SanDisk 2011 Annual Report Download - page 23

Proxy Statement
conclusions that the Company’s compensation policies were not reasonably likely to have a material adverse
effect on the Company and include many features that mitigate the likelihood of excessive risk-taking, including
those discussed below.
Balance of Compensation. Individual elements of the Company’s compensation program include base
salaries, incentive compensation, and for certain of its employees, share-based awards. By providing a mix of
different elements of compensation that reward both short-term and long-term performance, the Company’s
compensation programs as a whole provide a balanced approach to incentivizing and retaining employees,
without placing an inappropriate emphasis on any particular form of compensation.
Objective Company Results and Pre-established Performance Measures Dictate Annual Incentives. Under
the Company’s cash-based incentive plan, payments are subject to the satisfaction of specific annual performance
objectives established by the Compensation Committee in advance and may be subject to reimbursement or
forfeiture under the Company’s clawback policy. These performance objectives were directly and specifically
tied to earnings per share and achievement of strategic objectives for fiscal 2011.
Use of Long-Term Incentive Compensation. Share-based long-term incentive compensation that vests over a
period of years is a key component of the total compensation of many of the Company’s employees. This vesting
period encourages the Company’s executives and other employees to focus on sustaining and improving the
Company’s long-term performance. These grants are generally made annually, so executives and other key
employees always have unvested awards that could decrease significantly in value if the Company’s business is
not managed for the long term.
Internal Processes Further Restrict Risk. The Company has in place additional processes to limit risk to the
Company from its compensation programs. Specifically, sales commission payments are subject to multiple
internal controls regarding payout terms and payroll programs. Additionally, financial results upon which
incentive compensation payments are based are subject to regular review and audit. In addition, the Company
from time to time engages an external compensation consulting firm to assist in the design and review of the
Company’s compensation programs, as well as external legal counsel to assist with the periodic review of the
Company’s compensation plans to ensure compliance with applicable laws and regulations.
Nominating and Governance Committee
The Nominating and Governance Committee of the Board held two meetings and did not act by unanimous
written consent during fiscal 2011. The Nominating and Governance Committee currently consists of Directors
Marks (Chair), DeNuccio and Hartenstein. Mr. DeNuccio was appointed to serve as a member of the Nominating
and Governance Committee in March 2012. The Nominating and Governance Committee identifies, considers
and recommends Director nominees to be selected by the Board for submission to vote at the Company’s annual
stockholder meetings and to fill vacancies occurring between annual stockholder meetings, implements the
Board’s criteria for selecting new Directors, develops or reviews and recommends corporate governance policies
for the Board, and oversees the annual board and committee evaluation process. The Nominating and
Governance Committee is also authorized to conduct investigations and to retain, at the expense of the Company,
independent legal, accounting, financial, governance or other professional consultants selected by the
Nominating and Governance Committee, for any matters relating to its purposes. The Board adopted a charter for
the Nominating and Governance Committee, which was last reviewed and approved in March 2012. The Board
has determined that each of the members of the Nominating and Governance Committee is an “independent
director” as defined by NASDAQ regulations.
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