SanDisk 2010 Annual Report Download - page 61

Proxy Statement
Executive Compensation Program Objectives and Overview
The Company’s current executive compensation programs are intended to achieve three fundamental
objectives: (1) attract, retain and motivate qualified executives; (2) hold executives accountable for performance;
and (3) align executives’ interests with the interests of the Company’s stockholders. In structuring the Company’s
current executive compensation programs, the Company is guided by the following basic philosophies:
•Competition. The Company should provide competitive compensation opportunities so that the
Company can attract, retain and motivate qualified executives.
•Alignment with Stockholder Interests. A substantial portion of compensation should be contingent on
the Company’s performance. As an executive officer’s level of responsibility increases, a greater
portion of the officer’s total compensation should be dependent on the Company’s performance and
stock price appreciation.
•Pay for Performance. A substantial portion of compensation should be tied to Company and individual
performance.
As described in more detail below, the material elements of the Company’s current executive compensation
program for Named Executive Officers include a base salary, an annual cash incentive opportunity, a long-term
share-based incentive opportunity, 401(k) retirement benefits and severance protection for certain terminations of
the Named Executive Officers’ employment.
The Company believes that each element of its executive compensation program helps the Company to
achieve one or more of its compensation objectives. The table below lists each material element of the Company’s
executive compensation program and the compensation objective or objectives that it is designed to achieve.
Compensation Element Compensation Objectives Designed to be Achieved
Base Salary • Attract, retain and motivate qualified executives
Annual Cash Incentive Opportunity • Hold executives accountable for performance
• Align executives’ interests with those of
stockholders
• Attract, retain and motivate qualified executives
Long-Term Share-Based Incentives • Align executives’ interests with those of
stockholders
• Hold executives accountable for performance
• Attract, retain and motivate qualified executives
401(k) Retirement Benefits • Attract, retain and motivate qualified executives
Severance and Other Benefits Upon Termination of
Employment in Certain Circumstances
• Attract, retain and motivate qualified executives
As illustrated by the table above, base salaries, 401(k) retirement benefits and severance and other
termination benefits are all primarily intended to attract, retain and motivate qualified executives. These are the
elements of the Company’s current executive compensation program where the value of the benefit in any given
year is generally not variable. The Company believes that in order to attract, retain and motivate top-caliber
executives, it needs to provide executives with predictable benefit amounts that reward the executive’s continued
service. Some of the elements, such as base salaries, are generally paid out on a short-term or current basis. The
other elements are generally paid out on a longer-term basis. The Company believes that this mix of long-term
and short-term elements allows the Company to achieve its dual goals of attracting and retaining executives (with
the long-term benefits geared toward retention and the short-term awards focused on recruitment).
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