SanDisk 2012 Annual Report Download - page 40

The distribution on any exercised tandem or stand-alone stock appreciation right will be made in shares of
the Company’s Common Stock. Stock appreciation rights will remain exercisable for a limited period following
the holder’s cessation of service, but only to the extent those rights are exercisable at the time of such cessation
of service. The plan administrator will have complete discretion to extend the period following the holder’s
cessation of service during which his or her outstanding stock appreciation rights may be exercised and/or to
accelerate the exercisability or vesting of those stock appreciation rights in whole or in part. Such discretion may
be exercised at any time while the stock appreciation right remains outstanding, whether before or after the
holder’s actual cessation of service.
Stock Issuance and Cash Bonus Program. Shares of Common Stock may be issued under the Stock
Issuance and Cash Bonus Program, either as vested or unvested shares, through direct and immediate issuances
without any intervening option grants. The issue price per share, if any, shall be fixed by the plan administrator,
and may be payable in cash or any other valid consideration under Delaware law. Shares may also be issued as a
bonus for past services without any cash purchase price required of the recipient. Shares of Common Stock may
also be issued under the program pursuant to share right awards or RSUs, which entitle the recipients to receive
those shares, without the payment of any cash purchase price, upon the attainment of designated performance
goals or the completion of a prescribed service period or upon the expiration of a designated time period
following the vesting of those awards or units, including (without limitation) a deferred distribution date
following the termination of the recipient’s service with the Company.
The plan administrator will have complete discretion under the program to determine which eligible
individuals are to receive such stock issuances or share-based awards, the time or times when those issuances or
awards are to be made, the number of shares subject to each such issuance or award, the vesting schedule to be in
effect for the issuance or award and the cash consideration, if any, payable per share. The shares issued may be
fully and immediately vested upon issuance or may vest upon the completion of a designated service period or
the attainment of pre-established performance goals.
Performance-based awards granted under the 2013 Plan that may be paid only in cash and not related to
shares and that are granted to any one individual in any one calendar year will not provide for payment of more
than $10,000,000.
In order to assure that the compensation attributable to one or more restricted stock issuances, RSUs or other
share-based awards, or cash bonus opportunities under the program will qualify as performance-based
compensation which will not be subject to the $1 million limitation on the income tax deductibility of the
compensation paid per executive officer which is imposed under Section 162(m) of the Code, the plan
administrator will also have the discretionary authority to structure one or more restricted stock issuances, RSUs
or other share-based awards so that the shares of Common Stock subject to those issuances, units or awards or, in
the case of a cash bonus opportunity, the right to receive any payment with respect to such opportunity, will vest
only upon the achievement of certain pre-established corporate performance goals based on one or more of the
following criteria: (1) return on total stockholder equity; (2) earnings per share; (3) net income or operating
income; (4) earnings before interest, taxes, depreciation and amortization; (5) gross margin or operating margin;
(6) sales, revenue or invoice targets; (7) return on assets, capital or investment; (8) cash flow; (9) market share;
(10) penetration in or entry into specific channels or markets; (11) cost reduction goals; (12) budget comparisons;
(13) measures of customer satisfaction; (14) measures of inventory turns or inventory weeks of supply; (15) new
product developments or qualifications or launches or achievement of research and development milestones;
(16) the formation of joint ventures, research or development collaborations, or the completion of other corporate
transactions intended to increase the Company’s revenue or profitability or enhance the Company’s customer
base; (17) measures of employee satisfaction; (18) measures of improvements in product quality; (19) price of
Common Stock; (20) design wins; (21) on-time delivery metrics; and (22) any combination of, or a specified
increase in, any of the foregoing. Any of the performance goals may be based on either a GAAP or a non-GAAP
measure, as determined by the Compensation Committee, provided that such non-GAAP measures comply with
the requirements of Section 162(m) of the Code. In addition, such performance goals may be based upon the
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