SanDisk 2009 Annual Report Download - page 25

Proxy Statement
Director Compensation
Compensation for Non-Employee Directors during fiscal 2009 generally consisted of an annual retainer,
committee membership fees and annual share-based awards.
Annual Retainer and Committee Membership Fees
The following table sets forth the schedule of the annual retainer and committee membership fees for each
Non-Employee Director in effect during fiscal 2009:
Type of Fee Dollar Amount
Annual Board Retainer ............................................................ $40,000
Additional Annual Fee to Chair of Audit Committee .................................... $30,000
Additional Annual Fee to Chairs of Compensation Committee and Nominating and Governance
Committee ................................................................... $12,000
Additional Annual Fee to non-Chair Member of Audit Committee ......................... $20,000
Additional Annual Fee to non-Chair Member of Compensation Committee and Nominating and
Governance Committee ......................................................... $ 7,500
All Non-Employee Directors are also reimbursed for out-of-pocket expenses they incur serving as directors.
Share-Based Awards
Under our Non-Employee Director compensation policy as currently in effect, a Non-Employee Director
who first takes office and who has not been employed by the Company in the preceding twelve months receives,
at the time of his or her election or appointment to the Board, (i) an initial option grant to purchase 25,000 shares
of the Common Stock (the “Initial Option Grant”), and (ii) an initial restricted stock unit grant for a number of
units determined by dividing $320,000 by the average closing price per share of Common Stock on the
NASDAQ Global Market for the five 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 months at the time of grant
also receives an annual award consisting of (i) an option grant to purchase 6,250 shares of Common Stock (the
“Annual Option Grant”), and (ii) a restricted stock unit grant for a number of units determined by dividing
$80,000 by the average closing price per share of Common Stock on the NASDAQ Global Market for the five
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 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 the NASDAQ Global Market 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
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