SanDisk 2010 Annual Report Download - page 96

B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock Issuance and Cash Bonus Program may, in the
discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or
more installments over the Participant’s period of Service or upon the attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued
under the Stock Issuance and Cash Bonus Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under the
Stock Issuance and Cash Bonus Program pursuant to share right awards or restricted stock units which
entitle the recipients to receive the shares underlying those awards or units upon the attainment of
designated performance goals or the satisfaction of specified Service requirements 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 Participant’s Service.
2. The Plan Administrator shall also have the discretionary authority, consistent with Code
Section 162(m), to structure one or more stock issuances, or restricted stock unit or share right awards or
cash bonus awards so that the shares of Common Stock or cash subject to those issuances or awards shall
vest (or vest and become issuable or payable) 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) measures of inventory turns or inventory weeks of supply;
(14) new product development or successful completion of research and development projects; (15) the
formation of joint ventures, research or development collaborations, or the completion of other corporate
transactions intended to increase the Corporation’s revenue or profitability or enhance its customer base;
and (16) any combination of, or a specified increase in, any of the foregoing. Any of the performance goals
related to profitability may be based on either a GAAP or a non-GAAP measure, as determined by the
Compensation Committee; provided that such non-GAAP measures comply with the requirements of
Section 162(m) of the Code. In addition, such performance goals may be based upon the attainment of
specified levels of the Corporation’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
Corporation’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. To qualify awards as performance-based under Section 162(m), the applicable
criterion (or criteria, as the case may be) and specific performance goal or goals (“targets”) must be
established and approved by the Plan Administrator during the first 90 days of the performance period (and,
in the case of performance periods of less than one year, in no event after 25% or more of the performance
period has elapsed) and while performance relating to such target(s) remains substantially uncertain within
the meaning of Section 162(m) of the Code. Performance targets shall be adjusted to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set unless the Plan Administrator provides
otherwise at the time of establishing the targets. The applicable performance measurement period may not
be less than three months nor more than 10 years.
3. Any new, substituted or additional securities or other property (including money paid other than as a
regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s
unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting
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