NVIDIA 2013 Annual Report Download - page 42

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Director Compensation
In reviewing the type and form of compensation to be paid to our non-employee directors for the year starting on the
date of our 2013 Annual Meeting, the Compensation Committee consulted with Exequity LLP, its independent compensation
consultant, and reviewed peer data from the executive peer group approved by the Compensation Committee for fiscal year
2013. The Compensation Committee subsequently recommended, and the Board approved, effective on the date of our 2013
Annual Meeting, a mix of cash and equity awards for our non-employee directors with an approximate annual value of
$300,000. This value approximates the average total annual compensation, both cash and equity, paid by technology peer
companies of similar size and market capitalization to their non-employee directors. We refer to this as the 2013 Program.
Cash Compensation
Under the 2013 Program, the cash portion of the annual retainer, representing $75,000 on an annualized basis, is paid
quarterly over the course of twelve months beginning on May 15, 2013, the date of our 2013 Annual Meeting.
Equity Compensation
Under the 2013 Program, each non-employee director (with the exception of Ms. Hudson, who was appointed to the
Board in July 2013) elected in advance of the 2013 Annual Meeting the form of equity award he would receive on the first
trading day following the date of our 2013 Annual Meeting. Non-employee directors were allowed to elect stock options,
restricted stock units or a 50/50 combination of each. The aggregate value of the equity award was $225,000. The number
of shares subject to each stock option grant had a fair value (calculated using a binomial option pricing model, based on
the average closing market price over the 60 calendar days ending two business days before the 2013 Annual Meeting, as
determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or
FASB ASC Topic 718) equal to the portion of the annual retainer allocated to stock options. The number of shares subject
to each restricted stock unit equaled the value of the annual retainer allocated to the restricted stock unit divided by the
average closing market price over the 60 calendar days ending two business days before the 2013 Annual Meeting.
In order to correlate the vesting of the equity awards to the non-employee directors’ service on the Board and its
committees over the following year, stock options granted under the 2013 Program vest quarterly commencing on the day
following our 2013 Annual Meeting and RSUs vested as to 50% on November 20, 2013 (the third Wednesday in November
2013) and will vest as to the remaining 50% on May 21, 2014 (the third Wednesday in May 2014).
In connection with Ms. Hudson’s appointment to the Board in July 2013, she was granted (a) an initial stock option
award to purchase 50,000 shares of our common stock, vesting in equal quarterly installments over a three-year period
commencing July 18, 2013, and (b) an annual equity award consisting of (i) a stock option to purchase 35,645 shares of
our common stock, which vested as to 3,563 shares on August 15, 2013 and as to 10,694 shares quarterly thereafter over
the next three quarters, and (ii) a grant of 7,210 RSUs, which vested as to 2,883 shares on November 20, 2013 and will vest
as to the remaining 4,327 shares on May 21, 2014. Both stock options have an exercise price of $14.70 per share, which
was the closing price of our common stock as reported by NASDAQ on August 8, 2013.
The options granted to our Board members above have a term of ten years. If a non-employee director’s service as a
director terminates due to death, the option and RSU grants will immediately fully vest and the option grants will become
exercisable. Non-employee directors do not receive dividend equivalents on unvested RSUs.
Non-employee directors choosing RSUs as all or part of their equity compensation may elect to defer settlement of all
such RSUs upon vesting, to be issued on the earliest of (a) the date of the non-employee director’s “separation from
service” (as defined under Treasury Regulation Section 1.409A-1(h)), unless a six month delay would be required under
such Section, (b) the date of a change in control of NVIDIA that also would constitute a “change in control event” (as
defined under Treasury Regulation Section 1.409A-3(i)(5)), and (c) the third Wednesday in March of the year elected by
the non-employee director, which year must be no earlier than 2015. Messrs. Burgess and Gaither and Ms. Hudson elected
to defer settlement of the RSUs granted during fiscal year 2014.