BRIEFING DOCUMENT: NVIDIA CORP. FORM DEF 14A (Proxy Statement)
Source: nVidia Proxy Statement for Stockholders Annual Report 2003
1. Purpose of the Document:
This document serves as a formal notice to NVIDIA Corporation stockholders regarding the upcoming Annual Meeting of Stockholders and provides the necessary information to allow them to vote on proposed matters, either in person or by proxy. It outlines the agenda for the meeting, provides details about the nominated directors, the independent auditors, and discusses corporate governance practices, executive compensation, and other relevant information for stockholders.
2. Key Themes and Important Ideas:
Annual Stockholder Meeting: The primary purpose is to inform stockholders about the Annual Meeting scheduled for Thursday, August 19, 2004, at 2:00 p.m. local time at NVIDIA's executive offices in Santa Clara, California.
Voting Matters: Stockholders are asked to vote on two main proposals:
The election of three directors to serve for a three-year term.
The ratification of the selection of PricewaterhouseCoopers LLP as the independent auditors for the fiscal year ending January 30, 2005.
Director Elections and Board Structure:The Board of Directors is divided into three classes with three-year terms.
Three directors are up for re-election: James C. Gaither, Jen-Hsun Huang, and A. Brooke Seawell.
Dr. Steven Chu was appointed to the Board in July 2004 and will serve until the 2005 Annual Meeting.
The Board recommends a vote "FOR" each named nominee.
Biographies and qualifications for all directors (nominated and continuing in office) are provided, highlighting their experience and tenure.
Independent Auditors and Audit Committee:The Audit Committee oversees the company's accounting, auditing, and financial reporting.
PricewaterhouseCoopers LLP has been selected as the independent auditors for fiscal year 2005, replacing KPMG LLP.
The decision to change auditors was made by the Audit Committee after evaluating proposals from several firms and considering potential benefits of a "fresh look" at the company's financial processes.
This change was not related to the quality of services provided by KPMG LLP.
Stockholder ratification of PricewaterhouseCoopers LLP is being sought as a matter of good corporate practice.
The Audit Committee report confirms discussions with the independent auditors regarding financial statements, internal controls, and auditor independence.
Fees billed by KPMG LLP for audit, tax, and other services for fiscal years 2004 and 2003 are disclosed.
Corporate Governance:The document highlights the independence of the Board members, noting that all directors except Jen-Hsun Huang are deemed independent according to Nasdaq listing standards.
Details about the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are provided, including their responsibilities and members.
The company has adopted a Worldwide Code of Ethics and a Financial Team Code of Ethics.
Procedures for stockholder communications with the Board are outlined.
Executive Compensation:NVIDIA's compensation philosophy aims to attract, retain, and reward high-quality executives and align their financial interests with stockholders.
Compensation comprises base salary, annual cash incentives, and equity compensation.
Base salaries are targeted at or below the industry median, with incentives designed to bring total compensation to approximately the industry median upon achievement of objectives.
Equity compensation, primarily stock options, is considered an integral component.
Efforts have been made to reduce stock option dilution, including establishing targeted annual dilution levels and eliminating an "evergreen" provision in a stock plan.
Details of compensation for named executive officers, including salary, bonus, and stock option grants, are presented.
Information on employment and change of control agreements is included.
Stockholder Information:Information on who can vote at the meeting, how to vote (in person, by mail, telephone, or internet), and the deadline for voting is provided.
The quorum requirement for the meeting is a majority of outstanding shares entitled to vote.
Details on how votes are counted, including the effect of abstentions and broker non-votes, are explained.
Information on "householding" of proxy materials is included.
Instructions for submitting stockholder proposals for future meetings are provided.
Security Ownership:A table details the beneficial ownership of common stock by directors, executive officers, and 5% stockholders as of June 15, 2004.
Jen-Hsun Huang, the President and CEO, holds the largest percentage of beneficial ownership among individuals listed (7.1%).
AXA Financial, Inc. and FMR Corporation are identified as 5% stockholders.
Equity Compensation Plan Information:A summary of outstanding stock options, weighted-average exercise prices, and shares available for future issuance under various equity compensation plans is presented as of January 25, 2004.
Details of the 2000 Nonstatutory Equity Incentive Plan are outlined, including eligibility, terms of awards, and change of control provisions.
Performance Measurement Comparison:A graph compares the cumulative total return of NVIDIA common stock, the S&P 500 Index, and the S&P Semiconductors Index from December 31, 1999, to January 25, 2004. This visually demonstrates NVIDIA's stock performance relative to broader market and industry indices.
3. Most Important Ideas or Facts:
The Annual Meeting is scheduled for August 19, 2004, to vote on the election of three directors and the ratification of PricewaterhouseCoopers LLP as independent auditors.
Jen-Hsun Huang, James C. Gaither, and A. Brooke Seawell are the nominees for election to the Board of Directors.
PricewaterhouseCoopers LLP was selected as the independent auditors, replacing KPMG LLP, after a review process that included multiple auditing firms.
The Board is largely composed of independent directors, with the exception of the CEO, Jen-Hsun Huang.
Executive compensation is designed to be competitive, performance-based, and aligned with stockholder interests, with a focus on equity compensation.
NVIDIA has taken steps to manage stock option dilution, including establishing dilution targets and eliminating an evergreen provision in its stock plan.
Detailed stock ownership information for key individuals and entities is provided.
The document outlines the specific terms of stock option grants, including vesting schedules and exercise periods.
4. Relevant Quotes:
"You are cordially invited to attend the Annual Meeting of Stockholders of NVIDIA Corporation, a Delaware corporation. The meeting will be held on Thursday, August 19, 2004 at 2:00 p.m. local time at our executive offices, 2701 San Tomas Expressway, Santa Clara, California, for the following purposes: 1. To elect three directors to hold office until the 2007 Annual Meeting of Stockholders. 2. To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for our fiscal year ending January 30, 2005."
"The Board has determined that all of NVIDIA’s directors are independent directors as independence is currently defined in Rule 4200(a)(15) of the Nasdaq listing standards, except for Mr. Huang, our President and Chief Executive Officer."
"After a careful evaluation of each of the proposals received from KPMG LLP, Deloitte & Touche LLP, Ernst & Young LLP and PricewaterhouseCoopers LLP, the Audit Committee determined to dismiss KPMG LLP as NVIDIA’s independent auditors and to engage PricewaterhouseCoopers LLP as NVIDIA’s independent auditors for our fiscal year ending January 30, 2005."
"Our compensation philosophy is to: Provide a means for NVIDIA to attract, retain and reward high-quality executives and other employees who contribute to our long-term success; and Align the financial interests of the executive officers and other employees with those of the stockholders."
"We have established a Targeted Annual Dilution Levels. Our Compensation Committee established a targeted annual dilution from net new stock options at a range of 4.0-4.5% for the current fiscal year 2005..."
This briefing document summarizes the essential information contained within the provided excerpts of the NVIDIA Corp. DEF 14A filing from July 9, 2004.
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