SanDisk 2011 Annual Report Download - page 43

Proxy Statement
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 executive officers. These
are the elements of the Company’s current executive compensation program where the value of the benefit in any
given year is generally not variable. The Company believes that in order to attract, retain and motivate
top-caliber executive officers, it needs to provide them with predictable benefit amounts that reward their
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. The Company believes that this mix of
long-term and short-term elements allows the Company to achieve its dual goals of attracting and retaining
executive officers (with the long-term benefits geared toward retention and the short-term awards focused on
recruitment).
The Company’s annual cash incentive opportunity is primarily intended to hold the executive officers,
including the Named Executive Officers, accountable for their performance, although the Company believes the
cash incentive also aligns the interests of the executive officers with those of the Company’s stockholders and
helps the Company attract, retain and motivate the executive officers. The Company’s long-term share-based
incentives are primarily intended to align the interests of the executive officers, including the Named Executive
Officers, with those of the Company’s stockholders, although the Company believes the share-based incentives
also help hold executive officers accountable for their performance and help the Company attract, retain and
motivate executive officers. These are the elements of the Company’s current executive compensation program
that are designed to reward performance and the creation of stockholder value, and therefore the value of these
benefits is dependent on performance. The annual cash incentive opportunity is paid out on an annual basis to the
executive officers, including the Named Executive Officers, and is designed to reward performance for that
period. The long-term equity incentives are generally designed to reward performance over one or more years.
The Compensation Committee evaluates executive compensation relative to compensation paid to similarly
situated executive officers at companies determined to be peer companies of the Company. The Compensation
Committee reviewed and approved the following selected peer companies in fiscal 2011:
• Adobe Systems Incorporated
• Advanced Micro Devices, Inc.
• Analog Devices, Inc.
• Broadcom Corporation
• CA, Inc.
• Electronic Arts Inc.
• Juniper Networks, Inc.
• LSI Corporation
• Marvell Technology Group Ltd.
• Maxim Integrated Products, Inc.
• Micron Technology, Inc.
• NetApp, Inc.
• NVIDIA Corporation
• Seagate Technology LLC
• Symantec Corporation
• Xilinx, Inc.
• Yahoo! Inc.
The Company and the Compensation Committee believe that these peer companies, which were selected
from within and outside the Company’s industry, are comparable to the Company in size and growth pattern and
compete with the Company for executive talent. Although the peer companies differ from the S&P
Semiconductor Company Stock Index and the Philadelphia Semiconductor Index, which the Company has
selected as the industry indices for purposes of the stock performance graph that appeared in the Company’s
Form 10-K for the fiscal year ended January 1, 2012, the Company and the Compensation Committee believe
these peer companies provide relevant comparative compensation data for the Company.
Consistent with the compensation philosophies described above, the goal of the Company is to provide its
executive officers, including the Named Executive Officers, with a compensation program that is competitive in
light of the compensation paid to comparable executive officers at its peer companies. To that end, the Company
generally targets base salaries and long-term incentives at approximately the 50th percentile within its peer
companies. The Company generally targets total cash compensation at approximately the 60th percentile within
its peer companies; however, the Company has the ability to and does exercise discretion to set compensation
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