[x]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Delaware | 94-3177549 |
(State or Other Jurisdiction of | (I.R.S. Employer |
Incorporation or Organization) | Identification No.) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is an accelerated filer (as defined in the Exchange Rule 12b-2) Yes x No o
31.3Rule 13a-14(a)/15d-14(a) President and Chief Executive Officer Certification.
Item 10. | Directors and Executive Officers of the Registrant | 1 |
Item 11. | Executive Compensation | 4 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 8 |
Item 13. | Certain Relationships and Related Transactions | 10 |
Item 14. | Principal Accountant Fees and Services | 11 |
Signatures | 12 | |
Exhibit Index | 13 |
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
James C. Gaither, age 66, has served as an NVIDIA director since December 1998. Mr. Gaither is a managing director of Sutter Hill Ventures, a venture capital investment firm. He is a retired partner of the law firm of Cooley Godward LLP 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, 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 Boar d of Trustees of The Carnegie Endowment for International Peace. Mr. Gaither currently serves on the Board of Directors of Levi Strauss & Company, a manufacturer and marketer of brand-name apparel, and Siebel Systems, Inc., an information software systems company. Mr. Gaither holds a B.A. in Economics from Princeton University and a J.D. degree from Stanford University Law School.
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Stockholder Communications with the Board of Directors and Director Nominations
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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 25, 2004, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were complied with. However, in August 1999, Mr. Miller failed to file a Form 4 reporting the acquisition of 936 shares of our common stock from a partnership distribution. Further, On May 5, 2003, we submitted to the SEC for filingfour Form 4s reporting a stock option grant for 200,000 shares to Jen-Hsun Huang, a stock option grant for 70,000 shares to Di Ma, a stock option grant for 70,000 sh ares to Jeffrey D. Fisher and a stock option grant for 70,000 shares to Daniel Vivoli.May 5, 2003, was the first day of the SEC’s new system for the electronic filing of Section 16 reports. As publicly reported, the SEC experienced technical difficulties and disabled submissions utilizing third-party software. The technical difficulties were subsequently resolved and Mr. Huang’s Form 4 was accepted for filing on May 6, 2003 andMr. Fisher,Dr. Ma and Mr. Vivoli’s Form 4s were accepted for filing on May 7, 2003. We intend to seek a date adjustment for these filings back to May 5, 2003, the date they were submitted and du e.
NVIDIA has adopted a Code of Business Conduct and Ethics that applies to all our executive officers, directors and employees. The Code of Business Conduct and Ethics is available on our website atwww.nvidia.com.If we make any amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
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ITEM 11.EXECUTIVE COMPENSATION
Weautomaticallygrant stock options to our directors who are not employees of NVIDIA or our subsidiaries, under the 1998 Non-Employee Directors’ Stock Option Plan (the Directors’ Plan) and the 1998 Equity Incentive Plan (the 1998 Plan). In July 2000, the Board of Directors amended the 1998 Plan, to incorporate the automaticgrant provisions of the Directors’ Plan into the 1998 Plan. Only a non-employee director may receive stock option grants pursuant to the automatic grant provisions and such option grants are non-discretionary. Our Board of Directors amended the Directors’ Plan in May 2002. The amendments made in May 2002, while intended to continue to provide incentives to our non-employee directors, took into account our growth since 1998 and the resulting increase in value of our common stock and therefore in each case reduced the number of shares granted to our non-employee directors. The terms of the Directors’ Plan, as amended, are described below.
Initial Grants. Under the amended Directors’ Plan, each non-employee director who is elected or appointed to NVIDIA’s Board of Directors for the first time is automatically granted an option to purchase 75,000 shares, which vests quarterly over a three-year period.
Annual Grants – Board Members. On August 1 of each year each non-employee director is automatically granted an option to purchase 25,000 shares, or the Annual Grant. The Annual Grants will begin vesting on the second anniversary of the date of the grant and vest quarterly during the next year. The Annual Grants will be fully vested on the third anniversary of the date of the grant, provided that the director has attended at least 75% of the meetings during the year following the date of the grant. On August 1,2003, we granted options covering 25,000 shares to each of Messrs. Coxe, Gaither, Jones, Miller, Seawell and Stevens at an exercise price per share of $19.09. The exercise price of each option was equal to the closing price of ou r common stock as reported on Nasdaq National Market for the last market-trading day prior to the date of grant.
Annual Grants – Committee Members. On August 1 of each year each non-employee director who is a member of a committee of the Board of Directors is automatically granted an option to purchase 5,000 shares, or the Committee Grant. The Committee Grants vest in full on the first anniversary of the date of the grant, provided that the director has attended at least 75% of the meetings during the year following the date of the grant. On August 1, 2003 we granted options covering 5,000 shares to each of Messrs. Coxe, Gaither, Jones, Miller, Seawell and Stevens at an exercise price per share of $19.09. The exercise price of each option was equal to the closing price of our common stock as reported on Nasdaq National Market for the last market-trading day prior to the date of grant. Messrs. Coxe, Gaither and Jones are members of more than one committee and they elected to receive only a single grant for committee service during fiscal year 2004.
Annual Grants – Vesting. If a non-employee director fails to attend at least 75% of the regularly scheduled meetings during the year following the grant of an option, rather than vesting as described previously, the Annual Grants will vest 30% upon the three-year anniversary of the grant date and 70% for the fourth year, such that in each case the entire option will become fully vested on the four-year anniversary of the date of the grant and the Committee Grants 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% for the fourth year. For the Annual Grants and Committee Grants, if the person has not been serving on the Board of Directors or committee since a prior year’s annual meeting, the number of shares granted will be reduced pro rata for each full quarter prior to the date of grant during which such person did not serve in such capacity.
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General Provisions. The exercise price for such options is equal to 100% of the fair market value on the date of grant. No option granted under such provisions may be exercised after the expiration, which is either 10 years or six years from the date it was granted. Options granted after May 8, 2003 have a six, rather than 10, year term. Such options generally are non-transferable. However, an optionee may designate a beneficiary who may exercise the option following the optionee’s death. An optionee whose service relationship with NVIDIA or any of our affiliates, whether as a non-employee director or subsequently as an employee, director or consultant ceases for any reason, may exercise vested options for the term provided in the option agreement, 12 months generally, 18 months in the event of death.
Change of Control. If we sell 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 stock options either will be assumed or substituted for by any surviving entity. If the surviving entity does not assume or substitute for the stock options, the stock options will terminate if they are not exercised prior to any sale of assets, merger or consolidation.
The following table presents summary information for the fiscal years ended January 27, 2002, January 26, 2003 and January 25, 2004, concerning the compensation awarded or paid to, or earned by our Chief Executive Officer andthe otherfour most highly compensated executive officers at January 25, 2004. These individuals in the table below are referred to as the Named Executive Officers.
Annual Compensation | Long TermCompensation Awards | ||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Securities Underlying Options (#) | |||||||||
Jen-Hsun Huang President and Chief Executive Officer | 2004 2003 2002 | $400,000 400,763 400,000 | 412,000 — 400,000 | 200,000 250,000 500,000 | |||||||||
Marvin D. Burkett (1) Chief Financial Officer | 2004 2003 2002 | 300,000 137,769 — | 368,780 124,500 — | — 400,000 — | |||||||||
Jeffrey D. Fisher Executive Vice President, Worldwide Sales | 2004 2003 2002 | 300,000 300,875 302,308 | 193,280 — 237,500 | 70,000 40,000 70,000 | |||||||||
Di Ma, Ph.D. Vice President, Operations | 2004 2003 2002 | 225,000 225,413 226,404 | 70,000 40,000 40,000 | ||||||||||
David M. Shannon (2) Vice President and General Counsel | 2004 2003 2002 | 250,000 128,989 — | 140,711 350,000 — | — 250,000 — |
(1) Mr. Burkett joined NVIDIA as Chief Financial Officer in September 2002.
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Individual Grants | ||||||
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term | ||||||
Name | Number of Securities Underlying Options Granted (#) | Percent of Total Options Granted to Employees in Fiscal Year | Exercise Price Per Share ($) | Expiration Date | 5% ($) | 10% ($) |
Jen-Hsun Huang | 200,000 | 1.60% | $14.27 | 05/15/10 | $1,161,865 | $2,707,639 |
Marvin D. Burkett | --- | --- | --- | --- | --- | --- |
Jeffrey D. Fisher | 70,000 | 0.56% | $14.27 | 04/30/09 | $339,722 | $770,712 |
Di Ma, Ph.D. | 70,000 | 0.56% | $14.27 | 04/30/09 | $339,722 | $770,712 |
David M. Shannon | --- | --- | --- | --- | --- | --- |
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Number of Securities Underlying Unexercised Options at January 25, 2004 | Value of Unexercised In-the-Money Options at January 25, 2004 | |||||
Name | Shares Acquired on Exercise (#) | Value Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable |
Jen-Hsun Huang | 0 | $0 | 2,629,000 | 1,250,000 | $46,117,028 | $7,293,700 |
Marvin D. Burkett | 0 | $0 | 125,000 | 275,000 | $1,701,250 | $3,742,750 |
Jeffrey D. Fisher | 50,000 | $814,865 | 276,243 | 111,177 | $4,656,639 | $1,109,137 |
Di Ma, Ph.D. | 0 | $0 | 50,000 | 80,000 | $412,166 | $692,494 |
David M. Shannon | 0 | $0 | 78,125 | 171,875 | $939,063 | $2,065,938 |
David M. Shannon. We entered into an employment agreement with David M. Shannon, our Vice President and General Counsel, dated July 12, 2002, effective as of the first day of employment. Under the terms of the agreement, Mr. Shannon received a sign-on bonus of $50,000 and an annual salary of $250,000. If Mr. Shannon had resigned or was terminated with cause prior to the one-year anniversary of his employment, he was obligated to return the sign-on bonus. In addition, pursuant to the employment agreement, as Mr. Shannon satisfactorily performed his duties on a full-time basis during the first six-months of his employment he was paid a $300,000 bonus in February 2003. Mr. Shannon was entitled to accelerated vesting of one year of equivalent vesting under his stock option for 250,000 shares if he had been involuntarily terminated within 12 months of his hir e date as a direct result of a merger, consolidation, acquisition or sale of assets of NVIDIA.
Marvin D. Burkett. We entered into an employment agreement with Marvin D. Burkett, our Chief Financial Officer, dated August 12, 2002, effective as of the first day of employment. Under the terms of the agreement, Mr. Burkett was entitled to an annual salary of $300,000 and a $150,000 bonus on the six-month anniversary of his hire date if he satisfactorily performed his duties on a full-time basis during that entire six month period. Mr. Burkett was paid this bonus in February 2003. Mr. Burkettwas also entitled to a second $150,000 bonus payable on the first anniversary of his hire date if hecontinued to satisfactorily perform his duties on a full-time basis through the one-y ear anniversary of his hiring. Mr. Burkett was paid this bonus in August 2003. Mr. Burkett was also entitled to accelerated vesting of one year of equivalent vesting under his stock option for 400,000 shares if he had been involuntarily terminated within 12 months of his hire date as a direct result of a merger, consolidation, acquisition or sale of assets of NVIDIA.
1998 Equity Incentive Plan and 2000 Nonstatutory Equity Incentive Plan. If we sell 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 under the 1998 Equity Incentive Plan and 2000 Nonstatutory Equity Incentive Plan will either (a) be assumed or substituted for by the surviving entity or (b) ifnot assumed or substituted,the vesting and excercisability of the awards will accelerate in full and the awards will terminate if they are not exercised prior to the closing of the change of control.
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ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Shares Beneficially Owned (Including the Numberof Shares Shown in the First Column) | |||
Name and Address of Beneficial Owner | Shares Issuable Pursuant to Options Exercisable Within 60 days of March 15, 2004 | Number | Percent |
Directors and Executive Officers | |||
Jen-Hsun Huang (1) | 2,839,000 | 11,897,322 | 7.1% |
Marvin D. Burkett | 150,000 | 157,135 | * |
Jeffrey D. Fisher (2) | 301,519 | 502,440 | * |
Di Ma, Ph.D. (3) | 62,500 | 134,591 | * |
David M. Shannon | 109,375 | 115,476 | * |
Daniel F. Vivoli | 128,128 | 311,474 | * |
Tench Coxe (4) | 418,593 | 1,202,429 | * |
James C. Gaither | 299,843 | 349,843 | * |
Harvey C. Jones | 348,593 | 1,323,897 | * |
William J. Miller (5) | 413,593 | 564,529 | * |
A. Brooke Seawell | 548,593 | 548,593 | * |
Mark A. Stevens (6) | 348,593 | 1,231,465 | * |
All directors and executive officers as a group (12 persons) (7) | 5,968,330 | 18,339,194 | 10.7% |
5% Stockholders | |||
AXA Financial, Inc. (8) 1290 Avenue of the Americas New York, NY 10104 | — | 10,371,833 | 6.3% |
FMR Corporation (9) Edward C. Johnson 3d and Abigail P. Johnson 82 Devonshire Street Boston, MA 02109 | — | 20,147,032 | 12.2% |
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(5) Includes 150,936 shares held by the Millbor Family Trust, of which Mr. Miller and his wife are co-trustees.
(6) Includes 327,872 shares held by The 3rd Millennium Trust, of which Mr. Stevens and his wife are co-trustees, and an aggregate of 555,000 shares of common stock owned by entities affiliated with Sequoia Capital: (a) 162,801 shares held by Sequoia Capital Franchise Fund; (b) 22,200 shares held by Sequoia Capital Franchise Partners; (c) 138,213 shares held by Sequoia Capital IX; (d) 21,274 shares held by Sequoia Capital Entrepreneurs Fund; (e) 25,514 shares held by Sequoia Capital IX Principals Fund; (f) 146,733 shares held by Sequoia Capital X; (g) 21,609 shares held by Sequoia Capital Technology Partners X; and (h) 16,656 shares held by Sequoia Capital X Principals Fund. Mr. Stevens, a director of NVIDIA, is a general partner of these funds affiliated with Sequoia Capital, and therefore he may be deemed to beneficially own these shares; however, Mr. Stevens disclaims beneficial ownership of the shares held by these funds, except to the extent of his pecuniary interest therein.
(7) Includes shares described in footnotes one through five above.
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) |
Equity compensation plans approved by security holders (1) | 34,571,216 | $13.25 (3) | 33,126,110 |
Equity compensation plans not approved by security holders (2) | 8,195,489 | $18.22 (3) | 10,309,447 |
Total | 42,766,705 | $14.20 (3) | 43,435,557 |
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General. The 2000 Nonstatutory Equity Incentive Plan, or the 2000 Plan, provides for the grant of nonstatutory stock options to employees and directors of, and consultants to, NVIDIA or affiliates of NVIDIA. As of April 30, 2004, under the 2000 Plan there were 18,416,478 shares of common stock authorized for issuance, of which8,069,155shares are subject to outstanding stock option grants and 10,347,323 shares are available for future grant and issuance. Under the terms of the 2000 Plan, the number of available shares may increase in the future as a result of cancellations or expirations of granted options or the repurchase of unvested restricted stock and stock bonuses. The 2000 Plan will expire upon the earlier of its termination by our Board of Directors or when there are no more shares available for issuance under the 2000 Plan. The 2000 Plan is administered by the Compensation Committee of the Board of Directors; however, the Board of Directors may also administer the 2000 Plan.
Terms of Stock Awards. The terms and price of nonstatutory stock options, stock bonuses, and rights to purchase restricted stock granted under the 2000 Plan are set forth in each optionee’s option agreement. The term of such nonstatutory stock options is either six or 10 years. Grants made after May 8, 2003 have six year terms, unless determined otherwise by the Compensation Committee or the Board of Directors. Until April 2004, initial options granted to new employees would vest 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 each quarter over the subsequent 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 April 2004, new employees’ initial options will vest over a three-year period on a quarterly basis. Performance grants to existing employees will also vest over a three-year period; however, the option will not begin vesting until the second anniversary of the date of grant, after which time the option will vest in quarterly increments over the remaining one-year period. In the future, stock options may have the same or different vesting terms. 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.
Change of Control. Upon a change in control of NVIDIA, a stock award will either (a) be assumed or substituted by the surviving entity or (b) if not assumed or substituted, the vesting and exercisability of such stock awards will accelerate in full and the awards will terminate if they are not exercised prior to the closing of the change of control.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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2004 | 2003 | ||||||
Audit Fees: | |||||||
Audit Review and Preparation — Audit of consolidated financial statements, review of interim financial statements and assistance with SEC filings | $ | 821,000 | $ | 693,000 | |||
Statutory Audits — Statutory audits of foreign subsidiaries | 64,000 | 53,000 | |||||
Restatement Services — Fees for the restatement of prior year financial statements | -- | 210,000 | |||||
Total Audit Fees | $ | 885,000 | $ | 956,000 | |||
Audit-Related Fees: | |||||||
Merger and acquisition activities, internal control reviews and consultation concerning financial accounting and reporting standards | 24,000 | 47,000 | |||||
Tax Fees: | |||||||
Tax Compliance — Preparation and review of income tax returns | 112,000 | 141,000 | |||||
General Tax Advice and Tax Planning | 44,000 | 286,000 | |||||
Total Tax Fees | $ | 156,000 | $ | 427,000 | |||
All Other Fees: | |||||||
Forensic audit services relating to the restatement of prior year financial statements | -- | 31,000 | |||||
Total Fees | $ | 1,065,000 | $ | 1,461,000 | |||
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 20, 2004.
NVIDIA Corporation
By /s/ JEN-HSUN HUANG______________
Jen-Hsun Huang
Signature | Title | Date |
/s/ JEN-HSUN HUANG | ||
Jen-Hsun Huang | President, Chief Executive Officerand Director (Principal ExecutiveOfficer) | May 20, 2004 |
/s/ MARVIN D. BURKETT | ||
Marvin D. Burkett | Chief Financial Officer (PrincipalFinancial and Accounting Officer) | May 20, 2004 |
/s/ TENCH COXE* | ||
Tench Coxe | Director | May 20, 2004 |
/s/ JAMES C. GAITHER* | ||
James C. Gaither | Director | May 20, 2004 |
/s/ HARVEY C. JONES* | ||
Harvey C. Jones | Director | May 20, 2004 |
/s/ WILLIAM J. MILLER* | ||
William J. Miller | Director | May 20, 2004 |
/s/ A. BROOKE SEAWELL* | ||
A. Brooke Seawell | Director | May 20, 2004 |
/s/ MARK A. STEVENS* | ||
Mark A. Stevens | Director | May 20, 2004 |
*By: /s/ JEN-HSUN HUANG
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Exhibit Number | Description of Document |
31.3(21) | Rule 13a-14(a)/15d-14(a) President and Chief Executive Officer Certification. |
31.4(21) | Rule 13a-4(a)/15d-14(a) Chief Financial Officer Certification. |
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