performance period covering the first half of fiscal 2013. The Compensation Committee believed this increase
was appropriate to bring Mr. Nickl's target bonus level within a reasonable range of our stated pay positioning
strategy.
For both the first and second half of fiscal 2013, the Compensation Committee selected adjusted earnings
per share as the financial measure for Messrs. Milligan and Nickl under the ICP. The Compensation Committee
selected adjusted earnings per share as the appropriate goal for Messrs. Milligan and Nickl because it believed
adjusted earnings per share is an appropriate holistic metric for corporate-level executives such as the Chief
Executive Officer and Chief Financial Officer in order to measure the level of the company's overall short-term
performance. For fiscal 2013, the Compensation Committee provided that adjusted earnings per share was
calculated as diluted earnings per share under generally accepted accounting principles, adjusted to exclude
certain expenses that the Compensation Committee did not consider when setting the applicable targets for fiscal
2013 and believed were extraordinary and unrelated to the day-to-day execution of our business.
The Compensation Committee selected subsidiary operating income as the appropriate goal for the
remaining executive officers who are subsidiary-level executives because it believed subsidiary operating income
is an appropriate metric to measure short-term operating performance at the subsidiary level. The goal for each of
the remaining executives was based on the subsidiary for which the executive had principal responsibility. For
fiscal 2013, subsidiary operating income was calculated as subsidiary revenue less cost of goods sold and
operating expenses.
The following table reflects the target goals under the ICP for fiscal 2013, the achievement rate of the goals,
the resulting achievement rate and the final bonus payout rate approved by the Compensation Committee (or, for
Mr. Murphy, by Mr. Leyden).
First Half of Fiscal 2013
Second Half of Fiscal 2013
Name
Metric
Target Goal
Achievement(a)
Plan
Achievement
Rate
Bonus
Payout
Rate
Target Goal
Achievement(b)
Plan
Achievement
Rate
Bonus
Payout
Rate
Stephen D.
Milligan . . . . . . .
Adj. EPS
$5.16
$4.45
65%
90%
$3.54
$4.06
151%
151%
John F. Coyne . . . .
Adj. EPS
$5.16
$4.45
65%
65%
--
--
--
--
Wolfgang U.
Nickl . . . . . . . . . .
Adj. EPS
$5.16
$4.45
65%
90%
$3.54
$4.06
151%
164%
Timothy M.
Leyden . . . . . . . . WD Sub Op. Inc.
$707 million $608 million
65%
90% $489 million $588 million
174%
174%
Michael D.
Cordano . . . . . . . HGST Sub Op. Inc. $726 million $630 million
67.5%
92.5% $464 million $516 million
137%
152%
James J. Murphy . . WD Sub Op. Inc.
$707 million $608 million
65%
90% $489 million $588 million
174%
174%
(a) Actual earnings per share under generally accepted accounting principles for the first half of fiscal 2013 was
$3.42, which included $253 million, or $1.03 per share, in charges related to a reduction in previously
recognized California deferred tax assets as a result of California Proposition 39, amortization of intangibles
related to our acquisition of HGST and employee termination benefits incurred as a result of restructuring
activities. As such, the actual adjusted earnings per share for the first half of fiscal 2013 was $4.45.
(b) Actual earnings per share under generally accepted accounting principles for the second half of fiscal 2013
was $0.48, which included $865 million, or $3.58 per share, in charges related to an arbitration award,
amortization of intangibles related to our acquisition of HGST and employee termination benefits incurred as
a result of restructuring activities. As such, the actual adjusted earnings per share for the second half of fiscal
2013 was $4.06.
As indicated in the table above, the Compensation Committee made certain adjustments to the plan
achievement rates in determining the actual bonus payout rates. For the first half of fiscal 2013, the
Compensation Committee discussed that the company's performance against the target goals did not accurately
reflect the company's performance during the period in light of a significantly smaller available market for hard
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