<PAGE>   1
                                                                  EXHIBIT 10.169

EXECUTIVE RETENTION INCENTIVE AGREEMENT


      This Executive Retention Agreement (the "Agreement") is made and entered
into as of June 23, 1999 (the "Effective Date"), by and between Maxtor
Corporation, a Delaware corporation (the "Company") and Michael R. Cannon
("Executive").

                                 R E C I T A L S

A.    Executive is the president and chief executive officer of the Company and
      possesses valuable knowledge of the Company, its business and operations,
      and the markets in which the Company competes.

B.    The Company draws upon the knowledge, experience and advice of Executive
      in order to manage its business for the benefit of the Company's
      stockholders.

C.    Executive and the Company have entered into a Retention Agreement dated
      May 29, 1998 setting forth certain incentives for Executive to remain
      employed with the Company (the "May 1998 Retention Agreement").

D.    The Compensation Committee of the Board of Directors desires to supplement
      Executive's retention arrangements so as to provide additional
      compensation and benefits to the Executive to encourage Executive to
      continue to devote his full attention and dedication to the Company and to
      create additional incentives to continue his employment with the Company.

      1.    Loan.

            (a) As of the Effective Date of this Agreement, the Company will
loan Executive the sum of Five Million ($5,000,000.00) (the "Loan"). Except as
otherwise provided in this Agreement, the Loan shall be subject to the terms and
conditions of the promissory note, attached hereto as Exhibit 1 (the "Promissory
Note").

            (b) Notwithstanding any other provisions in the Promissory Note to
the contrary:

                  (i) In consideration of Executive's future services, on June
22, 2002, Executive's obligation to pay the then outstanding balance of the Loan
(including unpaid principal and accrued interest thereon) shall be forgiven and
the Promissory Note shall be canceled, provided Executive remains continuously
employed through such date;

                  (ii) Upon the occurrence of a termination of Executive's
employment by the Company for other than Cause, as that term is defined in the
May 1998 Retention Agreement, Executive's obligation to pay the then outstanding
balance of the Loan (including unpaid principal and accrued interest thereon)
shall be forgiven and the Promissory Note shall be canceled;

                  (iii) Upon the occurrence of a Termination Upon a Change of
Control, as that term is defined in the May 1998 Retention Agreement,
Executive's obligation to pay the


                                       1
<PAGE>   2
then outstanding balance of the Loan (including unpaid principal and accrued
interest thereon) shall be forgiven and the Promissory Note shall be canceled;

                  (iv) In the event Executive becomes Permanently Disabled, as
that term is defined in the May 1998 Retention Agreement, or dies, Executive's
obligation to pay the then outstanding balance of the loan (including unpaid
principal and accrued interest thereon) shall be forgiven and the Promissory
Note shall be canceled.

      2. Payment of Taxes. All payments made to Executive under this Agreement
shall be subject to all applicable federal and state income, employment and
payroll taxes. At the time the Promissory Note is canceled or any payment
thereunder is forgiven, in whole or in part, or at any time thereafter as
requested by the Company, Executive hereby authorizes withholding from payroll
and any other amounts payable to him, and otherwise agrees to make adequate
provision for any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Company, which may arise in connection with
such forgiveness or cancellation. Executive acknowledges that, notwithstanding
any other provision of the Agreement, no obligations under the Promissory Note
shall be forgiven or canceled unless the tax withholding obligations of the
Company are satisfied.

      3. Parachute Payment. If due to the benefits provided under this
Agreement, Executive is subject to any excise tax due to characterization of any
amounts payable hereunder as excess parachute payments pursuant to Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company
agrees to offer the Executive the option of (i) receiving the full parachute
payment subject to the excise tax, or (ii) receiving a reduced parachute payment
that would not be subject to the excise tax (which in some circumstances may
maximize the net benefit to Executive). Unless the Company and Executive
otherwise agree in writing, any calculation required under this Section 3 shall
be made in writing by independent public accountants agreed to by the Company
and Executive (the "Accountants"), whose calculation shall be conclusive and
binding upon Executive and the Company for all purposes. For purposes of
calculating the Executive's options under this Section 3 the Accountants may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and Executive shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 3 The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 3

      4. Arbitration. Any claim, dispute or controversy arising out of this
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in Santa Clara County,
California or elsewhere by mutual agreement. The selection of the arbitrator and
the arbitration procedure shall be governed by the Commercial Arbitration Rules
of the American Arbitration Association. All costs and expenses of arbitration
or litigation, including but not limited to attorneys fees and other costs
reasonably incurred by the Executive, shall be paid by the Company. Judgment may
be entered on the award of the arbitration in any court having jurisdiction.

      5. Interpretation. Executive and the Company agree that this Agreement
shall be interpreted in accordance with and governed by the laws of the State of
California, without regard to such state's conflict of laws rules.


                                       2
<PAGE>   3
      6. Conflict in Benefits. This Agreement and the Promissory Note shall
supersede all prior arrangements, whether written or oral, and understandings
regarding the Loan. This Agreement is not intended to and shall not affect,
limit or terminate the May 1998 Retention Agreement which is supplemented hereby
and which shall remain in full force and effect as supplemented hereby.
Notwithstanding any other provision in the May 1998 Retention Agreement to the
contrary, the benefits payable under the May 1998 Retention Agreement upon a
Termination Upon Change of Control shall NOT be reduced by any amount of the
Loan which may be forgiven upon a Termination Upon Change of Control. Moreover,
this Agreement is not intended to and shall not limit (i) any plans, programs,
or arrangements of the Company that are regularly made available to a
significant number of employees of the Company, (ii) the Company's 1998
Restricted Stock Plan, (iii) any agreement or arrangement with the Executive
that has been reduced to writing and which does not relate to the subject matter
hereof, (iv) any agreements or arrangements hereafter entered into by the
parties in writing, all of which shall remain in full force and effect in
accordance with the terms thereof. With respect to the Loan, this Agreement and
the Note are the entire agreement and no other documents, understanding or
discussion has been relied upon in entering this Agreement or the Note or
contain any term or condition of this Agreement or Note.

      7. Successors and Assigns.

            (a) Successors of the Company. The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession transaction constitutes a material breach
of this Agreement by the Company. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 7 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.

            (b) Heirs of Executive. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

      8. Notices. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:

            if to the Company:     Maxtor Corporation
                                   2190 Miller Drive
                                   Longmont, Colorado 80501
                                   Attn:  General Counsel

and if to the Executive at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.


                                       3
<PAGE>   4
      9. Validity. If any one or more of the provisions (or any part thereof) of
this Agreement shall be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions (or any
part thereof) shall not in any way be affected or impaired thereby.

      10. Modification. This Agreement may only be modified or amended by a
supplemental written agreement signed by Executive and the Company. Executive
has had the opportunity to consult counsel of Executive's own choosing prior to
entering into this Agreement and Note.

      11. Ratification. The parties hereto ratify and reaffirm the May 1998
Retention Agreement and the Promissory Note dated June 23, 1999, both of which
are incorporated herein by reference.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.

                                         MAXTOR CORPORATION


Date:                                    By:    /s/ Glenn H. Stevens
      -----------                               --------------------------------
                                                Vice President, General Counsel
                                         Title: and Secretary
                                                --------------------------------

                                         EXECUTIVE:

Date:                                    /s/ Michael R. Cannon
      -----------                        ---------------------------------------
                                         Michael R. Cannon

Address for Notice:

-------------------------------

-------------------------------

-------------------------------

                                       4