SanDisk 2013 Annual Report Download - page 52

and, with the exception of Mr. Mehrotra’s agreement, provide for a severance payment of one and one-half
times the annual base salary and target bonus, as well as eighteen (18) months of Company-paid medical
insurance, in the event of a Qualifying Termination. Under Mr. Mehrotra’s change in control agreement, in
the event of a Qualifying Termination, the severance payment is two times his annual base salary and target
bonus and his entitlement to Company-paid medical insurance is for twenty-four (24) months.
As discussed under ‘‘Annual Cash Incentive Awards’’ and ‘‘Subsequent Committee Actions,’’ the
Compensation Committee has established a target bonus percentage for each Named Executive Officer.
Severance payments under the change in control agreements are based on these target bonus percentages
as in effect for the calendar year in which the change in control occurs, regardless of actual performance
and regardless of whether the Compensation Committee had the discretion to award a lower bonus or no
bonus. The Company believes that the use of target bonuses for this purpose is appropriate to provide
certainty to the executive officers and to avoid disputes concerning the calculation of severance payments.
The change in control agreements with the Named Executive Officers also provide certain other
severance protections, such as (i) accelerated vesting of outstanding equity awards (with accelerated
options to remain exercisable for twelve (12) months following termination, subject to the maximum term
of the option); and (ii) executive outplacement benefits for twelve (12) months following termination
(including resume assistance, career evaluation and assessment, individual career counseling, access to one
or more on-line employment databases, and administrative support). Similar to cash severance benefits,
the Company believes these other severance benefits are consistent with the severance arrangements of the
Company’s peer companies and provide the Named Executive Officers with financial and personal security
during a period of time when they are likely to be unemployed.
Please see ‘‘Potential Payments Upon Termination or Change in Control’’ below for a description of
the potential payments that may be made to the Named Executive Officers in connection with their
termination of employment or a change in control.
401(k) Retirement Benefits
The Company provides a retirement benefit opportunity to its executive officers, including the Named
Executive Officers, under the terms of its tax-qualified 401(k) plan. In fiscal year 2013, the Company made
a discretionary matching contribution on behalf of each participant equal to one-half of the first 6% of
compensation contributed to the plan by the participant. The Named Executive Officers participate in the
plan on the same terms as the Company’s other participating employees. The Company does not maintain
any other deferred compensation (including nonqualified deferred compensation), defined benefit or
supplemental retirement plans for its Named Executive Officers.
Subsequent Committee Actions
In connection with its annual base salary review in February 2014 and based on the factors discussed
above under ‘‘Base Salaries,’’ the Compensation Committee set the fiscal year 2014 base salaries of the
Named Executive Officers who are currently employees of the Company as follows: Mr. Mehrotra,
$1,000,000; Ms. Bruner, $620,000; Mr. Sadana, $516,000; Dr. Sivaram $459,000; and Mr. Whitaker,
$450,000. These base salary adjustments, effective as of February 18, 2014, reflect increases from the most
recent salaries for each of these Named Executive Officers of 5.3%, 4.1%, 4.0%, 2.0% and 5.9%,
respectively.
In February 2014, the Compensation Committee also established performance targets and a maximum
individual bonus payout amount in connection with the Company’s fiscal year 2014 annual cash incentive
program for the executive officers including the Named Executive Officers. The performance targets under
the fiscal year 2014 annual cash incentive program relate to a non-GAAP EPS goal and certain strategic
objectives, the attainment of which the Compensation Committee will evaluate following the end of fiscal
year 2014.
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