UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant þ
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Check the appropriate box:
o		Preliminary Proxy Statement
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þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material under Rule 240.14a-12

INTUIT INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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INTUIT INC.

 

NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

You are cordially invited to attend our 2011 Annual Meeting of Stockholders, which will be held at 8:00 a.m. Pacific Standard Time on January 19, 2011 at our offices at 2600 Casey Avenue, Building 9, Mountain View, California 94043. We will also offer a webcast of the annual meeting at http://investors.intuit.com.

 

We are holding the meeting to:

 

1. Elect 10 directors nominated by the Board of Directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected;

 

2. Ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2011;

 

3. Approve the Amended and Restated 2005 Equity Incentive Plan;

 

4. Hold an advisory vote on executive compensation; and

 

5. Consider any other matters that may properly be brought before the meeting and any postponement(s) or adjournment(s) thereof.

 

Items 1 through 4 are more fully described in the attached proxy statement. We have not received notice of other matters that may be properly presented at the annual meeting.

 

Only stockholders who owned our stock at the close of business on November 22, 2010 may vote at the meeting, or at any adjournment or postponement of the meeting. For 10 days prior to the annual meeting, a list of stockholders eligible to vote at the meeting will be available for review during our regular business hours at our headquarters at 2700 Coast Avenue, Mountain View, California 94043. If you would like to view the stockholder list, please call Intuit Investor Relations at (650) 944-3560 to schedule an appointment.

 

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials, over the Internet or by telephone, as promptly as possible. You may also request a paper proxy card to submit your vote by mail, if you prefer. We encourage you to vote via the Internet. We believe it is convenient for our stockholders, while significantly lowering the cost of our annual meeting and conserving natural resources.

 

By order of the Board of Directors,

Laura A. Fennell
Senior Vice President, General Counsel and Corporate
Secretary

 

Mountain View, California

November 24, 2010

INTUIT INC.

 

PROXY STATEMENT 2011 ANNUAL MEETING OF STOCKHOLDERS

 

IMPORTANT VOTING INFORMATION

 

If you hold your shares in “street name,” meaning your shares are held in a stock brokerage account, or by a bank or other nominee that is the record holder of your shares, the U.S. Securities and Exchange Commission (the “SEC”) has approved a rule that changes the way in which your vote in the election of directors will be handled beginning with Intuit’s 2011 Annual Meeting of Stockholders.

 

If you hold your shares in the name of a broker, bank or other nominee, you may receive a Notice of Internet Availability of Proxy Materials from the holder of record containing instructions that you must follow in order for your shares to be voted. Certain of these institutions offer Internet and telephone voting. If you received the proxy materials in paper form, the materials include a voting instruction form so you can instruct the holder of record how to vote your shares. In either case, in the past, if you did not transmit your voting instructions before the annual meeting, your broker could vote on your behalf on the election of directors and other matters considered to be routine.

 

New Rule for Stockholder Voting

 

Effective January 1, 2010, your broker is no longer permitted to vote on your behalf on the election of directors unless you provide specific instructions, either by following the instructions from your broker about voting your shares by Internet or telephone, or by completing and returning the voting instruction form. In addition, your broker is not permitted to vote on your behalf on proposals 3 and 4, which are considered non-routine matters. For your vote to be counted in the election of directors and on proposals 3 and 4, you will need to communicate your voting decisions to your bank, broker or other nominee before the date of the annual meeting of stockholders.

 

Your Participation in Voting the Shares You Own is Important

 

Voting your shares is important to ensure that you have a say in the governance of Intuit and to fulfill the objectives of the majority voting standard that Intuit applies in the election of directors. Please review the proxy materials and follow the relevant instructions to vote your shares. We hope you will exercise your rights and participate fully as a stockholder in the future of Intuit.

 

More Information is Available

 

If you have any questions about this new rule or the proxy voting process in general, please contact the bank, broker or other nominee that is the record holder of your shares. The SEC also has a website (http://www.sec.gov/spotlight/proxymatters.shtml) with more information about voting at annual meetings.

INTUIT INC.

 

PROXY STATEMENT 2011 ANNUAL MEETING OF STOCKHOLDERS

 

INTUIT INC.
P.O. Box 7850
Mountain View, CA 94039-7850

PROXY STATEMENT FOR THE
2011 ANNUAL MEETING OF STOCKHOLDERS

INFORMATION ABOUT THE MEETING, VOTING AND PROXIES

 

Date, Time and Place of Meeting

 

Intuit Inc.’s (“Intuit” or the “Company”) Board of Directors (the “Board”) is asking for your proxy for use at the Intuit Inc. 2011 Annual Meeting of Stockholders (the “Meeting”) and at any adjournment or postponement of the Meeting for the purposes set forth in the accompanying Notice of 2011 Annual Meeting of Stockholders. We are holding the Meeting on Wednesday, January 19, 2011 at 8:00 a.m. Pacific Standard Time at our offices at 2600 Casey Avenue, Building 9, Mountain View, California 94043. We have first released this proxy statement to Intuit stockholders beginning on November 24, 2010.

 

Internet Availability of Proxy Materials

 

We are pleased to continue to furnish proxy materials to our stockholders on the Internet, rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice of Internet Availability will instruct you as to how you may access and review the proxy materials and cast your vote on the Internet. If you received a Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of the Meeting. We anticipate that the Notice of Internet Availability will be mailed to stockholders on or about November 24, 2010.

 

Record Date, Outstanding Shares and Quorum

 

Only holders of record of Intuit common stock at the close of business on November 22, 2010 (called the “Record Date”) will be entitled to vote at the Meeting. On the Record Date, we had approximately 313,061,098 shares outstanding and entitled to vote. We need a quorum to take action at the Meeting. We will have a quorum if a majority of the shares outstanding and entitled to vote on the Record Date are present at the Meeting, either in person or by proxy.

 

If by the date of the Meeting we do not receive sufficient shares to constitute a quorum or approve one or more of the proposals, the Chair of the Meeting, or the persons named as proxies, may propose one or more adjournments of the Meeting to permit further solicitation of proxies. The persons named as proxies would typically exercise their authority to vote in favor of adjournment.

 

Voting Rights

 

Holders of our common stock are entitled to one vote for each share they owned on the Record Date. The Inspector of Elections appointed for the Meeting will tabulate all votes. The Inspector will separately tabulate yes and no votes, abstentions and broker non-votes for each proposal.

 

Stockholder of Record or Beneficial Owner

 

Stockholder of Record.  If your shares are registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company (“AST”), you are considered the stockholder of record with respect to those shares, and the Notice of Internet Availability was sent directly to you by Intuit. If you request printed copies of the proxy materials by mail, you will also receive a proxy card.

Beneficial Owner of Shares Held in Street Name.  If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the Notice of Internet Availability was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. If you request printed copies of the proxy materials by mail, you will receive a voting instruction form, rather than a proxy card.

 

Voting and Revoking Proxies

 

The Board is soliciting proxies to vote your shares at the Meeting. All stockholders of record have three options for submitting their vote prior to the Meeting:

 

 

We encourage you to register your vote via the Internet.  If you attend the Meeting, you may also submit your vote in person, and any votes that you previously submitted — whether via the Internet, by phone or by mail — will be superseded by the vote that you cast at the Meeting. If you properly submit your proxy, via the Internet, by phone or by mail, and do not revoke it prior to the Meeting, your shares will be voted in the manner described in this proxy statement or as you may otherwise direct.

 

If you sign and return your proxy card but do not give any instructions on how you would like to vote your shares, your shares will be voted in favor of the election of each of the director nominees listed in Proposal 1 and in favor of Proposals 2, 3, and 4. As far as we know, no other matters will be presented at the Meeting. However, if any other matters of business are properly presented, the proxy holders named on the proxy card are authorized to vote the shares represented by proxies according to their judgment.

 

If you are a beneficial owner of shares held in “street name” through a brokerage firm, bank, broker-dealer, or other similar organization, you may receive a Notice of Internet Availability of Proxy Materials from the holder of record containing instructions that you must follow in order for your shares to be voted. Certain of these institutions offer Internet and telephone voting. If you wish to vote at the Meeting, you must bring to the Meeting a letter from the record holder confirming your beneficial ownership of the shares.

 

Whether you submit your proxy via the Internet, by phone or by mail, you may revoke it at any time before voting takes place at the Meeting. If you are the record holder of your shares and you wish to revoke your proxy, you must deliver instructions to: Laura A. Fennell, Corporate Secretary, at Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California 94039-7850. You may also revoke a proxy by submitting a later-dated vote, in person at the Meeting. If a broker, bank or other nominee is the record holder of your shares and you wish to revoke your proxy, you must contact the record holder of your shares directly.

 

Votes Required to Elect Directors and Adopt Proposals

 

Each share of our common stock outstanding on the Record Date is entitled to one vote on each of the 10 director nominees and one vote on each other matter. To be elected, directors must receive a majority of the votes cast (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Each director who is standing for re-election at the Meeting has tendered a contingent, irrevocable resignation from the Board that will become effective only if the director fails to receive the required majority vote. In that event, the Nominating and Governance Committee of the Board will make a recommendation to the Board whether to accept or reject the resignation, or whether some other action should be taken. The Board will act on the recommendation of the Nominating and Governance Committee and publicly disclose its decision and the rationale behind it within 90 days after the date of the certification of the election results. Approval of each of the other proposals on the agenda requires the affirmative vote of the majority of the shares of common stock present or

represented by proxy and voted “for” or “against” the proposal. Accordingly, a majority of votes cast is required to approve these proposals.

 

Abstentions and Broker Non-Votes

 

Any shares represented by proxies that are marked to abstain from voting on a proposal will be counted as present in determining whether we have a quorum. They will also be counted in determining the total number of shares entitled to vote on a proposal. Abstentions and, if applicable, broker non-votes will not be counted as votes “for” or “against” a Director nominee or the other proposals. Accordingly, abstentions are not counted for the purpose of determining the number of votes cast on these proposals.

 

If your shares are held in street name and you do not instruct your broker on how to vote your shares, your broker, in its discretion, may either leave your shares unvoted or vote your shares on routine matters. Only Proposal 2 (ratifying the appointment of our independent registered public accounting firm) is considered a routine matter. In accordance with federal legislation adopted in 2010, the SEC has approved changes to NYSE Rule 452, the broker vote rule, that make executive compensation matters, including say-on-pay, non-routine matters. If your broker returns a proxy card but does not vote your shares, this results in a “broker non-vote.” Broker non-votes will be counted as present for the purpose of determining a quorum. Proposals 1 (election of directors), 3 (amendment and restatement of the 2005 Equity Incentive Plan) and 4 (advisory vote on executive compensation) are not considered routine matters, and without your instruction, your broker cannot vote your shares. Because brokers do not have discretionary authority to vote on these proposals, broker non-votes will not be counted for the purpose of determining the number of votes cast on the proposals.

 

Soliciting Proxies

 

Intuit will pay all expenses of soliciting proxies to be voted at the Meeting. After the proxies are initially distributed, Intuit and/or its agents may also solicit proxies by mail, electronic mail, telephone or in person. We have hired a proxy solicitation firm, Innisfree M&A Incorporated, to assist us in soliciting proxies. We will pay Innisfree a fee of $9,000 plus their expenses, which we estimate will be approximately $7,000. We will ask brokers, custodians, nominees and other record holders to prepare and send a Notice of Internet Availability of Proxy Materials to people or entities for whom they hold shares and forward copies of the proxy materials to beneficial owners who request paper copies.

 

Voting Results

 

The preliminary voting results will be announced at the Meeting. The final voting results will be tallied by our Inspector of Elections and published in a Current Report on Form 8-K that we expect to file within four business days of the Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Meeting, we intend to file a Form 8-K to disclose preliminary voting results and, within four business days after the final results are known, we will file an additional Form 8-K to disclose the final voting results.

 

Delivery of Voting Materials to Stockholders Sharing an Address

 

To reduce the expense of delivering duplicate materials to stockholders sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Notice of Internet Availability, Annual Report on Form 10-K and proxy materials, as applicable, sent to stockholders until such time as one or more of these stockholders notifies us that they wish to receive individual copies. This procedure will reduce duplicate mailings and save printing costs and postage fees, as well as natural resources.

 

How to Obtain a Separate Set of Voting Materials

 

If you received a householded mailing this year, and you would like to have additional copies of our Notice of Internet Availability of Proxy Materials, Annual Report on Form 10-K and proxy materials, as applicable, mailed to you, please submit your request to Investor Relations, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View,

California, 94039-7850, or call (650) 944-3560 and we will deliver these materials to you promptly upon such written or oral request. You may also contact us at the address or phone number above if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future. If you would like to opt out of householding for future mailings, call (800) 542-1061 or send a written request to Investor Relations at the above address.

 

Annual Report on Form 10-K and Additional Materials

 

The Notice of 2011 Annual Meeting of Stockholders, this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended July 31, 2010 have been made available to all stockholders entitled to vote at the Meeting and who received the Notice of Internet Availability. The Annual Report on Form 10-K can also be viewed at http://investors.intuit.com.

 

Paper copies of our Annual Report on Form 10-K (excluding exhibits) for the fiscal year ended July 31, 2010 may be obtained without charge by writing to Investor Relations, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California, 94039-7850, or by calling (650) 944-3560.

 

Our Board currently consists of 10 directors, all of whom are standing for re-election. The nominees for election include seven independent directors, as defined in the applicable rules for companies traded on the NASDAQ Global Select Market (NASDAQ) and three directors who are employees of Intuit. Stockholders elect all directors annually. The authorized number of directors is currently 10.

 

Each of the incumbent directors listed below has been nominated for election by the Board upon recommendation by the Nominating and Governance Committee and has agreed to stand for election to a one-year term. Information concerning the nominees for director is provided below.

 

David H. Batchelder (Age 61)
Principal, Relational Investors LLC

 

Mr. Batchelder has been an Intuit director since 2009 and is a member of the Compensation and Organizational Development Committee and Acquisition Committee. Mr. Batchelder has been a Principal of Relational Investors LLC, an investment advisory firm that he founded, since 1996. From 1988 to 2005, Mr. Batchelder was a Principal of Relational Advisors LLC, a financial advisory and investment banking firm that he founded. Prior to founding Relational Investors and Relational Advisors, Mr. Batchelder held various executive positions with Mesa Petroleum Co., and was an Audit Manager with Deloitte & Touche LLP. Mr. Batchelder has been a member of the board of directors of The Home Depot, Inc. since 2007. Mr. Batchelder served as a director of ConAgra Foods, Inc. from 2002 to 2007 and Washington Group International, Inc. from 1993 to 2007. Mr. Batchelder holds a Bachelor’s degree in Accounting from Oklahoma State University. The Board believes that Mr. Batchelder should be re-elected to the Board because of his management and finance experience; his service as a director of several companies in a wide range of industries as well as his insights into the views of institutional investors.

 

Christopher W. Brody (Age 66)
Chairman, Vantage Partners LLC

 

Mr. Brody has been an Intuit director since 1993 and is a member of the Compensation and Organizational Development Committee and Chairman of the Nominating and Governance Committee. Mr. Brody has been chairman of Vantage Partners LLC, a private investment firm that he founded, since 1999. From 1971 to 1998 Mr. Brody was a partner of Warburg, Pincus & Co., a venture capital and private equity investment firm. Over the past 29 years, Mr. Brody has served on the boards of over 15 public and private companies in a number of different industries. Currently, Mr. Brody serves as a director of several private companies. Mr. Brody holds a Bachelor of Arts in English Literature from Harvard College and a Master in Business Administration from Harvard Business

School. The Board believes that Mr. Brody should be re-elected to the Board because of his experience and knowledge of corporate finance, strategic planning and general management; his experience and knowledge of operational matters gained as a past and present director of several other public and private companies; and his knowledge of Intuit, its markets and operations developed over his tenure as a director of Intuit.

 

William V. Campbell (Age 70)
Chairman of the Board of Directors, Intuit Inc.

 

Mr. Campbell has been an Intuit director since 1994 and Chairman of the Board since 1998. Mr. Campbell is currently Non-Executive Chairman of Intuit. Mr. Campbell served as Intuit’s President and Chief Executive Officer from 1994 to 1998 and was Acting Chief Executive Officer from September 1999 to January 2000. Mr. Campbell has been a member of the board of directors of Apple, Inc., since 1997 where he co-chairs the Audit Committee. In addition to Mr. Campbell’s public company leadership experience, he serves as the Chair of the Board of Trustees of Columbia University. Mr. Campbell holds a Bachelor of Arts in Economics and a Masters of Science from Columbia University. The Board believes that Mr. Campbell should be re-elected to the Board because of his professional experience managing and advising innovative high growth companies; his leadership throughout the technology industry; and his understanding of Intuit, its strategy, markets, operations and management.

 

Scott D. Cook (Age 58)
Founder and Chairman of the Executive Committee, Intuit Inc.

 

Mr. Cook has been an Intuit director since 1984. A co-founder of Intuit, Mr. Cook served as Intuit’s President and Chief Executive Officer from 1984 to 1994 and served as Chairman of the Board from 1993 to 1998. Mr. Cook has been a director of eBay Inc. since 1998 where he is a member of the Corporate Governance and Nominating Committee. Mr. Cook has been a director of The Procter & Gamble Company since 2000 where he chairs the Innovation & Technology Committee and is a member of the Compensation & Leadership Development Committee. Mr. Cook holds a Bachelor of Arts in Economics and Mathematics from the University of Southern California and a Master in Business Administration from Harvard Business School. The Board believes that Mr. Cook should be re-elected to the Board because of his experience as an entrepreneur and corporate executive; his knowledge of Intuit’s operations, markets, management and strategy; his role in guiding and fostering innovation; and his experience as a Board member of other large consumer-focused companies.

 

Diane B. Greene (Age 55)
Former President and Chief Executive Officer, VMware, Inc.

 

Ms. Greene has been an Intuit director since 2006 and is a member of the Audit and Risk Committee and the Nominating and Governance Committee. Ms. Greene co-founded VMware, Inc. in 1998 and took the company public in 2007. Ms. Greene served as chief executive officer and president of VMware from 1998 to 2008, a member of the board of directors of VMware from 2007 to 2008, and as an Executive Vice President of EMC Corporation from 2005 to 2008. Prior to VMware, Ms. Greene held technical leadership positions at Silicon Graphics, Tandem, and Sybase and was chief executive officer of VXtreme. In addition to Ms. Greene’s public company board experience, she is a member of The MIT Corporation. Ms. Greene holds a Bachelor of Arts in mechanical engineering from the University of Vermont, a Master of Science degree in naval architecture from the Massachusetts Institute of Technology and a Master of Science degree in computer science from the University of California, Berkeley. The Board believes that Ms. Greene should be re-elected to the Board because she brings to the Board her experience and insights as a successful technology entrepreneur and former chief executive officer of a public company as well as her expertise and knowledge of cloud computing and software as a service businesses.

 

Michael R. Hallman (Age 65)
President, The Hallman Group

 

Mr. Hallman has been an Intuit director since 1993 and is the Chairman of the Compensation and Organizational Development Committee and a member of the Nominating and Governance Committee. Mr. Hallman has been President of The Hallman Group, a management consulting firm, since 1992. Prior to his founding the Hallman Group, Mr. Hallman held the positions of president and chief operating officer of Microsoft Corporation

from 1990 to 1992. Mr. Hallman served as a director of InFocus Corporation from 1993 to 2008, Digital Insight Corporation from 2001 to 2007, and Watchguard Technologies, Inc. from 2000 to 2006. Mr. Hallman holds both a Bachelor’s and a Master’s degree in Business Administration from the University of Michigan. The Board believes that Mr. Hallman should be re-elected to the Board because of his experience managing a large public technology company; his knowledge of corporate strategy and operational oversight gained from his past and present leadership roles and directorships in various industries; and his expertise in strategic and information technology matters.

 

Edward A. Kangas (Age 66)
Non-Employee Chairman, Tenet Healthcare

 

Mr. Kangas has been an Intuit director since 2007 and is a member of the Acquisition Committee and the Compensation and Organizational Development Committee. Mr. Kangas has been chairman of Tenet Healthcare since 2003. From 1989 to 2000, Mr. Kangas was global chairman and chief executive officer of Deloitte. Mr. Kangas held the position of managing partner of Deloitte & Touche (USA) from 1989 to 1994. Mr. Kangas has been a member of the board of directors of: Allscripts Healthcare Solutions, Inc. since 2010; Hovnanian Enterprises, Inc. since 2002; and United Technologies Corporation since 2008. Mr. Kangas was a member of the board of Electronic Data Systems Corporation from 2004 to 2008 and Eclipsys Corporation from 2004 to 2010. Mr. Kangas holds a Bachelor’s degree and a Master’s degree in Business Administration from the University of Kansas. The Board believes that Mr. Kangas should be re-elected to the Board because he brings to the Board global executive experience as well as his knowledge and expertise acquired through his service as a director of companies in industries that are highly relevant to Intuit’s businesses, including software, technology, professional services, and healthcare.

 

Suzanne Nora Johnson (Age 53)
Former Vice-Chairman, The Goldman Sachs Group

 

Ms. Nora Johnson has been an Intuit director since 2007 and is a member of the Acquisition Committee and the Audit and Risk Committee. Ms. Nora Johnson held the Honorary Title of Senior Director of The Goldman Sachs Group from 2007 to 2009. Ms. Nora Johnson joined The Goldman Sachs Group in 1985 and held several management positions throughout her 22 year tenure including: Vice Chairman, Chairman of the Global Markets Institute, and Head of the Global Investments Research Division. Ms. Nora Johnson has been a member of the board of directors of: American International Group, Inc since 2008; Pfizer Inc. since 2007; and VISA Inc. since 2007. Ms. Nora Johnson’s significant non-profit board affiliations include, among others, the American Red Cross and the University of Southern California. Ms. Nora Johnson earned a Bachelor’s degree from the University of Southern California and a Juris Doctor from Harvard Law School. The Board believes that Ms. Nora Johnson should be re-elected to the Board because she brings valuable business experience managing large, complex, global institutions as well as insights into how changes in the financial services industry, public policy and the macro-economic environment affect our businesses.

 

Dennis D. Powell (Age 62)
Former Chief Financial Officer, Cisco Systems, Inc.

 

Mr. Powell has been an Intuit director since 2004 and is Chairman of the Audit and Risk Committee and a member of the Acquisition Committee. Mr. Powell was executive advisor of Cisco Systems, Inc. from 2008 to 2010. Mr. Powell joined Cisco in 1997 and held several management positions throughout his tenure including: Senior Vice President and Chief Financial Officer from 2003 to 2008; Senior Vice President, Corporate Finance Vice President from 2002 to 2003; and Corporate Controller from 1997 to 2002. Prior to Cisco, Mr. Powell held the position of senior partner at Coopers & Lybrand LLP, where his tenure spanned 26 years. Mr. Powell has been a member of the boards of directors of Applied Materials, Inc. since 2007 and VMware, Inc. since 2007. Mr. Powell holds a Bachelor of Science in Business Administration with a concentration in accounting from Oregon State University. The Board believes Mr. Powell should be re-elected to the Board because he brings to the Board his executive management experience with large, global organizations as well as insights into financial and operational issues gained through his tenure as an executive at a large public technology company.

Brad D. Smith (Age 46)
President and Chief Executive Officer, Intuit Inc.

 

Mr. Smith has been an Intuit director since 2008 and is currently President and Chief Executive Officer of Intuit. Mr. Smith joined Intuit in 2003 and has served as Senior Vice President and General Manager, Small Business Division from 2006 to 2007, Senior Vice President and General Manager, QuickBooks from 2005 to 2006, Senior Vice President and General Manager, Consumer Tax Group from 2004 to 2005 and as Vice President and General Manager of Intuit’s Accountant Central and Developer Network from 2003 to 2004. Before joining Intuit, Mr. Smith held the position of Senior Vice President of Marketing and Business Development of ADP, where he held several executive positions from 1996 to 2003. Mr. Smith was elected to the board of directors of Yahoo! Inc. in 2010. Mr. Smith holds a Bachelor’s degree in Business Administration from Marshall University and a Master’s degree in Management from Aquinas College. The Board believes Mr. Smith should be re-elected because, as Chief Executive Officer of Intuit, he possesses the most relevant knowledge of Intuit’s strategy, markets, operations and employees and provides industry expertise and context on all matters that come before the Board.

 

On October 12, 2009, we entered into a letter agreement (the “Letter Agreement”) with Relational Investors LLC (“Relational”), certain of Relational’s affiliates, Mr. Batchelder, Ralph V. Whitworth and John A. Sullivan (collectively, the “Relational Group”) pursuant to which the Relational Group withdrew its nomination of three candidates for election as directors at the 2009 Annual Meeting of Stockholders (the “2009 Annual Meeting”).

 

Pursuant to the Letter Agreement, (a) we nominated Mr. Batchelder for election to our Board at the 2009 Annual Meeting, and (b) Mr. Batchelder joined the Acquisition Committee and Compensation and Organizational Development Committee of our Board.

 

In addition, the Relational Group has agreed to observe customary standstill provisions through the date that is 30 days prior to the last day of the notice period specified in Intuit’s advance notice bylaw related to nominations of directors at Intuit’s next Annual Meeting of Stockholders. The standstill provisions provide, among other things, that the Relational Group will not (a) engage in or in any way participate in a solicitation of proxies or consents with respect to Intuit, (b) initiate any shareholder proposals, (c) control or seek to control, or influence or seek to influence, the management, the Board or policies of Intuit, or (d) own more than 9.9% of Intuit’s common stock.

 

Our Board has determined to renominate Mr. Batchelder in connection with the Meeting. As a result, the Relational Group has agreed to vote for and publicly support and recommend our Board’s nominees for director at the Meeting.

 

Our Board has adopted Corporate Governance Principles that are designed to assist the Board in observing practices and procedures that serve the best interests of Intuit and our stockholders. The Nominating and Governance Committee is responsible for overseeing these Corporate Governance Principles and periodically making recommendations to the Board regarding any changes. These Corporate Governance Principles address, among other things, our policy on succession planning and senior leadership development, retirement, Board performance evaluations, committee structure and stock ownership requirements.

 

We maintain a corporate governance page on our company website that contains key information about corporate governance matters. This information includes copies of our Code of Conduct & Ethics for all employees, including our Company’s senior executive and financial officers, our Operating Values, and the charter for each Board committee. The link to this corporate governance page can be found at http://investors.intuit.com/governance.cfm.

 

The Board oversees management’s performance on behalf of Intuit’s stockholders. The Board’s primary responsibilities are (1) to select, oversee and determine compensation for the Chief Executive Officer who, with

senior management, runs Intuit on a day-to-day basis, (2) to monitor management’s performance to assess whether Intuit is operating in an effective, efficient and ethical manner in order to create value for Intuit’s stockholders, and (3) to periodically review Intuit’s long-range plan, business initiatives, capital projects and budget matters.

 

The Board appoints the Chairman of the Board, who may be a former officer of Intuit if the Board determines that it is in the best interests of Intuit and its stockholders. The roles of Chairman of the Board and Chief Executive Officer may be held by the same person or may be held by different people. However, if the Chairman is also the Chief Executive Officer, then the Board has determined that it will appoint a lead independent director. Currently, the positions of Chairman of the Board and Chief Executive Officer are held by separate persons. The Board believes that the separation of the roles of Chairman of the Board and Chief Executive Officer is appropriate at this time as it allows our Chief Executive Officer to focus primarily on management and strategy responsibilities, while allowing our Chairman to focus on leadership of the Board, providing feedback and advice to the Chief Executive Officer and providing a channel of communication between the Board members and the Chief Executive Officer. William V. Campbell, the current Chairman of the Board, is a non-executive employee of Intuit and previously served as Intuit’s chief executive officer. The Chairman of the Board presides over all Board meetings and works with the Chief Executive Officer to develop agendas for Board meetings. The Chairman advises the Chief Executive Officer and other members of senior management on business strategy and leadership development. He also works with the Board to drive decisions about particular strategies and policies and, in concert with the independent Board committees, facilitates a performance evaluation process of the Board.

 

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The Board held six meetings during fiscal 2010. The independent directors also meet in executive session without management present. During fiscal 2010, the independent directors held four executive sessions. With respect to executive sessions of the independent directors, the independent directors may from time to time designate an independent director to serve as presiding director to chair these sessions. In addition, the presiding director may advise the Chairman of the Board with respect to agendas and information to be provided to the Board and may perform such other duties as the Board may from time to time delegate to assist it in fulfilling its responsibilities. The Board has delegated certain responsibilities and authority to the committees described below. Committees report regularly on their activities and actions to the full Board.

 

Our Board has responsibility for overseeing risk management for the Company. The Board exercises this oversight responsibility directly and through its committees, as follows:

 

 

Intuit’s management team is responsible for balancing risk and opportunity in support of Intuit’s objectives. Management exercises this responsibility day to day through ongoing identification of risks related to significant business activities, implementation of risk mitigation activities and alignment of risk management to the Company’s strategy.

 

Pursuant to new SEC rules relating to risks arising from compensation policies and practices that could reasonably be likely to have a material adverse impact on the Company, the Company’s management conducted a review of its key compensation programs, policies and practices. This review was conducted in conjunction with Frederic W. Cook & Co., Inc. (“FW Cook”), the Compensation and Organizational Development Committee’s independent compensation consultant, which prepared a report on the Company’s incentive programs.

 

Our review included an analysis of the Company’s short-term and long-term compensation programs covering key program details, performance factors for each program, target award ranges, maximum funding levels, and plan administrative oversight and control requirements. Key program elements assessed relating to potential compensation risks were pay mix, performance metrics, performance goals and payout curves, payment timing and adjustments, severance packages, equity incentives and stock ownership requirements and trading policies.

 

Our analysis was reviewed with the Compensation and Organizational Development Committee at its October 20, 2010 meeting. The review and analysis did not identify any areas of material risk arising from Intuit’s compensation programs.

 

Our assessment noted that Intuit’s approach to compensation utilizes a mix of cash and equity and annual and long-term incentives, as well as multiple performance metrics for its various programs. Our mix of compensation, the design features of our programs, and the respective oversight and control requirements are designed to mitigate any potential for inappropriate risk taking. For example, our annual incentive bonus plan bases 25% of the award on company-wide performance (revenue growth and non-GAAP operating income growth) and 75% on a qualitative evaluation of business unit and individual performance, which evaluation mitigates any tendency for an executive to focus exclusively on the specific financial metrics under the plan. Moreover, the performance metrics associated with our annual plan are aligned with the Company’s business plans and strategic objectives. In addition, officer compensation plans have individual payout and/or aggregate funding caps. Although certain commission plans for employees below the officer level do not have specific payment caps, the Company has concluded that risks arising from such plans are not reasonably likely to have a material adverse impact, in light of the controls maintained for such plans.

 

Long-term incentives make up approximately 50% of target total direct compensation (base pay, annual incentives, and long-term incentives) for executives and consist of a portfolio of equity related incentives that incent performance over a variety of time periods with respect to several balanced goals. For fiscal year 2011 the long-term incentives are divided into: stock options (generally vesting over three years with an option term of seven years); time-based restricted stock units (“RSUs”) (generally vesting over three years); performance-based RSUs measured by three-year Generally Accepted Accounting Principles (“GAAP”) operating income and revenue growth; and performance-based RSUs measured by three-year relative total shareholder return. In addition, Intuit has adopted stock ownership guidelines for executives at the senior vice president level and above and has an insider trading policy that prohibits trading put or call options and short sales.

 

Our Board currently includes seven independent directors, all of whom are standing for election. To be considered independent under NASDAQ rules, a director may not be employed by Intuit or engage in certain types

of business dealings with Intuit. In addition, as required by NASDAQ rules, the Board has made a determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the directors and by Intuit with regard to each director’s business and personal activities as they relate to Intuit and Intuit’s management. Based on this review, the Board has determined that Mr. Batchelder, Mr. Brody, Ms. Greene, Mr. Hallman, Mr. Kangas, Ms. Nora Johnson and Mr. Powell are independent directors. The Board previously determined that Mr. Sclavos, who resigned from our Board effective March 1, 2010, was an independent director.

 

In assessing director independence under NASDAQ rules, the Nominating and Governance Committee and the full Board review relevant transactions, relationships and arrangements that may affect the independence of our Board members. Each of Mr. Powell and Mr. Kangas is, or was during fiscal 2010 (and Mr. Sclavos is, or was during fiscal 2010) a director of companies with which Intuit conducts business in the ordinary course. Consistent with NASDAQ independence standards, Intuit did not make payments to, or receive payments from, any of these companies for property or services in the current or any of the last three fiscal years that exceed 5% of Intuit’s or any of the other parties’ consolidated gross revenues. Following review of these transactions, the Board determined that each of these directors was independent under NASDAQ rules.

 

The Board expects that each director will prepare for, attend and participate in all Board and applicable committee meetings and that each Board member will see that other commitments do not materially interfere with his or her service on the Board. Directors generally may not serve on the boards of more than six public companies, including Intuit’s Board. Any director, who has a principal job change, including retirement, must offer to submit a letter of resignation to the Chairman of the Board. The Board, in consultation with the Nominating and Governance Committee, will review each offered resignation and determine whether or not to accept such resignation after consideration of the continued appropriateness of Board membership under the new circumstances.

 

During fiscal 2010, no director attended less than 75% of the aggregate number of meetings of the Board and the committees on which he or she served. Seven of our current directors attended the last Annual Meeting of Stockholders, held in December 2009. We moved our Meeting this year to coincide with our January 2011 meeting of the Board. Under the Corporate Governance Principles, all directors are encouraged to attend the annual meetings of Intuit’s stockholders.

 

The Board currently has a standing Acquisition Committee, Audit and Risk Committee, Compensation and Organizational Development Committee, and Nominating and Governance Committee. The members of each committee are appointed by the Board based on recommendations of the Nominating and Governance Committee. Each member of these committees is an independent director as determined by the Board in accordance with NASDAQ listing standards and each member of the Audit and Risk Committee meets heightened independence criteria. Each committee has a charter and annually reviews its charter and makes recommendations to our Board for

revision of its charter to reflect evolving best practices. Copies of each charter can be found on our website at http://investors.intuit.com/charters.cfm. Current committee members are identified in the following table.

 

 

The Acquisition Committee was established on January 16, 2008 to review and approve acquisition, divestiture and investment transactions proposed by Intuit’s management in which the total consideration to be paid or received by Intuit is within certain limits that may be established by the Board from time to time.

 

In fiscal 2010, the Acquisition Committee held five meetings.

 

The Audit and Risk Committee represents and assists the Board in its oversight of Intuit’s financial reporting, internal controls and audit functions, and is directly responsible for the selection, retention, compensation and oversight of the work of Intuit’s independent auditor.

 

Our Board has determined that each member of the Audit and Risk Committee is independent, as defined under applicable NASDAQ listing standards and SEC rules related to audit committee members, and is financially literate, as required by NASDAQ listing standards. All members of the Audit and Risk Committee have been determined by the Board to meet the qualifications of an “audit committee financial expert,” as defined by SEC rules, and to meet the qualifications of “financial sophistication” in accordance with NASDAQ listing standards. Stockholders should understand that these designations related to an Audit and Risk Committee member’s experience and understanding do not impose upon him or her any duties, obligations or liabilities greater than those generally imposed on other members of the Board. The Audit and Risk Committee held a portion of each meeting in closed session with our independent auditors, Ernst & Young LLP, present.

 

In fiscal 2010, the Audit and Risk Committee held 12 meetings. The responsibilities and activities of the Audit and Risk Committee are described in greater detail in “Audit and Risk Committee Report” beginning on page 58.

 

The Compensation and Organizational Development Committee (the “Compensation Committee”) assists the Board in the review and approval of executive compensation and the oversight of organizational and management development for executive officers and other employees of Intuit. Each member of this committee is independent under NASDAQ listing standards and is a “Non-Employee Director,” as defined in Rule 16(b)-3 under the Securities Exchange Act of 1934. The Compensation Committee met 12 times in fiscal 2010. The Compensation Committee held a portion of each meeting in closed session, with only the Compensation Committee members and, on certain occasions, William Campbell, the Chairman of the Board, present.

For more information on the responsibilities and activities of the Compensation Committee, including the committee’s processes for determining executive compensation, see the “Compensation and Organizational Development Committee Report” on page 24 and “Compensation Discussion and Analysis” beginning on page 25.

 

The Compensation Committee is also responsible for reviewing the compensation for non-employee directors on an annual basis and making recommendations to the Board, in the event they determine changes are needed.

 

Section 162(m) Subcommittee

 

In the event that not all of the members of the Compensation Committee are “outside directors” for purposes of Regulation 1.162-27 under Section 162(m) of the Internal Revenue Code, the Charter of the Compensation Committee authorizes the designation of a subcommittee of not less than two members who are “outside directors.” This subcommittee has responsibility and authority to review and approve all elements of compensation that may require approval by a committee of “outside directors” in order for such compensation to qualify for deductibility under Section 162(m) and related regulations. In July 2010, the Board and the Compensation Committee designated such a subcommittee, consisting of Mr. Batchelder, Mr. Hallman and Mr. Kangas. This subcommittee was not required to meet in fiscal 2010.

 

The Nominating and Governance Committee reviews and makes recommendations to the Board regarding Board composition and appropriate governance standards. The Nominating and Governance Committee held five meetings in fiscal 2010.

 

The Nominating and Governance Committee has adopted a process to identify and evaluate candidates for director, whether recommended by management, Board members, or stockholders (if made in accordance with the procedures set forth under “Stockholder Recommendations of Director Candidates” on page 20). The committee will evaluate candidates properly recommended by stockholders in the same manner as candidates recommended by others.

 

The Nominating and Governance Committee believes that all nominees for Board membership should possess the highest ethics, integrity and values and be committed to representing the long-term interests of Intuit’s stockholders. In addition, nominees should have broad, high-level experience in business, government, education, technology or public interest. They should also have sufficient time to carry out their duties as directors of Intuit and have an inquisitive and objective perspective, practical wisdom and mature judgment. The committee will also consider additional factors — such as independence, diversity, expertise and specific skills, and other qualities that may contribute to the Board’s overall effectiveness — when evaluating candidates for director. Intuit may also engage third-party search firms to provide assistance in identifying and evaluating Board candidates.

 

Consideration of director candidates typically involves a series of discussions and a review of available information concerning the candidate, the existing composition of the Board, and other factors the committee deems relevant. In conducting its review and evaluation, the committee may solicit the views of management, other Board members and other individuals it believes may have insight into a candidate.

 

In considering diversity in the selection of nominees, the Nominating and Governance Committee looks for individuals with varied professional experience, background, knowledge, skills and viewpoints in order to achieve and maintain a group of directors that, as a whole, provides effective oversight of the management of the Company. Although our nomination policy does not prescribe specific standards for diversity, the Board and the Nominating and Governance Committee do look for nominees with a diverse set of skills that will complement the existing skills and experience of our directors and provide an overall balance of diversity of perspectives, backgrounds and experiences. Our Board is currently composed of a group of leaders with broad and diverse experience in many fields, including: management of large global enterprises; technology and innovation leadership; consumer products and services; healthcare; financial services; legal and compliance; executive compensation; and corporate

governance. Our Board members have acquired these diverse skills through their accomplished careers and their service as directors of a wide range of other public and private companies.

 

No executive officer of Intuit during fiscal 2010 served, or currently serves, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on Intuit’s Board or Intuit’s Compensation Committee.

 

The Compensation Committee is responsible for reviewing the equity and cash compensation for directors on an annual basis and making recommendations to the Board, in the event it determines changes are needed. Our director compensation programs are designed to provide an appropriate incentive to attract and retain qualified non-employee board members. At our 2009 Annual Meeting on December 15, 2009, our stockholders approved a new non-employee director compensation program to go into effect after the date of the 2009 Annual Meeting. Under this program the equity component of the director compensation program was changed from a fixed number of stock options to a fixed dollar value of RSUs, as discussed under “Automatic Restricted Stock Unit Grants to Non-Employee Directors (after December 15, 2009)” on page 19.

 

The following table summarizes the fiscal 2010 compensation earned by each member of the Board other than Mr. Smith, whose compensation is described under “Executive Compensation” beginning on page 43.

 

 

 

 

The following table shows each RSU and option grant made to each of our directors, other than Mr. Smith, during fiscal 2010, including the grant date, number of shares, grant date fair value, and exercise price, if applicable.

 

 

 

The following table provides information on the outstanding equity awards held by our directors, other than Mr. Smith, as of July 31, 2010.

 

 

Non-employee directors are paid an annual cash retainer of $30,000, plus additional cash retainers based on their committee service. These annual retainers are paid in quarterly installments and are listed in the following table:

 

We reimburse non-employee directors for out-of-pocket expenses incurred in connection with attending Board and committee meetings.

 

All equity grants to non-employee directors in fiscal year 2010 were made pursuant to a shareholder-approved non-discretionary formula set forth in our 2005 Equity Incentive Plan. Through December 15, 2009, our directors received annual grants of a fixed number of stock options for their Board service (22,500 options for Board membership, 10,000 options for service as a committee chair and 7,500 options for service as a committee member).

 

The stockholders of the Company approved an amendment to the 2005 Equity Incentive Plan on December 15, 2009, after which equity grants to non-employee directors were made in the form of a fixed dollar value of RSUs, rather than options, in the following amounts: new Board members ($250,000 on date of joining Board), continuing Board members ($175,000 annually), Committee members ($57,500 annually), and Board-designated Committee chairs ($17,500 annually). Because the formula is based on a fixed dollar amount, the number of RSUs awarded annually to non-employee directors varies, depending on the closing market price of Intuit’s common stock on the date of grant. Annual Board and committee grants are awarded each year on the first business day after the Annual Meeting of Stockholders. Initial Board and committee grants are awarded shortly after the director first joins the Board or committee and are pro-rated based on the number of full months the director will serve (assuming continuous service) between grant date and the next vesting date. If the non-employee director elects, settlement of the awards can be deferred for up to five years. A non-employee director will receive committee grants for a maximum of two committees.

 

Vesting of these RSUs occurs on December 1 of each year, so long as the non-employee director does not experience a termination. Initial Board grants vest in four equal installments over four years, annual Board grants vest in two equal installments over two years and committee grants vest in one year. If any grant has been pro-rated as described above, the number of shares that vest on the first vesting date (but not any other vesting date) shall be correspondingly pro-rated.

 

If Proposal No. 3 is approved, the existing provisions of the 2005 Equity Incentive Plan providing for automatic grants of RSUs will be deleted. Instead, the Board will have discretion to establish a program to grant equity awards to our directors in amounts and with vesting and other provisions to be determined from time to time by the Board.

 

In October 2010 the Board approved a new director equity compensation program, which will be effective for grants to directors made immediately following the Meeting. Grants will be made to non-employee directors and the Chairman of the Board in the form of a fixed dollar value of RSUs in the following amounts:

 

 

Because the formula is based on a fixed dollar amount, the number of RSUs awarded annually to non-employee directors varies, depending on the closing market price of Intuit’s common stock on the date of grant. The annual grants will be awarded on the first business day after each Annual Meeting of Stockholders. Initial Board and committee awards are pro-rated based on the number of full months the director will serve (assuming continuous service) between the grant date and the next vesting date. If the director elects, settlement of the awards can be

deferred for up to five years. A director can receive committee grants for a maximum of two committees. Vesting of these RSUs occurs on the first date of the twelfth month following the date of grant, so long as the director does not experience a termination. For example, for grants made in January 2011, vesting would occur on January 1, 2012. Initial Board grants vest in four equal installments over four years, annual Board and Chairman grants vest in two equal installments over two years and committee grants vest in one year. If any grant has been pro-rated as described above, the number of shares that vest on the first vesting date (but not any other vesting date) shall be correspondingly pro-rated.

 

Each director is required to hold at least 10,000 shares of Intuit common stock by the later of July 2011 or five years from the date the director joined the Board. The value of this minimum stock ownership is greater than five times the cash retainer for non-employee directors during fiscal 2010. The shares must then be held throughout the director’s tenure on the Board. If any director does not meet the stock ownership requirement within the designated time frame, 50% of his or her annual cash retainers will be made in the form of Intuit stock until compliance is achieved.

 

The Nominating and Governance Committee is responsible for receiving stockholder communications on behalf of the Board. Any stockholder may send communications by mail to the Board or individual directors c/o Corporate Secretary, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California 94039-7850 or via our website at http://investors.intuit.com/contactBoard.cfm. The Board has instructed the Corporate Secretary to review this correspondence and determine, in his or her discretion, whether matters submitted are appropriate for Board consideration. The Corporate Secretary may also forward certain communications elsewhere in the Company for review and possible response. In particular, communications such as product or commercial inquiries or complaints, job inquiries, surveys and business solicitations or advertisements or patently offensive or otherwise inappropriate material will not be forwarded to the Board.

 

As discussed above, our Nominating and Governance Committee will consider director candidates recommended by a stockholder. A stockholder seeking to recommend a candidate for the committee’s consideration should submit the candidate’s name and qualifications to: Nominating and Governance Committee, c/o Corporate Secretary, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California 94039-7850 or via our website at http://investors.intuit.com/contactBoard.cfm. You may find a copy of a document entitled “Process of Identifying and Evaluating Nominees for Director” on our website http://investors.intuit.com/contactBoard.cfm.

 

Any stockholder who intends to present a proposal for inclusion in Intuit’s 2012 proxy statement and form of proxy must submit the proposal, in writing, so that the Corporate Secretary receives it at our principal executive offices by August 1, 2011. Any stockholder who wishes to bring a proposal or nominate a person for election to the Board at the 2012 Annual Meeting of Stockholders that is not intended for inclusion in the Intuit’s 2012 proxy statement must provide written notice of the proposal or nomination to Intuit’s Corporate Secretary, at our principal executive offices, between October 6, 2011 and November 5, 2011. In addition, our stockholders must comply with the procedural requirements in our bylaws, which stockholders can obtain from us upon request. Our bylaws are also on file with the SEC.

 

The following table shows shares of Intuit’s common stock that we believe are owned as of October 31, 2010 by:

 

 

Unless indicated in the notes, each stockholder has sole voting and investment power for all shares shown, subject to community property laws that may apply to create shared voting and investment power. Unless indicated in the notes, the address of each beneficial owner is c/o Intuit Inc., P.O. Box 7850, Mountain View, California 94039-7850.

 

We calculated the “Percent of Class” based on 313,601,653 shares of common stock outstanding on October 31, 2010. In accordance with SEC regulations, we also include (1) shares subject to options that are currently exercisable or will become exercisable within 60 days of October 31, 2010, and (2) shares issuable upon settlement of RSUs that are vested, or will become vested within 60 days of October 31, 2010. Those shares are deemed to be outstanding and beneficially owned by the person holding such option or RSU for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 

 

 

 

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Intuit’s directors and executive officers, and greater-than-10% stockholders to file forms with the SEC to report their ownership of Intuit shares and any changes in ownership. Anyone required to file forms with the SEC must also send copies of the forms to Intuit. We have reviewed all forms provided to us. Based on that review and on written information given to us by our executive officers and directors, we believe that all Section 16(a) filing requirements were met during fiscal 2010, except that Forms 4 reflecting the August 1, 2009 vesting of RSUs granted to each of Mr. Patel and Mr. Smith were not timely filed due to administrative error. The vesting was reported on August 28, 2009.

 

Set out below is the Compensation Discussion and Analysis, which is a discussion of Intuit’s executive compensation programs and policies written from the perspective of how we and management view and use such policies and programs. We strive to see that Intuit’s compensation programs are fiscally responsible, market responsive and performance based. Guided by these principles, we regularly review and monitor senior management’s compensation, as well as their potential for larger leadership roles, to produce the greatest value for Intuit’s three stakeholders — employees, customers and stockholders. To this end, the Compensation and Organizational Development Committee has reviewed the components of compensation paid to each of Intuit’s officers for fiscal 2010, including annual base salary, target incentive bonus and equity compensation.

 

Given our role in providing guidance on program design, administering those programs and policies, and in making specific compensation decisions for senior executives, the Compensation and Organizational Development Committee participated in the preparation of the Compensation Discussion and Analysis and reviewed and discussed the Compensation Discussion and Analysis with management. Based on the review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

COMPENSATION AND ORGANIZATIONAL
DEVELOPMENT COMMITTEE MEMBERS

 

Michael R. Hallman (Chair)
David H. Batchelder
Christopher W. Brody
Edward A. Kangas

 

The Compensation and Organizational Development Committee (the “Compensation Committee”) oversees Intuit’s compensation plans and policies, approves compensation of our executive officers and administers our stock compensation plans. This Compensation Discussion and Analysis (“CD&A”) contains a discussion and analysis of compensation approved by the Compensation Committee and paid for fiscal 2010 to the executive officers named below (the “Named Executive Officers”) and included in the “Summary Compensation Table” on page 43:

 

 

Executive Summary

 

Intuit delivered strong financial results in fiscal 2010, achieving revenue growth of 11%, non-GAAP operating income growth of 18% and non-GAAP EPS growth of 16%. Appendix A to this proxy statement includes a reconciliation of non-GAAP operating income and non-GAAP EPS to the most comparable GAAP measures. Intuit and its management delivered these strong results in an environment of continued economic uncertainty and a sluggish recovery of the U.S. economy. Intuit continued to demonstrate excellent execution against its three-point strategy of building growth in its core businesses, building adjacent businesses and entering new geographies, and accelerating the transition to connected services.

 

The Consumer Group, which includes our TurboTax and personal finance offerings, continued to grow its customer bases, gain share in its categories and improve customer retention, delivering 15% revenue growth for the year. Our Small Business Group grew revenue 9% for the year, accelerated its acquisition of new users, grew revenue per customer in the QuickBooks business, improved customer satisfaction scores, and grew its online and subscription based offerings. While achieving strong revenue growth in these core businesses, Intuit also focused on building its adjacent businesses, through acquisitions such as Mint.com and Medfusion, and entering new geographies with online and mobile offerings. Intuit also continued to accelerate its transition to connected services, growing revenue from connected services offerings faster than the Company average and growing the customer bases in our flagship online offerings aggressively. In addition, Intuit kept its employee satisfaction scores near best-in-class levels.

 

Because Intuit was able to deliver such strong results for shareholders, customers and employees, the Compensation Committee determined that our Named Executive Officers would receive cash bonuses, equity grants and, in some cases, salary increases, in recognition of Company and individual performance, as further discussed in this CD&A.

 

Compensation Philosophy and Objectives

 

The Compensation Committee compensates our executives based on overall Company performance and individual employee performance, and our overall compensation packages are designed to help Intuit acquire, retain and motivate talented executives with proven experience. Because our Named Executive Officers lead our largest business units or functions, they have the ability to directly influence overall company performance and, as a result, have a greater portion of their pay tied to short and long-term incentive programs than most other Intuit employees. Our key measures of Company and individual performance are discussed in more detail below.

 

The Compensation Committee believes that a mix of both cash and equity incentives is appropriate, as cash incentives reward executives for near term results, while equity incentives motivate executives to increase stockholder value in the longer term. In determining the amount of the cash and equity incentives, the Compensation Committee considers each officer’s total compensation on both a short and long-term basis to assess the retention value of the overall compensation package.

We carefully manage equity compensation to provide competitive rewards that are commensurate with results delivered, while limiting dilution to stockholders. The majority of our RSUs granted to senior executives vest only upon achievement of designated financial targets, and stock options provide value to our executives only if Intuit’s stock price increases following the date of grant.

 

The Compensation Committee conducts its annual review process near the end of Intuit’s fiscal year to determine each executive’s cash bonus, equity awards, including options and RSUs, and any adjustments to base salary. The purpose of the review timing is to allow consideration of performance in the compensation decision-making process for the year.

 

Specific Elements of Compensation

 

Compensation for all Named Executive Officers is a mix of the principal components summarized in the following table and described in greater detail below.

 

 

Base Salary

 

Intuit provides base salaries to all of its employees, including the Named Executive Officers, to provide them the security of a fixed cash payment for services rendered. As discussed in our proxy statement for our 2009 Annual Stockholder Meeting, in July 2009, the Compensation Committee reviewed the base salaries of our Named Executive Officers and determined that the base salaries of our Named Executive Officers were competitive versus our peer group. Based on this analysis, the Compensation Committee decided not to increase Named Executive Officer salary levels for fiscal 2010. This decision was also consistent with a Company-wide decision not to increase salaries for employees at the director level and above in light of the economic downturn. In July 2010, the Compensation Committee reviewed the base salaries of our Named Executive Officers in the context of the benchmarking provided by FW Cook, the Compensation Committee’s independent compensation consultant, to determine whether the base salaries of any of our Named Executive Officers should be increased to remain competitive with their peers at the companies which comprise our peer group, as further described under “Use of Competitive Data” on page 38.

 

Chief Executive Officer Salary.  The Compensation Committee decided to increase Mr. Smith’s base salary from $800,000 to the market median of $950,000, taking into account the benchmarking analysis from FW Cook and the fact that Mr. Smith had not received a base salary increase since August 2008. Based on his new base salary and continuing target bonus of 120% of base salary, FW Cook determined that Mr. Smith’s resulting target cash compensation is at the peer median.

 

Other Named Executive Officer Salaries.  The Compensation Committee also approved an increase in Mr. Maurer’s base salary from $475,000 to $515,000, taking into account the analysis from FW Cook, the Chief Executive Officer’s evaluation of Mr. Maurer’s performance, and the excellent results of the consumer tax business under his leadership. With this adjustment, Mr. Maurer’s salary falls between the 50th and 75th percentile of peers.

The Compensation Committee also increased Mr. Williams’ salary from $600,400 to $625,000 in recognition of his outstanding performance, the scope and complexity of his role and his strategic leadership with regard to Intuit’s long-term goals. Mr. Williams’ salary remains in the top quartile of the peer group. The Compensation Committee did not adjust the base salaries of Mr. Patel or Mr. Goodarzi.

 

Annual Cash Bonuses

 

Intuit uses cash bonuses to reward achievement of annual Company financial performance and individual strategic and operational objectives, which are expected to increase stockholder value. Each of Intuit’s Named Executive Officers has an annual bonus target that is a stated percentage of base salary, which is determined by the executive’s role within Intuit. The bonus targets were set by the Compensation Committee based on scope and significance of each executive’s leadership role at Intuit and remained unchanged from fiscal 2009. The target amounts are used as a guideline for the determination of cash bonuses, but actual bonus payments for fiscal 2010 were greater than these targets because of the delivery of strong results in fiscal 2010, as discussed below.

 

Cash bonuses for our Named Executive Officers were paid out under the Senior Executive Incentive Plan (“SEIP”), which is a stockholder-approved plan designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. Each year, the Compensation Committee sets a performance target which must be achieved in order for participants to receive a cash bonus under the SEIP. In the first quarter of fiscal 2010, the Compensation Committee established a Company revenue target of $3.1 billion as the minimum performance hurdle for any Named Executive Officer to be eligible for a cash bonus under the SEIP. At the close of fiscal 2010, the Compensation Committee certified that Intuit had exceeded the revenue target and thus each Named Executive Officer qualified for a cash bonus under the SEIP.

 

Following certification of achievement of this target for purposes of Section 162(m), the Compensation Committee applied its discretion to determine the actual amount of each Named Executive Officer’s cash bonus. The bonus is divided into two components:

 

 

The Compensation Committee weighted these two components of the bonus at 25% and 75% for all Intuit executives in order to tie annual cash bonus awards to both the overall Company performance and, to a greater degree, to the executive’s individual contribution to the strategic and operational performance of their business unit or functional group.

 

Company Performance Component

 

The Company component of the cash bonus for the Named Executive Officers is based on both Intuit’s revenue growth and non-GAAP operating income growth for fiscal 2010. Both measures are weighted equally because the Company believes that annual profitable growth sustained over time translates into durable value creation for shareholders, and that neither revenue growth nor operating income growth is more important than the other measure.

To determine the component of each Named Executive Officer’s bonus based on overall Company performance, the Compensation Committee adopted the following matrix, which gives a range of bonus payments based on Intuit’s achievement of revenue growth and non-GAAP operating income growth targets for fiscal 2010:

 

Bonus Ranges for Fiscal 2010

 

 

Because the Company’s revenue grew 11% and non-GAAP operating income grew 18%, the component of each executive’s bonus based on overall Company performance was set by the Compensation Committee in the range of 110%-130% of that executive’s target. The Compensation Committee, in consultation with the Chief Executive Officer, then made an informed, but ultimately subjective determination that the Company performance component of each executive’s bonus (including bonuses for the Named Executive Officers) would be paid at 115% of target. The Compensation Committee chose this percentage because they determined the Company delivered strong results for shareholders, with operating results above plan during a fiscal year in which the economy remained challenging, and that this positioned Intuit well for continued growth in the coming year.

 

Individual Performance Component

 

In addition to setting the Company performance component, the Compensation Committee established a separate range for the component of each Named Executive Officer’s cash bonus based on individual performance. Consistent with the Company’s general compensation practices, the Compensation Committee determined that employees who received an “outstanding” performance rating were eligible to receive an individual performance component of their bonus in the range of approximately 120% to 165% of target.

The actual payouts of this component to our Named Executive Officers were in the range of 139% to 166%, depending on the Compensation Committee’s subjective evaluation of each executive’s performance, as discussed below the following table.

 

The following table summarizes the inputs that were used in calculating the cash bonus paid to each of our Named Executive Officers. Actual bonus amounts were rounded immaterially in certain cases.

 

 

Brad Smith’s Bonus.  In determining the component of Mr. Smith’s bonus related to his individual performance, the Compensation Committee considered his impact on one-year operational and longer-term strategic plans. In particular, the Compensation Committee determined that Mr. Smith had delivered outstanding performance on the following one-year operational goals which were established by the Compensation Committee earlier in fiscal 2010:

 

 

 

In assessing Mr. Smith’s performance of these one-year goals, the Compensation Committee noted that revenue grew 11% and non-GAAP operating income grew 18% year-over-year, while the Company was able to

continue investing in growth opportunities and returning cash to shareholders, while maintaining a strong balance sheet in a tough economy. Under Mr. Smith’s leadership, Intuit also improved its customer satisfaction scores in QuickBooks, TurboTax, Financial Services and Accounting Professionals offerings. Mr. Smith oversaw the key acquisitions of Mint.com and Medfusion, which extend the Company’s leadership in connected services. In addition, employee satisfaction scores remained at or near best-in-class levels, and Mr. Smith continued to improve Intuit’s engineering culture by building momentum around Intuit’s culture of innovation. Throughout the year, Mr. Smith led a unified executive team that provided dynamic and collaborative leadership to the entire Company.

 

The Compensation Committee also determined that Mr. Smith had delivered outstanding progress toward the following longer-term goals which were established by the Compensation Committee earlier in fiscal 2010:

 

 

 

 

 

In assessing Mr. Smith’s performance and progress toward these long-term goals, the Compensation Committee determined that he continued to drive strong execution of the three-year strategic plan for each major business unit. The Compensation Committee also recognized that under Mr. Smith’s leadership, Intuit had made significant progress toward its strategic initiatives of driving growth in the core businesses, building adjacent businesses and entering new geographies, and accelerating Intuit’s transition to connected services. In particular, revenue from the Company’s software-as-a-service offerings grew faster than traditional desktop offerings, and several business units began offering mobile applications. Mr. Smith also defined expectations and skills required for all levels of leadership at Intuit and put in place new initiatives to assess and retain key engineering talent. As discussed above, he also built a strong foundation for long-term progress and leadership by maintaining employee satisfaction scores near best-in-class and generating improvements in customer satisfaction scores in several key businesses.

 

The Compensation Committee evaluated Mr. Smith’s performance based on his achievement of these short-term and long-term goals and, after consulting with the Board without Mr. Smith present, determined that his overall performance rating was outstanding. In consideration of this rating, the Compensation Committee applied its judgment to determine that the component of Mr. Smith’s bonus related to individual performance would be paid at 160% of target. The Compensation Committee determined that this bonus award was consistent with Mr. Smith’s achievement of the goals described above. In determining this component of Mr. Smith’s bonus, no individual factor was assigned any specific weight by the Compensation Committee. Rather, the Compensation Committee assessed these factors and their overall impact on the Company and exercised its judgment in setting his bonus.

 

The Compensation Committee also determined the individual performance component of cash bonuses for our other Named Executive Officers, based on each executive’s leadership and progress toward one-year operational and longer-term strategic plans. In evaluating executives and determining each of their overall performance ratings, the Compensation Committee considered: (1) the performance evaluation and pay recommendations made by the Chief Executive Officer, which took into account the performance of each executive’s business unit or functional group, and (2) the scope and degree of difficulty of the executive’s responsibilities. Performance evaluations and ratings are, by their nature, subjective, and there is no quantitative formula that determines a performance rating for our executive officers.

 

Neil Williams’ Bonus.  Based on the recommendation provided by the Chief Executive Officer, the Compensation Committee determined that Mr. Williams had outstanding performance for fiscal 2010. Under his

leadership, Intuit’s finance team partnered with our business units to achieve excellent results. Through the use of rigorous operating mechanisms, leaders were better able to forecast return on investment on a more detailed level. Mr. Williams also led the staged outsourcing of non-core operations that improved our operating margins and is expected to reduce Intuit’s cost structure over the long-term. He also continued to execute on a multi-year effort to reduce spending and transform the finance organization to improve its efficiency and effectiveness and build a solid foundation for the future. Based on its review, the Compensation Committee determined that the individual performance component of Mr. Williams’ bonus would be paid out at 139% of target.

 

Kiran Patel’s Bonus.  Based on the recommendation provided by the Chief Executive Officer, the Compensation Committee determined that Mr. Patel had outstanding performance for fiscal 2010, based on his role in driving growth in Intuit’s largest business unit during the year. Mr. Patel’s leadership of the Small Business Group enabled that business to deliver 9% revenue growth year-over-year. The group grew its customer base and gained share in its key categories, while delivering on a clear strategy towards more online and subscription-based customers. Based on this assessment, the Compensation Committee determined that the individual performance component of Mr. Patel’s bonus would be paid out at 157% of target.

 

Daniel Maurer’s Bonus.  Based on the recommendation provided by the Chief Executive Officer, the Compensation Committee determined that Mr. Maurer had outstanding performance for fiscal 2010, based on his role in leading Intuit’s Consumer Group. Mr. Maurer’s leadership of the Consumer Group helped prepare that business for a successful tax season, including growth in the TurboTax customer base, increased share within the category and improved customer retention. Under Mr. Maurer’s leadership, the Consumer Group delivered 15% revenue growth, well above the Company average, and grew total federal TurboTax units by 11%. Based on this assessment, the Compensation Committee determined that the individual performance component of Mr. Maurer’s bonus would be paid out at 166% of target.

 

Sasan Goodarzi’s Bonus.  Based on the recommendation provided by the Chief Executive Officer, the Compensation Committee determined that Mr. Goodarzi also had outstanding performance based on his leadership of the Financial Services Division. During fiscal year 2010, this division was able to grow revenue 7% year — over-year, while growing the number of internet banking and bill pay customers, introducing a number of new offerings for financial institutions and expanding the number of financial institutions offering our services. Based on its review, the Compensation Committee determined that the individual performance component of Mr. Goodarzi’s bonus would be paid out at 140% of target.

 

In determining the individual performance component of each executive’s cash bonus, no individual factor was assigned any specific weight by the Compensation Committee. Rather, the Compensation Committee assessed these factors and exercised its judgment in setting the individual performance component.

 

Equity Incentives

 

Stock options and RSUs (including performance-based RSUs) are a critical component of Intuit’s efforts to attract and retain executive officers and other employees. Intuit grants stock options to provide a long-term incentive for executives to remain with Intuit. Stock options provide value only if Intuit’s stock price increases (which benefits all stockholders), and only if the executive remains with Intuit until his or her options vest. Intuit’s standard practice is to grant options that vest over a three-year period, with the first third of the options vesting on the one-year anniversary of the grant date and the remaining options vesting monthly over the following two years.

 

RSUs also provide a long-term incentive for executives to remain with Intuit as they receive no value unless they remain with the Company, but because they do not have an exercise price, RSUs provide some amount of value to recipients regardless of Intuit’s stock price.

 

Performance-based Vesting of Fiscal 2009 and Amended Fiscal 2008 RSU Awards

 

In August 2009, as part of Intuit’s annual performance and compensation review process for our last fiscal year ended July 31, 2009, the Compensation Committee approved the grant of performance-based RSUs to each Named Executive Officer. These grants were described in more detail in our proxy statement for our annual meeting of stockholders held on December 15, 2009. These RSUs will vest in August 2012 (or in the case of the Chief

Executive Officer, in 2012 and 2014) as to a percentage of the target number of shares based on Intuit’s achievement of specified goals for year-over-year revenue growth and return on invested capital (“ROIC”) for the year ended July 31, 2010. The following table shows the potential range of shares that could have been earned by our Named Executive Officers, based on the achievement of these targets under the 2009 performance-based RSUs:

 

Earned Percentage of Target Award for
August 2009 Performance-based RSUs

 

 

Because Intuit’s revenue grew 11% from fiscal 2009 to 2010, and ROIC was 14.1% for fiscal 2010, each of our Named Executive Officers will vest as to 125% of the target number of shares on August 2012 (or in the case of the Chief Executive Officer, in 2012 and 2014).

 

In July 2009, the Compensation Committee also approved amendments to the performance-based RSUs that had been granted to the Named Executive Officers on August 11, 2008 to establish new performance targets for those RSUs. These amended grants were described in more detail in our proxy statement for our annual meeting of stockholders held on December 15, 2009. In light of the economic downturn in 2008 and 2009, Intuit did not achieve its original performance targets for these RSUs. The Compensation Committee felt that the downturn in economic conditions could not have been reasonably predicted at the time these RSUs were granted. Rather than losing the retention value of these RSUs entirely, the Compensation Committee determined in July 2010 that it was appropriate and in the best interests of Intuit and its stockholders to amend these awards to provide further incentive to achieve fiscal 2010 revenue growth and ROIC targets. As amended, the August 2008 RSUs will vest in August 2011 (or in the case of the Chief Executive Officer, in 2011 and 2013) as to a variable percentage of the target number of shares based on Intuit’s achievement of specified goals for year-over-year revenue growth and ROIC for the year ended July 31, 2010. The following table shows the potential range of shares that could have been earned by our Named Executive Officers, based on the achievement of these targets under the amended 2008 performance-based RSUs:

 

Earned Percentage of Target Award for
August 2008 Performance-based RSUs (as amended)

 

 

Because Intuit’s revenue grew 11% from fiscal 2009 to 2010, and ROIC was 14.1% for fiscal 2010, each of our Named Executive Officers will vest as to 100% of the target number of shares on August 2011 (or in the case of the Chief Executive Officer, in 2011 and 2013).

The following table sets forth the target number of performance-based RSUs granted to each of our Named Executive Officers in August 2009 and August 2008, and the actual number of shares that have been earned and will vest under those awards, based on Intuit’s revenue growth and ROIC for fiscal 2010, as discussed above.

 

 

Stock Option and RSU Grants for Fiscal 2010

 

Timing of Annual Equity Incentive Grants.  As part of Intuit’s annual performance and compensation review process, the Compensation Committee approves stock option and RSU awards to our Named Executive Officers within a few weeks before or after Intuit’s July 31 fiscal year-end. In fiscal 2009, the Compensation Committee issued the annual option and RSU grants in early August 2009, shortly after the end of fiscal year 2009. These grants were described in detail in Intuit’s proxy statement for its 2009 Annual Meeting. In fiscal 2010, the Compensation Committee simplified this process and consolidated all annual equity grants so that they occur in July. Therefore, for fiscal 2010, the Compensation Committee moved up the date of its annual RSU awards by three weeks compared to last year (i.e., before fiscal year-end) so that the awards would correspond more closely with our year-end performance review process. As a result, the “Summary Compensation Table” (on page 43) includes not only the value of equity awards granted in recognition of fiscal year 2010 performance, but also the value of awards for fiscal year 2009 performance, which were granted in the first two weeks of fiscal 2010.

 

The table below illustrates how annual equity grant dates for stock options and RSUs have varied over the last few years. Because of the change of equity grant dates by only a few weeks compared to fiscal 2009, the value of equity grants represented in the “Summary Compensation Table” for fiscal 2010 appears artificially high. However, the awards for fiscal 2009 and 2010 were granted more than 11 months apart. In the future, Intuit intends to continue to grant annual equity awards in the last weeks of the fiscal year with which they are associated in order to better align pay with our performance review process.

 

 

Grant Types.  For fiscal 2010, the Compensation Committee determined that the majority of the equity award value granted to each Named Executive Officer would be in the form of performance-based equity awards, which is a significant increase in the relative weighting of performance-based awards over time-based awards compared to prior years. The Company increased the weighting of performance-contingent awards for Named Executive Officers to 70% of their total long-term incentive to ensure that the majority of equity awards are earned for performance rather than continued employment. The performance hurdles associated with the awards relate to three-year operating income growth and relative total shareholder return (“TSR”) as discussed further below. The time-based portion of the equity grants was reduced to 30% of the total long-term incentive to provide modest

potential to earn awards that align with shareholder return. The Compensation Committee still views these awards as providing pay for performance since the award values are tied to Intuit’s stock price.

 

The table below shows the overall mix of equity awards, as well as the four individual types of awards, which are (1) time-based options (15% of total long-term incentive value); (2) time-based RSUs (15% of total long-term incentive value), which also include a minimum one-year GAAP operating income performance hurdle; (3) performance-contingent RSUs dependent on achieving three-year GAAP operating income growth and three-year revenue growth goals (35% of total long-term incentive value); and (4) performance-contingent RSUs dependent on relative TSR compared to a peer group (35% of total long-term incentive value).

 

 

Time-Based Awards (30% of Total Long-term Incentive)

 

Only 30% of the value of the long-term equity awards is time-based, and of this time-based value, 50% was granted in the form of stock options and 50% in the form of RSUs. This 50/50 mix was used because it is consistent with Intuit’s historical equity grant practices. The 50% that is in stock options is provided to reward increases in stock price. In fact, the Company views time-based options as a performance based incentive because the executive only realizes value as the stock price increases. The rationale for the portion granted as time-vested RSUs is to provide retention through potential short-term market volatility. RSUs also provide a link to shareholders’ interests because their value fluctuates with stock price. While the vesting of these RSUs is primarily time-based, the Company must achieve a one-year GAAP operating income hurdle before these RSUs will begin to vest to allow such awards to qualify under Section 162(m) of the Internal Revenue Code.

 

Performance-Based Awards (70% of Total Long-term Incentive)

 

For fiscal 2010, 70% of the value of the long-term equity awards is performance-based, with half contingent on Intuit’s achievement of three-year operating performance goals and half based on Intuit’s relative three-year TSR compared to a pre-established peer group. The reason for dividing the contingent award in this way is to balance achievement of key internal goals, which are expected to increase shareholder value, with measurement of actual shareholder return relative to a group of similar investments. The Compensation Committee believes that this focuses Named Executive Officers on both long-term internal operating performance, which the Compensation Committee believes is largely within management’s control, and on long-term shareholder return, which is the goal of sustained multi-year profitable growth and ultimately reflects our shareholders’ perception of our performance.

 

Vesting of Awards.  The Named Executive Officers’ stock options (other than those of Mr. Smith) vest over three years, with 33.333% of the shares vesting after one year and 2.778% of the shares vesting each month thereafter. The time-based RSUs granted to our Named Executive Officers (other than Mr. Smith) also vest over three years, with one-third of the shares vesting in July of each year beginning in 2011. With regard to performance-based RSUs, all the Named Executive Officers have the same performance hurdles. Upon achievement of those hurdles, the Named Executive Officers’ performance-based RSUs (other than those of Mr. Smith) vest 100% after three years. The vesting terms of Mr. Smith’s equity awards differ from those of the other Named Executive Officers, because of the Compensation Committee’s desire to tie the Chief Executive Officer’s compensation more closely to Intuit’s performance for a longer period of time. Specifically, the stock options and time-based RSUs granted to Mr. Smith vest over five years, with 50% vesting after three years and 50% after five years, and Mr. Smith’s performance-based RSUs vesting 50% after three years and 50% after five years.

Clawback Provisions for Performance-based RSUs.  With respect to the operating performance RSUs granted in July 2010, in the event that the Company must restate its financial results and the restatement decreases the level of vesting achieved under those performance-based RSUs, the Named Executive Officer must return to the Company an amount in cash or equivalent value in shares equal to the value of shares that would not have vested based on the restated financial results.

 

Equity Grant Eligibility.  The sole factor used by the Compensation Committee in determining whether an executive was eligible to receive any stock options and RSUs was that executive’s performance rating, which was based on the factors described under “Annual Cash Bonuses” above. In order to be eligible to receive stock options and RSUs, an executive had to have a performance rating of “Strong” or “Outstanding.” Based on their fiscal 2010 performance ratings of “Outstanding”, all of the Named Executive Officers were eligible to receive stock options and RSUs.

 

Equity Grant Value.  As noted above, the Compensation Committee determined equity award sizes using the underlying value of the grants. Then, using the model provided above for fiscal 2010, the Compensation Committee based the size of each type of equity award on its value.

 

The following table sets forth the equity grant value assigned to each Named Executive Officer and the targeted number of performance-based RSUs, time-based RSUs and stock options granted to each of our Named Executive Officers in connection with the fiscal 2010 performance and compensation review process. As noted above, the Compensation Committee wanted more than 50% of the value and more than 50% of the number of shares underlying the Named Executive Officers’ equity awards to be contingent on performance, rather than simply time-based vesting:

 

 

Operating Performance RSUs

 

The performance-based RSUs earned for achieving three-year operating goals (the “Operating Performance RSUs”) depend on the compounded annual growth rate (“CAGR”) of Intuit’s revenue and GAAP operating income between fiscal 2010 and fiscal 2013. Revenue growth and GAAP operating income growth are equally weighted because the Company believes that sustained profitable growth over three years will create shareholder value, and that neither revenue growth nor operating income growth is more important than the other measure. The Compensation Committee determined that GAAP operating income growth would be the best measure of operating performance as reported to shareholders and that this would correlate most completely with shareholder value creation over time.

 

Each Named Executive Officer was awarded Operating Performance RSUs based on a “target” number of stock units, which is earned for achieving the operating growth goals. The actual RSU payouts may be as low as 0%

of target if there is no growth over three years, and may be as high as 160% of target if the goals are exceeded, as described in the table below.

 

 

 

 

Relative Total Shareholder Return RSUs

 

These RSUs may be earned based on Intuit’s relative TSR over a three-year period beginning August 1, 2010 compared to 40 other U.S.-based software and business services companies that fall in the same General Industry Classification Standard (“GICS”) code as Intuit. For this purpose, the peer companies were chosen objectively and reflect all U.S. companies within Intuit’s GICS code that have market capitalization between 0.2x and 5x Intuit’s market capitalization (the “TSR Peers”). The TSR Peers were chosen so that the Relative TSR RSUs will reward the Named Executive Officers based on objective measurement of Intuit’s three-year return compared to similar companies in which an Intuit shareholder might reasonably be expected to invest. In general, the shareholder return of both Intuit and the TSR Peers is measured using a thirty-day average at the start and the end of the performance period. This is to reduce the effect of daily stock market volatility on the starting and ending measurement points. There is a “target” payout, which is earned when Intuit’s performance is at the 60th percentile of the peers. These awards may be as high as 160% of target if Intuit’s TSR reaches the 100th percentile of the TSR Peers and may be as low as 0% of target if performance is at the 30th percentile of the TSR Peers. The awards are capped at 100% of target in the event that Intuit’s relative performance is above the 60th percentile but TSR is negative over the three-

year performance period. The table below describes the percent of target that may be earned under these awards based on relative TSR: