SanDisk 2007 Annual Report Download - page 34
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Please see the “Potential Payments Upon Termination or Change in Control” section below for a description of
the potential payments that may be made to the Named Executive Officers in connection with their termination of
employment or a change in control.
Stock Ownership Guidelines
Each Director and executive officer (as defined in Section 16 of the Securities Exchange Act of 1934, as
amended) is required to own the Company’s Common Stock. The ownership requirement is satisfied by beneficial
ownership as defined under Rule 13d-3 under the Securities Exchange Act of 1934, as amended. Each Director and
named executive officer (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) should own
no less than 1,000 shares of the Company’s Common Stock on the first anniversary of his or her service, and own an
additional 1,000 shares for each subsequent year until he or she is required to own 5,000 shares after 5 years of
service, at which point there is no requirement to own additional shares.
Section 162(m) Policy
Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly-held companies for
compensation paid to certain executive officers, to the extent that compensation exceeds $1,000,000 per officer in
any year. The limitation applies only to compensation which is not considered to be performance-based, either
because it is not tied to the attainment of performance milestones or because it is not paid pursuant to a stockholder-
approved plan. The Compensation Committee believes that in establishing the cash and equity incentive com-
pensation programs for the Company’s executive officers, the potential deductibility of the compensation payable
under those programs should be only one of a number of relevant factors taken into consideration, and not the sole
governing factor. Accordingly, the Compensation Committee may provide one or more executive officers with the
opportunity to earn incentive compensation, whether through cash bonus programs tied to the Company’s financial
performance or share-based awards in the form of restricted stock or restricted stock units, which may be in excess
of the amount deductible by reason of Section 162(m) or other provisions of the Internal Revenue Code. The
Compensation Committee believes it is important to maintain incentive compensation at the requisite level to attract
and retain the executive officers essential to the Company’s financial success, even if all or part of that
compensation may not be deductible by reason of the Section 162(m) limitation.
31