WASHINGTON — SanDisk Corp. officials have reversed a pay cut for executives after just five months, saying market conditions improved dramatically for the company, which makes data storage products for cameras and other electronics.
Company founder and Chief Executive Eli Harari took a 20 percent pay cut starting March 1. However, after revoking the pay cut this month, SanDisk set Harari's new base salary at $848,000. The company paid him an $800,419 salary in 2006.
The Milpitas, Calif.-based company's decision to reverse the executive pay cut was noted in its quarterly report for the second quarter ended July 1, filed with the Securities and Exchange Commission on Aug. 7.
The salary is only a fraction of total compensation for Harari. The Associated Press' calculations put his total pay for 2006 at $13.1 million, including bonus, incentives and perks.
Lori Barker, SanDisk's senior director of investor relations, said the market improvements that prompted the change were discussed in Harari's last quarterly conference call.
SanDisk's profit for the second quarter ending July 1 had plunged 71 percent to $28 million, or 12 cents a share. However, Harari said in the conference call that "very difficult" market conditions at the beginning of the second quarter had turned around.
Besides lifting a 10 percent to 20 percent pay cut for executives in August, SanDisk also put regular employees' normal annual raises back into effect, Barker said.
SanDisk's move to restore executive pay so soon after cutting pay wasn't unusual considering market conditions improved so quickly, said Daniel Gelbtuch, a senior analyst at CIBC World Markets.
"Flash markets are very volatile," he said.
As part of its move to cut costs, SanDisk also reduced its work force and closed redundant facilities. The company record a $6.7 million restructuring charge for the six months ended July 1, according to the quarterly report filed with the SEC.
The bulk of that charge — $6 million — related to severance and benefits to 149 terminated employees, the filing said.
Barker was unsure how many of these employees will be rehired now that SanDisk's financial outlook is brighter.