SanDisk 2011 Annual Report Download - page 41

Proxy Statement
Continued Commitment to Pay-for-Performance. The Compensation Committee sets a significant portion of
the compensation of the executive officers, including the Named Executive Officers, based on their ability to
achieve annual operational objectives that advance the Company’s long-term business objectives and that are
designed to create sustainable long-term stockholder value in a cost-effective manner. The Company’s
performance-based compensation elements are guided by the Compensation Committee’s long-term objectives of
maintaining market competitiveness and retention value. In particular, the Compensation Committee takes into
consideration the fact that, consistent with the Company’s compensation philosophy described in more detail
below, equity awards increase each executive officer’s stake in the Company, thereby reinforcing the incentive to
manage the Company’s business as owners and subjecting a significant portion of the executive officer’s total
compensation to fluctuations in the market price of Common Stock.
Actions related to compensation taken by the Compensation Committee in fiscal 2011 demonstrate the
Company’s continued commitment to pay-for-performance, with a substantial portion of the executive officers’
compensation being at-risk and subject to important performance measures aligned with long-term stockholder
value. The following compensation actions taken during fiscal 2011 are designed to reward strong performance
through short-term and long-term incentives:
• During fiscal 2011, a significant portion of the compensation of each Named Executive Officer who is
currently employed by the Company was at-risk, being comprised of performance-based cash bonus
and at-the-money stock option awards, which become valuable to the executive officer only upon
realized share appreciation.
• The Compensation Committee established key performance metrics for the fiscal 2011 annual cash
incentive opportunity, which provided for payments based upon achievement relative to a non-GAAP
earnings per share (“EPS”) target and the achievement of certain key strategic objectives.
Continued Commitment to Good Compensation Governance. The Company endeavors to maintain good
governance standards with respect to its executive compensation program. The Compensation Committee
believes that the compensation arrangements for the executive officers, including the Named Executive Officers,
are consistent with market practice and provide for compensation that is reasonable based on the Company’s and
each individual executive officer’s performance. The Company has instituted the following policies, which
remain in effect in fiscal 2012, to ensure that its executive compensation program is consistent with good
governance standards:
• In general, the executive officers will not be entitled to guaranteed, non-performance based bonuses or
salary increases.
• In general, the executive officers will not be entitled to tax reimbursement or tax gross-up payments in
respect of perquisites or other compensation.
• The Company adopted a clawback policy pursuant to which each Section 16 officer, including each
Named Executive Officer, may be required to reimburse or forfeit all or a portion of any cash-based
incentive compensation received if the Company’s financial statements are required to be restated as a
result of material non-compliance with any financial reporting requirements.
• To align the interests of the Company’s executive officers with the interests of the Company’s
stockholders, the Company maintains stock ownership guidelines (set forth in the Company’s
Corporate Governance Principles, which are available on the Company’s website) that require that each
executive officer retain a minimum equity ownership interest in the Company.
• Perquisites and other personal benefits do not constitute a significant portion of the compensation for
the executive officers. The Company’s executive officers participate in broad-based Company-
sponsored health and welfare benefits programs on the same basis as other regular employees.
• The Company does not currently offer, nor does the Company have plans to provide, defined benefit
pension arrangements or nonqualified deferred compensation plans or arrangements to its executive
officers.
29