Only Nvidia, the suddenly vital $2 trillion AI titan, managed to transform a lacking C-suite incentive into a non-issue. The leading producer of semiconductor chips fell short of financial targets in fiscal 2023 related to sales and non-GAAP operating income, and top-level employees did not meet two crucial payment thresholds as a result, as revealed in corporate disclosures. The company did not award any cash incentives to its executive team in fiscal 2023 and certain performance-based stock grants did not fully vest. Nevertheless, the design of the firm’s stock program and its extraordinary success have largely prevented any significant talent exodus.
Consider CEO and creator Jensen Huang himself. The board last increased Huang’s incentive opportunity in fiscal 2022 to $2 million with a grant possibility of 200% or $4 million, a relatively small amount for such a influential tech CEO. His remuneration remained at that level until the compensation committee of the board announced a new scheme last month for fiscal 2025. (The fiscal year 2025 refers to the firm’s fiscal year ending on January 26, 2025.) However, the stock program has been valued at almost half a billion dollars for Huang.
Huang received stock valued at $61.8 million, in addition to $442.8 million in value from exercising options in fiscal 2023. Even though his senior executives did not meet specific targets and only obtained a form of unit award based on performance, they performed exceptionally. The least earning executive in the senior team gained $14.8 million when their 75,510 shares vested in fiscal 2023, according to corporate reports.
“Many machine learning engineers are currently weighing their options between two possibilities – either join a fast-growing company, in which case, Nvidia is one of the most successful options they can find,” said Khaled Hussein, CEO of technology talent recruitment platform Betterleap. “Alternatively, some engineers will choose to create their own successful venture.”
An ‘adequately competitive’ remuneration scheme
Huang’s incentives include unit awards that are eligible for vesting over a four-year period, depending on meeting specific annual operating income targets, known as SY PSUs. His compensation package also involves a second type of unit award based on three-year total shareholder return…
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