NVIDIA 2004 Annual Report Download - page 51

In February 1998, our Board of Directors adopted the 1998 Non−Employee Directors’ Stock Option Plan, or the Directors Plan, to
provide for the automatic grant of non−qualified options to purchase shares of our common stock to directors of us who are not
employees or consultants of us or of an affiliate of us. The Directors Plan was amended on May 22, 2002.
Under the amended Directors Plan, each non−employee director who is elected or appointed to our 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, or Initial Grant.
Previously, such a director was entitled to a grant of 200,000 shares, vesting monthly over a four−year period.
Under the amended Directors Plan, on August 1, 2002, each non−employee director was automatically granted an option to purchase
75,000 shares, which will vest 33% on the first anniversary of the grant date, with the remaining 66% vesting quarterly over the
second and third years after the date of grant, provided that the director has attended at least 75% of the meetings during the year
following the date of the grant, or 2002 Grants. Previously, such a director was entitled to an annual grant of 80,000 shares, vesting
100% on the first anniversary of the date of the grant.
On August 1, 2003 and on each August 1 thereafter, each non−employee director will be automatically granted an option to purchase
25,000 shares, or Annual Grant. These 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, 2002 and each August 1 of each year thereafter, each non−employee director who is a member of a committee of the
Board of Directors will automatically be granted an option to purchase 5,000 shares, or 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. Previously, such a director was entitled to a grant of 20,000 shares, vesting in full on the first
anniversary of the date of the grant.
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 2002 Grants and 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, and 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. For the 2002 Grants, 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.
The Compensation Committee administers the amended Directors Plan. A total of 1,200,000 shares have been authorized and issued
under the amended Directors Plan of which none is available for future issuance as of January 25, 2004. In July 2000, our Board of
Directors amended the 1998 Plan to incorporate the automatic grant provisions of the amended Directors Plan. Future grants to
non−employee directors will be made out of the 1998 Plan until such time as shares may become available under the amended
Directors Plan.
56
NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Employee Stock Purchase Plan
In February 1998, our Board of Directors approved the 1998 Employee Stock Purchase Plan, or the Purchase Plan. In June 1999, the
Purchase Plan was amended to increase the number of shares reserved for issuance automatically each year at the end of our fiscal
year for the next 10 years (commencing at the end of fiscal 2000 and ending 10 years later in 2009) by an amount equal to 2% of the
outstanding shares of us on each such date, including on an as−if−converted basis preferred stock and convertible notes, and
outstanding options and warrants, calculated using the treasury stock method; provided that the maximum number of shares of
common stock available for issuance from the Purchase Plan could not exceed 26,000,000 shares. There are a total of 19,199,814
shares authorized for issuance. At January 25, 2004, 3,760,932 shares have been issued under the Purchase Plan and 15,438,882 shares
are available for future issuance.
The Purchase Plan is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code.
Under the Purchase Plan, the Board has authorized participation by eligible employees, including officers, in periodic offerings
following the adoption of the Purchase Plan. Under the Purchase Plan, separate offering periods shall be no longer than 27 months.
Under the current offering adopted pursuant to the Purchase Plan, each offering period is 24 months, which is divided into four
purchase periods of 6 months.
Employees are eligible to participate if they are employed by us or an affiliate of us designated by the Board. Employees who
participate in an offering may have up to 10% of their earnings withheld pursuant to the Purchase Plan and applied on specified dates
determined by the Board to the purchase of shares of common stock. The Board may increase this percentage at its discretion, up to