SanDisk 2007 Annual Report Download - page 39

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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.
Stock Options
Each stock option reported in column (g) of the table above was granted with a per-share exercise price equal to
the fair market value of a share of the Company’s Common Stock on the grant date. For these purposes, and in
accordance with the terms of the 2005 Plan and the Company’s option grant practices, the fair market value is equal
to the closing price of a share of Common Stock on the NASDAQ Global Select Market on the applicable grant date.
Each stock option granted to our Named Executive Officers in fiscal 2007 is subject to a four year vesting
schedule, with 25% of the option vesting on March 20, 2008, and the remaining 75% of the option vesting in twelve
substantially equal installments on each successive three month anniversary of March 20, 2008. Once vested, each
stock option will generally remain exercisable until its normal expiration date. Each of the stock options granted to
our Named Executive Officers in fiscal 2007 has a term of seven years. Outstanding options, 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 stock option
will immediately terminate upon a termination of the Named Executive Officer’s employment. The Named
Executive Officer will generally have three months to exercise the vested portion of the stock option following a
termination of employment. This period is extended to twelve months if the termination is on account of the Named
Executive Officer’s death or permanent disability. However, if a Named Executive Officer’s employment is
terminated by the Company for “misconduct” (as determined under the plan), outstanding stock options (whether
vested or unvested) will immediately terminate.
The stock options granted to the Named Executive Officers during fiscal 2007 do not include any dividend or
dividend equivalent rights.
Restricted Stock Units
Each restricted stock unit awarded to our Named Executive Officers in fiscal 2007 represents a contractual
right to receive one share of the Company’s Common Stock if the time-based 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.
Mr. Mehrotra’s restricted stock unit award consisting of 50,000 shares is subject to a four year vesting
schedule, with 25% of the restricted stock unit vesting on March 20, 2008, and the remaining 75% of the restricted
stock unit vesting in three substantially equal installments on each successive one year anniversary of March 20,
2008. Mr. Mehrotra’s restricted stock unit award consisting of 15,000 shares is subject to a one year vesting
schedule, with 100% of the restricted stock vesting on March 20, 2008. Subject to any accelerated vesting that may
apply, upon the termination of a Named Executive Officer’s employment, any then-unvested restricted stock units
will generally terminate.
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 or dividend rights with respect to
the restricted stock units. Non-Employee Directors 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).
36