Seagate (STX) Commits to Restructuring Plan: to Cut 6% of Workforce and Reduce Exec Compensation

January 14, 2009 10:12 AM EST

In a Form 8-K, Seagate Technology (NYSE: STX) today announced that on January 11, 2009, the company committed to a restructuring plan intended to realign its cost structure with the current macroeconomic business environment.

The Plan includes reducing worldwide headcount by approximately 2,950 people, representing approximately 6% of its global employee headcount, which is inclusive of the previously disclosed 10% reduction of the U.S. workforce.

The Plan, which the Company expects to largely complete by the end of the March quarter, is expected to result in total pretax charges of approximately $90 million. These charges will primarily be incurred in the December 2008 quarter, and will consist mainly of employee termination costs, with the majority of cash payments expected to be paid in the March 2009 quarter. The savings generated from these restructuring activities are expected to amount to approximately $130 million annually.

In connection with the Company’s overall cost reduction strategy, the Company expects to reduce salaries of certain employees, including its named executive officers, as follows:

• 25% for CEO, Named Executive Officers and Executive Vice Presidents
  
• 20% for Senior Vice Presidents
  
• 15% for Vice Presidents
  
• 10% for management, sales, supervisors and professional employees.

The salary reductions are expected to be finalized shortly and become effective in February 2009. The estimated savings generated from these salary reductions are expected to amount to approximately $80 million annually.

Seagate Technology engages in the design, manufacture, and marketing of disc drives for enterprise, desktop, mobile computing, consumer electronics, and branded solutions markets of the disc drive industry.

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