SanDisk 2010 Annual Report Download - page 49

Proxy Statement
(i) the amount by which the fair market value of the shares on the sale or disposition date exceeded the purchase
price paid for those shares or (ii) the excess of the fair market value of the shares on the start date of that offering
period over the purchase price which would have been paid for those shares had they been purchased on that start
date, and any additional gain upon the disposition will be taxed as a long-term capital gain. The Company will
not be entitled to an income tax deduction with respect to such disposition.
A participant who still owns the purchased shares at the time of death will recognize taxable income equal
to the lesser of (i) the amount by which the fair market value of the shares on the date of death exceeds the
purchase price or (ii) the excess of the fair market value of the shares on the start date of the offering period in
which those shares were acquired over the purchase price which would have been paid for those shares had they
been purchased on that start date.
Foreign Taxation.
The income tax consequences to participants in the International Plan will vary by country. Generally, those
participants will be subject to taxation at the time the shares are purchased.
Accounting Treatment
Pursuant to the accounting principles currently applicable to employee stock purchase plans such as the
2005 Purchase Plans, the fair value of each purchase right granted under the 2005 Purchase Plans will be charged
as a direct compensation expense to the Company’s reported earnings over the offering period to which that
purchase right pertains. The fair value of each such purchase right will be determined as of its grant date.
New Plan Benefits
Because benefits under the 2005 Purchase Plans will depend on employees’ elections to participate and the
fair market value of the Company’s common stock at various future dates, it is not possible to determine the
benefits that will be received by executive officers and other employees if the amendments to the 2005 Purchase
Plans are approved by the stockholders. Non-employee directors are not eligible to participate in the 2005
Purchase Plans.
Required Vote
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and
entitled to vote on Proposal No. 4 is required for approval of the amendments to the 2005 Purchase Plans
described above. If stockholders do not approve this proposal, then the current share limits under, and other terms
and conditions of, the 2005 Purchase Plans will continue in effect.
Recommendation of the Board of Directors
The Board believes that it is in the Company’s best interests to continue to provide its employees with the
opportunity to acquire an ownership interest in the Company through their participation in the 2005 Purchase
Plans and thereby encourage them to remain in the Company’s employ and more closely align their interests with
those of the stockholders.
The Board believes that Proposal No. 4 is in the Company’s best interests and the best interests of its
stockholders and unanimously recommends a vote FOR the approval of the amendments to the 2005
Purchase Plans.
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