SanDisk 2012 Annual Report Download - page 52

COMPENSATION DISCUSSION AND ANALYSIS
This section contains a discussion of the material elements of compensation awarded to, earned by or paid to
the following executive officers of the Company: the principal executive officer and the principal financial
officer; two other most highly compensated individuals who were serving as executive officers as of the last day
of fiscal year 2012; and one former executive officer who would have been one of the three other most highly
compensated executive officers but for the fact that the individual was not serving as an executive officer of the
Company at the end of fiscal year 2012. These individuals are referred to as the “Named Executive Officers” in
this Proxy Statement and include:
• Sanjay Mehrotra—President and Chief Executive Officer (principal executive officer);
• Judy Bruner—Executive Vice President, Administration and Chief Financial Officer (principal
financial officer);
• Sumit Sadana—Executive Vice President and Chief Strategy Officer;
• Dr. Khandker Quader—Senior Vice President, Memory Technology, Design and Product Development
(who resigned from his position effective as of April 12, 2013); and
• James Brelsford—Chief Legal Officer and Senior Vice President of IP Licensing (who resigned from
his position effective as of December 14, 2012).
The Company’s current executive compensation programs are determined and approved by the
Compensation Committee. None of the Named Executive Officers is a member of the Compensation Committee.
Executive Summary
SanDisk has a long-standing commitment to a compensation program guided by three basis philosophies:
alignment of compensation with stockholder interests, pay-for-performance, and compensation opportunities that
are competitive so that the Company can attract, retain and motivate top-tier talent. The Compensation
Committee sets a significant portion of the compensation of the executive officers, including the Named
Executive Officers, based on their ability to achieve annual financial and strategic objectives that advance the
Company’s long-term business objectives and that are designed to create sustainable long-term stockholder
value. The Compensation Committee also takes into consideration the fact that, consistent with the Company’s
compensation philosophy described in more detail below, equity awards increase each Named Executive
Officer’s stake in the Company, thereby reinforcing the incentive to manage the Company’s business as owners
and subjecting a significant portion of the executive officer’s total compensation to fluctuations in the market
price of Common Stock. During fiscal year 2012, a significant percentage of each Named Executive Officer’s
total compensation (as reported in the Summary Compensation Table) was at-risk, having included (1) annual
performance-based cash bonus opportunities, which become payable only upon the achievement of certain
financial and strategic objectives established by the Compensation Committee, which advance the Company’s
near-, medium- and long-term business objectives and are designed to create sustainable long-term stockholder
value, (2) RSUs, the value of which is directly tied to the Company’s results of operations and the value of the
Company’s Common Stock, and (3) and stock options with exercise prices equal to the fair market value of the
Company’s Common Stock on the grant date, which become valuable only upon realized share appreciation after
the grant date.
The Company’s performance-based compensation elements are also guided by the Committee’s long-term
objectives of maintaining market competitiveness and retention value. In addition, the Company continues to be
committed to good compensation governance practices, as evidenced by its clawback policy on cash-based
incentive awards. The Compensation Committee believes that the compensation arrangements for the Named
Executive Officers are consistent with market practice and provide for compensation that is reasonable in light of
the Company’s and each individual Named Executive Officer’s performance.
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