SanDisk 2012 Annual Report Download - page 29

Proxy Statement
(“RSU”) grant for a number of units determined by dividing $320,000 by the average closing price per share of
Common Stock on NASDAQ for the five (5) trading days ended on, and including, the grant date (the “Initial
Unit Grant”). Each Non-Employee Director who has served in that capacity for at least six (6) months at the time
of grant also receives, on the date of the annual meeting of the Company’s stockholders, an annual award
consisting of (i) an option grant to purchase 6,250 shares of Common Stock (the “Annual Option Grant”), and
(ii) an RSU grant for a number of units determined by dividing $80,000 by the average closing price per share of
Common Stock on NASDAQ for the five (5) trading days ended on, and including, the grant date (the “Annual
Unit Grant”). The initial and annual awards described above are granted under, and are subject to, the Company’s
Amended and Restated 2005 Incentive Plan, as amended (the “2005 Plan”).
Initial and Annual Stock Option Grants. The Initial and Annual Option Grants are granted with a per share
exercise price equal to the fair market value of a share of Common Stock on the grant date. For these purposes,
and in accordance with the terms of the 2005 Plan and the Company’s share-based award grant practices, the fair
market value is equal to the closing price of a share of the Common Stock on NASDAQ on the grant date.
The stock options granted to Non-Employee Directors are immediately exercisable. However, upon a
Non-Employee Director’s cessation of service with the Company, any shares purchased upon exercise of the
option that have not vested (as described below) are subject to repurchase by the Company at the lower of (i) the
exercise price paid for the shares or (ii) the fair market value of the shares at the time of repurchase (as
determined under the 2005 Plan). This type of stock option is generally referred to as an “early exercise” stock
option because the holder is permitted to exercise the option prior to the time that the underlying shares vest.
Subject to the Non-Employee Director’s continued service, the shares subject to the Initial Option Grant vest, and
the Company’s repurchase right lapses, in four substantially equal annual installments on each of the first
through fourth anniversaries of the grant date. Subject to the Non-Employee Director’s continued service, the
shares subject to the Annual Option Grant vest, and the Company’s repurchase right lapses, in one installment on
the earlier of (i) first anniversary of the grant date or (ii) the day immediately preceding the next annual meeting
of the Company’s stockholders following the grant date.
Once vested, each option will generally remain exercisable for fully vested shares of Common Stock
(i.e., shares which are not subject to the Company’s repurchase right) until its normal expiration date. Each of the
options granted to the Company’s Non-Employee Directors under the 2005 Plan has a term of seven (7) years.
However, vested stock options may terminate earlier in connection with a change in control of the Company.
Pursuant to the terms of the 2005 Plan, stock options granted to the Company’s Non-Employee Directors will
vest on an accelerated basis in connection with a change in control of the Company. Shares subject to the option
that have not vested will immediately terminate (or be subject to the Company’s repurchase right to the extent
already purchased under the option) upon the cessation of the Non-Employee Director’s service. However, the
shares subject to options vest, and the Company’s repurchase right lapses, in full if the Non-Employee Director’s
cessation of service is as a result of the Director’s death or permanent disability. Non-Employee Directors
generally have twelve (12) months to exercise the vested portion of the option following a cessation of service.
The options granted to Non-Employee Directors do not include any dividend or dividend equivalent rights.
However, Non-Employee Directors are entitled to dividends with respect to shares purchased upon the exercise
of options, whether or not such shares have vested under the option, at the same rate as the Company’s other
stockholders.
Initial and Annual RSU Grants. Each RSU awarded to the Company’s Non-Employee Directors represents
a contractual right to receive one share of the Common Stock if the time-based vesting requirements described
below are satisfied.
Subject to the Non-Employee Director’s continued service, the units subject to the Initial Unit Grant vest in
four substantially equal annual installments on each of the first through fourth anniversaries of the grant date.
Subject to the Non-Employee Director’s continued service, the units subject to the Annual Unit Grant vest in one
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