SanDisk 2010 Annual Report Download - page 80

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following section describes the benefits that may become payable to Named Executive Officers in
connection with certain terminations of their employment with the Company and/or a change in control of the
Company. As prescribed by the SEC’s disclosure rules, in calculating the amount of any potential payments to
these Named Executive Officers, the Company has assumed that the applicable triggering event (i.e., termination
of employment or change in control) occurred on December 31, 2010 and that the price per share of Common
Stock is equal to the closing price per share on December 31, 2010 the last trading day in fiscal 2010.
In addition to the change in control and termination benefits described below, outstanding share-based
awards held by the Company’s Named Executive Officers may also be subject to accelerated vesting in
connection with certain changes in control of the Company under the terms of the Company’s equity incentive
plans as noted under “Grants of Plan-Based Awards in Fiscal 2010” and “Outstanding Equity Awards at Fiscal
2010 Year-End” above. The estimated value of accelerated vesting under the Company’s equity incentive plans
is covered below under the description of these Named Executive Officers’ severance arrangements.
The Company has calculated the value of any option or stock award that may be accelerated in connection
with a change in control of the Company to be the full value of such award (i.e., the full “spread” value for option
awards and the full price per share of Common Stock for stock awards).
Change of Control Benefits Agreements with Named Executive Officers
The Company has entered into a change of control agreement with each Named Executive Officer. The
agreements are substantially identical (except as noted below with respect to Mr. Mehrotra) and provide for
certain benefits to be paid to the Named Executive Officer in connection with a change of control and/or
termination of employment with the Company under the circumstances described below.
Change of Control Benefits. Upon a “Change of Control” (as defined in the change of control agreement) of
the Company, for purposes of the Named Executive Officer’s vesting in then outstanding and unvested
performance-based equity awards, the Named Executive Officer will be deemed to have met the performance
goals as of the end of the specified performance measuring period if the Named Executive Officer remains an
employee as of the end of such period. Any performance-based awards that do not vest solely by meeting the
performance goals shall continue to vest in accordance with the terms of the applicable award agreement by
assuming the performance goal is met.
Severance Benefits—Termination of Employment in Connection with Change in Control. In the event a Named
Executive Officer’s employment is terminated by the Company (or a successor) without “Cause” (and not on
account of the Named Executive Officer’s death or disability) or by the Named Executive Officer for “Good
Reason” (as those terms are defined in the change of control agreement) within three (3) months before or eighteen
(18) months following a Change of Control of the Company, the Named Executive Officer will be entitled to
severance pay that includes: (i) a lump sum cash payment equal to one and one-half (1.5) times (two (2) times for
Mr. Mehrotra) the sum of (A) the Named Executive Officer’s annual base salary as of the Change of Control or
termination of employment, whichever is greater, plus (B) the Named Executive Officer’s target annual bonus for
the calendar year of termination; (ii) for a period of eighteen (18) months (plus six (6) additional months for
Mr. Mehrotra) following the termination date (or, if earlier, until the date the Named Executive Officer becomes
eligible for coverage under the health plan of a future employer), premiums for continuation of the same or
equivalent health insurance coverage for the Named Executive Officer and his or her eligible dependents (if
applicable) as the Named Executive Officer was receiving immediately prior to the termination; (iii) accelerated
vesting of the Named Executive Officer’s equity awards to the extent outstanding on the termination date and not
otherwise vested, with accelerated options to remain exercisable for one (1) year following the termination (subject
to the maximum term of the option and to any right that the Company may have to terminate options in connection
with the Change of Control); and (iv) if requested, for a period of twelve (12) months following the termination,
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