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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 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 25, 2009, 33,395,699 shares had been issued under the Purchase Plan and 44,604,301 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 6 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 2009, 2008 and 2007, employees
purchased approximately 3.0 million, 2.1 million and 5.7 million shares with weighted
-
average prices of $12.79, $14.29 and $4.28 per share, respectively, and grant
-
date fair values of $5.90, $5.48 and $2.43 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.
The following summarizes the transactions under our equity incentive plans:
Options
Available for
Grant
Options
Outstanding
Weighted
Average
Exercise Price
Per Share
Balances, January 29, 2006
46,966,464
131,937,720
$
6.33
Authorized
1,637,075
-
-
Granted and assumed
(18,809,418
)
18,809,418
$
19.73
Exercised
-
(36,878,840
)
$
5.34
Cancelled
2,876,306
(2,876,306
)
$
8.95
Balances, January 28, 2007
32,670,427
110,991,992
$
8.86
Authorized
25,114,550
-
-
Granted
(17,201,305
)
17,201,305
$
27.32
Exercised
-
(34,151,892
)
$
5.74
Cancelled
3,460,332
(3,460,332
)
$
18.45
Balances, January 27, 2008
44,044,004
90,581,073
$
13.18
Authorized
-
-
-
Granted
(17,888,695
)
17,888,695
$
8.03
Exercised
-
(7,670,038
)
$
3.14
Cancelled
3,345,450
(3,345,450
)
$
7.66
Balances, January 25, 2009
29,500,759
97,454,280
$
13.83
81