SanDisk 2013 Annual Report Download - page 49

periods. The Compensation Committee also takes into consideration the number of unvested share-based
incentive awards held by each Named Executive Officer, in order to maintain an appropriate level of
equity incentive for that individual. However, the Compensation Committee does not adhere to any
specific guidelines as to the relative equity award holdings of the Company’s executive officers, including
the Named Executive Officers. Furthermore, similar to the setting of base salaries, the weighting of the
above factors is subjective, and the Compensation Committee does not use a formula to determine the
number or value of share-based incentive awards granted to any executive officer, including the Named
Executive Officers.
Timing. The Compensation Committee typically grants long-term share-based incentive awards in
the first quarter of the fiscal year, except for awards to new hires and awards related to the promotion and
retention of current employees. However, there is no formal program, plan or policy in place at the
Company or in the Compensation Committee’s charter with respect to the timing of long-term share-based
incentive award grants, except as set forth below with respect to grants to new employees and related to
promotions and retention. The Compensation Committee has complete discretion as to when it awards
long-term share-based incentive awards. There is also no program, plan or policy related to the timing of
grants to the executive officers in coordination with the release of material nonpublic information.
Long-term share-based incentive awards granted to new hires or to promoted employees occur after the
new hire has joined the Company or, in the case of a promoted employee, after the promotion has been
approved. For a newly hired or promoted executive officer, the associated stock award is granted at the
next meeting of the Compensation Committee. For a newly hired or promoted employee who is not an
executive officer, the associated stock award is granted by the Company’s Special Option Committee or
Secondary Executive Committee which generally takes actions at least once per month.
Stock Options. The Compensation Committee grants a portion of the long-term share-based
incentive awards to the executive officers, including the Named Executive Officers, in the form of stock
options with an exercise price that is equal to the fair market value of the closing price of the Common
Stock on the grant date. Thus, the Named Executive Officers will only realize value on their stock options
if the Company’s stockholders realize value on their shares. The stock options also function as a retention
incentive for the Company’s executive officers as they generally vest and become exercisable over a four
(4) year period following the grant date. In fiscal year 2013, the Compensation Committee granted stock
options to each of the Named Executive Officers. The material terms of these stock options granted in
fiscal year 2013 to the Named Executive Officers are described below under ‘‘Grants of Plan-Based
Awards in Fiscal 2013.’’
RSUs. The Compensation Committee grants a portion of the long-term share-based incentive
awards to the executive officers, including the Named Executive Officers, in the form of RSUs. An RSU
represents a contractual right to receive one share of Common Stock if the applicable vesting requirements
are satisfied. The Company has determined that it is advisable to grant RSUs in addition to stock options
(and in lieu of larger stock option grants) in order to minimize stock expense to the Company and dilution
to stockholders as well as to attract and retain the executive officers. RSUs granted in fiscal year 2013
function as a retention incentive as they generally vest and result in the annual issuance of stock over a
four (4) year period following the grant date. In fiscal year 2013, the Compensation Committee granted
RSUs subject to such time-based vesting to each of the Named Executive Officers. The material terms of
these RSUs granted in fiscal year 2013 to the Named Executive Officers are described below under
‘‘Grants of Plan-Based Awards in Fiscal 2013.’’
In fiscal year 2013, the Compensation Committee granted each Named Executive Officer RSUs and
stock options as described under ‘‘Grants of Plan-Based Awards in Fiscal 2013.’’ The Compensation
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Proxy Statement