SanDisk 2012 Annual Report Download - page 33

Proxy Statement
issuance under the 2005 Plan. While there is no corresponding limit under the 2013 Plan, each share of
Common Stock underlying a Full Value Award granted under the 2013 Plan will be counted against the
shares of Common Stock authorized for issuance under the 2013 Plan as 1.5 shares of Common Stock.
• The 2005 Plan provides for an automatic grant program, pursuant to which the Non-Employee
Directors automatically receive an initial equity grant upon his or her initial appointment to the Board,
and a subsequent equity grant on the date of each annual stockholders meeting, subject to maximum
share amounts of 150,000 shares and 40,000 shares, respectively. The 2013 Plan does not provide for
an automatic grant program for Non-Employee Directors, and equity grants to Non-Employee
Directors will be provided for in a separate Non-Employee Director Compensation Policy to be
adopted by the Board from time to time, provided that no one Non-Employee Director may receive
share-based awards under the 2013 Plan for more than 150,000 shares in the aggregate per calendar
year.
The Compensation Committee and the Board believe that the 2013 Plan is in the best interests of the
stockholders because equity awards granted under the 2013 Plan will help it to:
• Attract, motivate and retain talented employees;
• Encourage employee stock ownership to align employee and stockholder short-term and long-term
interests; and
• Link employee compensation with Company performance.
If the stockholders do not approve the 2013 Plan, the Company’s plans to operate its business could be
adversely affected. Additionally, the Company may need to instead offer material cash-based incentives to
compete for talent, which could impact its quarterly results of operations and balance sheet and may make the
Company less competitive compared to other technology companies and the Company’s peer companies in
hiring and retaining top talent.
The Company’s future success depends heavily on its ability to attract and retain top-caliber employees. The
ability to grant equity awards is a necessary and powerful recruiting and retention tool for the Company to hire
and motivate the quality personnel it needs to drive the Company’s growth and financial gains.
The Company Expects to Hit Current Full Value Award Share Limits Under the 2005 Plan in Fiscal Year
2014
The Company currently maintains the 2005 Plan and, other than 61,688 shares that are available for future
issuance under the Assumed Plans, the 2005 Plan is the only incentive plan under which the Company may make
share-based awards. While approximately 9.7 million shares remain available for future grant under the 2005
Plan as of March 15, 2013, the 2005 Plan limits the aggregate number of shares which may be issued without
cash consideration under the Stock Issuance and Cash Bonus Program (whether as direct stock issuances or
pursuant to RSUs or other share-right awards) (“Full Value Awards”) to twenty-five percent (25%) of the total
number of shares of Common Stock authorized for issuance under the 2005 Plan. As of March 15, 2013, of the
approximately 9.7 million shares available for future grant under the 2005 Plan, only approximately 1.9 million
shares remain available for future grant as Full Value Awards. Under current company practices, this number of
Full Value Awards will only last through 2013 and will not be sufficient for the Company to grant its annual
retention and promotional equity awards in fiscal year 2014, which are expected to occur prior to the 2014 annual
meeting of stockholders.
The 2013 Plan establishes a “fungible plan” ratio, in which every Full Value Award awarded will be
counted against the shares of Common Stock authorized for issuance under the 2013 Plan as 1.5 shares of
Common Stock, in lieu of an upper limit on the portion of the shares authorized under the 2013 Plan that may be
issued as Full Value Awards. The 2013 Plan contemplates a total of 20,000,000 shares being available for
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