SanDisk 2006 Annual Report Download - page 22

Audit Committee (referred to as the “Audit Committee Delegate”) the authority to pre-approve services not
prohibited by law to be performed by the Company’s independent registered public accounting firm. The Audit
Committee has appointed Catherine P. Lego as the Audit Committee Delegate and, as such, Ms. Lego reports any
decision to pre-approve permissible services to the full Audit Committee at its next regular meeting. In addition,
from time to time, the Audit Committee has adopted and/or revised a Pre-Approval Policy under which particular
services or categories of services are pre-approved, subject to certain specified maximum dollar amounts. Such pre-
approval is generally granted for a term of twelve (12) months from the date of pre-approval and automatically
renews at the end of the one-year period unless revoked or revised by the Audit Committee.
The Audit Committee has concluded that the provision of the audit-related services, tax services and other non-
audit services identified above is compatible with the principal accountants’ independence.
Required Vote
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and
entitled to vote on Proposal No. 2 is required to ratify the appointment of Ernst & Young LLP as the Company’s
independent registered public accounting firm for the fiscal year ending December 30, 2007. Should such
stockholder approval not be obtained, the Board of Directors will reconsider its appointment of Ernst & Young
LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 30, 2007.
Recommendation of the Board of Directors
The Board believes that Proposal No. 2 is in the Company’s best interests and in the best interests of its
stockholders and recommends a vote FOR the ratification of the appointment of Ernst & Young LLP to serve
as the Company’s independent registered public accounting firm for the fiscal year ending December 30,
2007.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL REGARDING PERFORMANCE-VESTING SHARES
The AFL-CIO Fund, 815 Sixteenth Street, N.W., Washington, D.C. 20006, a beneficial owner of 7,600 shares
of Common Stock, has notified us that it intends to present the following proposal at the meeting:
Shareholder Proposal
RESOLVED, that the shareholders of SanDisk Corporation (“SanDisk” or “Company”) urge the Board of
Directors to adopt a policy that a significant portion of future equity compensation grants to senior executives shall
be shares of stock that require the achievement of performance goals as a prerequisite to vesting (“performance-
vesting shares”).
This policy shall apply to existing employment agreements and equity compensation plans only if the use of
performance-vesting shares can be legally implemented by the Company and will otherwise apply to the design of
all future plans and agreements.
Supporting Statement
We believe that our Company’s compensation policies should encourage the ownership of stock by senior
executives in order to align their interests with those of shareholders. To achieve this goal, we favor granting senior
executives actual shares of stock that vest only after meeting specified performance goals. In our opinion,
performance-vesting shares are a better form of equity compensation than fixed-price stock options or time-
vesting restricted stock.
Fixed-price stock option grants provide senior executives with incentives that may not be in the best interests of
long-term shareholders. In our view, stock option grants promise executives all the benefit of share price increases
with little of the risk of share price declines. This asymmetrical incentive structure can reward executives for share
price volatility, a measure of investment risk. Stock options can also reward short-term decision-making because
Proxy Statement
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