SanDisk 2012 Annual Report Download - page 59

Proxy Statement
Eligibility for and the amount of bonuses payable under the 2012 bonus program were based on the
following: (1) the Company’s performance relative to strategic objectives, which collectively constituted 35% of
the 2012 bonus program, and (2) the Company’s performance during fiscal year 2012 relative to an EPS target,
which constituted 65% of the 2012 bonus program. The strategic objectives approved by the Compensation
Committee related to (1) research and development projects relating to future NAND technology nodes and
future 3-dimensional memory technologies, (2) customer acceptance and revenue objectives with respect to client
SSD products, (3) customer acceptance and revenue objectives with respect to enterprise SSD products,
(4) customer acceptance objectives for embedded products with major OEM customers, and (5) unit sales targets
with respect to retail sales in emerging markets. In the aggregate, the Company exceeded the target performance
for the strategic objectives. With respect to the fiscal year 2012 EPS goal, the minimum EPS target approved by
the Compensation Committee that would have resulted in a payout under the 2012 bonus program was $3.75 per
share. The Company’s fiscal year 2012 EPS result was $2.38 per share, below the minimum EPS target approved
by the Compensation Committee. Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Non-GAAP Financial Measures,” of the Company’s Form 10-K for the fiscal year
ended December 30, 2012 includes a discussion of the non-GAAP financial measures used by the Company. The
table within the non-GAAP financial measures discussion reconciles the Company’s non-GAAP net income to
the Company’s GAAP-basis net income and shows how the corresponding per-share amounts were derived. The
discussion following that table also includes a description of the adjustments shown in the table, including
income tax adjustments.
After the completion of fiscal year 2012, the Compensation Committee evaluated the fiscal year 2012
performance of the Company and the individual performance of each Named Executive Officer who was
currently an employee of the Company. As a result of the Company’s achievement of the strategic objectives
described above, each of the Named Executive Officers became eligible for the maximum bonus amount of
300% of his or her target bonus amount (other than Dr. Quader, whose fiscal year 2012 bonus was not subject to
a maximum limitation, in accordance with the 2012 bonus program in effect for the broader employee
population). However, the Compensation Committee exercised its discretion in determining the final bonus
amounts payable under the 2012 bonus program in consideration of the following factors. The Compensation
Committee considered the Company’s actual EPS, which was below the minimum EPS threshold under the 2012
bonus program, and the 65% weighting of the EPS objective under the 2012 program. The Compensation
Committee also considered the achievement of the strategic objectives in excess of the target performance
objectives. Key consideration was also given by the Compensation Committee to the actions taken by the Named
Executive Officers to improve the Company’s financial results sequentially quarter-over-quarter in the second
half of fiscal year 2012, and the contributions of each of the Named Executive Officers to the over-achievement
of the strategic objectives. The Compensation Committee also considered the individual performance of each
Named Executive Officer, as follows:
• Mr. Mehrotra—The Compensation Committee considered Mr. Mehrotra’s contributions to the sequential
improvements achieved in the financial results in the latter half of fiscal year 2012, the leadership he provided
toward achievement of the fiscal year 2012 strategic objectives, as well as his leadership in key decisions about
future strategy.
• Ms. Bruner—The Compensation Committee considered Ms. Bruner’s contributions to the sequential
improvements achieved in the financial results in the latter half of fiscal year 2012, as well as her continued
leadership in the Company’s financial matters, investor relations and other administrative and infrastructure
functions and corporate management of the Company, particularly with respect to the preparation of the
Company’s new headquarters facilities.
• Mr. Sadana—The Compensation Committee considered Mr. Sadana’s contributions to the Company’s
overall strategy and mergers and acquisitions in fiscal year 2012, the Company’s strategic position, and
improvements in the Company’s product development process, as well as his leadership in the corporate
management of the Company, including a period in fiscal year 2012 during which he also served as head of the
Company’s corporate engineering department.
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