NVIDIA, the semiconductor chip manufacturing giant with a market value of up to $2 trillion, has now become indispensable in the field of artificial intelligence. Despite failing to achieve financial targets related to revenue and non-GAAP operating income in the fiscal year 2023, resulting in zero cash bonuses for NVIDIA’s executive team, meaning they did not receive any cash rewards. Additionally, certain performance-based equity awards were also not vested. However, NVIDIA’s unique equity plan structure and its outstanding performance have successfully prevented significant talent loss.
Take the company’s CEO and founder, Jensen Huang, as an example. Although his bonus opportunity was increased to 200% of the 2022 fiscal year, or $4 million, at the last board meeting, which seems negligible for a CEO of such an influential tech company, his compensation has remained at this level. It was not until last month that the compensation committee of the board announced a new plan for the fiscal year 2025. Notably, Huang’s equity plan has brought him nearly $500 million in value.
In the fiscal year 2023, Huang not only received $61.8 million worth of stock but also gained $442.8 million in stock through exercising options. Although senior executives only received one type of performance share unit award due to failing to meet certain targets, their overall performance was still remarkable. Data disclosed by the company shows that even in the fiscal year 2023, the executive with the lowest pay in the senior team earned $14.8 million through 75,510 vested shares.
Khaled Hussein, CEO of the tech talent recruiting platform Betterleap, said, “Many machine learning engineers now face two choices – joining a ‘rocket ship’ like NVIDIA or building their own ‘rocket ship’ to pursue their careers. And NVIDIA is undoubtedly the biggest ‘rocket ship’ they can get.”
In summary, despite facing financial challenges, NVIDIA, with its strong equity plan and outstanding performance, has not only successfully stabilized its core team but also attracted a large number of top talents, further consolidating its leading position in the field of artificial intelligence.
Fairness rules everything at NVIDIA.
Like many tech companies, NVIDIA executives’ compensation is not primarily in cash but incentivized through equity. This giant is not known for high salaries or exorbitant bonuses like some financial services companies, but Huang firmly believes in the company’s broad prospects. Therefore, he chooses to share the company’s growth fruits with employees through equity rewards, hoping they will achieve wealth appreciation through their shares.
Headhunting experts have pointed out that although other companies are eager to poach NVIDIA’s machine learning engineers, general managers, and executives, recruiters have not been very successful in luring them away due to the significant amount of unvested equity these employees hold. Some tech companies, sometimes use the timing of equity vesting to try to attract talent to switch, but NVIDIA’s unique equity plan shows executives the space for continuous appreciation in the short, medium, and long term. Dora Vell, CEO of Vell Executive Search, stated, “At NVIDIA, it is difficult for executives to be lured by other companies unless they feel that it is not the right place for them.”
According to a report in March, other executives at NVIDIA, including Chief Financial Officer Colette Kress and Executive Vice President of Global Field Operations Ajay Puri, will maintain their bonus targets for the fiscal year 2025. Notably, although 96% of Huang’s total compensation is closely tied to the company’s performance targets, only about 56% of other executives’ pay is linked to achieving performance goals. In the fiscal year 2023, the NVIDIA board also increased the potential payout value for Kress, Puri, Executive Vice President of Operations Debora Shoquist, and Executive Vice President and General Counsel Timothy Teter, with each executive’s earnings increasing by about 22%.
Hussein observes NVIDIA and its competitors in the field of artificial intelligence, noting that currently, these companies’ executives are “enjoying the joy of success.”
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