SanDisk 2012 Annual Report Download - page 23

Proxy Statement
Company’s Section 16 Officers (including all of the Named Executive Officers, who are identified below in
“Compensation Discussion and Analysis”). In fiscal year 2012, the Compensation Committee did not retain any
outside compensation consultants to advise on fiscal year 2012 Director or executive compensation matters. In
fiscal year 2012, the Company’s management retained Compensia, Inc., an outside compensation consultant, to
assist management in analyzing the Company’s peer companies for fiscal year 2013 compensation, evaluating
the competitiveness of the Company’s executive compensation programs relative to the Company’s fiscal year
2012 peer companies and providing management with information on compensation-related trends and
developments in the Company’s industry and fiscal year 2012 peer companies, including equity award practices.
Compensia did not provide any other services to the Company.
Compensation Committee Interlocks and Insider Participation. During fiscal year 2012, the Compensation
Committee consisted of, and currently consists of, Directors Federman (Chair), DeNuccio and Hu (as well as
Mr. Marks through mid-March 2012). In fiscal year 2012, no member of the Compensation Committee was a
current or former executive officer or employee of the Company. See “Certain Transactions and Relationships”
for a description of one transaction occurring during fiscal year 2012 involving Mr. Federman requiring
disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party
transactions. None of the Company’s executive officers served as a director or a member of a compensation
committee (or other committee serving an equivalent function) of any other entity, the executive officers of
which served as a Director or member of the Compensation Committee during the fiscal year ended
December 30, 2012.
Analysis of Risk in Compensation Programs. In setting compensation, the Compensation Committee also
considers the risks to the Company’s stockholders, and the Company as a whole, arising out of the Company’s
compensation programs. In March 2013, the Company’s management met to discuss and assess the risk profile of
the Company’s compensation programs. Their review considered risk-influencing characteristics of the overall
structure and individual components of the Company’s compensation program, including the Company’s base
salaries, incentive plans and equity plans. A report regarding management’s findings was provided to the
Compensation Committee for its review and consideration. Following this review and consideration, the
Compensation Committee concurred with management’s conclusions that the Company’s compensation policies
were not reasonably likely to have a material adverse effect on the Company and included 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, share-based awards. By providing a mix of
different elements of compensation that reward both short-term 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
objectives established by the Compensation Committee in advance and may be subject to reimbursement or
forfeiture under the Company’s clawback policy. These performance objectives were directly and specifically
tied to the Company’s fiscal year 2012 financial results, as quantified by diluted non-GAAP earnings per share,
as well as the achievement of strategic objectives for fiscal year 2012.
Use of Long-Term Incentive Compensation. Share-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 and improving 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.
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