SanDisk 2010 Annual Report Download - page 62

The Company’s annual cash incentive opportunity is primarily intended to hold Named Executive Officers
accountable for performance, although the Company also believes it aligns Named Executive Officers’ interests
with those of the Company’s stockholders and helps the Company attract, retain and motivate executives. The
Company’s long-term equity incentives are primarily intended to align Named Executive Officers’ interests with
those of the Company’s stockholders, although the Company also believes they help hold executives accountable
for performance and help the Company attract, retain and motivate executives. These are the elements of the
Company’s current executive compensation program that are designed to reward performance and the creation of
stockholder value, and therefore the value of these benefits is dependent on performance. Each Named Executive
Officer’s annual bonus opportunity is paid out on an annual basis and is designed to reward performance for that
period. Long-term equity incentives are generally paid out or earned on a long-term basis and are designed to
reward performance over one or more years.
The individual compensation elements are intended to create a total compensation package for each Named
Executive Officer that the Company believes achieves its compensation objectives and provides competitive
compensation opportunities.
The Compensation Committee evaluates executive compensation relative to compensation paid to similarly
situated executives at companies determined to be peer companies of the Company. The Company and the
Compensation Committee selected the following peer companies in fiscal 2010:
• Adobe Systems Incorporated
• Advanced Micro Devices, Inc.
• Analog Devices, Inc.
• Broadcom Corporation
• CA, Inc.
• Electronic Arts Inc.
• Juniper Networks, Inc.
• LSI Corporation
• Marvell Technology Group Ltd.
• Maxim Integrated Products, Inc.
• Micron Technology, Inc.
• NetApp Inc.
• NVIDIA Corporation
• Seagate Technology LLC
• Symantec Corporation
• Xilinx, Inc.
• Yahoo! Inc.
The Company and the Compensation Committee believes that these peer companies, which were selected
from within and outside the Company’s industry, are comparable in size and growth pattern with the Company
and compete with the Company for executive talent. Although the peer companies differ from the S&P
Semiconductor Company Stock Index and the Philadelphia Semiconductor Index, which the Company has
selected as the industry indices for purposes of the stock performance graph that appeared in the Company’s
Annual Report on Form 10-K for fiscal 2010, the Company and the Compensation Committee believes these peer
companies provide relevant comparative compensation data for the Company.
Consistent with the Company compensation philosophies described above, the Company’s goal is to provide
each Named Executive Officer with a current executive compensation program that is competitive in light of the
compensation paid to comparable executives at its peer companies. To that end, the Company generally targets
base salaries and long-term incentives at approximately the 50th percentile within its peer companies. The
Company generally targets total cash compensation at approximately the 60th percentile within its peer
companies; however, the Company has the ability to, and does, exercise discretion to set compensation levels
that are above or below these benchmarks. In determining the appropriate levels of compensation to be paid to
Named Executive Officers, the Compensation Committee retains the discretion to consider amounts realized
from prior compensation. However, amounts realized from prior compensation were not a material factor in
determining fiscal 2010 compensation for the Named Executive Officers. Furthermore, amounts realized from
prior compensation were not considered in setting future retirement benefits since with the exception of certain
payments and benefits provided to Dr. Harari upon his retirement (discussed below under “Dr. Harari Retirement
Agreement”), the only retirement benefit currently offered by the Company is the Named Executive Officers’
ability to participate in the Company’s 401(k) plan during their employment with the Company.
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