Western Digital Corp (NASDAQ:WDC) has announced an expansion of its 2021 Long-Term Incentive Plan, following approval from its shareholders at the annual meeting held on November 20, 2024. The amendment adds 6 million shares to the plan, aimed at providing equity-based compensation to key employees.
At the annual meeting, shareholders also voted on several key proposals, including the election of directors. All eight nominated directors were elected to serve until the next annual meeting. The approval of executive compensation on an advisory basis was also secured, with a majority of votes cast in favor. Additionally, the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year 2025 was ratified by a substantial majority.
The expansion of the equity incentive plan is part of Western Digital's strategy to align the interests of its employees with those of its shareholders, potentially serving as a motivational tool to retain and attract talent. The specific terms of the amended equity plan, which was initially approved by the board on August 22, 2024, are detailed in the proxy statement filed on October 7, 2024.
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In related developments, Western Digital announced a significant growth with a revenue of $4.1 billion for the fiscal first quarter of 2025. The company's earnings per share increased to $1.78 with a non-GAAP gross margin of 38.5%. Sequential growth was reported in both Flash and HDD segments, attributed to the AI Data Cycle demand.
Western Digital is also progressing with the separation of its Flash and HDD businesses, aiming to complete the process by the end of the fiscal second quarter.
For the next quarter, Western Digital anticipates revenue between $4.2 billion and $4.4 billion, with projected earnings per share between $1.75 and $2.05. However, the company experienced operational dissynergies of approximately $30 million due to carrying dual cost structures.
InvestingPro Insights
Western Digital's recent expansion of its Long-Term Incentive Plan aligns with its position as a prominent player in the Technology Hardware, Storage & Peripherals industry, as highlighted by InvestingPro Tips. The company's market capitalization stands at $24.05 billion, reflecting its significant presence in the sector.
InvestingPro data shows that Western Digital's revenue growth has been robust, with a 26.61% increase over the last twelve months and an impressive 48.91% growth in the most recent quarter. This strong performance may justify the company's decision to enhance its equity-based compensation program to retain and attract top talent.
However, investors should note that Western Digital is trading at a relatively high P/E ratio of 70.31, which could indicate that the market has high expectations for future growth. An InvestingPro Tip suggests that the company is trading at a low P/E ratio relative to near-term earnings growth, potentially offering an attractive entry point for long-term investors.
For those interested in a deeper analysis, InvestingPro offers additional tips and insights on Western Digital's financial health and market position. Currently, there are 5 more InvestingPro Tips available for Western Digital, providing a comprehensive view of the company's prospects.
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