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Governance and Ethics

NVIDIA and its board of directors are committed to sound principles of corporate governance. The company has adopted charters, codes of conduct, and policies to define corporate governance at NVIDIA, promote the interests of our stockholders, and establish common expectations as to how our business is conducted.

We have nine directors on our board and three board committees (Audit, Compensation, and Nominating and Corporate Governance). At the time of our 2012 10-K filing, eight of our nine directors (89 percent) were independent, which exceeds the majority threshold required by NASDAQ. Independence is determined by heightened compliance with NASDAQ rules on director independence. The sole non-independent director is Jen-Hsun Huang, the company's president and chief executive officer (CEO). Our bylaws and corporate governance policies permit the roles of chairman of the board and CEO to be filled by the same or different individuals. This provides the board flexibility in determining what is best for the company. At this time, NVIDIA has a lead director, William J. Miller, rather than a board chair.

The Nominating and Corporate Governance Committee reviewed the qualifications of each of the nominees for election and unanimously recommended that each nominee be submitted for election to the board. The board approved the recommendation on Feb. 27, 2013.

Our corporate governance practices are rated by external organizations such as Institutional Shareholder Services. According to ISS and as of April 2013, NVIDIA Corporation’s overall Governance QuickScore is 5, based on the following components: Audit (1), Board Structure (2), Compensation (4), Shareholder Rights (7). These scores indicate decile ranking relative to a particular index or region determined by ISS. A decile score of 1 indicates lower governance risk, whereas a score of 10 indicates higher governance risk. 

Executive Compensation

Our compensation program is designed to attract, retain and motivate a talented, innovative and entrepreneurial team of executives. To this end, the vast majority of executive compensation is based on performance, both of the individual and the business. In addition, our variable compensation programs are structured to recognize both short- and long-term contributions to the company.

Our compensation program is administered under a rigorous process that includes review of peer group practices; advice of an independent third-party consultant (who reports to the Compensation Committee, not to the company); and long-standing, consistently applied practices with respect to the timing of equity grants and the pricing of stock options.

Compensation Recovery Policy

In April 2009, our board adopted a Compensation Recovery Policy wherein if (i) 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 (ii) the board or a committee of independent directors concludes that our CEO or CFO had received a variable compensation payment or portion thereof that would not have been payable if the original interim or annual financial statements reflected the restatement, our CEO or CFO shall disgorge to NVIDIA the net after-tax amount of such variable compensation payment.

To learn more about our executive compensation practices, please see our proxy materials.

Internal Control

NVIDIA’s SOX Compliance Group is responsible for evaluating the effectiveness of the company’s disclosure controls and procedures and internal control over financial reporting.
Based on their evaluation as of Jan. 29, 2012, our management has concluded that our disclosure controls and procedures and internal control over financial reporting effectively provide reasonable assurance.

For more information, please visit our FY2013 10-K, Item 9A.

Ethics

We believe that the integrity with which we conduct ourselves and our business is key to our ability to run a successful, innovative business and maintain our reputation. We expect our directors, executives and employees to conduct themselves with the highest degree of integrity, ethics and honesty.

Our Worldwide Code of Conduct applies to all of our executive officers, directors and employees, including our principal executive officer and principal financial and accounting officer. In addition, we have established a Financial Team Code of Conduct that applies to our executive officers, directors and members of our finance, accounting and treasury departments.

The Worldwide Code of Conduct and the Financial Team Code of Conduct can be found in the Investor Relations section of our website under Corporate Governance. If we make any amendments to either code 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.

Our code prohibits engaging in transactions or activities that are a conflict of interest. When entering purchase requisitions, employees must certify that they don’t have a conflict of interest. To better protect us and our stockholders, we regularly review our code and related policies to ensure that they provide clear guidance to our directors, executives and employees.

We have established a corporate hotline (operated by a third party) to allow any employee to confidentially and anonymously lodge a complaint about any accounting, internal control, auditing or other matters of concern (unless prohibited by local privacy laws for employees located in the European Union). Employees are encouraged to report suspected conflicts of interest to their manager or human resources representative or through the hotline. An external organization operates the hotline, and this administrative choice enhances our employees’ comfort level with anonymous reporting. We have a strict “no retaliation” policy regarding reports of activities that run counter to our ethical expectations.

If an employee is found to have violated either the Worldwide Code of Conduct or the Financial Team Code of Conduct, we would take appropriate actions up to and including termination of employment.

Ethics Training

All NVIDIA employees receive ethics and sexual harassment training. Our goal is for all employees globally to receive our Worldwide Code of Conduct training, which covers environmental and social responsibility issues, and as of March 2013, 90 percent had completed this training (see the screenshot of our online training tool above). Eighty percent of employees who have frequent contact with customers, partners and suppliers (such as those in sales, finance and procurement), also have received anti-corruption training. Employees who serve at the director level and above received legal training for leaders in 2009.

Board of Directors at a Glance
Nonexecutive Lead Director:
Yes

Terms:
At our 2011 Annual Meeting of Stockholders, NVIDIA stockholders approved the declassification of our board of directors; by 2014, all directors will stand for election annually. Declassification will be phased in over several years. The two directors elected at the 2011 Annual Meeting were elected for three-year terms. The three directors who were up for reelection at our 2012 Annual Meeting were elected for a one-year term. The directors who are up for reelection at the 2013 Annual Meeting will be elected for a one-year term. Beginning at our 2014 Annual Meeting, all directors will stand for election annually.

Number of Independent Directors:
8/9 (see proxy for ages)

Number of Women on Board:
0/9

Number of Minorities on Board:
1/9

Committees:
Audit, Compensation, and Nominating and Corporate Governance

Board Self-Evaluation:
The board and board committees evaluate their performance annually.
90% of employees have completed the Code of Conduct training. Our goal is 100%. As new employees join NVIDIA, they are asked to take the training within their first 30 days.