SanDisk 2010 Annual Report Download - page 22

Analysis”), in accordance with the Compensation Committee charter. Each Named Executive Officer is reviewed
annually based on whether various performance objectives were met during the preceding review period. Each is
given a performance rating based on such review that is presented to the Compensation Committee and used in
the Compensation Committee’s review and analysis of such officer’s overall compensation. The Company’s
Chief Financial Officer provides financial and other information to the Compensation Committee to assist in
determining appropriate compensation levels. No other Named Executive Officer currently has a role in
determining or recommending the form or amount of compensation paid to the Named Executive Officers.
The Board has delegated concurrent authority to the Compensation Committee and the Special Option
Committee to grant share-based awards (including stock options and stock units) to employees who are not
subject to Section 16 of the Exchange Act (“Section 16 officers”). The Special Option Committee may not grant
share-based awards to Directors. The Special Option Committee may consist of one or more Directors. In fiscal
2010, the Special Option Committee consisted of Dr. Harari through July 20, 2010 and consisted of Dr. Harari
and Mr. Mehrotra beginning on July 21, 2010. As of January 1, 2011, the Special Option Committee was
comprised solely of Mr. Mehrotra. The Special Option Committee took action by written consent 36 times during
fiscal 2010. The Board has also delegated authority to the Secondary Executive Committee to grant stock options
(but not stock units or other equity awards) to non-Section 16 officers and non-Directors. The Secondary
Executive Committee may be comprised of one or more officers of the Company. In fiscal 2010, the Secondary
Executive Committee consisted of Mr. Mehrotra and Judy Bruner, the Company’s Executive Vice President,
Administration and Chief Financial Officer, through July 20, 2010, and consisted solely of Ms. Bruner beginning
on July 21, 2010. The Secondary Executive Committee took action by written consent 17 times during fiscal
2010. Share-based awards to Section 16 officers are made exclusively by the Compensation Committee.
Independent Compensation Consultant.As indicated above, pursuant to its charter, the Compensation
Committee has the power, in its discretion, to retain at the Company’s expense, such independent counsel and
other advisors and experts as it deems necessary or appropriate to carry out the Compensation Committee’s
duties. Under its charter, the Compensation Committee has the express authority to decide whether to retain a
compensation consultant to assist in the evaluation of compensation. If the Compensation Committee decides in
its discretion to retain such a firm, the Board delegates to the Compensation Committee the sole authority to
retain and terminate any compensation consultant engaged to assist in the evaluation of the compensation of the
Company’s senior executive officers (including all of the Named Executive Officers). In 2010, the Compensation
Committee did not retain any outside compensation consultants. From time-to-time, management has retained
and consulted with its own outside advisors, including compensation consultants, to assist in analyzing the
Company’s peer companies and preparing recommendations to the Compensation Committee regarding
compensation programs and levels.
Compensation Committee Interlocks and Insider Participation.No current member of the Compensation
Committee is a current or former executive officer or employee of the Company or had any relationships
requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and
related-party transactions. None of the Company’s executive officers served as a director or a member of a
compensation committee (or other committee serving an equivalent function) of any other entity, the executive
officers of which served as a Director or member of the Compensation Committee during the fiscal year ended
January 2, 2011.
Analysis of Risk in Compensation Programs.In setting compensation, the Compensation Committee also
considers the risks to the Company’s stockholders, and the Company as a whole, arising out of the Company’s
compensation programs. In March 2011, management met with the Company’s external legal counsel to discuss
and assess the risk profile of the Company’s compensation programs. Their review considered risk-determining
characteristics of the overall structure and individual components of the Company’s compensation program,
including the Company’s base salaries, incentive plans and equity plans. A report of the findings was provided to
the Compensation Committee for its review and consideration. Following this assessment, the Compensation
Committee concurred with management’s conclusions that the Company’s compensation policies were not
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