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NVIDIA CORPORATION |
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Date and time: | Wednesday, May 18, 2016 at 10:00 a.m. Pacific Daylight Time | |||
Location: | Online at www.virtualshareholdermeeting.com/NVIDIA2016 | |||
Items of business: | • Election of twelve directors nominated by the Board of Directors• Approval of our executive compensation• Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2017• Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan• Approval of an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan | |||
Transaction of other business properly brought before the meeting | ||||
Record date: | You can vote at the meeting if you were a stockholder of record at the close of business on March 21, 2016. | |||
Virtual meeting admission: | We will be holding our annual meeting online only this year. Stockholders of record as of March 21, 2016 will be able to participate in the annual meeting by visiting www.virtualshareholdermeeting.com/NVIDIA2016. To participate in the annual meeting, you will need the control number included on your notice of Internet availability of the proxy materials or your proxy card (if you received a printed copy of the proxy materials). | |||
Pre-meeting forum: | The new online format for the annual meeting also allows us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.theinvestornetwork.com/forum/nvda. On our pre-meeting forum, you can submit questions in advance of the annual meeting, and also access copies of our proxy statement and annual report. |
PAGE | |
1998 ESPP | NVIDIA Corporation 1998 Employee Stock Purchase Plan |
2007 Plan | NVIDIA Corporation Amended and Restated 2007 Equity Incentive Plan |
2012 ESPP | NVIDIA Corporation Amended and Restated 2012 Employee Stock Purchase Plan |
2015 Meeting | 2015 Annual Meeting of Stockholders |
2016 Meeting | 2016 Annual Meeting of Stockholders |
2017 Meeting | 2017 Annual Meeting of Stockholders |
AC | Audit Committee |
Board | The Company’s Board of Directors |
CC | Compensation Committee |
CD&A | Compensation Discussion and Analysis |
CEO | Chief Executive Officer |
Company | NVIDIA Corporation, a Delaware corporation |
Control Number | Identification number for each stockholder included in Notice or Proxy Card |
Dodd Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act |
Exchange Act | Securities Exchange Act of 1934, as amended |
Exequity | Exequity LLP, the CC’s independent compensation consultant |
FASB | Financial Accounting Standards Board |
Fiscal 2015 | The Company’s fiscal year 2015 (January 27, 2014 to January 25, 2015) |
Fiscal 2016 | The Company’s fiscal year 2016 (January 26, 2015 to January 31, 2016) |
Fiscal 2017 | The Company’s fiscal year 2017 (February 1, 2016 to January 29, 2017) |
Fiscal 2018 | The Company’s fiscal year 2018 (January 30, 2017 to January 28, 2018) |
Form 10-K | The Company’s Annual Report on Form 10-K for Fiscal 2016 filed with the SEC on March 16, 2016 |
Full Value Award | An equity award other than a stock option or stock appreciation right |
GAAP | Generally accepted accounting principles |
Internal Revenue Code | U.S. Internal Revenue Code of 1986, as amended |
Lead Director | Lead independent director |
MY PSUs | PSUs with a multi-year performance metric |
NASDAQ | The NASDAQ Stock Market LLC |
NCGC | Nominating and Corporate Governance Committee |
NEOs | Named Executive Officers |
Non-GAAP Operating Income | GAAP operating income adjusted for stock-based compensation, product warranty charge, acquisition-related costs, and restructuring and other charges, as the Company reports in its earnings materials. The net aggregate adjustment to GAAP operating income for these items for Fiscal 2016 was $378 million |
Notice | Notice of Internet Availability of Proxy Materials |
NYSE | New York Stock Exchange |
PSUs | Performance stock units |
RSUs | Restricted stock units |
S&P 500 | Standard & Poor’s 500 Composite Index |
SEC | U.S. Securities and Exchange Commission |
Stretch Operating Plan | Maximum goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs |
SY PSUs | PSUs with a single-year performance metric |
Target Compensation Plan | Target goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs |
Threshold Compensation Plan | Threshold goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs |
TSR | Total stockholder return |
PwC | PricewaterhouseCoopers LLP |
Variable Cash Plan | The Company’s variable cash compensation plan |
Date and time: | Wednesday, May 18, 2016 at 10:00 a.m. Pacific Daylight Time | |||
Location: | Online at www.virtualshareholdermeeting.com/NVIDIA2016 | |||
Record date: | Stockholders as of March 21, 2016 are entitled to vote | |||
Admission to meeting: | You will need your Control Number to attend the annual meeting |
Matter | Page Number (for more detail) | Board Recommendation | Vote Required for Approval | Effect of Abstentions | Effect of Broker Non-Votes | |
Management Proposals: | ||||||
Election of twelve directors | FOR each director nominee | More FOR than WITHHOLD votes | None | None | ||
Approval of our executive compensation | FOR | Majority of shares present | Against | None | ||
Ratification of selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2017 | FOR | Majority of shares present | Against | None | ||
Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan | FOR | Majority of shares present | Against | None | ||
Approval of an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan | FOR | Majority of shares present | Against | None |
Name | Age | Director Since | Occupation | Committees | ||||
AC | CC | NCGC | ||||||
Robert K. Burgess | 58 | 2011 | Independent Consultant | Chair | ||||
Tench Coxe | 58 | 1993 | Managing Director, Sutter Hill Ventures | Member | ||||
Persis S. Drell | 60 | 2015 | Dean, School of Engineering, Stanford University | Member | ||||
James C. Gaither | 78 | 1998 | Managing Director, Sutter Hill Ventures | Member | ||||
Jen-Hsun Huang | 53 | 1993 | President & CEO, NVIDIA Corporation | |||||
Dawn Hudson | 58 | 2013 | Chief Marketing Officer, National Football League | Member | ||||
Harvey C. Jones | 63 | 1993 | Managing Partner, Square Wave Ventures | Member | Member | |||
Michael G. McCaffery | 62 | 2015 | Chairman & Managing Director, Makena Capital Management | Member | * | |||
William J. Miller** | 70 | 1994 | Independent Consultant | Chair | ||||
Mark L. Perry | 60 | 2005 | Independent Consultant | Chair | * | |||
A. Brooke Seawell | 68 | 1997 | Venture Partner, New Enterprise Associates | Member | * | |||
Mark A. Stevens | 56 | 2008 | *** | Managing Partner, S-Cubed Capital | Member | Member |
ü | Declassified Board | ü | Independent Lead Director |
ü | Majority voting for directors | ü | 11 out of 12 Board members independent |
ü | Active Board oversight of risk and risk management | ü | At least annual Board and committee self-assessments |
ü | Stock ownership guidelines for our directors and executive officers | ü | Annual stockholder outreach, including Lead Director participation |
ü | 75% or better attendance by each Board member at meetings of the Board and applicable committees | ü | Independent directors frequently meet in executive sessions |
• | MY PSUs with a relative goal: introduced PSUs with a 3-year performance measure based on our TSR relative to the S&P 500 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and structured a meaningful portion of our CEO’s Fiscal 2016 equity award in the form of these 3-year PSUs |
• | Separate performance metrics: assigned separate, distinct metrics for each component of our compensation where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as a goal for our Variable Cash Plan and for our PSUs) |
• | Greater proportion of "at-risk," performance-based compensation: increased average “at-risk,” performance-based compensation as a percentage of total target pay |
Component | Performance Metric | Percentage of CEO Pay | Percentage of Average Other NEO Pay |
Variable Cash Plan | Annual revenue | 11% | 9% |
SY PSUs | Annual Non-GAAP Operating Income | 51% | 38% |
MY PSUs | 3-year TSR relative to the S&P 500 | 27% | 4% |
89% | 51% |
• | Increase the share reserve under our 2007 Plan by 18,800,000 shares; |
• | Impose a minimum vesting requirement of 12 months from the date of grant on Full Value Awards under the 2007 Plan; |
• | Prohibit acceleration of vesting on any awards under the 2007 Plan, with exceptions for a participant’s death or disability or in the event of certain corporate events; and |
• | Make certain changes to the permitted adjustments for our performance goals. |
• | Attend the 2016 Meeting online and vote during the meeting; |
• | Submit another properly completed proxy card with a later date; |
• | Send a written notice that you are revoking your proxy to NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050, Attention: Secretary; or |
• | Submit another proxy by telephone or Internet after you have already provided an earlier proxy. |
Proposal Number | Proposal Description | Vote Required for Approval | Effect of Abstentions | Effect of Broker Non-Votes |
1 | Election of twelve directors | Directors are elected if they receive more FOR votes than WITHHOLD votes | None | None |
2 | Approval of our executive compensation | FOR votes from the holders of a majority of shares present and entitled to vote | Against | None |
3 | Ratification of the selection of PwC as our independent registered public accounting firm for Fiscal 2017 | FOR votes from the holders of a majority of shares present and entitled to vote | Against | None |
4 | Approval of an amendment and restatement of our 2007 Plan | FOR votes from the holders of a majority of shares present and entitled to vote | Against | None |
5 | Approval of an amendment and restatement of our 2012 ESPP | FOR votes from the holders of a majority of shares present and entitled to vote | Against | None |
Name | Age | Director Since | Occupation | Indepen-dent | Other Public Company Boards | |
Robert K. Burgess | 58 | 2011 | Independent Consultant | ü | 1 | |
Tench Coxe | 58 | 1993 | Managing Director, Sutter Hill Ventures | ü | 2 | |
Persis S. Drell | 60 | 2015 | Dean, School of Engineering, Stanford University | ü | – | |
James C. Gaither | 78 | 1998 | Managing Director, Sutter Hill Ventures | ü | – | |
Jen-Hsun Huang | 53 | 1993 | President & CEO, NVIDIA Corporation | – | ||
Dawn Hudson | 58 | 2013 | Chief Marketing Officer, National Football League | ü | 2 | |
Harvey C. Jones | 63 | 1993 | Managing Partner, Square Wave Ventures | ü | – | |
Michael G. McCaffery | 62 | 2015 | Chairman & Managing Director, Makena Capital Management | ü | – | |
William J. Miller* | 70 | 1994 | Independent Consultant | ü | 3 | |
Mark L. Perry | 60 | 2005 | Independent Consultant | ü | 2 | |
A. Brooke Seawell | 68 | 1997 | Venture Partner, New Enterprise Associates | ü | 1 | |
Mark A. Stevens | 56 | 2008 | ** | Managing Partner, S-Cubed Capital | ü | – |
Directors’ Skills and Qualifications | ||
• Independence• Senior management and operating experience necessary to oversee our business• Professional, technical and industry knowledge• Financial expertise• Financial community experience (including as an investor in other companies)• Marketing and brand management• Public company board experience• Experience with emerging technologies and new business models | • Legal expertise• Diversity, including gender and ethnic background• Academia experience• Desirability as a member of any committees of the Board• Willingness and ability to devote substantial time and effort to Board responsibilities• Ability to represent the interests of the stockholders as a whole rather than special interest groups or constituencies• All relationships between the proposed nominee and any of our stockholders, competitors, customers, suppliers or other persons with a relationship to NVIDIA |
COMPETENCY | Burgess | Coxe | Drell | Gaither | Huang | Hudson | Jones | McCaffery | Miller | Perry | Seawell | Stevens |
Senior Management and Operating | ü | ü | ü | ü | ü | ü | ü | ü | ||||
Industry and Technical | ü | ü | ü | ü | ||||||||
Financial/Financial Community | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ||
Public Company Board | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||
Emerging Technologies and Business Models | ü | ü | ü | ü | ||||||||
Marketing and Brand Management | ü | ü | ||||||||||
Legal | ü | ü |
ROBERT K. BURGESS | Independent Consultant | |||||
Age: 58 | Director Since: 2011 | Committees: CC | ||||
Robert K. Burgess has served as an independent investor and board member to technology companies since 2005. He was chief executive officer from 1996 to 2005 of Macromedia, Inc., a provider of internet and multimedia software, which was acquired by Adobe Systems Incorporated; he also served from 1996 to 2005 on its board of directors, as chairman of its board of directors from 1998 to 2005 and as executive chairman for his final year. Previously, he held key executive positions from 1984 to 1991 at Silicon Graphics, Inc. (SGI), a graphics and computing company; from 1991 to 1995, served as chief executive officer and a board member of Alias Research, Inc., a publicly traded 3D software company, until its acquisition by SGI; and resumed executive positions at SGI during 1996. Mr. Burgess serves on the board of Adobe and has served on the boards of several privately-held companies. He was a director of IMRIS Inc., a provider of image guided therapy solutions, until 2013. He holds a BCom degree from McMaster University. | ||||||
TENCH COXE | Managing Director, Sutter Hill Ventures | |||||
Age: 58 | Director Since: 1993 | Committees: CC | ||||
Tench Coxe has been a managing director of Sutter Hill Ventures, a venture capital investment firm, since 1989, where he focuses on investments in the IT sector. Prior to joining Sutter Hill Ventures in 1987, he was director of marketing and MIS at Digital Communication Associates. He serves on the board of directors of Mattersight Corp., a customer loyalty software firm, Artisan Partners Asset Management Inc., an institutional money management firm, and several privately held technology companies. Mr. Coxe holds a BA degree in Economics from Dartmouth College and an MBA degree from Harvard Business School. | ||||||
PERSIS S. DRELL | Dean, School of Engineering, Stanford University | |||||
Age: 60 | Director Since: 2015 | Committees: CC | ||||
Persis S. Drell is the Dean of the Stanford School of Engineering, a Professor in the School of Engineering and a Professor of Materials Science and Engineering and Physics at Stanford University. Dr. Drell, who assumed the post of Dean in September 2014, has been on the faculty at Stanford since 2002. Dr. Drell served as the Director of the U.S. Department of Energy SLAC National Accelerator Laboratory from 2007 to 2012. Dr. Drell is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and is a fellow of the American Physical Society. She has been the recipient of a Guggenheim Fellowship and a National Science Foundation Presidential Young Investigator Award. Dr. Drell holds a Ph.D. from the University of California Berkeley and an AB degree in Mathematics and Physics from Wellesley College. | ||||||
JAMES C. GAITHER | Managing Director, Sutter Hill Ventures | |||||
Age: 78 | Director Since: 1998 | Committees: NCGC | ||||
James C. Gaither has been a partner of Sutter Hill Ventures, a venture capital investment firm, since 2000. He was a partner in the law firm Cooley LLP from 1971 to 2000 and senior counsel to the firm from 2000 to 2003. Prior to practicing law he 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 U.S. Department of Justice and staff assistant to U.S. President Lyndon Johnson. Mr. Gaither is a former president of the Board of Trustees at Stanford University, former vice chairman of the board of directors of The William and Flora Hewlett Foundation and past chairman of the Board of Trustees of the Carnegie Endowment for International Peace. Mr. Gaither holds a BA degree in Economics from Princeton University and a JD degree from Stanford University Law School. | ||||||
JEN-HSUN HUANG | President and Chief Executive Officer, NVIDIA Corporation | |||||
Age: 53 | Director Since: 1993 | Committees: none | ||||
Jen-Hsun Huang co-founded NVIDIA in 1993 and has since served as president, chief executive officer, and a member of the board of directors. Mr. Huang held a variety of positions from 1985 to 1993 at LSI Logic Corp., a computer chip manufacturer, including leading the business unit responsible for the company’s system-on-a-chip strategy. He was a microprocessor designer from 1984 to 1985 at Advanced Micro Devices, Inc., a semiconductor company. Mr. Huang holds a BSEE degree from Oregon State University and an MSEE degree from Stanford University. | ||||||
DAWN HUDSON | Chief Marketing Officer, National Football League | |||||
Age: 58 | Director Since: 2013 | Committees: CC | ||||
Dawn Hudson has served as Chief Marketing Officer for the National Football League since October 2014. Previously, she served from 2009 to 2014 as vice chairman of The Parthenon Group, an advisory firm focused on strategy consulting. She was president and chief executive officer of Pepsi-Cola North America, the beverage division of PepsiCo, Inc. for the U.S. and Canada, from 2005 to 2007 and president from 2002, and simultaneously served as chief executive officer of the foodservice division of PepsiCo, Inc. from 2005 to 2007. Previously, she spent 13 years in marketing, advertising and branding strategy, holding leadership positions at major agencies, such as D’Arcy Masius Benton & Bowles and Omnicom. She currently serves on the boards of directors of The Interpublic Group of Companies, Inc., an advertising holding company, and Amplify Snack Brands, Inc., a snack food company. She was a director of P.F. Chang’s China Bistro, Inc., a restaurant chain, from 2010 until 2012, of Allergan, Inc., a biopharmaceutical company, from 2008 until 2014, and of Lowes Companies, Inc., a home improvement retailer, from 2001 until May 2015. She holds a BA degree in English from Dartmouth College. | ||||||
HARVEY C. JONES | Managing Partner, Square Wave Ventures | |||||
Age: 63 | Director Since: 1993 | Committees: CC, NCGC | ||||
Harvey C. Jones has been the managing partner of Square Wave Ventures, a private investment firm, since 2004. Mr. Jones has been an entrepreneur, high technology executive and active venture investor for over 30 years. In 1981, he co-founded Daisy Systems Corp., a computer-aided engineering company, ultimately serving as its president and chief executive officer until 1987. Between 1987 and 1998, he led Synopsys. Inc., a major electronic design automation company, serving as its chief executive officer for seven years and then as executive chairman. In 1997, Mr. Jones co-founded Tensilica Inc., a privately held technology IP company that developed and licensed high performance embedded processing cores. He served as chairman of the Tensilica board of directors from inception through its 2013 acquisition by Cadence Design Systems, Inc. In 2014, coincident with his investment in the company, Mr. Jones joined the board of directors of Tintri Inc., a private company that builds data storage solutions for virtual and cloud environments. He also served as lead director on the board of directors of Wind River Systems, Inc. from 2006 until its sale to Intel Corporation in 2009. Mr. Jones holds a BS degree in Mathematics and Computer Sciences from Georgetown University and an MS degree in Management from Massachusetts Institute of Technology. | ||||||
MICHAEL G. MCCAFFERY | Chairman and Managing Director, Makena Capital Management | ||||
Age: 62 | Director Since: 2015 | Committees: AC | |||
Michael G. McCaffery is the Chairman and a Managing Director of Makena Capital Management, an investment management firm. From December 2005 to December 2013, he was the Chief Executive Officer of Makena Capital Management. From September 2000 to June 2006, he was the President and Chief Executive Officer of the Stanford Management Company, the university subsidiary charged with managing Stanford University’s financial and real estate investments. Prior to Stanford Management Company, Mr. McCaffery was President and Chief Executive Officer of Robertson Stephens and Company, a San Francisco-based investment bank and investment management firm, from January 1993 to December 2009, and also served as Chairman from January 2000 to December 2000. Mr. McCaffery serves on the board of directors, or on the advisory boards, of several privately held companies and non-profits. He was a director of KB Home, a homebuilding company, from 2003 until 2015. Mr. McCaffery is a Trustee of the Rhodes Scholarship Trust. Mr. McCaffery holds a BA degree from the Woodrow Wilson School of Public and International Affairs at Princeton University, a BA Honours degree and an MA degree in Politics, Philosophy and Economics from Merton College, Oxford University, Oxford, England, and an MBA degree from the Stanford Graduate School of Business. | |||||
WILLIAM J. MILLER | Independent Consultant | ||||
Age: 70 | Director Since: 1994 | Committees: NCGC | |||
William J. Miller has served as an independent consultant since 1999 and is on the board of directors of Waters Corp., a scientific instrument manufacturing company; Digimarc Corp., a developer and supplier of secure identification products and digital watermarking technology; and Glu Mobile, Inc., a publisher of mobile games. He was president, chief executive officer and chairman of the board of directors from 1996 to 1999 of Avid Technology, Inc., a provider of digital tools for multimedia. He was chief executive officer and a board director from 1992 to 1995 of Quantum Corp., a mass storage company, where he was chairman for three years. From 1981 to 1992, he held various positions at Control Data Corp., a supplier of computer hardware, software and services, including executive vice president and president, information services. He holds a BA degree in Communications and a JD degree from the University of Minnesota. | |||||
MARK L. PERRY | Independent Consultant | ||||
Age: 60 | Director Since: 2005 | Committees: AC | |||
Mark L. Perry serves on the boards of, and consults for, various companies and non-profit organizations. From 2012 to 2015, Mr. Perry served as an Entrepreneur-in-Residence at Third Rock Ventures, a venture capital firm. He served from 2007 to 2011 as president and chief executive officer of Aerovance, Inc., a biopharmaceutical company. He was an executive officer from 1994 to 2004 at Gilead Sciences, Inc., a biopharmaceutical company, serving in a variety of capacities, including general counsel, chief financial officer, and executive vice president of operations, responsible for worldwide sales and marketing, legal, manufacturing and facilities; he was also its senior business advisor until 2007. From 1981 to 1994, Mr. Perry was with the law firm Cooley LLP, where he was a partner for seven years. He serves on the boards of directors of Global Blood Therapeutics, Inc. and MyoKardia, Inc., both biopharmaceutical companies. Mr. Perry holds a BA degree in History from the University of California, Berkeley, and a JD degree from the University of California, Davis. | |||||
A. BROOKE SEAWELL | Venture Partner, New Enterprise Associates | |||||
Age: 68 | Director Since: 1997 | Committees: AC | ||||
A. Brooke Seawell has served since 2005 as a venture partner at New Enterprise Associates, and was a partner from 2000 to 2005 at Technology Crossover Ventures. He was executive vice president from 1997 to 1998 at NetDynamics, Inc., an application server software company, which was acquired by Sun Microsystems, Inc. He was senior vice president and chief financial officer from 1991 to 1997 of Synopsys, Inc., an electronic design automation software company. He serves on the board of directors of Tableau Software, Inc., a business intelligence software company, and several privately held companies. Mr. Seawell served on the board of directors of Glu Mobile, Inc., a publisher of mobile games, from 2006 to 2014, and of Informatica Corp., a data integration software company, from 1997 to August 2015. Mr. Seawell is a member of the Stanford University Athletic Board and previously served on the Management Board of the Stanford Graduate School of Business. Mr. Seawell holds a BA degree in Economics and an MBA degree in Finance from Stanford University. | ||||||
MARK A. STEVENS | Managing Partner, S-Cubed Capital | |||||
Age: 56 | Director Since: 2008 (previously served 1993-2006) | Committees: AC, NCGC | ||||
Mark A. Stevens has been the managing partner of S-Cubed Capital, a private family office investment firm, since 2012. He was a managing partner from 1993 to 2011 of Sequoia Capital, a venture capital investment firm, where he had been an associate for the preceding four years. Previously, he held technical sales and marketing positions at Intel Corporation, and was a member of the technical staff at Hughes Aircraft Co. He served from 2006 to 2012 as a member of the board of directors of Alpha and Omega Semiconductor Limited. He is a Trustee of the University of Southern California and a part-time lecturer at the Stanford University Graduate School of Business. Mr. Stevens holds a BSEE degree, a BA degree in Economics and an MS degree in Computer Engineering from the University of Southern California and an MBA degree from Harvard Business School. | ||||||
• | Determining an appropriate schedule of Board meetings, seeking to ensure that the independent members of the Board can perform their duties responsibly while not interfering with the flow of our operations; |
• | Working with our CEO, seeking input from all directors, the CEO and other relevant management, as to the preparation of the agendas for Board and committee meetings; |
• | Advising the Board on a regular basis as to the quality, quantity and timeliness of the flow of information requested by the Board from our management with the goal of providing what is necessary for the independent members of the Board to effectively and responsibly perform their duties, and, although our management is responsible for the preparation of materials for the Board, the Lead Director may specifically request the inclusion of certain material; and |
• | Coordinating, developing the agenda for, and moderating executive sessions of the independent members of the Board, and acting as principal liaison between the independent members of the Board and the CEO on sensitive issues. |
AC | CC | NCGC | |
Members | Mark L. Perry (Chair) Michael G. McCaffery A. Brooke Seawell Mark A. Stevens | Robert K. Burgess (Chair) Tench Coxe Persis S. Drell Dawn Hudson Harvey C. Jones | William J. Miller (Chair) James C. Gaither Harvey C. Jones Mark A. Stevens |
Meetings in Fiscal 2016 | 9 | 6 | 3 |
Functions | • Oversees our corporate accounting and financial reporting process;• Oversees our internal audit function;• Determines and approves the engagement, retention and/or termination of the independent registered public accounting firm, or any new independent registered public accounting firm;• Evaluates the performance of and assesses the qualifications of our 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 results of the annual audit, the results of our quarterly financial statements and the effectiveness of internal control over financial reporting;• Reviews the financial statements to be included in our quarterly report on Form 10-Q and annual report on Form 10-K;• Reviews earnings press releases, as well as the substance of financial information and earnings guidance provided to analysts on our quarterly earnings calls;• 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. | • 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 CEO 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 CD&A and considers whether to recommend that it be included in the proxy statement and Form 10-K;• Administers our stock option and purchase plans, variable compensation plans and other similar programs; and• Assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. | • Identifies, reviews and evaluates candidates to serve as directors;• Recommends candidates for election to our Board;• Makes recommendations to the Board regarding committee membership and chairs;• Assesses the performance of the Board and its committees;• Reviews and assesses our corporate governance principles and practices;• Monitors changes in corporate governance practices and rules and regulations;• Approves related party transactions;• Establishes procedures for the receipt, retention and treatment of complaints we receive regarding violations of our Code of Conduct; and• Monitors the effectiveness of our anonymous tip process and corporate governance guidelines. |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) | Total ($) | ||||
Robert K. Burgess | 75,000 | 210,904 | 7,355 | (4) | 293,259 | |||
Tench Coxe | 75,000 | 210,904 | — | 285,904 | ||||
Persis S. Drell (2) | 71,875 | 486,989 | (3) | — | 558,864 | |||
James C. Gaither | 75,000 | 210,904 | 7,355 | (4) | 293,259 | |||
Dawn Hudson | 75,000 | 210,904 | — | 285,904 | ||||
Harvey C. Jones | 75,000 | 210,904 | — | 285,904 | ||||
Michael G. McCaffery (2) | 71,875 | 486,989 | (3) | — | 558,864 | |||
William J. Miller | 75,000 | 210,904 | — | 285,904 | ||||
Mark L. Perry | 75,000 | 210,904 | — | 285,904 | ||||
A. Brooke Seawell | 75,000 | 210,904 | — | 285,904 | ||||
Mark A. Stevens | 75,000 | 210,904 | — | 285,904 |
(1) | On May 21, 2015, each non-employee director received his or her 2015 Program RSU grant for 10,283 shares. Amounts shown in this column do not reflect dollar amounts actually received by the director. Instead, these amounts reflect the aggregate full grant date fair value calculated in accordance with FASB Accounting Standards Codification Topic 718, or FASB ASC Topic 718, for awards granted during Fiscal 2016. The assumptions used in the calculation of values of the awards are set forth under Note 2 to our consolidated financial statements titled “Stock-Based Compensation” in our Form 10-K. The grant date fair value per share for these awards as determined under FASB ASC Topic 718 was $20.51. |
(2) | Dr. Drell and Mr. McCaffery joined the Board in March 2015. |
(3) | On April 8, 2015, Dr. Drell and Mr. McCaffery each received: (a) in connection with their appointments, an initial RSU grant for 10,656 shares, with a grant date fair value per share as determined under FASB ASC Topic 718 of $21.03, and (b) as compensation for their service on the Board and committees through the date of the 2015 Meeting, an RSU grant for 2,361 shares, with a grant date fair value per share as determined under FASB ASC Topic 718 of $22.02. |
(4) | Represents payment of accrued dividend equivalents on vested RSUs granted in Fiscal 2014 where settlement had been deferred until Fiscal 2016. |
Name | RSUs | Stock Options | Name | RSUs | Stock Options | |||||||||
Robert K. Burgess | 10,283 | 66,041 | Michael G. McCaffery | 23,300 | — | |||||||||
Tench Coxe | 5,142 | 246,885 | William J. Miller | 22,491 | 167,820 | |||||||||
Persis S. Drell | 23,300 | — | Mark L. Perry | 5,142 | 35,000 | |||||||||
James C. Gaither | 22,491 | 122,269 | A. Brooke Seawell | 5,142 | 167,820 | |||||||||
Dawn Hudson | 17,493 | 105,177 | Mark A. Stevens | 5,142 | 120,942 | |||||||||
Harvey C. Jones | 22,491 | — |
Name of Beneficial Owner | Shares Owned | Shares Issuable Within 60 Days | Total Shares Beneficially Owned | Percent | ||||
NEOs: | ||||||||
Jen-Hsun Huang | 21,518,474 | (1) | 2,570,874 | 24,089,348 | 4.45% | |||
Colette M. Kress | 41,852 | 93,500 | 135,352 | * | ||||
Ajay K. Puri | 135,415 | 382,454 | 517,869 | * | ||||
David M. Shannon | 203,572 | (2) | 373,137 | 576,709 | * | |||
Debora Shoquist | 58,945 | 128,729 | 187,674 | * | ||||
Directors, not including CEO: | ||||||||
Robert K. Burgess | 45,796 | 66,041 | 111,837 | * | ||||
Tench Coxe | 1,559,874 | (3) | 246,885 | 1,806,759 | * | |||
Persis S. Drell | — | 2,361 | 2,361 | * | ||||
James C. Gaither | 175,791 | (4) | 134,477 | 310,268 | * | |||
Dawn Hudson | 6,104 | 96,843 | 102,947 | * | ||||
Harvey C. Jones | 824,490 | (5) | 12,208 | 836,698 | * | |||
Michael G. McCaffery | — | 2,361 | 2,361 | * | ||||
William J. Miller | 302,808 | (6) | 167,820 | 470,628 | * | |||
Mark L. Perry | 100,937 | (7) | 35,000 | 135,937 | * | |||
A. Brooke Seawell | 160,000 | (8) | 167,820 | 327,820 | * | |||
Mark A. Stevens | 1,873,905 | (9) | 120,942 | 1,994,847 | * | |||
Directors and executive officers as a group (16 persons) | 27,007,963 | (10) | 4,601,452 | 31,609,415 | 5.82% | |||
5% Stockholders: | ||||||||
FMR LLC | 80,699,998 | (11) | — | 80,699,998 | 14.99% | |||
The Vanguard Group, Inc. | 45,325,807 | (12) | — | 45,325,807 | 8.42% | |||
BlackRock, Inc. | 36,216,630 | (13) | — | 36,216,630 | 6.73% | |||
PRIMECAP Management Company | 29,067,675 | (14) | — | 29,067,675 | 5.40% |
(1) | Includes (i) 19,222,520 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; (ii) 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; and (iii) 557,000 shares of common stock held by The Huang 2012 Irrevocable Trust, of which Mr. Huang and his wife are co-trustees. By virtue of their status as co-trustees of the Huang Trust and The Huang 2012 Irrevocable Trust, each of Mr. Huang and his wife may be deemed to have shared beneficial ownership of the shares referenced in (i) - (iii), and to have shared power to vote or to direct the vote or to dispose of or direct the disposition of such shares. |
(2) | Includes 110,800 shares of common stock held by the Shannon Revocable Trust, of which Mr. Shannon and his wife are co-trustees and of which Mr. Shannon exercises shared voting and investment power. |
(3) | Includes (i) 171,312 shares of common stock held in a retirement trust over which Mr. Coxe exercises sole voting and investment power, and (ii) 1,335,421 shares of common stock held in the Coxe Revocable 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 in the retirement trust and by the Coxe Revocable Trust, except to the extent of his pecuniary interest therein. |
(4) | Includes 158,484 shares of common stock held by the James C. Gaither Revocable Trust U/A/D 9/28/2000, of which Mr. Gaither is the trustee and of which Mr. Gaither exercises sole voting and investment power. |
(5) | Represents (i) 758,970 shares of common stock held in the H.C. Jones Living Trust, of which Mr. Jones is trustee and of which Mr. Jones exercises sole voting and investment power, and (ii) (a) 21,840 shares of common stock owned by the Gregory C. Jones Trust, of which Mr. Jones is co-trustee and of which Mr. Jones exercises shared voting and investment power, (b) 21,840 shares of common stock owned by the Carolyn E. Jones Trust, of which Mr. Jones is a co-trustee and of which Mr. Jones exercises shared voting and investment power and (c) 21,840 shares of common stock owned by the Harvey C. Jones III Trust, of which Mr. Jones is a co-trustee and of which Mr. Jones exercises shared voting and investment power, collectively, the Jones Children Trusts. Mr. Jones disclaims beneficial ownership of the 65,520 shares of common stock held by the Jones Children Trusts, except to the extent of his pecuniary interest therein. |
(6) | Represents shares of common stock held by the Millbor Family Trust, of which Mr. Miller and his wife are co-trustees and of which Mr. Miller exercises shared voting and investment power. |
(7) | Includes 50,000 shares of common stock held by The Perry & Pena Family Trust, of which Mr. Perry and his wife are co-trustees and of which Mr. Perry exercises shared voting and investment power. |
(8) | Represents shares of common stock held by the Rosemary & A. Brooke Seawell Revocable Trust U/A dated 1/20/2009, of which Mr. Seawell and his wife are co-trustees and of which Mr. Seawell exercises shared voting and investment power. |
(9) | Includes 1,854,007 shares of common stock 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. |
(10) | Includes shares owned by all directors and executive officers listed in this beneficial ownership table. |
(11) | This information is based solely on a Schedule 13G/A, dated February 12, 2016, filed with the SEC on February 12, 2016 by FMR LLC, or FMR, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that FMR has sole voting power with respect to 12,531,485 shares and sole dispositive power with respect to 80,699,998 shares. FMR is located at 245 Summer Street, Boston, Massachusetts 02210. |
(12) | This information is based solely on a Schedule 13G/A, dated February 10, 2016, filed with the SEC on February 11, 2016 by The Vanguard Group, Inc., or Vanguard, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that Vanguard has sole voting power with respect to 963,412 shares and sole dispositive power with respect to 44,305,777 shares. Vanguard is located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
(13) | This information is based solely on a Schedule 13G/A, dated January 22, 2016, filed with the SEC on February 10, 2016 by BlackRock, Inc., or BlackRock, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that BlackRock has sole voting power with respect to 30,914,726 shares and sole dispositive power with respect to 36,206,711 shares. BlackRock is located at 55 East 52nd Street, New York, New York 10055. |
(14) | This information is based solely on a Schedule 13G/A, dated February 11, 2016, filed with the SEC on February 12, 2016 by PRIMECAP Management Company, or PRIMECAP, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that PRIMECAP has sole voting power with respect to 6,044,360 shares and sole dispositive power with respect to 29,067,675 shares. PRIMECAP is located at 225 South Lake Avenue, #400, Pasadena, California 91101. |
Jen-Hsun Huang | President and Chief Executive Officer |
Colette M. Kress | Executive Vice President and Chief Financial Officer |
Ajay K. Puri | Executive Vice President, Worldwide Field Operations |
David M. Shannon | Executive Vice President, Chief Administrative Officer and Secretary |
Debora Shoquist | Executive Vice President, Operations |
Table of Contents to Compensation Discussion and Analysis | ||||
Page | Page | |||
EXECUTIVE SUMMARY Executive Compensation Goals Consistent with our goal of attracting, motivating and retaining a high-caliber executive team, our executive compensation program is designed to pay for performance. We utilize compensation elements that meaningfully align our NEOs’ interests with those of our stockholders to create long-term value. As such, our NEO pay is heavily weighted toward “at-risk,” performance-based compensation, in the form of equity awards and variable cash that is only earned if we achieve multiple corporate financial metrics. | |
Fiscal 2016 Enhancements We value stockholder feedback and maintain an annual outreach program to ensure that our stockholders view our pay practices as well-structured. Despite strong stockholder support of our executive compensation program in recent years, including over 98% “say-on-pay” approval at our 2015 Meeting, our CC enhanced Fiscal 2016 executive compensation in response to stockholder feedback to further strengthen the link between our performance and our NEOs’ pay: | |
ü | MY PSUs with a relative goal: introduced PSUs with a 3-year performance period based on our TSR relative to the S&P 500 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and structured a meaningful portion of our CEO’s Fiscal 2016 equity award in the form of these 3-year PSUs |
ü | Separate performance metrics: assigned separate, distinct metrics for each component of our compensation where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as the goal for our Variable Cash Plan and for our PSUs) |
ü | Greater proportion of "at-risk," performance-based compensation: increased average “at-risk,” performance-based compensation as a percentage of total target pay |
Below is a summary of the components of our Fiscal 2016 executive compensation program where the amount of the award is subject to achievement of performance criteria, and the percentage of NEO pay assigned to each one: | |
• | Attracting, motivating and retaining a high-caliber executive team to provide leadership for our success in a dynamic, competitive market–We design our executive compensation program to position NVIDIA competitively among the companies against which we recruit and compete for talent. Our CC does not use a strict weighting system among compensation elements for each NEO, but instead considers the total compensation necessary to attract, motivate and retain these individuals. |
• | Paying for performance–Our NEOs’ compensation is heavily weighted toward “at-risk” compensation in the form of equity awards and variable cash compensation that are only earned upon achievement of varied, pre-determined financial and operating performance metrics. |
• | Aligning our NEOs’ interests with those of our stockholders to create long-term value–Our CC believes that a mix of cash and equity incentives is appropriate, and uses cash to reward NEOs for near-term results that we believe drive long-term stockholder value, and equity to further motivate NEOs to increase and sustain stockholder value in the longer term. Equity compensation aligns the interests of stockholders and NEOs by creating a strong, direct link between the ultimate value of the compensation that NEOs realize and stock price appreciation. Our CC believes that if our NEOs own shares of our common stock with values that are significant to them, they will have an incentive to act to maximize longer-term stockholder value instead of short-term gain. Therefore, equity compensation comprises a significant portion of the total target value of the annual compensation opportunity for each of our NEOs and our Corporate Governance Policies require our NEOs to hold an equity interest in NVIDIA equivalent to 1-6x their respective base salaries. |
What We Do | What We Don’t Do | |||
ü | Heavily weight our NEO compensation toward “at-risk,” performance-based compensation | û | Have employment contracts or severance agreements with NEOs providing for specific terms of employment or severance benefits, respectively | |
ü | Use multi-year vesting for all executive officer equity awards | û | Provide change-in-control benefits to our executive officers | |
ü | Engage with our stockholders and corporate governance groups to discuss our executive compensation program and make changes to our pay practices based on their feedback | û | Provide for automatic equity vesting upon a change-in-control except for the provisions in our equity plans that are applicable to all of our employees if an acquiring company does not assume or substitute our outstanding stock awards | |
ü | Utilize separate, distinct metrics for the “at-risk” components of our compensation where the amount of the award is subject to achievement of performance criteria | û | Offer our NEOs supplemental retirement benefits or perquisites that are not available to all NVIDIA employees | |
ü | Grant PSU awards with a multi-year performance metric | û | Provide tax gross-ups | |
ü | Structure our executive compensation program to minimize inappropriate risk-taking | û | Allow for the repricing of stock options without stockholder approval | |
ü | Cap SY PSU, MY PSU and Variable Cash Plan payouts | û | Use discretion in performance incentive award determination | |
ü | Select peer companies that we compete with for executive talent, and have a similar business and are of similar size as us, and review their pay practices | û | Pay dividends or dividend equivalents on unearned shares | |
ü | Solicit advice from the CC’s independent compensation consultant | |||
ü | Rely on long-standing, consistently-applied practices on the timing of equity grants | |||
ü | Have meaningful stock ownership guidelines for NEOs | |||
ü | Enforce “no-hedging” and “no-pledging” policies | |||
ü | Maintain a “clawback” policy for the recovery of performance-based cash and equity compensation | |||
ü | Make internal comparisons among executive officers when determining compensation | |||
ü | Have three or more independent non-employee directors serve on the CC |
• Exequity does not provide any services directly to NVIDIA (although NVIDIA does pay the cost of Exequity’s services on behalf of the CC)• The amount of fees paid to Exequity by NVIDIA as a percentage of Exequity’s total revenue• Exequity’s policies and procedures that are designed to prevent conflicts of interest | • Any business or personal relationship of Exequity or its individual compensation advisors with an NEO• Any business or personal relationship of the individual compensation advisors with any member of our CC• Any NVIDIA stock owned by Exequity or its individual compensation advisors |
• | With which we generally think we compete for executive talent; |
• | That have an established business, market presence, and complexity similar to us; and |
• | That are of similar size to us as measured by revenue and market capitalizations (at roughly 0.5-2.0x NVIDIA). |
Activision Blizzard | Analog Devices, Inc. | Electronic Arts, Inc. | Micron Technology, Inc. |
Adobe Systems, Incorporated | Avago Technologies | Intuit, Inc. | Network Appliance, Inc. |
Advanced Micro Devices | Autodesk, Inc. | Juniper Networks, Inc. | SanDisk Corporation |
Agilent Technologies, Inc. | Broadcom Corporation | KLA-Tencor Corporation | Symantec Corporation |
Altera Corporation | Citrix Systems Inc. | Marvell Technology Group | Xilinx |
Factors Our CC Considers | ||||
ü | The need to attract new talent to our executive team and retain existing talent in a highly competitive industry | ü | The need to motivate NEOs to address particular business challenges that are unique to any given year | |
ü | Feedback from our stockholders regarding our executive pay practices | ü | A review of an NEO’s current total compensation | |
ü | An NEO’s past performance and expected contribution to future results | ü | Our CEO’s recommendations (other than for himself), because of his direct knowledge of the results delivered and leadership demonstrated by each NEO | |
ü | The Company’s performance and forecasted financial results | ü | The independent judgment of the members of our CC | |
ü | The trends in compensation paid to similarly situated officers at our peer companies | ü | The total compensation cost and stockholder dilution from executive compensation actions, in order to help us maintain a responsible cost structure for our compensation programs* | |
ü | The 25th, 50th and 75th percentiles of compensation paid to similarly situated executives at our peer companies based on the data gathered from the Radford Global Technology Survey | ü | The philosophy that the total compensation opportunity and the percentage of total compensation “at risk” should increase with the level of responsibility | |
ü | Internal pay equity–an NEO’s responsibilities, the scope of each NEO’s position and the complexity of the department or function the NEO manages, relative to the NEO’s internal peers, compared to similarly situated executives |
“Fixed” Compensation | “At-Risk” Compensation | ||||
Base Salary | Variable Cash | SY PSUs | MY PSUs | RSUs (1) | |
Form | Cash | Cash | Equity | Equity | Equity |
Who Receives | All NEOs | All NEOs | All NEOs | All NEOs | All NEOs except CEO |
When Granted or Determined | Annually in Fiscal Q1 | Annually in Fiscal Q1 | On the 3rd Wednesday in March | On the 3rd Wednesday in March | On the 3rd Wednesdays in March and September |
When Paid or Earned | Paid retroactively to start of fiscal year, via biweekly payroll | Earned after fiscal year end and paid the following April, only if performance threshold achieved | Shares eligible to vest determined after fiscal year end based on performance metric achieved | Shares eligible to vest determined after 3rd fiscal year end based on performance metric achieved | On each vesting date, subject to the NEO’s continued service on each such date |
Performance Measure | N/A | Revenue (determines payout) | Non-GAAP Operating Income (determines number of shares eligible to vest) | TSR relative to the S&P 500 (determines number of shares eligible to vest) | N/A |
Performance Period | N/A | 1 year | 1 year | 3 years | N/A |
Vesting | N/A | N/A | If performance threshold achieved, 25% on approximately the 1-year anniversary of the date of grant; 12.5% every six months thereafter | If performance threshold achieved, 100% on approximately the 3-year anniversary of the date of grant | 25% on approximately the 1-year anniversary of the date of grant; 12.5% every six months thereafter |
Timeframe Emphasized | Annual | Annual | Long-term because of 4-year vesting schedule | Long-term because of 3-year performance period | Long-term because of 4-year vesting schedule |
Maximum Amount that can be Earned | N/A | 200% of Variable Compensation Target | For our CEO, 150% of his Target Compensation Plan SY PSU amount For our other NEOs, 200% of his or her Target Compensation Plan SY PSU amount Ultimate value delivered depends on stock price on date earned shares vest | For our CEO, 150% of his Target Compensation Plan MY PSU amount For our other NEOs, 200% of his or her Target Compensation Plan MY PSU amount Ultimate value delivered depends on stock price on date earned shares vest | 100% of grant Ultimate value delivered depends on stock price on date shares vest |
• | MY PSUs with a relative goal: introduced PSUs where the number of shares which are eligible to vest is based on the relative performance of our TSR, measured by percentile rank, compared to that of companies in the S&P 500 over a 3-year period ending on the last day of our Fiscal 2018 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and emphasized these PSUs most for our CEO |
• | Separate performance metrics: assigned separate, distinct metrics for each component of our compensation–Variable Cash Plan, SY PSUs and MY PSUs–where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as the goal for our Variable Cash Plan and for our PSUs) |
• | Greater proportion of “at-risk,” performance-based compensation: increased average “at-risk,” performance-based compensation as a percentage of total target pay from 70% in Fiscal 2015 to 75% in Fiscal 2016 for our NEOs (other than our CEO) and slightly increased the percentage from 88% in Fiscal 2015 to 89% in Fiscal 2016 for our CEO (whose Fiscal 2016 equity award remains entirely comprised of PSUs) |
(1) | Excludes a one-time sign-on bonus and a one-time anniversary bonus paid to Ms. Kress pursuant to her 2013 offer letter. The sign-on bonus was paid in Fiscal 2014, and earned in Fiscal 2015 when Ms. Kress reached her anniversary of employment with us. The anniversary bonus was paid in Fiscal 2015, and earned in Fiscal 2016 when Ms. Kress reached her second anniversary of employment. |
(2) | Represents the cash payable under the Variable Cash Plan upon achievement of Target Compensation Plan performance on the Non-GAAP Operating Income goal for Fiscal 2015 and on the revenue goal for Fiscal 2016. |
(3) | Represents the aggregate fair value of the target amount of the equity awards the CC intended to deliver at the time the awards were approved by the CC upon achievement of Target Compensation Plan performance on the Non-GAAP Operating Income goal for SY PSUs and on the relative TSR goal for MY PSUs. |
(4) | Represents the aggregate fair value of the target amount of the equity awards the CC intended to deliver at the time the awards were approved by the CC. Our CC considers RSUs to be inherently “at-risk” pay that is performance-based because their value is dependent upon our stock price, which is a financial performance measure, over a 4-year vesting period. |
Component of Compensation | Performance Metric for | Metric Determines | CC’s Rationale for Selected Fiscal 2016 Performance Metric | |
Fiscal 2015 | Fiscal 2016 | |||
Variable Cash Plan | Annual Non-GAAP Operating Income | Annual revenue | Cash earned under Variable Cash Plan | • Key indicator of our annual performance which drives value and contributes to long-term success of the Company• Our executive team focuses on growth in the Company's specialized markets where our technologies did not previously exist; revenue growth in these new markets is the best predictor of the Company's future success• Distinct, separate metric from Non-GAAP Operating Income, which was used as the performance metric for our Fiscal 2015 SY PSUs |
SY PSUs | Annual Non-GAAP Operating Income | Same as Fiscal 2015 | If, and extent to which, SY PSUs become eligible to vest | • Key indicator of our annual performance which drives value and contributes to long-term success of the Company• Reflects both our annual revenue generation and effective management of operating expenses• To ensure long-term performance emphasis, structured to vest over a 4-year period |
MY PSUs | Not part of compensation program | Relative TSR compared to the S&P 500 over 3 years | If, and extent to which, MY PSUs become eligible to vest | • Aligns directly with stockholder value creation over a 3-year period• Provides direct comparison of our stock price performance (including dividends) against an index that represents a broader capital market with which we compete• Relative TSR is both objectively determinable and readily available, such that our performance can be evaluated by a third party |
Objectives of Fiscal 2016 Compensation Program | |
ü | Demonstrate our commitment to stockholder engagement and consideration by implementing changes to our executive compensation program based on their feedback |
ü | Increase focus on “at-risk” pay, particularly long-term PSUs that only become eligible to vest based on achievement of specific performance goals |
ü | Motivate our NEOs to achieve maximum results by giving them increased opportunity for reward upon financial, operational and stock price performance achievements |
ü | Achieve greater alignment of our NEOs’ interests with those of our stockholders with the introduction of MY PSUs that only become eligible to vest based on our relative multi-year TSR performance against a widely-recognized benchmark |
ü | Use different performance metrics for variable cash compensation, SY PSUs and MY PSUs to reward our NEOs separately for each performance achievement goal |
ü | Maintain consistent pay practices relative to our peers by granting PSUs and RSUs, which helps us manage dilution and retain our NEOs |
ü | Provide effective retention incentive award levels by granting equity to our NEOs in the form of RSUs and SY PSUs that are subject to a 4-year vesting schedule and MY PSUs that cliff vest after 3 years |
ü | Reinforce our culture of stock ownership by increasing the value of equity granted to our NEOs |
Variable Cash Plan | SY PSUs | MY PSUs | |||||
Performance Metric | Revenue | Non-GAAP Operating Income | TSR relative to the S&P 500 | ||||
Performance Timeframe | 1 year | 1 year | 3 years | ||||
Threshold Goal (25% payout) (1)(2) | $4,500 million | $724 million | 25th percentile | ||||
Target Compensation Plan Goal (100% payout) (2) | $4,750 million | $872 million | 50th percentile | ||||
Stretch Operating Plan Goal (150% for CEO/ 200% payout for other NEOs) (2)(3) | $5,280 million | $1,100 million | 75th percentile | ||||
CC’s Rationale for Goals | • Stretch Operating Plan goal a significant achievement and only possible with strong market factors and a very high level of executive management execution and corporate performance• Target Compensation Plan goals: • Attainable with significant effort and success in execution, and was not certain | ||||||
• Included budgeted investments in future growth businesses and revenue growth that took into account both macroeconomic conditions and reasonable but challenging growth estimates for our ongoing and new businesses | • Same as for Variable Cash Plan (see left), but also included gross margin growth | ||||||
• Set higher than Fiscal 2015 Stretch Operating Plan goal of $825 million to recognize strong growth performance | |||||||
• Set higher than Fiscal 2015 actual performance of $4,682 million |
(1) | Achievement less than the Threshold goal would result in no payout. |
(2) | For achievement between Threshold and Target Compensation Plan and between Target Compensation Plan and Stretch Operating Plan, payouts would be determined using straight-line interpolation. |
(3) | Our CEO’s SY PSU and MY PSU payouts were capped at 150% of Target Compensation Plan to help manage internal pay equity. |
(1) | For achievement of Non-GAAP Operating Income between $724 million and $872 million, the number of SY PSUs eligible to vest would be equal to an amount linearly interpolated between the Threshold and Target Compensation Plan amounts. For achievement of Non-GAAP Operating Income between $872 million and $1,100 million, the number of SY PSUs eligible to vest would be equal to an amount linearly interpolated between the Target Compensation Plan and Stretch Operating Plan amounts. |
(1) | For achievement of revenue between $4,500 million and $4,750 million, the payout would be equal to an amount linearly interpolated between the Threshold and Target Compensation Plan amounts. For achievement of revenue between $4,750 million and $5,280 million, the payout would be equal to an amount linearly interpolated between the Target Compensation Plan and Stretch Operating Plan amounts. |
Fiscal 2015 Pay ($) | Fiscal 2016 Pay ($) | Change | Fiscal 2016 Pay Relative to Peer Group (percentile) | Fiscal 2016 Shares | ||||||||
Threshold | Target Compensation Plan | Stretch Operating Plan | ||||||||||
Target Cash Compensation | 1,700,000 | 2,000,000 | up 18% | |||||||||
Base Salary | 1,000,000 | 1,000,000 | ||||||||||
Target Variable Cash | 700,000 | 1,000,000 | (1) | |||||||||
Target Equity Compensation | 6,300,000 | 7,000,000 | up 11% | |||||||||
SY PSUs | 6,300,000 | 4,600,000 | 55,000 | 220,000 | 330,000 | (2) (3) | ||||||
MY PSUs | — | 2,400,000 | 27,500 | 110,000 | 165,000 | (2) | ||||||
Target Total Compensation | 8,000,000 | 9,000,000 | up 13% | 50th | (4) |
(1) | Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Huang earned an award of $1,490,566. |
(2) | Stretch Operating Plan payout capped at 150% of Target Compensation Plan to help manage internal pay equity. |
(3) | Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. |
(4) | Market position of target total compensation was set at the median as a result of the CC’s objective to balance internal pay equity with other NEOs and external market competitiveness with other peer CEOs. Mr. Huang’s Fiscal 2016 target cash compensation reflected an increase to bring it closer to market practices for our peer companies’ CEOs, while still remaining at the lower end of the market (25th percentile), which the CC determined was appropriate to emphasize performance-based equity compensation in particular for Mr. Huang due to his responsibility as CEO. |
Fiscal 2015 Pay ($) | Fiscal 2016 Pay ($) | Change | Fiscal 2016 Pay Relative to Peer Group (percentile) | Fiscal 2016 Shares | ||||||||
Threshold | Target Compensation Plan | Stretch Operating Plan | ||||||||||
Target Cash Compensation (1) | 1,050,000 | 1,050,000 | — | |||||||||
Base Salary | 775,000 | 775,000 | ||||||||||
Target Variable Cash | 275,000 | 275,000 | (2) | |||||||||
Target Equity Compensation | 2,097,430 | 2,392,335 | up 14% | |||||||||
SY PSUs | 1,207,450 | 1,358,610 | 17,250 | 69,000 | 138,000 | (3) | ||||||
MY PSUs | — | 147,675 | 1,875 | 7,500 | 15,000 | |||||||
RSUs | 889,980 | 886,050 | (4) | |||||||||
Target Total Compensation | 3,147,430 | 3,442,335 | up 9% | 65th | (5) |
(1) | Target cash compensation excludes a sign-on bonus of $1.5 million and an anniversary bonus of $1.0 million earned in Fiscal 2015 and Fiscal 2016, respectively, pursuant to Ms. Kress’ offer letter. The CC determined that these special bonuses were necessary to attract Ms. Kress, in consideration of her compensation opportunity at her prior employer. |
(2) | Based on our revenue achievement of 149% of Target Compensation Plan, Ms. Kress earned an award of $409,906. |
(3) | Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. |
(4) | In Fiscal 2016, Ms. Kress was granted a total of 45,000 RSUs. |
(5) | The target total compensation increase for Fiscal 2016 was structured entirely in the form of an increase to Ms. Kress’ performance-based equity. Ms. Kress’ overall pay mix is weighted more heavily towards performance-based equity than target cash, to further align her with stockholders, to establish long-term incentives and to provide retention value as she joined the company in 2013. |
Fiscal 2015 Pay ($) | Fiscal 2016 Pay ($) | Change | Fiscal 2016 Pay Relative to Peer Group (percentile) | Fiscal 2016 Shares | ||||||||
Threshold | Target Compensation Plan | Stretch Operating Plan | ||||||||||
Target Cash Compensation | 1,250,000 | 1,350,000 | up 8% | |||||||||
Base Salary | 875,000 | 875,000 | ||||||||||
Target Variable Cash | 375,000 | 475,000 | (1) | |||||||||
Target Equity Compensation | 1,611,725 | 2,549,855 | up 58% | |||||||||
SY PSUs | 1,012,700 | 1,417,680 | 18,000 | 72,000 | 144,000 | (2) | ||||||
MY PSUs | — | 147,675 | 1,875 | 7,500 | 15,000 | |||||||
RSUs | 599,025 | 984,500 | (3) | |||||||||
Target Total Compensation | 2,861,725 | 3,899,855 | up 36% | 90th | (4) |
(1) | Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Puri earned an award of $708,019. |
(2) | Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. |
(3) | In Fiscal 2016, Mr. Puri was granted a total of 50,000 RSUs. |
(4) | Total target total compensation was set at the higher end of the market due to responsibility and scope increase as head of worldwide field operations. The target total compensation increase for Fiscal 2016 was structured primarily in the form of performance-based equity, to further align Mr. Puri’s interests with stockholders and long-term company performance. |
Fiscal 2015 Pay ($) | Fiscal 2016 Pay ($) | Change | Fiscal 2016 Pay Relative to Peer Group (percentile) | Fiscal 2016 Shares | ||||||||
Threshold | Target Compensation Plan | Stretch Operating Plan | ||||||||||
Target Cash Compensation | 1,000,000 | 1,000,000 | — | |||||||||
Base Salary | 800,000 | 800,000 | ||||||||||
Target Variable Cash | 200,000 | 200,000 | (1) | |||||||||
Target Equity Compensation | 1,348,630 | 1,506,285 | up 12% | |||||||||
SY PSUs | 903,640 | 984,500 | 12,500 | 50,000 | 100,000 | (2) | ||||||
MY PSUs | — | 78,760 | 1,000 | 4,000 | 8,000 | |||||||
RSUs | 444,990 | 443,025 | (3) | |||||||||
Target Total Compensation | 2,348,630 | 2,506,285 | up 7% | 75th | (4) |
(1) | Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Shannon earned an award of $298,113. |
(2) | Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. |
(3) | In Fiscal 2016, Mr. Shannon was granted a total of 22,500 RSUs. |
(4) | Total target compensation was set at the higher end of the market due to responsibility and scope increase as head of human resources, legal and intellectual property licensing. The target total compensation increase for Fiscal 2016 was structured entirely in the form of performance-based equity, to further align Mr. Shannon’s interests with stockholders and long-term company performance. |
Fiscal 2015 Pay ($) | Fiscal 2016 Pay ($) | Change | Fiscal 2016 Pay Relative to Peer Group (percentile) | Fiscal 2016 Shares | ||||||||
Threshold | Target Compensation Plan | Stretch Operating Plan | ||||||||||
Target Cash Compensation | 850,000 | 850,000 | — | |||||||||
Base Salary | 700,000 | 700,000 | ||||||||||
Target Variable Cash | 150,000 | 150,000 | (1) | |||||||||
Target Equity Compensation | 1,409,185 | 1,752,410 | up 24% | |||||||||
SY PSUs | 810,160 | 984,500 | 12,500 | 50,000 | 100,000 | (2) | ||||||
MY PSUs | — | 118,140 | 1,500 | 6,000 | 12,000 | |||||||
RSUs | 599,025 | 649,770 | (3) | |||||||||
Target Total Compensation | 2,259,185 | 2,602,410 | up 15% | > 75th | (4) |
(1) | Based on our revenue achievement of 149% of Target Compensation Plan, Ms. Shoquist earned an award of $223,585. |
(2) | Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. |
(3) | In Fiscal 2016, Ms. Shoquist was granted a total of 33,000 RSUs. |
(4) | Total target compensation was set at the higher end of the market due to responsibility and scope increase as head of chips and systems operations, facilities and information technology. The target total compensation increase for Fiscal 2016 was structured primarily in the form of performance-based equity, to further align Ms. Shoquist’s interests with stockholders and long-term company performance. |
• | Our CEO and CFO will be required to disgorge the net after-tax amount of that portion of the variable compensation payment that would not have been payable if the original interim or annual financial statements reflected the Restatement; and |
• | The Board or the committee of independent directors may require any other officer or employee to repay all (or a portion of) the variable compensation payment that would not have been payable if the original interim or annual financial statements reflected the Restatement, as determined by the Board or such committee in its sole discretion. In using its discretion, the Board or the independent committee may consider whether such person was involved in the preparation of our financial statements or otherwise caused the need for the Restatement and may, to the extent permitted by applicable law, recoup amounts by (1) requiring partial or full repayment by such person of any variable or incentive compensation or any gains realized on the exercise of stock options or on the open-market sale of vested shares, (2) canceling (in full or in part) any outstanding equity awards held by such person and/or (3) adjusting the future compensation of such person. |
Compensation Design Features that Guard Against Excessive Risk-Taking | |
ü | Our compensation program encourages our employees to remain focused on both our short-term and long-term goals |
ü | We design our variable cash and PSU compensation programs for executives so that payouts are based on achievement of corporate performance targets, and we cap the potential award payout |
ü | We have internal controls over our financial accounting and reporting which is used to measure and determine the eligible compensation award under our plan |
ü | Financial plan target goals and final awards under the Variable Cash Plan and of SY PSUs are approved by the CC and consistent with the annual operating plan approved by the full board each year |
ü | MY PSUs are designed with a relative goal |
ü | We have a compensation recovery policy applicable to all employees that allows NVIDIA to recover compensation paid in situations of fraud or material financial misconduct |
ü | All executive officer equity awards have multi-year vesting |
ü | We have stock ownership guidelines that we believe are reasonable and are designed to align our executive officers’ interests with those of our stockholders |
ü | We enforce a “no-hedging” policy and a “no-pledging” policy involving our common stock which prevents our employees from insulating themselves from the effects of NVIDIA stock price performance |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) | Total ($) | |||||||||
Jen-Hsun Huang | 2016 | 1,018,941 | — | 7,456,900 | — | 1,490,566 | 4,694 | (3) | 9,971,101 | ||||||||
President and Chief Executive Officer | 2015 | 998,418 | — | 6,896,000 | — | 1,400,000 | 2,622 | (4) | 9,297,040 | ||||||||
2014 | 837,450 | — | 2,111,400 | 1,657,750 | 1,405,030 | 13,622 | (5) | 6,025,252 | |||||||||
Colette M. Kress (6) | 2016 | 789,680 | 1,000,000 | (7) | 2,692,935 | — | 409,906 | 3,710 | (9) | 4,896,231 | |||||||
Executive Vice President and Chief Financial Officer | 2015 | 773,774 | 1,500,000 | (8) | 2,247,920 | — | 550,000 | 3,210 | (9) | 5,074,904 | |||||||
2014 | 158,945 | — | 3,242,800 | — | 190,668 | 428 | (4) | 3,592,841 | |||||||||
Ajay K. Puri | 2016 | 891,574 | — | 2,865,555 | — | 708,019 | 10,096 | (10) | 4,475,244 | ||||||||
Executive Vice President, Worldwide Field Operations | 2015 | 873,616 | — | 1,734,325 | — | 750,000 | 9,024 | (9) | 3,366,965 | ||||||||
2014 | 498,479 | — | 745,200 | 321,080 | 815,300 | 6,402 | (9) | 2,386,461 | |||||||||
David M. Shannon | 2016 | 815,153 | — | 1,688,220 | — | 298,113 | 9,656 | (9) | 2,811,142 | ||||||||
Executive Vice President, Chief Administrative Officer and Secretary | 2015 | 798,735 | — | 1,455,830 | — | 400,000 | 6,511 | (9) | 2,661,076 | ||||||||
2014 | 498,371 | — | 645,300 | 277,804 | 530,200 | 6,402 | (9) | 1,958,077 | |||||||||
Debora Shoquist | 2016 | 713,259 | — | 1,977,660 | — | 223,585 | 9,524 | (9) | 2,924,028 | ||||||||
Executive Vice President, Operations | 2015 | 698,893 | — | 1,510,205 | — | 300,000 | 9,024 | (9) | 2,518,122 | ||||||||
2014 | 498,371 | — | 558,900 | 240,810 | 318,120 | 6,402 | (9) | 1,622,603 |
(1) | Amounts shown in this column do not reflect dollar amounts actually received by the NEO. Instead, these amounts reflect the aggregate full grant date fair value calculated in accordance with FASB ASC Topic 718 for the respective fiscal year. The assumptions used in the calculation of values of the awards are set forth under Note 2 to our consolidated financial statements titled “Stock-Based Compensation” in our Form 10-K. With regard to the NEOs’ stock awards with performance-based vesting conditions, the reported grant date fair value assumes the probable outcome of the conditions at Target Compensation Plan, determined in accordance with applicable accounting standards. Based on the performance that was actually achieved for SY PSUs in Fiscal 2016, the grant date fair values of all stock awards would be $9,826,300 for Mr. Huang, $4,179,195 for Ms. Kress, $4,416,435 for Mr. Puri, $2,765,220 for Mr. Shannon and $3,054,660 for Ms. Shoquist. |
(2) | As applicable, reflects amounts earned in Fiscal 2016, 2015 and 2014 and paid in March or April of each respective year pursuant to our Variable Cash Plan for each respective year. For further information please see our Compensation Discussion and Analysis above. |
(3) | Represents a contribution to a health savings account and imputed income from life insurance coverage. These benefits are available to all eligible NVIDIA employees. |
(4) | Represents imputed income from life insurance coverage. This benefit is available to all eligible NVIDIA employees. |
(5) | Represents award for the filing of patents of which Mr. Huang is a named inventor with the U.S. Patent and Trademark Office and imputed income from life insurance coverage. These benefits are available to all eligible NVIDIA employees. |
(6) | Ms. Kress joined NVIDIA as our Executive Vice President and Chief Financial Officer in September 2013. |
(7) | Represents an anniversary bonus paid in Fiscal 2015 that was earned in Fiscal 2016. |
(8) | Represents a sign-on bonus paid in Fiscal 2014 that was earned in Fiscal 2015. |
(9) | Represents a match of contributions to our 401(k) savings plan and imputed income from life insurance coverage, which we provide to all eligible employees. |
(10) | Represents a match of contributions to our 401(k) savings plan, a contribution to a health savings account and imputed income from life insurance coverage, which we provide to all eligible employees. |
Name | Grant Date | Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($) (2) | |||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||
Jen-Hsun Huang | 3/18/15 | 3/16/15 | (3) | — | 55,000 | 220,000 | 330,000 | — | 4,738,800 | (4) | |||||||||||
3/18/15 | 3/16/15 | (5) | — | 27,500 | 110,000 | 165,000 | — | 2,178,100 | (6) | ||||||||||||
3/16/15 | 3/16/15 | 250,000 | 1,000,000 | 2,000,000 | — | — | — | ||||||||||||||
Colette M. Kress | 3/18/15 | 3/16/15 | (3) | — | 17,250 | 69,000 | 138,000 | — | 1,486,260 | (4) | |||||||||||
3/18/15 | 3/16/15 | (5) | — | 1,875 | 7,500 | 15,000 | — | 236,475 | (6) | ||||||||||||
3/18/15 | 3/16/15 | — | — | 22,500 | (7) | 484,650 | |||||||||||||||
9/16/15 | 8/19/15 | — | — | 22,500 | (8) | 485,550 | |||||||||||||||
3/16/15 | 3/16/15 | 68,750 | 275,000 | 550,000 | — | — | — | ||||||||||||||
Ajay K. Puri | 3/18/15 | 3/16/15 | (3) | — | 18,000 | 72,000 | 144,000 | — | 1,550,880 | (4) | |||||||||||
3/18/15 | 3/16/15 | (5) | — | 1,875 | 7,500 | 15,000 | — | 236,475 | (6) | ||||||||||||
3/18/15 | 3/16/15 | — | — | 20,000 | (7) | 430,800 | |||||||||||||||
9/16/15 | 8/19/15 | — | — | 30,000 | (8) | 647,400 | |||||||||||||||
3/16/15 |