SanDisk 2012 Annual Report Download - page 65

Proxy Statement
Insider Trading Policy
The Company’s insider trading policy prohibits the Company’s employees, including executive officers,
from short-selling the Company’s Common Stock, trading in derivative securities related to the Company’s
securities, including the Company’s Common Stock, or otherwise engaging in activities designed to hedge
against the Company’s Common Stock.
Section 162(m) Policy
Section 162(m) of the Code disallows a tax deduction to publicly-held companies for compensation paid to
certain executive officers, to the extent that compensation exceeds $1 million per officer in any year. The
limitation applies only to compensation which is not considered to be performance-based, either because it is not
tied to the attainment of performance milestones or because it is not paid pursuant to a stockholder-approved
plan. The Compensation Committee believes that in establishing the cash and equity incentive compensation
programs for the Company’s executive officers, the potential deductibility of the compensation payable under
those programs should be only one of a number of relevant factors taken into consideration, and not the sole
governing factor. Accordingly, the Compensation Committee may provide one or more executive officers with
the opportunity to earn incentive compensation, whether through cash bonus programs tied to the Company’s
financial performance or share-based awards in the form of restricted stock or RSUs, which may be in excess of
the amount deductible by reason of Section 162(m) or other provisions of the Code. The Compensation
Committee believes it is important to maintain incentive compensation at the requisite level to attract and retain
the executive officers essential to the Company’s financial success, even if all or part of that compensation may
not be deductible by reason of the Section 162(m) limitation.
Say-on-Pay
The Board and management value the opinions of the Company’s stockholders. At the 2011 Annual
Meeting of Stockholders, the Board recommended an annual say-on-pay advisory vote on executive
compensation and approximately 89% of the votes cast on the say-on-pay frequency vote proposal were in favor
of holding a say-on-pay advisory vote every year. As a result, the Board has implemented an annual advisory
vote on the Company’s executive compensation program. At the 2012 Annual Meeting of Stockholders, more
than 96% of the votes cast on the say-on-pay advisory vote proposal were in favor of the Company’s executive
compensation program. The Board and the Compensation Committee reviewed the results of the say-on-pay vote
and in light of the approval of a substantial majority of the Company’s stockholders of the executive
compensation program, material changes to the executive compensation program were not made as a result of the
outcome of the favorable say-on-pay advisory vote at the 2012 Annual Meeting of Stockholders. The Board and
the Compensation Committee recognize that executive pay practices and notions of sound governance principles
continue to evolve, and will continue to evaluate and adapt the Company’s executive compensation practices.
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