Document:

Exhibit

Exhibit 10.4

CASH-SETTLED PERFORMANCE STOCK UNIT AWARD AGREEMENT

THIS CASH-SETTLED PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of March 30, 2020 (the “Award Date”) between Ocwen Financial Corporation, a Florida corporation (the “Corporation”), and [participant name], an employee of the Corporation or of a Subsidiary (the “Participant”).

WHEREAS, the Corporation desires, by granting to the Participant an award of cash-settled stock units pursuant to the Corporation’s 2017 Performance Incentive Plan (the “2017 Plan”), to further the objectives of the 2017 Plan;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto have agreed, and do hereby agree, as follows:

1.    STOCK UNIT GRANT

The Corporation hereby grants to the Participant, pursuant to and subject to the 2017 Plan, an aggregate “target” of [number of units] stock units (the “Stock Units”), on the terms and conditions herein set forth (the “Award”).  As used herein, the term “stock unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the 2017 Plan) solely for purposes of the 2017 Plan and this Agreement.  The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Paragraph 2 below.  The Stock Units shall not be treated as property or as a trust fund of any kind.  Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the 2017 Plan.

2.    VESTING OF STOCK UNITS

A.    Generally

Subject to the following provisions of this Paragraph 2 and Paragraph 4, the extent to which the Stock Units become vested and payable will be determined in accordance with the performance-based vesting conditions as set forth in Appendix A hereto, incorporated herein by this reference.  The “Vesting Date” applicable to the Stock Units is the third anniversary of the Award Date, subject to adjustment as set forth in Paragraph 2 hereof.

B.    Retirement or Termination by the Corporation Without Cause

If the Participant’s employment with the Corporation or any of its Subsidiaries terminates by reason of the Participant’s (i) Retirement or (ii) termination by the Participant’s employer without Cause (other than following a 409A Change of Control (as defined below)) at any time on or before the Vesting Date, the Award shall remain outstanding and eligible to vest as though no such termination of the Participant’s employment had occurred. In such circumstances, if the performance-based vesting conditions set forth in Appendix A are satisfied as of the Vesting Date, the Award shall vest as provided in Appendix A, provided that (i) the number of Stock Units eligible to vest shall be reduced on a pro-rata basis in proportion to the percentage of the three-year period between the Award Date and the Vesting Date that the Participant was employed by the Corporation or one of its Subsidiaries prior to such termination of the Participant’s employment; (ii) the 

Page 1 of 12

Participant satisfies the release requirement set forth in the following sentence, and (iii) the Participant complies with the conditions set forth in Paragraph 5 hereof through the Vesting Date.  As a condition of any such vesting, the Participant shall, not later than 21 days after such a termination of the Participant’s employment (or such longer period as may be required under applicable law for the Participant to consider the release in order for the release to be effective) provide the Corporation with a valid, executed written release of claims in a form acceptable to the Corporation, and such release shall not have been revoked by the Participant pursuant to any revocation rights afforded by applicable law.  Any such Stock Units that vest after the Participant’s Retirement or termination by the Participant’s employer without Cause shall be paid in accordance with Paragraph 7 hereof. 

For purposes of this Agreement, “Retirement” shall mean termination (other than by reason of death, Disability (as defined below) or by the Participant’s employer for Cause) of the Participant's employment with the Corporation or one of its Subsidiaries; provided, however, that for purposes of this Agreement only, the Participant must have attained the age of 60 and been an employee of the Corporation or any of its Subsidiaries for not less than 5 years as of the date of termination of employment by reason of Retirement. 

For purposes of this Agreement, “Cause” shall mean that the Administrator, acting in good faith based on the information then available to it, determines that the Participant: (a) has been convicted of, or has pled guilty to, a felony (under the laws of the United States or any state thereof or other applicable jurisdiction); (b) has engaged in acts of fraud, material dishonesty or other acts of willful misconduct in the course of the Participant’s duties for the Corporation or any of its Subsidiaries; (c) the Participant has willfully failed to substantially perform the Participant’s duties for the Corporation or any of its Subsidiaries; (d) has materially breached any of the provisions of any agreement to which the Participant is a party with the Corporation or any of its Subsidiaries; or (e) has materially breached any written policy of the Corporation or any of its Subsidiaries that is applicable to the Participant in the course of the Participant’s employment and has been communicated to the Participant; provided, however, as to clauses (c), (d) and (e) only, that Cause shall only exist if the Corporation or a Subsidiary (as the case may be) shall have provided written notice to the Participant of the condition(s) claimed to constitute Cause under such clause and the Participant shall have failed to remedy such circumstance(s) within 30 days following the date of such notice.

The Stock Units subject to the Award remain subject to forfeiture should the applicable performance conditions as provided in Appendix A not be met as of the Vesting Date.

For clarity, for purposes of this Agreement no termination of the Participant’s employment shall be deemed to have occurred if the Participant ceases to be employed by the Corporation or a Subsidiary but, immediately thereafter, continues in the employ of another Subsidiary or the Corporation.

C.    Death or Disability

If the Participant’s employment with the Corporation or any of its Subsidiaries is terminated at any time prior to the Vesting Date by reason of the Participant’s death or if the Participant incurs a Disability while employed by the Corporation or one of its Subsidiaries, the Award shall immediately vest on a pro-rata basis in proportion to the percentage of the three-year period between the Award Date and the Vesting Date that the Participant was employed by the Corporation or one of its Subsidiaries prior to such termination of the Participant’s employment.  In such circumstances, the performance-based vesting conditions shall be deemed to have been achieved at “Target”, as set forth in Appendix A (including as to any otherwise-completed Measurement Period set forth in Appendix A) as of the date of such death or Disability. Such Stock Units shall be paid in accordance with Paragraph 7 hereof, provided that for the purposes of such payment the Vesting Date as to such Stock Units shall be deemed to be the date of the Participant’s death or Disability 

Page 2 of 12

and payment shall be made not later than 60 days after the date of the Participant’s death or Disability.  Any remaining unvested portion of the Award after giving effect to such acceleration shall terminate and be cancelled as of the date of the Participant’s death or Disability  (For clarity, if the Participant’s employment with the Corporation or any of its Subsidiaries terminated by reason of the Participant’s death, or if the Participant incurred a Disability while employed by the Corporation or one of its Subsidiaries, mid-way between the first anniversary of the Award Date and the second anniversary of the Award Date, the Participant would vest in one-half of the “target” number of Stock Units subject to the Award, and any remaining unvested portion of the Award would terminate and be cancelled.)  For purposes of this Agreement, “Disability” shall mean  the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.  

D.    Change of Control

If a 409A Change of Control occurs on or before the Vesting Date, the Award shall remain outstanding and eligible to vest on the Vesting Date, provided that the performance-based vesting conditions shall be deemed to have been achieved at “Target” as set forth in Appendix A (including as to any otherwise-completed Measurement Period set forth in Appendix A) (that is, following the 409A Change of Control, the Award will be subject to only time-based vesting based on the Participant’s continued employment, and not a performance-based measure).  Such Stock Units shall be paid in accordance with Paragraph 7 hereof.  As used herein, “409A Change of Control” shall mean the occurrence of (a) a “change in the ownership” of the Corporation within the meaning of Treasury Regulation 1.409A-3(i)(5)(v) (which, for illustrative purposes, is generally triggered if any one person (or persons acting as a group) acquire ownership of Corporation stock which constitutes more than 50% of the total fair market value or total voting power of the stock of the Corporation), (b) a “change in the effective control” of the Corporation within the meaning of Treasury Regulation 1.409A-3(i)(5)(vi)(A)(1) (which, for illustrative purposes, is generally triggered if any one person (or persons acting as a group) acquire during a period of not more than twelve months ownership of stock of the Corporation possessing 30% or more of the total voting power of the stock of the Corporation; or certain majority changes in the membership of the Board occur over a period of not more than twelve months), or (c) a change “in the ownership of a substantial portion of the assets” of the Corporation within the meaning of Treasury Regulation 1.409A-3(i)(5)(vii) (which, for illustrative purposes, is generally triggered if any one person (or persons acting as a group) acquire during a period of not more than twelve months assets from the Corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all assets of the Corporation immediately before such acquisition(s)).

Except as expressly otherwise provided in this Paragraph 2, the Participant’s continued employment on the Vesting Date shall be a condition to the vesting of the Award and the rights and benefits under this Agreement.  

If the Participant’s employment terminated in the circumstances set forth in Paragraph 2.B prior to the 409A Change of Control and the conditions to vesting pursuant to Paragraph 2.B are satisfied, the performance-based vesting condition shall be deemed to have been achieved at “Target” as set forth in Appendix A as of the Vesting Date (including as to any otherwise-completed Measurement Period set forth in Appendix A) and such Stock Units shall be paid in accordance with Paragraph 7. 

E.     Post Change of Control Termination by the Corporation Without Cause or Resignation for Good Reason

If, following a 409A Change of Control and on or before the Vesting Date, (i) the Corporation (or Subsidiary that employs the Participant, as the case may be) terminates the Participant’s employment for any reason other than Cause or (ii) the Participant resigns employment with the Corporation (or Subsidiary that employs 

Page 3 of 12

the Participant, as the case may be) for Good Reason, the Stock Units subject to the Award shall vest as of the date of such termination of the Participant’s employment with the Corporation and its Subsidiaries (the Participant’s “Separation Date”),  with the performance-based vesting conditions deemed to have been achieved at “Target” as set forth in Appendix A (including as to any otherwise-completed Measurement Period set forth in Appendix A), subject, however, to the Participant satisfying the release requirement set forth in the following sentence.  As a condition of any such vesting, the Participant shall, not later than 21 days after such a termination of the Participant’s employment (or such longer period as may be required under applicable law for the Participant to consider the release in order for the release to be effective) provide the Corporation with a valid, executed written release of claims in a form acceptable to the Corporation, and such release shall not have been revoked by the Participant pursuant to any revocation rights afforded by applicable law.  If this Paragraph 2.E applies, payment of the Stock Units that vest shall be made in accordance with Paragraph 7, except that if the Separation Date occurs within two years following the 409A Change of Control the Vesting Date shall be deemed to be the Separation Date as to such Stock Units and such Stock Units shall be paid within 60 days following the Separation Date.
 
For the purposes of this Agreement, “Good Reason” means, a (1) a material reduction by the Corporation in Participant’s base salary; (2) a material diminution in Participant’s position; or (3) a relocation of Participant’s location of employment by more than 50 miles from the office where Participant is located as of the Award Date; provided, however, that any such condition or conditions, as applicable, shall not constitute grounds for a termination for Good Reason unless both (x) the Participant provides written notice to the Corporation of the condition(s) claimed to constitute grounds for Good Reason within 60 days of the initial existence of such condition(s), and (y) the Corporation or Subsidiary (as the case may be) fails to remedy such condition(s) within 30 days after receiving such written notice thereof; and provided, further, that in all events the termination of the Participant’s employment shall not constitute a termination for Good Reason unless such termination occurs not more than 180 days following the initial existence of the condition claimed to constitute grounds for Good Reason.

F.    Continued Employment

Except as expressly otherwise provided in this Paragraph 2, continued employment through the Vesting Date is a condition to the vesting of the Award and the rights and benefits under this Agreement.  Except as expressly otherwise provided in this Paragraph 2, employment for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Paragraph 4 below or under the 2017 Plan.  As used in this Agreement, references to the Participant’s “employment” (and similar references to the Participant’s being “employed” and an “employee”) shall include any period when the Participant is either (i) an employee of the Corporation or any of its Subsidiaries or (ii) a member of the Board.

3.    DIVIDEND AND VOTING RIGHTS

The Participant shall have no rights as a stockholder of the Corporation, no dividend rights, and no voting rights with respect to the Stock Units.

4.    TERMINATION OF AWARD

If, on or before the Vesting Date, the Participant’s employment with the Corporation or any of its Subsidiaries terminates other than under circumstances described in Paragraph 2, above (or if the termination occurs in circumstances described in Paragraph 2 above but a release or other condition to the treatment otherwise 

Page 4 of 12

provided for in Paragraph 2 above in the circumstances is not satisfied), the Award shall terminate and be cancelled as of the last day of the Participant’s employment with the Corporation or such Subsidiary.  If the Award is terminated hereunder (including, without limitation, pursuant to Appendix A, Paragraph 2 or this Paragraph 4), the Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.

5.    CONDITIONS UPON RETIREMENT

If the Participant’s employment with the Corporation or any of its Subsidiaries terminates by reason of Retirement, the rights of the Participant with respect to the Award shall be subject to the conditions that until the Award is vested, he/she shall (a) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Corporation or any of its direct or indirect Subsidiaries, and (b) be available, unless he/she shall have died, at reasonable times for consultations at the request of the Corporation’s management with respect to phases of the business with which he/she was actively connected during his/her employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.  In the event that either of the above conditions is not fulfilled, the Participant shall forfeit all rights to the Award, as of the date of the breach of the conditions of this Paragraph 5.  Any determination by the Board that the Participant is or has engaged in a competitive business or activity as aforesaid or has not been available for consultations as aforesaid shall be conclusive.

6.    NO EMPLOYMENT COMMITMENT

Nothing contained in this Agreement or the 2017 Plan constitutes an employment or service commitment by the Corporation or any of its Subsidiaries, affects the Participant’s status as an employee at will who is subject to termination with or without Cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or services, or affects the right of the Corporation or any Subsidiary to increase or decrease the Participant’s other compensation or benefits.  Nothing in this Agreement, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

7.    TIMING AND MANNER OF PAYMENT OF STOCK UNITS

On or as soon as administratively practical following the Vesting Date as provided in Appendix A (or other applicable date determined pursuant to Paragraph 2 hereof), and in all events not later than 74 days after the Vesting Date (or such other period as may be provided for in Paragraph 2), the Corporation shall deliver to the Participant a cash payment (subject to any withholding for taxes pursuant to Paragraph 8) equal to the number of Stock Units that vested on the Vesting Date multiplied by the Payment Value.  The “Payment Value” as of the Vesting Date is the sum of: (a) the closing price (in regular trading) for a share of Common Stock on the principal stock exchange on which the Common Stock is then listed or admitted to trade (the “Exchange”) on the Vesting Date or, if no sales of Common Stock were reported on the Exchange on that date, the closing price (in regular trading) for a share of Common Stock on the Exchange for the next preceding day on which sales of Common Stock were reported on the Exchange, plus (b) the amount of regular cash dividends paid by the Corporation on a share of Common Stock as to which the applicable ex-dividend date(s) are after the Award Date and on or before the Vesting Date; provided, however, that if the Corporation’s Common Stock is not listed or admitted to trade on any national securities exchange on the Vesting Date, 

Page 5 of 12

the Payment Value with respect to the Vesting Date shall be either (i) if a 409A Change of Control has occurred on or prior to the Vesting Date and the Corporation’s Common Stock has ceased to be so listed or admitted to trade in connection with such 409A Change of Control, the amount of the cash consideration paid for a share of Corporation Common Stock in such transaction plus the amount of regular cash dividends paid by the Corporation on a share of Common Stock as to which the applicable ex-dividend date(s) are after the Award Date and before the date of such 409A Change of Control, or (ii) if clause (i) is not applicable, such other amount as the Administrator determines, in its sole and absolute discretion, to be fair and reasonable and consistent with the purposes of the Award.  The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Appendix A, Paragraph 2 or Paragraph 4.

If the Participant is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of the Participant’s separation from service with the Corporation, and payment pursuant to the preceding paragraph is to be made in connection with such separation from services, the Participant shall not be entitled to any payment or benefit pursuant to the preceding paragraph until the earlier of (i) the date which is six (6) months after the Participant’s separation from service for any reason other than death, or (ii) the date of the Participant’s death.  The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.  Any amounts otherwise payable to the Participant upon or in the six (6) month period following the Participant’s separation from service that are not so paid by reason of this paragraph shall be paid as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after the Participant’s separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of the Participant’s death). If, in connection with the Participant’s separation from service, the Participant is required to provide the Corporation with a release of claims and the maximum period in which the Participant has to consider, execute, and revoke such release of claims spans two calendar years, any payment of the Stock Units vesting in connection with such separation from service shall be made in the second of such two calendar years.

The timing of payment of any Stock Units may not be changed by the Corporation (including pursuant to any provision of the Plan), except as would satisfy Treasury Regulation Section 1.409A-3(j)(4).

8.    TAX WITHHOLDING

Upon any payment in respect of the Stock Units, the Corporation shall be entitled to reduce the amount of the cash payment to the Participant with respect of the Award by the amount of any tax withholding obligations of the Corporation or its Subsidiaries with respect to such payment.

9.    ADJUSTMENT UPON SPECIFIED EVENTS

Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the 2017 Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section to the number of Stock Units (or the consideration that may become payable with respect to a vested Stock Unit) then outstanding in respect of the Award.  No such adjustment shall be made, however, as to any cash dividend or distribution that has already been taken into account in determining the Payment Value pursuant to Section 7.

10.    NON-TRANSFERABILITY OF THE AWARD 

The Award shall not be transferable otherwise than by will or by the applicable laws of descent and distribution.  More particularly (but without limiting the generality of the foregoing), the Award may not be assigned, 

Page 6 of 12

transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.  Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Award contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Award, shall be null and void and without effect.

11.    AMENDMENT

In the event that the Board amends the 2017 Plan and such amendment modifies or otherwise affects the subject matter of this Agreement, this Agreement shall, to that extent, be deemed to be amended by such amendment to the 2017 Plan.  However, the timing of payment of the Award (to the extent it becomes vested) shall be as set forth in this Award Agreement and may not be changed (pursuant to the Plan, any amendment thereto, or otherwise) except as would be compliant with (and not result in any tax, penalty or interest under) Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

12.    CONSTRUCTION

In the event of any conflict between the 2017 Plan and this Agreement, the provisions of the 2017 Plan shall control.  If any provision of this Agreement is held to be invalid or unenforceable for any reason, such provision shall be conformed to prevailing law rather than voided, if possible, in order to achieve the intent of the parties and, in any event, the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the parties hereto.  This Agreement shall be governed in all respects by the laws of the State of Florida.

13.    ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Corporation and the Participant and supersedes all other discussions, correspondence, representations, understandings and agreements between the parties, with respect to the subject matter hereof.

14.    HEADINGS

The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed a part hereof.

15.    CLAWBACK POLICY

The Stock Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or cash received with respect to the Stock Units.

16.    SECTION 409A

It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) so as not to subject the Participant to payment of any additional tax, penalty or interest imposed under Code Section 409A.  The provisions of this Agreement shall be construed and interpreted to avoid the imputation 

Page 7 of 12

of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Participant.

Page 8 of 12

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

OCWEN FINANCIAL CORPORATION

By: ___________________________________

PARTICIPANT

By: ___________________________________
    
    
 

Page 9 of 12

APPENDIX A

VESTING REQUIREMENTS

The Stock Units subject to the Award will be eligible to vest in a single installment on the Vesting Date based on the Corporation’s achievement of certain performance goals as determined below and subject to the continued service requirements set forth in this Agreement. 

The Stock Units that will be available to vest on the Vesting Date shall be determined based on the following four measurement periods (each, a “Measurement Period”), with the percentage of the “target” number of Stock Units allocated to each such Measurement Period as set forth in the chart below:

	
			
	Measurement Period
	Period Dates
	Percentage of Stock Units Allocated

	First Measurement Period
	March 30, 2020 through March 30, 2021
	15%

	Second Measurement Period
	March 30, 2021 through March 30, 2022
	15%

	Third Measurement Period
	March 30, 2022 through March 30, 2023
	15%

	Fourth Measurement Period
	March 30, 2020 through March 30, 2023
	55%

For each Measurement Period, the target number of Stock Units subject to the Award that will be allocated to that Measurement Period will be determined by multiplying the total target number of Stock Units subject to the Award by the percentage of Stock Units allocated to that Measurement Period (as shown above) (“Allocated Stock Units”). 

The Stock Units for a particular Measurement Period that will be eligible to vest will be determined by multiplying the Allocated Stock Units for that Measurement Period by the percentage of Stock Units vesting based on the Relative TSR (as defined below) achieved by the Corporation for that Measurement Period as follows:

	
			
	Relative TSR Achieved for the Measurement Period
	Performance Level
	Percentage of Allocated Stock Units Vesting

	<25th percentile
	Below Threshold
	0%

	25th percentile
	Threshold
	50%

	50th percentile
	Target
	100%

	100th percentile
	Maximum
	200%

Provided that the level of Relative TSR achieved for a Measurement Period is at least “Threshold,” the percentage of the Allocated Stock Units for that Measurement Period that will be eligible to vest for a Relative TSR for that Measurement Period achieved between the levels set forth in the table above will be determined based on straight-line interpolation between points (for clarity, if the Relative TSR achieved for the 

Page 10 of 12

Measurement Period was the 60th percentile, the percentage of the Allocated Stock Units for that Measurement Period that will be eligible to vest would be 120%). In no event will the vesting percentage exceed 200% for any Measurement Period. 
    
Definitions.  For purposes of this Appendix A, the following definitions shall apply:

“Absolute Total Shareholder Return” (or “Absolute TSR”) means, as to the applicable company for the applicable Measurement Period, the cumulative (non-compounded) total return (expressed as a percentage) of an investment in the company’s common stock for the Measurement Period, determined using the Beginning Stock Price to value the company’s common stock at the start of the Measurement Period and the Ending Stock Price to value the company’s common stock at the end of the Measurement Period.  For purposes of such determination, the Ending Price (or one or more of the Closing Stock Prices used to determine the Ending Price, as the Administrator may determine) shall be equitably and proportionately adjusted by the Administrator to the extent (if any) determined necessary by the Administrator to preserve the intended incentives of the award and mitigate the impact of any stock split, stock dividend or reverse stock split occurring during the Measurement Period and the Beginning Price (or one or more of the Closing Stock Prices used to determine the Beginning Price, as the Administrator may determine) shall be equitably and proportionately adjusted by the Administrator to the extent (if any) determined necessary by the Administrator to preserve the intended incentives of the award and mitigate the impact of any stock split, stock dividend or reverse stock split occurring during the thirty (30) consecutive trading day period used to determine the Beginning Stock Price. 

“Beginning Stock Price” as to a Measurement Period means the average of the Closing Stock Prices for the applicable company for the thirty (30) consecutive trading days ending with the first trading day of the Measurement Period.

“Closing Stock Price” means, as of any calendar day as to the applicable company for the applicable Measurement Period, the sum of (a) the closing price (in regular trading) for a share of the company’s common stock on the principal stock exchange on which the company’s common stock is then listed or admitted to trade (the “Exchange”) for the date in question or, if no sales of the company’s common stock were reported on the Exchange on that date, the closing price (in regular trading) for a share of the company’s common stock on the Exchange for the next preceding day on which sales of the company’s common stock were reported on the Exchange, plus (b) (as of any date after the Award Date) the amount of cash dividends paid by the company on a share of its common stock as to which the applicable ex-dividend date(s) are after the Award Date and on or before the particular calendar day in question.  If the applicable company’s common stock is no longer listed or admitted to trade on a national securities exchange as of any particular date, the Closing Stock Price for that date as to that company shall be the value as reasonably determined by the Administrator for purposes of the award in the circumstances.

“Compensation Peer Group” means the following companies:
		
	•
	Associated Banc-Corp

		
	•
	BankUnited, Inc.

		
	•
	Black Knight Financial Services, Inc.

		
	•
	CenterState Bank Corporation

		
	•
	CoreLogic, Inc.

		
	•
	Flagstar Bancorp, Inc.

		
	•
	Jack Henry & Associates, Inc.

		
	•
	LendingTree, Inc.

		
	•
	MGIC Investment Corporation

Page 11 of 12

		
	•
	Mr. Cooper Group Inc.

		
	•
	Navient Corporation

		
	•
	PennyMac Financial Services, Inc.

		
	•
	People's United Financial, Inc.

		
	•
	Radian Group Inc.

		
	•
	Signature Bank

		
	•
	Sterling Bancorp

		
	•
	Synovus Financial Corp.

		
	•
	Walker & Dunlop, Inc.

To measure relative performance, the Compensation Peer Group will consist of (1) companies that are in the Compensation Peer Group and are publicly-traded for the entire Measurement Period and (2) companies that are initially in the Compensation Peer Group and cease to be publicly-traded during the Measurement Period because of insolvency (with the Absolute TSRs of such companies being deemed equal to the lowest Absolute TSR of companies that are in the Compensation Peer Group for the entire period).  Companies that are initially included in the Compensation Peer Group but that cease to be publicly-traded during the Measurement Period because they are acquired or for other reasons will not be included in assessing relative performance and shall be deemed to be excluded from the Compensation Peer Group.

“Ending Stock Price” means, as to a particular Measurement Period, the average of the Closing Stock Prices for the applicable company for the thirty (30) consecutive trading days ending with the last trading day of the Measurement Period.

“Relative Total Shareholder Return” (or “Relative TSR”) means the Corporation’s Absolute TSR ranked relative to the Absolute TSR values of companies in its Compensation Peer Group (as defined above), expressed as a percentile where the highest Absolute TSR achieved by the Corporation or other company in the Compensation Peer Group is the 100th percentile and the lowest Absolute TSR achieved by the Corporation or other company in the Compensation Peer Group is the 0th percentile. 

Determination.  Following the end of each Measurement Period, the Administrator shall make a determination as to the Corporation’s achievement of the performance-based vesting requirements set forth in this Appendix A as to that Measurement Period. Any portion of the Allocated Stock Units subject to the Award for a particular Measurement Period that are outstanding at the end of that Measurement Period and are not eligible to vest in accordance with this Appendix A based on the Corporation’s performance for that Measurement Period shall terminate as of the last day of that Measurement Period (except as provided in Paragraph 2 of the Agreement).  In all events, the Administrator’s determination of the Corporation’s performance during each Measurement Period, and the number of Stock Units eligible to vest, pursuant to this Appendix A shall be final and binding.

* * *

Page 12 of 12Document

Exhibit 10.1
                                        
						
		Western Digital Corporation
		5601 Great Oaks Parkway
		San Jose, California 95119

February 18, 2020    

David Goeckeler
[address redacted]

Dear David,

It is with great pleasure that we at Western Digital extend this offer of employment to you to serve as our Chief Executive Officer reporting to the Board of Directors. In connection with your appointment as our Chief Executive Officer, the Board of Directors also intends to appoint you as a member of the Board, effective on or around your employment start date. This offer is contingent upon successful completion of background and reference checks.

Salary
This position is exempt and will pay an annual base salary of $1,250,000 (US Dollars).

Annual Short-Term Incentive Compensation During your employment, you will be eligible to participate in Western Digital's Executive Short-Term Incentive (STI) Plan beginning with a pro rata award for fiscal year 2020. The performance period is Western Digital’s fiscal year, which begins on or about July 1 each fiscal year. Your start date must be at least one month prior to the end of the fiscal year to be eligible to participate. The payout will be based on your eligible wages earned during the performance period. Funding will be based on corporate business results and is contingent upon approval by the Compensation Committee of the Board of Directors (Committee). Your individual target payout is 175% of your eligible earnings for each performance period.

Annual Long-Term Incentive Compensation
During your employment, you will also be eligible to receive awards under our annual long-term incentive (LTI) program beginning in fiscal year 2021. Contingent upon approval by the Committee, we will recommend a fiscal year 2021 LTI award with a market value at grant of $12,000,000 (US Dollars). The LTI award will consist of 40% restricted stock units (RSUs) and 60% performance stock units (PSUs).       

Sign-On Awards
Contingent upon your commencing employment with Western Digital, you will receive the following sign-on awards with an aggregate market value at grant of $34,000,000 (US Dollars):

RSU Award
The sign-on award will include an RSU grant with a market value at grant of $10,000,000 (US Dollars) which will be subject to Western Digital's Standard Terms and Conditions for restricted stock unit awards. This award value will be converted to a number (rounded down to the nearest whole number) of RSUs equal to (i) $10,000,000 (US Dollars), divided by (ii) the closing stock price of a share of Western Digital’s common stock as of the grant date of the award.  The grant date will be within 30 calendar days of your first day of employment at Western Digital. These RSUs are to be settled in shares of Western Digital common stock at the time of vesting. Vesting will occur in substantially equal annual installments on each of the next two (2) anniversaries of the date of grant. Please note that vesting will cease upon termination of your service with Western Digital or one of its subsidiaries, except if we terminate your employment without “Cause” (as defined in Western Digital’s Executive Severance Plan).  If we terminate your employment without Cause, the sign-on RSU award will fully vest and be settled in connection with your separation date provided that you satisfy applicable release requirements. 

PSU Award
The sign-on award will include a PSU grant with a market value at grant of $20,500,000 (US Dollars) which will be subject to Western Digital's Standard Terms and Conditions for performance stock unit awards. This award value will be converted to a number (rounded down to the nearest whole number) of PSUs equal to (i) $20,500,000 (US Dollars), divided by (ii) the closing stock price of a share of Western Digital’s common stock as of the grant date of the award. The grant date will be within 30 calendar days of your first day of employment at Western Digital. These PSUs are to be settled in shares of Western Digital common stock at the time of vesting. Vesting will be based on Western Digital’s relative TSR performance compared to the S&P 500 Index constituents over a three (3) year period, with payout of 50% at 25th percentile performance, 80% payout at median performance and 150% payout at 75th percentile performance. Payout for performance between these points will be determined using straight line interpolation. Please note that vesting will cease upon termination of your service with Western Digital or one of its subsidiaries, except if we terminate your employment without Cause.  If we terminate your employment without Cause, the sign-on PSU award will remain outstanding and subject to the performance conditions underlying the award; the award will settle at the end of the performance period based on Western Digital’s actual performance under the award provided that you satisfy applicable release requirements. 

Sign-On Cash 
The sign-on award will include a cash payment of $3,500,000 (US Dollars), payable within three weeks of your start date. The sign-on cash award is subject to repayment to Western Digital if you do not remain employed by Western Digital through the first anniversary of your start date, unless we terminate your employment without Cause. If we terminate your employment without Cause, you will not be required to repay the sign-on cash award if you provide a satisfactory release of claims to Western Digital. The sign-on cash award is considered taxable income to you. 

Change in Control
Western Digital’s current Standard Terms and Conditions for RSUs and PSUs generally provide that, in connection with a transaction in which Western Digital will not survive or will not survive as a public company in respect of our common stock, the Committee may provide that performance will be deemed satisfied as to open PSU performance periods at 100% of the applicable “target” level or such greater level as the Committee may provide, a unit subject to the awards may be settled in cash based on the closing transaction price, and if the awards are to be terminated (and not assumed or continued) in the transaction, all time-based vesting requirements applicable to RSUs and PSUs will be deemed satisfied. In addition to the foregoing change in control benefits, you will be entitled to severance benefits in the event you are terminated without “Cause” or you resign for “Good Reason” following a Change in Control pursuant to Western Digital’s Change of Control Severance Plan. Such severance benefits generally consist of: a lump sum payment equal to two times your annual base salary plus target STI award; 100% vesting of any unvested outstanding equity awards, with any performance-based equity awards becoming vested at target; and 24 months of continued health and welfare benefits.

Confidential Information
As a condition of employment, immediately upon hire you will be required to sign an Employee Inventions and Confidentiality Agreement governing inventions, proprietary information and such other subject matter, which Western Digital considers vital to protect its operation. Please also be advised that Western Digital respects the confidential information and trade secrets of others and endeavors to comply with all laws regarding the use and protection of trade secret information. Western Digital takes its obligations in this respect very seriously and expects the same from its employees. As you prepare to terminate your current employment, please ensure that all documents and property belonging to your employer are returned. This includes documents you may have prepared in the course of your employment and documents that may be in your home, on your home computer or in your car. Western Digital does not want access to any confidential information belonging to your former employer and specifically directs you not to take this information with you or bring onto Western Digital’s premises. You are prohibited from using trade secret or confidential information or property of any previous employer or other person in connection with carrying out your job duties at Western Digital.  

Employment Terms
You are employed by Western Digital on an at-will basis. This means that either you or Western Digital may terminate the employment relationship at any time, with or without cause. The at-will nature of your employment with Western Digital can only be changed by an agreement in writing signed by you and the Chief Human Resources Officer. Furthermore, by accepting employment with Western Digital, you warrant that you are not bound by the terms of an employment agreement with a third party that would preclude or limit your right to work for Western Digital. You agree to provide Western Digital with a copy of any and all agreements with a third party that contain any restrictions or obligations that conflict with, or are inconsistent with, the performance of your duties for Western Digital.

Benefits
As a senior leader in the organization you will not accrue vacation hours, but will coordinate your time off around the needs of the business. You will be eligible on your first day of employment for our benefits plan, which allows you to choose the coverage that fits your needs. You will also be eligible to 

join the Western Digital Corporation 401(k) Plan immediately. You will receive a complete benefits summary during your orientation on your first day of employment. Your position qualifies you for additional benefits provided exclusively to executives of your level including Financial Counseling Reimbursement and company paid life insurance up to $500,000 (US Dollars) (which may require evidence of insurability).

Employment Commencement
Your first day of employment will be a mutually acceptable date in March 2020 to be determined.  Your work location will be at our headquarters at 5601 Great Oaks Parkway, San Jose, CA 95119. On your first day, you will be required to provide authentic documents that establish your identity and employment eligibility.

Notwithstanding anything else contained herein to the contrary, this offer and your employment by Western Digital are subject to your appointment by the Board of Directors as Western Digital’s Chief Executive Officer.

If there are any questions of which I may be of assistance, please let me know.

Sincerely,

/s/Lori Sundberg

Lori Sundberg 
Chief Human Resources Officer

Accepted and Agreed:

						
	/s/David Goeckeler	Date: 03/02/20
	David Goeckeler

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}]]