NVIDIA 2009 Annual Report Download - page 96

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Equity Incentive Program
We consider equity compensation to be long-term compensation and an integral component of our efforts to attract and retain
exceptional executives, senior management and world-class employees. We believe that properly structured equity compensation
aligns the long-term interests of stockholders and employees by creating a strong, direct link between employee compensation and
stock appreciation, as stock options are only valuable to our employees if the value of our common stock increases after the date of
grant.
2007 Equity Incentive Plan
At the Annual Meeting of Stockholders held on June 21, 2007, our stockholders approved the NVIDIA Corporation 2007
Equity Incentive Plan, or the 2007 Plan.
The 2007 Plan authorizes the issuance of incentive stock options, nonstatutory stock options, restricted stock, restricted stock
unit, stock appreciation rights, performance stock awards, performance cash awards, and other stock-based awards to employees,
directors and consultants. Only our employees may receive incentive stock options. The 2007 Plan succeeds our 1998 Equity Incentive
Plan, our 1998 Non-Employee Directors’ Stock Option Plan, our 2000 Nonstatutory Equity Incentive Plan, and the PortalPlayer, Inc.
2004 Stock Incentive Plan, or the Prior Plans. All options and stock awards granted under the Prior Plans shall remain subject to the
terms of the Prior Plans with respect to which they were originally granted. Up to 101,845,177 shares which, due to the subsequent
stock split now totals 152,767,766 shares, of our common stock may be issued pursuant to stock awards granted under the 2007 Plan
or the Prior Plans. As of January 25, 2009, 29.5 million shares were available for future issuance under the 2007 Plan.
Options granted to new employees generally vest ratably quarterly over a three-year period. Grants to existing employees in
recognition of performance generally vest as to 25% of the shares two years and three months after the date of grant and as to the
remaining 75% of the shares subject to the option in equal quarterly installments over a nine month period. Options granted under the
2007 Plan generally expire in six years from the date of grant.
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 calendar 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.
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Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research℠