SanDisk 2010 Annual Report Download - page 215

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
Note 8: Compensation and Benefits
Share-Based Benefit Plans
2005 Incentive Plan.On May 27, 2005, the Company’s stockholders approved the 2005 Stock Incentive
Plan, which was amended in May 2006 and renamed the 2005 Incentive Plan (“2005 Plan”). Shares of the
Company’s common stock may be issued under the 2005 Plan pursuant to three separate equity incentive
programs: (i) the discretionary grant program under which stock options and stock appreciation rights may be
granted to officers and other employees, non-employee board members and independent consultants, (ii) the
stock issuance program under which shares may be awarded to such individuals through restricted stock or
restricted stock unit awards or as a stock bonus for services rendered to the Company, and (iii) an automatic grant
program for the non-employee board members pursuant to which such individuals will receive option grants or
other stock awards at designated intervals over their period of board service. The 2005 Plan also includes a
performance-based cash bonus awards program for employees classified under Section 16. Grants and awards
under the discretionary grant program generally vest as follows: 25% of the shares will vest on the first
anniversary of the vesting commencement date and the remaining 75% will vest proportionately each quarter
over the next 12 quarters of continued service. Awards under the stock issuance program generally vest in equal
annual installments over a 4-year period. Grants under the automatic grant program will vest in accordance with
the specific vesting provisions set forth in that program. A total of 28,044,911 shares of the Company’s common
stock have been reserved for issuance under this plan. The share reserve may increase by up to 10,000,000 shares
of common stock to the extent that outstanding options under the 1995 Stock Option Plan and the 1995
Non-Employee Directors Stock Option Plan expire or terminate unexercised, of which as of January 2, 2011,
2,344,911 shares of common stock had been added to the 2005 Plan reserve. All options granted under the 2005
Plan were granted with an exercise price equal to the fair market value of the common stock on the date of grant
and will expire seven years from the date of grant.
1995 Stock Option Plan and 1995 Non-Employee Directors Stock Option Plan. Both of these plans
terminated on May 27, 2005, and no further option grants were made under the plans after that date. However,
options that were outstanding under these plans on May 27, 2005 continue to be governed by their existing terms
and may be exercised for shares of the Company’s common stock at any time prior to the expiration of the
ten-year option term or any earlier termination of those options in connection with the optionee’s cessation of
service with the Company.
2005 Employee Stock Purchase Plan. The 2005 Employee Stock Purchase Plan (“ESPP”) was approved by
the stockholders on May 27, 2005. The ESPP consists of two components: a component for employees residing
in the U.S. and an international component for employees who are non-U.S. residents. The ESPP allows eligible
employees to purchase shares of the Company’s common stock at the end of each six-month offering period at a
purchase price equal to 85% of the lower of the fair market value per share on the start date of the offering period
or the fair market value per share on the purchase date. The ESPP had an original authorization of 5,000,000
shares to be issued, of which 1,267,651 shares were available to be issued as of January 2, 2011. In the fiscal
years ended January 2, 2011, January 3, 2010 and December 28, 2008, a total of 966,288, 1,158,909 and 956,187
shares of common stock, respectively, have been issued under this plan.
msystems Ltd. 1996 Section 102 Stock Option/Stock Purchase Plan and 2003 Stock Option and Restricted
Stock Incentive Plan. The msystems Ltd. 1996 Section 102 Stock Option/Stock Purchase Plan and 2003 Stock
Option and Restricted Stock Incentive Plan acquired through the Company’s acquisition of msystems Ltd., were
terminated on November 19, 2006, and no further grants were made under these plans after that date. However,
award grants that were outstanding under these plans on November 19, 2006 continue to be governed by their
existing terms and may be exercised for shares of the Company’s common stock at any time prior to the
expiration of the ten-year option term or any earlier termination of those options in connection with the
optionee’s cessation of service with the Company.
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