SanDisk 2010 Annual Report Download - page 36

options may be exercised and/or to accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain outstanding, whether before or after the
optionee’s actual cessation of service.
The 2005 Plan allows the issuance of two types of stock appreciation rights under the discretionary grant
program:
• Tandem stock appreciation rights provide the holders with the rights to surrender their options for an
appreciation distribution from the Company in an amount equal to the excess of (i) the fair market
value of the vested shares of Common Stock subject to the surrendered option over (ii) the aggregate
exercise price payable for those shares.
• Stand-alone stock appreciation rights allow the holders to exercise those rights as to a specific number
of shares of Common Stock and receive in exchange an appreciation distribution from the Company in
an amount equal to the excess of (i) the fair market value of the shares of Common Stock as to which
those rights are exercised over (ii) the aggregate base price in effect for those shares. The base price per
share may not be less than the fair market value per share of Common Stock on the date the stand-alone
stock appreciation right is granted, and the right may not have a term in excess of seven (7) years.
The distribution on any exercised tandem or stand-alone stock appreciation right will be made in shares of
the Company’s Common Stock. Stock appreciation rights will remain exercisable for a limited period following
the holder’s cessation of service, but only to the extent those rights are exercisable at the time of such cessation
of service. The plan administrator will have complete discretion to extend the period following the holder’s
cessation of service during which his or her outstanding stock appreciation rights may be exercised and/or to
accelerate the exercisability or vesting of those stock appreciation rights in whole or in part. Such discretion may
be exercised at any time while the stock appreciation right remains outstanding, whether before or after the
holder’s actual cessation of service.
Stock Issuance and Cash Bonus Programs. Shares may be issued under the stock issuance program at a
price per share not less than their fair market value, payable in cash or other valid consideration under Delaware
law. Shares may also be issued as a bonus for past services without any cash purchase price required of the
recipient. Shares of Common Stock may also be issued under the program pursuant to share right awards or
restricted stock units, which entitle the recipients to receive those shares, without the payment of any cash
purchase price, upon the attainment of designated performance goals or the completion of a prescribed service
period or upon the expiration of a designated time period following the vesting of those awards or units,
including (without limitation) a deferred distribution date following the termination of the recipient’s service
with the Company.
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. 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
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