SanDisk 2012 Annual Report Download - page 39

Proxy Statement
Equity Incentive Programs
Discretionary Grant Program. Under the Discretionary Grant Program, eligible persons may be granted
options to purchase shares of the Company’s Common Stock or stock appreciation rights tied to the value of the
Common Stock. Other than as will be provided in the written policy adopted by the Company regarding the
compensation of Non-Employee Directors, as may be amended from time to time (the “Non-Employee Director
Compensation Policy”), the plan administrator will have complete discretion to determine which eligible
individuals are to receive option grants or stock appreciation rights, the time or times when those options or stock
appreciation rights are to be granted, the number of shares subject to each such grant, the vesting schedule (if
any) to be in effect for the grant, the maximum term for which the granted option or stock appreciation right is to
remain outstanding and the status of any granted option as either an incentive stock option or a non-statutory
option under the federal tax laws. The holder of an option or stock appreciation right will have no stockholder
rights (including dividend or dividend equivalent rights) with respect to the shares subject to the option or stock
appreciation right until such person has exercised the option or stock appreciation right, paid the exercise price
and become a holder of record of the purchased shares.
Each granted option will have an exercise price per share determined by the plan administrator, but the
exercise price will not be less than one hundred percent (100%) of the fair market value of the option shares on
the grant date. No granted option will have a term in excess of seven (7) years. The shares subject to each option
will generally vest in one or more installments over a specified period of service measured from the grant date.
However, one or more options may be structured so that they will be immediately exercisable for any or all of the
option shares. The shares acquired under such immediately exercisable options will be subject to repurchase by
the Company, at the lower of the exercise price paid per share or the fair market value per share, if the optionee
ceases service prior to vesting in those shares.
Incentive stock options may by granted only to employees. The aggregate fair market value of the shares of
Common Stock for which one or more options granted to any employee under the 2013 Plan may for the first
time become exercisable as incentive stock options during any one calendar year shall not exceed the sum of one
hundred thousand dollars ($100,000). If any employee to whom an incentive stock option is granted is a holder of
10% of the Common Stock of the Company, then the exercise price shall not be less than one hundred ten percent
(110%) of the fair market value per share of the Common Stock on the option grant date, and the option term
shall not exceed five (5) years.
Upon cessation of service, the optionee will have a limited period of time in which to exercise his or her
outstanding options to the extent exercisable for vested shares. Subject to Section 409A of the Code, the plan
administrator will have complete discretion to extend the period following the optionee’s cessation of service
during which his or her outstanding options may be exercised and/or to accelerate the exercisability or vesting of
such options in whole or in part. Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee’s actual cessation of service.
The 2013 Plan allows the issuance of two types of stock appreciation rights under the Discretionary Grant
Program:
• Tandem stock appreciation rights provide the holders with the rights to surrender their options for an
appreciation distribution from the Company in an amount equal to the excess of (i) the fair market
value of the vested shares of Common Stock subject to the surrendered option over (ii) the aggregate
exercise price payable for those shares.
• Stand-alone stock appreciation rights allow the holders to exercise those rights as to a specific number
of shares of Common Stock and receive in exchange an appreciation distribution from the Company in
an amount equal to the excess of (i) the fair market value of the shares of Common Stock as to which
those rights are exercised over (ii) the aggregate base price in effect for those shares. The base price per
share may not be less than the fair market value per share of Common Stock on the date the stand-alone
stock appreciation right is granted, and the right may not have a term in excess of seven (7) years.
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