SanDisk 2010 Annual Report Download - page 75

Proxy Statement
Description of Plan-Based Awards
All actual non-equity incentive plan payouts were made under the fiscal 2010 annual cash incentive plan
and are disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan
Compensation.”
During fiscal 2010, each Named Executive Officer was awarded time-based restricted stock unit and stock
option awards. Each of these awards was granted under, and is subject to the terms of, the 2005 Plan. The plan is
administered by the Compensation Committee. The Compensation Committee has authority to interpret the plan
provisions and make all required determinations under the plan. This authority includes making required
proportionate adjustments to outstanding awards upon the occurrence of certain corporate events such as
reorganizations, mergers and stock splits, and making provision to ensure that any tax withholding obligations
incurred in respect of awards are satisfied. Awards granted under the 2005 Plan are generally only transferable to
a beneficiary of a Named Executive Officer upon his or her death. However, the Compensation Committee may
establish procedures for the transfer of awards to other persons or entities, provided that such transfers comply
with applicable securities laws and, with limited exceptions set forth in the plan document, are not made for
value.
Under the terms of the 2005 Plan, if there is a change in control of the Company, each Named Executive
Officer’s outstanding share-based awards granted under the plan will generally become fully vested and, in the
case of options, exercisable to the extent such outstanding awards are not substituted or assumed in connection
with the transaction. Any options that become vested in connection with a change in control generally must be
exercised prior to the change in control, or they will be canceled in exchange for the right to receive a cash
payment in connection with the change in control transaction. In addition, if there is a change in control of the
Company, the Compensation Committee may terminate the performance period applicable to the cash incentive
award and pro-rate (based on the number of days during the performance period prior to the transaction) the
bonus and performance targets based on year-to-date performance.
Restricted Stock Units
Each restricted stock unit reported in column (c) of the table above and granted to the Named Executive
Officers in fiscal 2010 represents a contractual right to receive one share of the Company’s Common Stock if the
vesting requirements described below are satisfied. Restricted stock units are credited to a bookkeeping account
established by the Company on behalf of each Named Executive Officer receiving such an award. The restricted
stock units are subject to a four year vesting schedule, with 25% of the units vesting on each of the first four
anniversaries of the date of grant. Outstanding restricted stock units, however, may terminate earlier in
connection with a change in control transaction or a termination of the Named Executive Officer’s employment.
Subject to any accelerated vesting that may apply, the unvested portion of the restricted stock unit will
immediately terminate upon a termination of the Named Executive Officer’s employment.
Restricted stock units will generally be paid in an equivalent number of shares of the Company’s Common
Stock as they become vested. Named Executive Officers are not entitled to voting rights with respect to the
restricted stock units. Named Executive Officers are, however, entitled to the following dividend equivalent
rights with respect to the restricted stock units. If the Company pays a cash dividend on its Common Stock and
the dividend record date occurs after the grant date and before all of the restricted stock units have either been
paid or terminated, then the Company will credit the Named Executive Officer’s bookkeeping account with an
amount equal to (i) the per-share cash dividend paid by the Company on its Common Stock with respect to the
dividend record date, multiplied by (ii) the total number of outstanding and unpaid restricted stock units
(including any unvested restricted stock units) as of the dividend record date. These dividend equivalents will be
subject to the same vesting, payment and other terms and conditions as the original restricted stock units to which
they relate (except that the dividend equivalents may be paid in cash or such other form as the plan administrator
may deem appropriate).
63