SanDisk 2010 Annual Report Download - page 63

Proxy Statement
During fiscal 2010, Dr. Harari attended meetings of the Compensation Committee relating to Company-
wide compensation issues and the compensation of the Named Executive Officers other than himself. Subsequent
to his appointment as President and Chief Executive Officer on January 1, 2011, Mr. Mehrotra also attended
meetings of the Compensation Committee relating to fiscal 2010 compensation of the Named Executive Officers.
At meetings pertaining to officer pay, the Company’s Chief Executive Officer presents compensation
recommendations for the Named Executive Officers other than himself and explains to the Compensation
Committee the basis and rationale for his recommendations. The Compensation Committee understands that in
determining his recommendations, the Company’s Chief Executive Officer considers the scope and responsibility
of each officer’s position and the individual performance of each officer and reviews compensation of similarly
situated officers in the Company’s peer companies, to the extent that there is a similarly situated officer. With
respect to Dr. Harari’s and, in connection with his appointment as the Company’s President and Chief Executive
Officer, Mr. Mehrotra’s compensation, the Company and its advisers collect chief executive officer
compensation data from comparable companies, including those in the Company’s peer companies, based on
size, location and industry. The Company presents the collected data to the Compensation Committee. The
Compensation Committee reviews the data and deliberates to determine an appropriate level of compensation for
the Chief Executive Officer based on the Company’s targeted compensation levels. Neither Dr. Harari nor
Mr. Mehrotra has participated in the Compensation Committee deliberations that relate to their personal
compensation and each has excused himself from that portion of the Compensation Committee meetings.
Employees of the Company occasionally meet with a compensation consulting firm retained by the Company to
discuss broader compensation issues and trends or to discuss officer pay. Neither Dr. Harari nor Mr. Mehrotra
has met or consulted with the compensation consulting firm individually nor has either of them discussed his
individual compensation with the consulting firm retained by the Company.
Current Executive Compensation Program Elements
Base Salaries
The Compensation Committee generally reviews the base salaries for each Named Executive Officer in the
first quarter of each year. To assist with that review, management has in the past provided the Compensation
Committee with a summary of the base salary levels in effect for comparable executives at the Company’s peer
companies (based on their published prior fiscal year’s data). The Compensation Committee has typically
considered such summary, as well as internal comparables, individual performance and the Company’s financial
performance. The weighting of these factors by the Compensation Committee has been subjective, not formulaic.
The Compensation Committee does not use a formula for determining base salaries and other forms of
compensation and does not benchmark compensation at any specific levels relative to the peer companies. In
fiscal 2009, the Company instituted a salary freeze generally applicable to all levels of the Company’s
employees, and the Compensation Committee therefore believed that it was also appropriate to freeze the salaries
of the Named Executive Officers.
Based on the subjective factors described above and because there were no salary adjustments in fiscal
2009, the Compensation Committee determined it was appropriate to set salaries for fiscal 2010 for the Named
Executive Officers in the following amounts: Dr. Harari $925,000; Mr. Mehrotra $600,000; Ms. Bruner $510,000
and Mr. Cedar $430,000. Mr. Mehrotra’s salary for 2011 was determined in the third quarter of 2010 to be
$800,000 in connection with his promotion to President and Chief Executive Officer. In October 2010, Mr. Cedar
was promoted to the position of Executive Vice President and Chief Technology Officer. In connection with this
appointment, the Compensation Committee approved an increase to Mr. Cedar’s base salary to $475,000.
Annual Cash Incentive Award
None of the Named Executive Officers has an employment agreement or other contractual right to cash
incentive awards or bonuses for any given year. In recent years, the Company has granted cash incentive awards
to the Named Executive Officers that were determined based on the achievement of specified performance goals.
51