NVIDIA 2011 Annual Report Download - page 74

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unless terminated sooner, the 2007 Plan is scheduled to terminate on April 23, 2017. Our Board may suspend or terminate the 2007 Plan at any
time. No awards may be granted under the 2007 Plan while the 2007 Plan is suspended or after it is terminated. The Board may also amend the 2007 Plan at
any time. However, if legal, regulatory or listing requirements require stockholder approval, the amendment will not go into effect until the stockholders have
approved the amendment.
PortalPlayer, Inc. 1999 Stock Option Plan
We assumed options issued under the PortalPlayer, Inc. 1999 Stock Option Plan, or the 1999 Plan, when we completed our acquisition of
PortalPlayer on January 5, 2007. The 1999 Plan was terminated upon completion of PortalPlayer’s initial public offering of common stock in 2004. No shares
of common stock are available for issuance under the 1999 Plan other than to satisfy exercises of stock options granted under the 1999 Plan prior to its
termination and any shares that become available for issuance as a result of expiration or cancellation of an option that was issued pursuant to the 1999 Plan.
Previously authorized yet unissued shares under the 1999 Plan were cancelled upon completion of PortalPlayer’s initial public offering.
Each option we assumed in connection with our acquisition of PortalPlayer was converted into the right to purchase that number of shares of
NVIDIA common stock determined by multiplying the number of shares of PortalPlayer common stock underlying such option by 0.3601 and then rounding
down to the nearest whole number of shares. The exercise price per share for each assumed option was similarly adjusted by dividing the exercise price by
0.3601 and then rounding up to the nearest whole cent. Vesting schedules and expiration dates did not change.
Under the 1999 Plan, incentive stock options were granted at a price that was not less than 100% of the fair market value of PortalPlayer’s common
stock, as determined by its board of directors, on the date of grant. Non-statutory stock options were granted at a price that was not less than 85% of the fair
market value of PortalPlayer’s common stock, as determined by its board of directors, on the date of grant.
Generally, options granted under the 1999 Plan are exercisable for a period of ten years from the date of grant, and shares vest at a rate of 25% on
the first anniversary of the grant date of the option, and an additional 1/48th of the shares upon completion of each succeeding full month of continuous
employment thereafter.
1998 Employee Stock Purchase Plan
In February 1998, our Board 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 year 2000 and ending 10 years later in 2009) by an amount equal to 2% of the outstanding shares 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 52,000,000 shares which, due to subsequent
stock-splits, is now 78,000,0000 shares. The number of shares will no longer be increased annually as we reached the maximum permissible number of shares
at the end of fiscal year 2006. There are a total of 78,000,000 shares authorized for issuance. At January 30, 2011, 46,002,673 shares had been issued under
the Purchase Plan and 31,997,327 shares were 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 six months.
Employees are eligible to participate if they are employed by us or an affiliate of us as designated by the Board. Employees who participate in an
offering may have up to 10% of their earnings withheld pursuant to the Purchase Plan up to certain limitations 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 15%. The price of common stock
purchased under the Purchase Plan will be equal to the lower of the fair market value of the common stock on the commencement date of each offering period
and the purchase date of each offering period at 85% at the fair market value of the common stock on the relevant purchase date. During fiscal years 2011,
2010 and 2009, employees purchased approximately 6.7 million, 5.9 million, and 3.0 million shares, respectively, with weighted-average prices of $6.59,
$6.76, and $12.79 per share, respectively, and grant-date fair values of $4.06, $4.60 and $5.90 per share, respectively. Employees may end their participation
in the Purchase Plan at any time during the offering period, and participation ends automatically on termination of employment with us and in each case their
contributions are refunded.
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