SanDisk 2013 Annual Report Download - page 60

Under the terms of the Incentive Plans, if there is a change in control of the Company, each Named
Executive Officer’s outstanding share-based awards granted under the plan will generally become fully
vested and, in the case of options, exercisable, to the extent such outstanding awards are not substituted or
assumed in connection with the transaction. Any options that would vest in connection with a change in
control generally must be 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
2013 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 annually from 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 Incentive Plans 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 2013 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 2013 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
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