challenges resulting from the Thailand flooding.
The Compensation Committee also noted the significant amount of charges excluded in the calculation of
adjusted earnings per share, charges which we believed impacted our stock price. As a result, the Compensation
Committee exercised its discretion to adjust the individual bonus payments to executive officers, approving
payouts for Messrs. Coyne and Leyden at 100% of the executive's target bonus opportunity (rather than at the
152% achievement rate), and payouts for Messrs. Nickl and Murphy at 130% of the executive's target bonus
opportunity (rather than at the 152% achievement rate).

For the second half of fiscal 2012, the Compensation Committee exercised its discretion to adjust the

individual bonus payments to executive officers, approving payouts for all executive officers at 195% of the
executive's target bonus opportunity (rather than at the 200% achievement rate) to provide bonus payouts to
executive officers that were equivalent to the funding level of the bonus plan applicable to non-executive
officers.

Please see the section entitled "Incentive Compensation Plan" on page 49 for a table that reflects each

executive's target semi-annual bonus opportunity under the ICP for each half of fiscal 2012 and the actual semi-
annual bonuses paid to the executive under the ICP for fiscal 2012.

Long-Term Incentive Compensation

The following section analyzes our long-term incentive (LTI) program and the LTI awards made to or

earned by executive officers in fiscal 2012.

Fiscal 2012 Annual LTI Awards.

Under our annual LTI program, described in more detail below, a

combination of stock options, restricted stock units and/or long-term performance cash awards are generally
granted on an annual basis to our executive officers and other key employees. Beginning in fiscal 2012, the
Compensation Committee established annual LTI grant guidelines for each executive officer, including the Chief
Executive Officer, which are based on the individual's position level, are expressed as a percentage of annual
salary and range from a minimum, midpoint and maximum value. The annual LTI grant guidelines are reviewed
by the Compensation Committee during its annual compensation review in connection with a review of the
composite market data. For fiscal 2012, the following table includes the LTI grant guidelines for our named
executive officers:

Name

LTI Guideline

As % of Base Salary

Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

600% - 1,000%

President; Subsidiary Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

400% - 600%

Executive Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200% - 500%

Senior Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100% - 350%

These long-term incentive guidelines are one factor the Compensation Committee considers when

determining the grant value of the annual awards to each executive under the LTI program. The Compensation
Committee also considers our target pay position strategy, the recommendation of our Chief Executive Officer
(other than for the Chief Executive Officer's LTI award) and a subjective evaluation of the executive's
responsibilities, individual performance, current compensation package, value of unvested equity awards and
expected future contributions and value to the company.