SanDisk 2012 Annual Report Download - page 54

•Pay for Performance. A substantial portion of compensation should be tied to Company and individual
performance.
•Competition. The Company should provide competitive compensation opportunities so that the
Company can attract, retain and motivate qualified executive officers.
As described in more detail below, the material elements of the Company’s current executive compensation
program for the executive officers include the following: a base salary, an annual cash incentive opportunity, a
long-term share-based incentive opportunity, 401(k) retirement benefits and severance protection for certain
terminations of employment. These individual compensation elements are intended to create a total compensation
package for the executive officers that the Company believes achieves its compensation objectives and provides
competitive compensation opportunities. Furthermore, with the exception of the severance protection, the
elements of the executive officers’ compensation are the same as those of the Company’s broader employee
population, which the Company believes also aligns the interests of the executive officers with the Company as a
whole.
The Company believes that each element of its executive compensation program helps the Company to
achieve one or more of the compensation objectives described above. The table below lists each material element
of the Company’s executive compensation program and the compensation objective or objectives that it is
designed to achieve.
Compensation Element Compensation Objectives Designed to be Achieved
Base Salary • Attract, retain and motivate qualified executive
officers
Annual Cash Incentive Opportunity • Hold executive officers accountable for
performance
• Align executive officers’ interests with those of
stockholders
• Attract, retain and motivate qualified executive
officers
Long-term Share-Based Incentives • Align executive officers’ interests with those of
stockholders
• Hold executive officers accountable for
performance
• Attract, retain and motivate qualified executive
officers
401(k) Retirement Benefits • Attract, retain and motivate qualified executive
officers
Severance and Other Benefits Upon Termination of
Employment in Certain Circumstances
• Attract, retain and motivate qualified executive
officers
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 goals of attracting and retaining executive officers.
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