SanDisk 2014 Annual Report Download - page 21

served as a director or a member of a compensation committee (or other committee serving an equivalent
function) of any other entity, the executive officers of which served as a Director or member of the
Compensation Committee during the fiscal year ended December 28, 2014.
Analysis of Risk in Compensation Programs. In setting compensation, the Compensation Committee
also considers the risks to the Company’s stockholders, and the Company as a whole, arising out of the
Company’s compensation programs. In March 2015, the Company’s management met to discuss and assess
the risk profile of the Company’s compensation programs. Their review considered risk-influencing
characteristics of the overall structure and individual components of the Company’s compensation
program, including the Company’s base salaries, incentive plans and equity plans. A report regarding
management’s findings was provided to the Compensation Committee for its review and consideration.
Following this review and consideration, the Compensation Committee concurred with management’s
conclusions that the Company’s compensation policies were not reasonably likely to have a material
adverse effect on the Company and included many features that mitigate the likelihood of excessive
risk-taking, including those discussed below.
Balance of Compensation. Individual elements of the Company’s compensation program include
base salaries, incentive compensation, and for certain of its employees, share-based awards. By providing a
mix of different elements of compensation that reward both short-term and long-term performance, the
Company’s compensation programs as a whole provide a balanced approach to incentivizing and retaining
employees, without placing an inappropriate emphasis on any particular form of compensation.
Company Results and Pre-established Performance Measures Dictate Annual Incentives. Under the
Company’s cash-based incentive plan, payments are subject to the satisfaction of specific annual
performance objectives established by the Compensation Committee in advance and may be subject to
reimbursement or forfeiture under the Company’s clawback policy. These performance objectives were
directly and specifically tied to the Company’s fiscal year 2014 diluted non-GAAP earnings per share, as
well as the achievement of strategic objectives for fiscal year 2014.
Use of Long-Term Incentive Compensation. Share-based long-term incentive compensation that vests
over a period of years is a key component of the total compensation of many of the Company’s employees.
This vesting period encourages the Company’s executives and other employees to focus on sustaining and
improving the Company’s long-term performance. These grants are generally made annually, so executives
and other key employees always have unvested awards that could decrease significantly in value if the
Company’s business is not managed for the long term.
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 three meetings during fiscal year
2014. During fiscal year 2014, the Nominating and Governance Committee consisted of Mr. Marks
(Chair), Mr. Hartenstein, and Mr. DeNuccio (through February 3, 2014). The Nominating and
Governance Committee identifies, considers and recommends Director nominees to be selected by the
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Proxy Statement