NVIDIA Corporation
NVIDIA CORP (Form: DEF 14A, Received: 04/07/2016 16:29:32)
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
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NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS

Date and time:
Wednesday, May 18, 2016 at 10:00 a.m. Pacific Daylight Time
 
 
Location:
Online at www.virtualshareholdermeeting.com/NVIDIA2016

Items of business:

Election of twelve 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 2017
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 vote at the meeting if you were a stockholder of record at the close of business on March 21, 2016.
 
 
Virtual meeting admission:
We will be holding our annual meeting online only this year. Stockholders of record as of March 21, 2016 will be able to participate in the annual meeting by visiting www.virtualshareholdermeeting.com/NVIDIA2016 . To participate in the annual meeting, you will need the control number included on your notice of Internet availability of the proxy materials or your proxy card (if you received a printed copy of the proxy materials).
 
 
Pre-meeting forum:
The new online format for the annual meeting also allows us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.theinvestornetwork.com/forum/nvda . On our pre-meeting forum, you can submit questions in advance of the annual meeting, and also access copies of our proxy statement and annual report.


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 18, 2016. This Notice, our Proxy Statement, our Annual Report on Form 10-K and our Stockholder Letter are available at www.nvidia.com/proxy .


By Order of the Board of Directors


David M. Shannon
Secretary

Santa Clara, California
April 7, 2016


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TABLE OF CONTENTS
 
PAGE
 


Table of Contents

DEFINITIONS
1998 ESPP
NVIDIA Corporation 1998 Employee Stock Purchase Plan
2007 Plan
NVIDIA Corporation Amended and Restated 2007 Equity Incentive Plan
2012 ESPP
NVIDIA Corporation Amended and Restated 2012 Employee Stock Purchase Plan
2015 Meeting
2015 Annual Meeting of Stockholders
2016 Meeting
2016 Annual Meeting of Stockholders
2017 Meeting
2017 Annual Meeting of Stockholders
AC
Audit Committee
Board
The Company’s Board of Directors
CC
Compensation Committee
CD&A
Compensation Discussion and Analysis
CEO
Chief Executive 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 2015
The Company’s fiscal year 2015 (January 27, 2014 to January 25, 2015)
Fiscal 2016
The Company’s fiscal year 2016 (January 26, 2015 to January 31, 2016)
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)
Form 10-K
The Company’s Annual Report on Form 10-K for Fiscal 2016 filed with the SEC on March 16, 2016
Full Value Award
An equity award other than a stock option or stock appreciation right
GAAP
Generally accepted accounting principles
Internal Revenue Code
U.S. Internal Revenue Code of 1986, as amended
Lead Director
Lead independent director
MY PSUs
PSUs with a multi-year performance metric
NASDAQ
The NASDAQ Stock Market LLC
NCGC
Nominating and Corporate Governance Committee
NEOs
Named Executive Officers
Non-GAAP Operating Income
GAAP operating income adjusted for stock-based compensation, product warranty charge, acquisition-related costs, and restructuring and other charges, as the Company reports in its earnings materials. The net aggregate adjustment to GAAP operating income for these items for Fiscal 2016 was $378 million
Notice
Notice of Internet Availability of Proxy Materials
NYSE
New York Stock Exchange
PSUs
Performance stock units
RSUs
Restricted stock units
S&P 500
Standard & Poor’s 500 Composite Index
SEC
U.S. Securities and Exchange Commission
Stretch Operating Plan
Maximum goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs
SY PSUs
PSUs with a single-year performance metric
Target Compensation Plan
Target goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs
Threshold Compensation Plan
Threshold goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs
TSR
Total stockholder return
PwC
PricewaterhouseCoopers LLP
Variable Cash Plan
The Company’s variable cash compensation plan

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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.

2016 Annual Meeting of Stockholders
Date and time:
Wednesday, May 18, 2016 at 10:00 a.m. Pacific Daylight Time
 
 
Location:
Online at www.virtualshareholdermeeting.com/NVIDIA2016
 
 
Record date:
Stockholders as of March 21, 2016 are entitled to vote
 
 
Admission to meeting:
You will need your Control Number to attend the annual meeting
Voting Matters and Board Recommendations
While we have summarized the 2016 Meeting proposals below, please review the proxy statement for more information. Every stockholder’s vote is important. Our Board urges you to vote your shares FOR each of the proposals below.
Matter
Page Number (for more detail)
Board Recommendation
Vote Required for Approval
Effect of Abstentions
Effect of Broker Non-Votes
Management Proposals:
 
Election of twelve 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 PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2017
FOR
Majority of shares present
Against
None
 
Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan
FOR
Majority of shares present
Against
None
 
Approval of an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan
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
Committees
AC
CC
NCGC
Robert K. Burgess
58
2011
 
Independent Consultant
 
 
Chair
 
Tench Coxe
58
1993
 
Managing Director, Sutter Hill Ventures
 
 
Member
 
Persis S. Drell
60
2015
 
Dean, School of Engineering, Stanford University
 
 
Member
 
James C. Gaither
78
1998
 
Managing Director, Sutter Hill Ventures
 
 
 
Member
Jen-Hsun Huang
53
1993
 
President & CEO, NVIDIA Corporation
 
 
 
 
Dawn Hudson
58
2013
 
Chief Marketing Officer, National Football League
 
 
Member
 
Harvey C. Jones
63
1993
 
Managing Partner, Square Wave Ventures
 
 
Member
Member
Michael G. McCaffery
62
2015
 
Chairman & Managing Director, Makena Capital Management
Member
*
 
 
William J. Miller**
70
1994
 
Independent Consultant
 
 
 
Chair
Mark L. Perry
60
2005
 
Independent Consultant
Chair
*
 
 
A. Brooke Seawell
68
1997
 
Venture Partner, New Enterprise Associates
Member
*
 
 
Mark A. Stevens
56
2008
***
Managing Partner, S-Cubed Capital
Member
 
 
Member

* AC Financial Expert
** Lead Director
*** Mr. Stevens previously served as a member of our Board from 1993 until 2006


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Board Overview

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 more veteran directors bring, the NCGC and Board have recognized the importance of bringing in new perspectives and ideas. Therefore, the Board has appointed four highly qualified new directors in the last five years, most recently with the additions of Dr. Drell and Mr. McCaffery in 2015. Below are the key 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:
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. Highlights of our corporate governance practices include:  
ü
Declassified Board
ü
Independent Lead Director
ü
Majority voting for directors
ü
11 out of 12 Board members independent
ü
Active Board oversight of risk and risk management
ü
At least annual Board and committee self-assessments
ü
Stock ownership guidelines for our directors and executive officers
ü
Annual stockholder outreach, including Lead Director participation
ü
75% or better attendance by each Board member at meetings of the Board and applicable committees
ü
Independent directors frequently meet in executive sessions

Regular stockholder outreach is important to us. We seek a collaborative approach to issues of importance to our stockholders that affect our business and also to ensure that they see our governance and executive pay practices as well-structured. Our management contacts each stockholder holding at least 1% of our common stock (except for brokerage firms and institutional stockholders whom we know do not engage in individual conversations with issuers) to gain valuable insights into the corporate governance and executive compensation issues they most care about. In Fall 2015, our Lead Director attended these meetings, and we expect representatives of the Board will continue to participate in future stockholder outreach.

Approval of Executive Compensation for Fiscal 2016 (Proposal 2)

We are asking our stockholders to cast a non-binding vote, also known as “say-on-pay,” to approve our NEO 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 has adopted a policy of providing for annual “say-on-pay” votes.

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Executive Compensation Highlights

At our 2015 Meeting, over 98% of the votes cast on our say-on-pay proposal were in support of the compensation paid to our NEOs for Fiscal 2015. Consistent with its strong commitment to engagement, communication and transparency, the CC continues to regularly review our executive compensation program to ensure alignment between the interests of our executive officers and stockholders. In response to feedback received in Fiscal 2015 during our regular stockholder outreach meetings, the CC made the following changes, each intended to further align pay with performance:

MY PSUs with a relative goal : introduced PSUs with a 3-year performance measure based on our TSR relative to the S&P 500 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and structured a meaningful portion of our CEO’s Fiscal 2016 equity award in the form of these 3-year PSUs
Separate performance metrics : assigned separate, distinct metrics for each component of our compensation where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as a goal for our Variable Cash Plan and for our PSUs)
Greater proportion of "at-risk," performance-based compensation : increased average “at-risk,” performance-based compensation as a percentage of total target pay
Component
Performance Metric
Percentage of CEO Pay
Percentage of Average
Other NEO Pay
Variable Cash Plan
Annual revenue
11%
9%
SY PSUs
Annual Non-GAAP Operating Income
51%
38%
MY PSUs
3-year TSR relative to the S&P 500
27%
  4%
 
 
89%
51%

Ratification of Selection of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for Fiscal Year 2017 (Proposal 3)
We are asking our stockholders to ratify the AC’s selection of PwC as our independent registered public accounting firm for Fiscal 2017. While we are not required to have our stockholders ratify the selection of PwC, we are doing so because we believe it is 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 during the year 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 Amended and Restated 2007 Equity Incentive Plan (Proposal 4)
We are asking our stockholders to approve an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan primarily to:

Increase the share reserve under our 2007 Plan by 18,800,000 shares;
Impose a minimum vesting requirement of 12 months from the date of grant on Full Value Awards under the 2007 Plan;
Prohibit acceleration of vesting on any awards under the 2007 Plan, with exceptions for a participant’s death or disability or in the event of certain corporate events; and
Make certain changes to the permitted adjustments for our performance goals.

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 Amended and Restated 2012 Employee Stock Purchase Plan (Proposal 5)
We are asking our stockholders to approve an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan to increase the share reserve under our 2012 ESPP by 10,000,000 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
2701 SAN TOMAS EXPRESSWAY
SANTA CLARA, CALIFORNIA 95050
(408) 486-2000
  ____________________________________________________
PROXY STATEMENT FOR THE 2016 ANNUAL MEETING OF STOCKHOLDERS - MAY 18, 2016
  ____________________________________________________

INFORMATION ABOUT THE MEETING

Your proxy is being solicited for use at the 2016 Meeting on behalf of the Board. Our 2016 Meeting will take place on Wednesday, May 18, 2016 at 10:00 a.m. Pacific Daylight Time.
Meeting Attendance

If you were an NVIDIA stockholder as of the close of business on the March 21, 2016 record date, or if you hold a valid proxy, you can attend and vote at our 2016 Meeting at www.virtualshareholdermeeting.com/NVIDIA2016 , which contains instructions on how to demonstrate proof of stock ownership, and how to vote and submit questions via the Internet. Our 2016 Meeting will be held entirely online to allow greater participation and improved communication, and provide cost savings for our stockholders and the Company. You will need the Control Number included on your Notice or proxy card (if you received a printed copy of the proxy materials) to enter the meeting.

The new online format for the annual meeting will allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.theinvestornetwork.com/forum/nvda . On our pre-meeting forum, you can submit questions in advance of the annual meeting, and also access copies of our proxy statement and annual report.

Even if you plan to attend the 2016 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 2016 Meeting.

Non-stockholders can also listen to the 2016 Meeting live at www.virtualshareholdermeeting.com/NVIDIA2016 . An archived copy of the webcast will be available at www.nvidia.com/proxy through June 1, 2016.

Quorum and Voting

Quorum. To hold our 2016 Meeting, we need a majority of the outstanding shares entitled to vote at the close of business on March 21, 2016, or a quorum, represented at the 2016 Meeting either by attendance online or by proxy. On the record date, there were 544,548,659 shares of common stock outstanding and entitled to vote, meaning that 272,274,330 shares must be represented at the 2016 Meeting or by proxy to have a quorum. A list of stockholders entitled to vote at the 2016 Meeting will be available at our headquarters, 2701 San Tomas Expressway, Santa Clara, California for 10 days prior to the 2016 Meeting. 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 2016 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 2016 Meeting to another date.

Vote Options . 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.


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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 21, 2016, and can vote shares in any of the following ways:

By attending the 2016 Meeting online and voting during the meeting;
Via mail, by signing and mailing your proxy card to us before the 2016 Meeting; or
By telephone or over 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 2016 Meeting in any of the following ways:

Attend the 2016 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, 2701 San Tomas Expressway, Santa Clara, California 95050, Attention: Secretary; or
Submit another proxy by telephone or 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 21, 2016, your shares are held in “street name.” As a beneficial owner, such nominee is the stockholder of record of your shares. However, you have the right to direct your nominee on how to vote the shares in your account. You should have received a Notice or voting instructions from your nominee, and should follow the included instructions in order to instruct such nominee on how to vote your shares. To vote by attending the 2016 Meeting online, you must obtain a valid proxy from your nominee.

If you do not instruct your nominee how to vote your shares, such nominee can use its discretion to vote such “uninstructed” shares with respect to matters considered by NYSE rules to be “routine”. However, your nominee will not be able to vote your shares with respect to “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, unless they receive specific instructions from you. A broker non-vote occurs when a nominee does not receive voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares. 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.

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 2016 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 21, 2016. Votes will be counted by the inspector of election. The following table summarizes vote requirements and the effect of abstentions and broker non-votes:
Proposal Number
Proposal Description
Vote Required for Approval
Effect of Abstentions
Effect of Broker Non-Votes
1
Election of twelve 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
Against
None
3
Ratification of the selection of PwC as our independent registered public accounting firm for Fiscal 2017
FOR  votes from the holders of a majority of shares present and entitled to vote
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
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
Against
None
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 2016 Meeting, Jen-Hsun Huang or David M. Shannon as your proxyholder will vote your shares using his best judgment.


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Vote Results . Preliminary voting results will be announced at the 2016 Meeting. Final voting results will be published in a current report on Form 8-K, which will be filed with the SEC by May 24, 2016.

Proxy Materials

An SEC rule allows companies like NVIDIA to furnish their proxy materials over the Internet even if the stockholder has not previously elected to receive the materials in this manner. On or about April 7, 2016, we sent stockholders who own our common stock at the close of business on March 21, 2016 (other than those who previously requested electronic or paper delivery) a Notice containing instructions on how to access our proxy materials, vote over 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 2701 San Tomas Expressway, Santa Clara, California 95050).

We will pay the entire cost of soliciting proxies. Our directors and employees may also solicit proxies in person, by telephone, by mail, by 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 an estimated fee of approximately $15,000 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.

2017 Annual Meeting Stockholder Proposals

To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 8, 2016 to NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050, Attention: Secretary and must comply with all applicable requirements of Rule 14a-8 promulgated under the Exchange Act. However, if we do not hold our 2017 Meeting between April 18, 2017 and June 17, 2017, 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 2017 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 December 8, 2016, and not earlier than November 8, 2016. We also advise you to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

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Proposal 1—Election of Directors
Our Board has twelve members. All of our directors have one-year terms and stand for election annually. Upon the recommendation of our NCGC, our Board has nominated for election at the 2016 Meeting the 12 individuals listed in the table below to hold office until the 2017 Meeting and until his or her successor is elected or appointed. Each of the nominees listed below is currently a director of NVIDIA previously elected by our stockholders.
Our nominees include 11 independent directors, as defined by the rules and regulations of NASDAQ, and one NVIDIA officer: Jen-Hsun Huang, who serves as our President and CEO.
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. In accordance with our Bylaws, directors are elected if they receive more FOR votes than WITHHOLD votes.

Recommendation of the Board
The Board recommends that you vote FOR the election of each of the following nominees:
Name
Age
Director Since
Occupation
Indepen-dent
Other Public Company Boards
Robert K. Burgess
58
2011
 
Independent Consultant
ü
1
Tench Coxe
58
1993
 
Managing Director, Sutter Hill Ventures
ü
2
Persis S. Drell
60
2015
 
Dean, School of Engineering, Stanford University
ü
James C. Gaither
78
1998
 
Managing Director, Sutter Hill Ventures
ü
Jen-Hsun Huang
53
1993
 
President & CEO, NVIDIA Corporation
 
Dawn Hudson
58
2013
 
Chief Marketing Officer, National Football League
ü
2
Harvey C. Jones
63
1993
 
Managing Partner, Square Wave Ventures
ü
Michael G. McCaffery
62
2015
 
Chairman & Managing Director, Makena Capital Management
ü
William J. Miller*
70
1994
 
Independent Consultant
ü
3
Mark L. Perry
60
2005
 
Independent Consultant
ü
2
A. Brooke Seawell
68
1997
 
Venture Partner, New Enterprise Associates
ü
1
Mark A. Stevens
56
2008
**
Managing Partner, S-Cubed Capital
ü
* Lead Director
** Mr. Stevens previously served as a member of our Board from 1993 until 2006

Director Qualifications

The Board looks for its current and potential directors to have a broad range of skills, education, experiences and qualifications that can be leveraged in order to benefit NVIDIA and our stockholders. The NCGC is responsible for reviewing, assessing and recommending nominees to the Board for approval. 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 and Qualifications
 
 

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
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

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Additionally, directors are expected to possess personal traits such as integrity and candor and must be able to commit significant time to the Company’s oversight. In determining whether to recommend a director for re-election, the NCGC also reviews the director’s overall service to NVIDIA, including the director’s past attendance at Board and committee meetings and participation in and contributions to the activities of the Board.

Ensuring the Board is composed of directors who exhibit a variety of skills, professional experience and backgrounds, as well as bring diverse viewpoints and perspectives, is a priority of the NCGC and the Board. The NCGC and the Board also 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 valuable experience and institutional knowledge that our more veteran directors bring, the NCGC and Board have recognized the importance of bringing in new perspectives and ideas. Therefore, the Board has appointed four highly qualified new directors in the last five years, constituting one-third of our total Board. Most recently, Dr. Drell and Mr. McCaffery joined the Board in 2015.

NVIDIA is thriving as a company in part because we have combined deep technology and computing industry experience developed during our 23-year history with groundbreaking initiatives in areas such as artificial intelligence and self-driving cars. Similarly, 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 background 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 the company 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. The following directors’ biographies note each director’s relevant experience, qualifications and skills relative to this list as of the date of this proxy statement.

COMPETENCY
Burgess
Coxe
Drell
Gaither
Huang
Hudson
Jones
McCaffery
Miller
Perry
Seawell
Stevens
Senior Management and Operating
ü
 
 
 
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
ü
Emerging Technologies and Business Models
 
ü
 
ü
 
 
ü
 
 
 
 
ü
Marketing and Brand Management
 
 
 
 
ü
ü
 
 
 
 
 
 
Legal
 
 
 
ü
 
 
 
 
 
ü
 
 

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 that led the NCGC and Board to believe that he or she should continue to serve on the Board.


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ROBERT K. BURGESS
Independent Consultant
 
 
Age :   58
Director Since : 2011
Committees :   CC
 
 
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 has served on the boards of several privately-held companies. He was a director of IMRIS Inc., a provider of image guided therapy solutions, 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.
 
 
TENCH COXE
Managing Director, Sutter Hill Ventures
 
 
Age :   58
Director Since :    1993
Committees :   CC
 
 
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.

 
 
PERSIS S. DRELL
Dean, School of Engineering, Stanford University
 
 
Age : 60
Director Since : 2015
Committees :   CC
 
 
Persis S. Drell is the Dean of the Stanford School of Engineering, a Professor in the School of Engineering and a Professor of Materials Science and Engineering and Physics at Stanford University. Dr. Drell, who assumed the post of Dean in September 2014, has been on the faculty at Stanford since 2002. Dr. Drell 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.


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JAMES C. GAITHER
Managing Director, Sutter Hill Ventures
 
 
Age :    78
Director Since : 1998
Committees :   NCGC
 
 
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.

 
 
JEN-HSUN HUANG
President and Chief Executive Officer, NVIDIA Corporation
 
 
Age :    53
Director Since : 1993
Committees :   none
 
 
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.

 
 
DAWN HUDSON
Chief Marketing Officer, National Football League
 
 
Age :    58
Director Since : 2013
Committees :   CC
 
 
Dawn Hudson has served as Chief Marketing Officer for the National Football League since October 2014. Previously, she 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. She currently serves on the boards of directors of The Interpublic Group of Companies, Inc., an advertising holding company, and Amplify Snack Brands, Inc., a snack food 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, and of Lowes Companies, Inc., a home improvement retailer, from 2001 until May 2015. 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.


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HARVEY C. JONES
Managing Partner, Square Wave Ventures
 
 
Age :    63
Director Since : 1993
Committees :   CC, NCGC
 
 
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 2014, coincident with his investment in the company, Mr. Jones joined the board of directors of Tintri Inc., a private company that builds data storage solutions for virtual and cloud environments. He also served as lead director on the board of directors of Wind River Systems, Inc. from 2006 until its sale to Intel Corporation in 2009. 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 financial expertise qualifies him to serve as an “audit committee financial expert” within the meaning of SEC rules, and his significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
MICHAEL G. MCCAFFERY
Chairman and Managing Director, Makena Capital Management
 
Age :    62
Director Since : 2015
Committees :   AC
 
Michael G. McCaffery   is the Chairman and a Managing Director of Makena Capital Management, an investment management firm. From December 2005 to December 2013, he was the Chief Executive Officer of Makena Capital Management. From September 2000 to June 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 January 1993 to December 2009, and also served as Chairman from January 2000 to December 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. Mr. McCaffery 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. His financial expertise qualifies him to serve as an “audit committee financial expert” within the meaning of SEC rules.

 
WILLIAM J. MILLER
Independent Consultant
 
Age :    70
Director Since : 1994
Committees :   NCGC
 
William J. Miller   has served as an independent consultant since 1999 and is on the board of directors of Waters Corp., a scientific instrument manufacturing company; Digimarc Corp., a developer and supplier of secure identification products and digital watermarking technology; and Glu Mobile, Inc., a publisher of mobile games. He was president, chief executive officer and chairman of the board of directors from 1996 to 1999 of Avid Technology, Inc., a provider of digital tools for multimedia. He was chief executive officer and a board director from 1992 to 1995 of Quantum Corp., a mass storage company, where he was chairman for three years. From 1981 to 1992, he held various positions at Control Data Corp., a supplier of computer hardware, software and services, including executive vice president and president, information services. He holds a BA degree in Communications and a JD degree from the University of Minnesota.

 
 
 
 
 
 
 
 
Mr. Miller brings to the Board considerable leadership and corporate governance experience and an understanding of the roles and responsibilities of a corporate board. His financial expertise qualifies him to serve as an “audit committee financial expert” within the meaning of SEC rules.


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MARK L. PERRY
Independent Consultant
 
Age :    60
Director Since : 2005
Committees :   AC
 
Mark L. Perry serves on the boards of, and consults for, various companies and non-profit organizations. From 2012 to 2015, 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 boards of directors of Global Blood Therapeutics, Inc. and 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. His financial expertise qualifies him to serve as an “audit committee financial expert” within the meaning of SEC rules.

 
 
A. BROOKE SEAWELL
Venture Partner, New Enterprise Associates
 
 
Age :    68
Director Since : 1997
Committees :   AC
 
 
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 August 2015. Mr. Seawell is a member of the Stanford University Athletic Board and previously served 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 financial expertise qualifies him to serve as an “audit committee financial expert” within the meaning of SEC rules and his significant financial community experience gives the Board an understanding of the methods by which companies can increase value for their stockholders.

 
 
MARK A. STEVENS
Managing Partner, S-Cubed Capital
 
 
Age :    56
Director Since : 2008
(previously served 1993-2006)
Committees :   AC, NCGC
 
 
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. He served from 2006 to 2012 as a member of the board of directors of Alpha and Omega Semiconductor Limited. He is a Trustee of the University of Southern California and a part-time lecturer at the Stanford University Graduate School of Business. 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.

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Information About the Board of Directors and Corporate Governance

Independence of the Members of the Board of Directors

Consistent with the requirements of NASDAQ, our Corporate Governance Policies require our Board to affirmatively determine that a majority of our directors do not have a relationship that would interfere with their exercise of independent judgment in carrying out their responsibilities and do meet any other qualification requirements required by the SEC and NASDAQ. After considering all relevant relationships and transactions, the Board determined all members of the Board are “independent” as defined by NASDAQ’s rules and regulations, except for Jen-Hsun Huang, our president and CEO. Thus, as of the date of the mailing of this proxy statement, 92% of the members of our Board are independent. The Board also determined that all members of our AC, CC and NCGC are independent under applicable NASDAQ listing standards. In addition, Messrs. McCaffery, Perry and Seawell of the AC are “audit committee financial experts” under 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 the Company. 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 of the board, the Board believes that our stockholders are best served at this time by having a Lead Director, who is an integral part of our Board structure and a critical aspect of effective corporate governance. The independent directors consider the role and designation of the Lead Director on an annual basis. Mr. Miller has been our Lead Director since May 2009. Mr. Miller brings considerable skills and experience, as described above, to the role. In addition, Mr. Miller is the chairperson of our NCGC, which affords him increased engagement with Board governance and composition. While our 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, 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 our CEO, seeking input from all directors, the CEO and other relevant management, as to the preparation of the agendas for Board and committee meetings;

Advising the Board 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.

As discussed above, except for our CEO, our Board is comprised of independent directors. The active involvement of these 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. Our CC assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Management periodically reports to the Board or relevant committee, which provides guidance on risk assessment and mitigation. Each committee charged with risk oversight reports up to the Board on those matters.


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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 practices 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 2016, our independent directors met in executive session at all of the four regularly scheduled 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 2016, our independent directors met in executive session with our CEO at two 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. Eleven of our twelve Board members attended our 2015 Meeting.

Board Self-Assessments

In Fiscal 2016, the NCGC oversaw an annual evaluation process, 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 discussions on key matters, and identifying specific issues which should be discussed in the future. After these evaluations were complete, our outside corporate counsel summarized the results, provided a preview for our Lead Director and then submitted the summary for discussion by the NCGC. Action plans were developed by the NCGC and recommended for discussion by the full Board.

In response to the evaluations conducted in Fiscal 2016, our Board added topics to the annual Board meeting agenda and expanded the list of materials that the Board should review at each Board meeting.

Director Orientation and Continuing Education

The NCGC and our General Counsel are responsible for director orientation programs and for director continuing education programs to assist directors in maintaining the skills and knowledge necessary or appropriate for the performance of their responsibilities. Orientation programs are designed to familiarize new directors with our businesses, strategies, and policies and to assist new directors in developing the skills and knowledge required for their service on the Board. 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 our CEO). The shares may include vested deferred stock and shares held in trust and by immediate family members. Non-employee directors had or have until the later of (i) the end of Fiscal 2016 or (ii) within five years of Board appointment, to reach the ownership threshold. The stock ownership guidelines are intended to further align director interests with stockholder interests.


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Each of our non-employee directors holds shares of our common stock, and, with the exception of Dr. Drell and Mr. McCaffery, who joined our Board in March 2015, each of our non-employee directors currently meets or exceeds the stock ownership requirements.

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 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, accounting and treasury departments. 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.

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. In order to better protect us and our stockholders, we regularly review our Code of Conduct and related policies to ensure that they provide clear guidance to our directors, executives and employees.

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 David M. Shannon, our Secretary, at NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050. 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.

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Nomination of Directors

The NCGC identifies, reviews and evaluates candidates to serve as directors and recommends candidates for election to the Board. The NCGC may engage a professional search firm to identify and assist the NCGC in identifying, evaluating and conducting due diligence on potential director nominees. The NCGC conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The NCGC meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board. For an explanation of the factors the NCGC considers when evaluating candidates and the Board as a whole, please see Director Qualifications above.

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 above. 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. Stockholders are advised to review our Bylaws and Corporate Governance Policies, which contain the requirements for director nominations. The NCGC did not receive any stockholder nominations during Fiscal 2016.

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 six times during Fiscal 2016, 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 addressed challenges 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.

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. The Board intends to make periodic rotations in the future, but determined to maintain the existing committee membership for Fiscal 2017.


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AC
CC
NCGC
Members
Mark L. Perry ( Chair )
Michael G. McCaffery
A. Brooke Seawell
Mark A. Stevens
Robert K. Burgess ( Chair )
Tench Coxe
Persis S. Drell
Dawn Hudson
Harvey C. Jones
William J. Miller ( Chair )
James C. Gaither
Harvey C. Jones
Mark A. Stevens
Meetings in Fiscal 2016
9
6
3
Functions

Oversees our corporate accounting and financial reporting process;
Oversees our internal audit function;
Determines and approves the engagement, retention and/or 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 the SEC rules in our annual proxy statement or annual report on 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.

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 our CEO 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 considers whether to recommend that it be included 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.

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;
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 and corporate governance guidelines.


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Director Compensation

In reviewing the compensation to be paid to our non-employee directors for the year starting on the date of our 2015 Meeting, the CC consulted with Exequity and reviewed data from our Fiscal 2015 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 annual value of $300,000. This value approximates the average total annual compensation, both cash and equity, paid by technology peer companies of similar size and market capitalization to their non-employee directors. We refer to this as the 2015 Program. We do not pay any additional fees for serving as a chairperson or member of Board committees or for meeting attendance.

Cash Compensation

Under the 2015 Program, the cash portion of the annual retainer, representing $75,000 on an annualized basis, was paid quarterly. Dr. Drell and Mr. McCaffery were each paid an additional $15,625 during Fiscal 2016, representing the pro-rated portion of their cash compensation for their service on the Board from the date of their appointments in March 2015 to the date of our 2015 Meeting.

Equity Compensation

2015 Program

Under the 2015 Program, the value of the equity award, in the form of RSUs, or the 2015 Program RSUs, was $225,000. The number of shares subject to each 2015 Program RSU equaled this value, divided by the average closing market price over the 60 calendar days ending the business day before the 2015 Meeting to smooth for any daily volatility. The 2015 Program RSUs were granted on the first trading day following the date of our 2015 Meeting.

In order to correlate the vesting of the 2015 Program RSUs to the directors’ service on the Board and its committees over the following year, 2015 Program RSUs vested as to 50% on November 18, 2015 (the third Wednesday in November 2015) and will vest as to the remaining 50% on May 18, 2016 (the third Wednesday in May 2016). If a director’s service terminates due to death, his or her 2015 Program RSU grants will immediately fully vest. Non-employee directors do not receive dividend equivalents on unvested 2015 Program RSUs.

Initial Grants and 2014 Program

In connection with Dr. Drell’s and Mr. McCaffery’s appointments to the Board in March 2015, each was granted on April 8, 2015: (a) an initial RSU grant for 10,656 shares, which vests as to 1/6th of the shares approximately every six months, or the Initial RSUs, and (b) a RSU grant for 2,361 shares as compensation for their service on the Board and committees through the date of the 2015 Meeting, which vested in full on May 20, 2015, or the 2014 Program RSUs. If Dr. Drell’s or Mr. McCaffery’s service terminates due to death, her or his RSU grants will immediately fully vest. They 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 or be no earlier than (i) 2016 for the 2014 Program RSUs, (ii) 2017 for the 2015 Program RSUs and (iii) 2019 for the Initial RSUs. Messrs. Burgess, Gaither, Jones, McCaffery and Miller, Ms. Hudson and Dr. Drell elected to defer settlement of the RSUs granted during Fiscal 2016.

Other Compensation/Benefits

Our non-employee directors are also reimbursed for expenses incurred in attending Board and committee meetings, as well as in attending continuing educational programs pursuant to our Corporate Governance Policies. Directors who are also employees do not receive any fees or equity compensation for service on the Board.


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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.

Fiscal 2016 Compensation

The following table provides information regarding Fiscal 2016 compensation for non-employee directors:

Director Compensation for Fiscal 2016
Name
Fees Earned or Paid in Cash ($)
Stock Awards ($) (1)
All Other Compensation ($)
Total ($)
Robert K. Burgess
75,000
210,904

 
7,355

(4)  
293,259
Tench Coxe
75,000
210,904

 

 
285,904
Persis S. Drell (2)
71,875
486,989

(3)  

 
558,864
James C. Gaither
75,000
210,904

 
7,355

(4)  
293,259
Dawn Hudson
75,000
210,904

 

 
285,904
Harvey C. Jones
75,000
210,904

 

 
285,904
Michael G. McCaffery (2)
71,875
486,989

(3)  

 
558,864
William J. Miller
75,000
210,904

 

 
285,904
Mark L. Perry
75,000
210,904

 

 
285,904
A. Brooke Seawell
75,000
210,904

 

 
285,904
Mark A. Stevens
75,000
210,904

 

 
285,904
 __________
(1)  
On May 21, 2015, each non-employee director received his or her 2015 Program RSU grant for 10,283 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 2016. 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 $20.51.
(2)  
Dr. Drell and Mr. McCaffery joined the Board in March 2015.
(3)  
On April 8, 2015, Dr. Drell and Mr. McCaffery each received: (a) in connection with their appointments, an initial RSU grant for 10,656 shares, with a grant date fair value per share as determined under FASB ASC Topic 718 of $21.03, and (b) as compensation for their service on the Board and committees through the date of the 2015 Meeting, an RSU grant for 2,361 shares, with a grant date fair value per share as determined under FASB ASC Topic 718 of $22.02.
(4)  
Represents payment of accrued dividend equivalents on vested RSUs granted in Fiscal 2014 where settlement had been deferred until Fiscal 2016.

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 31, 2016:
Name
RSUs
Stock Options
 
Name
RSUs
Stock Options
Robert K. Burgess
10,283

 
66,041

 
 
Michael G. McCaffery
23,300

 

 
Tench Coxe
5,142

 
246,885

 
 
William J. Miller
22,491

 
167,820

 
Persis S. Drell
23,300

 

 
 
Mark L. Perry
5,142

 
35,000

 
James C. Gaither
22,491

 
122,269

 
 
A. Brooke Seawell
5,142

 
167,820

 
Dawn Hudson
17,493

 
105,177

 
 
Mark A. Stevens
5,142

 
120,942

 
Harvey C. Jones
22,491

 

 
 
 
 
 
 
 


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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 2016 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 2016, 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 .


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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of January 31, 2016 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 31, 2016.

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 538,513,027 shares of our common stock outstanding as of January 31, 2016, 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
21,518,474

(1)  
2,570,874

24,089,348

4.45%
Colette M. Kress
41,852

 
93,500

135,352

*
Ajay K. Puri
135,415

 
382,454

517,869

*
David M. Shannon
203,572

(2)  
373,137

576,709

*
Debora Shoquist
58,945

 
128,729

187,674

*
Directors, not including CEO:
 
 
 
 
 
Robert K. Burgess
45,796

 
66,041

111,837

*
Tench Coxe
1,559,874

(3)  
246,885

1,806,759

*
Persis S. Drell

 
2,361

2,361

*
James C. Gaither
175,791

(4)  
134,477

310,268

*
Dawn Hudson
6,104

 
96,843

102,947

*
Harvey C. Jones
824,490

(5)  
12,208

836,698

*
Michael G. McCaffery

 
2,361

2,361

*
William J. Miller
302,808

(6)  
167,820

470,628

*
Mark L. Perry
100,937

(7)  
35,000

135,937

*
A. Brooke Seawell
160,000

(8)  
167,820

327,820

*
Mark A. Stevens
1,873,905

(9)  
120,942

1,994,847

*
Directors and executive officers as a group (16 persons)
27,007,963

(10)  
4,601,452

31,609,415

5.82%
5% Stockholders:
 
 
 
 
 
FMR LLC
80,699,998

(11)  

80,699,998

14.99%
The Vanguard Group, Inc.
45,325,807

(12)  

45,325,807

8.42%
BlackRock, Inc.
36,216,630

(13)  

36,216,630

6.73%
PRIMECAP Management Company
29,067,675

(14)  

29,067,675

5.40%
__________
* Represents less than 1% of the outstanding shares of our common stock.

(1)  
Includes (i) 19,222,520 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; (ii) 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; and (iii) 557,000 shares of common stock held by The Huang 2012 Irrevocable Trust, of which Mr. Huang and his wife are co-trustees. 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 (i) - (iii), and to have shared power to vote or to direct the vote or to dispose of or direct the disposition of such shares.


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(2)  
Includes 110,800 shares of common stock held by the Shannon Revocable Trust, of which Mr. Shannon and his wife are co-trustees and of which Mr. Shannon exercises shared voting and investment power.

(3)  
Includes (i) 171,312 shares of common stock held in a retirement trust over which Mr. Coxe exercises sole voting and investment power, and (ii) 1,335,421 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 shared voting and investment power. Mr. Coxe disclaims beneficial ownership in the shares held in the retirement trust and by the Coxe Revocable Trust, except to the extent of his pecuniary interest therein.

(4)  
Includes 158,484 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.

(5)  
Represents (i) 758,970 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, and (ii) (a) 21,840 shares of common stock owned by the Gregory C. Jones Trust, of which Mr. Jones is co-trustee and of which Mr. Jones exercises shared voting and investment power, (b) 21,840 shares of common stock owned by the Carolyn E. Jones Trust, of which Mr. Jones is a co-trustee and of which Mr. Jones exercises shared voting and investment power and (c) 21,840 shares of common stock owned by the Harvey C. Jones III Trust, of which Mr. Jones is a co-trustee and of which Mr. Jones exercises shared voting and investment power, collectively, the Jones Children Trusts. Mr. Jones disclaims beneficial ownership of the 65,520 shares of common stock held by the Jones Children Trusts, except to the extent of his pecuniary interest therein.

(6)  
Represents shares of common stock held by the Millbor Family Trust, of which Mr. Miller and his wife are co-trustees and of which Mr. Miller exercises shared voting and investment power.

(7)  
Includes 50,000 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.

(8)  
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.

(9)  
Includes 1,854,007 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.

(10)  
Includes shares owned by all directors and executive officers listed in this beneficial ownership table.

(11)  
This information is based solely on a Schedule 13G/A, dated February 12, 2016, filed with the SEC on February 12, 2016 by FMR LLC, or FMR, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that FMR has sole voting power with respect to 12,531,485 shares and sole dispositive power with respect to 80,699,998 shares. FMR is located at 245 Summer Street, Boston, Massachusetts 02210.

(12)  
This information is based solely on a Schedule 13G/A, dated February 10, 2016, filed with the SEC on February 11, 2016 by The Vanguard Group, Inc., or Vanguard, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that Vanguard has sole voting power with respect to 963,412 shares and sole dispositive power with respect to 44,305,777 shares. Vanguard is located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

(13)  
This information is based solely on a Schedule 13G/A, dated January 22, 2016, filed with the SEC on February 10, 2016 by BlackRock, Inc., or BlackRock, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that BlackRock has sole voting power with respect to 30,914,726 shares and sole dispositive power with respect to 36,206,711 shares. BlackRock is located at 55 East 52nd Street, New York, New York 10055.

(14)  
This information is based solely on a Schedule 13G/A, dated February 11, 2016, filed with the SEC on February 12, 2016 by PRIMECAP Management Company, or PRIMECAP, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that PRIMECAP has sole voting power with respect to 6,044,360 shares and sole dispositive power with respect to 29,067,675 shares. PRIMECAP is located at 225 South Lake Avenue, #400, Pasadena, California 91101.

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Proposal 2—Approval of Executive Compensation

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.

Advisory approval of this proposal requires the vote of the holders of a majority of the shares present or represented by proxy and entitled to vote at the 2016 Meeting.

Recommendation of the Board
The Board recommends that you vote FOR the approval of the compensation of our NEOs because, as discussed in these disclosures, we believe that our compensation policies and decisions are effective in achieving the Company’s goals. Therefore the Board recommends that our stockholders adopt the following resolution:
R ESOLVED , 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 .”


.



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Executive Compensation

Compensation Discussion and Analysis

This section describes the Fiscal 2016 executive compensation for our NEOs listed below:
Jen-Hsun Huang
President and Chief Executive Officer
Colette M. Kress
Executive Vice President and Chief Financial Officer
Ajay K. Puri
Executive Vice President, Worldwide Field Operations
David M. Shannon
Executive Vice President, Chief Administrative Officer and Secretary
Debora Shoquist
Executive Vice President, Operations
Table of Contents to Compensation Discussion and Analysis
 
 
Page
 
Page
 
 
 
 
EXECUTIVE SUMMARY

Executive Compensation Goals

Consistent with our goal of attracting, motivating and retaining a high-caliber executive team, our executive compensation program is designed to pay for performance. We utilize compensation elements that meaningfully align our NEOs’ interests with those of our stockholders to create long-term value. As such, our NEO pay is heavily weighted toward “at-risk,” performance-based compensation, in the form of equity awards and variable cash that is only earned if we achieve multiple corporate financial metrics.

Fiscal 2016 Enhancements

We value stockholder feedback and maintain an annual outreach program to ensure that our stockholders view our pay practices as well-structured. Despite strong stockholder support of our executive compensation program in recent years, including over 98% “say-on-pay” approval at our 2015 Meeting, our CC enhanced Fiscal 2016 executive compensation in response to stockholder feedback to further strengthen the link between our performance and our NEOs’ pay:

ü
MY PSUs with a relative goal : introduced PSUs with a 3-year performance period based on our TSR relative to the S&P 500 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and structured a meaningful portion of our CEO’s Fiscal 2016 equity award in the form of these 3-year PSUs
ü
Separate performance metrics : assigned separate, distinct metrics for each component of our compensation where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as the goal for our Variable Cash Plan and for our PSUs)

ü
Greater proportion of "at-risk," performance-based compensation : increased average “at-risk,” performance-based compensation as a percentage of total target pay
Below is a summary of the components of our Fiscal 2016 executive compensation program where the amount of the award is subject to achievement of performance criteria, and the percentage of NEO pay assigned to each one:


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EXECUTIVE COMPENSATION GOALS

The primary goals for our executive compensation program are:

Attracting, motivating and retaining a high-caliber executive team to provide leadership for our success in a dynamic, competitive market –We design our executive compensation program to position NVIDIA competitively among the companies against which we recruit and compete for talent. Our CC does not use a strict weighting system among compensation elements for each NEO, but instead considers the total compensation necessary to attract, motivate and retain these individuals.
Paying for performance –Our NEOs’ compensation is heavily weighted toward “at-risk” compensation in the form of equity awards and variable cash compensation that are only earned upon achievement of varied, pre-determined financial and operating performance metrics.
Aligning our NEOs’ interests with those of our stockholders to create long-term value –Our CC believes that a mix of cash and equity incentives is appropriate, and uses cash to reward NEOs for near-term results that we believe drive long-term stockholder value, and equity to further motivate NEOs to increase and sustain stockholder value in the longer term. Equity compensation aligns the interests of stockholders and NEOs by creating a strong, direct link between the ultimate value of the compensation that NEOs realize and stock price appreciation. Our CC believes that if our NEOs own shares of our common stock with values that are significant to them, they will have an incentive to act to maximize longer-term stockholder value instead of short-term gain. Therefore, equity compensation comprises a significant portion of the total target value of the annual compensation opportunity for each of our NEOs and our Corporate Governance Policies require our NEOs to hold an equity interest in NVIDIA equivalent to 1-6x their respective base salaries.


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­­­­­­­­­­­OUR COMPENSATION PRACTICES

Below are key elements of our compensation program, as well as problematic pay practices that we avoid:
What We Do
 
What We Don’t Do
ü
Heavily weight our NEO compensation toward “at-risk,” performance-based compensation
 
û
Have employment contracts or severance agreements with NEOs providing for specific terms of employment or severance benefits, respectively
ü
Use multi-year vesting for all executive officer equity awards
 
û
Provide change-in-control benefits to our executive officers
ü
Engage with our stockholders and corporate governance groups to discuss our executive compensation program and make changes to our pay practices based on their feedback
 
û
Provide for automatic equity vesting upon a change-in-control except for the provisions in our equity plans that are applicable to all of our employees if an acquiring company does not assume or substitute our outstanding stock awards
ü
Utilize separate, distinct metrics for the “at-risk” components of our compensation where the amount of the award is subject to achievement of performance criteria
 
û
Offer our NEOs supplemental retirement benefits or perquisites that are not available to all NVIDIA employees
ü
Grant PSU awards with a multi-year performance metric
 
û
Provide tax gross-ups
ü
Structure our executive compensation program to minimize inappropriate risk-taking
 
û
Allow for the repricing of stock options without stockholder approval
ü
Cap SY PSU, MY PSU and Variable Cash Plan payouts
 
û
Use discretion in performance incentive award determination
ü
Select peer companies that we compete with for executive talent, and have a similar business and are of similar size as us, and review their pay practices
 
û
Pay dividends or dividend equivalents on unearned shares
ü
Solicit advice from the CC’s independent compensation consultant
 
 
 
ü
Rely on long-standing, consistently-applied practices on the timing of equity grants
 
 
 
ü
Have meaningful stock ownership guidelines for NEOs
 
 
 
ü
Enforce “no-hedging” and “no-pledging” policies
 
 
 
ü
Maintain a “clawback” policy for the recovery of performance-based cash and equity compensation
 
 
 
ü
Make internal comparisons among executive officers when determining compensation
 
 
 
ü
Have three or more independent non-employee directors serve on the CC
 
 
 

HOW WE DETERMINE EXECUTIVE COMPENSATION

Role of Our CC, Compensation Consultants, and Management

Our CC makes all NEO compensation decisions. Below is the cycle under which our CC manages our executive compensation program.

 


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During Fiscal 2016, our CC continued to use Exequity as its independent compensation consultant, for its experience working with compensation committees at other technology companies, the familiarity of the senior consultant at Exequity with our compensation structure and the availability of Exequity to attend CC meetings. Our CC analyzed whether the work of Exequity as a compensation consultant in Fiscal 2016 raised any conflict of interest, taking into consideration the following:

Exequity does not provide any services directly to NVIDIA (although NVIDIA does pay the cost of Exequity’s services on behalf of the CC)
The amount of fees paid to Exequity by NVIDIA as a percentage of Exequity’s total revenue
Exequity’s policies and procedures that are designed to prevent conflicts of interest

Any business or personal relationship of Exequity or its individual compensation advisors with an NEO
Any business or personal relationship of the individual compensation advisors with any member of our CC
Any NVIDIA stock owned by Exequity or its individual compensation advisors

After considering these factors, our CC determined that the work of Exequity and its individual compensation advisors did not create any conflict of interest.

Exequity reports directly to our CC, advising our CC on all material matters relating to executive and non-employee director compensation. Exequity took its direction from our CC Chairperson and coordinated with our CEO and legal and human resources departments, as needed, to understand management proposals and financial objectives and to obtain compensation data that management gathered for our peer group of companies to assist our CC with decisions in February and March 2015. The data that management gathered was from the Radford Global Technology Survey based on parameters established by our CC.

Exequity provided our CC with the following services for Fiscal 2016: (i) reviewed and provided recommendations on the composition of our peer group; (ii) analyzed the Radford survey data; (iii) conducted an independent analysis and review of our CEO’s compensation and advised our CC regarding his pay components; (iv) advised the CC on equity grants to non-employee directors; (v) reviewed and provided feedback on our compensation risk analysis; and (vi) reviewed this CD&A.
 
Our CC, working directly with Exequity and without the presence of our CEO, deliberates and makes decisions regarding the salary, target variable cash compensation and target equity-based compensation to be awarded to our CEO for the new fiscal year, as well as performance-based compensation payouts for the prior fiscal year. In setting compensation for our other NEOs, our CC solicits the input of our CEO, who recommends to our CC the salary, target variable cash compensation and target equity-based compensation to be awarded to our NEOs for the new fiscal year. Our CC remains solely responsible for making the final decisions on compensation for all of our NEOs. An NEO is not present during discussions of his or her compensation package nor participates directly in approving the amount of any portion of his or her own compensation package.

Peer Companies and Market Compensation Data

In December 2014, Exequity and our human resources department recommended, and our CC approved, our peer companies for Fiscal 2016, which were companies:

With which we generally think we compete for executive talent;
That have an established business, market presence, and complexity similar to us; and
That are of similar size to us as measured by revenue and market capitalizations (at roughly 0.5-2.0x NVIDIA).

Our peer group for Fiscal 2016 remained the same as it was for Fiscal 2015, except that LSI Corporation was removed and Avago Technologies was added following its acquisition of LSI. The chart below reflects trailing twelve months annual revenue and trailing twelve months average market capitalization for NVIDIA and the median of our Fiscal 2016 peer group as of December 2014 when the peer group was approved by our CC.

Activision Blizzard
Analog Devices, Inc.
Electronic Arts, Inc.
Micron Technology, Inc.
Adobe Systems, Incorporated
Avago Technologies
Intuit, Inc.
Network Appliance, Inc.
Advanced Micro Devices
Autodesk, Inc.
Juniper Networks, Inc.
SanDisk Corporation
Agilent Technologies, Inc.
Broadcom Corporation
KLA-Tencor Corporation
Symantec Corporation
Altera Corporation
Citrix Systems Inc.
Marvell Technology Group
Xilinx

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Our CC reviews market practices and compensation data for our peer companies’ comparably-situated executives when making decisions about compensating our desired talent pool. Radford survey data is used to obtain compensation data for the companies in our peer group for the three major components of our compensation program and total target compensation. When reviewing and analyzing the amount of each major component and the total compensation opportunity for our NEOs, our CC reviews each component at the 25th, 50th and 75th percentiles of our peer companies’ comparably-situated executives for guidance. Our CC reviews these pay levels as reference points in its overall decision making, as indicative of the level of compensation necessary to attract, retain and motivate our NEOs. Our CC sets the actual amount of each element of compensation and the total compensation opportunity of each NEO based in part on its review of peer group data and in part on the factors discussed below and in Compensation Actions for Fiscal 2016 in respect of actual decisions for Fiscal 2016.

Factors Used in Determining Executive Compensation

When establishing the elements of executive compensation, our CC may take into consideration one or more of the following factors. The relative weight, if any, given to each of the factors below varies with each individual NEO and with respect to each element of compensation at the sole discretion of our CC.

Factors Our CC Considers
ü
The need to attract new talent to our executive team and retain existing talent in a highly competitive industry
 
ü
The need to motivate NEOs to address particular business challenges that are unique to any given year
ü
Feedback from our stockholders regarding our executive pay practices
 
ü
A review of an NEO’s current total compensation
ü
An NEO’s past performance and expected contribution to future results
 
ü
Our CEO’s recommendations (other than for himself), because of his direct knowledge of the results delivered and leadership demonstrated by each NEO
ü
The Company’s performance and forecasted financial results
 
ü
The independent judgment of the members of our CC
ü
The trends in compensation paid to similarly situated officers at our peer companies
 
ü
The total compensation cost and stockholder dilution from executive compensation actions, in order to help us maintain a responsible cost structure for our compensation programs*
ü
The 25th, 50th and 75th percentiles of compensation paid to similarly situated executives at our peer companies based on the data gathered from the Radford Global Technology Survey
 
ü
The philosophy that the total compensation opportunity and the percentage of total compensation “at risk” should increase with the level of responsibility
ü
Internal pay equity an NEO’s responsibilities, the scope of each NEO’s position and the complexity of the department or function the NEO manages, relative to the NEO’s internal peers, compared to similarly situated executives
 
 
 
__________
* For a discussion of stock-based compensation cost, see Note 2 to our consolidated financial statements titled “Stock-Based Compensation” in our Form 10-K.


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FISCAL 2016 COMPONENTS OF PAY
The primary elements of NVIDIA’s Fiscal 2016 executive compensation program are summarized below:
 
“Fixed” Compensation
“At-Risk” Compensation
Base Salary
Variable Cash
SY PSUs
MY PSUs
RSUs (1)
Form
Cash
Cash
Equity
Equity
Equity
Who Receives
All NEOs
All NEOs
All NEOs
All NEOs
All NEOs except CEO
When Granted or Determined
Annually in Fiscal Q1
Annually in Fiscal Q1
On the 3rd Wednesday in March
On the 3rd Wednesday in March
On the 3rd Wednesdays in March and September
When Paid or Earned
Paid retroactively to start of fiscal year, via biweekly payroll
Earned after fiscal year end and paid the following April, only if performance threshold achieved
Shares eligible to vest determined after fiscal year end based on performance metric achieved
Shares eligible to vest determined after 3rd fiscal year end based on performance metric achieved
On each vesting date, subject to the NEO’s continued service on each such date
Performance Measure
N/A
Revenue (determines 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
N/A
N/A
If performance threshold achieved, 25% on approximately the 1-year anniversary of the date of grant; 12.5% every six months 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; 12.5% every six months thereafter
Timeframe Emphasized
Annual
Annual
Long-term because of 4-year vesting schedule
Long-term because of 3-year performance period
Long-term because of 4-year vesting schedule
Maximum Amount that can be Earned
N/A
200% of Variable Compensation Target
For our CEO, 150% of his Target Compensation Plan SY PSU amount

For our other NEOs, 200% of his or her Target Compensation Plan SY PSU amount

Ultimate value delivered depends on stock price on date earned shares vest
For our CEO, 150% of his Target Compensation Plan MY PSU amount

For our other NEOs, 200% of his or her Target Compensation Plan MY PSU amount

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
_______
(1) Our CC considers RSUs to be inherently “at-risk” pay that is performance-based because the realized value is dependent upon our stock price, which is a financial performance measure.

In addition to the above key elements of our NEOs’ compensation, 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. Our NEOs, as well as our other full-time employees, are eligible to participate in our 2012 ESPP, unless otherwise prohibited by the rules of the Internal Revenue Service, and our 401(k) plan. We have a Company match under our 401(k) plan. In calendar 2015, we matched, on a dollar-for-dollar basis, each participant’s salary deferral contributions to the 401(k) plan, up to a maximum of $2,000, provided the participant was an employee on December 31, 2015. Each of our NEOs received a $2,000 match in Fiscal 2016 except for Mr. Huang, who did not participate in our 401(k) plan.

CHANGES TO FISCAL 2016 COMPENSATION

We value feedback from our stockholders and maintain an annual stockholder outreach program to ensure that they view our pay practices as well-structured. In Fall 2014, we contacted each stockholder holding at least 1% of our common stock (except for brokerage firms and institutional stockholders whom we know do not engage in individual conversations with issuers), representing an aggregate ownership of 44.5%. We ultimately held meetings with the corporate governance groups of stockholders representing an aggregate of 30.6% of our common stock to obtain their feedback on our executive compensation. Several expressed support for the use of PSUs, particularly those with a multi-year performance period. They also noted a preference for separate, distinct financial performance metrics for each component of our “at-risk” compensation where the amount of the award is subject to achievement of performance criteria. Despite over 98% approval of our say-on-pay proposal from the votes cast at our 2015 Meeting, our CC made a number of enhancements to Fiscal 2016 executive compensation to address this stockholder feedback, as follows:


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MY PSUs with a relative goal : introduced PSUs where the number of shares which are eligible to vest is based on the relative performance of our TSR, measured by percentile rank, compared to that of companies in the S&P 500 over a 3-year period ending on the last day of our Fiscal 2018 (prior to Fiscal 2016, all of our PSUs had an annual performance period with absolute goals) and emphasized these PSUs most for our CEO
Separate performance metrics : assigned separate, distinct metrics for each component of our compensation–Variable Cash Plan, SY PSUs and MY PSUs–where the amount of the award is subject to achievement of performance criteria (in Fiscal 2015, we used the same financial metric as the goal for our Variable Cash Plan and for our PSUs)
Greater proportion of “at-risk,” performance-based compensation : increased average “at-risk,” performance-based compensation as a percentage of total target pay from 70% in Fiscal 2015 to 75% in Fiscal 2016 for our NEOs (other than our CEO) and slightly increased the percentage from 88% in Fiscal 2015 to 89% in Fiscal 2016 for our CEO (whose Fiscal 2016 equity award remains entirely comprised of PSUs)
A comparison of our Fiscal 2015 and Fiscal 2016 compensation components and a summary of our performance metrics are below:

________
(1)  
Excludes a one-time sign-on bonus and a one-time anniversary bonus paid to Ms. Kress pursuant to her 2013 offer letter. The sign-on bonus was paid in Fiscal 2014, and earned in Fiscal 2015 when Ms. Kress reached her anniversary of employment with us. The anniversary bonus was paid in Fiscal 2015, and earned in Fiscal 2016 when Ms. Kress reached her second anniversary of employment.
(2)  
Represents the cash payable under the Variable Cash Plan upon achievement of Target Compensation Plan performance on the Non-GAAP Operating Income goal for Fiscal 2015 and on the revenue goal for Fiscal 2016.
(3)  
Represents the aggregate fair value of the target amount of the equity awards the CC intended to deliver at the time the awards were approved by the CC upon achievement of Target Compensation Plan performance on the Non-GAAP Operating Income goal for SY PSUs and on the relative TSR goal for MY PSUs.
(4)  
Represents the aggregate fair value of the target amount of the equity awards the CC intended to deliver at the time the awards were approved by the CC. Our CC considers RSUs to be inherently “at-risk” pay that is performance-based because their value is dependent upon our stock price, which is a financial performance measure, over a 4-year vesting period.


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Component of Compensation
Performance Metric for
Metric Determines
CC’s Rationale for Selected Fiscal 2016 Performance Metric
Fiscal 2015
Fiscal 2016
Variable Cash Plan
Annual Non-GAAP Operating Income
Annual revenue
Cash earned under Variable Cash Plan

Key indicator of our annual performance which drives value and contributes to long-term success of the Company
Our executive team focuses on growth in the Company's specialized markets where our technologies did not previously exist; revenue growth in these new markets is the best predictor of the Company's future success
Distinct, separate metric from Non-GAAP Operating Income, which was used as the performance metric for our Fiscal 2015 SY PSUs
SY PSUs
Annual Non-GAAP Operating Income
Same as Fiscal 2015
If, and extent to which, SY PSUs become eligible to vest

Key indicator of our annual performance which drives value and contributes to long-term success of the Company
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
MY PSUs
Not part of compensation program
Relative TSR compared to the S&P 500 over 3 years
If, and extent to which, MY PSUs become eligible to vest

Aligns directly with stockholder 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 TSR is both objectively determinable and readily available, such that our performance can be evaluated by a third party

The Fiscal 2016 enhancements to our compensation program were intended to further align with the following objectives:
Objectives of Fiscal 2016 Compensation Program
ü
Demonstrate our commitment to stockholder engagement and consideration by implementing changes to our executive compensation program based on their feedback
ü
Increase focus on “at-risk” pay, particularly long-term PSUs that only become eligible to vest based on achievement of specific performance goals
ü
Motivate our NEOs to achieve maximum results by giving them increased opportunity for reward upon financial, operational and stock price performance achievements
ü
Achieve greater alignment of our NEOs’ interests with those of our stockholders with the introduction of MY PSUs that only become eligible to vest based on our relative multi-year TSR performance against a widely-recognized benchmark
ü
Use different performance metrics for variable cash compensation, SY PSUs and MY PSUs to reward our NEOs separately for each performance achievement goal
ü
Maintain consistent pay practices relative to our peers by granting PSUs and RSUs, which helps us manage dilution and retain our NEOs
ü
Provide effective retention incentive award levels by granting equity to our NEOs in the form of RSUs and SY PSUs that are subject to a 4-year vesting schedule and MY PSUs that cliff vest after 3 years
ü
Reinforce our culture of stock ownership by increasing the value of equity granted to our NEOs




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COMPENSATION ACTIONS AND ACHIEVEMENTS FOR FISCAL 2016

Total Target Compensation Approach

In making Fiscal 2016 compensation decisions, for each NEO our CC reviewed and considered each element of pay independently and in the context of overall target pay opportunity for each NEO. As part of that process, our CC also reviewed the target cash opportunity (base salary plus variable cash compensation), target equity opportunity and total target pay for similarly situated executives of our peer companies. The CC considered the factors discussed in Factors Used in Determining Executive Compensation above, the CC’s specific compensation objectives for Fiscal 2016 as outlined in Changes to Fiscal 2016 Compensation above and, for NEOs other than the CEO, the CEO’s recommendation. Our CC did not use a formula or assign a particular weight to any one factor in determining each NEO’s target pay. Rather, our CC’s determination of the total target compensation, mix of cash and equity and fixed and “at-risk” pay opportunities was subjective for each NEO and was a function of the CC’s overall objectives for total pay positioning and balancing the pay mix. When the CC made changes to one element of pay, those changes were made primarily in the context of the levels of the other elements of pay, and resulting total target pay for such NEO. Resulting total target compensation for the NEOs was generally between the 50th and 75th percentile of the peer market data (except for Mr. Puri whose total target compensation was near the 90th percentile as explained below). In approving this structure, the CC was mindful that these equity awards would only be realized at above-market levels upon exceptional corporate performance.

Continued Emphasis on Long-Term, “At-Risk,” Performance-Based Equity Awards

The CC determined that for our NEOs, long-term, “at-risk,” performance-based equity awards granted in Fiscal 2016 would again comprise a meaningful portion of their Fiscal 2016 total target compensation, and more so than in Fiscal 2015. Accordingly, each NEO received a greater portion of total target compensation for Fiscal 2016 in the form of equity awards, with the exception of our CEO, whose proportion of total target compensation in the form of equity awards was already significant and entirely comprised of PSUs. The CC emphasized long-term equity awards by increasing the size of the annual PSU component, which included the introduction of MY PSUs most significantly for our CEO. The CC’s overall goal was to enhance the long-term, “at-risk” opportunities to drive results and increase alignment with stockholders while maintaining a sufficient level of annual cash compensation for competitive and retentive purposes. The PSUs and RSUs deliver additional long-term incentive and retentive benefits by vesting over a 3- or 4-year period, to the extent the performance goal is attained (for PSUs) and to the extent the NEO remains in service with us (for PSUs and RSUs).

The CC determined a target equity opportunity value that it wanted to deliver to each NEO in Fiscal 2016 as described above. Generally, this target equity opportunity fell at the higher end of the peer market data, which the CC determined was appropriate based on the CC’s emphasis on long-term, “at-risk,” performance-based compensation and allowing for above-market rewards for exceptional corporate performance. To determine actual shares awarded to achieve the target equity opportunity value, the CC reviewed the 90-day trailing average of our stock price, as opposed to our stock price on the grant date, to smooth for any daily volatility to inform it on the number of shares to deliver for RSUs and the target number of shares to deliver for SY PSUs and MY PSUs. For each NEO other than our CEO, the CC delivered roughly 60% of the target equity opportunity in the form of PSUs and 40% of the target equity opportunity in the form of RSUs, which percentages fluctuated by NEO based on individual adjustments as determined by the CC. Our CEO’s target equity opportunity was granted 100% in the form of SY PSUs (whose value is aligned with our Non-GAAP Operating income performance) and MY PSUs (whose value is aligned with our relative stock price performance).

For RSUs, our CC makes grants twice each year because it wants to re-assess our executive equity compensation mid-year. In Fiscal 2016, our CC granted RSUs to each NEO (other than our CEO) in March 2015 representing 50% of the RSU target opportunity value that the CC established at the start of Fiscal 2015 for each such NEO. In August 2015, our CC reviewed the potential grant sizes for the second half of the year, based on the RSU target opportunity value established at the start of Fiscal 2016, and decided no changes for the NEOs were necessary, except with respect to Mr. Puri, who received an additional 10,000 RSUs because of his extraordinary performance and contributions to the company, as well as internal pay equity considerations. Therefore, in September 2015 the CC granted RSUs to each NEO (other than the CEO) representing another 50% of the RSU target opportunity value established at the start of Fiscal 2016 (and an additional 10,000 RSUs for Mr. Puri). All of the RSUs vest over a four year period beginning on the date of grant (with 25% vesting on approximately the one year anniversary of the date of grant), subject to each NEO’s continued service with us.




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For SY PSUs and MY PSUs, the target numbers of shares awarded to each NEO for Fiscal 2016 represented the numbers of shares eligible to vest upon achievement of Target Compensation Plan performance on the Fiscal 2016 Non-GAAP Operating Income goal and on the goal of TSR over a 3-year period relative to the S&P 500, respectively. For each of our NEOs, the minimum number of shares eligible to vest was 25% of the Target Compensation Plan number of shares if Threshold performance was achieved and the maximum number of shares eligible to vest was capped at 200% of the Target Compensation Plan number of shares (or 150% for Mr. Huang) if Stretch Operating Plan performance was achieved. No shares were eligible to vest if Threshold performance was not achieved. If Threshold performance was achieved, 25% of the eligible SY PSU shares would vest on the one-year anniversary of the grant date and 12.5% of the eligible SY PSU shares would vest every six months thereafter over the next three years, subject to each NEO’s continued service with us. Shares underlying any PSUs that are not earned will be cancelled.

Goals for Certain Performance-Based Compensation
Based on the strategic plan prepared for Fiscal 2016 as approved by the Board, the CC set the following goals for the Variable Cash Plan, SY PSUs and MY PSUs:
 
Variable Cash Plan
SY PSUs
MY PSUs
Performance Metric
Revenue
Non-GAAP Operating Income
TSR relative to the S&P 500
Performance Timeframe
1 year
1 year
3 years
Threshold Goal (25% payout) (1)(2)
$4,500 million
$724 million
25 th  percentile
Target Compensation Plan Goal (100% payout) (2)
$4,750 million
$872 million
50 th  percentile
Stretch Operating Plan Goal
(150% for CEO/ 200% payout for other NEOs) (2)(3)
$5,280 million
$1,100 million
75 th  percentile
CC’s Rationale for Goals

Stretch Operating Plan goal a significant achievement and only possible with strong market factors and a very high level of executive management execution and corporate performance
Target Compensation Plan goals:
Attainable with significant effort and success in execution, and was not certain
 

Included budgeted investments in future growth businesses and revenue growth that took into account both macroeconomic conditions and reasonable but challenging growth estimates for our ongoing and new businesses

Same as for Variable Cash Plan (see left), but also included gross margin growth
 

Set higher than Fiscal 2015 Stretch Operating Plan goal of $825 million to recognize strong growth performance
 
 

Set higher than Fiscal 2015 actual performance of $4,682 million
 
__________
(1)  
Achievement less than the Threshold goal would result in no payout.
(2)  
For achievement between Threshold and Target Compensation Plan and between Target Compensation Plan and Stretch Operating Plan, payouts would be determined using straight-line interpolation.
(3)  
Our CEO’s SY PSU and MY PSU payouts were capped at 150% of Target Compensation Plan to help manage internal pay equity.

Fiscal 2016 Achievement

Following the close of Fiscal 2016, the CC met and reviewed our financial results against the variable compensation targets set at the beginning of the year:


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_________
(1)  
For achievement of Non-GAAP Operating Income between $724 million and $872 million, the number of SY PSUs eligible to vest would be equal to an amount linearly interpolated between the Threshold and Target Compensation Plan amounts. For achievement of Non-GAAP Operating Income between $872 million and $1,100 million, the number of SY PSUs eligible to vest would be equal to an amount linearly interpolated between the Target Compensation Plan and Stretch Operating Plan amounts.


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_________
(1)  
For achievement of revenue between $4,500 million and $4,750 million, the payout would be equal to an amount linearly interpolated between the Threshold and Target Compensation Plan amounts. For achievement of revenue between $4,750 million and $5,280 million, the payout would be equal to an amount linearly interpolated between the Target Compensation Plan and Stretch Operating Plan amounts.


Achievement of the MY PSU goals will be determined after January 28, 2018, the ending date of the three year measurement period for the MY PSUs granted in Fiscal 2016.

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Target Fiscal 2016 Compensation Decisions

Below is a summary, for each NEO separately, of the target Fiscal 2016 compensation decisions and changes made by the CC. All target equity compensation values presented below reflect the target aggregate fair value of equity awards at the time of CC approval. In making the NEO Fiscal 2016 compensation decisions and changes, the CC considered the factors set forth in the section titled “ Factors Used in Determining Executive Compensation ” and focused primarily on the overall target pay opportunity for each NEO. For all of our NEOs, increases in overall target pay opportunities were delivered primarily, or entirely, in the form of increases to performance-based equity opportunities, in line with the CC’s goal to deliver a substantial, and greater, proportion of target compensation in the form of such awards that align our NEO interests with those of our stockholders and our company performance over the longer-term. Differences amongst individual NEO target pay levels were a result of subjective factors considered by the CC relating to individual performance, capability and contributions, as based on our CEO’s assessment (other than for himself), and internal pay equity amongst our NEOs.

Jen-Hsun Huang - President, Chief Executive Officer, Co-Founder and Director
 
Fiscal 2015 Pay ($)
Fiscal 2016 Pay ($)
Change
Fiscal 2016 Pay Relative to Peer Group (percentile)
Fiscal 2016 Shares
Threshold
Target Compensation Plan
Stretch Operating Plan
Target Cash Compensation
1,700,000

2,000,000

 
up 18%
 
 
 
 
 
 
     Base Salary
1,000,000

1,000,000

 
 
 
 
 
 
 
 
     Target Variable Cash
700,000

1,000,000

(1)  
 
 
 
 
 
 
 
Target Equity Compensation
6,300,000

7,000,000

 
up 11%
 
 
 
 
 
 
     SY PSUs
6,300,000

4,600,000

 
 
 
 
55,000
220,000
330,000
(2) (3)  
     MY PSUs

2,400,000

 
 
 
 
27,500
110,000
165,000
(2)  
Target Total Compensation
8,000,000

9,000,000

 
up 13%
50th
(4)  
 
 
 
 
__________
(1)  
Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Huang earned an award of $1,490,566.
(2)  
Stretch Operating Plan payout capped at 150% of Target Compensation Plan to help manage internal pay equity.
(3)  
Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016.
(4)  
Market position of target total compensation was set at the median as a result of the CC’s objective to balance internal pay equity with other NEOs and external market competitiveness with other peer CEOs. Mr. Huang’s Fiscal 2016 target cash compensation reflected an increase to bring it closer to market practices for our peer companies’ CEOs, while still remaining at the lower end of the market (25 th percentile), which the CC determined was appropriate to emphasize performance-based equity compensation in particular for Mr. Huang due to his responsibility as CEO.

Colette M. Kress - Executive Vice President and Chief Financial Officer

 
Fiscal 2015 Pay ($)
Fiscal 2016 Pay ($)
Change
Fiscal 2016 Pay Relative to Peer Group (percentile)
Fiscal 2016 Shares
Threshold
Target Compensation Plan
Stretch Operating Plan
Target Cash Compensation (1)
1,050,000

1,050,000

 
 
 
 
 
 
 
     Base Salary
775,000

775,000

 
 
 
 
 
 
 
 
     Target Variable Cash
275,000

275,000

(2)  
 
 
 
 
 
 
 
Target Equity Compensation
2,097,430

2,392,335

 
up 14%
 
 
 
 
 
 
     SY PSUs
1,207,450

1,358,610

 
 
 
 
17,250
69,000
138,000
(3)  
     MY PSUs

147,675

 
 
 
 
1,875
7,500
15,000
 
     RSUs
889,980

886,050

(4)  
 
 
 
 

 
 
Target Total Compensation
3,147,430

3,442,335

 
up 9%
65th
(5)  
 
 
 
 
__________
(1)  
Target cash compensation excludes a sign-on bonus of $1.5 million and an anniversary bonus of $1.0 million earned in Fiscal 2015 and Fiscal 2016, respectively, pursuant to Ms. Kress’ offer letter. The CC determined that these special bonuses were necessary to attract Ms. Kress, in consideration of her compensation opportunity at her prior employer.
(2)  
Based on our revenue achievement of 149% of Target Compensation Plan, Ms. Kress earned an award of $409,906.

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(3)  
Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016.
(4)  
In Fiscal 2016, Ms. Kress was granted a total of 45,000 RSUs.
(5)  
The target total compensation increase for Fiscal 2016 was structured entirely in the form of an increase to Ms. Kress’ performance-based equity. Ms. Kress’ overall pay mix is weighted more heavily towards performance-based equity than target cash, to further align her with stockholders, to establish long-term incentives and to provide retention value as she joined the company in 2013.

Ajay K. Puri - Executive Vice President, Worldwide Field Operations

 
Fiscal 2015 Pay ($)
Fiscal 2016
Pay ($)
Change
Fiscal 2016 Pay Relative to Peer Group (percentile)
Fiscal 2016 Shares
Threshold
Target Compensation Plan
Stretch Operating Plan
Target Cash Compensation
1,250,000

1,350,000

 
up 8%
 
 
 
 
 
 
     Base Salary
875,000

875,000

 
 
 
 
 
 
 
 
     Target Variable Cash
375,000

475,000

(1)  
 
 
 
 
 
 
 
Target Equity Compensation
1,611,725

2,549,855

 
up 58%
 
 
 
 
 
 
     SY PSUs
1,012,700

1,417,680

 
 
 
 
18,000
72,000
144,000
(2)  
     MY PSUs

147,675

 
 
 
 
1,875
7,500
15,000
 
     RSUs
599,025

984,500

(3)  
 
 
 
 
 
 
 
Target Total Compensation
2,861,725

3,899,855

 
up 36%
90th
(4)  
 
 
 
 
__________
(1)  
Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Puri earned an award of $708,019.
(2)  
Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016.
(3)  
In Fiscal 2016, Mr. Puri was granted a total of 50,000 RSUs.
(4)  
Total target total compensation was set at the higher end of the market due to responsibility and scope increase as head of worldwide field operations. The target total compensation increase for Fiscal 2016 was structured primarily in the form of performance-based equity, to further align Mr. Puri’s interests with stockholders and long-term company performance.

David M. Shannon - Executive Vice President, Chief Administrative Officer and Secretary

 
Fiscal 2015 Pay ($)
Fiscal 2016 Pay ($)
Change
Fiscal 2016 Pay Relative to Peer Group (percentile)
Fiscal 2016 Shares
Threshold
Target Compensation Plan
Stretch Operating Plan
Target Cash Compensation
1,000,000

1,000,000

 
 
 
 
 
 
 
     Base Salary
800,000

800,000

 
 
 
 
 
 
 
 
     Target Variable Cash
200,000

200,000

(1)  
 
 
 
 
 
 
 
Target Equity Compensation
1,348,630

1,506,285

 
up 12%
 
 
 
 
 
 
     SY PSUs
903,640

984,500

 
 
 
 
12,500
50,000
100,000
(2)  
     MY PSUs

78,760

 
 
 
 
1,000
4,000
8,000
 
     RSUs
444,990

443,025

(3)  
 
 
 
 

 
 
Target Total Compensation
2,348,630

2,506,285

 
up 7%
75th
(4)  
 
 
 
 
__________
(1)  
Based on our revenue achievement of 149% of Target Compensation Plan, Mr. Shannon earned an award of $298,113.
(2)  
Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016.
(3)  
In Fiscal 2016, Mr. Shannon was granted a total of 22,500 RSUs.
(4)  
Total target compensation was set at the higher end of the market due to responsibility and scope increase as head of human resources, legal and intellectual property licensing. The target total compensation increase for Fiscal 2016 was structured entirely in the form of performance-based equity, to further align Mr. Shannon’s interests with stockholders and long-term company performance.
 

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Debora Shoquist - Executive Vice President, Operations

 
Fiscal 2015 Pay ($)
Fiscal 2016
Pay ($)
Change
Fiscal 2016 Pay Relative to Peer Group (percentile)
Fiscal 2016 Shares
Threshold
Target Compensation Plan
Stretch Operating Plan
Target Cash Compensation
850,000

850,000

 
 
 
 
 
 
 
     Base Salary
700,000

700,000

 
 
 
 
 
 
 
 
     Target Variable Cash
150,000

150,000

(1)  
 
 
 
 
 
 
 
Target Equity Compensation
1,409,185

1,752,410

 
up 24%
 
 
 
 
 
 
     SY PSUs
810,160

984,500

 
 
 
 
12,500
50,000
100,000
(2)  
     MY PSUs

118,140

 
 
 
 
1,500
6,000
12,000
 
     RSUs
599,025

649,770

(3)  
 
 
 
 

 
 
Target Total Compensation
2,259,185

2,602,410

 
up 15%
> 75th
(4)  
 
 
 
 
__________
(1)  
Based on our revenue achievement of 149% of Target Compensation Plan, Ms. Shoquist earned an award of $223,585.
(2)  
Based on Non-GAAP Operating Income achievement, the Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016.
(3)  
In Fiscal 2016, Ms. Shoquist was granted a total of 33,000 RSUs.
(4)  
Total target compensation was set at the higher end of the market due to responsibility and scope increase as head of chips and systems operations, facilities and information technology. The target total compensation increase for Fiscal 2016 was structured primarily in the form of performance-based equity, to further align Ms. Shoquist’s interests with stockholders and long-term company performance.



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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 our CEO to hold a number of shares of our common stock with a value equal to six times his base salary, and our other NEOs to hold a number of shares of our common stock with a value equal to his or her respective base salary. The shares may include shares held in trust and by immediate family members. NEOs have until the later of (i) the end of Fiscal 2016 or (ii) within five years of appointment, to reach the ownership threshold. The stock ownership guidelines are intended to further align NEO interests with stockholder interests.

Mr. Huang holds stock with a value equal to 732 times his annual base salary, based on our closing price as of March 21, 2016. All of our other NEOs hold stock with a value exceeding his or her respective base salary, based on our closing price as of March 21, 2016.

Compensation Recovery Policy

In April 2009, our Board adopted a Compensation Recovery Policy which covers all of our 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, CFO or any other officer or employee received a variable compensation payment that would not have been payable if the original interim or annual financial statements reflected the Restatement, then under the Compensation Recovery Policy:

Our CEO and CFO will be required to disgorge the net after-tax amount of that portion of the variable compensation payment that would not have been payable if the original interim or annual financial statements reflected the Restatement; and
The Board or the committee of independent directors may require any other officer or employee to repay all (or a portion of) the variable compensation payment that would not have been payable if the original interim or annual financial statements reflected the Restatement, as determined by the Board or such committee in its sole discretion. 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 (in full or in part) 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 Wall Street Reform and Consumer Protection Act when the final regulations related to that policy are issued.

Tax and Accounting Implications

Section 162(m) of the Internal Revenue Code limits the amount that we may deduct from our federal income taxes for remuneration paid to our CEO and three most highly compensated executive officers (other than our CFO) to $1 million per person covered per year, unless certain requirements are met. Section 162(m) of the Internal Revenue Code provides an exception from this deduction limitation for certain forms of “performance-based compensation”. While our CC is mindful of the benefit to NVIDIA’s performance of full deductibility of compensation, our CC believes that it should not be constrained by the requirements of Section 162(m) of the Internal Revenue Code where those requirements would impair flexibility in compensating our NEOs in a manner that can best promote our corporate objectives. Therefore, our CC has not adopted a policy that requires that all compensation be deductible and approval of compensation, including the grant of “performance-based compensation” to our NEOs, by our CC is not a guarantee of deductibility under the Internal Revenue Code. Our CC 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 so as to avoid the possible adverse tax consequences that may arise from non-compliance.


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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 2016 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 and equity 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 chief administrative officer and our chief financial officer. 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 award under our plan
ü
Financial plan target goals and final awards under the Variable Cash Plan and of 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


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Summary Compensation Table for Fiscal Years 2016, 2015 and 2014
The following table summarizes information regarding the compensation earned by our CEO, our chief financial officer and our other three executive officers during fiscal years 2016, 2015 and 2014. We refer to these individuals as our NEOs.
Name and Principal
Position
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards ($) (1)
Option
Awards
($) (1)
Non-Equity
Incentive Plan
Compensation
($) (2)
All Other
Compensation
($)
Total
($)
Jen-Hsun Huang
2016
1,018,941


 
7,456,900


1,490,566

4,694

(3)  
9,971,101

President and Chief Executive Officer
2015
998,418


 
6,896,000


1,400,000

2,622

(4)  
9,297,040

2014
837,450


 
2,111,400

1,657,750

1,405,030

13,622

(5)  
6,025,252

Colette M. Kress (6)
2016
789,680

1,000,000

(7)  
2,692,935


409,906

3,710

(9)  
4,896,231

Executive Vice President and Chief Financial Officer
2015
773,774

1,500,000

(8)  
2,247,920


550,000

3,210

(9)  
5,074,904

2014
158,945


 
3,242,800


190,668

428

(4)  
3,592,841

Ajay K. Puri
2016
891,574


 
2,865,555


708,019

10,096

(10)  
4,475,244

Executive Vice President, Worldwide Field Operations
2015
873,616


 
1,734,325


750,000

9,024

(9)  
3,366,965

2014
498,479


 
745,200

321,080

815,300

6,402

(9)  
2,386,461

David M. Shannon
2016
815,153


 
1,688,220


298,113

9,656

(9)  
2,811,142

Executive Vice President, Chief Administrative Officer and Secretary
2015
798,735


 
1,455,830


400,000

6,511

(9)  
2,661,076

2014
498,371


 
645,300

277,804

530,200

6,402

(9)  
1,958,077

Debora Shoquist
2016
713,259


 
1,977,660


223,585

9,524

(9)  
2,924,028

Executive Vice President, Operations
2015
698,893


 
1,510,205


300,000

9,024

(9)  
2,518,122

2014
498,371


 
558,900

240,810