UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrantx
Filed by a Party other than the Registrant¨
Check the appropriate box:
¨ | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
¨ | Soliciting Material Pursuant to §240.14a-12 | |
NVIDIA CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| x | No fee required. |
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
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| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
| NVIDIA CORPORATION | ||
| Headquarters | Meeting Location | |
| 2701 SAN TOMAS EXPRESSWAY | 2800 SCOTT BOULEVARD | |
| SANTA CLARA, CALIFORNIA 95050 | SANTA CLARA, CALIFORNIA 95050 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 19, 2008MAY 20, 2009
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of NVIDIA Corporation which will take place on Thursday, June 19, 2008Wednesday, May 20, 2009, at 10:9:00 a.m. localpacific daylight time in Building E of our headquarters which is located at 2800 Scott Boulevard, Santa Clara, California, 95050 for the following purposes:
| To elect three directors nominated by the Board of Directors to hold office until our |
| 2. |
| To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending January |
| To conduct any other business properly brought before the Annual Meeting. |
These items of business are more fully described in the proxy statement accompanying this notice.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
Only stockholders who owned our stock at the close of business on April 21, 2008March 30, 2009 may vote at the Annual Meeting or any adjournments, continuations or postponements of the meeting. A list
We are pleased to take advantage of the U.S. Securities and Exchange Commission rule that allows companies to furnish proxy materials to their stockholders entitledover the Internet. On or about April 8, 2009, we mailed to our stockholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials, or the Notice, containing instructions on how to access our proxy materials, including our proxy statement and annual report. The Notice also instructs you on how to access your proxy card to vote atover the Annual Meeting will be available at our headquarters, 2701 San Tomas Expressway, Santa Clara, California for 10 days prior to the Annual Meeting. If you would like to view the stockholder list, please call our Stock Administration Department at (408) 486-2000 to schedule an appointment.
Internet. Your vote is important. Whether or not you plan to attend the Annual Meeting,PLEASE VOTE YOUR SHARES.SHARES If you plan to vote by mail, please do so as promptly as possible in order to ensure that we receive your vote. A postage pre-paid envelope is enclosed for your convenience..
Please see the map at the back of this proxy statement for directions to Building E of our headquarters.headquarters located at 2800 Scott Boulevard, Santa Clara, California, 95050. We look forward to seeing you at our Annual Meeting.
By Order of the Board of Directors
/s/ David M. Shannon
David M. Shannon
Secretary
Santa Clara, California
May 15, 2008April 8, 2009
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting toTo Be Held on June 19, 2008.May 20, 2009.
This Notice, Proxy Statement, and Ourour Annual Report to Stockholders on Form 10-K and our Stockholder Letter
can be accessed electronically at
www.nvidia.com/proxy
PLEASE CONFIRM YOUR PREFERENCE FOR ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS.You can expedite delivery of your Annual Meeting materials and avoid costly printing and mailing of these documents by signing up to receive them electronically. For further information on how to take advantage of this environment and cost-saving service, please see page 5 of the proxy statement.
Please note that the contents of our website are not incorporated into this proxy statement.
NVIDIA CORPORATION
2701 SAN TOMAS EXPRESSWAY
SANTA CLARA, CALIFORNIA, 95050
PROXY STATEMENT
FOR THE 20082009 ANNUAL MEETING OF STOCKHOLDERS
JMUNEAY 19, 200820, 2009
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why am I receiving these materials?
Your proxy is being solicited on behalf of the Board of Directors, or the Board, of NVIDIA Corporation, a Delaware corporation. Your proxy is for use at our 2009 Annual Meeting of Stockholders, or the 2009 Annual Meeting, to be held on Wednesday, May 20, 2009, at 9:00 a.m. pacific daylight time. This proxy statement contains important information regarding the 2009 Annual Meeting, the proposals on which you are being asked to vote, information you may find useful in determining how to vote and voting procedures.
Where is the annual meeting2009 Annual Meeting going to be?
Our 20082009 Annual Meeting of Stockholders will take place in Building E of our headquarters located at 2800 Scott Boulevard, Santa Clara, California.California 95050. Our principal executive offices are located at 2701 San Tomas Expressway, Santa Clara, California 95050, and our telephone number is (408) 486-2000. Please see the map at the end of this proxy statement for directions.directions to the 2009 Annual Meeting.
Why amdid I receiving thesereceive a Notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?
You receivedWe are pleased to take advantage of the U.S. Securities and Exchange Commission, or SEC, rule that allows companies to furnish their proxy materials over the Internet. On or about April 8, 2009, we sent stockholders who own our common stock at the close of business on March 30, 2009 (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials, or the Notice, containing instructions on how to access our proxy materials, including our proxy statement and our fiscal 2009 annual report. The Notice also instructs you on how to access your proxy card to vote over the Internet or by telephone. In addition, the Notice contains instructions on how to request a paper copy of our proxy materials, including this proxy statement, our fiscal 2009 annual report and a form of proxy card or voting instruction card. The Notice also provides instructions on how you can elect to receive future proxy materials electronically or in printed form by mail. If you choose to receive future proxy materials electronically, you will receive an email next year with instructions containing a link to the proxy materials and a link to the proxy voting site. Your election to receive proxy materials electronically or in printed form by mail will remain in effect until you terminate such election. We believe that this process allows us to provide our stockholders with the information they need in a timelier manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.
Why did I receive a full set of proxy materials in the mail instead of a Notice regarding the Internet availability of proxy materials?
We are providing stockholders who have previously requested to receive paper copies of the proxy materials with paper copies of the proxy materials instead of a Notice. If you would like to reduce the environmental impact and the enclosedcosts incurred by us in mailing proxy card because the Board of Directors of NVIDIA Corporation,materials, you may elect to receive all future proxy materials electronically via email or the Board,Internet.
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If you make this election, you will receive an e-mail message shortly after the proxy statement is soliciting yourreleased containing the Internet link to access our Notice, proxy statement and annual report. The e-mail also will include instructions for voting on the Internet.
In order to receive these materials electronically, you must follow the applicable procedure below:
Stockholders of Record. If you are a stockholder of record, you can choose to receive our future proxy materials electronically by following the instructions to vote on the Internet atwww.proxyvote.com and when prompted, indicate that you agree to access stockholder communications electronically in future years.
Street Name Holders. If your shares are held in street name, you can choose to receive our future proxy materials electronically by visitingwww.icsdelivery.com/nvda.
Your choice to receive proxy materials electronically will remain in effect until you contact our Investor Relations Department and tell us otherwise. You may visit the Investor Relations section of our website atwww.nvidia.com, send an electronic mail message toirelectronicdelivery@nvidia.com or contact our Investor Relations Department by mail at 2701 San Tomas Expressway, Santa Clara, California 95050.
The SEC has enacted rules that permit us to make available to stockholders electronic versions of the annual meeting. You are invitedproxy materials even if the stockholder has not previously elected to attendreceive the annual meeting. You domaterials in this manner. We have chosen this option in connection with the 2009 Annual Meeting, and if you have not needpreviously requested to attendreceive electronic or paper delivery, you should have received by mail, a Notice instructing you how to access the annual meetingmaterials on the Internet and how to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy by telephone or over the Internet.
We are distributing this proxy statement and the accompanying proxy card on or about May 15, 2008.
Who can vote at the annual meeting?2009 Annual Meeting?
Stockholders of record at the close of business on April 21, 2008March 30, 2009 (the record date) will be entitled to vote at the annual meeting.2009 Annual Meeting. On the record date, there were 556,115,886544,633,196 shares of common stock outstanding and entitled to vote.
Are A list of stockholders entitled to vote at the numbers in this proxy statement adjusted2009 Annual Meeting will be available at our headquarters, 2701 San Tomas Expressway, Santa Clara, California for 10 days prior to the last year’s three-for-two stock split?
All shares and prices reported in this proxy statement have been adjusted2009 Annual Meeting. If you would like to reflectview the three-for-two stock split that was effected on September 10, 2007.stockholder list, please call our Stock Administration Department at (408) 486-2000 to schedule an appointment.
What is the difference between a stockholder of record and a beneficial owner?
Stockholder of Record. You are a stockholder of record if at the close of business on April 21, 2008March 30, 2009 your shares were registered directly in your name with our transfer agent—BNY Mellon Shareowner Services.Services, our transfer agent.
Beneficial Owner. You are a beneficial owner if your shares were held through a broker or other nominee and not in your name at the close of business on April 21, 2008.March 30, 2009. Being a beneficial owner means that, like most of our stockholders, your shares are held in street name and your broker sends thesethe Notice or the proxy materials to you. As a beneficial owner, your broker or other nominee is the stockholder of record of your shares. You have the right to direct your broker on how to vote the shares in your account. However, because you are not the stockholder of record, if you would like to vote your shares in person at the annual meeting2009 Annual Meeting you must obtain a legally valid proxy from your broker prior to the annual meeting.2009 Annual Meeting.
What am I voting on?
There are threetwo matters scheduled for a vote:
the election of three directors nominated by our Board and named in the proxy statement;
the approval of an amendment to our certificate of incorporation; and
the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending January 25, 2009.31, 2010.
In addition, you are entitled to vote on any other matters that are properly brought before the annual meeting.2009 Annual Meeting.
How do I vote?
May IYou may either vote by proxy card, by telephoneFOR all the nominees to the Board or over the Internet?you mayWITHHOLD your vote for any nominee you specify. For each other matter to be voted on, you may voteFOR orAGAINST orABSTAIN from voting.
Stockholder of Record. If you are a stockholder of record, there are four ways for you to vote your shares.
In Person. You may vote in person by coming to the annual meeting.2009 Annual Meeting. Even if you plan to attend the annual meeting,2009 Annual Meeting, we urge you to vote by proxy prior to the annual meeting2009 Annual Meeting to ensure your vote is counted.
By Proxy. To voteIf you received printed proxy materials, you may submit your proxy by mail by signing your proxy simply complete, sign and datecard. If you provide specific voting instructions, your shares will be voted as you have instructed.
By Telephone or Internet. You may submit your proxy by following the enclosed proxy card and return it promptlyinstructions provided in the envelope provided.Notice to vote over the Internet. If you returnreceived a printed version of the proxy materials by mail, you may submit your signedproxy by following the instructions provided with your proxy materials and on your proxy card to us before the annual meeting, we will vote your shares as you direct.
By Telephone. To vote by telephone, dial toll-free 1-866-540-5760 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the Control Number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Daylight Savings Time on June 18, 2008 to be counted.
On the Internet. To vote onover the Internet go towww.proxyvoting.com/nvda to complete an electronic proxy card. You will be asked to provide the Control Number from the enclosed proxy card. Your vote must be receivedor by 11:59 p.m., Eastern Daylight Savings Time on June 18, 2008 to be counted.telephone.
Beneficial Owner. If you are a beneficial owner, you should have received a proxy cardNotice or Voting Instruction Form with these proxy materialsvoting instructions from your broker. You should follow the Voting Instruction Forminstructions in the Notice or voting instructions in order to instruct your broker on how to vote your shares. The broker holding your shares may allow you to deliver your voting instructions by telephone or over the Internet. If your Voting Instruction Form doesNotice or voting instructions do not include telephone or Internet instructions, please complete and return your Voting Instruction FormNotice or voting instructions promptly by mail. To vote in person at the annual meeting,2009 Annual Meeting, you must obtain a valid proxy from your broker.
Will the annual meeting2009 Annual Meeting be webcast?
An audio webcast of the annual meeting2009 Annual Meeting will be available on the Investor Relations page of our website atwww.nvidia.com at 10:9:00 a.m. local time on June 19, 2008.May 20, 2009. The webcast will allow investors to listen to the annual meeting,2009 Annual Meeting, but stockholders accessing the annual meeting2009 Annual Meeting through the webcast will not be considered present at the annual meeting2009 Annual Meeting and will not be able to vote through the webcast or to ask questions. An archived copy of the webcast will be available on our web site through June 30, 2008.5, 2009. Registration to listen to the webcast will be required.
What is a broker non-vote?
Brokers that hold shares of our common stock for a beneficial owner typically have the authority to vote on “routine” proposals when they have not received instructions from the beneficial owner at least ten10 days prior to the annual meeting.2009 Annual Meeting. The election of directors and the ratification of the selection of our independent registered public accounting firm are considered to be routine matters. Brokers may not vote their customers’ shares on matters that are considered to be “non-routine” such as the proposal to approve the amendment to our certificate of incorporation.. The shares that are not voted on non-routine matters are called broker non-votes.
How are votes counted?
Votes will be counted by the inspector of election appointed for the annual meeting,2009 Annual Meeting, who will separately countFOR votes,AGAINST votes, abstentions and broker non-votes. With regard to Proposal 1, the election of three members to our Board named in this proxy statement, you may withhold your vote for a particular nominee. The number ofWITHHOLDvotes will also be counted by the inspector of election. You may also choose to abstain. Shares not present at the meeting, shares votingABSTAIN and broker non-votes will have no effect on the election of directors.
If you are a stockholder of record and you returned a signed and dated proxy card without marking any voting selections, your shares will be votedFORproposal numbers one and three.two. If any other matter is properly
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presented at the annual meeting,2009 Annual Meeting, either Jen-Hsun Huang or David M. Shannon as your proxy will vote your shares using his best judgment.
May I change my vote after submitting my proxy?
Yes. If you are a stockholder of record, you may revoke your proxy at any time before the final vote at the annual meeting2009 Annual Meeting in any one of the following four ways:
you may submit another properly completed proxy card with a later date;
you may send a written notice that you are revoking your proxy to NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050, attention: General Counsel/Secretary;
you may attend the annual meeting2009 Annual Meeting and vote in person; or
you may submit another proxy by telephone or Internet after you have already provided an earlier proxy.
What is the quorum requirement?
We need a quorum of stockholders to hold our annual meeting.2009 Annual Meeting. A quorum exists when at least a majority of the outstanding shares entitled to vote at the close of business on April 21, 2008March 30, 2009 are represented at the annual meeting2009 Annual Meeting either in person or by proxy. On the record date, there were 556,115,886544,633,196 shares of common stock outstanding and entitled to vote meaning that 278,057,944272,316,599 shares must be represented in person or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy or vote at the annual meeting.2009 Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is not a quorum, a majority of the votes present at the annual meeting2009 Annual Meeting may adjourn the annual meeting2009 Annual Meeting to another date.
How many votes are needed to elect directors (Proposal 1)?
We have adopted Bylaw provisions providing for a majority vote standard in non-contested elections. As the number of nominees properly nominated for the annual meeting2009 Annual Meeting is the same as the number of directors to be elected, the annual meeting2009 Annual Meeting is a non-contested election. Pursuant to our Bylaws, if the number of votesWITHHELD with respect to a nominee exceeds the number of votesFOR, then the nominee is required to submit their resignation for consideration by our Board and our Nominating and Corporate Governance Committee.
How many votes are needed to approve the proposed amendment to our certificate of incorporation (Proposal 2)?
The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote is required to approve the proposed amendment to our certificate of incorporation. If you do not vote orABSTAIN from voting, it will have the same effect as anAGAINSTvote. Brokers may not vote on Proposal 2 without receiving instructions from the beneficial owners of the shares. Broker non-votes will have the same effect as anAGAINSTvote.
How many votes are needed to ratify PricewaterhouseCoopers LLP as our independent registered public accounting firm (Proposal 3)2)?
The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote is required for the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm. If youABSTAIN from voting, it will have the same effect as anAGAINSTvote. If you do not vote, it will have no effect.
How can I find out the results of the voting at the annual meeting?2009 Annual Meeting?
Preliminary voting results will be announced at the annual meeting.2009 Annual Meeting. Final voting results will be published in our quarterly report on Form 10-Q for our second quarter ending July 27, 2008,26, 2009, which will be filed with the Securities and Exchange Commission, or SEC by September 5, 2008.4, 2009.
Who is paying for this proxy solicitation?
We will pay the entire cost of soliciting proxies. Our directors and employees may also solicit proxies in person, by telephone, by mail, by Internet or by other means of communication. Directors and employees will not
be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one Notice or full set of proxy card?materials in the mail?
If you received more than one Notice or proxy card,materials your shares are registered in more than one name or are held in different accounts. Please complete, sign and return each Notice or proxy card to ensure that all of your shares are voted. If you would like to modify your instructions so that you receive one Notice or proxy card for each account or name, please contact your broker.
What does it mean if multiple members of my household are stockholders but we only received one Notice or full set of proxy materials?materials in the mail?
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for Notices and proxy materials with respect to two or more stockholders sharing the same address by delivering a single Notice or set of proxy materials addressed to those stockholders. In accordance with a prior notice sent to certain brokers, banks, dealers or other agents, we are sending only one annual report andNotice or set of proxy statementmaterials to those addresses with multiple stockholders unless we received contrary instructions from any stockholder at that address. This practice, known as “householding,” allows us to satisfy the delivery requirements for delivering Notices or proxy statements and annual reportsmaterials with respect to two or more stockholders sharing the same address by delivering a single copy of these documents. Householding helps to reduce our printing and postage costs, reduces the amount of mail you receive and helps to preserve the environment.
If you currently receive multiple copies of ourthe Notice or proxy statement and annual reportmaterials at your address and would like to request “householding” of your communications, please contact your broker. Once you have elected “householding” of your communications, “householding” will continue until you are notified otherwise or until you revoke your consent. If any stockholder residing at such an address wishes to receive a separate set of documents, they may telephone our Stock Administration Department at (408) 486-2000 or write to our Stock Administration Department at 2701 San Tomas Expressway, Santa Clara, California 95050.
When are stockholder proposals due for next year’s annual meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by January 15,December 9, 2009 to NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CACalifornia 95050, Attention: General Counsel/Secretary and must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended. If you wish to submit a proposal that is not to be included in next year’s proxy materials, but that may be considered at the 20092010 annual meeting, you must do so in writing
following the above instructions by January 15,not later than the close of business on December 9, 2009, and not earlier than the close of business on November 9, 2009. We also advise you to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations, including the different notice submission date requirements in the event that we do not hold our 20092010 annual meeting between MayApril 20, 20092010 and JulyJune 19, 2009.2010.
Can I view these proxy materials over the Internet?on NVIDIA’s website?
Yes. This proxy statement is posted on our Investor Relations website atwww.nvidia.com. You also can use this website to view our other filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended January 27, 2008.25, 2009. The contents of our website are not a part of this proxy statement.
Can I view materials for future annual meetings over the Internet?
Yes. We are encouraging all of our stockholders to receive future communications from us by email. Opting to receive proxy materials electronically will assist in our efforts to protect the environment and will save us the cost of printing and mailing these documents to you. You can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. If you make this election, you will receive an e-mail message shortly after the proxy statement is released containing the Internet link to access our proxy statement and annual report. The e-mail also will include instructions for voting on the Internet.5
In order to receive these materials electronically, you must follow the applicable procedure below:
Holders of record—If you are a holder of record you can choose to receive our future proxy materials electronically by following the instructions to vote on the Internet atwww.proxyvote.com and when prompted, indicate that you agree to access stockholder communications electronically in future years.
Street name holders—If your shares are held in street name, you can choose to receive our future proxy materials electronically by visitingwww.icsdelivery.com/nvda.
Your choice to receive proxy materials electronically will remain in effect until you contact our Investor Relations Department and tell us otherwise. You may visit the Investor Relations section of our website atwww.nvidia.com, send an electronic mail message toirelectronicdelivery@nvidia.com or contact our Investor Relations Department by mail at 2701 San Tomas Expressway, Santa Clara, CA 95050.
The SEC has enacted rules that permit us to make available to stockholders electronic versions of the proxy materials even if the stockholder has not previously elected to receive the materials in this manner. Although we have not chosen this option in connection with this year’s annual meeting, it is possible that we may do so next year. To the extent we elect this option, and you have not previously elected to receive electronic materials, you will receive by mail, a notice of Internet availability of proxy materials instructing you how to access the materials on the Internet and how to vote your shares.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
ELECTIONELECTION OF DIRECTORS DIRECTORS
Our Board is divided into three classes serving staggered three year terms. At the annual meeting,2009 Annual Meeting, our stockholders will elect three directors to serve as directors until our 20112012 annual meeting of stockholders. Messrs. JonesCoxe and Miller and Dr. ChuPerry are currently directors and were previously elected by our stockholders. Mr. Stevens is also currently a director and previously served as a member of the Board from June 1993 until June 2006. Mr. Stevens was recommended for appointment to the Board by our management. Our Nominating and Corporate Governance Committee reviewed the qualifications of each of the nominees for election and unanimously recommended that each nominee be submitted for election to the Board. Our Board approved the recommendation at its meeting held on February 7, 2008.12, 2009. If elected at the annual meeting,2009 Annual Meeting, each of the nominees will serve until the 20112012 annual meeting of stockholders and until a successor is elected or appointed.
The Board expects the nominees will be available for election. If a nominee declines or is unable to act as a director, your proxy may be voted for any substitute nominee proposed by the Board or the size of the Board may be reduced. In accordance with our Bylaws, directors are elected if they receive moreFORvotes thanWITHHOLDvotes. Unless you instruct otherwise, your proxy will be votedFOR the election of these nominees.
The following is information for each of the members of our Board as of the date of this proxy statement.
Name | Position with NVIDIA | Age | Director Since | Expiration of Term | ||||
Steven Chu, Ph.D. | Director | 60 | July 2004 | 2008 | ||||
Harvey C. Jones | Director | 55 | November 1993 | 2008 | ||||
William J. Miller | Director | 62 | November 1994 | 2008 | ||||
Tench Coxe | Director | 50 | June 1993 | 2009 | ||||
Mark L. Perry | Director | 52 | May 2005 | 2009 | ||||
Jen-Hsun Huang | Chief Executive Officer, President and Director | 45 | April 1993 | 2010 | ||||
James C. Gaither | Lead Director | 70 | December 1998 | 2010 | ||||
A. Brooke Seawell | Director | 60 | December 1997 | 2010 |
Nominees for Election for a Three-yearThree-Year Term Expiring at Our 20112012 Annual Meeting
Dr. Steven Chu became the Director of the Lawrence Berkeley National Laboratory, a research laboratory of the Department of Energy managed by the University of California, in August 2004. From 1987 to August 2004, Dr. Chu served as a Professor of Physics and Applied Physics at Stanford University. At Stanford, Dr. Chu served as Chair of the Physics Department from 1990 through 1993 and from 1999 through 2001. From 1983 to 1987, Dr. Chu served as the head of the Quantum Electronics Research Department at AT&T Bell Laboratories, the research division of AT&T Corp., a telecommunications company. In 1997, Dr. Chu, with two colleagues at National Institute of Standards and Technology and College de France, was awarded the Nobel Prize in physics for the development of methods to cool and trap atoms with laser light. Dr. Chu serves on the Board of Trustees of the University of Rochester and on the board of directors of The William and Flora Hewlett Foundation. Dr. Chu holds an A.B. degree in Mathematics and a B.S. degree in Physics from the University of Rochester and a Ph.D. in Physics from the University of California at Berkeley.
Harvey C. Jones is the Chairman of the board of directors of Tensilica Inc., a privately-held company he co-founded in 1997. Tensilica designs and licenses application-specific microprocessors for use in high-volume embedded systems. From December 1987 through February 1998, Mr. Jones held various positions at Synopsys, Inc., an electronic design automation software company, where he served as Chief Executive Officer through January 1994 and as Executive Chairman of the board of directors until February 1998. Prior to Synopsys, Mr. Jones served as President and Chief Executive Officer of Daisy Systems Corporation, a computer-aided engineering company that he co-founded in 1981. Mr. Jones currently serves on the board of directors of Wind
River Systems, Inc., an embedded software and services provider, and several privately-held companies. Mr. Jones holds a B.S. degree in Mathematics and Computer Sciences from Georgetown University and an M.S. degree in Management from the Massachusetts Institute of Technology.
William J. Miller has served as an independent board member for several companies and has been an occasional consultant to several technology companies since October 1999. From April 1996 through October 1999, Mr. Miller was Chief Executive Officer and Chairman of the board of directors of Avid Technology, Inc., a provider of digital tools for multimedia. Mr. Miller also served as President of Avid Technology from September 1996 through October 1999. From March 1992 to October 1995, Mr. Miller served as Chief Executive Officer of Quantum Corporation, a mass storage company. He was a member of the board of directors of Quantum, and Chairman thereof, from May 1992 and September 1993, respectively, to August 1995. From 1981 to March 1992, he served in various positions at Control Data Corporation, a supplier of computer hardware, software and services, most recently as Executive Vice President and President, Information Services. Mr. Miller serves on the board of directors of Waters Corporation, a scientific instrument manufacturing company, Digimarc Corporation, a developer and supplier of secure identification products and digital watermarking technology, Overland Storage, Inc., a supplier of data storage products, and Glu Mobile, Inc., a publisher of mobile games. Mr. Miller holds B.A. and J.D. degrees from the University of Minnesota.
THE BOARD RECOMMENDSA VOTE IN FAVOROFTHE ELECTION
TOTHE BOARDOF EACH NAMED NOMINEE.
Directors Continuing in Office until Our 2009 Annual Meeting
Tench Coxe is a managing director of the general partner of Sutter Hill Ventures, a venture capital investment firm. Prior to joining Sutter Hill Ventures in 1987, Mr. Coxe was Director of Marketing and MIS at Digital Communication Associates. Mr. Coxe also serves on the board of directors of eLoyalty Corporation, a customer loyalty software firm, and several privately-held companies. Mr. Coxe holds a B.A. degree in Economics from Dartmouth College and an M.B.A. degree from Harvard Business School.
Mark L. Perry currently serves as the President and Chief Executive Officer and a member of the board of directors of Aerovance Inc., a biopharmaceutical company. Prior to joining Aerovance in February 2007, Mr. Perry served as the senior business advisor for Gilead Sciences, Inc., a biopharmaceutical company. Mr. Perry was an executive officer of Gilead from July 1994 to April 2004, serving in a variety of capacities, including General Counsel, Chief Financial Officer and most recently, Executive Vice President of Operations, responsible for worldwide sales and marketing, legal, manufacturing and facilities. From September 1981 to June 1994, Mr. Perry was with the law firm Cooley Godward KronishLLP in San Francisco and Palo Alto, California, serving as a partner of the firm from 1987 until 1994. Mr. Perry also serves as a member of the board of directors of Nuvelo, Inc., a biopharmaceutical company, and Aerovance. Mr. Perry holds a B.A. degree in History from the University of California, Berkeley and a J.D. degree from the University of California, Davis.
Mark A. Stevens has been a managing member of Sequoia Capital, a venture capital investment firm, since March 1993. Prior to that time, beginning in July 1989, he was an associate at Sequoia Capital. Prior to joining Sequoia, he held technical sales and marketing positions at Intel Corporation and was a member of the technical staff at Hughes Aircraft Company. Mr. Stevens currently serves on the boards of several privately-held companies. Mr. Stevens holds a B.S.E.E. degree, a B.A. degree in Economics and an M.S. degree in Computer Engineering from the University of Southern California and an M.B.A. degree from Harvard Business School.
THE BOARD RECOMMENDSA VOTEIN FAVOROFTHE ELECTION
TOTHE BOARDOF EACH NAMED NOMINEE.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The following is information for each of the members of our Board as of the date of this proxy statement.
Name | Position with NVIDIA | Age | Director Since | Expiration of Term | ||||
Tench Coxe | Director | 51 | June 1993 | 2009 | ||||
Mark L. Perry | Director | 53 | May 2005 | 2009 | ||||
Mark A. Stevens | Director | 49 | September 2008* | 2009 | ||||
James C. Gaither | Lead Director | 71 | December 1998 | 2010 | ||||
Jen-Hsun Huang | Chief Executive Officer, President and Director | 46 | April 1993 | 2010 | ||||
A. Brooke Seawell | Director | 61 | December 1997 | 2010 | ||||
Harvey C. Jones | Director | 56 | November 1993 | 2011 | ||||
William J. Miller | Director | 63 | November 1994 | 2011 |
| * | Mr. Stevens previously served as a member of our Board of Directors from June 1993 until June 2006. |
Directors Continuing in Office until Our 2010 Annual Meeting
James C. Gaither ishas been a managing director of Sutter Hill Ventures, a venture capital investment firm.firm, since July 2000. He is a retired partner of the law firm of Cooley Godward KronishLLP and was a partner of the firm from 1971 until July 2000 and senior counsel to the firm from July 2000 to 2003. Prior to beginning his law practice with the firm in 1969, Mr. Gaither served as a law clerk to The Honorable Earl Warren, Chief Justice of the United States Supreme Court, Special Assistant to the Assistant Attorney General in the United States Department of Justice and Staff Assistant to the President of the United States, Lyndon Johnson. Mr. Gaither is a former president of the Board of Trustees at Stanford University and is Vice Chairman of the Board of Directors of The William and Flora Hewlett Foundation and Chairman of the Board of Trustees of The Carnegie Endowment for International Peace. Mr. Gaither holds a B.A. in Economics from Princeton University and a J.D. degree from Stanford University Law School.
Jen-Hsun Huangco-founded NVIDIA in April 1993 and has served as our President and Chief Executive Officer since that time. From 1985 to 1993, Mr. Huang was employed at LSI Logic Corporation, a computer chip manufacturer, where he held a variety of positions, most recently as Director of Coreware, the business unit responsible for LSI’s “system-on-a-chip” strategy. From 1984 to 1985, Mr. Huang was a microprocessor designer for Advanced Micro Devices, Inc., a semiconductor company. Mr. Huang holds a B.S.E.E. degree from Oregon State University and an M.S.E.E. degree from Stanford University.
A. Brooke Seawellhas been a Venture Partner with New Enterprise Associates, a venture capital investment firm, since January 2005. From February 2000 to December 2004, Mr. Seawell was a Partner with Technology Crossover Ventures, a venture capital investment firm. From 1997 to 1998, Mr. Seawell was Executive Vice President of NetDynamics, Inc., an application server software company, which was acquired by Sun Microsystems, Inc. From 1991 to 1997, Mr. Seawell was Senior Vice President and Chief Financial Officer of Synopsys, Inc., an electronic design automation software company. Mr. Seawell also serves on the board of directors of Informatica Corporation, a data integration software company, Glu Mobile, Inc., a publisher of mobile games, and several privately heldprivately-held companies. Mr. Seawell serves on the Management Board of the Stanford Graduate School of Business. Mr. Seawell holds a B.A. degree in Economics and an M.B.A. degree in Finance from Stanford University.
Directors Continuing in Office until Our 2011 Annual Meeting
Harvey C. Jones is the Chairman of the board of directors of Tensilica Inc., a privately-held company he co-founded in 1997. Tensilica designs and licenses application-specific microprocessors for use in high-volume
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embedded systems. From December 1987 through February 1998, Mr. Jones held various positions at Synopsys, Inc., an electronic design automation software company, where he served as Chief Executive Officer through January 1994 and as Executive Chairman of the board of directors until February 1998. Prior to Synopsys, Mr. Jones served as President and Chief Executive Officer of Daisy Systems Corporation, a computer-aided engineering company that he co-founded in 1981. Mr. Jones currently serves on the board of directors of Wind River Systems, Inc., an embedded software and services provider, and several privately-held companies. Mr. Jones holds a B.S. degree in Mathematics and Computer Sciences from Georgetown University and an M.S. degree in Management from the Massachusetts Institute of Technology.
William J. Miller has served as an independent board member for several companies and has been an occasional consultant to several technology companies since October 1999. From April 1996 through October 1999, Mr. Miller was Chief Executive Officer and Chairman of the board of directors of Avid Technology, Inc., a provider of digital tools for multimedia. Mr. Miller also served as President of Avid Technology from September 1996 through October 1999. From March 1992 to October 1995, Mr. Miller served as Chief Executive Officer of Quantum Corporation, a mass storage company. He was a member of the board of directors of Quantum, and Chairman thereof, from May 1992 and September 1993, respectively, to August 1995. From 1981 to March 1992, he served in various positions at Control Data Corporation, a supplier of computer hardware, software and services, most recently as Executive Vice President and President, Information Services. Mr. Miller serves on the board of directors of Waters Corporation, a scientific instrument manufacturing company, Digimarc Corporation, a developer and supplier of secure identification products and digital watermarking technology, Overland Storage, Inc., a supplier of data storage products, and Glu Mobile, Inc., a publisher of mobile games. Mr. Miller holds B.A. and J.D. degrees from the University of Minnesota.
Independence of the Members of the Board of Directors
Consistent with the requirements of The NasdaqNASDAQ Stock Market LLC, or NASDAQ, our Corporate Governance Policies require our Board to affirmatively determine that a majority of our directors do not have a relationship that would interfere with their exercise of independent judgment in carrying out their responsibilities and meet any other qualification requirements required by the Securities and Exchange Commission, or SEC and NASDAQ. After considering all relevant relationships and transactions, the Board determined all members of the Board are “independent” as defined by the SEC’s and NASDAQ’s rules and regulations, except for Jen-Hsun Huang, our Presidentpresident and Chief Executive Officer.chief executive officer. The Board also determined that all members of our Audit, Compensation and Nominating and Corporate Governance Committees are independent under applicable NASDAQ listing standards. In March 2009, in connection with the settlement of the stockholder derivative lawsuits relating to our historical stock option practices, or the Settlement, we adopted a supplement to our Corporate Governance Policies, or the Supplement, to be effective on the date that the Settlement is effective, currently expected to be on or about April 17, 2009. Once effective, the Supplement will require our Board to affirmatively determine that at least 75% of our directors are “independent” as defined by the SEC’s and NASDAQ’s rules and regulations and our own higher standards. As of the date of the mailing of this proxy statement, 80% of the members of our Board are independent.
Lead Independent Director
The other independent members of the Board appointed Mr. Gaither as the lead independent director of the Board. As the Lead Director, Mr. Gaither presides over executive sessions of the Board. Mr. Gaither works with our chief executive officer and the other members of the Board to establish the agenda for executive sessions of the independent directors. Effective immediately following our 2009 Annual Meeting, as part of our periodic Lead Director rotation, the other independent members of the Board appointed Mr. Miller to succeed Mr. Gaither as the Lead Director.
Audit Committee Financial Experts
The Board has determined that each of Messrs. Seawell and Perry satisfy the criteria adopted by the SEC to serve as an “audit committee financial expert” within the meaning of the SEC rules.
Corporate Governance Policies of the Board of Directors
In January 2004, theThe Board has documented our governance practices by adopting Corporate Governance Policies to assure that the Board will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The Board amended and restated its Corporate Governance Policies in May 2007. The Corporate Governance Policiesand the Supplement, as described above, set forth the practices the Board follows with respect to board composition and selection, regular evaluations of the Board and its committees, board meetings and involvement of senior management, chief executive officer performance evaluation, and board committees and compensation. As required under NASDAQ’s listing standards, our independent directors have in the past and will continue to meet regularly in scheduled executive sessions at which only independent directors are present. Our Corporate Governance Policies and the Supplement may be viewed under Corporate Governance in the Investor Relations section of our website atwww.nvidia.com.
Although we do not have a formal policy regarding attendance by members of the Board at our annual meetings, our practice is that in addition to Mr. Huang, one independent director will attend each annual meeting on behalf of all independent directors and all members of the Board are encouraged to attend. Messrs. Huang, Gaither, Jones and CoxeMiller were present at our 2007 annual meeting. Mr. Gaither was out of the country and unable to attend the2008 annual meeting.
Code of Conduct
We have a Worldwide Code of Conduct that applies to all of our executive officers, directors and employees.employees, including our principal executive officer and principal financial and accounting officer. Also, we have a Financial Team Code of Conduct that applies to our executive officers, directors and members of our finance, accounting and treasury departments. Both the Worldwide Code of Conduct and the Financial Team Code of Conduct are available under Corporate Governance in the Investor Relations section of our website atwww.nvidia.com. If we make any amendments to the Worldwide Code of Conduct or the Financial Team Code of Conduct or grant any waiver from a provision of either code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate with the Board regarding nominations of directors or other matters may do so by sending written communications addressed to David M. Shannon, our Secretary, at NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050. All stockholder communications we receive that are addressed to the Board will be compiled by our Secretary. If no particular director is named, letters will be forwarded, depending on the subject matter, to the Chair of the Audit, Compensation, or Nominating and Corporate Governance Committee.
Nomination of Directors
The Nominating and Corporate Governance Committee identifies, reviews and evaluates candidates to serve as directors and recommends candidates for election to the Board. In making its determinations, the Nominating and Corporate Governance Committee strives to select individuals who have the highest personal and professional integrity, have demonstrated exceptional ability and judgment and will be effective in collectively serving the long-term interests of the stockholders. In selecting individuals as nominees, the Nominating and Corporate Governance Committee will also consider any other factor that it deems relevant, including industry experience and diversity.
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to NVIDIA during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee determines whether the nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC
9
rules and regulations and, when necessary, the advice of counsel. The Nominating and Corporate Governance Committee uses its network of contacts to compile a list of potential candidates, but may also engage a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board.
The Nominating and Corporate Governance Committee evaluates candidates proposed by stockholders using the same criteria as it uses for other candidates. Matters put forth by our stockholders will be reviewed by the Nominating and Corporate Governance Committee, which will determine whether these matters should be presented to the Board. The Nominating and Corporate Governance Committee will give serious consideration to
all such matters and will make its determination in accordance with its charter and applicable laws. Stockholders seeking to recommend a prospective nominee should follow the instructions under the headingStockholder Communications with the Board of Directors. Stockholder submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record owner of our stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. Stockholders are advised to review our bylaws, which contain the requirements for director nominations. The Nominating and Corporate Governance Committee did not receive any stockholder nominations during fiscal 2008.2009.
Majority Vote Standard
As a part of our continuing process of enhancing our corporate governance procedures and to provide our stockholders with a more meaningful role in the outcome of the election of directors, in March 2006, our Board amended our Bylaws to adopt a majority vote standard for non-contested director elections. Our Bylaws now provide that in a non-contested election if the votes castFOR an incumbent director do not exceed the number of votesWITHHELD, such incumbent director shall promptly tender his resignation to the Board. The Nominating and Corporate Governance Committee will review the circumstances surrounding theWITHHELD vote and promptly make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken. In making its decision, the Board will evaluate the best interests of NVIDIA and our stockholders and will consider all factors and relevant information. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the stockholder vote. The director who tenders his resignation will not participate in the Board’s or the Nominating and Corporate Governance Committee’s decisions. In a contested election, which is an election in which the number of nominees exceeds the number of directors to be elected, our directors will be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors at that meeting.
Board Meeting Information
The Board met 87 times during fiscal 20082009. In addition, during fiscal 2009, the Board held a two-day meeting, during which the Board discussed the strategic direction of NVIDIA, explored and had a Board retreat.discussed new business opportunities and the product roadmap, and addressed possible challenges facing NVIDIA. We expect each Board member to attend each meeting of the Board and the committees on which he serves. In fiscal 2008,2009, each Board member attended 75% or more of the aggregate meetings of the Board and of the committees on which he served. If a Board member does not attend at least 75% of the meetings of the Board or the committees on which he serves, the vesting period of his annual stock option grants will be lengthened as described more fully under the headingDirector Compensation.
Committees of the Board of Directors
The Board has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of these committees operates under a written charter, which may be viewed under Corporate Governance in the Investor Relations section of our website atwww.nvidia.com.
In fiscal 2006, the Board concluded that having our directors rotate and serve on different committees provides a benefit to us and our stockholders. By rotating among committees, we believe all members are more fully informed regarding the full scope of Board and Companyour activities. Effective March 1, 2007, Mr. Coxe became a member of the Audit Committee and Mr. Miller became a member of the Compensation Committee. The Board believes that thesesuch rotations are a good corporate governance practice and intends to make periodic rotations in the future. On February 7, 2008,5, 2009, the Nominating and Corporate Governance Committee examined the composition and chairmanship of the Board’s committees and recommended certain rotations to the full Board that the Committees remain unchanged for fiscal 2009.
Committees and | Number of Meetings Held During Fiscal | |
Audit | Meetings: | |
Fiscal Mark L. Perry* A. Brooke Seawell Tench Coxe
| • oversees our corporate accounting and financial reporting process;
• evaluates the performance of and assesses the qualifications of our independent registered public accounting firm;
• determines and approves the engagement of the independent registered public accounting firm;
• determines whether to retain or terminate the existing independent registered public accounting firm or to appoint and engage a new independent registered public accounting firm;
• reviews and approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;
• confers with management and our independent registered public accounting firm regarding the effectiveness of internal control over financial reporting;
• discusses with management and the independent registered public accounting firm the results of the annual audit and the results of our quarterly financial statements;
• reviews the financial statements to be included in our annual report;
• prepares the report required to be included by the SEC rules in our annual proxy statement or Annual Report on Form 10-K; and
• establishes procedures for the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. | |
| Compensation | Meetings: Written Consent: 3 | |
Fiscal Harvey C. Jones* James C. Gaither William J. Miller
| • reviews and approves our overall compensation strategy and policies; • reviews and recommends to the Board the compensation of our Board members;
• reviews and approves the compensation and other terms of employment of our chief executive officer and other executive officers;
• reviews and approves corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management;
• reviews and approves the disclosure contained in Compensation Discussion and Analysis and considers whether to recommend that it be included in the proxy statement and
• administers our stock option and purchase plans, variable compensation plans and other similar • may form and delegate authority to subcommittees as appropriate, including, but not limited to, a subcommittee composed of one of more members of the Board. | |
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Committees and | Number of Meetings Held During Fiscal 2009 and Committee Functions | |
Nominating and Corporate Governance | Meetings: | |
Fiscal James C. Gaither*
Harvey C. Jones | • identifies, reviews and evaluates candidates to serve as directors;
• recommends candidates for election to our Board;
• makes recommendations to the Board regarding the committee membership;
• assesses the performance of the Board and its committees; and
• reviews and assesses our corporate governance principles and practices. | |
| * | Committee Chairperson |
| (1) |
If all nominees to our Board are elected, effective immediately following our 2009 Annual Meeting, our committees will be composed of the following members:
Audit | Compensation | Nominating and Corporate | ||
Mr. Perry (Chairperson) | Mr. Stevens (Chairperson) | Mr. Miller (Chairperson) | ||
Mr. Seawell | Mr. Jones | Mr. Gaither | ||
Mr. Coxe | Mr. Miller | Mr. Jones | ||
Mr. Gaither | Mr. Stevens | |||
In addition to our three standing committees, onin August 5, 2007 the Board formed a Special Litigation Committee to investigate, evaluate, and make a determination as to how we should proceed with respect to the claims and allegations asserted in certain derivative actions cases brought on behalf of NVIDIA against certain of our current and former executive officers and directors. The derivative actions assert claims concerning errors related to our historical stock option granting practices and associated accounting for stock-based compensation expense. Dr. Steven Chu and Mr. Perry andserved on the Special Litigation Committee during fiscal 2009. Dr. Chu areresigned from the membersBoard of Directors and all committees thereof, effective as of the date he was sworn in as Secretary of Energy of the United States, January 21, 2009. In March 2009, we settled each of the derivative actions. Assuming the Settlement becomes effective in April 2009, the responsibilities of the Special Litigation Committee.Committee have concluded.
COMPENSATION COMMITTEE INTERLOCKSCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION INSIDER PARTICIPATION
For fiscal 2008,2009, the Compensation Committee consisted of Messrs. Gaither, Jones, Miller and Coxe. Effective March 1, 2007,Stevens. Mr. Miller replaced Mr. Coxe as a member ofStevens was appointed to the Compensation Committee.Committee effective September 3, 2008. As described above, if all nominees to our Board are elected, immediately following our 2009 Annual Meeting, the Compensation Committee shall consist of Messrs. Jones, Miller and Stevens. No member of the Compensation Committee is an officer or employee of NVIDIA, and none of our executive officers serve as a director or member of a compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee. Each of our current directors except for Dr. Chu, has purchased and holds shares of our common stock. As of January 27, 2008, Dr. Chu held vested stock options to purchase 243,750 shares of our common stock.
DIRECTOR COMPENSATIONDIRECTOR COMPENSATION
Our non-employee directors receive options to purchase shares of our common stock for their services as members of our Board. Non-employee directors do not receive cash compensation for their services as members of our Board, but may be reimbursed for expenses incurred in attending Board and committee meetings.meetings and continuing educational programs as set forth in our Corporate Governance Policies. Directors who are also employees do not receive any fees or equity compensation for service on the Board. Mr. Huang is our only employee director.
Historically, options to purchase shares of our common stock have been automatically granted to our non-employee directors under our 1998 Non-Employee Directors’ Stock Option Plan as incorporated into our 1998 Equity Incentive Plan, which we refer to as the 1998 Plan. Beginning in June 2007, we started granting annual stock option grants will be made on the first trading day after the annual meeting to our non-employee directors from our 2007 Equity Incentive Plan, which we refer to as the 2007 Plan.
Fiscal 2009
In March 2008, the Compensation Committee undertook aits annual review of the type and amountform of compensation paid to our non-employee directors in connection with their service on our Board and its committees by reviewing peer company data provided bycommittees. The Compensation Committee consulted with our Human Resources Department and Hewitt Associates LLC. The Compensation Committee used our binomial option pricing model to value the stock option grants issued pursuant to our existing non-employee director compensation program, which includes initial Board grantsLLC, or Hewitt, and annual Board and committee grants that range in size as follows: 135,000 shares for initial Board grants; 36,000 shares for annual Board grants; and 12,000 shares for annual committee grants (for Compensation and Audit Committees). The potential total annual value received by a non-employee director for these grants was then compared to the total annual compensation of non-employee directors at selectreviewed peer companies.company data. Based on this review, the Compensation Committee elected to continue itsrecommended, and the Board of Directors approved, continuing our practice of compensating our non-employee directors for their services to NVIDIA solely through the use of stock options grants.option grants in fiscal 2009 and to target the compensation of non-employee directors at approximately the 75th percentile of the peer companies. The Compensation Committee believes that payment for servicesemployed our binomial option pricing model to determine grant recommendations whose fair value (as determined in equity best alignsaccordance with Statement of Financial Accounting Standards No. 123 (revised), or SFAS No. 123(R),Share Based Payment) approximately aligned with the interests75th percentile of our select peer companies’ total annual compensation, both cash and equity, for non-employee directors with thosedirectors. As a result of our stockholders, in that non-employee directors recognize compensation only whenthis review, the value of our stock increases. The Compensation Committee determined forrecommended, and the Board approved, establishing the fiscal 2009 that the size of the initial, Board grants and annual Board and committee stock option grants should be reduced as follows:at 120,000, shares for initial Board grants; 30,000 shares for annual Board grants; and 10,000 shares, respectively.
The Board does not set a specific dollar value target for annual committeethe grants (forto the non-employee directors. Instead, the Compensation and Audit Committees), as the Committee believed that similar incentive values could be achieved withestablishes in advance a fewerset number of shares given NVIDIA’ssubject to such grants, generally a few months before the date of our annual meeting. As a result, the fair value of such grants will fluctuate as the price of our common stock price performance overfluctuates during the past year. The Compensation Committee completed a similar review of non-employee director compensation in March 2007 and March 2006 at which time it made a similar determination to reduce the size of stock option grants to our non-employee directors. interim period.
SeeCompensation Discussion and Analysis—Role of Various Parties in Making Compensation Decisions for additional information about the role of Hewitt Associates LLC.Hewitt.
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Compensation for Fiscal 2008
The following table provides information regarding compensation of non-employee directors who served during fiscal 2008 on our Audit and Compensation Committees.2009:
DIRECTOR COMPENSATIONFOR FISCAL 20082009
Name | Option Awards($) (1)(2)(3)(4) | Total ($) | Option Awards($) (1)(2)(3)(4) | Total ($) | ||||||||
Steven Chu | $ | 394,764 | $ | 394,764 | $ | 368,156 | $ | 368,156 | ||||
Tench Coxe | 441,941 | 441,941 | 478,181 | 478,181 | ||||||||
James C. Gaither | 441,941 | 441,941 | 478,181 | 478,181 | ||||||||
Harvey C. Jones | 441,941 | 441,941 | 478,181 | 478,181 | ||||||||
William J. Miller | 441,941 | 441,941 | 478,181 | 478,181 | ||||||||
Mark L. Perry (5) | 644,701 | 644,701 | 525,354 | 525,354 | ||||||||
A. Brooke Seawell | 441,941 | 441,941 | 478,181 | 478,181 | ||||||||
Mark A. Stevens (7) | 95,660 | 95,660 | ||||||||||
| (1) |
| (2) |
Name | Expense Related to Stock Options Granted in Fiscal 2009 ($) | Expense Related to Stock Options Granted Prior to Fiscal 2009 ($) | ||||
Steven Chu | $ | 61,660 | $ | 306,496 | ||
Tench Coxe | 116,933 | 361,248 | ||||
James C. Gaither | 116,933 | 361,248 | ||||
Harvey C. Jones | 116,933 | 361,248 | ||||
William J. Miller | 116,933 | 361,248 | ||||
Mark L. Perry | 116,933 | 408,421 | ||||
A. Brooke Seawell | 116,933 | 361,248 | ||||
Mark A. Stevens | 95,660 | — | ||||
(3) | At fiscal year end, each non-employee director held stock options to purchase the following aggregate number of shares of our common stock: Dr. Chu, options to purchase |
| (4) | Except for Mr. Stevens, on June 20, 2008, each non-employee director received a stock option to purchase 30,000 shares as compensation for his service on the Board with an exercise price of $19.76 per share, which was the closing price of our common stock as reported by NASDAQ on June 20, 2008. The |
Name Steven Chu Tench Coxe James C. Gaither Harvey Jones William J. Miller Mark L. Perry A. Brooke Seawell Expense Related
to Stock Options Granted
in Fiscal 2008 ($) Expense Related to
Stock Options
Granted Prior to
Fiscal 2008 ($) $ 76,671 $ 318,093 154,660 287,281 154,660 287,281 154,660 287,281 154,660 287,281 154,660 490,041 154,660 287,281
No. 123(R) for financial reporting purposes was $9.17 per share for a total grant date fair value of $91,700 per grant. On September 3, 2008, Mr. Stevens received a stock option to purchase 120,000 shares as compensation for his service on the Board with an exercise price of $11.66 per share, which was the closing price of our common stock as reported by NASDAQ on September 3, 2008. The grant date fair value of this award as determined under SFAS No. 123(R) for financial reporting purposes was $6.02 per share for a total grant date fair value of $722,400. Assumptions used in the calculation of these amounts are included in Note 2,Stock-Based Compensation, of the Notes to our Audited Consolidated Financial Statements for fiscal 2009 included in our Annual Report on Form 10-K filed with the SEC on March 13, 2009. |
| (5) | In fiscal |
The following table summarizes
| (6) | Dr. Chu resigned from the Board, effective as of the date he was sworn in as Secretary of Energy of the United States, January 21, 2009. |
| (7) | Effective September 3, 2008, Mr. Stevens was appointed to the Board and the Compensation Committee. |
Fiscal 2010
In March 2009, the Compensation Committee again undertook an annual review of the form and amount of compensation providedpaid to our non-employee directors. The Compensation Committee consulted with our Human Resources Department and Hewitt, and reviewed peer company data. Based on this review, the Compensation Committee recommended, and the Board of Directors approved, the continuation of our policy of aligning directors and stockholders’ interests by providing only equity compensation in the form of stock options and to target the compensation of non-employee directors at approximately the 75th percentile of the peer companies. The Compensation Committee employed our binomial option pricing model to determine grant recommendations whose approximate fair value (as determined under SFAS No. 123(R) for financial reporting purposes) aligned with the 75th percentile of our select peer companies’ total annual compensation, both cash and equity, for non-employee directors.
Historically, two grants have been made to non-employee directors: one for committee service vesting over the following year, and one for board service, vesting over one year, commencing two years following the grant. In light of the fact that all non-employee directors currently serve on a committee and will do so in fiscal 2010, it was determined that for fiscal 20082010, the annual board and compensation expectedcommittee grant should be combined into a single grant to compensate for overall service to NVIDIA. In addition, the Compensation Committee determined such combined grant should vest quarterly over the year following the 2009 Annual Meeting in order to correlate the vesting of the annual stock option to the non-employee director’s service on the Board and its committees over the following year. Therefore, as a result of the review above, a single stock option for 48,000 shares will be provided in fiscal 2009.granted to each non-employee director on the first trading day following the date of our 2009 Annual Meeting.
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SUMMARYOF NON-EMPLOYEE DIRECTOR COMPENSATION
The following table summarizes the compensation provided to our non-employee directors for fiscal 2009 and compensation expected to be provided in fiscal 2010.
Type of Compensation | Fiscal | Fiscal |
| |||||
| Initial Board | Option to purchase 120,000 shares of common stock | Initial Board Grants issued in fiscal 2009 vest quarterly over a three year period The vesting for the pro rated portion of any Annual Board Grant issued to a new director in fiscal 2010 shall vest quarterly from the date of appointment to the Board such that the grant is fully vested on the one year anniversary of the 2009 Annual Meeting | ||||||
| Annual Board | Options to purchase 30,000 shares of common stock | Annual Board Grants for fiscal 2009 vest quarterly beginning on the second anniversary of the date of Annual Board Grants for fiscal 2010 vest quarterly over the year following the 2009 Annual Meeting | ||||||
| Annual Committee | Option to purchase | |||||||
| Vesting is adjusted in certain circumstances as described below. |
The following are the principal terms of the stock options granted to our non-employee directors.directors in fiscal 2009.
Initial Grants.In fiscal 2009, Initial stock option grants ofBoard Grants for 120,000 areshares were made to each new non-employee director who iswas elected or appointed to our Board on the date of election or appointment. On September 3, 2008, in connection with his appointment to the Board, Mr. Stevens was granted a stock option to purchase 120,000 shares of our common stock, at an exercise price of $11.66 per share, which was the closing price of NVIDIA common stock as reported by NASDAQ on September 3, 2008.
Annual Grants—Board Members. Prior to the adoption of our 2007 Plan in June 2007, annual stock option grants (Annual Board Grants) were made on August 1st of each year. Beginning with our stockholders’ approval of the 2007 Plan at our annual meeting in June 2007, the Annual Board Grants are made on the first trading day after the
annual meeting.meeting, unless there is a blackout period under our insider trading policy in which case, the Annual Board Grants will be made on the first trading day after the trading window opens. On June 22, 2007,20, 2008, each of Messrs. Coxe, Gaither, Jones, Miller, Perry and Seawell and Dr. Chu received anwas granted a stock option to purchase 36,00030,000 shares of our common stock, at an exercise price of $29.08$19.76 per share, which was the closing price of ourNVIDIA common stock as reported by NASDAQ on June 22, 2007.20, 2008.
Annual Grants—Committee Members. Prior to the adoption of our 2007 Plan in June 2007, annual stock option grants (Annual Committee Grants) were made on August 1st of each year. Beginning with our stockholders’ approval of the 2007 Plan at our annual meeting in June 2007,In fiscal 2009, the Annual Committee Grants arewere made on the day after the annual meeting. On June 22, 2007,20, 2008, each of Messrs. Coxe, Gaither, Jones, Miller, Perry and Seawell received anwas granted a stock option to purchase 12,00010,000 shares of our common stock, at an exercise price of $29.08$19.76 per share, which was the closing price of ourNVIDIA common stock as reported by the NASDAQ on June 22, 2007.20, 2008.
Annual Grants—Adjusted Vesting for Not Attending Meetings. IfWith respect to the Annual Board Grants granted in fiscal 2009, if a non-employee director fails to attend at least 75% of the regularly scheduled meetings of the Board during the yeartwo-year period following the grant of anthe option, vesting of the option will change. Instead of vesting as described above, the Annual Board Grants will vest 30% upon the three-year anniversary of the grant date and 70% during the fourth year, such that the entire option will become fully vested on the four-year anniversary of the date of the grant. If a non-employee director fails to attend at least 75% of the regularly scheduled meetings of the committee on which he sits during the year following the grant of anthe option, rather than vesting as described above, his Annual Committee Grant will vest annually over four years following the date of grant at the rate of 10% per year for the first three years and 70% during the fourth year. To date, these adjusted vesting provisions have never been triggered.
Annual Grants—Adjusted Vesting for Death or Disability. IfWith respect to the Annual Board Grants granted in fiscal 2009, if a non-employee director’s service as a director terminates between the date of grant of the Annual Board Grant and the two-year anniversary of the date of grant of the Annual Board Grant due to disability, or death, the Annual Board Grant will immediately vest and be exercisable on a quarterly pro rata basis over a one year period beginning onfor each full quarter served during such time. With respect to the date of such death or disability. IfAnnual Committee Grants granted in fiscal 2009, if a non-employee director’s service as a committee member terminates between the date of grant of the Annual Committee Grant and the one-year anniversary of the date of grant of the Annual Committee Grant due to disability, or death, then the Annual Committee Grant will immediately vest and be exercisable based on the number of months served on the respective committee prior to the termination of service.
Annual Grants—Pro-Rata Adjustment. Adjusted Vesting for Death. If a non-employee director’s service as a director did not serve onterminates due to death, the Initial Board or committee for a full year since the prior year’s annual meeting, the number of shares subject to the grant is reduced on a pro-rata basis for each full quarter that the non-employee director did not serve on theGrant, Annual Board or committee.Grants and Annual Committee Grants shall immediately vest and become exercisable.
Vesting Adjustments. The change-in-control provisions in each of our 1998 Plan and 2007 Plan apply to options to purchase shares of our common stock held by our non-employee directors and may result in the acceleration of the vesting of such shares in certain circumstance. Please seeEmployee, Severance and Change-in-Control Agreements for a further discussion of these provisions.
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APPROVALRATIFICATION OF INCREASEIN NUMBER SELECTION OF AUTHORIZED SHARESOF COMMON STOCK
We are requesting stockholder approval of an amendment to our Amended and Restated Certificate of Incorporation to increase our authorized number of shares of common stock from 1,000,000,000 shares to 2,000,000,000 shares. See Appendix A for a copy of the proposed amendment to our Amended and Restated Certificate of Incorporation.
The additional shares of common stock to be authorized by adoption of the amendment would have rights identical to our currently outstanding common stock and will not have any immediate effect on the rights of existing stockholders. To the extent the additional authorized shares are issued in the future, they will decrease the existing stockholders’ percentage equity ownership and, depending upon the price at which they are issued as compared to the price paid by existing stockholders for their shares, could be dilutive to our existing stockholders. If the amendment is adopted, it will become effective upon filing of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
In addition to the 556,093,138 shares of common stock outstanding on April 15, 2008, the Board has reserved 230,767,766 shares for issuance upon exercise of options and rights granted under our stock option and stock purchase plans. In addition, 6,000,000 shares of common stock are reserved which may be issued pursuant to the terms of the Asset Purchase Agreement, dated December 15, 2000, by and among 3dfx Interactive, Inc., NVIDIA US Investment Company and NVIDIA.
Although the Board does not have current plans to issue the additional shares of common stock, the proposed amendment will allow us to have a sufficient number of shares of authorized and unissued common stock, which can be issued in connection with such corporate purposes as may, from time to time, be considered advisable by the Board. The additional shares may be used for various purposes without further stockholder approval such as:
raising capital;
providing equity incentives to employees, officers or directors;
establishing strategic relationships with other companies;
expanding our business or product lines through the acquisition of other businesses or products; and
paying stock dividends to existing stockholders.
The increase in the authorized number of shares of common stock and the subsequent issuance of such shares could have the effect of delaying or preventing a change in control of NVIDIA. However, the Board is not aware of any attempt to take control of NVIDIA and is not presenting this proposal with the intent that it be utilized as an anti-takeover device.
The affirmative vote of the holders of a majority of the outstanding shares of the common stock will be required to approve this amendment to our Amended and Restated Certificate of Incorporation. As a result, abstentions and broker non-votes will have the same effect as negative votes.
THE BOARDOF DIRECTORS RECOMMENDS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
A VOTE IN FAVOR OF PROPOSAL 2.
RATIFICATIONOF SELECTIONOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2009FIRM FOR FISCAL 2010
The Audit Committee has selected PricewaterhouseCoopers LLP, or PwC, to serve as our independent registered public accounting firm for our fiscal year ending January 25, 2009.31, 2010. Stockholder ratification of the Audit Committee’s selection of PwC is not required by our bylaws or any other governing documents or laws. As a matter of good corporate governance, we are submitting the selection of PwC to our stockholders for ratification. If our stockholders do not ratify the selection, the Audit Committee will reconsider whether or not to retain PwC. Even if the selection is ratified, the Audit Committee in its sole discretion may direct the appointment of a different independent registered public accounting firm at any time during the fiscal year if they determineit determines that such a change would be in our best interests and those of our stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting2009 Annual Meeting will be required to ratify the selection of PwC. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as votes against the proposal. Broker non-votes are counted toward a quorum, but are not counted for any purpose in determining whether this Proposalproposal has been approved.
We expect that a representative of PwC will attend the annual meeting.2009 Annual Meeting. The PwC representative will have an opportunity to make a statement at the annual meeting2009 Annual Meeting if he or she so desires. The representative will also be available to respond to appropriate stockholder questions.
THE BOARD RECOMMENDS
A VOTE ININ FAVOROF PROPOSAL 3.2.
AUDIT COMMITTEE AND INDEPENDENT AUDITOR INFORMATION
REPORTOFTHE AUDIT COMMITTEEOFTHE BOARDOF DIRECTORS
The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent specifically incorporated by reference therein.
The Audit Committee oversees accounting, financial reporting, internal control over financial reporting, financial practices and audit activities of NVIDIA and its subsidiaries. The Audit Committee reviews the results and scope of the audit and other services provided by the independent registered public accounting firm and reviews financial statements and the accounting policies followed by NVIDIA prior to the issuance of the financial statements with both management and the independent registered public accounting firm.
Management is responsible for the financial reporting process, the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP, the system of internal control over financial reporting, and the procedures designed to facilitate compliance with accounting standards and applicable laws and regulations. PricewaterhouseCoopers LLP, or PwC, NVIDIA’sour independent registered public accounting firm for fiscal 2008,2009, was responsible for performing an independent audit of the consolidated financial statements and issuing a report on the consolidated financial statements and of the effectiveness of itsour internal control over financial reporting as of January 27, 2008.25, 2009. PwC’s judgments as to the quality, not just the acceptability, of NVIDIA’sour accounting principles and such other matters are required to be disclosed to the Audit Committee under applicable standards. The Audit Committee oversees these processes. Also, the Audit Committee has ultimate authority and responsibility to select, evaluate and, when appropriate, terminate the independent registered public accounting firm. The Audit Committee approves audit fees and non-audit services provided by and fees paid to the independent registered public accounting firm.
The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or the independent registered public accounting firm. The Audit Committee does not plan or conduct audits, determine that NVIDIA’sour financial statements are complete and accurate and in accordance with GAAP, or assess NVIDIA’sour internal control over financial reporting. The Audit Committee relies, without additional independent verification, on the information provided by NVIDIA’sour management and on the representations made by management that the financial statements have been prepared with integrity and objectivity, and the opinion of PwC that such financial statements have been prepared in conformity with GAAP.
In this context, the Audit Committee reviewed and discussed the audited consolidated financial statements for fiscal 20082009 with management and NVIDIA’sour internal control over financial reporting with management and PwC. Specifically, the Audit Committee discussed with PwC the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as well as the auditors’ independenceamended. We have received from management and NVIDIA, including the matters inPwC the written disclosures and letter required by the letter fromapplicable requirements of the independent registered public accounting firm received byPublic Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee in accordance with the requirements of the Independence Standards Board Standard No. 1.concerning independence. The Audit Committee also considered whether the provision of certain permitted non-audit services by PwC is compatible with PwC’s independence and discussed PwC’s independence with PwC.
Based on the Audit Committee’s review and discussions, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form 10-K of NVIDIA for the fiscal year ended January 27, 2008.25, 2009.
AUDIT COMMITTEE
Mark L. Perry, Chairman
A. Brooke Seawell
Tench Coxe
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FEES BILLED BY THETHE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following is a summary of fees billed by PwC for fiscal 20082009 and 20072008 for audit, tax and other professional services during the fiscal year:
| Fiscal 2008 | Fiscal 2007 | |||||
AUDIT FEES (1): | $ | 2,788,379 | $ | 4,479,851 | ||
AUDIT-RELATED FEES (2): | 67,500 | 480,867 | ||||
TAX FEES (3): | 161,722 | 53,513 | ||||
ALL OTHER FEES (4): | 2,805 | 4,018 | ||||
TOTAL FEES | $ | 3,020,406 | $ | 5,018,249 | ||
| Fiscal 2009 | Fiscal 2008 | |||||
Audit Fees (1) | $ | 3,424,469 | $ | 2,788,379 | ||
Audit-Related Fees (2) | 79,000 | 67,500 | ||||
Tax Fees (3) | 189,235 | 161,722 | ||||
All Other Fees (4) | 3,000 | 2,805 | ||||
Total Fees | $ | 3,695,704 | $ | 3,020,406 | ||
| (1) | Audit fees include fees for the audit of our consolidated financial statements, the audit of our internal control over financial reporting, reviews of our quarterly financial statements and annual report, reviews of SEC registration statements and related consents and fees related to statutory audits of some of our international entities. |
| (2) | Audit-related fees for fiscal years 2009 and 2008 consisted of fees for acquisitions. |
| (3) | Tax |
| (4) | All other fees consist of fees for products or services other than those included above, including payment to PwC related to the use of an accounting regulatory database. |
All of the services provided for fiscal 20082009 and 20072008 described above were pre-approved by the Audit Committee or the Chairman of the Audit Committee through the authority granted to him by the Audit Committee, which is described below.
Our Audit Committee has determined that the rendering of services other than audit services by PwC iswas compatible with maintaining PwC’s independence.
Pre-Approval Policies and Procedures
The Audit Committee has adopted policies and procedures for the pre-approval of all audit and permissible non-audit services rendered by our independent registered public accounting firm. The policy generally permits pre-approvals of specified permissible services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of our independent registered public accounting firm or on an individual case-by-case basis before the independent registered public accounting firm is engaged to provide each service. In some cases the full Audit Committee provides pre-approval for up to a year related to a particular defined task or scope. In other cases, the Audit Committee has delegated power to Mark L. Perry, the Chairman of our Audit Committee, to pre-approve additional non-audit services if the need for the service was unanticipated and approval is required prior to the next scheduled meeting of the Audit Committee. Mr. Perry then communicates such pre-approval to the full Audit Committee at its next meeting.
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of AprilFebruary 15, 20082009 as to shares of our common stock beneficially owned by:
each director;
each of the executive officers named in the Summary Compensation Table;
all of our directors and executive officers as a group; and
all those known by us to be beneficial owners of more than five percent or more of our common stock.
Beneficial ownership is determined in accordance with the SEC’s rules and generally includes voting or investment power with respect to securities as well as shares of common stock subject to options exercisable within 60 days of AprilFebruary 15, 2008.2009. Unless otherwise indicated, the address of each of the individuals listed below is c/o NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050.
Name and Address of Beneficial Owner | Shares Owned(#) (1) | Shares Issuable Pursuant to Options Exercisable Within 60 days of April 15, 2008(#) | Total of Shares Beneficially Owned(#) | Percent(%) | ||||||
Named Executive Officers: | ||||||||||
Jen-Hsun Huang | 22,123,704 | (2) | 6,570,744 | 28,694,448 | 5.1 | % | ||||
Marvin D. Burkett | 175,705 | 468,564 | 644,269 | * | ||||||
Ajay K. Puri | 4,146 | 397,861 | 402,007 | * | ||||||
David M. Shannon | 64,454 | (3) | 236,070 | 300,524 | * | |||||
Debora Shoquist | — | 41,666 | 41,666 | * | ||||||
Directors, not including CEO: | ||||||||||
Steven Chu, Ph.D. | — | 281,250 | 281,250 | * | ||||||
Tench Coxe | 1,399,644 | (4) | 716,250 | 2,115,894 | * | |||||
James C. Gaither | 159,405 | 311,250 | 470,655 | * | ||||||
Harvey C. Jones | 2,004,743 | (5) | 446,250 | 2,450,993 | * | |||||
William J. Miller | 302,808 | (6) | 1,106,250 | 1,409,058 | * | |||||
Mark L. Perry | 50,000 | (7) | 190,000 | 240,000 | * | |||||
A. Brooke Seawell | 150,000 | (8) | 1,286,250 | 1,436,250 | * | |||||
All directors and executive officers as a group | 26,434,609 | (9) | 12,052,405 | 38,487,014 | 6.8 | |||||
5% Stockholders | ||||||||||
Barclays Global Investors, NA. and Affiliates | 34,074,489 | (10) | — | 34,074,489 | 6.1 | |||||
AXA and affiliates | 48,491,541 | (11) | — | 48,491,541 | 8.7 | |||||
Name of Beneficial Owner(1) | Shares Owned | Shares Issuable within 60 days | Total Shares Owned | Percent(%) | |||||
Named Executive Officers: | |||||||||
Jen-Hsun Huang (2) | 21,729,504 | 5,904,744 | 27,634,248 | 5.1 | % | ||||
Marvin D. Burkett | 176,244 | 693,564 | 869,808 | * | |||||
Ajay K. Puri | 4,494 | 566,611 | 571,105 | * | |||||
David M. Shannon (3) | 64,851 | 386,070 | 450,921 | * | |||||
Debora Shoquist | 1,182 | 124,999 | 126,181 | * | |||||
Directors, not including CEO: | |||||||||
Tench Coxe (4) | 1,399,644 | 769,500 | 2,169,144 | * | |||||
James C. Gaither (5) | 159,404 | 364,500 | 523,904 | * | |||||
Harvey C. Jones (6) | 2,012,543 | 279,336 | 2,291,879 | * | |||||
William J. Miller (7) | 302,808 | 1,159,500 | 1,462,308 | * | |||||
Mark L. Perry (8) | 50,000 | 224,500 | 274,500 | * | |||||
A. Brooke Seawell (9) | 75,000 | 681,000 | 756,000 | * | |||||
Mark A. Stevens (10) | 1,837,866 | 20,000 | 1,857,866 | * | |||||
All directors and executive officers as a group(13 persons) (11) | 27,813,540 | 11,174,324 | 38,987,864 | 7.1 | % | ||||
5% Stockholders: | |||||||||
AXA and affiliates (12) | 54,392,810 | — | 54,392,810 | 10.1 | % | ||||
PRIMECAP Management Company and affiliates (13) | 36,888,574 | — | 36,888,574 | 6.8 | % | ||||
| * | Represents less than 1 percent of the outstanding shares of our common stock. |
| (1) | This table is based upon information provided to us by our executive officers and |
| (2) | Includes 19,572,465 shares of common stock held by Jen-Hsun Huang and Lori Huang, as co-trustees of the Jen-Hsun and Lori Huang Living Trust u/a/d May 1, 1995, or the Huang Trust, and 1,237,239 shares of common stock held by J. and L. Huang Investments, L.P., of which the Huang Trust is the general partner. By virtue of their status as co-trustees of the Huang Trust, each of Jen-Hsun Huang and Lori Huang may be deemed to have shared beneficial ownership of the |
19,572,465 shares held by the Huang Trust and 1,237,239 shares held J. and L. Huang Investments, L.P. and to have shared power to vote or to direct the vote or to dispose of or direct the disposition of such securities. |
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| (3) | Includes |
| (4) | Includes 171,312 shares of common stock held in a retirement trust over which Mr. Coxe exercises sole voting and investment power. Mr. Coxe disclaims beneficial ownership in these shares except as to his pecuniary interest in the shares. Also includes 321,849 shares held in the Coxe Revocable Trust, or the Coxe Trust, of which Mr. Coxe and his wife are co-trustees and of which Mr. Coxe exercises shared voting and investment power. Mr. Coxe disclaims beneficial ownership in the shares held by the Coxe Trust, except to the extent of his pecuniary interest |
| (5) | Includes 5,574 shares held by the James C. Gaither Revocable Trust, of which Mr. Gaither is the trustee and of which Mr. Gaither exercises sole voting and investment power. |
| (6) | Includes (i) 439,826 shares of common stock held in the Jones Living Trust, of which Mr. Jones is a co-trustee and |
| Includes 1,837,866 shares held by the 3rd Millennium Trust, of which Mr. Stevens and his wife are co-trustees and of which Mr. Stevens exercises shared voting and investment power. |
| (11) | Includes shares described in footnotes two through |
| This information is based solely on |
| (13) | This information is based solely on a Schedule 13G/A, dated February 5, 2009, filed with the SEC on February 12, 2009 by PRIMECAP Management Company, or PRIMECAP, reporting its beneficial ownership as of December 31, 2008. The Schedule 13G/A reports that PRIMECAP has sole voting power with respect to 8,499,074 shares and sole dispositive power with respect to 36,888,574 shares. PRIMCECAP is located at 225 South Lake Ave., #400, Pasadena, CA 91101. |
COMPENSATION DISCUSSIONAND ANALYSIS
Our Compensation Discussion and Analysis describes our compensation philosophy and objectives, outlines our compensation program, and explains how we believe our compensation program achieves our philosophy and objectives. We also explain how our compensation process works as well as our compensation decisions for fiscal 2008.2009 and certain compensation decisions for fiscal 2010. Those senior executives whose compensation is discussed below are listed in theSummary Compensation Table for Fiscal Years 2009, 2008 and 2007 in this proxy statement and in this section we refer to them as our executive officers. The compensation process for these executive officers is the same for the other members of our executive staff.
Executive Compensation Philosophy and Overview
Our success begins withis grounded in our culture of innovation, teamwork, and entrepreneurship. Our compensation programs are designed to support this culture by allowing us to:
| • | Attract and retain the world’s best |
| • | Motivate and reward |
| • | Align compensation with stockholder’s |
| • | Manage resources |
| • | Align executive and employee compensation structures. We believe that our compensation programs should be consistent across our employee population and that the interests of our executives should be aligned with our employee base. Therefore, we have structured our compensation programs for our executive officers to be |
Elements of Compensation
Our executive compensation program consists of the following components:
Base salary;
Variable cash compensation; and
Long-term incentives in the form of stock options.options and, commencing in fiscal 2010, a combination of stock options and restricted stock unit awards.
As discussed in greater detail below, the Compensation Committee of the Board of Directors, or the Compensation Committee, does not use a strict weighting system between compensation elements for each executive officer, but instead considers the total compensation necessary to motivate and retain these individuals with a strong biasmix that is significantly biased towards performance based components, including variable cash compensation and equity compensation. At present, we do not believe it is necessary to supplement these three primary elements with perquisites, executive change-in-control arrangements or special severance benefits.benefits, except in special circumstances, such as short term arrangements as discussed below for Mr. White.
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How We Make Compensation Decisions
Role of the Various Parties in Making Compensation Decisions
Our executive compensation program is administered by the Compensation Committee, of the Board of Directors, the Committee, with the assistance of our Chief Executive Officer, or CEO, and members of our Human Resources Department, including the Senior Vice President, Human Resources.
For fiscal 2007 and 2008,2009, the Compensation Committee retained an executive compensation consultant, Hewitt Associates LLC, or Hewitt, to assist with the pay-determinationcompensation-determination process for all executive officers, including our CEO. Hewitt reports directly to the Compensation Committee. Hewitt worked with the Compensation Committee and our management to gather and analyze third-party data about our peer companies’ compensation practices and provided feedback regarding proposed compensationmacro-compensation decisions. During fiscal 2008,2009, Hewitt also aided the Compensation Committee with a review of the compensation of our non-employee directors and aided management and the Committee with the analysis and preparation of our 2007 Equity Incentive Plan.directors.
At the end of each fiscal year, our Senior Vice President, Human Resources and other members of his department work with ourthe CEO and the Compensation Committee to review our overall compensation program for our executive officers. The process begins with members of our Human Resources department gathering data from the Radford Executive Survey. They then analyze paycompensation practices at our peer companies (described below), assess existing paycompensation programs at NVIDIA, forecast our growth, and model total compensation costs and stock dilution from any proposed changes to the existing paycompensation programs. The Senior Vice President, Human Resources then presents a proposed compensation plan for the upcoming fiscal year to our CEO.
Our CEO reviews the plan for the upcoming year as well aswith the Compensation Committee. In addition, our CEO reviews the individual performance of each executive against results achieved and leadership demonstrated during the prior fiscalprevious year. Our CEO also considers the challenges faced during the previous year of eachand the scope and difficulty of the other executive officers and recommends individual variable compensation payouts for each executive officer for that prior year. In addition, in light of the factors discussed below, theofficer’s role. The CEO then makes recommendations regardingfor each executive officer’s base salary, variable compensation level and stock option grantsequity-based awards for the new fiscal year, as well as variable compensation payouts for the prior year. Through several regularly scheduled meetings, the Compensation Committee reviews these recommendations with the CEO and the Senior Vice President, Human Resources and makes compensation decisions for the executive officers. The Compensation Committee adjusts each executive officer’s compensation up or down based on the factors discussed above.
The Compensation Committee, working directly with Hewitt, makes compensation decisions for our CEO separately without his participation. The Compensation Committee evaluates the CEO’s performance taking into account a self-review prepared by the CEO and the Compensation Committee’s own judgment of the results achieved by our CEO as compared to goals established at the beginning of the fiscal year. In addition, the Compensation Committee analyzes market data and the compensation practices at our peer companies. At the end of this annual process, the Compensation Committee reviews its overall compensation decisions with the full Board in executive session.
Compensation Benchmarking
When establishing the compensation program each year, the Compensation Committee determines the amount and types of compensation that will best allow us to secure key talent and to motivate performance and innovation, keeping in mind the competitive market for executive talent. In order to balance these goals, the Compensation Committee reviews the data discussed below.
For fiscal 2008,2009, members of our Human Resources Department began with the full Radford Executive Survey of 159162 companies as a source of compensation data for all of the executive officers. They then created three different subsets or peer lists within that larger group as described in the table below. We use information based on all four groups to help assess the market and help determine appropriate levels of paycompensation for our executive officers. The following companies make up our three peer company groups:
Company Name | EE | EX | SC | Company Name | EE | EX | SC | |||||||||
Adobe Systems Incorporated | X | X |
| X | X | X | ||||||||||
Advanced Micro Devices, Inc. | X | X | X |
| X | X | X | |||||||||
Agere Systems Inc. | X | X |
| X | ||||||||||||
Agilent Technologies, Inc. | X |
| X | |||||||||||||
Altera Corporation | X | X |
| X | ||||||||||||
| Micron Technology, Inc. | X | X | X | ||||||||||||
| X | X | Microsoft Corporation | X | ||||||||||||
| X | Motorola, Inc. | X | |||||||||||||
Atmel Corporation | X | National Semiconductor Corporation | X | X | X | |||||||||||
Autodesk, Inc. | X | X | Network Appliance, Inc. | X | X | |||||||||||
Avago Technologies Limited | X | NXP Semiconductors USA Inc. | X | |||||||||||||
BEA Systems, Inc. | X | ON Semiconductor Corporation | X | X | ||||||||||||
Broadcom Corporation | X | X | X | Oracle Corporation | X | |||||||||||
Cadence Design Systems, Inc. | X | Palm, Inc. | X | |||||||||||||
| X |
| X | |||||||||||||
| X | X | Qimonda North America Corporation | X | ||||||||||||
Dell Inc. | X | QUALCOMM Incorporated | X | X | ||||||||||||
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eBay Inc. | X | X |
| X | ||||||||||||
Electronic Arts Inc. | X | X |
| X | X | X | ||||||||||
| X |
| X | |||||||||||||
Fairchild Semiconductor International, Inc. | X | Sony Computer Entertainment America Inc. | X | |||||||||||||
Gateway, Inc. | X |
| X | |||||||||||||
Google Inc. | X |
| X | X | ||||||||||||
Infineon Technologies AG | X | X |
| X | X | |||||||||||
Intel Corporation | X | X | Symantec Corporation | X | ||||||||||||
International Rectifier Corporation | X | Synopsys, Inc. | X | |||||||||||||
Intuit Inc. | X | X | Texas Instruments Incorporated | X | X | X | ||||||||||
Juniper Networks, Inc. | X | X | Xilinx, Inc. | X | X | X | ||||||||||
| X | X | Yahoo! Inc. | X | ||||||||||||
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| X | ||||||||||||||
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Key to Table:
EE: Companies listed as employee peers are the companies in various industries with which we feel we compete for executives and employees.
EX: Companies listed as executive peers are the companies of similar size, complexity and with comparable revenue.
SC: Companies listed as semiconductor peers are all the companies in the semiconductor industry from the Radford Executive Survey.
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In order to analyze the survey data, each executive officer’s position is matched to a job code in the Radford Executive Survey. Our Human Resources Department then provides the CEO and the Compensation Committee with the average for each of the peer groups for the 50th percentile and for the 75th percentile for the three major components of our compensation program. These percentiles are not used as the standard for setting compensation, rather they are used to provide the Compensation Committee with data points for purposes of comparison in evaluating whether the proposed compensation levels for our executive officers are reasonably likely to help us achieve our compensation program objectives.
Use of Tally Sheets
When making annual decisions about an executive officer’s compensation, the Compensation Committee reviews the executive officer’s total compensation as set forth in a tally sheet that includes:
Current and past base salary;
Target variable compensation in previous years;
Amount of shares granted to each executive officer in the prior twofour fiscal years; and
Data about the rewards offered to executives in similar positions at comparable companies.
The tally sheets help the Compensation Committee analyze the executive officer’s short- and long-term compensation at NVIDIA and compare total compensation packages offered by our peer companies. The Compensation Committee is committed to reviewing tally sheets annually.
Elements of Our Compensation Program
Base Salary
Purpose. Base salaries are set at levels we believe are sufficient to recruit and retain key executives and employees.executive officers. However, we believe biasing an executive officer’s paycompensation toward variable paycompensation programs and long-term equity compensation creates a strong link between that executive’s pay and performance. Therefore, while the Compensation Committee does not rely on a weighting system between fixed and variable compensation, our executive officers’ base salaries ranged from approximately 7%15% to 17%20% of their total target compensation in fiscal 2007 and 12% to 17% of their total target compensation in fiscal 2008.2009, other than for our CEO. Base salaries are reviewed annually and adjusted as the Compensation Committee deems necessary and appropriate to meet our compensation and business goals.
Factors Considered When Establishing Base Salary. When setting base salaries, the Compensation Committee considers an executive officer’s responsibilities (including the scope of their position and complexity of the department or function they manage), experience, the base salaries for other members of NVIDIA’s executive staff, and the market data of salaries at peer companies. While reviewing potential changes in base salary, the Compensation Committee also considers the operating expense impact and budgets for employeeexecutive officer salary adjustments.
Fiscal 20082009 Determinations. The base salaries of Messrs. Burkett, Shannon and Puri did not change from fiscal 2007 to fiscalIn March 2008, because the Compensation Committee determined that the current base salariessalary of each executive officer for each of these executive officersfiscal 2009 should remain at its fiscal 2008 level, as the Compensation Committee believed that they were set at levels that balanced our goals of retention and internal pay equity.
After consideration, In September 2008, in light of the current economic environment and our cost reduction efforts, Mr. Huang determined that it would be appropriate for substantially all of his compensation to be linked to our performance. The Compensation Committee increasedaccepted Mr. Huang’s voluntary proposal to reduce his annual base salary from $600,000 to $1 (after taxes and benefit contributions). This reduction in Mr. Huang’s base salary from $500,000 in fiscal 2007 to $600,000 in fiscal 2008 because it believedwas effective on October 1, 2008.
Fiscal 2010 Determinations. In March 2009, the Compensation Committee determined that Mr. Huang’s fiscal 2007the base salary was no longer competitive withof each of Messrs. Shannon and Puri and Ms. Shoquist for fiscal 2010 should remain at its fiscal 2009 level. However, in light of the current economic environment and our cost reduction efforts, effective March 1, 2009,
these base salaries were temporarily reduced by 5% in connection with a company-wide salary reduction action, subject to periodic review against business conditions. For fiscal 2010, the Compensation Committee determined that the annual base salary of the chief executive officers of our peer companies. The Committee believed the salary increase was warranted considering Mr. Huang’s highHuang should remain at its fiscal 2009 level of performance in leading$600,000. However, given the current economic environment and our growth, reflected in part by the 78% increase in our net income from fiscal 2007 to 2008, to approximately $798 million,cost reduction efforts, Mr. Huang voluntarily proposed that his base salary remain at $1 (after taxes and benefit contributions) and the 34% increase in our revenue from fiscal 2007 to 2008, to approximately $4.1 billion.
Ms. ShoquistDavid White joined NVIDIA in September 2007February 2009 as our SeniorExecutive Vice President of Operations. Herand Chief Financial Officer, or CFO. His annual base salary was established at the level of $275,000,$425,000 for fiscal 2010, based primarily on a review by the Committee of the levelCEO’s recommendation that this salary was necessary to attract an executive with herhis skills and background herand in consideration of his compensation at herhis prior employeremployer. Mr. White succeeds Mr. Burkett, whose decision to retire as CFO was previously announced in March 2008 and her compensation relativewho is continuing to other executives at NVIDIA.provide services to NVIDIA as a Senior Advisor.
Variable Cash Compensation
Purpose and Structure. In keeping with our pay-for-performance culture, variable cash compensation is designed to be a substantial portion of each executive’s total compensation annually and rewards executives for individual performance and for their role in helping NVIDIA meet its annual financial goals.
The variable cash compensation an executive officer actually receives depends on corporate financial results for the year and the executive’s individual performance during the year. A target payout is divided into two components:
| • | Corporate Performance. 50% of the target variable compensation for an executive officer depends on our success at achieving a corporate performance target. This target is established by the Compensation Committee in light of our approved operating plan, with input from our CEO. If we do not meet the target at a threshold level of performance, he or she will receive no payment for this portion of his or her variable compensation. If the threshold level of performance is surpassed, the executive officer will receive a payment of up to 200% of the target value of this portion of the payout. |
| • | Individual |
The variable compensation plan for the executive officers is similar to the variable compensation plan applicable to over 700900 NVIDIA key employees in that it focuses on both corporate and individual performance to determine payouts, if any, and has the same corporate performance goal.
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Factors Considered When Establishing Target Variable Compensation. Annually, the Compensation Committee determines the total target variable compensation for each executive officer.
When setting the amount of the target variable compensation for each executive officer, the Compensation Committee considers the following:
the CEO’s recommendations;
each executive officer’s scope of responsibility;
each executive officer’s anticipated contributions in the fiscal year; and
the compensation of other similarly situated executives at our peer companies.
Fiscal 2008 Performance2009 Targets. The Compensation Committee approved the corporate performance target, established our CEO’s performance targets and approved the fiscal 20082009 total target variable compensation for each executive officer in March 2007.2008.
| • | Definition of Corporate |
| • | Establishment of Corporate |
| • | Individual |
| • | Target Variable Compensation Level. For fiscal |
Ms. Shoquist’s target variable compensation level was established at $225,000 (pro-rated for her time employed in fiscal 2008), based on the same factors that were used to set her base salary, as discussed above.
Following the end of the fiscal year, executive officers are evaluated based on their performance against their individual objectives and their leadership objectives. The CEO also considers the challenges faced during the previous year and the scope and difficulty of the executive officer’s role, and may adjust payments up or down based on these factors.
Fiscal 20082009 Payout Determinations. Fiscal 2008 was a record year for NVIDIA.
| • | Corporate Performance Payouts. Our |
| • | Individual Performance Payouts. In September 2008, in light of the cost saving actions being taken by NVIDIA, the CEO on behalf of the executive officers voluntarily proposed, and the Compensation Committee determined, that the executive officers, including the CEO, would receive no individual performance payouts for fiscal 2009. |
Fiscal 2010 Targets.
| • | Corporate Targets. In March 2009, the Compensation Committee determined not to establish any corporate targets for compensatory purposes for fiscal 2010 because payout for corporate performance |
in fiscal year 2010 would not be appropriate in light of the current economic environment and our cost reduction efforts. |
| • | Individual Performance |
Mr. White joined NVIDIA in February 2009 and under the terms of his offer letter he is eligible to receive a payout with respect to his individual performance target. His target variable compensation level was established at $385,000 (pro-rated for his time employed in fiscal 2010), based on the same factors that were used to set his base salary, as discussed above, of which 50% relates to his individual performance. If Mr. White leaves NVIDIA for any reason prior to the end of fiscal 2010 or the date of distribution, no incentive compensation will be paid to him.
Clawback Policy. In April 2009, in connection with the settlement of the stockholder derivative lawsuits relating to our historical stock option practices, or the Settlement, our Board adopted a policy, or the Clawback Policy, to be implemented on the date that the Settlement is effective, currently expected to be on or about April 17, 2009, pursuant to which, if (i) we are required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement included in a report on Form 10-Q or Form 10-K, due to material noncompliance with any financial reporting requirement under the federal securities laws, or a Restatement, and (ii) the Board or a committee of independent directors concludes that our CEO or CFO had received a variable compensation payment, or portion thereof, that would not have been payable if the original interim or annual financial statements reflected the Restatement, then our CEO or CFO shall disgorge to NVIDIA the net after-tax amount of such variable compensation payment.
In addition, pursuant to the Clawback Policy, if the Board or a committee of independent directors determines that an officer (including our CEO and CFO) or other employee received a variable compensation payment, or portion thereof, that would not have been payable if our original interim or annual financial statement reflected a Restatement, then the Board or such committee, in its discretion, may take such actions as it deems necessary or appropriate to address the events that gave rise to the Restatement and to prevent its recurrence. In using its discretion, the Board or such committee may consider whether such person was involved in the preparation of our financial statements or otherwise caused the need for the Restatement. Such actions may include, to the extent permitted by applicable law, requiring partial or full repayment of any variable compensation or other incentive compensation paid to such person, requiring repayment of any gains realized on the exercise of stock options or on the open-market sale of vested shares and causing the partial or full cancellation of restricted stock or deferred stock awards and outstanding stock options.
Equity Compensation
Purpose. NVIDIA believes equity-based compensation is critical to its overall paycompensation program for all of its employees, including its executives.executive officers. Equity-based compensation provides several significant advantages:
It allows us to provide exceptional potential rewards and to attract top talent. Exceptional rewards are realized only if our growth is strong and results in stock price appreciation creating value for our stockholders.
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It creates a strong incentive for executivesexecutive officers to improve financial results and take the right actions to increase our value over the long term. Because the ultimate value of the grant varies with results, equity-based compensation creates a strong link between pay and performance.
It links executives’executives officers’ interests directly with stockholders’ because rewards depend on stock performance.
Structure. Historically, annual executive stock options grants were made in a single stock option grant during the first quarter of each fiscal year. In fiscal 2008, the Committee reviewed and revised the stock option grant process for the executive officers. Instead of making a single stock option grant a year for each executive, the Committee determined that it would decide the overall stock option targets for the year, but make the grants on a semi-annual basis. This change results in the executive officers grants being made on the same dates as all other semi-annual employee stock option grants. This alignment ensures that executives are treated consistently with other employees. The first executive semi-annual grants are granted at a pre-determined date in the first quarter of the fiscal year and the second executive semi-annual grants are granted at a pre-determined date in the third quarter of the fiscal year. The executive semi-annual grant in the third quarter is subject to the executive officer remaining employed, continuing to meet performance expectations, and is subject to adjustment based on the value of the stock at the time of grant.
Vesting of executive semi-annual grants does not begin for two years (three years for Mr. Huang). In general, the vesting schedule of the executive semi-annual grants is such that they will begin to vest after currently held options are fully vested. The Committee structured vesting of the executive semi-annual grants to serve the following objectives:
to ensure executives take a long-term view of company performance; and
to encourage retention, as the executive must remain employed to recognize its value.
The vesting of stock option grants made to Mr. Huang is delayed for an additional year, to further encourage the philosophy of building long-term stockholder value.
Factors Considered. For each executive officer, the Compensation Committee considers the following elements in determining stock optionequity grants:
anticipated future performance demonstrated by individual past performance;
the potential reward and retention value of the grant, determined by reviewing the estimated value of the proposed stock optionequity grant (determined using the Black-Scholes valuation model) compared with stock options or other equity awards offered to executivesexecutive officers in similar positions by our peer companies; and
alignment to the employee equity program, shares available, and total stock based compensation expense.
Fiscal 20082009 Structure and Grants. In February 2007,fiscal 2009, based on the factors explained above, the Compensation Committee decidedmade grants semi-annually to our executive officers on the third Wednesday of March and the third Wednesday of September, consistent with our policy for other employees. During the first quarter of fiscal 2009, the Compensation Committee approved a target equity grant for each eligible executive for fiscal 2009, which was divided as follows, except with respect to Ms. Shoquist as explained below: (a) 50% of the target grant was granted in March and (b) the remaining 50% was budgeted to be granted in September, subject to a performance review by the Compensation Committee prior to the September grant date. With respect to Ms. Shoquist, who at the time of the March 2008 grants was the newest executive officer at NVIDIA, the Compensation Committee agreed with the CEO’s recommendation to grant more shares in March 2008 in order to provide additional long-term incentives.
In September 2008, the Compensation Committee determined to grant less than the remaining budgeted stock options in the second half of fiscal 2009. Accordingly, the Compensation Committee reduced the semi-annual grants for the second half of fiscal 2009 by 10% for each of Messrs. Huang, Puri and Shannon and Ms. Shoquist. Other than the stock option targetsgrant of 75,000 shares in March 2008, Mr. Burkett did not receive any other stock options in fiscal 2009, due to his decision to retire upon the hiring of our new CFO.
The number of stock options granted to our executive officers in fiscal 2009 were as follows:
Name | Option Grants in March 2008 | Option Grants in September 2008 | Total Option Grants in Fiscal 2009(1) | |||
Jen-Hsun Huang (2) | 200,000 | 180,000 | 380,000 | |||
Marvin D. Burkett (3) | 75,000 | — | 75,000 | |||
Ajay K. Puri (3) | 62,500 | 56,250 | 118,750 | |||
David M. Shannon (3) | 62,500 | 56,250 | 118,750 | |||
Debora Shoquist (3) | 75,000 | 30,000 | 105,000 | |||
|
| (1) | For more information about the stock options granted to our executive officers in fiscal 2009, please seeGrants of Plan-Based Awards for Fiscal 2009 in this proxy statement. |
| (2) | Mr. Huang’s stock option granted in March 2008 will vest as to (i) 50% of the stock option on August 15, 2012, and (ii) the remaining 50% on November 15, 2012, contingent upon his continued service to NVIDIA. Mr. Huang’s stock option granted in September 2008 will vest as to (i) 50% of the stock option on February 15, 2013, and (ii) the remaining 50% of the stock option on May 15, 2013, contingent upon his continued service to NVIDIA. |
| (3) | The stock options will vest as to (i) 50% of the stock option, two years and three months from the date of grant and (ii) the remaining 50% of the stock option, two years and six months from the date of grant such that the stock option is fully vested on the date that is two years and six months from the date of grant, contingent upon the executive officer’s continued service to NVIDIA. |
In general, the vesting schedule of the executive officer semi-annual grants would be aggregate optionis such that they will begin to vest after currently held options are fully vested. The Compensation Committee structured vesting of the executive officer semi-annual grants to Mr.serve the following objectives:
to ensure executives take a long-term view of company performance; and
to encourage retention, as the executive officer must remain employed to recognize its value.
Fiscal 2010 Structure and Grants. In March 2009, we introduced restricted stock units, or RSUs, as a form of equity compensation to all employees, including executive officers. Our executive officers (except Messrs. Huang and White as explained below), and the other top 260 leaders in NVIDIA, will receive as equity compensation a combination of 405,000 shares, Mr. BurkettRSUs and stock options. The target mix of 247,500 shares, Mr. Shannonstock options to RSUs for our executive officers on a value basis is 50% stock options and 50% RSUs. All of 135,000 sharesour other employees will receive RSUs only. The Compensation Committee believes that the use of RSUs, in combination with stock options, for our executive officers will maintain our pay-for-performance culture, provide significant award upside for achieving outstanding performance and Mr. Puripromote retention, while maintaining a level of 112,500 shares,total direct compensation competitiveness and reducing overall dilution of stockholder ownership.
In March 2009, the Compensation Committee determined the target number of RSUs and stock options to be granted to the executive officers in fiscal 2010 and, consistent with 50%past practices, intends to make the grants on a semi-annual basis (in March and September). In light of the aggregate share number grantedcompany-wide salary reductions, no variable compensation in fiscal 2009 and 2010 and ineligibility to participate in the tender offer as an optiondiscussed below, the Compensation Committee determined that larger than normal grants in March 2007 (accordingwere necessary to our grant policy described below). The size of each target equity award reflected the increasing complexity of each executive officer’s job at NVIDIA, an assessment of equity awards and total pay packages at our peer companies, and the overall bias of our compensation program in favor ofcreate long-term incentive compensation.
In September 2007, the Committee reviewed the target for the second executive semi-annual grants scheduled to be made toour executive officers. The number of RSUs and stock options granted to our executive officers in March 2009 were as follows:
Name | RSU Grants in March 2009 | Option Grants in March 2009 | ||
Jen-Hsun Huang (1) | — | 250,000 | ||
Ajay K. Puri (2) | 35,750 | 63,750 | ||
David M. Shannon (2) | 56,725 | 90,100 | ||
Debora Shoquist (2) | 62,525 | 68,950 | ||
|
| (1) | In light of Mr. Huang’s position as CEO, the Compensation Committee determined to only grant stock options and not RSUs to Mr. Huang in fiscal 2010. Mr. Huang’s stock option will vest as to (i) 50% of the stock option on August 15, 2013, and (ii) the remaining 50% of the stock option on November 15, 2013, contingent upon his continued service to NVIDIA. |
| (2) | The stock options will vest as to approximately 33.36% of the shares on the one-year anniversary of the date of grant, with the remainder vesting over the next two years thereafter in equal amounts every quarter, contingent upon the executive officer’s continued service to NVIDIA. The RSUs will vest as to approximately 33.36% of the shares on the one-year anniversary of the date of grant, with the remainder vesting over the next two years thereafter in equal amounts every six months, contingent upon the executive officer’s continued service to NVIDIA. |
The Compensation Committee determinedbelieves that notwithstanding the targetvesting periods of both the RSUs and the stock option grants set atoptions properly balance the beginning of fiscal 2008, the sizepotential compensatory benefits of the third quarter grants should be reducedwith the long-term success of NVIDIA.
Mr. White joined NVIDIA in February 2009 and under the same manner that our overall stock option grant guidelines had been reduced for all NVIDIA employees as the Committee believed that similar incentive values could be achieved with a fewer numberterms of shares given NVIDIA’s stock price performance over the past year. As a result, Mr. Huang’s total stock option grant in fiscal 2008 was reduced to 366,525 shares, Mr. Burkett’s total stock option grant in fiscal 2008 was reduced to 223,988 shares, Mr. Shannon’s was reduced to 122,175 shares and Mr. Puri’s was reduced to 96,522 shares.
Ms. Shoquist was grantedhis offer letter he received a stock option grant of 450,000 shares on March 9, 2009 (the same date as all grants made to purchase 250,000our employees that started employment in February 2009). Mr. White did not receive a combination of stock options and RSUs because he entered into his offer letter with NVIDIA before we introduced RSUs as a form of equity compensation. The number of shares subject to this stock option grant was based primarily on the same factorsCEO’s recommendation that were usedthe amount of the grant was necessary to set her base salaryattract an executive with his skills and variable compensation level,background. Given the magnitude of the grant, the vesting schedule for this option was extended such that it vests quarterly over a four year period, subject to acceleration as discussed above.below.
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Other Benefits
We offer our executive officers the same health and change-in-control protections that we offer to all of our employees. We do not have any special benefit, severance, change-in-control or other programs for our executive officers.officers, except as discussed below for Mr. White.
HealhHealth and Welfare Benefits. In order to attract and retain qualified executive officers and other employees, we must offer our employees a competitive package of health and welfare programs. Our Human Resources Department compares annually our health and welfare benefits packages to those offered by peer companies to ensure our package is competitive and we will be able to attract and retain employees.
We maintain medical, vision, dental and accidental death and disability insurance as well as paid time off and paid holidays for all of our employees. Our executive officers are eligible to participate in these programs along with and on the same basis as our other employees. Like all of our full-time employees, our executive officers are eligible to participate in our 1998 Employee Stock Purchase Plan and our 401(k) plan.
No Perquisites. Our executive officers do not receive any perquisites or personal benefits that are not available to all NVIDIA employees.
Severance and Change-in-Control Agreements. WeExcept in special circumstances, such as short term arrangements as discussed below for Mr. White, we do not have severance or change-in-control agreements with any of our employees, including our executive officers. While such agreements are offered by many of our peer companies, we want to encourage executive officers to focus on growing and building value for our stockholders by focusing our compensation program on at-risk compensation elements such as variable cash compensation and long termlong-term equity grants.
Under the circumstances described under the headingEmployment, Severance and Change-in-Control Agreements all of the stock options or restricted stock units held by our executive officers and all of our other employees would be accelerated if they were not assumed or substituted by an acquiring company. However, this is a provision of our broad-based employee equity incentive plan rather than a special executive change-in-control arrangement.
Pursuant to the terms of Mr. White’s offer letter, in the event that Mr. White’s employment is involuntarily terminated as a direct result of the completion of an acquisition of NVIDIA within the first twelve months of his employment, the vesting of his initial grant of 450,000 stock option shares will be accelerated such that 25% of such grant will be vested as of the date his employment is terminated. We believe that the terms of Mr. White’s offer letter are consistent with our prior practice for the recruitment of certain of our new executive officers.
Additional Executive Compensation Practices and Procedures
Managing the Use of Equity
While equity is an important component of overall compensation, we carefully monitor the number of stock optionsequity-based awards granted to employees. We strive to balance paycompensation and reward to employees against stock optionequity expense and the potential dilution of stockholder ownership. We accomplish this by:ownership by following two principals:
budgetingWe budget the number of stock optionsequity-based awards available for employee grants. In determining the size of this pool, we consider factors such as the growth in the number of employees eligible for grants, competitive compensation practices, expected average grant sizes based on expected performance and the accounting expense of granting optionsequity-based awards and potential dilution; anddilution.
beingWe are sensitive to our annual dilution rate. We define thehave historically defined our annual dilution rate as the net number of new optionsequity granted during a fiscal year as a percentage of the outstanding common stock at fiscal year-end. For fiscal 2008,2009, the Compensation Committee established an annual dilution budget of 2.25% to 2.75% for all employee and new hire grants other than those related to merger and acquisition activity. Our actual dilution rate for fiscal 2008 was 2.47%. This included grants to new hires, existing employees and employees joining from acquisition activity. In fiscal 2008 we had a 22% increase in total employees from 4,083 to 4,985. For fiscal 2009, the Committee has established anet dilution budget of 2.0% to 2.75%, even thoughwhich was subsequently increased to 3.0% in September 2008, for all
employee and new hire grants other than those related to merger and acquisition activity. Our actual net dilution rate for fiscal 2009 was 2.71%. This included grants to new hires, existing employees and employees joining from acquisition activity. In fiscal 2009 we had a 8.7% increase in total employees from 4,985 at fiscal 2008 year-end to 5,420 at fiscal 2009 year-end. |
For fiscal 2010, the Compensation Committee has established a total dilution budget of 3.5% to 4.0%. Our fiscal 2010 budget is based on gross dilution versus our historical practice of net dilution, and does not give effect to the approximately 28.5 million stock options accepted for cancellation in our recently completed tender offer and assumes that we anticipate continued growthdo not implement a stock repurchase program in fiscal 2010. After giving effect to the cancellation of the approximately 28.5 million stock options in the tender offer and increased numberassuming we do not implement a stock repurchase program in fiscal 2010, our net dilution budget for fiscal 2010 is approximately negative 1.25% to negative 1.75%.
As discussed above in fiscal 2010 we will be granting our employees RSUs. For purposes of employees.our annual dilution rate calculations each RSU is counted as more than one share in accordance with RiskMetric’s published policies. Currently, based on our historical common stock volatility, each RSU is counted as 1.5 shares. We will not exceed the approved dilution budget without explicit approval from the Compensation Committee. The fiscal 20092010 dilution budget also does not account for any grants that may result from mergers and acquisitions. We expect theour dilution rate to vary in future periods as our business and competitive environment changeschange and in response to any accounting or regulatory developments.
In March 2009, we completed a cash tender offer for approximately 33.1 million stock options held by our employees, of which approximately 28.5 million were tendered for cancellation. Members of the Board of Directors and our executive officers were not eligible to participate in the tender offer. We use equity to promote employee retention and to provide an incentive vehicle valued by employees that is also aligned to stockholder interest. However, our common stock price declined significantly during fiscal 2009, and all of the eligible options subject to the tender offer were “out-of-the-money” (i.e., had exercise prices above our then-current common stock price). Therefore, we provided an opportunity to our employees to obtain a cash payment for their eligible options, while reducing our existing overhang and potential stockholder dilution from such stock options. Only options with an exercise price of greater than $17.50 per share were eligible to be tendered. Shares subject to cancelled stock options are available for future issuance pursuant to the 2007 Equity Incentive Plan.
Equity Granting Policies
The Compensation Committee adopted specific policies regarding the grant dates of stock options to all employees in fiscal 2008.2009. As part of its overall compensation review, the Compensation Committee annually reviews these policies and makes adjustments. Our specific stock option grant policies grants for theour executive officers are as follows:
| • | New Hire Grants. The grant date |
| • | Semi-Annual Grants. |
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| • | Other Grants. All other |
We do not grant re-loadstock options upon the exercise of an option using shares already in the holder’s possession (i.e. reload options), make loans to executives to exercise their stock options or for any other reason, grant stock options at a discount, or allow semi-annual or off-cycle grants to be made to our executive staff when our stock trading window is closed.
Stock Ownership Guidelines
In May 2007, the Board approved its amended and restatedOur Corporate Governance Policies as supplemented by the Supplement, which include stock ownership guidelines. The policiesis expected to be effective on or about April 17, 2009, as explained above, require each director and executive officer to hold at least 10,00025,000 shares of our common stock during the period in which he or she serves as a director or executive officer, unless our Nominating and Corporate Governance Committee waives the requirement. The 10,00025,000 shares may include
vested but unexercised stock options. Non-employee directors and executive officers will have 18 months from the date that they become directors or executive officers to reach the ownership threshold. Each of our directors and executive officers currently meets the stock ownership requirement.requirement, except for Mr. White, who joined NVIDIA in February 2009 and has until August 2010 to reach this ownership threshold. The stock ownership guidelines are intended to further align director and executive officer interests with stockholder interests.
Tax and Accounting Implications
Section 162(m) of the Internal Revenue Code limits the amount that the Companywe may deduct from its federal income taxes for remuneration paid to our Chief Executive OfficerCEO and three most highly compensated executive officers (other than our Chief Financial Officer)CFO) to $1 million per executive per year, unless certain requirements are met. Section 162(m) provides an exception from this deduction limitation for certain forms of “performance-based compensation,” as well as for the gain recognized by an executive upon the exercise of qualifying compensatory stock options. While the Compensation Committee is mindful of the benefit to NVIDIA performance of full deductibility of compensation, we believe the Compensation Committee must not be constrained by the requirements of Section 162(m) where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, the Compensation Committee has not adopted a policy that requires that all compensation be deductible. The Compensation Committee intends to continue to compensate our executive officers in a manner consistent with the best interests of NVIDIA and our stockholders.
We adopted SFAS No. 123(R) on January 30, 2006. SFAS No. 123(R) establishes accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the grants, and is recognized as an expense over the requisite employee service period. We use a binomial option pricing model to estimate the fair value of each stock option grant for accounting purposes.
SUMMARY COMPENSATION TABLEFOR FISCAL YEARS 2009, 2008AND 2007
The following table summarizes information regarding the compensation earned by our chief executive officer, our chief financial officer and our other three executive officers during our fiscal year 2008.2009. We refer to these individuals as our named executive officers.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($)(1)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | |||||||||||||||
Jen-Hsun Huang | 2008 | $ | 584,083 | (4) | $ | 150,000 | (5) | $ | 3,152,069 | $ | 2,250,000 | $750 | (6) | $ | 6,136,902 | |||||||
Chief Executive Officer and President | 2007 | 500,000 | — | 2,507,627 | 1,624,375 | — | 4,632,002 | |||||||||||||||
Marvin D. Burkett (7) | 2008 | 425,000 | — | 2,038,520 | 637,500 | — | 3,101,020 | |||||||||||||||
Chief Financial Officer | 2007 | 425,000 | — | 1,323,613 | 573,538 | — | 2,322,151 | |||||||||||||||
Ajay K. Puri | 2008 | 300,000 | — | 1,446,015 | 525,000 | 6,373 | (8) | 2,277,388 | ||||||||||||||
Vice President of Worldwide Sales | 2007 | 300,000 | 75,000 | (9) | 1,045,467 | 329,850 | 6,372 | (8) | 1,756,689 | |||||||||||||
David M. Shannon | 2008 | 300,000 | — | 1,310,006 | 412,500 | — | 2,022,506 | |||||||||||||||
Senior Vice President, General Counsel and Secretary | 2007 | 300,000 | — | 874,397 | 312,375 | — | 1,486,772 | |||||||||||||||
Debora Shoquist (10) Senior Vice President, Operations | 2008 | 98,894 | — | 538,033 | 126,570 | — | 763,497 | |||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($)(1)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||||
Jen-Hsun Huang Chief Executive Officer and President | 2009 2008 2007 | $
| 401,272 584,083 500,000 | (4) (5)
| $
| — 150,000 — | (6)
| $
| 3,609,098 3,152,069 2,507,627 | $
| — 2,250,000 1,624,375 | $
| — 750 — | (7)
| $
| 4,010,370 6,136,902 4,632,002 | |||||||
Marvin D. Burkett (8) Chief Financial Officer | 2009 2008 2007 |
| 425,000 425,000 425,000 |
|
| — — — |
|
| 2,239,070 2,038,520 1,323,613 |
| — 637,500 573,538 |
| — — — |
|
| 2,664,070 3,101,020 2,322,151 | |||||||
Ajay K. Puri Vice President of Worldwide Sales | 2009 2008 2007 |
| 301,154 300,000 300,000 |
|
| — — 75,000 |
(10) |
| 1,713,037 1,446,015 1,045,467 |
| — 525,000 329,850 |
| 6,344 6,373 6,372 | (9) (9) (9) |
| 2,020,535 2,277,388 1,756,689 | |||||||
David M. Shannon Senior Vice President, General Counsel and Secretary | 2009 2008 2007 |
| 300,000 300,000 300,000 |
|
| — — — |
|
| 1,462,050 1,310,006 874,397 |
| — 412,500 312,375 |
| — — — |
|
| 1,762,050 2,022,506 1,486,772 | |||||||
Debora Shoquist (11) Senior Vice President, Operations | 2009 2008 |
| 270,769 98,894 |
|
| — — |
|
| 1,717,332 538,033 |
| — 126,570 |
| — — |
|
| 1,988,101 763,497 | |||||||
| (1) |
|
Statements for fiscal |
| (2) | The amounts recognized for financial statement reporting purposes include compensation expense from awards granted both in and prior to fiscal |
Name | Expense Related to Stock Options Granted in Fiscal 2008 ($) | Expense Related to Stock Options Granted Prior to Fiscal 2008 ($) | Expense Related to Stock Options Granted in Fiscal 2009 ($) | Expense Related to Stock Options Granted prior to Fiscal 2009 ($) | ||||||||
Jen-Hsun Huang | $ | 305,761 | $ | 2,846,308 | $ | 385,106 | $ | 3,223,992 | ||||
Marvin D. Burkett | 504,903 | 1,533,617 | 254,389 | 1,984,681 | ||||||||
Ajay K. Puri | 230,932 | 1,215,082 | 260,686 | 1,452,351 | ||||||||
David M. Shannon | 275,401 | 1,034,604 | 260,686 | 1,201,364 | ||||||||
Debora Shoquist | 538,033 | — | 280,361 | 1,436,971 | ||||||||
| (3) |
| (4) | Mr. Huang voluntarily decreased his base salary to $1, after taxes and benefit contributions, effective October 1, 2008. |
35
| (5) | Mr. Huang’s base salary |
| Reflects an amount earned in fiscal 2008 and paid in March 2008 to Mr. Huang under our 2008 Variable Compensation Plan, in excess of the target amount related to his individual |
| Represents an award for the filing of a patent of which Mr. Huang is an inventor with the U.S. Patent and Trademark Office, or the PTO. Awards are made to all NVIDIA employees whose patents are filed by NVIDIA with the PTO. |
| Mr. Burkett |
| Represents imputed income for provision of medical insurance for an additional person. |
| Represents the aggregate amount of a signing bonus paid to Mr. Puri in fiscal 2007. The signing bonus was payable in quarterly installments of $25,000. The first installment of the signing bonus was paid during fiscal 2006. |
| Ms. Shoquist joined NVIDIA as our Senior Vice President, Operations in September 2007. |
GRANTSOF PLAN-BASED AWARDS TABLEFOR FISCAL 20082009
The following table provides information regarding all grants of plan-based awards that were made to or earned by our named executive officers during fiscal 2008.2009. Disclosure on a separate line item is provided for each grant of an award made to a named executive officer. The information in this table supplements the dollar value of stock options and other awards set forth in theSummary Compensation Tablefor Fiscal Years 2009, 2008 and 2007 by providing additional details about the awards.
The option grants to purchase shares of our common stock set forth in the following table arewere made under either our 1998 Plan or our 2007 Plan. The exercise price of the options granted under the 1998 Plan is equal to the closing price of our common stock as reported by NASDAQ for the last market-trading day prior to the date of grant as provided by our 1998 Plan. The exercise price of options granted under the 2007 Plan is equal to the closing price of our common stock as reported by NASDAQ on the date of grant. Under both the 1998 Plan and the 2007 Plan, the exercise price may be paid in cash, in shares of our common stock valued at fair market value on the exercise date or through a cashless exercise procedure involving a same-day sale of the purchased shares. All stock option grants are subject to service based vesting.
During fiscal 2008,2009, none of our named executive officers were awarded or held any performance-based equity incentive awards.
Name | Grant Date | Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Closing Market Price of Common Stock on Grant Date ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | Grant Date | Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | ||||||||||||||||||||||||
| Target ($) | Target ($) | ||||||||||||||||||||||||||||||||||||
Jen-Hsun Huang | 3/21/07 | 3/1/07 | — | 202,500 | (2) | $ | 18.90 | (3) | $ | 19.98 | $ | 1,707,075 | 3/19/08 9/17/08 N/A | 3/11/08 9/3/08 N/A |
$ | — — 1,500,000 | 200,000 180,000 — | (2) (4)
| $
| 17.66 10.00 — | (3) (6)
| $
| 2,150,000 1,148,400 — | ||||||||||||||
| 9/19/07 | 9/12/07 | — | 164,025 | (4) | 34.36 | (6) | 34.36 | 2,922,926 | |||||||||||||||||||||||||||||
| N/A | N/A | $ | 1,500,000 | — | — | — | — | ||||||||||||||||||||||||||||||
Marvin D. Burkett | 3/21/07 | 3/1/07 | — | 123,750 | (2) | 18.90 | (3) | 19.98 | 971,438 | 3/19/08 N/A | 3/11/08 N/A |
| — 425,000 | 75,000 — | (2)
|
| 17.66 — | (3)
|
| 753,000 — | |||||||||||||||||
| 9/19/07 | 9/12/07 | — | 100,238 | (4) | 34.36 | (6) | 34.36 | 1,672,972 | |||||||||||||||||||||||||||||
| N/A | N/A | 425,000 | — | — | — | — | |||||||||||||||||||||||||||||||
Ajay K. Puri | 3/21/07 | 3/1/07 | — | 56,249 | (2) | 18.90 | (3) | 19.98 | 441,555 | 3/19/08 9/17/08 N/A | 3/11/08 9/3/08 N/A |
| — — 350,000 | 62,500 56,250 — | (2) (4)
|
| 17.66 10.00 — | (3) (6)
|
| 627,500 338,625 — | |||||||||||||||||
| 9/19/07 | 9/12/07 | — | 45,563 | (4) | 34.36 | (6) | 34.36 | 760,447 | |||||||||||||||||||||||||||||
| N/A | N/A | 350,000 | — | — | — | — | |||||||||||||||||||||||||||||||
David M. Shannon | 3/21/07 | 3/1/07 | — | 67,500 | (2) | 18.90 | (3) | 19.98 | 529,875 | 3/19/08 9/17/08 N/A | 3/11/08 9/3/08 N/A |
| — — 275,000 | 62,500 56,250 — | (2) (4)
|
| 17.66 10.00 — | (3) (6)
|
| 627,500 338,625 — | |||||||||||||||||
| 9/19/07 | 9/12/07 | — | 54,675 | (4) | 34.36 | (6) | 34.36 | 912,526 | |||||||||||||||||||||||||||||
| N/A | N/A | 275,000 | — | — | — | — | |||||||||||||||||||||||||||||||
Debora Shoquist | 10/5/07 | 9/14/07 | — | 250,000 | (7) | 36.93 | (8) | 36.93 | 4,155,000 | 3/19/08 9/17/08 N/A | 3/11/08 9/3/08 N/A |
| — — 225,000 | 75,000 30,000 — | (2) (4)
|
| 17.66 10.00 — | (3) (6)
|
| 753,000 180,600 — | |||||||||||||||||
| N/A | N/A | 84,380 | — | — | — | — | |||||||||||||||||||||||||||||||
| (1) | Represents possible awards under the |
| (2) | Represents stock options granted to our named executive officers in the first quarter of fiscal |
| (3) | Represents the closing price of our common stock as reported by NASDAQ on March |
| (4) | Represents stock options granted to our |
| (5) | The grant date fair value was determined under SFAS No. 123(R) for financial reporting purposes. For a discussion of the determination of fair value of stock options under SFAS No. 123(R), see Note 2 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal |
| (6) | Represents the closing price of our common stock as reported by NASDAQ on September |
OUTSTANDING EQUITY AWARDS ATASOF JANUARY 27, 2008 TABLE25, 2009
The following table presents information regarding outstanding equity awards held by our named executive officers’ outstanding equity awardsofficers as of January 27, 2008.25, 2009. Option grants made before February 2004 generally had a ten year term and option grants made after February 2004 generally have a six-year term. As of January 27, 2008,25, 2009, none of our named executive officers held unearned equity incentive awards or stock awards.
| Option Awards | |||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||
Jen-Hsun Huang | 4,092,744 | — | $ | 3.11 | (1) | 1/31/10 | |||||
| 1,500,000 | — | 11.95 | (1) | 7/25/11 | |||||||
| 750,000 | — | 12.39 | (1) | 5/14/12 | |||||||
| 300,000 | 300,000 | (3) | 5.30 | (1) | 5/14/10 | ||||||
| — | 600,000 | (4) | 8.75 | (1) | 5/12/11 | ||||||
| — | 600,000 | (5) | 8.47 | (1) | 5/16/12 | ||||||
| — | 150,000 | (6) | 10.00 | (1) | 5/16/12 | ||||||
| — | 450,000 | (7) | 19.16 | (1) | 3/30/13 | ||||||
| — | 202,500 | (8) | 18.90 | (1) | 3/20/14 | ||||||
| — | 164,025 | (9) | 34.36 | (2) | 9/18/14 | ||||||
Marvin D. Burkett | 135,000 | 45,000 | (10) | 8.75 | (1) | 4/12/10 | |||||
| 150,000 | 150,000 | (11) | 8.47 | (1) | 5/16/11 | ||||||
| — | 225,000 | (12) | 19.16 | (1) | 3/30/12 | ||||||
| — | 123,750 | (13) | 18.90 | (1) | 3/21/13 | ||||||
| 100,238 | (14) | 34.36 | (2) | 9/18/13 | |||||||
Ajay K. Puri | 341,611 | 225,000 | (15) | 12.05 | (1) | 12/21/11 | |||||
| — | 56,249 | (13) | 18.90 | (1) | 3/20/13 | ||||||
| — | 45,563 | (14) | 34.36 | (2) | 9/18/13 | ||||||
David M. Shannon | 48,570 | 30,000 | (10) | 8.75 | (1) | 4/12/10 | |||||
| 52, 500 | 104,997 | (11) | 8.47 | (1) | 5/16/11 | ||||||
| — | 150,000 | (12) | 19.16 | (1) | 3/30/12 | ||||||
| — | 67,500 | (13) | 18.90 | (1) | 3/20/13 | ||||||
| — | 54,675 | (14) | 34.36 | (2) | 9/18/13 | ||||||
Debora Shoquist | 20,833 | 229,167 | (16) | 36.93 | (2) | 10/4/13 | |||||
| Option Awards | |||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||
Jen-Hsun Huang | 2,604,744 1,500,00 750,000 600,000 300,000 — — — — — — — | — — — — 300,000 600,000 150,000 450,000 202,500 164,025 200,000 180,000 | (3) (4) (5) (6) (7) (8) (9) (10) | $ �� | 3.11 11.95 12.39 5.30 8.75 8.47 10.00 19.16 18.90 34.36 17.66 10.00 | (1) (1) (1) (1) (1) (1) (1) (1) (1) (2) (2) (2) | 1/30/10 7/25/11 5/14/12 5/14/10 4/12/11 5/16/12 5/16/12 3/30/13 3/20/14 9/18/14 3/18/15 9/16/15 | ||||
Marvin D. Burkett | 168,570 299,994 168,750 — — — | — — 56,250 123,750 100,238 75,000 | (11) (12) (13) (14) | 8.75 8.47 19.16 18.90 34.36 17.66 | (1) (1) (1) (1) (2) (2) | 4/12/10 5/16/11 3/30/12 3/20/13 9/18/13 3/18/14 | |||||
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| Option Awards | ||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||||||
Ajay K. Puri | 566,611 — — — — | — 56,249 45,563 62,500 56,250 | (12) (13) (14) (15) | 12.05 18.90 34.36 17.66 10.00 | (1) (1) (2) (2) (2) | 12/21/11 3/20/13 9/18/13 3/18/14 9/16/14 | ||||
David M. Shannon | 78,570 157,500 112,500 — — — — | — — 37,500 67,500 54,675 62,500 56,250 | (11) (12) (13) (14) (15) | 8.75 8.47 19.16 18.90 34.36 17.66 10.00 | (1) (1) (1) (1) (2) (2) (2) | 4/12/10 5/16/11 3/30/12 3/20/13 9/18/13 3/18/14 9/16/14 | ||||
Debora Shoquist | 104,166 — — | 145,834 75,000 30,000 | (16) (14) (15) | 36.93 17.66 10.00 | (2) (2) (2) | 10/4/13 3/18/14 9/16/14 | ||||
| (1) | Represents the closing |
| (2) | Represents the closing |
| (3) |
| The option vests in equal quarterly installments over a one year period beginning on May 15, 2008 such that the option will be fully vested on May 15, 2009. |
| The option vests in equal quarterly installments over a one year period beginning on May 15, 2009 such that the option will be fully vested on May 15, 2010. |
The option vests in equal quarterly installments over a one year period beginning on May 15, 2009 such that the option will be fully vested on May 15, 2010. This option was granted with an exercise price of |
premium over the closing price of our common stock on NASDAQ on the last trading day prior to the date of grant, which was |
| The option vests in equal quarterly installments over a one year period beginning on May 15, 2010 such that the option will be fully vested on May 15, 2011. |
| (7) | The option |
| (8) | The option vests as to 50% of the shares |
| (9) | The option vests as to 50% of the shares |
| (10) | The option vests as to |
| (11) | The option |
| (12) | The option vests as to |
| (13) | The option vests as to 50% of the shares |
| (14) | The option vests as to 50% of the shares |
| (15) | The option vests |
| (16) | The option vests in equal quarterly installments over a three year period beginning on September 17, 2007 such that the option will be fully vested on |
OPTION EXERCISESAND STOCK VESTEDIN FISCAL YEAR 2008 TABLE2009
The following table shows information regarding option exercises by our named executive officers during fiscal 2008.2009. None of our named executive officers had stock awards outstanding or that vested during fiscal 2008.2009.
Amounts shown under the heading “Value Realized on Exercise” represent the difference between the exercise price per share of the stock option shares and the sales price of the shares of our common stock. The value realized was determined without considering any taxes that may have been owed. The exercise price of each stock option was equal to the closing price of our common stock as reported by NASDAQ for the last market-tradingtrading day prior to the date of grant.
| Option Awards | Option Awards | ||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | |||||||
Jen-Hsun Huang | 1,665,000 | $ | 42,964,465 | 1,488,000 | $ | 18,408,982 | |||||
Marvin D. Burkett | 300,924 | 4,859,629 | 11,436 | (1) | — | ||||||
Ajay K. Puri | 108,389 | 2,608,794 | — | — | |||||||
David M. Shannon | 556,472 | 14,136,569 | — | — | |||||||
Debora Shoquist | — | — | — | — | |||||||
| (1) | On February 19, 2008, Mr. Burkett exercised and held these shares, of which 6 shares had an exercise price of $8.47 per share and of which 11.430 shares had an exercise price of $8.75 per share. |
EMPLOYMENT, SEVERANCEAND CHANGE-IN-CONTROL AGREEMENTS
Employment Agreements.Our executives are “at-will” employees and we do not have employment, severance or change-in-control agreements with our executive officers.officers, except as discussed inCompensation Discussion and Analysis—Severance and Change-in-Control Agreements for Mr. White.
Change-in-Control Agreements. Our 1998 Plan provides that if we sell all or substantially all of our assets, or we are involved in any merger or any consolidation in which we are not the surviving corporation, or if there is any other change-in-control, all outstanding awards held by all employees then providing services, including our executive officers, under the 1998 Plan will either (a) be assumed or substituted for by the surviving entity or (b) if not assumed or substituted, the vesting and exercisability of the awards will accelerate in full and the awards will terminate if they are not exercised prior to the closing of the change-in-control.
Our 2007 Plan provides that in the event of a corporate transaction or a change-in-control, outstanding stock awards may be assumed, continued, or substituted by the surviving corporation. If the surviving corporation does not assume, continue, or substitute such stock awards, then (a) any stock awards that are held by individuals performing services for NVIDIA immediately prior to the effective time of the transaction, the vesting and
39
exercisability provisions of such stock awards will be accelerated in full and such stock awards will be terminated if not exercised prior to the effective date of the corporate transaction or change-in-control, and (b) all other outstanding stock awards will be terminated if not exercised on or prior to the effective date of the corporate transaction or change-in-control.
POTENTIAL PAYMENTS UPON TERMINATIONOR CHANGE-IN-CONTROL
Potential Payments Upon Change-in-Control.Upon a change-in-control or certain other corporate transactions of NVIDIA, unvested stock options will fully vest in some cases as described above underEmployment, Severance and Change-in-Control Agreements—Change-in-Control Agreements.The table below shows our estimates of the amount of the benefit each of our named executive officers would have received if the unvested options held by them as of January 27, 200825, 2009 had become fully vested as a result of a change-in-control. The estimated benefit amount of unvested options was calculated by multiplying the number of in-the-money unvested options held by the applicable named executive officer by the difference between the closing price of our common stock on January 25, 200823, 2009 as reported by NASDAQ, which was $24.95,$7.71, and the exercise price of the option. Based on such closing price, none of our named executive officers would have received any benefit if the unvested options held by them as of January 25, 2009 had become fully vested as a result of a change-in-control.
| Number of Unvested Options at January 27, 2008 (#) | Total Estimated Benefit ($) | ||||
Jen-Hsun Huang | 2,466,525 | $ | 31,576,125 | ||
Marvin D. Burkett | 643,988 | 5,252,438 | |||
Ajay K. Puri | 326,812 | 3,242,806 | |||
David M. Shannon | 407,172 | 3,493,226 | |||
Debora Shoquist | 229,167 | — | |||
Name | Number of Unvested Options at January 25, 2009 (#) | Total Estimated Benefit ($) | ||
Jen-Hsun Huang | 2,246,525 | — | ||
Marvin D. Burkett | 355,238 | — | ||
Ajay K. Puri | 220,562 | — | ||
David M. Shannon | 278,425 | — | ||
Debora Shoquist | 250,834 | — | ||
COMPENSATION COMMITTEE REPORTCOMPENSATION COMMITTEE REPORT
The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, other than our Annual Report on Form 10-K, where it shall be deemed to be “furnished,” whether made before or after the date hereof and irrespective of any general incorporation language in any such filing unless specifically incorporated by reference therein.
The Compensation Committee of the Board of Directors oversees the compensation programs of NVIDIA on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement.
In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K of NVIDIA for the year ended January 27, 200825, 2009 and in this proxy statement.
| COMPENSATION COMMITTEE |
| Harvey C. Jones, Chairman |
| James C. Gaither |
| William J. Miller |
Mark A. Stevens |
EQUITY COMPENSATION PLAN INFORMATIONEQUITY COMPENSATION PLAN INFORMATION
The number of shares issuable upon exercise of outstanding stock options, the weighted-average exercise price of the outstanding options, and the number of stock options remaining for future issuance under each of our equity compensation plans as of January 27, 200825, 2009 are summarized as follows:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | ||||||||||
Equity compensation plans approved by security holders (1) | 90,535,251 | $ | 13.18 | (3) | 138,154,616 | 82,903,896 | $ | 13.54 | (3) | 74,111,396 | ||||||
Equity compensation plans not approved by security holders (2) | 45,337 | $ | 18.37 | (3) | — | 14,550,384 | $ | 15.44 | (3) | — | ||||||
Total | 90,580,588 | $ | 13.18 | (3) | 138,154,616 | 97,454,280 | $ | 13.83 | (3) | 74,111,396 | ||||||
| (1) | This row includes our 2007 Plan (which is intended as the successor to and continuation of our 1998 Equity Incentive Plan, our 1998 Non-Employee Directors’ Stock Option Plan, our 2000 Nonstatutory Equity Incentive Plan, and the PortalPlayer, Inc. 2004 Stock Incentive Plan) and our 1998 Employee Stock Purchase Plan. Of these shares, |
| (2) | This row represents the 2000 Nonstatutory Equity Incentive Plan, the PortalPlayer, Inc. 2004 Stock Incentive Plan and the PortalPlayer, Inc. 1999 Stock Option Plan, which |
| (3) | Represents the weighted average exercise price of outstanding stock options only. |
| (4) | In March 2009, we completed a cash tender offer for outstanding stock options in the aggregate amount of 28,532,050 shares, or the Tendered Options. The Tendered Options were cancelled and became available for issuance under our 2007 Plan. |
41
2000 Nonstatutory Equity Incentive Plan
The 2000 Nonstatutory Equity Incentive Plan, or the 2000 Plan, provided for the grant of nonstatutory stock options to employees, directors, and consultants. The terms and exercise price of awards granted under the 2000 Plan are set forth in each optionee’s option agreement. The term of nonstatutory stock options is either six or ten years. Grants made after May 8, 2003 generally have six year terms. Until February 2004, options granted to new employees vested over a period of four years, with 25% of the shares vesting one year from the date of grant and the remaining 75% of the shares vesting quarterly over the next three years. During this same time period, stock options granted to existing employees generally would vest each quarter over a four-year period from the date of grant. Beginning in February 2004, new employees’ initial options vest quarterly over a three-year period. Grants to existing employees in recognition of performance also vest over a three-year period; however, the option did not begin vesting until the second anniversary of the date of grant, after which time the option vests in quarterly increments over the remaining one-year period. Generally, an option terminates three months after the termination of the optionee’s service to NVIDIA. If the termination is due to the optionee’s disability, the exercise period generally is extended to 12 months. If the termination is due to the optionee’s death or if the optionee dies within three months after his or her service terminates, the exercise period generally is extended to 18 months following death. We no longer make option grants from this plan.
PortalPlayer, Inc. 2004 Stock Incentive Plan
We assumed the PortalPlayer, Inc. 2004 Stock Incentive Plan, or the 2004 Plan, and all related outstanding options in connection with our acquisition of PortalPlayer, Inc., or PortalPlayer, in January 2007. The 2004 Plan was adopted by the PortalPlayer stockholders in 2004. Each option we assumed in connection with our acquisition of PortalPlayer has been converted into the right to purchase that number of shares of NVIDIA common stock determined by multiplying the number of shares of PortalPlayer common stock underlying such option by 0.3601 and then rounding down to the nearest whole number of shares. The exercise price per share for each assumed option has been similarly adjusted by dividing the exercise price by 0.3601 and then rounding up to the nearest whole cent. Vesting schedules and expiration dates for the assumed options did not change. Under the 2004 Plan, options generally vest as to 25% of the shares one year after the date of grant and as to 1/48th of the shares each month thereafter and expire ten years from the date of grant. We no longer make option grants from this plan.
PortalPlayer, Inc. 1999 Stock Option Plan
General. We assumed options issued under the PortalPlayer, Inc. 1999 Stock Option Plan, or the 1999 Plan, when we completed our acquisition of PortalPlayer onin January 5, 2007. The 1999 Plan was terminated
upon completion of PortalPlayer’s initial public offering of common stock in 2004. No shares of common stock are available for issuance under the 1999 Plan other than to satisfy exercises of currently outstanding stock options granted under the 1999 Plan prior to its termination. Any shares that become available for issuance as a result of expiration or cancellation of such options shall again be available for issuance under the 2007 Plan.
Term of Stock Awards. Each option we assumed in connection with our acquisition of PortalPlayer has been converted into the right to purchase that number of shares of NVIDIA common stock determined by multiplying the number of shares of PortalPlayer common stock underlying such option by 0.3601 and then rounding down to the nearest whole number of shares. The exercise price per share for each assumed option has been similarly adjusted by dividing the exercise price by 0.3601 and then rounding up to the nearest whole cent. Vesting schedules and expiration dates did not change.
The 1999 Plan permitted the PortalPlayer Board to grant non-statutory options with an exercise price of as low as 85% of the fair market value of PortalPlayer’s common stock. PortalPlayer did not grant options at less than 100% of the fair market value of PortalPlayer’s common stock. Under the 1999 Plan, options generally vest as to 25% of the shares one year after the date of grant and as to 1/48th of the shares each month thereafter and expire ten years from the date of grant.
REVIEWOF TRANSACTIONSWITH RELATED PERSONS
It is our policy that all employees, officers and directors must avoid any activity that is or has the appearance of conflicting with our interests. This policy is included in our Worldwide Code of Conduct and our Financial Team Code of Conduct. We conduct a review of all related party transactions for potential conflict of interest situations on an ongoing basis and all transactions involving executive officers or directors must be approved by the Audit Committee or another independent body of the Board. Except as discussed below, we did not conduct any transactions with related persons in fiscal 2009 that would require disclosure in this proxy statement or approval by the Audit Committee.
TRANSACTIONSWITH RELATED PERSONS
We have entered into indemnity agreements with our executive officers and directors which provide, among other things, that we will indemnify such executive officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, executive officer or other agent of NVIDIA, and otherwise to the fullest extent permitted under Delaware law and our bylaws. We also intend to execute these agreements with our future executive officers and directors.
See the section above entitledEmployment, Severance and Change-in-Control Agreements for a description of the terms of our 1998 Plan and our 2007 Plan related to a change–in-control of NVIDIA.
We have granted stock options to our executive officers and our non-employee directors. See “Executive Compensation” and “Director Compensation.”
REVIEWOF TRANSACTIONSWITH RELATED PERSONS
It is our policy that all employees, officers and directors must avoid any activity that is or has the appearance of conflicting with our interests. This policy is included in our Worldwide Code of Conduct and our Financial Team Code of Conduct. We conduct a review of all related party transactions for potential conflict of interest situations on an ongoing basis and all transactions involving executive officers or directors must be approved by the Audit Committee or another independent body of the Board. We did not conduct any transactions with related persons in fiscal 2008 that would require disclosure in this proxy statement or approval by the Audit Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership of our common stock and other equity securities with the SEC. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended January 27, 2008,2009, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were complied with.with; except that a Form 4, covering the acquisition of an aggregate of 11,700 shares of our common stock in connection with becoming a co-trustee of his childrens’ trusts, was filed late by Mr. Jones.
43
The Board knows of no other matters that will be presented for consideration at the annual meeting.2009 Annual Meeting. If any other matters are properly brought before the annual meeting,2009 Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ David M. Shannon
David M. Shannon
Secretary
May 15, 2008April 8, 2009
ACOPYOFOUR ANNUAL REPORTON FORM 10-KFORTHEFISCALYEARENDED JANUARY 27, 200825, 2009ASFILEDWITHTHE SECURITIESAND EXCHANGE COMMISSIONSECISBEINGFURNISHEDTOSTOCKHOLDERSCONCURRENTLYHEREWITH. STOCKHOLDERTOCKHOLDERSMAYSUBMITAWRITTENREQUESTFORANADDITIONALCOPYOFTHE ANNUAL REPORTON FORM 10-KFORTHEFISCALYEARENDED JANUARY 27, 200825, 2009TO: INVESTOR RELATIONS, NVIDIA CORPORATION, 2701 SAN TOMAS EXPRESSWAY, SANTA CLARA, CALIFORNIA 95050. WEWILLALSOFURNISHACOPYOFANYEXHIBITTOTHE FORM 10-KFORTHE ANNUAL REPORTIFSPECIFICALLYREQUESTEDINWRITING.
NVIDIA and the NVIDIA logo are either registered trademarks or trademarks of NVIDIA Corporation in theUnited States and other countries. Other company names used in this publication are for identification purposesonly and may be trademarks of their respective companies.
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NVIDIA CORPORATION
(a Delaware corporation)
NVIDIA CORPORATION, a Delaware corporation (the “Corporation”), does hereby certify:
First: The name of the Corporation isNVIDIA CORPORATION.
Second: The date on which the Corporation’s original Certificate of Incorporation was filed with the Delaware Secretary of State is February 24, 1998 under the name of NVIDIA Delaware Corporation.
Third: The Board of Directors of the Corporation, acting in accordance with Sections 141(f) and 242 of the General Corporation Law of the State of Delaware, adopted resolutions to amend Paragraph A of Article IV of the Amended and Restated Certificate of Incorporation of the Corporation to read in its entirety as follows:
“A. This corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the corporation is authorized to issue is Two Billion Two Million Shares (2,002,000,000) shares. Two Billion (2,000,000,000) shares shall be Common Stock, each having a par value of one-tenth of one cent ($.001). Two Million (2,000,000) shares shall be Preferred Stock, each having a par value of one-tenth of one cent ($.001).
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, by filing a certificate (a “Preferred Stock Designation”) pursuant to the Delaware General Corporation Law, to fix or alter from time to time the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions of any wholly unissued series of Preferred Stock, and to establish from time to time the number of shares constituting any such series or any of them; and to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.”
Fourth: Thereafter pursuant to a resolution of the Board of Directors this Certificate of Amendment was submitted to the stockholders of the Corporation for their approval, and was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
Fifth: All other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.
IN WITNESS WHEREOF, NVIDIA CORPORATION has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer and attested to by its Secretary in Santa Clara, California this day of , 2008.
Directions to Our Headquarters - Building E
FROM HIGHWAY 101
Take the San Tomas/Montague Exit
Follow the sign to San Tomas Expressway
Stay on San Tomas for less than a mile to Walsh Avenue
Turn left onto Walsh Avenue
Continue on Walsh Avenue to the stoplight at Scott Boulevard
Turn left onto Scott Boulevard
2800 Scott Boulevard is the first office building on the left
Turn left into 2800 Scott Boulevard
FROM INTERSTATE 280
Take the Saratoga Ave/Saratoga Exit towards Santa Clara
Stay on Saratoga Avenue for about 1 mile
Turn left onto San Tomas Expressway and drive for approximately 3 miles to Walsh Avenue
Turn right onto Walsh Avenue
Continue on Walsh Avenue to the stoplight at Scott Boulevard
Turn left onto Scott Boulevard
2800 Scott Boulevard is the first office building on the left
Turn left into 2800 Scott Boulevard
NVIDIA.
NVIDIA CORPORATION
2701 SAN TOMAS EXPRESSWAY
SANTA CLARA, CA 95050
VOTE BY INTERNET-www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on May 19, 2009. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE-1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May 19, 2009. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to NVIDIA Corporation, 2008 Annual Meeting Proxy Cardc/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
PleaseTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
Mark HereM12252
for AddressKEEP THIS PORTION FOR YOUR RECORDS
change or IsDETACH AND RETURN THIS PORTION ONLY
CommentsTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SEE REVERSE SIDENVIDIA CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL THE NOMINEES FOR DIRECTOR LISTED BELOW, A VOTE “FOR”AND PROPOSAL 2.
PROPOSAL 2 AND A VOTE “FOR” PROPOSAL 3.Vote On Directors
1. To electElection of the three directors nominated by the Board of Directors to hold office until the 20112012 Annual Meeting of Stockholders.
FOR WITHHOLD ABSTAINNominees:
(01) Steven Chu01) Tench Coxe
FOR WITHHOLD ABSTAIN02) Mark L. Perry
(02) Harvey C. Jones03) Mark A. Stevens
FOR WITHHOLD ABSTAINFor All
(03) William J. MillerWithhold All
For All Except
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
Vote On Proposal
2. To approve an amendment to the NVIDIA Corporation CertificateThe ratification of Incorporation.
FOR AGAINST ABSTAIN
3. To ratify the selection of PricewaterhouseCoopers LLP as
NVIDIA’s the independent registered public accounting firm of NVIDIA Corporation for
the fiscal year ending January 25, 2009. FOR AGAINST ABSTAIN31, 2010.
OTHER MATTERS: The Board of Directors knows of noFor
Against
Abstain
3. In their discretion, upon such other matters that may properly come before the meeting or any adjournments thereof.
The shares represented by this proxy when properly executed will be presented for consideration atvoted in the Annual Meeting.manner directed herein by the undersigned stockholder(s). If no direction is made, this proxy will be voted FOR all the nominees and proposal 2. If any other matters are properly broughtcome before the Annual Meeting, it is the intention ofmeeting, the persons named in this proxy card towill vote on such matters, in accordance with their best judgment.discretion.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.Signature [PLEASE SIGN WITHIN BOX]
Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians and attorneys-in-fact should add their titles. If signer is a corporation, please give full corporate name and have a duly authorized officer sign stating title. If signer is a partnership, please sign in partnership name by authorized person.Date
? FOLD AND DETACH HERE ?Signature (Joint Owners)
Vote by Internet or Telephone or Mail 24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet http://www.proxyvoting.com/nvda
Use the internet to vote your proxy.
Have your proxy card in hand
when you access the web site.
OR
Telephone 1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
OR
Mail
Mark, sign and date your proxy card and
return it in the
enclosed postage-paid
envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May 20, 2009:
The Notice and Proxy Statement, Annual Report on Form 10-K and Stockholder Letter are available at www.proxyvote.com.
M12253
NVIDIA CORPORATION
THIS PROXY IS SOLICITED BYON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 19, 2008 MAY 20, 2009
The undersignedstockholder(s) hereby appointsappoint(s) Jen-Hsun Huang and David M. Shannon, and eachor either of them, as proxies, and attorneys-in-fact,each with fullthe power of substitution,to appoint his substitute, and hereby authorizesauthorize(s) them to represent and to vote, as designated on the reverse side of this proxy card, all of the shares of stockCommon Stock of NVIDIA Corporation whichthat the undersigned may bestockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders of NVIDIA Corporation to be held on Thursday, June 19, 2008 at 10:9:00 a.m. (local time)pacific daylight time on May 20, 2009, at the officesBuilding E of NVIDIA Corporationour headquarters located at 2800 Scott Boulevard, Santa Clara, California 95050, and at any and all adjournments, continuations and postponements thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the Annual Meeting.adjournment or postponement thereof.
UNLESS A CONTRARY DIRECTION IS INDICATED,THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR ALLTHE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1,ON THE REVERSE SIDE FOR PROPOSAL 2,THE BOARD OF DIRECTORS AND FOR PROPOSAL 3 AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY WILLCARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
CONTINUED AND TO BE VOTED IN ACCORDANCE THEREWITH.
(Continued and to be marked, dated and signed on the other side)
Address Change/Comments (Mark the corresponding box on the reverse side)
? FOLD AND DETACH HERE ?
You can now access your NVIDIA Corporation account online.
Access your NVIDIA Corporation stockholder account online via Investor ServiceDirect® (ISD).
The transfer agent for NVIDIA Corporation now makes it easy and convenient to get current information on your stockholder account.
View account status View payment history for dividends
View certificate history Make address changes
View book-entry information Obtain a duplicate 1099 tax form
Establish/change your PIN
Visit us on the web at http://www.bnymellon.com/shareowner
For Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
Toll Free Number: 1-800-370-1163SIGNED ON REVERSE SIDE.