Western Digital Corporation (WDC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Annual Meeting of Stockholders of Western Digital Corporation. I am Matt Massengill, Chairman of the Board of Directors. I hereby call the meeting to order and declare it to be in session. As discussed in our proxy statement, this year's annual meeting is being held in a virtual-only format, which enables us to leverage technology to enhance stockholder access to the annual meeting and to grant stockholders the opportunity to exercise the same rights as if they had attended an in-person meeting. In addition, we believe this year's virtual meeting format will protect the health and safety of all attendees particularly in light of the COVID-19 pandemic. As noted in our proxy statement, stockholders of record and beneficial owners as of September 21, 2020, can submit questions directly through the virtual annual meeting web page. Questions should be entered into the text box appearing in the bottom left-hand corner of the virtual annual meeting web page. Additionally, you may also vote on the proposals being considered today by clicking on the Vote Here button located on the lower right-hand side of the virtual annual meeting web page. Let us briefly review the agenda for the meeting. I will first introduce our directors, executive officers and representatives of KPMG, the company's independent registered public accounting firm, who are with us virtually this morning. Next, I'll report on proof of delivery of the notice of today's meeting included in the proxy statement, and we'll introduce the inspector of election, who will report on the existence of a quorum at this meeting. I will then introduce each of the proposals that will be voted on today. Under the company's bylaws, the proposals on the agenda are the only proposals that may be heard at this annual meeting. After answering questions on the proposals before the meeting, we will announce the preliminary results and close the polls. After adjournment of the formal business of the meeting, we will have a general question-and-answer session. The meeting will conclude after the general question-and-answer period. As a reminder, if you have questions that you would like us to respond to during the designated question-and-answer periods, please submit them through the virtual annual meeting web page. In asking your questions, we ask that you observe the rules of procedure, including by limiting yourself to 1 question during each question-and-answer period. A link to the rules of procedure is located at the bottom right-hand corner of the virtual annual meeting web page. And now let me introduce our nominees for Director. Kimberly Alexy, a Director since November 2018 and Founder of Alexy Capital Management; Martin Cole, a Director since December 2014 and former Chief Executive of the Technology Group of Accenture plc; Kathleen Cote, a Director since January 2001 and former Chief Executive Officer of Worldport Communications, Inc.; Tunç Doluca, a Director since August 2018 and the President and Chief Executive Officer of Maxim Integrated; David Goeckeler, a Director since March 2020. Mr. Goeckeler currently serves as the company's Chief Executive Officer; Paula Price, a Director since rejoining the Board in June 2020. Ms. Price is a current adviser and former Executive Vice President and Chief Financial Officer of Macy's, Inc. Ms. Price also previously served on our Board from 2014 to 2019; and Stephanie Streeter, a Director since November 2018 and former Chief Executive Officer of Libbey Inc. I have been a Director since January 2000, serving as Chairman of the Board since November 2015, and I'm also a Former Chairman, President and Chief Executive Officer of Western Digital Corporation. Next, let me introduce our executive officers attending today, in addition to David Goeckeler with us this morning are Robert Eulau, Executive Vice President and Chief Financial Officer; Michael Ray, Executive Vice President, Chief Legal Officer and Secretary. Mr. Ray is serving as the Secretary for today's meeting. And now our accountants. With us from KPMG, the company's independent registered public accounting firm are Lincoln Clark, partner; and Jennifer Miller, Managing Director. Mr. Clark and Ms. Miller will be available to answer questions concerning the company's financial statements during the question-and-answer session. As noted in the proxy materials furnished to you for today's meeting, the record date for voting at this meeting was the close of business on September 21, 2020. The list of registered stockholders on the record date is available for your review on the virtual annual meeting web page. The Secretary has reported to me that Broadridge Financial Solutions has delivered an affidavit of distribution that shows that proxy materials for this meeting, including a notice of the meeting were distributed to stockholders commencing on October 5, 2020. A copy of both the notice and the affidavit will be included in the minutes for this meeting. This morning, Michael Ray will serve as the inspector of election. Michael, do we have a quorum and a valid meeting?

Yes, Matt, there are in attendance in person or by proxy 271,764,122 shares, which is in excess of 86% of the shares outstanding on the record date that are entitled to vote at this meeting. Accordingly, the meeting has been duly called and a quorum is present.

The votes collected today will be included in the final tabulation, which will be reported in a Form 8-K to be filed by the company within the next 4 business days. If you have already submitted a proxy or voting instructions, you do not need to vote during the meeting. Your vote has already been recorded. If any of the stockholders present have not voted yet and wish to cast their vote today or have voted by proxy and wish to revoke such proxy and vote today. You should enter your vote by clicking on the Vote Here button located on the lower right-hand side of the virtual annual meeting web page. As a reminder, if you have questions that you would like us to respond to during the designated question-and-answer periods, please submit them through the virtual annual meeting web page at any time. We will now turn our attention to the next item on our agenda, the presentation of the proposals to be voted on. The proposals have been described in detail in the proxy statement for this meeting. The first proposal is the election of 8 directors to serve until our next annual meeting of stockholders and until their respective successors are duly elected and qualified. Each director nominee receiving the affirmative approval of a majority of the votes cast with respect to his or her election will be elected as Director. The second proposal is approval of an advisory basis of the compensation of our named executive officers as disclosed in the proxy statement. A third proposal is to approve the amendment and restatement of our 2017 performance incentive plan to increase the number of shares of our common stock available for issuance under that plan by 9.8 million. The final item for business today is a proposal to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for fiscal 2021. That concludes the introduction of all matters requiring a vote of stockholders. We'll now pause to review any questions that may -- that have been submitted on our virtual annual meeting web page about the proposals before the meeting. There will be a general question-and-answer period after the adjournment of the formal business portion of the meeting. So at this time, we will only address questions relating to the proposals before the meeting. Peter Andrew, our Vice President of Investor Relations, will be assisting us with any questions submitted. Peter, will you please read any questions that have been submitted regarding the proposals?

Thanks, Matt. No questions regarding the proposals have been submitted.

Michael, will you please announce the preliminary results of voting?

Mr. Chairman, these are the preliminary voting results as of November 17, 2020 at 2 p.m. For Proposal 1, each of the 8 nominees for Director has received at least 94% of the votes cast with respect to that director. Accordingly, under our majority vote standard for director elections, each of the nominees has been elected to serve until the next annual meeting of stockholders and until his or her respective successor is duly elected and qualified. For Proposal 2, at least 91% of the shares represented and entitled to vote on this proposal voted for the compensation of the named executive officers disclosed in the proxy statement. Accordingly, stockholders have approved, on an advisory basis, the compensation of the company's named executive officers. For Proposal 3, at least 90% of the shares represented and entitled to vote on this proposal voted for the amendment and restatement of the 2017 performance incentive plan. Accordingly, stockholders have approved the amendment and restatement of the 2017 performance incentive plan. For Proposal 4, at least 95% of the shares represented and entitled to vote on this proposed -- this proposal voted for ratification of the appointment of KPMG as our independent registered public accounting firm for fiscal 2021. Accordingly, the appointment of KPMG is the company's independent registered public accounting firm for fiscal 2021 has been ratified.