SanDisk 2010 Annual Report Download - page 23

Proxy Statement
reasonably likely to have a material adverse effect on the Company and include many features that mitigate the
likelihood of excessive risk-taking, including those discussed below.
Balance of Compensation. Individual elements of the Company’s compensation program include base
salaries, incentive compensation, and for certain of its employees, equity-based awards. By providing a mix of
different elements of compensation that reward both short- and long-term performance, the Company’s
compensation programs as a whole provide a balanced approach to incentivizing and retaining employees,
without placing an inappropriate emphasis on any particular form of compensation.
Objective Company Results and Pre-established Performance Measures Dictate Annual Incentives. Under
the Company’s cash-based incentive plan, payments are subject to the satisfaction of specific annual performance
targets established by the Compensation Committee in advance. These performance targets were directly and
specifically tied to earnings per share and achievement of strategic targets for fiscal 2010.
Use of Long-Term Incentive Compensation. Equity-based long-term incentive compensation that vests over
a period of years is a key component of the total compensation of many of the Company’s employees. This
vesting period encourages the Company’s executives and other employees to focus on sustaining the Company’s
long-term performance. These grants are generally made annually, so executives and other key employees always
have unvested awards that could decrease significantly in value if the Company’s business is not managed for the
long term.
Internal Processes Further Restrict Risk. The Company has in place additional processes to limit risk to the
Company from its compensation programs. Specifically, sales commission payments are subject to multiple
internal controls regarding payout terms and payroll programs and financial results upon which incentive
compensation payments are based are subject to regular review and audit. In addition, the Company from
time-to-time engages an external compensation consulting firm to assist in the design and review of the
Company’s compensation programs, as well as external legal counsel to assist with the periodic review of the
Company’s compensation plans to ensure compliance with applicable laws and regulations.
Nominating and Governance Committee
The Nominating and Governance Committee of the Board of Directors (the “Nominating and Governance
Committee”) held 3 meetings and did not act by unanimous written consent during fiscal 2010. The Nominating
and Governance Committee consists of Directors Marks and Hartenstein. The Nominating and Governance
Committee identifies, considers and recommends Director nominees to be selected by the Board of Directors for
submission to vote at the Company’s annual stockholder meetings and to fill vacancies occurring between annual
stockholder meetings, implements the Board’s criteria for selecting new Directors, develops or reviews and
recommends corporate governance policies for the Board, and oversees the Board’s annual evaluation process.
The Nominating and Governance Committee is also authorized to conduct investigations and to retain, at the
expense of the Company, independent legal, accounting, financial, governance or other professional consultants
selected by the Nominating and Governance Committee, for any matters relating to its purposes. The Board of
Directors adopted a charter for the Nominating and Governance Committee, which was last reviewed and
approved in March 2011. Stockholders can access the Nominating and Governance Committee charter at
www.sandisk.com. The Company will also provide copies of the Nominating and Governance Committee charter
free of charge to any stockholder who sends a written request to SanDisk Corporation, Investor Relations,
601 McCarthy Blvd., Milpitas, CA 95035. The Board of Directors has determined that each of the members of
the Nominating and Governance Committee is an “independent director” as defined in the NASDAQ
Marketplace Rules.
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