SanDisk 2013 Annual Report Download - page 70

CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Audit Committee is responsible for review, approval, or ratification of ‘‘related-person
transactions’’ between the Company or its subsidiaries and related persons. Under SEC rules, a related
person is a Director, officer, nominee for Director, or 5% stockholder of the Company since the beginning
of the last fiscal year and their immediate family members. The Company has adopted a written related
person transaction policy and procedures that apply to any transaction or series of transactions in which
the Company or a subsidiary is a participant, the amount involved exceeds $120,000 and a related person
has a direct or indirect material interest. The Audit Committee has determined that, barring additional
facts or circumstances, a related person does not have a direct or indirect material interest in the following
categories of transactions:
• any transaction with another company for which a related person’s only relationship is as an
employee (other than an executive officer), director, or beneficial owner of less than 5% of that
company’s shares, if the amount involved does not exceed the greater of $200,000, or 2% of that
company’s total annual revenue;
• compensation to executive officers determined by the Compensation Committee;
• compensation to Directors determined by the Board;
• transactions in which all security holders receive proportional benefits; and
• banking-related services involving a bank depository of funds, transfer agent, registrar, trustee
under a trust indenture, or similar service.
In accordance with the adopted policy and procedures, transactions involving related persons that are
not included in one of the above categories are generally reviewed by the Company’s legal department.
The legal department determines whether a related person could have a material interest in such a
transaction, and any such transaction is submitted to the Audit Committee for review. The Audit
Committee has delegated authority to the chair of the Audit Committee to review any such transactions
involving an amount less than $1,000,000. The Audit Committee or the chair of the Audit Committee, as
applicable, determines whether the related person has a material interest in a transaction and may
approve, ratify, rescind, or take other action with respect to the transaction in its discretion.
The son of Irwin Federman, one of the Company’s directors, is a Senior Manager in the business
development department of the Company’s Retail group. Mr. Federman’s son’s compensation is consistent
with that of others who hold similar roles at the Company. Mr. Federman plays no personal role in
determining his son’s compensation or reviewing his son’s performance. Mr. Federman does not receive a
direct or indirect benefit from his son’s position with the Company. In accordance with the related-person
transaction approval policy described above, Mr. Federman’s son’s employment with the Company was
reviewed by the legal department of the Company and submitted for review to the chair of the Audit
Committee, who ratified the transaction.
Dr. Chenming Hu, one of the Company’s directors, entered into a Consulting Services Agreement
with the Company, dated October 10, 2013 (the ‘‘2013 Consulting Agreement’’), pursuant to which Dr. Hu
provided the Company with advanced memory technology consulting services through January 10, 2014.
Dr. Hu earned $102,968 in consulting fees pursuant to the 2013 Consulting Agreement in 2013 and $11,032
in 2014. The 2013 Consulting Agreement also contains confidentiality provisions in favor of the Company.
In addition to consulting fees, the 2013 Consulting Agreement provides for reimbursement, subject to the
Company’s written approval, of expenses incurred in the performance of work under the 2013 Consulting
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