NVIDIA 2003 Annual Report Download - page 59

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 (“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 (“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
(“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 Directors Plan. A total of 1,200,000 shares have been
authorized and issued under the Directors Plan of which none is available for future issuance as of January 26,
2003. In July 2000, the Company’s Board of Directors amended the 1998 Plan to incorporate the automatic grant
provisions of the 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 Directors Plan.
Employee Stock Purchase Plan
In February 1998, the Company’s Board of Directors approved the 1998 Employee Stock Purchase Plan (the
“Purchase Plan”). In June 1999, the plan was amended to increase the number of shares reserved for issuance
automatically each year at the end of the Company’s 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 the
Company 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 15,681,352 shares authorized for issuance. At January 26, 2003, 2,104,670 shares
have been issued under the Purchase Plan and 13,576,682 shares are available for future issuance.
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