SanDisk 2012 Annual Report Download - page 58

Based on the subjective factors described above, the Compensation Committee determined it was
appropriate to set annual base salaries for fiscal year 2012 for Mr. Mehrotra, Ms. Bruner, Mr. Sadana and
Mr. Brelsford, effective as of February 27, 2012, at $900,000, $567,000, $425,000 and $409,500, respectively. In
addition, in connection with Mr. Sadana’s promotion to Executive Vice President and Chief Strategy Officer in
September 2012, the Compensation Committee determined it was appropriate to increase Mr. Sadana’s annual
base salary to $475,000, effective as of September 13, 2012. Dr. Quader’s salary for fiscal year 2012 was not set
by the Compensation Committee because he was not an executive officer at the time of the Compensation
Committee’s deliberations in February 2012. Dr. Quader’s salary for fiscal year 2012 was set at the level set forth
in the “Salary” column of the Summary Compensation Table by Mr. Mehrotra based on an evaluation of the
same subjective factors described above. The total base salaries effective for fiscal year 2012 for each of the
Named Executive Officers are as set forth in the “Salary” column of the Summary Compensation Table.
Annual Cash Incentive Awards
None of the executive officers, including the Named Executive Officers who are currently employees of the
Company, has an employment agreement or other contractual right to cash incentive awards for any given year
other than the change in control agreements entered into with the Named Executive Officers and the severance
benefits agreement entered into with the Company’s Chief Executive Officer. In recent years, the Company has
granted cash incentive awards to the Named Executive Officers that were determined based on the achievement
of specified performance goals, which were the same performance goals for the cash incentive awards provided
to the Company’s broader employee population. In February 2012, the Compensation Committee approved a
cash incentive program for fiscal year 2012 in which the employees, including the Named Executive Officers,
were participants (the “2012 bonus program”). Cash incentive awards provided to the Named Executive Officers
under the 2012 bonus program were designed to qualify as “performance-based” for purposes of Section 162(m)
of the Code, with respect to Messrs. Mehrotra, Brelsford and Sadana. The Named Executive Officers’ cash
incentive awards under the 2012 bonus program include a target incentive amount that is expressed as a
percentage of base salary, each of which was approved by the Compensation Committee based on its review of
comparable bonus opportunities at the Company’s peer companies, internal comparability with percentage
targets of other executive officers and the executive officer’s level of responsibility, experience and knowledge.
The target incentive amounts generally increase as an executive officer’s responsibilities increase, reflecting the
Company’s compensation philosophy that as an executive officer’s level of responsibility increases, a greater
portion of that executive officer’s total compensation should be dependent on the Company’s performance.
In February 2012, the Compensation Committee set the Named Executive Officer target bonus percentages
for fiscal year 2012 as follows: 150% of base salary for Mr. Mehrotra; 100% of base salary for Ms. Bruner; 75%
of base salary for Mr. Brelsford; and 75% of base salary for Mr. Sadana. In addition, in September 2012, in
connection with Mr. Sadana’s promotion to Executive Vice President and Chief Strategy Officer, the
Compensation Committee increased the target bonus percentage for Mr. Sadana from 75% to 90% of base salary.
The Named Executive Officer target bonus percentages for fiscal year 2012 were higher than those set for the
Named Executive Officers in fiscal year 2011, and are based upon the Compensation Committee’s determination
that the increase was appropriate due to its evaluation of the factors described above. Dr. Quader’s target bonus
percentage was not set by the Compensation Committee in fiscal year 2012 because he was not an executive
officer at the time of the Compensation Committee’s deliberations in February 2012. Dr. Quader’s target bonus
percentage was set at 70% of base salary by Mr. Mehrotra at the beginning of fiscal year 2012 based on an
evaluation of the same factors described above. In accordance with Section 162(m) of the Code, the
Compensation Committee established a maximum bonus amount payable to each of Mr. Mehrotra, Mr. Brelsford
and Mr. Sadana under the 2012 bonus program of 300% of his target bonus amount in connection with the
achievement of the business objectives described below. The Compensation Committee also established a
maximum bonus amount payable to Ms. Bruner under the 2012 bonus program of 300% of her target bonus
amount in connection with the achievement of the business objectives described below, although the
compensation of the principal financial officer is not subject to Section 162(m) of the Code. Subject to the
maximum target bonus amount, the Compensation Committee has the discretion to vary the individual cash
incentive awards or bonuses based on the performance of the Company and the individual.
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