SanDisk 2011 Annual Report Download - page 50

Stock Ownership Guidelines
Each Director and executive officer is required to beneficially own Common Stock (within the meaning of
Rule 13d-3 under the Exchange Act), with a minimum stock ownership requirement, if any, as determined by the
Board from time to time. The Company’s current stock ownership guidelines are set forth in the Company’s
Corporate Governance Principles, which are available on the Company’s website.
Section 162(m) Policy
Section 162(m) of the Code disallows a tax deduction to publicly-held companies for compensation paid to
certain executive officers, to the extent that compensation exceeds $1 million per officer in any year. The
limitation applies only to compensation which is not considered to be performance-based, either because it is not
tied to the attainment of performance milestones or because it is not paid pursuant to a stockholder-approved
plan. The Compensation Committee believes that in establishing the cash and equity incentive compensation
programs for the Company’s executive officers, the potential deductibility of the compensation payable under
those programs should be only one of a number of relevant factors taken into consideration, and not the sole
governing factor. Accordingly, the Compensation Committee may provide one or more executive officers with
the opportunity to earn incentive compensation, whether through cash bonus programs tied to the Company’s
financial performance or share-based awards in the form of restricted stock or restricted stock units, which may
be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Code. The
Compensation Committee believes it is important to maintain incentive compensation at the requisite level to
attract and retain the executive officers essential to the Company’s financial success, even if all or part of that
compensation may not be deductible by reason of the Section 162(m) limitation.
Say-on-Pay
The Board and management value the opinions of the Company’s stockholders. At the 2011 Annual
Meeting of Stockholders, more than 83% of the votes cast on the say-on-pay advisory vote proposal were in
favor of the Company’s executive compensation program. In addition, the Board recommended an annual
say-on-pay advisory vote on executive compensation and approximately 89% of the votes cast on the say-on-pay
frequency vote proposal were in favor of holding a say-on-pay advisory vote every year. As a result, the Board
has implemented an annual advisory vote on the Company’s executive compensation program. The Board and
the Compensation Committee reviewed the results of the say-on-pay vote and in light of the approval of a
substantial majority of the Company’s stockholders of the executive compensation program, material changes to
the executive compensation program were not made as a result of the outcome of the favorable say-on-pay
advisory vote at the 2011 Annual Meeting of Stockholders.
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