SanDisk 2013 Annual Report Download - page 46

Elements of the Current Executive Compensation Program
Base Salaries
The Compensation Committee generally reviews the base salaries of the executive officers, including
the Named Executive Officers, in the first quarter of each year. To assist with that review, Compensia
provided the Compensation Committee with a summary of the base salary levels in effect for comparable
executive officers based upon industry surveys as well as the Company’s peer companies (based on their
published prior year’s data). The Compensation Committee has typically considered such summaries, as
well as internal comparables, individual performance and the Company’s financial performance, in
reviewing the executive officers’ base salary levels. The weighting of these factors by the Compensation
Committee has been subjective, and not formulaic. The Compensation Committee does not use a formula
for determining the executive officers’ base salaries and other forms of compensation and does not
benchmark compensation at any specific levels relative to the peer companies.
Based on the subjective factors described above, the Compensation Committee determined it was
appropriate to set annual base salaries for fiscal year 2013 for Mr. Mehrotra, Ms. Bruner, and Mr. Sadana,
effective as of February 25, 2013, at $950,000, $595,500, and $496,000, respectively. The salaries for
Dr. Sivaram and Mr. Whitaker for fiscal year 2013 were set by the Compensation Committee at the levels
set forth in the ‘‘Salary’’ column of the Summary Compensation Table in the month in which each such
Named Executive Officer was hired. The total base salaries effective for fiscal year 2013 for each of the
Named Executive Officers are as set forth in the ‘‘Salary’’ column of the Summary Compensation Table.
Annual Cash Incentive Awards
Although none of the executive officers, including the Named Executive Officers who are currently
employees of the Company, has an employment agreement or other contractual right to cash incentive
awards for any given year (other than the change in control agreements entered into with the Named
Executive Officers and the severance benefits agreement entered into with the Company’s Chief Executive
Officer), in recent years, the Company has granted cash incentive awards to the Named Executive Officers.
These cash incentive awards were determined based on the achievement of specified performance goals,
which were the same performance goals for the cash incentive awards provided to the Company’s broader
employee population. In February 2013, the Compensation Committee approved a cash incentive program
for fiscal year 2013 in which the employees, including the Named Executive Officers, were participants (the
‘‘2013 bonus program’’). Cash incentive awards provided to the Named Executive Officers under the 2013
bonus program were designed to qualify as ‘‘performance-based’’ for purposes of Section 162(m) of the
Code, with respect to Messrs. Mehrotra and Sadana. The Named Executive Officers’ cash incentive awards
under the 2013 bonus program include a target incentive amount that is expressed as a percentage of base
salary. Such target incentive amounts for each of Mr. Mehrotra, Ms. Bruner, and Mr. Sadana were
approved by the Compensation Committee based on its review of comparable bonus opportunities at the
Company’s peer companies, internal comparability with percentage targets of other executive officers and
the executive officer’s level of responsibility, experience and knowledge. The target incentive amounts
generally increase as an executive officer’s responsibilities increase, reflecting the Company’s
compensation philosophy that as an executive officer’s level of responsibility increases, a greater portion of
that executive officer’s total compensation should be dependent on the Company’s performance.
In February 2013, the Compensation Committee set the target bonus percentages for certain Named
Executive Officers for fiscal year 2013, consistent with the target bonus percentages for fiscal year 2012, as
follows: 150% of base salary for Mr. Mehrotra; 100% of base salary for Ms. Bruner; and 90% of base salary
for Mr. Sadana. The target bonus percentage for each of Mr. Whitaker and Dr. Sivaram was set at 75% of
base salary by the Compensation Committee at the time that each was hired in fiscal year 2013. In
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