SanDisk 2010 Annual Report Download - page 34

February 25, 2011, approximately 3,487 employees (including 5 executive officers) were eligible to participate in
the discretionary grant and stock issuance programs and 8 non-employee Board members were eligible to
participate in those programs and the automatic grant program.
Securities Subject to 2005 Plan. As of February 25, 2011, the Company had 28,045,436 shares of Common
Stock that were authorized for grant under the 2005 Plan (which includes 25,700,000 shares previously approved
for grants and 2,345,436 shares that became available under Predecessor Plans). If the share increase of
9,000,000 shares, which is the subject of this 2005 Plan proposal, is approved by the Company’s stockholders,
then the number of shares of the Common Stock reserved for issuance over the term of the plan will increase
from 28,045,436 shares to 37,045,436 shares. As part of the original provisions of the 2005 Plan previously
approved by the Company’s stockholders, the share reserve is automatically increased by up to an additional
10,000,000 shares of Common Stock, to the extent any options outstanding under the Company’s predecessor
1995 Stock Option Plan or predecessor 1995 Non-Employee Directors Stock Option Plan (collectively, the
“Predecessor Plans”) subsequently expire or terminate unexercised. Such latter increase will occur whether or not
the stockholders approve the share increase, which is the subject of this 2005 Plan proposal. As of February 25,
2011, shares of Common Stock in the amount of 2,345,436 had been added to the 2005 Plan pursuant to the
cancellation or termination of awards under predecessor plans.
As of February 25, 2011, the Company had 18,211,944 shares that were subject to awards outstanding under
the 2005 Plan and an additional 4,755,490 shares remained available for future grant under the 2005 Plan.
Additionally, 4,123,728 shares were subject to awards outstanding under Predecessor Plans and 1,048,936 shares
were subject to awards granted under plans assumed in connection with acquisitions.
The maximum number of shares which may be issued without cash consideration (full value awards) under
the stock issuance program (whether as direct stock issuances or pursuant to restricted stock units or other share-
right awards) may not exceed twenty-five percent (25%) of the total number of shares of Common Stock from
time to time authorized for issuance under the 2005 Plan, including (without limitation): (i) any shares added to
the 2005 Plan reserve by reason of the expiration or termination of outstanding options under the Predecessor
Plans prior to exercise, (ii) any increases to the reserve under the 2005 Plan approved by the Company’s
stockholders, including the increase which is the subject of this 2005 Plan proposal, and (iii) any adjustments to
the share reserve by reason of stock dividends, stock splits or similar transactions affecting the outstanding
Common Stock. As of February 25, 2011, the Company had 4,755,490 shares of Common Stock available for the
grant of new awards, of which 2,739,050 shares of Common Stock were available for the grant of new awards
without cash consideration (full value awards) under the 2005 Plan. If stockholders approve the proposed
increase under this proposal, the number of shares of Common Stock available for the grant of new awards would
increase by 9,000,000, of which 2,250,000 shares of Common Stock would be available for the grant of new
awards without cash consideration (full value awards) under the 2005 Plan. If stockholders approve the proposed
increase under this proposal, approximately 13,755,490 shares would be available for the grant of new awards
(based on the number of shares that remained available as of February 25, 2011), of which 4,989,050 would be
available for the grant of new awards without cash consideration (full value awards) under the 2005 Plan.
No participant in the 2005 Plan may receive option grants, stand-alone stock appreciation rights, direct stock
issuances (whether vested or unvested) or other stock-based awards for more than 1,000,000 shares of Common
Stock in any single calendar year, subject to adjustment for subsequent stock splits, stock dividends and similar
transactions. This limitation will assure that any deductions to which the Company would otherwise be entitled
upon the exercise of stock options or stock appreciation rights granted under the discretionary grant program will
not be subject to the $1 million limitation on the income tax deductibility of compensation paid per executive
officer imposed under Section 162(m). In addition, one or more shares issued under the stock issuance program
may also qualify as performance-based compensation that is not subject to the Section 162(m) limitation, if the
vesting of those shares is tied solely to the attainment of one or more of the corporate performance milestones
discussed below in the summary description of that program. In 2006, stockholders approved the performance-
based award features of the stock issuance and cash bonus program.
22