SanDisk 2006 Annual Report Download - page 30

Named Executive Officers. Our President and Chief Operating Officer assists the Chief Executive Officer in
reviewing performance and formulating recommendations to the Compensation Committee. Our other Named
Executive Officers, including our Chief Financial Officer, provide financial and other information to the Com-
pensation Committee to assist in determining appropriate compensation levels. Our other executive officers,
including the other Named Executive Officers, do not currently have any role in determining or recommending the
form or amount of compensation paid to our Named Executive Officers and our other senior executive officers.
Executive Compensation Program Objectives and Overview
The Company’s current executive compensation programs are intended to achieve three fundamental objec-
tives: (1) attract, retain and motivate qualified executives; (2) hold executives accountable for performance; and
(3) align executives’ interests with the interests of our stockholders. In structuring our current executive com-
pensation programs, we are guided by the following basic philosophies:
•Competition. The Company should provide competitive compensation opportunities so that we can attract,
retain and motivate qualified executives.
•Alignment with Stockholder Interests. A substantial portion of compensation should be contingent on the
Company’s performance. As an executive officer’s level of responsibility increases, a greater portion of the
officer’s total compensation should be dependent on the Company’s performance and stock price
appreciation.
•Pay for Performance. A substantial portion of compensation should be tied to individual performance.
As described in more detail below, the material elements of our current executive compensation program for
Named Executive Officers include a base salary, an annual cash incentive opportunity, a long-term share-based
incentive opportunity, 401(k) retirement benefits and severance protection for certain actual or constructive
terminations of the Named Executive Officers’ employment.
We believe that each element of our executive compensation program helps us to achieve one or more of our
compensation objectives. The table below lists each material element of our executive compensation program and
the compensation objective or objectives that it is designed to achieve.
Compensation Element Compensation Objectives Designed to be Achieved
Base Salary kAttract, retain and motivate qualified executives
Annual Cash Incentive Opportunity kHold executives accountable for performance
kAlign executives’ interests with those of
stockholders
kAttract, retain and motivate qualified executives
Long-Term Share-Based Incentives kAlign executives’ interests with those of
stockholders
kHold executives accountable for performance
kAttract, retain and motivate qualified executives
401(k) Retirement Benefits kAttract, retain and motivate qualified executives
Severance and Other Benefits Upon Termination of
Employment
kAttract, retain and motivate qualified executives
As illustrated by the table above, base salaries, 401(k) retirement benefits and severance and other termination
benefits are all primarily intended to attract, retain and motivate qualified executives. These are the elements of our
current executive compensation program where the value of the benefit in any given year is generally not variable.
We believe that in order to attract, retain and motivate top-caliber executives, we need to provide executives with
predictable benefit amounts that reward the executive’s continued service. Some of the elements, such as base
salaries, are generally paid out on a short-term or current basis. The other elements are generally paid out on a
longer-term basis, such as upon retirement or other termination of employment. We believe that this mix of longer-
Proxy Statement
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