UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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NVIDIA Corporation
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2007 Equity Compensation Plan
Highlights from the 2007 Proxy
June 2007
2007 Plan
Asking for 9.7M More Shares
1998 Equity Incentive Plan will expire in Feb 2008
This plan is a Shareholder approved plan used for equity grants to our executive staff and directors
The new 2007 Plan will replace all existing equity plans:
1998 Equity Incentive Plan
1998 Non-employee Directors’ Stock Option Plan
2000 Nonstatutory Equity Incentive Plan
PortalPlayer, Inc. 2004 Stock Incentive Plan
Asking for 9.7 million additional shares
27.5 million shares total when added to shares currently available
At least two-years’ worth of option grants under current compensation programs
Historic Option Use
| Fiscal 2005 |
Fiscal 2006 |
Fiscal 2007 |
Fiscal 2008 | |||||
| Revenue |
$2.01 |
$2.38 |
$3.07 |
— | ||||
| GAAP net income |
$88.6 |
$301.2 |
$448.8 |
— | ||||
| Headcount growth |
15% |
30% |
49% |
— | ||||
| Total shares outstanding |
334,179,090 |
342,954,912 |
360,998,504 |
361,950,370 | ||||
| Options outstanding |
92,320,314 |
87,958,480 |
73,994,662 |
74,345,177 | ||||
| Shares available for grant |
45,023,408 |
31,310,976 |
21,780,284 |
17,633,674 | ||||
| Net options awarded (1) |
12,890,654 |
13,712,432 |
10,622,075 |
4,146,610 | ||||
| Total dilution (2) |
29.1% |
25.8% |
21.0% |
20.3% | ||||
| Net burn rate (3) |
3.9% |
4.0% |
2.9% |
2.25%- | ||||
| (full-year | ||||||||
| Shares repurchased |
4,168,706 |
12,804,340 |
10,337,429 |
(5) |
(1) Net options awarded equals total options granted minus cancellations and forfeitures.
(2) Total dilution = (options outstanding + shares available for grant) (total shares outstanding + options outstanding + shares available for grant)
(3) Net burn rate equals net options awarded divided by total shares outstanding.
(4) The numbers in this column do not include the approximately 9.7 million shares we are requesting.
(5) The total number of shares repurchased in Q1 FY08 was 3,958,555.
Sources: NVIDIA Proxy Statement dated May 9, 2007 and NVIDIA 10-Q for the quarter ended April 29, 2007.
Stock Options Central to Compensation Philosophy
High growth technology company – earnings growth of 782% over past 5 years
Stock options required to attract and retain the world’s best talent – grants based on performance
84% of outstanding options held by rank-and-file
Employees tend to hold options: 55% of outstanding options are fully vested, 99% of which are in the money
Low turnover: 9% versus industry benchmark of 17%
Sources: NVIDIA analysis of net income and NVIDIA Proxy Statement dated May 9, 2007.
Comp Committee and Management Carefully Managing Option Use
Total dilution decreased from 29.1% to 20% over past 2 years
Net burn rate decreased from 4% in FY05 and FY06 to 3% in FY07 (FY08 target is 2.25 - 2.75%)
Expiration term of options decreased from 10 to 6 years (25% of the current options outstanding have to be exercised or will expire in next 3 years)
Repurchased 23.1M shares while granted 24.3m shares in FY06 and FY07
Source: NVIDIA Proxy Statement dated May 9, 2007.
Split Recommendation Proxy Advisory Services
Glass Lewis & Co
Recommend vote FOR the new plan
Pay-for-Performance grade of “A”
ISS
Recommend vote AGAINST plan
Estimated SVT of 19% exceeds allowable cap of 12%
ISS Burn Rate Policy: Pass
ISS Pay for Performance Policy: Pass
Sources:
Glass Lewis & Co, 2007 NVIDIA Corporation Proxy Paper.
ISS US Proxy Advisory Services, Report on NVIDIA Corporation published June 8, 2007.
SVT Calculation Should Exclude
Vested, Exercised, In-the-Money Options
40,490,539 shares of options are vested, unexercised, in-the-money
If 73,994,662 shares are excluded, we believe SVT is 11.6% and within ISS guideline
Sources: ISS US Proxy Advisory Services, Report on NVIDIA Corporation published June 8, 2007 and NVIDIA analysis