SanDisk 2005 Annual Report Download - page 24

Proxy Statement
share reserve by reason of stock dividends, stock splits or similar transactions affecting the outstanding
Common Stock.
The plan administrator will have complete discretion under the program to determine which eligible
individuals are to receive such stock issuances or stock-based awards, the time or times when those issuances
or awards are to be made, the number of shares subject to each such issuance or award, the vesting schedule to
be in effect for the issuance or award and the cash consideration (if any) payable per share. The shares issued
may be fully and immediately vested upon issuance or may vest upon the completion of a designated service
period or the attainment of pre-established performance goals. If stockholders approve the 2005 Plan proposal,
the plan administrator will also have discretion under the program to determine which eligible individuals may
be granted cash bonus opportunities that are intended to be ""performance-based compensation'' within the
meaning of Section 162(m) of the Internal Revenue Code, as described below. Performance-based awards
granted under the 2005 Plan that may be paid only in cash and not related to shares and that are granted to
any one individual in any one calendar year will not provide for payment of more than $5,000,000.
In order to assure that the compensation attributable to one or more restricted stock issuances, restricted
stock units or other stock-based awards, or cash bonus opportunities under the program will qualify as
performance-based compensation which will not be subject to the $1 million limitation on the income tax
deductibility of the compensation paid per executive officer which is imposed under Section 162(m), the plan
administrator will also have the discretionary authority to structure one or more restricted stock issuances,
restricted stock units or other stock-based awards so that the shares of Common Stock subject to those
issuances, units or awards or, in the case of a cash bonus opportunity, the right to receive any payment with
respect to such opportunity, will vest only upon the achievement of certain pre-established corporate
performance goals based on one or more of the following criteria: (1) return on total stockholder equity;
(2) earnings per share; (3) net income or operating income before or after acquisition- related charges and
charges for stock-based compensation (all before or after taxes); (4) earnings before interest, taxes,
depreciation and amortization; (5) earnings before interest, taxes, depreciation, amortization, acquisition-
related charges and charges for stock-based compensation, (6) sales or revenue targets; (7) return on assets,
capital or investment; (8) cash flow; (9) market share; (10) cost reduction goals; (11) budget comparisons;
(12) measures of customer satisfaction; (13) any combination of, or a specified increase in, any of the
foregoing; (14) new product development or successful completion of research and development projects; and
(15) the formation of joint ventures, research or development collaborations, or the completion of other
corporate transactions intended to increase the Company's revenue or profitability or enhance the Company's
customer base. In addition, such performance goals may be based upon the attainment of specified levels of
the Company's performance under one or more of the measures described above relative to the performance of
other entities and may also be based on the performance of any of the Company's business units or divisions or
any parent or subsidiary. Performance goals may include a minimum threshold level of performance below
which no award will be earned, levels of performance at which specified portions of an award will be earned
and a maximum level of performance at which an award will be fully earned.
The plan administrator will have the discretionary authority at any time to accelerate the vesting of any
and all shares of restricted stock or other unvested shares outstanding under the stock issuance program.
However, no vesting requirements tied to the attainment of performance objectives may be waived with
respect to shares which were intended at the time of issuance to qualify as performance-based compensation
under Section 162(m), except in the event of certain involuntary terminations or changes in control or
ownership.
Outstanding restricted stock units or other stock-based awards under the stock issuance program will
automatically terminate, and no shares of the Company's Common Stock will actually be issued in satisfaction
of those units or awards, if the performance goals or service requirements established for such units or awards
are not attained. The plan administrator, however, will have the discretionary authority to issue shares of the
Company's Common Stock in satisfaction of one or more outstanding restricted stock units or other stock-
based right awards as to which the designated performance goals or service requirements are not attained.
However, no vesting requirements tied to the attainment of performance objectives may be waived with
respect to units or awards which were intended at the time of issuance to qualify as performance-based
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