SanDisk 2012 Annual Report Download - page 24

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 four meetings and did not act by unanimous
written consent during fiscal year 2012. During fiscal year 2012, the Nominating and Governance Committee
consisted of, and currently consists of, Directors Marks (Chair), DeNuccio and Hartenstein. 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 2013. The Board has determined that each of the members of the Nominating and
Governance Committee is an “independent director” as defined by NASDAQ listing standards.
Board Leadership Structure and Risk Oversight
Board Leadership Structure
Mr. Marks has served as the Chairman of the Board since January 1, 2011. Mr. Mehrotra has served as
Chief Executive Officer of the Company since January 1, 2011 and as a Director since July 2010. The Board
believes that it is in the Company’s best interests to maintain a separation of the Chairman of the Board and the
Chief Executive Officer roles because it allows the Chief Executive Officer of the Company to focus on the
Company’s day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental
role of providing advice to and independent oversight of management. Further, the Board recognizes the time,
effort and energy that the Chief Executive Officer is required to devote to his position, as well as the commitment
required to serve as the Company’s Chairman, particularly as the Board’s oversight responsibilities continue to
grow. The Company’s Corporate Governance Principles do not establish this approach as a fixed policy, but as a
structure that is considered from time to time.
Each of the current Directors, other than Mr. Mehrotra, is independent and the independent Directors have
regular executive sessions. Following an executive session of independent Directors, one or more of the attending
Directors may: (1) act as a liaison between the independent Directors and management regarding any specific
feedback or issues; (2) provide management with input regarding agenda items for Board and Committee
meetings; and (3) coordinate with management regarding information to be provided to the independent
Directors in performing their duties. The Board believes that this approach appropriately and effectively
complements the Company’s current leadership structure.
Under its charter, the Nominating and Governance Committee periodically reviews the performance of the
Board and its Committees, including the functionality and effectiveness of the Board’s leadership structure.
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