SanDisk 2013 Annual Report Download - page 53

Stock Ownership Guidelines
Each Director and executive officer is required to beneficially own Common Stock (within the
meaning of Rule 13d-3 under the Exchange Act), with a minimum stock ownership requirement, if any, as
determined by the Board from time to time. During fiscal year 2013, each Director and executive officer
was required to beneficially own 1,000 shares of Common Stock upon his or her one-year anniversary of
service, increasing by 1,000 shares upon each anniversary of service as a Director up to a maximum of 5,000
shares after five years of service. The Company’s Directors and executive officers complied with these
guidelines in fiscal year 2013.
In March 2014, the Company revised its stock ownership guidelines, as set forth in the Company’s
Corporate Governance Principles, to establish required minimum equity stakes (calculated by including
shares of Company Common Stock owned outright and half a share for each Company unvested RSU) and
outright equity ownership (defined as shares of Company Common Stock owned outright) for Directors
and executive officers. The revised stock ownership guidelines provide for, subject to a phase-in period of
five years from appointment as a Director or executive officer or from modification to the stock ownership
guidelines, the following required minimum outright equity ownership and equity stakes: (i) each Director
shall hold an outright equity ownership of at least 3,000 shares and an equity stake of at least 5,000 shares,
(ii) the Chief Executive Officer shall hold an outright equity ownership of at least 16,250 shares and an
equity stake of at least 65,000 shares, (iii) each Executive Vice President shall hold an outright equity
ownership of at least 6,250 shares and an equity stake of at least 25,000 shares, and (iv) each Senior Vice
President shall hold an outright equity ownership of at least 3,750 shares and an equity stake of at least
15,000 shares. The Company’s stock ownership guidelines are set forth in the Company’s Corporate
Governance Principles, which are available on the Company’s website.
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, RSUs or other forms of equity compensation, 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.
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Proxy Statement