SanDisk 2006 Annual Report Download - page 41

(except that the dividend equivalents may be paid in cash or such other form as the plan administrator may deem
appropriate).
Non-Equity Incentive Plan Award
Each non-equity incentive plan award granted to our Named Executive Officers in fiscal 2006 consisted of an
annual cash incentive opportunity under the 2005 Plan. The award provided for the payment of a cash bonus based
on the Company’s performance for fiscal 2006 in the areas of after-tax net income and revenue growth.
In connection with the award, each Named Executive Officer was awarded a target incentive amount,
expressed as a percentage of base salary. The target incentive amounts for the Named Executive Officers were 100%
of base salary for Dr. Harari, 85% of base salary for Mr. Mehrotra and 75% of base salary for the remaining Named
Executive Officers. In addition to establishing target incentive amounts, the Compensation Committee approved a
matrix used to calculate a multiplier of the target amount based on the level of the Company’s achievement of the
two performance goals. The multiplier ranged from a minimum of 0% of target for performance below a threshold
level, 42% for performance at a threshold level and a maximum of 375% of target for exceptional performance.
Based on the Company’s achievement of the performance goals in fiscal 2006 and the bonus matrix, the multiplier
for fiscal 2006 was 205% of target. Under the terms of the cash incentive awards, the Compensation Committee may
exercise discretion to reduce (but not increase) the amount of the bonus otherwise payable to a Named Executive
Officer based on the formula described above. For fiscal 2006, the Compensation Committee exercised its
discretion to pay bonuses at a rate less than the maximum multiplier provided for under the bonus matrix based on
the Company’s fiscal 2006 performance. Specifically, for fiscal 2006, the Compensation Committee approved
bonuses at 150% of target (as opposed to 205%) for the Chief Executive Officer, President and Chief Financial
Officer, and approved bonuses at 138% of target (as opposed to 205%) for the other Named Executive Officers
employed by the Company at year-end. In determining whether to exercise this discretion, the Compensation
Committee considered the factors discussed above under “Current Executive Compensation Program Elements —
Annual Cash Incentive Award” in the Compensation Discussion and Analysis section.
In February 2007, the Compensation Committee reviewed the Company’s performance with respect to after-
tax net income and revenue growth for fiscal 2006, certified the level of performance achieved and approved
incentive payouts under the awards based on its review. The amount of the payout approved by the Compensation
Committee under each Named Executive Officer’s incentive award for fiscal 2006 is presented in column (g) of the
Summary Compensation Table — Fiscal 2006 above.
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