SanDisk 2012 Annual Report Download - page 55

Proxy Statement
The Company’s annual cash incentive opportunity is primarily intended to hold the executive officers,
including the Named Executive Officers, accountable for their performance, although the Company believes the
cash incentive also aligns the interests of the executive officers with those of the Company’s stockholders and
helps the Company attract, retain and motivate the executive officers. The Company’s long-term share-based
incentives are primarily intended to align the interests of the executive officers, including the Named Executive
Officers, with those of the Company’s stockholders, although the Company believes the share-based incentives
also help hold executive officers accountable for their performance and help the Company attract, retain and
motivate executive officers. The annual cash incentive opportunity and the long-term share-based incentives are
designed to reward performance and the creation of stockholder value, and therefore the value of these benefits is
dependent on performance. The annual cash incentive opportunity is paid out on an annual basis to the executive
officers, including the Named Executive Officers, and is designed to reward performance for that period. The
long-term equity incentives are generally designed to reward performance over one or more years.
Consistent with the compensation philosophies described above, the goal of the Company is to provide its
executive officers, including the Named Executive Officers, with a compensation program that is competitive
relative to its industry peers. To that end, the Compensation Committee evaluates executive compensation
relative to compensation paid to similarly situated executive officers at companies determined to be peer
companies of the Company. The Compensation Committee reviewed and approved the following selected peer
companies for fiscal year 2012:
• 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.
These peer companies were selected from within and outside the Company’s industry on the basis of their
comparability to the Company in size and growth patterns, as well as their competition 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 Form 10-K for the fiscal year ended December 30,
2012, the Company and the Compensation Committee believe these peer companies provided relevant
comparative compensation data for the Company for fiscal year 2012.
While the Compensation Committee evaluates executive officer compensation relative to compensation paid
at these peer companies, the Compensation Committee does not use a formula for determining compensation for
the executive officers, including the Named Executive Officers, and therefore does not benchmark compensation
at any specific levels relative to the peer companies. In setting compensation for the Named Executive Officers,
the Compensation Committee reviews and considers a multitude of factors, including not only competitiveness
relative to the peer companies, but also experience levels, performance achieved, specific skills or competencies,
the desired pay mix between near-, medium- and long-term incentives, and the Company’s budget. In
determining the appropriate levels of compensation to be paid to the executive officers, including the Named
Executive Officers, the Compensation Committee also considers compensation previously realized by the
executive officer in his or her employment with the Company. However, amounts realized from prior
compensation were not a material factor in determining the fiscal year 2012 compensation for the Named
Executive Officers.
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