SanDisk 2012 Annual Report Download - page 71

Proxy Statement
exercised prior to the change in control, or they will be canceled in exchange for the right to receive a cash
payment in connection with the change in control transaction. In addition, if there is a change in control of the
Company, the Compensation Committee may terminate the performance period applicable to the cash incentive
award and pro-rate (based on the number of days during the performance period prior to the transaction) the
bonus and performance objectives based on year-to-date performance.
Restricted Stock Units
Each RSU reported in the table above and granted to the Named Executive Officers in fiscal year 2012
represents a contractual right to receive one share of the Company’s Common Stock if the vesting requirements
described below are satisfied. RSUs are credited to a bookkeeping account established by the Company on behalf
of each Named Executive Officer receiving such an award. The RSUs are subject to a four (4) year vesting
schedule, with 25% of the units vesting on each of the first four (4) anniversaries of the date of grant.
Outstanding RSUs, however, may terminate earlier in connection with a change in control transaction or a
termination of the Named Executive Officer’s employment. Subject to any accelerated vesting that may apply,
the unvested portion of the RSU will immediately terminate upon a termination of the Named Executive
Officer’s employment.
RSUs will generally be paid in an equivalent number of shares of the Company’s Common Stock as they
vest. The Named Executive Officers are not entitled to voting rights with respect to the RSUs. However, the
Named Executive Officers are entitled to the following dividend equivalent rights with respect to the RSUs. If
the Company pays a cash dividend on its Common Stock and the dividend record date occurs after the grant date
and before all of the RSUs have either been paid or terminated, then the Company will credit the Named
Executive Officer’s bookkeeping account with an amount equal to (i) the per-share cash dividend paid by the
Company on its Common Stock with respect to the dividend record date, multiplied by (ii) the total number of
outstanding and unpaid RSUs (including any unvested RSUs) as of the dividend record date. These dividend
equivalents will be subject to the same vesting, payment and other terms and conditions as the original RSUs to
which they relate (except that the dividend equivalents may be paid in cash or such other form as the plan
administrator may deem appropriate).
Stock Options
Each stock option reported in the table above was granted with a per-share exercise price equal to the fair
market value of a share of Common Stock on the grant date. For these purposes, and in accordance with the
terms of the 2005 Plan and the Company’s option grant practices, the fair market value is equal to the closing
price of a share of Common Stock on NASDAQ on the applicable grant date.
Each stock option granted to the Named Executive Officers in fiscal year 2012 is subject to a four (4) year
vesting schedule, with 25% of the option vesting on first anniversary of the date of grant, and the remaining 75%
of the option vesting in twelve (12) substantially equal installments on each successive three (3) month
anniversary thereafter. Once vested, each stock option will generally remain exercisable until its normal
expiration date. Each of the stock options granted to the Named Executive Officers in fiscal year 2012 has a term
of seven (7) years. Outstanding options, however, may terminate earlier in connection with a change in control
transaction or a termination of the Named Executive Officer’s employment. Subject to any accelerated vesting
that may apply, the unvested portion of the stock option will immediately terminate upon a termination of the
Named Executive Officer’s employment. The Named Executive Officer will generally have three (3) months to
exercise the vested portion of the stock option following a termination of employment. This period is extended to
twelve (12) months if the termination is on account of the Named Executive Officer’s death or permanent
disability. However, if a Named Executive Officer’s employment is terminated by the Company for
“misconduct” (as determined under the plan), outstanding stock options (whether vested or unvested) will
immediately terminate.
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