NVIDIA 2012 Annual Report Download - page 76

Table of Contents NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
We estimate forfeitures annually and revise the estimates of forfeiture, if necessary, in subsequent periods if actual forfeitures differ from those
estimates. Forfeitures are estimated based on historical experience.
The fair value of stock options granted under our stock option plans and shares issued under our employee stock purchase plan have been estimated at
the date of grant with the following assumptions:
Year Ended
January 29,
2012 January 30,
2011 January 31,
2010
Stock Options (Using a binomial model)
Weighted average expected life of stock options (in years) 3.0-5.4 3.1-6.7 3.7-5.8
Risk free interest rate 1.9%-3.8% 1.5%-3.3% 1.8%-2.9%
Volatility 46%-65% 42%-53% 45%-72%
Dividend yield — — —
Year Ended
January 29,
2012 January 30,
2011 January 31,
2010
Employee Stock Purchase Plan (Using the Black-Scholes model)
Weighted average expected life of stock options (in years) 0.5-2.0 0.5-2.0 0.5-2.0
Risk free interest rate 0.1%-0.7% 0.2%-0.8% 0.2 %– 1.0%
Volatility 57%-61% 45%-47% 53%-73%
Dividend yield — — —
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. Currently, we grant stock options and RSUs under our equity incentive plans. 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. Currently, we grant stock options and RSUs under our equity incentive plans. As of January 29, 2012, there were 22,425,952 shares available for
future issuance under the 2007 Plan.
In September 2010, we changed the vesting schedule for stock options and RSUs granted to employees from a three year period to a four year period.
Stock options granted to employees, subject to certain exceptions, vest over a four year period, subject to continued service, with 25% vesting on the
anniversary of the hire date in the case of new hires or the anniversary of the date of grant in the case of grants to existing employees and 6.25% vesting at the
end of each quarterly period thereafter. We do have unvested stock options that continue to vest pursuant to a three year vesting period, subject to continued
service. Options granted under the 2007 Plan generally expire six or ten years from the date of grant.
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