DEF 14A 1 nvda2018proxystatementsecf.htm NVIDIA 2018 PROXY STATEMENT Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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NVIDIA CORPORATION
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image0a12.jpg
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
Date and time:
Wednesday, May 16, 2018 at 10:30 a.m. Pacific Daylight Time
 
 
Location:
Online at www.virtualshareholdermeeting.com/NVIDIA2018

Items of business:

Election of eleven directors nominated by the Board of Directors
Approval of our executive compensation
Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2019
Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan
Approval of an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan
 
 
 
Transaction of other business properly brought before the meeting
 
 
Record date:
You can attend, and vote at, the annual meeting if you were a stockholder of record at the close of business on March 22, 2018.
 
 
Virtual meeting admission:
We will be holding our annual meeting online only this year at www.virtualshareholdermeeting.com/NVIDIA2018. To participate in the annual meeting, you will need the control number included on your notice of proxy materials or printed proxy card.
 
 
Pre-meeting forum:
In order to allow for communication with our stockholders in connection with the 2018 Meeting, we have established a pre-meeting forum located at www.proxyvote.com where you can submit questions to us in advance of the 2018 Meeting.
Your vote is very important. Whether or not you plan to attend the virtual meeting, PLEASE VOTE YOUR SHARES. As an alternative to voting online at the meeting, you may vote via the Internet, by telephone or, if you receive a paper proxy card in the mail, by mailing the completed proxy card.
Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on May 16, 2018. This Notice, our Proxy Statement, our Annual Report on Form 10-K and our Annual Review are available at www.nvidia.com/proxy.
By Order of the Board of Directors
image1a11.jpg
Timothy S. Teter
Secretary
Santa Clara, California
April 6, 2018



TABLE OF CONTENTS
 
PAGE



DEFINITIONS
2007 Plan
NVIDIA Corporation Amended and Restated 2007 Equity Incentive Plan
2012 ESPP
NVIDIA Corporation Amended and Restated 2012 Employee Stock Purchase Plan
AC
Audit Committee
Base Operating Plan
Target performance goal under the Variable Cash Plan, SY PSUs and MY PSUs
Board
The Company’s Board of Directors
CC
Compensation Committee
CD&A
Compensation Discussion and Analysis
CEO
Chief Executive Officer
CFO
Chief Financial Officer
Company
NVIDIA Corporation, a Delaware corporation
Control Number
Identification number for each stockholder included in Notice or proxy card
Dodd Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
Exchange Act
Securities Exchange Act of 1934, as amended
Exequity
Exequity LLP, the CC’s independent compensation consultant
FASB
Financial Accounting Standards Board
Fiscal 2017
The Company’s fiscal year 2017 (February 1, 2016 to January 29, 2017)
Fiscal 2018
The Company’s fiscal year 2018 (January 30, 2017 to January 28, 2018)
Fiscal 2019
The Company’s fiscal year 2019 (January 29, 2018 to January 27, 2019)
Form 10-K
The Company’s Annual Report on Form 10-K for Fiscal 2018 filed with the SEC on February 28, 2018
GAAP
Generally accepted accounting principles
Internal Revenue Code
U.S. Internal Revenue Code of 1986, as amended
Lead Director
Lead independent director
Meeting
Annual Meeting of Stockholders
MY PSUs
PSUs with a three-year performance metric
NASDAQ
The Nasdaq Stock Market LLC
NCGC
Nominating and Corporate Governance Committee
NEOs
Named Executive Officers consisting of our CEO, our CFO, and our other three most highly compensated executive officers as of the end of Fiscal 2018
Non-GAAP Operating Income
GAAP operating income adjusted for stock-based compensation expense, acquisition-related costs, contributions, legal settlement costs, and restructuring and other charges, as the Company reports in its respective earnings materials.  The net aggregate adjustment to GAAP operating income for these items for Fiscal 2018 was $407 million and for Fiscal 2017 was $287 million.  Please see Reconciliation of Non-GAAP Financial Measures in our CD&A for a reconciliation between the non-GAAP measures and GAAP results
Notice
Notice of Internet Availability of Proxy Materials
NYSE
New York Stock Exchange
Other NEOs
Colette M. Kress, Ajay K. Puri, and Debora Shoquist
Proposed 2007 Plan
The 2007 Plan, as proposed to be amended and restated
Proposed 2012 ESPP
The 2012 ESPP, as proposed to be amended and restated
PSUs
Performance stock units
PwC
PricewaterhouseCoopers LLP
RSUs
Restricted stock units
S&P 500
Standard & Poor’s 500 Composite Index
SEC
U.S. Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
Stretch Operating Plan
Performance goal necessary to earn the maximum award under the Variable Cash Plan and for the maximum number of SY PSUs and MY PSUs becoming eligible to vest
SY PSUs
PSUs with a single-year performance metric, vesting over four years
Threshold
Minimum performance goal necessary to earn an award under the Variable Cash Plan and for SY PSUs and MY PSUs to become eligible to vest
TSR
Total shareholder return
Variable Cash Plan
The Company’s variable cash compensation plan

1


PROXY SUMMARY
This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
2018 Annual Meeting of Stockholders
Date and time:
Wednesday, May 16, 2018 at 10:30 a.m. Pacific Daylight Time
Location:
Online at www.virtualshareholdermeeting.com/NVIDIA2018
Record date:
Stockholders as of March 22, 2018 are entitled to vote
Admission to meeting:
You will need your Control Number to attend the annual meeting
Voting Matters and Board Recommendations
A summary of the 2018 Meeting proposals is below. Every stockholder’s vote is important. Our Board urges you to vote your shares FOR each of the proposals.
Matter
 
Page
 
Board Recommendation
 
Vote Required
for Approval
 
Effect of Abstentions
 
Effect of Broker Non-Votes
Management Proposals:
 
 
 
 
 
 
 
 
 
 
 
Election of eleven directors
 
 
FOR each director nominee
 
More FOR than WITHHOLD votes
 
None
 
None
 
Approval of our executive compensation
 
 
FOR
 
Majority of shares present
 
Against
 
None
 
Ratification of selection of PwC as our independent registered public accounting firm for Fiscal 2019
 
 
FOR
 
Majority of shares present
 
Against
 
None
 
Approval of an amendment and restatement of our 2007 Plan
 
 
FOR
 
Majority of shares present
 
Against
 
None
 
Approval of an amendment and restatement of our 2012 ESPP
 
 
FOR
 
Majority of shares present
 
Against
 
None
Election of Directors (Proposal 1)
The following table provides summary information about each director nominee:
 
Name
 
Age
 
Director Since
 
Occupation
 
Financial Expert
 
Committee Membership Effective March 2018
 
 
Robert K. Burgess
 
60
 
2011
 
 
Independent Consultant
 
ü
 
CC
 
Tench Coxe
 
60
 
1993
 
 
Managing Director, Sutter Hill Ventures
 
 
 
CC
 
Persis S. Drell
 
62
 
2015
 
 
Provost, Stanford University
 
 
 
CC
 
James C. Gaither
 
80
 
1998
 
 
Managing Director, Sutter Hill Ventures
 
 
 
NCGC
 
Jen-Hsun Huang
 
55
 
1993
 
 
President & CEO, NVIDIA Corporation
 
 
 
 
 
Dawn Hudson
 
60
 
2013
 
 
Chief Marketing Officer, National Football League
 
ü
 
AC
 
Harvey C. Jones
 
65
 
1993
 
 
Managing Partner, Square Wave Ventures
 
ü
 
CC, NCGC
 
Michael G. McCaffery
 
64
 
2015
 
 
Chairman & Managing Director, Makena Capital Management
 
ü
 
AC
 
Mark L. Perry (1)
 
62
 
2005
 
 
Independent Consultant
 
ü
 
AC, NCGC
 
A. Brooke Seawell
 
70
 
1997
 
 
Venture Partner, New Enterprise Associates
 
ü
 
CC
 
Mark A. Stevens
 
58
 
2008
(2)
 
Managing Partner, S-Cubed Capital
 
 
 
AC, NCGC
(1) Lead Director
(2) Mr. Stevens previously served as a member of our Board from 1993 until 2006


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Board Overview and Recent Refreshment
Our director nominees exhibit a variety of competencies, professional experience and backgrounds, and contribute diverse viewpoints and perspectives to our well-rounded Board. While the Board benefits from the extensive experience and institutional knowledge that our longer-serving directors bring, it has also brought in new perspectives and ideas by appointing three new directors in the last five years. Below are the skills and competencies that our NCGC and Board consider important for our directors to have in light of our current business, and the number of directors that possess these competencies:
boardcompetenciesa03.jpg
Corporate Governance Highlights
Our Board is committed to strong corporate governance, which is used to promote the long-term interest of NVIDIA and our stockholders. We seek a collaborative approach to stockholder issues that affect our business and to ensure that our stockholders see our governance and executive pay practices as well-structured. Last year, our management contacted our top 30 institutional stockholders (except for brokerage firms and institutional stockholders who we know do not engage in individual conversations with companies), representing an aggregate ownership of 48%, to gain valuable insights into their views on corporate governance, executive compensation and corporate social responsibility issues. We met with stockholders holding in total 33% of our common stock in the Fall of 2017. A member of our Board attended these meetings.
Highlights of our corporate governance practices include:  
üProxy access
üDeclassified Board
üMajority voting for directors
üActive Board oversight of risk and risk management
üStock ownership guidelines for our directors and executive officers
ü75% or greater attendance by each Board member at meetings of the Board and applicable committees*
üIndependent Lead Director
üAll Board members independent, except for our CEO
üAt least annual Board and committee self-assessments
üAnnual stockholder outreach, including NCGC participation
üIndependent directors frequently meet in executive sessions
* With the exception of William J. Miller, whose attendance fell below 75% due to illness. Mr. Miller passed away in December 2017.
Approval of Executive Compensation for Fiscal 2018 (Proposal 2)
We are asking our stockholders to cast a non-binding vote, also known as “say-on-pay,” to approve our NEOs’ compensation. The Board believes that our compensation policies and practices are effective in achieving our goals of attracting, motivating and retaining a high-caliber executive team; rewarding financial and operating performance; and aligning our executives’ interests with those of our stockholders to create long-term value. The Board and our stockholders have approved annual “say-on-pay” votes.

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Executive Compensation Highlights
Our executive compensation program is designed to pay for performance. We utilize compensation elements that strongly align our NEOs’ interests with those of our stockholders to create long-term value. Our NEO pay is heavily weighted toward performance-based, “at-risk” variable cash and long-term equity awards that are only earned if we achieve pre-established corporate financial metrics.
At our 2017 Meeting, over 97% of the votes cast on our say-on-pay proposal were in support of the compensation paid to our NEOs for Fiscal 2017. After considering this advisory vote and feedback from our annual stockholder outreach, our CC concluded that our program effectively aligned executive pay with stockholder interests. Therefore, the CC maintained the same general compensation structure and made refinements for Fiscal 2018 to strengthen the link between corporate performance and NEO pay even further, including increasing the proportion of NEO compensation that is at-risk and performance-based.
Fiscal 2018 Financial Highlights
Starting with a focus on PC graphics, NVIDIA invented the GPU to solve some of the most complex problems in computer science. We have extended our focus in recent years to the revolutionary field of artificial intelligence. Our platform strategy combines hardware, system software, programmable algorithms, libraries, systems, and services to create unique value for the Gaming, Professional Visualization, Datacenter, and Automotive markets. For Fiscal 2018, NVIDIA’s TSR was 119% and we reported record revenue of $9.71 billion and record Non-GAAP Operating Income of $3.62 billion.
financialperformancea06.jpg
Please see Reconciliation of Non-GAAP Financial Measures in our CD&A for a reconciliation between the non-GAAP measures and GAAP results.
Ratification of Selection of PwC as our Independent Registered Public Accounting Firm for Fiscal 2019 (Proposal 3)
We are asking our stockholders to ratify the AC’s selection of PwC as our independent registered public accounting firm for Fiscal 2019. We are not required to have our stockholders ratify the selection of PwC, but we are doing so because we believe it is a matter of good corporate practice. If our stockholders do not ratify the selection, the AC will reconsider the appointment, but may nevertheless retain PwC as our independent registered public accounting firm. Even if the selection is ratified, the AC may select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of NVIDIA and our stockholders.
Approval of an Amendment and Restatement of our 2007 Plan (Proposal 4)
We are asking our stockholders to approve an amendment and restatement of our 2007 Plan primarily to increase the share reserve by 23,000,000 shares and to impose a minimum vesting requirement of 12 months from the date of grant on all awards under the Proposed 2007 Plan. The Board recommends a vote FOR this proposal because equity awards are an important component of our compensation program and the continued ability to issue these awards is essential to attracting, retaining and motivating our employees.
Approval of an Amendment and Restatement of our 2012 ESPP (Proposal 5)
We are asking our stockholders to approve an amendment and restatement of our 2012 ESPP to increase the share reserve by 13,500,000 shares. The Board recommends a vote FOR this proposal because our employee stock purchase program is an important employee benefit and is essential to attracting, retaining and motivating our employees.

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NVIDIA CORPORATION
2788 SAN TOMAS EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(408) 486-2000
  ____________________________________________________
PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS - MAY 16, 2018
____________________________________________________
INFORMATION ABOUT THE MEETING
Your proxy is being solicited for use at the 2018 Meeting on behalf of the Board. Our 2018 Meeting will take place on Wednesday, May 16, 2018 at 10:30 a.m. Pacific Daylight Time.
Meeting Attendance
If you were an NVIDIA stockholder as of the close of business on the March 22, 2018 record date, or if you hold a valid proxy, you can attend, ask questions during, and vote at our 2018 Meeting at www.virtualshareholdermeeting.com/NVIDIA2018. Our 2018 Meeting will be held entirely online to allow greater participation and provide cost savings for our stockholders and NVIDIA.
In order to allow for communication with our stockholders in connection with the 2018 Annual Meeting, we have established a pre-meeting forum located at www.proxyvote.com where you can submit questions to us in advance of the 2018 Meeting. You will need the Control Number included on your Notice or printed proxy card to enter the meeting and the pre-meeting forum.
Non-stockholders can also listen to the 2018 Meeting live at www.virtualshareholdermeeting.com/NVIDIA2018. An archived copy of the webcast will be available at www.nvidia.com/proxy through May 30, 2018.
Even if you plan to attend the 2018 Meeting online, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to attend the 2018 Meeting.
Quorum and Voting
To hold our 2018 Meeting, we need a majority of the outstanding shares entitled to vote at the close of business on March 22, 2018, or a quorum, represented at the 2018 Meeting either by attendance online or by proxy. On the record date, there were 607,036,458 shares of common stock outstanding and entitled to vote, meaning that 303,518,230 shares must be represented at the 2018 Meeting or by proxy to have a quorum. A list of stockholders entitled to vote will be available for 10 days prior to the 2018 Meeting at our headquarters, 2788 San Tomas Expressway, Santa Clara, California. If you would like to view the stockholder list, please call our Investor Relations Department at (408) 486-2000 to schedule an appointment.
Your shares will be counted towards the quorum only if you submit a valid proxy or vote at the 2018 Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is not a quorum, a majority of the votes present may adjourn the 2018 Meeting to another date.
You may vote FOR any nominee to the Board, you may WITHHOLD your vote for any nominee or you may ABSTAIN from voting. For each other matter to be voted on, you may vote FOR or AGAINST or ABSTAIN from voting.
Stockholder of Record
You are a stockholder of record if your shares were registered directly in your name with our transfer agent, Computershare, on March 22, 2018, and can vote shares in any of the following ways:
By attending the 2018 Meeting online and voting during the meeting;

5


Via mail, by signing and mailing your proxy card to us before the 2018 Meeting; or
By telephone or via the Internet, by following the instructions provided in the Notice or your proxy materials.

You may change your vote or revoke your proxy before the final vote at the 2018 Meeting in any of the following ways:
Attend the 2018 Meeting online and vote during the meeting;
Submit another properly completed proxy card with a later date;
Send a written notice that you are revoking your proxy to NVIDIA Corporation, 2788 San Tomas Expressway, Santa Clara, California 95051, Attention: Timothy S. Teter, Secretary; or
Submit another proxy by telephone or via the Internet after you have already provided an earlier proxy.

If you do not vote using any of the ways described above, your shares will not be voted.
Street Name Holder
If your shares are held through a nominee, such as a bank or broker, as of March 22, 2018, then you are the beneficial owner of shares held in “street name.” As a beneficial owner you have the right to direct the nominee how to vote the shares in your account. The nominee should provide you a separate Notice or voting instructions, and you should follow those instructions to tell the nominee how to vote. To vote by attending the 2018 Meeting online, you must obtain a valid proxy from your nominee.
If you are a beneficial holder and do not provide voting instructions to your nominee, the nominee will not be authorized to vote your shares on “non-routine” matters, including elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation) and amendments of equity plans. This is called a “broker non-vote.” If you are a beneficial holder and do not provide voting instructions to your nominee, the nominee will have discretion to vote for matters considered by the NYSE to be “routine,” including the ratification and selection of our independent registered public accounting firm for Fiscal 2019. Therefore, you MUST give your nominee instructions in order for your vote to be counted on the proposals to elect directors, to conduct an advisory approval of our executive compensation, to amend and restate our 2007 Plan, and to amend and restate our 2012 ESPP. We strongly encourage you to vote.
If you are a beneficial owner and you do not provide your nominee with voting instructions, the nominee can still register your shares for being present at the 2018 Annual meeting for determining quorum.
Note that under the rules of the national stock exchanges, any NVIDIA stockholder whose shares are held in street name by a member brokerage firm may revoke a proxy and vote his or her shares at the 2018 Meeting only in accordance with applicable rules and procedures of those exchanges, as employed by the street name holder’s brokerage firm.
Vote Count
On each matter to be voted upon, stockholders have one vote for each share of NVIDIA common stock owned as of March 22, 2018. Votes will be counted by the inspector of election as follows:
Proposal Number
 
Proposal Description
 
Vote Required for Approval
 
Effect of Abstentions
 
Effect of Broker
Non-Votes
1
 
Election of eleven directors
 
Directors are elected if they receive more FOR votes than WITHHOLD votes
 
None
 
None
2
 
Approval of our executive compensation
 
FOR votes from the holders of a majority of shares present and entitled to vote on this matter
 
Against
 
None
3
 
Ratification of the selection of PwC as our independent registered public accounting firm for Fiscal 2019
 
FOR votes from the holders of a majority of shares present and entitled to vote on this matter
 
Against
 
None
4
 
Approval of an amendment and restatement of our 2007 Plan
 
FOR votes from the holders of a majority of shares present and entitled to vote on this matter
 
Against
 
None
5
 
Approval of an amendment and restatement of our 2012 ESPP
 
FOR votes from the holders of a majority of shares present and entitled to vote on this matter
 
Against
 
None

6


If you are a stockholder of record and you return a signed proxy card without marking any selections, your shares will be voted FOR each of the nominees listed in Proposal 1 and FOR the other proposals. If any other matter is properly presented at the 2018 Meeting, Jen-Hsun Huang or Timothy S. Teter as your proxyholder will vote your shares using his best judgment.
Vote Results
Preliminary voting results will be announced at the 2018 Meeting. Final voting results will be published in a current report on Form 8-K or Form 10-Q, which will be filed with the SEC by May 22, 2018.
Proxy Materials
As permitted by SEC rules, we are making our proxy materials available to stockholders electronically via the Internet at www.nvidia.com/proxy. On or about April 6, 2018, we sent stockholders who own our common stock at the close of business on March 22, 2018 (other than those who previously requested electronic or paper delivery) a Notice containing instructions on how to access our proxy materials, vote via the Internet or by telephone, and elect to receive future proxy materials electronically or in printed form by mail.
If you choose to receive future proxy materials electronically (via www.proxyvote.com for stockholders of record and www.icsdelivery.com/nvda for street name holders) you will receive an email next year with links to the proxy materials and proxy voting site.
SEC rules also permit companies and intermediaries, such as brokers, to satisfy Notice and proxy material delivery requirements for multiple stockholders with the same address by delivering a single Notice or set of proxy materials addressed to those stockholders. We follow this practice, known as “householding,” unless we have received contrary instructions from any stockholder at that address.
If you received more than one Notice or full set of proxy materials, then your shares are either registered in more than one name or are held in different accounts. Please vote the shares covered by each Notice or proxy card. To modify your instructions so that you receive one Notice or proxy card for each account or name, please contact your broker. Your “householding” election will continue until you are notified otherwise or until you revoke your consent.
To make a change regarding the form in which you receive proxy materials (electronically or in print), or to request receipt of a separate set of documents to a household, contact our Investor Relations Department (through our website at www.nvidia.com, with an electronic mail message to ir@nvidia.com or by mail at 2788 San Tomas Expressway, Santa Clara, California 95051).
We will pay the entire cost of soliciting proxies. Our directors and employees may also solicit proxies in person, by telephone, by mail, via the Internet or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies. We have also retained MacKenzie Partners on an advisory basis for a fee not to exceed $20,000 and they may help us solicit proxies from brokers, bank nominees and other institutional owners. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
2019 Meeting Stockholder Proposals
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 7, 2018 to NVIDIA Corporation, 2788 San Tomas Expressway, Santa Clara, California 95051, Attention: Timothy S. Teter, Secretary and must comply with all applicable requirements of Rule 14a-8 promulgated under the Exchange Act. However, if we do not hold our 2018 Meeting between April 16, 2019 and June 15, 2019, then the deadline is a reasonable time before we begin to print and send our proxy materials. If you wish to submit a proposal for consideration at the 2019 Meeting that is not to be included in next year’s proxy materials, you must do so in writing following the above instructions not later than the close of business on February 15, 2019, and not earlier than January 16, 2019. We also advise you to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.


7


Proposal 1—Election of Directors
What am I voting on?  Electing the 11 director nominees identified below to hold office until the 2019 Meeting and until his or her successor is elected or appointed.
Vote required: Directors are elected if they receive more FOR votes than WITHHOLD votes.
Our Board has 11 members. All of our directors have one-year terms and stand for election annually. Our nominees include 10 independent directors, as defined by the rules and regulations of NASDAQ, and one NVIDIA officer: Mr. Huang, who serves as our President and CEO. Each of the nominees listed below is currently a director of NVIDIA previously elected by our stockholders.
The Board expects the nominees will be available for election. If a nominee declines or is unable to act as a director, your proxy may be voted for any substitute nominee proposed by the Board or the size of the Board may be reduced.
Recommendation of the Board
The Board recommends that you vote FOR the election of each of the following nominees:
Name
 
Age
 
Director Since
 
Occupation
 
Independent
 
Other Public Company Boards
Robert K. Burgess
 
60
 
2011
 
 
Independent Consultant
 
ü
 
2
Tench Coxe
 
60
 
1993
 
 
Managing Director, Sutter Hill Ventures
 
ü
 
2
Persis S. Drell
 
62
 
2015
 
 
Provost, Stanford University
 
ü
 
James C. Gaither
 
80
 
1998
 
 
Managing Director, Sutter Hill Ventures
 
ü
 
Jen-Hsun Huang
 
55
 
1993
 
 
President & CEO, NVIDIA Corporation
 
 
 
Dawn Hudson
 
60
 
2013
 
 
Chief Marketing Officer, National Football League
 
ü
 
1
Harvey C. Jones
 
65
 
1993
 
 
Managing Partner, Square Wave Ventures
 
ü
 
Michael G. McCaffery
 
64
 
2015
 
 
Chairman & Managing Director, Makena Capital Management
 
ü
 
Mark L. Perry (1)
 
62
 
2005
 
 
Independent Consultant
 
ü
 
2
A. Brooke Seawell
 
70
 
1997
 
 
Venture Partner, New Enterprise Associates
 
ü
 
1
Mark A. Stevens
 
58
 
2008
(2) 
 
Managing Partner, S-Cubed Capital
 
ü
 
1
(1) Lead Director
(2) Mr. Stevens previously served as a member of our Board from 1993 until 2006


8


Director Qualifications and Nomination of Directors
The NCGC identifies, reviews and assesses the qualifications of existing and potential directors and selects nominees for recommendation to the Board for approval. Ensuring the Board is composed of directors who exhibit a variety of skills, education, professional experience and backgrounds, as well as bring diverse viewpoints and perspectives, is a priority of the NCGC and the Board. The NCGC may conduct any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The NCGC may also engage a professional search firm to identify and assist the NCGC in identifying, evaluating and conducting due diligence on potential director nominees. The NCGC has not established specific minimum age, education, experience or skill requirements for potential members, and instead considers numerous factors regarding the nominee in light of our current business model, including the following:
Directors’ Skills, Qualifications and Traits
Integrity and candor
Independence
Senior management and operating experience necessary to oversee our business
Professional, technical and industry knowledge
Financial expertise
Financial community experience (including as an investor in other companies)
Marketing and brand management
Public company board experience
Experience with emerging technologies and new business models
Legal expertise
Diversity, including gender and ethnic background
Academia experience
Desirability as a member of any committees of the Board
Willingness and ability to devote substantial time and effort to Board responsibilities and Company oversight
Ability to represent the interests of the stockholders as a whole rather than special interest groups or constituencies
All relationships between the proposed nominee and any of our stockholders, competitors, customers, suppliers or other persons with a relationship to NVIDIA
Overall service to NVIDIA, including past attendance at Board and committee meetings and participation and contributions to the activities of the Board
The NCGC and the Board understand the importance of Board refreshment, and strive to maintain an appropriate balance of tenure, diversity and skills on the Board. While the Board benefits from the extensive experience and institutional knowledge that our longer-serving directors bring, it has also brought in new perspectives and ideas by appointing three new directors in the last five years. We feel that the mix of our Board members is the appropriate blend of experience and new perspectives. Our longer-tenured directors have the benefit of extensive familiarity with our operations and business areas and have the perspective of overseeing our activities during a wide variety of economic and competitive environments. Our new directors bring valuable insights in areas such as consumer marketing, branding and technology developments at leading academic institutions that are critical to supporting NVIDIA as it competes in new markets. Each year, as part of its annual evaluation, the NCGC and Board reviews each director’s past contributions, outside experiences and activities and makes a determination concerning how her or his experience and skills continue to add value to NVIDIA and the Board.
The following chart summarizes the skills and competencies of each director nominee that led our Board to conclude that he or she is qualified to serve on our Board. The lack of a check does not mean the director does not possess that skill or qualification; rather, a check indicates a specific area of focus or expertise for which the Board relies on such director nominee most.
Director Skills and Competencies
 
Burgess
 
Coxe
 
Drell
 
Gaither
 
Huang
 
Hudson
 
Jones
 
McCaffery
 
Perry
 
Seawell
 
Stevens
Senior Management and Operations
ü
 
 
 
 
 
 
 
ü
 
ü
 
ü
 
ü
 
ü
 
ü
 
 
Industry and Technical
 
 
 
 
ü
 
 
 
ü
 
 
 
ü
 
 
 
 
 
 
 
ü
Financial/Financial Community
ü
 
ü
 
 
 
ü
 
ü
 
ü
 
ü
 
ü
 
ü
 
ü
 
ü
Public Company Board
ü
 
ü
 
 
 
 
 
 
 
ü
 
ü
 
ü
 
ü
 
ü
 
ü
Emerging Technologies and Business Models
 
 
ü
 
 
 
ü
 
 
 
 
 
ü
 
 
 
 
 
ü
 
ü
Marketing and Brand Management
 
 
 
 
 
 
 
 
ü
 
ü
 
 
 
 
 
 
 
 
 
 
Legal
 
 
 
 
 
 
ü
 
 
 
 
 
 
 
 
 
ü
 
 
 
 

9


The NCGC evaluates candidates proposed by stockholders using the same criteria as it uses for other candidates. Stockholders seeking to recommend a prospective nominee should follow the instructions under Stockholder Communications with the Board of Directors below. Stockholder submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record owner of our stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
In addition, in November 2016, our Board voluntarily adopted proxy access by amending our Bylaws. As a result, our Bylaws provide that under certain circumstances, information regarding a director candidate or candidates nominated by a stockholder or group of stockholders will be included in our proxy statement. Information will be included regarding the greater of two candidates or 20% of the number of directors in office on the last day that a submission may be delivered, if nominated by a stockholder (or group of up to 20 stockholders) owning at least 3% of the voting power of our outstanding capital stock, continuously for at least three years. The stockholder or group must provide timely written notice of such nomination and the stockholder(s) and nominee must satisfy the other requirements specified in our Bylaws. 
The above summary of our proxy access rules is not intended to be complete and is subject to limitations set forth in our Bylaws and Corporate Governance Policies. Stockholders are advised to review these documents, which contain the requirements for director nominations. The NCGC did not receive any stockholder nominations during Fiscal 2018.
Our Director Nominees
The biographies below include information, as of the date of this proxy statement, regarding the particular experience, qualifications, attributes or skills of each director, relative to the skills matrix above, that led the NCGC and Board to believe that he or she should continue to serve on the Board.
burgessa03.jpg
 
ROBERT K. BURGESS
Robert K. Burgess has served as an independent investor and board member to technology companies since 2005. He was chief executive officer from 1996 to 2005 of Macromedia, Inc., a provider of internet and multimedia software, which was acquired by Adobe Systems Incorporated; he also served from 1996 to 2005 on its board of directors, as chairman of its board of directors from 1998 to 2005 and as executive chairman for his final year. Previously, he held key executive positions from 1984 to 1991 at Silicon Graphics, Inc. (SGI), a graphics and computing company; from 1991 to 1995, served as chief executive officer and a board member of Alias Research, Inc., a publicly traded 3D software company, until its acquisition by SGI; and resumed executive positions at SGI during 1996. Mr. Burgess serves on the board of Adobe and Rogers Communications Inc., a communications and media company, and has served on the boards of several privately-held companies. He was a director of IMRIS Inc., a provider of image guided therapy solutions, from 2010 until 2013. He holds a BCom degree from McMaster University.
Mr. Burgess brings to the Board senior management and operating experience and expertise in the areas of financial- and risk-management. He has a broad understanding of the roles and responsibilities of a corporate board and provides valuable insight on a range of issues in the technology industry.

 
Independent Consultant
 
Age:  60
 
Director Since: 2011
Committees:  CC
Independent Director
Financial Expert
 
 
 

10


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TENCH COXE
Tench Coxe has been a managing director of Sutter Hill Ventures, a venture capital investment firm, since 1989, where he focuses on investments in the IT sector. Prior to joining Sutter Hill Ventures in 1987, he was director of marketing and MIS at Digital Communication Associates. He serves on the board of directors of Mattersight Corp., a customer loyalty software firm, Artisan Partners Asset Management Inc., an institutional money management firm, and several privately held technology companies. Mr. Coxe holds a BA degree in Economics from Dartmouth College and an MBA degree from Harvard Business School.
Mr. Coxe brings to the Board expertise in financial and transactional analysis and provides valuable perspectives on corporate strategy and emerging technology trends. His significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
Managing Director,
Sutter Hill Ventures
 
Age:  60
 
Director Since:  1993
Committees:  CC
Independent Director
 
 
 
 
 
drella03.jpg
 
PERSIS S. DRELL
Persis S. Drell has been the Provost of Stanford University since 2017. A Professor of Materials Science and Engineering and Professor of Physics, Dr. Drell has been on the faculty at Stanford since 2002, and was the Dean of the Stanford School of Engineering from 2014 to 2017. She served as the Director of the U.S. Department of Energy SLAC National Accelerator Laboratory from 2007 to 2012. Dr. Drell is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and is a fellow of the American Physical Society. She has been the recipient of a Guggenheim Fellowship and a National Science Foundation Presidential Young Investigator Award. Dr. Drell holds a Ph.D. from the University of California Berkeley and an AB degree in Mathematics and Physics from Wellesley College.
An accomplished researcher and educator, Dr. Drell brings to the Board expert leadership in guiding innovation in science and technology.

 
Provost, Stanford University
 
Age: 62
 
Director Since: 2015
Committees:  CC
Independent Director
 
 
 
 
gaithera04.jpg
 
JAMES C. GAITHER
James C. Gaither has been a partner of Sutter Hill Ventures, a venture capital investment firm, since 2000. He was a partner in the law firm Cooley LLP from 1971 to 2000 and senior counsel to the firm from 2000 to 2003. Prior to practicing law, he served as a law clerk to The Honorable Earl Warren, Chief Justice of the United States Supreme Court, special assistant to the Assistant Attorney General in the U.S. Department of Justice and staff assistant to U.S. President Lyndon Johnson. Mr. Gaither is a former president of the Board of Trustees at Stanford University, former vice chairman of the board of directors of The William and Flora Hewlett Foundation and past chairman of the Board of Trustees of the Carnegie Endowment for International Peace. Mr. Gaither holds a BA degree in Economics from Princeton University and a JD degree from Stanford University Law School.
Mr. Gaither brings to the Board expertise in corporate strategy and negotiating complex transactions. He also provides valuable perspectives on the roles and responsibilities of a corporate board, including oversight of a public company’s legal and regulatory compliance and engagement with regulatory authorities. His significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
Managing Director, Sutter Hill Ventures
 
Age:  80
 
Director Since: 1998
Committees:  NCGC
Independent Director
 
 
 

11


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JEN-HSUN HUANG
Jen-Hsun Huang co-founded NVIDIA in 1993 and has since served as president, chief executive officer, and a member of the board of directors. Mr. Huang held a variety of positions from 1985 to 1993 at LSI Logic Corp., a computer chip manufacturer, including leading the business unit responsible for the company’s system-on-a-chip strategy. He was a microprocessor designer from 1984 to 1985 at Advanced Micro Devices, Inc., a semiconductor company. Mr. Huang holds a BSEE degree from Oregon State University and an MSEE degree from Stanford University.
Mr. Huang is one of the technology industry’s most respected executives, having taken NVIDIA from a startup to a world leader in visual computing. Under his guidance, NVIDIA has compiled a record of consistent innovation and sharp execution, marked by products that have gained strong market share.
 
President and Chief Executive Officer, NVIDIA Corporation
 
Age:  55
 
Director Since: 1993
Committees:  None
 
 
 
imagf28.jpg
 
DAWN HUDSON
Dawn Hudson has served as Chief Marketing Officer for the National Football League since 2014. She announced in March 2018 her intention to step down from the role effective April 2018. Ms. Hudson served from 2009 to 2014 as vice chairman of The Parthenon Group, an advisory firm focused on strategy consulting. She was president and chief executive officer of Pepsi-Cola North America, the beverage division of PepsiCo, Inc. for the U.S. and Canada, from 2005 to 2007 and president from 2002, and simultaneously served as chief executive officer of the foodservice division of PepsiCo, Inc. from 2005 to 2007. Previously, she spent 13 years in marketing, advertising and branding strategy, holding leadership positions at major agencies, such as D’Arcy Masius Benton & Bowles and Omnicom. Ms. Hudson currently serves on the board of directors of The Interpublic Group of Companies, Inc., an advertising holding company. She was a director of P.F. Chang’s China Bistro, Inc., a restaurant chain, from 2010 until 2012, of Allergan, Inc., a biopharmaceutical company, from 2008 until 2014, of Lowes Companies, Inc., a home improvement retailer, from 2001 until 2015, and of Amplify Snack Brands, Inc., a snack food company, from 2014 until 2018. She holds a BA degree in English from Dartmouth College.
Ms. Hudson brings to the board experience in executive leadership. As a longtime marketing executive, she has valuable expertise and insights in leveraging brands, brand development and consumer behavior. She also has considerable corporate governance experience, gained from more than 10 years of serving on the boards of public companies.

 
Chief Marketing Officer, National Football League
 
Age:  60
 
Director Since: 2013
Committees:  AC
Independent Director
Financial Expert
 
 

12


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HARVEY C. JONES
Harvey C. Jones has been the managing partner of Square Wave Ventures, a private investment firm, since 2004. Mr. Jones has been an entrepreneur, high technology executive and active venture investor for over 30 years. In 1981, he co-founded Daisy Systems Corp., a computer-aided engineering company, ultimately serving as its president and chief executive officer until 1987. Between 1987 and 1998, he led Synopsys. Inc., a major electronic design automation company, serving as its chief executive officer for seven years and then as executive chairman. In 1997, Mr. Jones co-founded Tensilica Inc., a privately held technology IP company that developed and licensed high performance embedded processing cores. He served as chairman of the Tensilica board of directors from inception through its 2013 acquisition by Cadence Design Systems, Inc. In 2016, Mr. Jones joined the board of directors of and invested in TempoQuest, a private company seeking to develop advanced weather forecasting systems that exploit accelerated GPU technology. He was a director of Tintri Inc., a company that builds data storage solutions for virtual and cloud environments, from 2014 until March 2018. Mr. Jones holds a BS degree in Mathematics and Computer Sciences from Georgetown University and an MS degree in Management from Massachusetts Institute of Technology.
Mr. Jones brings to the board an executive management background, an understanding of semiconductor technologies and complex system design. He provides valuable insight into innovation strategies, research and development efforts, as well as management and development of our technical employees. His significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
Managing Partner, Square Wave Ventures
 
Age:  65
 
Director Since: 1993
Committees:  CC, NCGC
Independent Director
Financial Expert
 
 
mccafferya03.jpg
 
MICHAEL G. McCAFFERY
Michael G. McCaffery is the Chairman and a Managing Director of Makena Capital Management, an investment management firm. From 2005 to 2013, he was the Chief Executive Officer of Makena Capital Management. From 2000 to 2006, he was the President and Chief Executive Officer of the Stanford Management Company, the university subsidiary charged with managing Stanford University’s financial and real estate investments. Prior to Stanford Management Company, Mr. McCaffery was President and Chief Executive Officer of Robertson Stephens and Company, a San Francisco-based investment bank and investment management firm, from 1993 to 2009, and also served as Chairman in 2000. Mr. McCaffery serves on the board of directors, or on the advisory boards, of several privately held companies and non-profits. He was a director of KB Home, a homebuilding company, from 2003 until 2015. Mr. McCaffery is a Trustee of the Rhodes Scholarship Trust. He holds a BA degree from the Woodrow Wilson School of Public and International Affairs at Princeton University, a BA Honours degree and an MA degree in Politics, Philosophy and Economics from Merton College, Oxford University, Oxford, England, and an MBA degree from the Stanford Graduate School of Business.
Mr. McCaffery brings to the Board a broad array of business, investment and real estate experience and recognized expertise in financial matters, as well as a demonstrated commitment to good corporate governance.

 
Chairman and Managing Director, Makena Capital Management
 
Age:  64
 
Director Since: 2015
 
Committees:  AC
 
Independent Director
 
Financial Expert
 
 


13


perrya03.jpg
 
MARK L. PERRY
Mark L. Perry serves on the boards of, and consults for, various companies and non-profit organizations. From 2012 to 2013, Mr. Perry served as an Entrepreneur-in-Residence at Third Rock Ventures, a venture capital firm. He served from 2007 to 2011 as president and chief executive officer of Aerovance, Inc., a biopharmaceutical company. He was an executive officer from 1994 to 2004 at Gilead Sciences, Inc., a biopharmaceutical company, serving in a variety of capacities, including general counsel, chief financial officer, and executive vice president of operations, responsible for worldwide sales and marketing, legal, manufacturing and facilities; he was also its senior business advisor until 2007. From 1981 to 1994, Mr. Perry was with the law firm Cooley LLP, where he was a partner for seven years. He serves on the board of directors and as lead independent director of Global Blood Therapeutics, Inc. and on the board of directors and as chairman of MyoKardia, Inc., both biopharmaceutical companies. Mr. Perry holds a BA degree in History from the University of California, Berkeley, and a JD degree from the University of California, Davis.
Mr. Perry brings to the Board operating and finance experience gained in a large corporate setting. He has varied experience in legal affairs and corporate governance, and a deep understanding of the roles and responsibilities of a corporate board.
 
Independent Consultant
 
Age:  62
 
Director Since: 2005
 
Committees:  AC, NCGC
 
Independent Director
 
Financial Expert
 
 
 
 
 
imagf33.jpg
 
A. BROOKE SEAWELL
A. Brooke Seawell has served since 2005 as a venture partner at New Enterprise Associates, and was a partner from 2000 to 2005 at Technology Crossover Ventures. He was executive vice president from 1997 to 1998 at NetDynamics, Inc., an application server software company, which was acquired by Sun Microsystems, Inc. He was senior vice president and chief financial officer from 1991 to 1997 of Synopsys, Inc., an electronic design automation software company. He serves on the board of directors of Tableau Software, Inc., a business intelligence software company, and several privately held companies. Mr. Seawell served on the board of directors of Glu Mobile, Inc., a publisher of mobile games, from 2006 to 2014, and of Informatica Corp., a data integration software company, from 1997 to 2015. He also previously served as a member of the Stanford University Athletic Board and on the Management Board of the Stanford Graduate School of Business. Mr. Seawell holds a BA degree in Economics and an MBA degree in Finance from Stanford University.
Mr. Seawell brings to the Board operational expertise and senior management experience, including knowledge of the complex issues facing public companies, and a deep understanding of accounting principles and financial reporting. His significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
Venture Partner, New Enterprise Associates
 
Age:  70
 
Director Since: 1997
Committees:  CC
Independent Director
Financial Expert
 
 

14


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MARK A. STEVENS
Mark A. Stevens has been the managing partner of S-Cubed Capital, a private family office investment firm, since 2012. He was a managing partner from 1993 to 2011 of Sequoia Capital, a venture capital investment firm, where he had been an associate for the preceding four years. Previously, he held technical sales and marketing positions at Intel Corporation, and was a member of the technical staff at Hughes Aircraft Co. Mr. Stevens serves as a member of the board of directors of Quantenna Communications, Inc., a provider of Wi-Fi solutions and is a Trustee of the University of Southern California. Mr. Stevens holds a BSEE degree, a BA degree in Economics and an MS degree in Computer Engineering from the University of Southern California and an MBA degree from Harvard Business School.
Mr. Stevens brings to the Board a deep understanding of the technology industry, and the drivers of structural change and high-growth opportunities. He provides valuable insight regarding corporate strategy development and the analysis of acquisitions and divestitures. His significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
Managing Partner, S-Cubed Capital
 
Age:  58
 
Director Since: 2008
(previously served 1993-2006)
 
Committees:  AC, NCGC
Independent Director
 
 

 
imagf52.jpg
 
In Memoriam - William J. Miller
 
 
 
Mr. William J. Miller, the Lead Director of the Board, passed away in December 2017.  Mr. Miller had been on our Board since 1994 and was the chairman of the NCGC.  He served on the Board through NVIDIA’s initial public offering and served as a trusted adviser, providing steady leadership and guidance throughout the growth of the Company. He will be greatly missed.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 



15


Information About the Board of Directors and Corporate Governance
Independence of the Members of the Board of Directors
NASDAQ rules and our Corporate Governance Policies require that at least a majority of our directors not have a relationship that would interfere with their exercise of independent judgment in carrying out their responsibilities and meet any other qualification requirements required by the SEC and NASDAQ. After considering all relevant relationships and transactions, our Board determined that 91% of our directors are “independent” as defined by NASDAQ’s rules and regulations. Mr. Huang is the only non-independent director on our Board. The Board also determined that all members of our AC, CC and NCGC are independent under applicable NASDAQ listing standards. In addition, Messrs. McCaffery and Perry and Ms. Hudson of the AC are “audit committee financial experts” based on SEC rules.
Board Leadership Structure
We believe that all members of our Board should have an equal voice in the affairs and the management of NVIDIA. Consistent with this philosophy, while our Bylaws and Corporate Governance Policies allow for the appointment of a chairperson of the board, we have chosen at this time not to have one. Given that we do not have a chairperson, the Board believes that our stockholders are best served at this time by having an independent Lead Director, who is an integral part of our Board structure and a critical aspect of our effective corporate governance. The independent directors consider the role and designation of the Lead Director on an annual basis. Mr. Perry was appointed as our Lead Director effective March 2018 and brings such skills and experience, as described in Our Director Nominees, to the role. In addition, Mr. Perry serves on both the NCGC and the AC, which affords him increased engagement with Board governance and composition as well as with risk assessment and management, and financial and regulatory matters of the Company. While the CEO has primary responsibility for preparing the agendas for Board meetings and presiding over the portion of the meetings of the Board where he is present, our Lead Director has significant responsibilities, which are set forth in our Corporate Governance Policies, and include, in part:
Determining an appropriate schedule of Board meetings, and seeking to ensure that the independent members of the Board can perform their duties responsibly while not interfering with the flow of our operations;
Working with the CEO, and seeking input from all directors and other relevant management, as to the preparation of the agendas for Board meetings;
Advising the CEO on a regular basis as to the quality, quantity and timeliness of the flow of information requested by the Board from our management with the goal of providing what is necessary for the independent members of the Board to effectively and responsibly perform their duties, and, although our management is responsible for the preparation of materials for the Board, the Lead Director may specifically request the inclusion of certain material; and
Coordinating, developing the agenda for, and moderating executive sessions of the independent members of the Board, and acting as principal liaison between the independent members of the Board and the CEO on sensitive issues.
The active involvement of our independent directors, combined with the qualifications and significant responsibilities of our Lead Director, provide balance on the Board and promote strong, independent oversight of our management and affairs.
Role of the Board in Risk Oversight
The Board is responsible for overseeing risk management at NVIDIA. The Board exercises direct oversight of strategic risks to NVIDIA and other risk areas not delegated to one of its committees. Our AC has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The AC also monitors compliance with certain legal and regulatory requirements and oversees the performance of our internal audit function. Our NCGC monitors the effectiveness of our anonymous tip process and corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct, and oversees corporate social responsibility risks. Our CC assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Management periodically provides information, including guidance on risk management and mitigation, to the Board or relevant committee. Each committee also reports to the Board on those matters.

16


Corporate Governance Policies of the Board of Directors
The Board has documented our governance practices by adopting Corporate Governance Policies to ensure that the Board will have the necessary authority and processes in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The Corporate Governance Policies set forth the practices the Board follows with respect to board composition and selection, regular evaluations of the Board and its committees, board meetings and involvement of senior management, chief executive officer performance evaluation, and board committees and compensation. Our Corporate Governance Policies may be viewed under Corporate Governance in the Investor Relations section of our website at www.nvidia.com.
Executive Sessions of the Board
As required under NASDAQ’s listing standards, our independent directors have in the past met, and will continue to meet, regularly in scheduled executive sessions at which only independent directors are present. In Fiscal 2018, our independent directors met in executive session at three Board meetings.
In addition, independent directors have in the past met, and will continue to meet, regularly in scheduled executive sessions with our CEO. In Fiscal 2018, our independent directors met in executive session with the CEO at all of the four regularly scheduled Board meetings.
Director Attendance at Annual Meeting
We do not have a formal policy regarding attendance by members of the Board at our annual meetings. We generally schedule a Board meeting in conjunction with our annual meeting and expect that all of our directors will attend each annual meeting, absent a valid reason. All of our then-Board members attended our 2017 Meeting.
Board Self-Assessments
In Fiscal 2018, the NCGC oversaw an evaluation process, conducted at least annually, whereby outside corporate counsel for NVIDIA interviewed each director to obtain his or her evaluation of the Board as a whole, and of the committees on which he or she serves. The interviews solicited ideas from the directors about, among other things, improving quality of Board and/or committee oversight effectiveness regarding strategic direction, financial and audit matters, executive compensation and other key matters. The interviews also focused on Board process and identifying specific issues which should be discussed in the future. After these evaluations were complete, our outside corporate counsel summarized the results, reviewed with our previous Lead Director, Mr. Miller, and then submitted the summary for discussion by the NCGC. Action plans were developed by the NCGC and recommended for discussion and approval by the full Board.
In response to the evaluations conducted in Fiscal 2018, our Board determined to improve insight into committee activities by reviewing each committee’s annual agenda with a particular focus on strategic and risk related matters managed by such committees, and to encourage directors to travel with Company executives to our international offices to gain additional exposure to our international operations.
Director Orientation and Continuing Education
The NCGC and our General Counsel are responsible for director orientation programs and for director continuing education programs Continuing education programs for directors may include a combination of internally developed materials and presentations, programs presented by third parties, and financial and administrative support for attendance at qualifying academic or other independent programs.
Director Stock Ownership Guidelines
The Board believes that directors should hold a significant equity interest in NVIDIA. Our Corporate Governance Policies require each non-employee director to hold a number of shares of our common stock with a value equal to six times the annual cash retainer for Board service during the period in which he or she serves as a director (or six times the base salary, in the case of the CEO). The shares may include vested deferred stock, shares held in trust and shares held by immediate family members. Non-employee directors have five years after their Board appointment to reach the ownership threshold. Our stock ownership guidelines are intended to further align director interests with stockholder interests.
Each of our non-employee directors and Mr. Huang currently meets or exceeds the stock ownership requirements. Furthermore, due to the level of their respective stock ownership, during Fiscal 2018, each of Messrs. Coxe, Jones and Stevens were required to make a filing with the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and pay a filing fee of $45,000 or $125,000 as required. Consistent with our approach to compensation and perks, each of these individuals chose to pay his respective filing fee himself.

17


Hedging and Pledging Policy
Our directors and executive officers may not hedge their ownership of NVIDIA stock, including trading in options, puts, calls, or other derivative instruments related to NVIDIA stock or debt. Directors and executive officers may not purchase NVIDIA stock on margin, borrow against NVIDIA stock held in a margin account, or pledge NVIDIA stock as collateral for a loan.
Outside Advisors
The Board and each of its principal committees may retain outside advisors and consultants of their choosing at our expense. The Board need not obtain management’s consent to retain outside advisors. In addition, the principal committees need not obtain either the Board’s or management’s consent to retain outside advisors.
Code of Conduct
We expect our directors, executives and employees to conduct themselves with the highest degree of integrity, ethics and honesty. Our credibility and reputation depend upon the good judgment, ethical standards and personal integrity of each director, executive and employee. We have a Code of Conduct that applies to our executive officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer. We also have a Financial Team Code of Conduct that applies to our executive officers, directors and members of our finance department. We regularly review our Code of Conduct and related policies to ensure that they provide clear guidance to our directors, executives and employees.
The Code of Conduct and the Financial Team Code of Conduct are available under Corporate Governance in the Investor Relations section of our website at www.nvidia.com. If we make any amendments to the Code of Conduct or the Financial Team Code of Conduct or grant any waiver from a provision of either code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
Corporate Hotline
We have established an independent corporate hotline to allow any employee to confidentially and anonymously lodge a complaint about any accounting, internal control, auditing, Code of Conduct or other matter of concern (unless prohibited by local privacy laws for employees located in the European Union).
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate with the Board regarding nominations of directors or other matters may do so by sending written communications addressed to Timothy S. Teter, our Secretary, at NVIDIA Corporation, 2788 San Tomas Expressway, Santa Clara, California 95051. All stockholder communications we receive that are addressed to the Board will be compiled by our Secretary. If no particular director is named, letters will be forwarded, depending on the subject matter, to the chairperson of the AC, CC or NCGC. Matters put forth by our stockholders will be reviewed by the NCGC, which will determine whether these matters should be presented to the Board. The NCGC will give serious consideration to all such matters and will make its determination in accordance with its charter and applicable laws.
Majority Vote Standard
Our Bylaws provide that in a non-contested election if the votes cast FOR an incumbent director do not exceed the number of WITHHOLD votes, such incumbent director shall promptly tender his or her resignation to the Board. The NCGC will then review the circumstances surrounding the WITHHOLD vote and promptly make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken. The Board will act on the NCGC’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the stockholder vote.
In a contested election, which is an election in which the number of nominees exceeds the number of directors to be elected, our directors will be elected by a plurality of the shares represented at any such meeting or by proxy and entitled to vote on the election of directors at that meeting. Under this provision, the directors receiving the greatest number of FOR votes will be elected.
Board Meeting Information
The Board met five times during Fiscal 2018, and held a two-day meeting, during which the Board discussed the strategic direction of NVIDIA, explored and discussed new business opportunities and the product roadmap, and other matters facing NVIDIA. We expect each Board member to attend each meeting of the Board and the committees on which he or she serves. Each Board member attended 75% or more of the meetings of the Board and of each committee on which he or she served, with the exception of Mr. Miller, whose attendance fell below 75% due to illness.

18


Committees of the Board of Directors
The Board has three standing committees: an AC, a CC and a NCGC. Each of these committees operates under a written charter, which may be viewed under Corporate Governance in the Investor Relations section of our website at www.nvidia.com.
The composition and various functions of our committees are set forth below. Committee assignments are determined based on background and the expertise which individual directors can bring to a committee. Our Board believes that rotations among committees are a good corporate governance practice which allows all members to be more fully informed regarding the full scope of the Board and our activities. In addition to a rotation that took effect after the 2017 Meeting, in February 2018, upon the recommendations of the NCGC, the Board examined the composition and chairmanship of the Board’s committees and approved certain additional rotations, effective on March 1, 2018, as set forth below:
AC
Meetings in Fiscal 2018: 9
Fiscal 2018 Members before 2017 Meeting
Fiscal 2018 Members after 2017 Meeting
Members effective March 2018
Mark L. Perry (Chair)
Michael G. McCaffery
A. Brooke Seawell
Mark A. Stevens
Mark L. Perry (Chair)
Michael G. McCaffery
Dawn Hudson
Mark A. Steven
Michael G. McCaffery (Chair)
Dawn Hudson
Mark L. Perry
Mark A. Stevens
Committee Role and Responsibilities
Oversees our corporate accounting and financial reporting process;
Oversees our internal audit function;
Determines and approves the engagement, retention and termination of the independent registered public accounting firm, or any new independent registered public accounting firm;
Evaluates the performance of and assesses the qualifications of our independent registered public accounting firm;
Reviews and approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;
Confers with management and our independent registered public accounting firm regarding the results of the annual audit, the results of our quarterly financial statements and the effectiveness of internal control over financial reporting;
Reviews the financial statements to be included in our quarterly report on Form 10-Q and annual report on Form 10-K;
Reviews earnings press releases, as well as the substance of financial information and earnings guidance provided to analysts on our quarterly earnings calls;
Prepares the report required to be included by SEC rules in our annual proxy statement or Form 10-K; and
Establishes procedures for the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
CC
Meetings in Fiscal 2018: 5
Fiscal 2018 Members before 2017 Meeting
Fiscal 2018 Members after 2017 Meeting
Members effective March 2018
Robert K. Burgess (Chair)
Tench Coxe
Persis S. Drell
Dawn Hudson
Harvey C. Jones
Robert K. Burgess (Chair)
Tench Coxe
Persis S. Drell
Harvey C. Jones
A. Brooke Seawell
Robert K. Burgess (Chair)
Tench Coxe
Persis S. Drell
Harvey C. Jones
A. Brooke Seawell
Committee Role and Responsibilities
Reviews and approves our overall compensation strategy and policies;
Reviews and recommends to the Board the compensation of our Board members;
Reviews and approves the compensation and other terms of employment of Mr. Huang and other executive officers;
Reviews and approves corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management;
Reviews and approves the disclosure contained in CD&A and for inclusion in the proxy statement and Form 10-K;
Administers our stock option and purchase plans, variable compensation plans and other similar programs; and
Assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

19


NCGC
Meetings in Fiscal 2018: 3
Fiscal 2018 Members before 2017 Meeting
Fiscal 2018 Members after 2017 Meeting
Members effective March 2018
William J. Miller(1) (Chair)
James C. Gaither
Harvey C. Jones
Mark A. Stevens
William J. Miller(1) (Chair)
James C. Gaither
Harvey C. Jones
Mark A. Stevens
Harvey C. Jones (Chair)
James C. Gaither
Mark L. Perry
Mark A. Stevens
Committee Role and Responsibilities
Identifies, reviews and evaluates candidates to serve as directors;
Recommends candidates for election to our Board;
Makes recommendations to the Board regarding committee membership and chairs;
Assesses the performance of the Board and its committees;
Reviews and assesses our corporate governance principles and practices;
Monitors changes in corporate governance practices and rules and regulations;
Approves related party transactions;
Reviews and assesses our corporate social responsibility;
Establishes procedures for the receipt, retention and treatment of complaints we receive regarding violations of our Code of Conduct; and
Monitors the effectiveness of our anonymous tip process.
(1) Mr. Miller passed away in December 2017.

20


Director Compensation
In reviewing our non-employee directors’ compensation for the year starting on the date of our 2017 Meeting, the CC consulted with Exequity and reviewed data from our Fiscal 2017 peer group. The CC subsequently recommended, and the Board approved, a mix of cash and equity awards for our non-employee directors with an approximate target annual value of $300,000. This value is slightly below the median total annual compensation, both cash and equity, paid by technology peer companies of similar size and market capitalization to their non-employee directors. We do not pay any additional fees for serving as a chairperson or member of Board committees or for meeting attendance, and directors who are also employees do not receive any fees or equity compensation for service on the Board.
Cash Compensation
The cash portion of the annual retainer, representing $75,000 on an annualized basis, was paid quarterly.
Equity Compensation
The value of the equity award, in the form of RSUs, was $225,000. The number of shares subject to each RSU award equaled this value, divided by the average closing market price of our common stock over the 60 calendar days ending the business day before the 2017 Meeting. The RSUs were granted on the first trading day following the date of our 2017 Meeting.
To correlate the vesting of the RSUs to the non-employee directors’ service on the Board and its committees over the following year, the RSUs vested as to 50% on November 15, 2017 (the third Wednesday in November 2017) and will vest as to the remaining 50% on May 16, 2018 (the third Wednesday in May 2018). If a non-employee director’s service terminates due to death, his or her RSU grants will immediately vest in full for the benefit of his or her beneficiary. Non-employee directors do not receive dividend equivalents on unvested RSUs.
Deferral of Settlement
Non-employee directors could elect to defer settlement of RSUs upon vesting, to be issued on the earliest of (a) the date of the 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 director, which year must have been no earlier than 2019. Messrs. Gaither, Jones, McCaffery, and Miller, and Ms. Hudson elected to defer settlement of the RSUs granted to them in 2017.
Other Compensation/Benefits
Our non-employee directors are reimbursed for expenses incurred in attending Board and committee meetings, as well as in attending continuing educational programs pursuant to our Corporate Governance Policies. However, we do not offer change-in-control benefits to our directors, except for the change-in-control vesting acceleration provisions in our equity plans that are applicable to all holders of stock awards under such plans in the event that an acquiring company does not assume or substitute for such outstanding stock awards.


21


Director Compensation for Fiscal 2018
Name
 
Fees Earned or Paid in Cash ($)
 
Stock Awards ($) *
 
Total ($)
Robert K. Burgess
 
75,000
 
284,066
 
359,066
Tench Coxe
 
75,000
 
284,066
 
359,066
Persis S. Drell
 
75,000
 
284,066
 
359,066
James C. Gaither
 
75,000
 
284,066
 
359,066
Dawn Hudson
 
75,000
 
284,066
 
359,066
Harvey C. Jones
 
75,000
 
284,066
 
359,066
Michael G. McCaffery
 
75,000
 
284,066
 
359,066
William J. Miller
 
75,000
 
284,066
 
359,066
Mark L. Perry
 
75,000
 
284,066
 
359,066
A. Brooke Seawell
 
75,000
 
284,066
 
359,066
Mark A. Stevens
 
75,000
 
284,066
 
359,066
*
On May 24, 2017, each non-employee director received his or her RSU grant for 2,058 shares. Amounts shown in this column do not reflect dollar amounts actually received by the director. Instead, these amounts reflect the aggregate full grant date fair value calculated in accordance with FASB Accounting Standards Codification Topic 718, or FASB ASC Topic 718, for awards granted during Fiscal 2018. The assumptions used in the calculation of values of the awards are set forth under Note 2 to our consolidated financial statements titled Stock-Based Compensation in our Form 10-K. The grant date fair value per share for these awards as determined under FASB ASC Topic 718 was $138.03.
The following table provides information regarding the aggregate number of RSUs and stock options held by each of our non-employee directors as of January 28, 2018:
Name
 
RSUs
 
Stock Options
 
Name
 
RSUs
 
Stock Options
Robert K. Burgess
 
7,242

 
66,041

 
Michael G. McCaffery
 
18,927

 

Tench Coxe
 
1,029

 

 
William J. Miller *
 

 

Persis S. Drell
 
11,685

 

 
Mark L. Perry
 
1,029

 

James C. Gaither
 
8,271

 
20,000

 
A. Brooke Seawell
 
1,029

 
70,000

Dawn Hudson
 
25,764

 
90,177

 
Mark A. Stevens
 
1,029

 

Harvey C. Jones
 
8,271

 

 
 
 
 
 
 
*
Mr. Miller passed away in December 2017. Pursuant to the terms of our 2007 Plan, upon his death any unvested RSUs held by Mr. Miller accelerated, became fully vested and were transferred to his designated beneficiary, any RSUs previously deferred were accelerated, became fully vested and were transferred to his designated beneficiary, and any exercisable stock options were transferred to his designated beneficiary.
10,283 RSUs for which settlement was previously deferred were ultimately issued in Fiscal 2018 to each of Messrs. Burgess, Gaither, Jones, and McCaffery, and Dr. Drell.

22


Review of Transactions with Related Persons
It is our policy that all employees, officers and directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, our interests. This policy is included in our Code of Conduct and our Financial Team Code of Conduct. We conduct a review of all related party transactions for potential conflict of interest situations on an ongoing basis and all transactions involving executive officers or directors must be approved by the NCGC or another independent body of the Board. Except as discussed below, we did not conduct any transactions with related persons in Fiscal 2018 that would require disclosure in this proxy statement or approval by the NCGC.
Transactions with Related Persons
We have entered into indemnity agreements with our executive officers and directors which provide, among other things, that we will indemnify such executive officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, executive officer or other agent of NVIDIA, and otherwise to the fullest extent permitted under Delaware law and our Bylaws. We intend to execute similar agreements with our future executive officers and directors.
See the section below titled Employment, Severance and Change-in-Control Arrangements for a description of the terms of the 2007 Plan, related to a change-in-control of NVIDIA.
During Fiscal 2018, we have granted RSUs to our non-employee directors, and RSUs and PSUs to our executive officers. See the section above titled Director Compensation and the section below titled Executive Compensation.



23


Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of January 28, 2018 as to shares of our common stock beneficially owned by each of our NEOs, each of our directors, all of our directors and executive officers as a group, and all known by us to be beneficial owners of 5% or more of our common stock. Beneficial ownership is determined in accordance with the SEC’s rules and generally includes voting or investment power with respect to securities as well as shares of common stock subject to options exercisable, or PSUs or RSUs that will vest, within 60 days of January 28, 2018.
This table is based upon information provided to us by our executive officers and directors. Information about principal stockholders, other than percentages of beneficial ownership, is based solely on Schedules 13G/A filed with the SEC. Unless otherwise indicated and subject to community property laws where applicable, we believe that each of the stockholders named in the table has sole voting and investment power with respect to the shares indicated as beneficially owned. Percentages are based on 606,214,893 shares of our common stock outstanding as of January 28, 2018, adjusted as required by SEC rules.
Name of Beneficial Owner
 
Shares Owned
 
Shares Issuable Within 60 Days
 
Total Shares Beneficially Owned
 
Percent
NEOs:
 
 
 
 
 
 
 
 
 
Jen-Hsun Huang
 
21,401,650

(1) 
 
2,167,187

 
23,568,837

 
3.87%
Colette M. Kress
 
46,213

 
 
92,001

 
138,214

 
*
Ajay K. Puri
 
231,802

 
 
100,562

 
332,364

 
*
Debora Shoquist
 
56,410

 
 
66,250

 
122,660

 
*
Timothy S. Teter
 
243

 
 
12,175

 
12,418

 
*
Directors, not including Mr. Huang:
 
 
 
 
 
 
 
 
 
Robert K. Burgess
 
4,431

 
 
66,041

 
70,472

 
*
Tench Coxe
 
1,263,975

(2) 
 

 
1,263,975

 
*
Persis S. Drell
 
14,419

 
 

 
14,419

 
*
James C. Gaither
 
174,757

(3) 
 
26,213

 
200,970

 
*
Dawn Hudson
 
3,052

 
 
90,177

 
93,229

 
*
Harvey C. Jones
 
449,461

(4) 
 
6,213

 
455,674

 
*
Michael G. McCaffery
 
12,644

 
 
6,213

 
18,857

 
*
Mark L. Perry
 
87,040

(5) 
 

 
87,040

 
*
A. Brooke Seawell
 
130,000

(6) 
 
70,000

 
200,000

 
*
Mark A. Stevens
 
1,981,647

(7) 
 

 
1,981,647

 
*
Directors and executive officers as a group (15 persons)
 
25,857,744

(8) 
 
2,703,032

 
28,560,776

 
4.70%
5% Stockholders:
 
 
 
 
 
 
 
 
 
FMR LLC
 
48,149,925

(9) 
 

 
48,149,925

 
7.94%
The Vanguard Group, Inc.
 
41,103,179

(10) 
 

 
41,103,179

 
6.78%
BlackRock, Inc.
 
37,619,834

(11) 
 

 
37,619,834

 
6.21%
* Represents less than 1% of the outstanding shares of our common stock.
(1) 
Includes (a) 15,928,594 shares of common stock held by Jen-Hsun Huang and Lori Huang, as co-trustees of the Jen-Hsun and Lori Huang Living Trust, u/a/d May 1, 1995, or the Huang Trust; (b) 1,237,239 shares of common stock held by J. and L. Huang Investments, L.P., of which the Huang Trust is the general partner; (c) 557,000 shares of common stock held by The Huang 2012 Irrevocable Trust, of which Mr. Huang and his wife are co-trustees; (d) 714,855 shares of common stock held by The Jen-Hsun Huang 2016 Annuity Trust I, of which Mr. Huang is trustee; (e) 761,405 shares of common stock held by The Jen-Hsun Huang 2016 Annuity Trust II, of which Mr. Huang is trustee; (f) 714,855 shares of common stock held by The Lori Lynn Huang 2016 Annuity Trust I, of which Mr. Huang’s wife is trustee; and (g) 761,405 shares of common stock held by The Lori Lynn Huang 2016 Annuity Trust II, of which Mr. Huang’s wife is trustee. By virtue of their status as co-trustees of the Huang Trust and The Huang 2012 Irrevocable Trust, each of Mr. Huang and his wife may be deemed to have shared beneficial ownership of the shares referenced in (a) - (c), and to have shared power to vote or to direct the vote or to dispose of or direct the disposition of such shares.
(2) 
Includes (a) 171,312 shares of common stock held in a retirement trust over which Mr. Coxe exercises sole voting and investment power, and (b) 1,085,421 shares of common stock held in The Coxe Revocable Trust, of which Mr. Coxe and his wife are co-trustees and of which Mr. Coxe exercises

24


shared voting and investment power. Mr. Coxe disclaims beneficial ownership in the shares held by The Coxe Revocable Trust, except to the extent of his pecuniary interest therein.
(3) 
Includes 174,757 shares of common stock held by the James C. Gaither Revocable Trust U/A/D 9/28/2000, of which Mr. Gaither is the trustee and of which Mr. Gaither exercises sole voting and investment power.
(4) 
Includes 426,970 shares of common stock held in the H.C. Jones Living Trust, of which Mr. Jones is trustee and of which Mr. Jones exercises sole voting and investment power.
(5) 
Includes 40,000 shares of common stock held by The Perry & Pena Family Trust, of which Mr. Perry and his wife are co-trustees and of which Mr. Perry exercises shared voting and investment power.
(6) 
Represents shares of common stock held by the Rosemary & A. Brooke Seawell Revocable Trust U/A dated 1/20/2009, of which Mr. Seawell and his wife are co-trustees and of which Mr. Seawell exercises shared voting and investment power.
(7) 
Includes 1,824,352 shares of common stock held by the 3rd Millennium Trust, of which Mr. Stevens and his wife are co-trustees and of which Mr. Stevens exercises shared voting and investment power.
(8) 
Includes shares owned by all directors and executive officers.
(9) 
This information is based solely on a Schedule 13G/A, dated January 9, 2018, filed with the SEC on January 10, 2018 by FMR LLC reporting its beneficial ownership as of December 29, 2017. The Schedule 13G/A reports that FMR has sole voting power with respect to 10,679,309 shares and sole dispositive power with respect to 48,149,925 shares. FMR is located at 245 Summer Street, Boston, Massachusetts 02210.
(10) 
This information is based solely on a Schedule 13G/A, dated February 7, 2018, filed with the SEC on February 9, 2018 by The Vanguard Group, Inc. reporting its beneficial ownership as of December 31, 2017. The Schedule 13G/A reports that Vanguard has sole voting power with respect to 855,993 shares and sole dispositive power with respect to 40,140,181 shares. Vanguard is located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
(11) 
This information is based solely on a Schedule 13G/A, dated January 24, 2018, filed with the SEC on February 8, 2018 by BlackRock, Inc. reporting its beneficial ownership as of December 31, 2017. The Schedule 13G/A reports that BlackRock has sole voting power with respect to 32,604,182 shares and sole dispositive power with respect to 37,619,834 shares. BlackRock is located at 55 East 52nd Street, New York, New York 10055.


25


Proposal 2—Approval of Executive Compensation
What am I voting on?  A non-binding vote, known as “say-on-pay,” to approve our Fiscal 2018 NEO compensation.
Vote required: A majority of the shares present or represented by proxy.
Effect of abstentions: Same as a vote AGAINST.
Effect of broker non-votes: None.        
In accordance with Section 14A of the Exchange Act, we are asking our stockholders to vote on an advisory basis, commonly referred to as “say-on-pay”, to approve the compensation paid to our NEOs as disclosed in the CD&A, the compensation tables and the related narrative disclosure contained in this proxy statement. In response to our stockholders’ preference, our Board has adopted a policy of providing for annual “say-on-pay” votes. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement.
This advisory proposal is not binding on the Board or us. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and the Board and, accordingly, the Board and the CC intend to consider the results of this vote in making determinations in the future regarding NEO compensation arrangements.
Recommendation of the Board
The Board recommends that our stockholders adopt the following resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”


.



26


Executive Compensation
Compensation Discussion and Analysis
This section describes the Fiscal 2018 executive compensation for our NEOs, who were:
Name
 
Current Title
Jen-Hsun Huang
 
President and CEO
Colette M. Kress
 
Executive Vice President and CFO
Ajay K. Puri
 
Executive Vice President, Worldwide Field Operations
Debora Shoquist
 
Executive Vice President, Operations
Timothy S. Teter
 
Executive Vice President, General Counsel and Secretary*
* Mr. Teter joined NVIDIA in January of 2017 as Senior Vice President, General Counsel and Secretary, and received a new-hire RSU grant in Fiscal 2018. As a result, Mr. Teter did not receive the annual equity opportunity that the other NEOs received or any other equity grants in Fiscal 2018. Accordingly, for purposes of this CD&A: (i) references to, and calculations regarding, performance-based and/or at-risk compensation exclude Mr. Teter’s Fiscal 2018 pay, and (ii) “Other NEOs” include only Ms. Kress, Mr. Puri, and Ms. Shoquist.
Executive Summary
Executive Compensation Goals
We design our executive compensation program to pay for performance and to attract, motivate and retain a high-caliber executive team. Our program aligns our NEOs’ interests with those of our stockholders, creating long-term value. NEO pay is heavily weighted toward performance-based variable cash and long-term equity awards that are only earned if we achieve pre-established corporate financial metrics such as revenue, Non-GAAP Operating Income, and TSR. In Fiscal 2018, performance-based compensation represented 92% and 57% of the total target pay of Mr. Huang and our Other NEOs, respectively.
Stockholder Feedback
In recent years, our CC has modified our executive compensation program in response to stockholder feedback, which we solicit annually, including:
Transitioning Mr. Huang’s equity compensation to 100% PSUs and increasing the proportion of PSUs for our Other NEOs
Increasing the proportion of at-risk compensation to total target pay
Introducing PSUs that are based on relative TSR, with a multi-year performance period
Establishing and maintaining separate financial metrics for each type of performance-based compensation

Our Fiscal 2017 executive compensation program received over 97% “say-on-pay” approval from our stockholders. After considering this advisory vote and feedback from our annual stockholder outreach, our CC concluded that our program effectively aligned executive pay with stockholder interests. Therefore, the CC maintained the same general compensation structure and made refinements for Fiscal 2018 to strengthen the link between corporate performance and NEO pay even further, including increasing the proportion of NEO compensation that is at-risk and performance-based.

27


Executive Compensation Program
Our CC oversees our executive compensation program and determines pay components, target compensation, and achievement for our NEOs. Our Fiscal 2018 executive compensation consisted primarily of the following elements:
Compensation
Element
 
 
 
Fixed or
At-Risk
 
Performance
Measure
 
% of Fiscal 2018 Target Pay*
 
Purpose
 
 
 
CEO
 
Other NEOs
 
 
 
 
 
 
 
 
 
 
 
CASH
   Base Salary
 
Compensate for expected day-to-day performance
 
Fixed
 
N/A
 
8%
 
21%
   Variable Cash
 
Motivate and reward for annual corporate financial performance
 
At-Risk
 
Annual Revenue
 
9%
 
9%
EQUITY INCENTIVES
   RSUs
 
Align with stockholder interests by linking NEO pay to the performance of our common stock
 
At-Risk
 
N/A
 
N/A
 
22%
   SY PSUs
 
Align with short-term stockholder interests by linking NEO pay to annual operational performance
 
At-Risk
 
Annual Non-GAAP Operating Income
 
55%
 
44%
   MY PSUs
 
Align with long-term stockholder interests by linking NEO pay to multi-year shareholder return
 
At-Risk
 
3-Year TSR Relative to S&P 500
 
28%
 
4%
 
 
 
 
 
 
 
 
 
 
 
% OF PERFORMANCE-BASED PAY:
 
92%
 
57%
% OF AT-RISK PAY:
 
92%
 
79%
* Calculations based on total target pay as approved by the CC, consisting of base salary, target opportunity under our Variable Cash Plan, and target value of equity opportunities the CC intended to deliver.
Financial Highlights
Starting with a focus on PC graphics, NVIDIA invented the GPU to solve some of the most complex problems in computer science. We have extended our focus in recent years to the revolutionary field of artificial intelligence. Our platform strategy combines hardware, system software, programmable algorithms, libraries, systems, and services to create unique value for the Gaming, Professional Visualization, Datacenter, and Automotive markets. For Fiscal 2018, NVIDIA’s TSR was 119% and we reported record revenue of $9.71 billion and record Non-GAAP Operating Income of $3.62 billion.
financialperformancea07.jpg
See Reconciliation of Non-GAAP Financial Measures in this CD&A for a reconciliation between the non-GAAP measures and GAAP results.
On January 28, 2018, the MY PSUs granted in Fiscal 2016 completed the three-year performance measurement period covering Fiscal 2016 through Fiscal 2018. NVIDIA’s TSR for this three-year period was 971%, representing the 100th percentile of companies in the S&P 500.
For Fiscal 2018:
Our NEOs were awarded cash payouts of 200% of target opportunity under our Fiscal 2018 Variable Cash Plan;
Shares representing 150% of Mr. Huang’s Fiscal 2018 SY PSU target opportunity and 200% of the Other NEOs’ respective Fiscal 2018 SY PSU target opportunity became eligible to vest over four years from the date of grant; and
Shares representing 150% of Mr. Huang’s MY PSU target opportunity and 200% of the Other NEOs’ respective MY PSU target opportunity for the Fiscal 2016 though Fiscal 2018 performance period became eligible to vest fully in March 2018

28


Our Compensation Practices
Our executive compensation program adheres to the following practices:
What We Do
 
What We Don’t Do
üEmphasize at-risk, performance-based compensation, with objective and distinct goals for each such component
üInclude multi-year PSU awards
üUse objective annual and 3-year performance targets to determine SY PSU and MY PSU awards earned, respectively
üRequire NEOs to provide continuous service for 12 months to vest in any equity awards and 4 years to fully vest in SY PSU and RSU awards
üReevaluate and adjust our program annually based on stockholder and corporate governance group feedback
üMinimize inappropriate risk-taking
üCap performance-based variable cash and PSU payouts
üRetain an independent compensation consultant reporting directly to the CC
üRequire our NEOs to maintain meaningful stock ownership
üEnforce “no-hedging” and “no-pledging” policies
üMaintain a clawback policy for performance-based compensation
 
X Enter into agreements with NEOs providing for specific terms of employment or severance benefits
X Give our executive officers special change-in-control benefits
X Provide automatic equity vesting upon a change-in-control (except for the provisions in our equity plans that apply to all employees if an acquiring company does not assume or substitute our outstanding stock awards)
X Give NEOs supplemental retirement benefits or perquisites that are not available to all employees
X Provide tax gross-ups
X Reprice stock options without stockholder approval
X Use discretion in performance incentive award determination
X Pay dividends or the equivalent on unearned or unvested shares
How We Determine Executive Compensation
Our CC manages our executive compensation program according to the cycle below:timelinea09.jpg
In the Fall of 2017, management and a member of our Board again conducted outreach to stockholders regarding executive pay, which the CC considered as it determined our Fiscal 2019 compensation program.
Roles of the CC, Compensation Consultant and Management
Our CC solicits the input of Mr. Huang and the CC’s independent compensation consultant, Exequity, which reports directly to our CC. The roles of our CC, Exequity, and management, including our CEO, CFO, and Human Resources and Legal departments, in setting our Fiscal 2018 NEO compensation program are summarized below.
At the CC’s direction, Exequity and management recommended a peer group for our program, which was approved by the CC. Management then gathered peer data from the Radford Global Technology Survey, which was considered by Exequity in its analysis of Mr. Huang’s Fiscal 2018 compensation, and by Mr. Huang in his recommendations on Other NEOs’ Fiscal 2018 compensation. The CC considered Exequity’s advice, Mr. Huang’s recommendations, and management’s proposed Fiscal 2018 performance goals prior to making its final and sole decision on all Fiscal 2018 NEO compensation. The CC also certified performance-based Fiscal 2017 compensation payouts. Additionally, Exequity advised the CC on the compensation risk analysis prepared by management.

29


During Fiscal 2018, our CC continued to use Exequity for its experience working with our CC and with compensation committees at other technology companies. Our CC analyzed whether Exequity’s role in Fiscal 2018 raised any conflict of interest, considering: (i) Exequity does not provide any services directly to NVIDIA (although we pay Exequity on the CC’s behalf), (ii) the percentage of Exequity’s total revenue resulting from fees paid by us on the CC’s behalf, (iii) Exequity’s conflict of interest policies and procedures, (iv) any business or personal relationship between Exequity and an NEO, or between Exequity’s individual compensation advisors and an NEO or any member of our CC, and (v) any NVIDIA stock owned by Exequity or its individual compensation advisors. After considering these factors, our CC determined that Exequity’s work did not create any conflict of interest.
Peer Companies and Market Compensation Data
Our Fiscal 2018 peer companies (1) compete with us for executive talent; (2) have established businesses, market presence, and complexity similar to us; and (3) are of similar size to us, as measured by revenue and market capitalization at roughly 0.5-3.5x of us. Our peer group for Fiscal 2018 remained the same as it was for Fiscal 2017, except as noted below:
Fiscal 2018 Peer Group (1)
Activision Blizzard
Applied Materials (2)
Intuit, Inc.
Symantec Corporation
VMWare
Adobe Systems, Incorporated
Autodesk, Inc.
Lam Research
Tesla Motors, Inc.
Western Digital (2)
Advanced Micro Devices
eBay (2)
Micron Technology, Inc.
Texas Instruments (2)
Xilinx
Analog Devices, Inc.
Electronic Arts, Inc.
Network Appliance, Inc.
 
 
(1) Agilent Technologies, Inc., Citrix Systems Inc., and Juniper Networks, Inc., each a Fiscal 2017 peer, were removed for Fiscal 2018 because their respective revenue and market capitalization fell below our targeted range.
(2) Added for similar industry and similar revenue to us.
The CC determined our Fiscal 2018 peer group in February 2017. At that time, our Fiscal 2017 revenue and market capitalization compared to our peer group companies as follows:
 
 
Revenue
 
Market Capitalization
Fiscal 2018 Peer Group
 
$2.21 billion - $13.00 billion
 
$10.89 billion - $75.44 billion
NVIDIA
 
$6.91 billion
 
$62.73 billion
Our CC reviews market practices and compensation data from the Radford survey for peer companies’ comparably-situated executives when determining the components of our executive compensation program as well as total compensation. The CC compares the total compensation opportunity for our NEOs and similarly-situated executives at the 25th, 50th and 75th percentiles of peer company data. Our CC determines NEO compensation opportunities, informed by this data and considering the factors below.
Factors Used in Determining Executive Compensation
Our CC considers the following factors in establishing executive compensation. The weight given to each factor may differ among NEOs and each component of pay, and is subject to the CC’s sole discretion.
üThe need to attract and retain talent in a highly competitive industry
üStockholder feedback regarding our executive pay
üAn NEO’s past performance and anticipated future contributions
üOur financial performance and forecasted results
üThe 25th, 50th and 75th percentiles of compensation and trends for similarly situated executives at peer companies, derived from the Radford Global Technology Survey
üThe need to motivate NEOs to address new business challenges
üEach NEO’s current total compensation
 
üInternal pay equity relative to similarly situated executives and the scope and complexity of the department or function the NEO manages
üOur CEO’s recommendations for the other NEOs, including his understanding of each NEO’s performance, capabilities, contributions
üEach NEO’s unvested equity
üOur CC’s independent judgment
üOur philosophy that an NEO’s total compensation opportunity and percentage of at-risk pay should increase with responsibility
üThe total compensation cost and stockholder dilution from executive compensation, to maintain a responsible cost structure for our compensation programs*
* See Note 2, Stock-Based Compensation of our Form 10-K consolidated financial statements for a discussion of stock-based compensation cost.

30


Components of Pay and Pay Mix
The primary components of NVIDIA’s Fiscal 2018 executive compensation program are summarized below:
 
 
Fixed Compensation
 
At-Risk Compensation
 
Base Salary
 
Variable Cash
 
SY PSUs
 
MY PSUs
 
RSUs*
Form
 
Cash
 
Cash
 
Equity
 
Equity
 
Equity
Who Receives
 
NEOs
 
NEOs
 
NEOs
 
NEOs
 
NEOs except Mr. Huang
When Granted or Determined
 
Annually in Fiscal Q1
 
Annually in Fiscal Q1
 
On the 6th business day of March
 
On the 6th business day of March
 
On the 6th business days of March and of September
When Paid or Earned
 
Paid retroactively to start of fiscal year, via biweekly payroll
 
If performance threshold achieved, earned after fiscal year end, paid in March
 
Shares eligible to vest determined after fiscal year end based on performance metric achievement
 
Shares eligible to vest determined after 3rd fiscal year end based on performance metric achievement
 
On each vesting date, subject to the NEO’s continued service on each such date
Performance Measure
 
N/A
 
Revenue (determines cash payout)
 
Non-GAAP Operating Income (determines number of shares eligible to vest)
 
TSR relative to the S&P 500 (determines number of shares eligible to vest)
 
N/A
Performance Period
 
N/A
 
1 year
 
1 year
 
3 years
 
N/A
Vesting Period
 
N/A
 
N/A
 
4 years
 
3 years
 
4 years
Vesting Terms
 
N/A
 
N/A
 
If performance threshold achieved, 25% on approximately the 1-year anniversary of the date of grant; 6.25% quarterly thereafter
 
If performance threshold achieved, 100% on approximately the 3-year anniversary of the date of grant
 
25% on approximately the 1-year anniversary of the date of grant; 6.25% quarterly thereafter
Timeframe Emphasized
 
Annual
 
Annual
 
Long-term
 
Long-term
 
Long-term
Maximum Amount That Can Be Earned
 
N/A
 
200% of target award opportunity under our Variable Cash Plan
 
150% of Mr. Huang’s SY PSU target opportunity and 200% of the Other NEOs’ respective SY PSU target opportunity

Ultimate value delivered depends on stock price on date earned shares vest
 
150% of Mr. Huang’s MY PSU target opportunity and 200% of the Other NEOs’ respective MY PSU target opportunity

Ultimate value delivered depends on stock price on date earned shares vest
 
100% of grant

Ultimate value delivered depends on stock price on date shares vest
* Our CC considers RSUs to be at-risk pay because the realized value depends on our stock price, which is a financial performance measure.
In addition, we maintain medical, vision, dental and accidental death and disability insurance as well as time off and paid holidays for all of our NEOs, on the same basis as our other employees. Like our other full-time employees, our NEOs are eligible to participate in our 401(k) plan, which includes a company match, and 2012 ESPP, unless otherwise prohibited by the rules of the Internal Revenue Service. For calendar 2017, we matched, on a dollar-for-dollar basis, each participant’s salary deferral contributions to the 401(k) plan, up to a maximum of $4,000, provided the participant was an employee on December 31, 2017. Each of our NEOs who participated in our 401(k) plan received a $4,000 match in Fiscal 2018.

31


The charts below illustrate the Fiscal 2018 target pay mix of Mr. Huang and the Other NEOs. Variable cash values represent the cash opportunity under the Variable Cash Plan upon achievement of target performance, and equity values represent the target value of the equity opportunities the CC intended to deliver at the time it approved the awards.
Fiscal 2018 CEO Target Pay Mix    
ceopaymixa08.jpg

Fiscal 2018 Other NEOs Target Pay Mix
otherneopaymixa01.jpg
Compensation Actions and Achievements
Stockholder Outreach
We value stockholder feedback and conduct an annual stockholder outreach program. During the Fall of 2016, we contacted our top 20 institutional stockholders (except for certain brokerage firms and institutional stockholders that do not engage in direct conversations with companies), representing an aggregate ownership of approximately 55% of our shares. A member of our Board and members of management discussed executive compensation with representatives of stockholders holding an aggregate of approximately 31% of our common stock. After considering their feedback, our CC concluded that our program effectively aligned executive pay with stockholder interests. Therefore, rather than make major structural changes, the CC refined our Fiscal 2018 program to strengthen the link between corporate performance and NEO pay even further, including increasing the proportion of NEO compensation that is at-risk and performance-based.
In the Fall of 2017, our management and a member of our Board again engaged in stockholder outreach. The CC considered the feedback from these meetings in making decisions regarding our Fiscal 2019 executive compensation program.
Total Target Compensation Approach
In deciding Fiscal 2018 compensation, our CC reviewed and considered each NEO’s total target pay opportunity, as well as how that opportunity was distributed across different pay elements. As part of that process, our CC compared Mr. Huang’s base salary, target variable cash opportunity, target equity opportunity, and total target pay against chief executives of our peer companies. For the Other NEOs, our CC reviewed their respective total target pay against similarly situated executives of our peers. The CC considered the factors discussed above in Factors Used in Determining Executive Compensation, the CC’s specific compensation objectives for Fiscal 2018 and, for the Other NEOs, Mr. Huang’s recommendation. Our CC did not use a single formula or assign a specific weight to any one factor in determining each NEO’s target pay. Rather, our CC used its business judgment and experience to set total target compensation, mix of cash and equity, and fixed and at-risk pay opportunities for each NEO to achieve our program’s objectives. When the CC set each element of pay for an NEO, it considered that change in the context of the levels of the other pay elements, and the resulting total target pay for such NEO, which fell between the 50th and 75th percentile of the peer market data. These amounts and structure allowed our NEOs to realize above-market value from equity awards and variable cash incentives only upon exceptional corporate performance.

32


Continued Emphasis on Long-Term, At-Risk, Performance-Based Equity Awards
For Fiscal 2018, the CC decided that long-term, at-risk, performance-based equity awards would again comprise a meaningful portion of NEO total target compensation. Accordingly, our NEOs received a substantial proportion of their total target compensation in the form of at-risk, performance-based equity awards. The CC continued to emphasize long-term equity awards by making the largest portion of NEO target pay long-term equity incentives and increasing the target value of the PSU components. Overall, the CC sought to enhance the long-term, at-risk opportunities to drive results and increase NEO and stockholder alignment, while providing sufficient annual cash compensation to be competitive and retain our NEOs. The PSUs and RSUs provide long-term incentives and retention benefits because our NEOs must remain with us for a multi-year period (3 years for MY PSUs and 4 years for SY PSUs and RSUs) and, for PSUs, only if the performance goal is achieved, to fully vest in the awards.
The CC concluded that a majority of the NEOs’ target equity opportunity should be at-risk and performance-based, and that, given Mr. Huang’s position as CEO, 100% of his grant should be at-risk and performance-based, tightly aligning his interests with stockholders. For the Other NEOs, the CC decided to provide roughly 70% of the target equity opportunity in the form of PSUs and 30% of the target equity opportunity in the form of RSUs, subject to individual adjustments determined appropriate by the CC. The CC decided to grant Mr. Huang’s target equity opportunity 100% in the form of SY PSUs (which value is aligned with our Non-GAAP Operating Income performance) and MY PSUs (which value is aligned with our relative stock price performance).
The CC evaluated market positioning, internal pay equity, individual performance, and level of unvested equity to determine a target equity opportunity value for Mr. Huang and our Other NEOs. To determine actual shares awarded to achieve the target value, the CC used the 120-day trailing average of our stock price, as opposed to our stock price on the grant date, reducing the impact of daily volatility on compensation decisions. This average determined the number of RSUs and the target number of SY PSUs and MY PSUs.
Our CC structured RSUs grants to the Other NEOs in two installments in order to re-assess our executive equity compensation mid-year. At the beginning of Fiscal 2018, the CC determined a total annual RSU award value for each of the Other NEOs and made initial grants of RSUs representing 50% of that value. In mid-Fiscal 2018, the CC reduced the number of RSUs awarded in the second biannual grant by approximately 40%, which they believed appropriately adjusted for the increase in our stock price since early Fiscal 2018.
The target numbers of SY PSU and MY PSU shares for each NEO were the numbers of shares eligible to vest upon our achievement of the Base Operating Plan Non-GAAP Operating Income performance goal for Fiscal 2018, and the Base Operating Plan TSR performance goal over a 3-year period relative to the S&P 500, respectively. No shares were eligible to vest if Threshold performance was not achieved. Shares underlying any PSUs that are not earned are cancelled.
If we achieved at least Threshold performance, the minimum number of shares eligible to vest was 50% of the SY PSU target opportunity and 25% of the MY PSU target opportunity. The maximum number of shares eligible to vest was capped at 150% of Mr. Huang’s SY PSU and MY PSU target opportunities and 200% of the Other NEOs’ respective SY PSU and MY PSU target opportunities if we achieved respective Stretch Operating Plan performance. 25% of the eligible SY PSU shares would vest on approximately the one-year anniversary of the grant date and 6.25% of the eligible SY PSU shares would vest every quarter thereafter over the next three years, subject to each NEO’s continued service with us. All of the eligible MY PSUs would vest following the end of the 3-year performance period.
Adjustments to Cash Compensation
While the CC emphasized performance-based equity awards, it also recognized that we had not adjusted certain NEOs’ cash compensation in recent years. Accordingly, the CC increased the target variable cash compensation for all NEOs and increased NEO base salaries to provide competitive cash compensation relative to our peer companies. Mr. Huang’s salary was at the median of peer chief executive officers, and therefore did not receive a salary increase. As Mr. Teter had joined NVIDIA in late Fiscal 2017, the CC did not adjust the base salary or target variable cash stated in his offer letter.

33


Goals for Certain Performance-Based Compensation
Based on the Fiscal 2018 strategic plan as approved by the Board, the CC set the following performance metrics and goals:
 
 
Variable Cash Plan
 
SY PSUs
 
MY PSUs
Metric
 
Revenue
 
Non-GAAP Operating Income
 
TSR relative to the S&P 500
Timeframe
 
1 year
 
1 year
 
3 years
CC’s Rationale for Metric
 
Key indicator of our annual performance which drives value and contributes to Company’s long-term success
Our executive team focuses on growth in the Company's specialized markets where our technologies did not previously exist; revenue growth a strong predictor of the Company's future success

Distinct, separate metric from Non-GAAP Operating Income
 
Key indicator of our annual performance which drives value and contributes to Company’s long-term success
Reflects both our annual revenue generation and
effective management of operating expenses
To ensure long-term performance emphasis, structured to vest over a 4-year period
 
Aligns directly with shareholder value creation over a 3-year period

Provides direct comparison of our stock price performance (including dividends) against an index that represents a broader capital market
with which we compete

Relative (as opposed to absolute) nature of goals accounts for macroeconomic factors impacting the broader market
 
 
Performance Goal
 
Shares Eligible to Vest as a % of Target Opportunity(2)
 
Performance Goal
 
Shares Eligible to Vest as a % of Target Opportunity(2)
 
Performance Goal
 
Shares Eligible to Vest as a % of Target Opportunity(2)
Threshold(1)
 
$7.20 billion
 
50%
 
$1.99 billion
 
50%
 
25th percentile
 
25%
Base Operating Plan
 
$7.70 billion
 
100%
 
$2.28 billion
 
100%
 
50th percentile
 
100%
Stretch Operating Plan
 
$9.00 billion
 
200%
 
$3.15 billion
 
150% for Mr. Huang; 200% for the Other NEOs
 
75th percentile
 
150% for Mr. Huang; 200% for the Other NEOs
(1) 
Achievement less than the Threshold goal would result in no payout.
(2) 
For achievement between Threshold and Base Operating Plan and between Base Operating Plan and Stretch Operating Plan, payouts would be determined using straight-line interpolation.
CC’s Rationale for Performance Goals
The CC set performance goals to achieve the program’s objectives, with the following rationales:
 
 
Variable Cash Plan
 
SY PSUs
 
MY PSUs
Stretch Operating Plan goals required significant achievement; only possible with strong market factors and a very high level of management execution and corporate performance
 
ü
 
ü
 
ü
Base Operating Plan goals:
 
 
 
 
 
 
Uncertain, but attainable with significant effort and execution success
 
ü
 
ü
 
ü
Included budgeted investments in future growth businesses and revenue growth (and, for SY PSUs and MY PSUs, gross margin growth) considering both macroeconomic conditions and reasonable but challenging growth estimates for our ongoing and new businesses
 
ü
 
ü
 
ü
Set higher than Fiscal 2017 actual revenue and actual Non-GAAP Operating Income, as applicable, to recognize strong growth performance
 
ü
 
ü
 
 
Relative TSR performance must be at or above 50th percentile of market to earn awards at competitive compensation levels
 
 
 
 
 
ü
Threshold goals appropriately decelerated payout for performance below Base Operating Plan; uncertain, but attainable and high enough to create modest value
 
ü
 
ü
 
ü

34


Fiscal 2018 Achievement
The CC reviewed our Fiscal 2018 financial results against the performance goals set at the beginning of the year for our Variable Cash Plan, SY PSUs and MY PSUs:
Variable Cash Plan
For Fiscal 2018, we reported record revenue of $9.714 billion, resulting in a payout under our Fiscal 2018 Variable Cash Plan of 200% of the target opportunity.
variableplanachievementa05.jpg
SY PSUs
For Fiscal 2018, we reported record Non-GAAP Operating Income of $3.617 billion, resulting in the maximum number of SY PSUs granted in Fiscal 2018 becoming eligible to vest at 150% of Mr. Huang’s SY PSU target opportunity and 200% of the Other NEOs’ respective SY PSU target opportunity. 25% of the eligible shares vested on March 21, 2018 and 6.25% of the eligible shares vest quarterly thereafter.
sypsuachievementa19.jpg

35


MY PSUs
The MY PSUs granted in Fiscal 2016 completed the three-year performance measurement period on January 28, 2018. NVIDIA’s TSR over this three-year period was 971%, representing the 100th percentile of companies in the S&P 500, resulting in the maximum number of MY PSUs becoming eligible to vest at 150% of Mr. Huang’s MY PSU target opportunity and 200% of the Other NEOs’ respective MY PSU target opportunity. 100% of the eligible shares vested on March 21, 2018.
mypsuachievementa06.jpg
Achievement of the MY PSU goals for grants in Fiscal 2017 will be determined after January 27, 2019, the ending date of the three-year measurement period for the MY PSUs granted in Fiscal 2017.
Achievement of the MY PSU goals for grants in Fiscal 2018 will be determined after January 26, 2020, the ending date of the three-year measurement period for the MY PSUs granted in Fiscal 2018.
Target Fiscal 2018 Compensation Actions
The CC’s target Fiscal 2018 compensation actions are summarized below for each NEO, reflecting the target value of the variable cash and equity opportunities the CC intended to deliver. The CC considered the factors set forth in Factors Used in Determining Executive Compensation above and focused primarily on the total target pay opportunity for each NEO.
JEN-HSUN HUANG
 
 
Target Pay ($)
 
Fiscal 2018 Compensation Actions
President, CEO & Director
   Base Salary
 
1,000,000

 
No change
huanga05.jpg
   Variable Cash
 
1,100,000

 
Up 10%, after no increase in 3 years; earned at $2,200,000
Equity
 
9,877,800

 
Up 14%
   SY PSUs
 
6,601,500

 
Target award opportunity of 67,500 shares; 101,250 shares became eligible to vest
   MY PSUs
 
3,276,300

 
Target award opportunity of 33,500 shares
Total
 
11,977,800

 
Up 13%, to balance external market competitiveness with other chief executive officers at our peers and internal pay equity with our other NEOs, resulting in pay at the 50th percentile relative to peer group

36


COLETTE M. KRESS
 
 
Target Pay ($)
 
Fiscal 2018 Compensation Actions
EVP & CFO

   Base Salary
 
900,000

 
Up 16%, after no increase in 3 years
kressa01.jpg
   Variable Cash
 
300,000

 
Up 9%, after no increase in 3 years; earned at $600,000
Equity
 
3,281,500

 
Up 9%, primarily due to increase in PSUs
   SY PSUs
 
2,050,938

 
Target award opportunity of 19,500 shares; 39,000 shares became eligible to vest
   MY PSUs
 
210,353

 
Target award opportunity of 2,000 shares
   RSUs
 
1,020,210

 
Granted 9,700 shares
Total
 
4,481,500

 
Up 10%, to balance external market competitiveness with other peer chief financial officers and internal pay equity with our other NEOs, resulting in pay at the 50th-65th percentile relative to peer group
AJAY K. PURI
 
 
Target Pay ($)
 
Fiscal 2018 Compensation Actions
EVP, WW Field Operations
   Base Salary
 
950,000

 
Up 6%, after a minimal increase in the prior period
puria01.jpg
   Variable Cash
 
650,000

 
Up 30% to maintain variable cash as a meaningful portion of pay and due to revenue-generating leadership position and role in helping the Company to enter new markets; earned at $1,300,000
Equity
 
3,378,850

 
Up 8%, primarily due to increase in PSUs
   SY PSUs
 
2,105,202

 
Target award opportunity of 20,000 shares; 40,000 shares became eligible to vest
   MY PSUs
 
210,520

 
Target award opportunity of 2,000 shares
   RSUs
 
1,063,127

 
Granted 10,100 shares
Total
 
4,978,850

 
Up 10%, due to revenue-generating leadership position and role in helping the Company to enter new markets and to maintain internal pay equity with other NEOs, resulting in pay at the 65th-75th percentile relative to peer group
DEBORA SHOQUIST
 
 
Target Pay ($)
 
Fiscal 2018 Compensation Actions
EVP, Operations
   Base Salary
 
850,000

 
Up 21%, after no increase in 3 years
shoquista02.jpg
   Variable Cash
 
250,000

 
Up 67%, after no increase in 3 years and to provide consistent leverage with other NEOs; earned at $500,000
Equity
 
2,404,450

 
Up 14%, primarily due to increase in PSUs
   SY PSUs
 
1,522,468

 
Target award opportunity of 14,500 shares; 29,000 shares became eligible to vest
   MY PSUs
 
157,497

 
Target award opportunity of 1,500 shares
   RSUs
 
724,485

 
Granted 6,900 shares
Total
 
3,504,450

 
Up 19%, due to responsibility and scope as head of chips and systems operations, facilities, and information technology, and to maintain internal pay equity with other NEOs, resulting in pay at the 75th percentile relative to peer group
TIMOTHY S. TETER
 
 
Target Pay ($)
 
Fiscal 2018 Compensation Actions*
EVP, GC & Secretary
   Base Salary
 
850,000

 
Set to maintain internal pay equity with other NEOs
tetera03.jpg
   Variable Cash
 
250,000

 
Set to maintain internal pay equity with other NEOs; earned at $500,000
Equity
 
5,800,000

 
Granted 48,700 RSUs as a new-hire award, which our CC assessed was necessary to recruit Mr. Teter and to provide him with an opportunity to earn a significant ownership stake in the Company; 25% vested on March 21, 2018 and 6.25% vests quarterly thereafter
Total
 
6,900,000

 
Due to responsibility as head of legal and new-hire grant, at 65th percentile relative to peer group
* Excludes an anniversary bonus of $450,000 paid in Fiscal 2018 pursuant to Mr. Teter’s offer letter (which must be repaid upon a resignation or termination under certain circumstances occurring prior to his second anniversary of employment in Fiscal 2019). The CC determined that this special bonus was necessary to attract Mr. Teter, in consideration of his compensation opportunity at his prior employer.

37


Additional Executive Compensation Practices, Policies, and Procedures
Stock Ownership Guidelines
The Board believes that executive officers should hold a significant equity interest in NVIDIA. Our Corporate Governance Policies require the CEO to hold shares of our common stock valued at six times his base salary, and our other NEOs to hold shares of our common stock valued at the NEO’s respective base salary. NEOs have up to five years from appointment to reach the ownership threshold. The stock ownership guidelines are intended to further align NEO interests with stockholder interests. Each of our NEOs currently exceeds the stock ownership requirements.
Compensation Recovery (“Clawback”) Policy
In April 2009, our Board adopted a Compensation Recovery Policy for all employees. Under this policy, if we are required to prepare an accounting restatement to correct an accounting error on an interim or annual financial statement included in a report on Form 10-Q or Form 10-K due to material noncompliance with any financial reporting requirement under the federal securities laws, or a Restatement, and if the Board or a committee of independent directors concludes that our CEO, our CFO or any other employee received a variable compensation payment that would not have been payable if the original interim or annual financial statements had reflected the Restatement, which we refer to as the Overpayment, then:
Our CEO and our CFO will disgorge the net after-tax portion of the Overpayment; and
The Board or the committee of independent directors in its sole discretion may require any other employee to repay the Overpayment. In using its discretion, the Board or the independent committee may consider whether such person was involved in the preparation of our financial statements or otherwise caused the need for the Restatement and may, to the extent permitted by applicable law, recoup amounts by (1) requiring partial or full repayment by such person of any variable or incentive compensation or any gains realized on the exercise of stock options or on the open-market sale of vested shares, (2) canceling up to all and any outstanding equity awards held by such person and/or (3) adjusting the future compensation of such person.
We will review and update the Compensation Recovery Policy as necessary for compliance with the clawback policy provisions of the Dodd Frank Act when the final regulations related to that policy are issued.
Tax and Accounting Implications
Section 162(m) of the Internal Revenue Code disallows a deduction to any publicly-held corporation and its affiliates for certain compensation paid to “covered employees” in a taxable year to the extent that compensation exceeds $1 million per covered employee. Prior to the enactment of the Tax Cuts and Jobs Act in December 2017, Section 162(m)-qualified “performance-based compensation” was not subject to this deduction limitation. Pursuant to the Tax Cuts and Jobs Act, the Section 162(m) performance-based compensation exception was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for remuneration provided pursuant to a written binding contract which was in effect on November 2, 2017 and which was not modified in any material respect on or after such date. As a result, compensation paid to any of our covered employees in excess of $1 million per taxable year generally will not be deductible unless, among other requirements, it is intended to qualify, and is eligible to qualify, as Section 162(m) performance-based compensation pursuant to the transition relief provided by the Tax Cuts and Jobs Act. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief provided by the Tax Cuts and Jobs Act, no assurance can be given that any compensation paid by NVIDIA will be eligible for such transition relief and, therefore, eligible for the Section 162(m) performance-based compensation exception. The CC will continue to monitor the applicability of Section 162(m) to our ongoing compensation arrangements and intends to continue to compensate our NEOs in a manner consistent with the best interests of NVIDIA and our stockholders.
Our CC also considers the impact of Section 409A of the Internal Revenue Code, and in general, our executive plans and programs are designed to comply with the requirements of that section to avoid the possible adverse tax consequences that may arise from non-compliance.

38


Reconciliation of Non-GAAP Financial Measures
A reconciliation between our Non-GAAP Operating Income and GAAP operating income is as follows (in millions):
 
Fiscal 2018
 
Fiscal 2017
GAAP operating income
$
3,210

 
$
1,934

Stock-based compensation expense
 
391

 
 
248

Acquisition-related costs
 
13

 
 
16

Contributions
 
2

 
 
4

Legal settlement costs
 
1

 
 
16

Restructuring and other charges
 

 
 
3

Non-GAAP Operating Income
$
3,617

 
$
2,221

Risk Analysis of Our Compensation Plans
With the oversight of the CC, members from the Company’s legal, human resources and finance departments, collectively Management, and Exequity, the independent consultant engaged by the CC, performed an assessment of the Company’s compensation programs and policies for Fiscal 2018 as generally applicable to our employees to ascertain any potential material risks that may be created by our compensation programs. The assessment focused on programs with variability of payout and the ability of participants to directly affect payout and the controls over participant action and payout. Specifically, Management and Exequity reviewed the Company’s variable cash compensation, equity compensation, and sales incentive compensation programs. Management and Exequity identified the key terms of these programs, potential concerns regarding risk taking behavior and specific risk mitigation features. Management’s assessment was first presented to our Senior Vice President, Human Resources, our CFO and our General Counsel. The assessment was then presented to the CC.
The CC considered the findings of the assessment described above and concluded that our compensation programs, which are structured to recognize both short-term and long-term contributions to the Company, do not create risks which are reasonably likely to have a material adverse effect on our business or financial condition.
The CC believes that the following compensation design features guard against excessive risk-taking:
Compensation Design Features that Guard Against Excessive Risk-Taking
ü
Our compensation program encourages our employees to remain focused on both our short-term and long-term goals
ü
We design our variable cash and PSU compensation programs for executives so that payouts are based on achievement of corporate performance targets, and we cap the potential award payout
ü
We have internal controls over our financial accounting and reporting which is used to measure and determine the eligible compensation awards under our Variable Cash Plan and our SY PSUs
ü
Financial plan target goals and final awards under our Variable Cash Plan and our SY PSUs are approved by the CC and consistent with the annual operating plan approved by the full Board each year
ü
MY PSUs are designed with a relative goal
ü
We have a compensation recovery policy applicable to all employees that allows NVIDIA to recover compensation paid in situations of fraud or material financial misconduct
ü
All executive officer equity awards have multi-year vesting
ü
We have stock ownership guidelines that we believe are reasonable and are designed to align our executive officers’ interests with those of our stockholders
ü
We enforce a “no-hedging” policy and a “no-pledging” policy involving our common stock which prevents our employees from insulating themselves from the effects of NVIDIA stock price performance

39


Summary Compensation Table for Fiscal 2018, 2017, and 2016
The following table summarizes information regarding the compensation earned by our NEOs during Fiscal 2018, 2017, and 2016. Fiscal 2018 and 2017 were 52-week years and Fiscal 2016 was a 53-week year.
Name and Principal Position
 
Fiscal
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards ($) (1)
 
Non-Equity
Incentive Plan
Compensation
($) (2)
 
All Other
Compensation
($)
 
Total
($)
Jen-Hsun Huang
 
2018
 
999,985

 

 
 
9,787,985

 
2,200,000

 
 
5,562

(3) 
 
12,993,532

President and CEO
 
2017
 
996,216

 

 
 
9,188,400

 
2,000,000

 
 
5,622

(3) 
 
12,190,238

 
2016
 
1,018,941

 

 
 
7,456,900

 
1,490,566

 
 
4,694

(3) 
 
9,971,101

Colette M. Kress
 
2018
 
899,120

 

 
 
3,327,973

 
600,000

 
 
6,622

(4) 
 
4,833,715

Executive Vice President and CFO
 
2017
 
769,609

 

 
 
3,299,770

 
550,000

 
 
4,286

(4) 
 
4,623,665

 
2016
 
789,680

 
1,000,000

(5)
 
2,692,935

 
409,906

 
 
3,710

(4) 
 
4,896,231

Ajay K. Puri
 
2018
 
949,640

 

 
 
3,425,382

 
1,300,000

 
 
12,844

(6) 
 
5,687,866

Executive Vice President, Worldwide Field Operations
 
2017
 
889,573

 

 
 
3,378,130

 
1,000,000

 
 
11,283

(6) 
 
5,278,986

 
2016
 
891,574

 

 
 
2,865,555

 
708,019

 
 
10,096

(6) 
 
4,475,244

Debora Shoquist
 
2018
 
848,947

 

 
 
2,438,904

 
500,000

 
 
11,524

(4) 
 
3,799,375

Executive Vice President, Operations
 
2017
 
695,131

 

 
 
2,278,170

 
300,000

 
 
10,024

(4) 
 
3,283,325

 
2016
 
713,259

 

 
 
1,977,660

 
223,585

 
 
9,524

(4) 
 
2,924,028

Timothy S. Teter (7)
 
2018
 
849,988

 

 
 
5,668,193

 
500,000

 
 
2,622

(8) 
 
7,020,803

Executive Vice President, General Counsel and Secretary
 
2017
 
14,752

 

 
 

 

 
 

 
 
14,752

 
2016
 

 

 
 

 

 
 

 
 

(1) 
Amounts shown in this column do not reflect dollar amounts actually received by the NEO. Instead, these amounts reflect the aggregate full grant date fair value calculated in accordance with FASB ASC Topic 718 for the respective fiscal year for grants of RSUs, SY PSUs and MY PSUs, as applicable. The assumptions used in the calculation of values of the awards are set forth under Note 2 to our consolidated financial statements titled Stock-Based Compensation in our Form 10-K. With regard to the NEOs’ stock awards with performance-based vesting conditions, the reported grant date fair value assumes the probable outcome of the conditions at Base Operating Plan, determined in accordance with applicable accounting standards.
Based on Stretch Operating Plan performance in Fiscal 2018, the respective grant date fair values of SY PSUs and MY PSUs granted in Fiscal 2018 would be $9,759,488 and $4,922,490 for Mr. Huang, $3,759,210 and $501,000 for Ms. Kress, $3,855,600 and $501,000 for Mr. Puri, and $2,795,310 and $375,750 for Ms. Shoquist.  Based on Stretch Operating Plan performance in Fiscal 2017, the respective grant date fair values of SY PSUs and MY PSUs granted in Fiscal 2017 would be $8,920,500 and $4,862,100 for Mr. Huang, $3,474,300 and $519,720 for Ms. Kress, $3,599,500 and $519,720 for Mr. Puri and $2,441,400 and $346,480 for Ms. Shoquist. Based on Stretch Operating Plan performance in Fiscal 2016, the respective grant date fair values of SY PSUs and MY PSUs granted in Fiscal 2016 would be $7,108,200 and $4,077,150 for Mr. Huang, $2,972,520 and $472,950 for Ms. Kress, $3,101,760 and $472,950 for Mr. Puri and $2,154,000 and $378,360 for Ms. Shoquist.
(2) 
As applicable, reflects amounts earned in Fiscal 2018, 2017, and 2016 and paid in March or April following each respective year pursuant to our Variable Cash Plan for each respective year. For further information please see our Compensation Discussion and Analysis above.
(3) 
Represents a contribution to a health savings account and imputed income from life insurance coverage. These benefits are available to all eligible NVIDIA employees.
(4) 
Represents a match of contributions to our 401(k) savings plan and imputed income from life insurance coverage. These benefits are available to all eligible NVIDIA employees.
(5) 
Represents an anniversary bonus paid in Fiscal 2015 that was earned in Fiscal 2016.
(6) 
Represents a match of contributions to our 401(k) savings plan, a contribution to a health savings account and imputed income from life insurance coverage. These benefits are available to all eligible NVIDIA employees.
(7) 
Mr. Teter joined the Company in January of 2017.
(8) 
Represents imputed income from life insurance coverage. This benefit is available to all eligible NVIDIA employees.

40


Grants of Plan-Based Awards for Fiscal 2018
The following table provides information regarding all grants of plan-based awards that were made to or earned by our NEOs during Fiscal 2018. Disclosure on a separate line item is provided for each grant of an award made to an NEO. The information in this table supplements the dollar value of stock and other awards set forth in the Summary Compensation Table for Fiscal Years 2018, 2017 and 2016 by providing additional details about the awards. The PSUs and RSUs set forth in the following table were made under our 2007 Plan. PSUs are eligible to vest based on performance against pre-established criteria. Both SY PSUs and RSUs are subject to service-based vesting.
Name
 
Grant
Date
 
Approval
Date
 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards
 
All Other Stock
Awards: Number of Shares of Stock
or Units (#)
 
Grant Date
Fair Value
of Stock
Awards ($) (2)
 
Threshold ($)
 
Target ($)
 
Maximum ($)
 
Threshold (#)
 
Target (#)
 
Maximum (#)
 
Jen-Hsun Huang
 
3/8/17
 
3/7/17
(3) 
 
 
 

 
 
 
33,750

 
67,500

 
101,250

 

   
 
6,506,325

(4) 
 
3/8/17
 
3/7/17
(5) 
 
 
 

 
 
 
8,375

 
33,500

 
50,250

 

 
 
3,281,660

 
 
3/7/17
 
3/7/17
 
 
550,000

 
1,100,000

 
2,200,000

 
 
 

 
 
 

 
 

 
Colette M. Kress
 
3/8/17
 
3/7/17
(3) 
 
 
 

 
 
 
9,750

 
19,500

 
39,000

 

 
 
1,879,605

(4) 
 
3/8/17
 
3/7/17
(5) 
 
 
 

 
 
 
500

 
2,000

 
4,000

 

 
 
250,500

 
 
3/8/17
 
3/7/17