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

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INTUIT INC.

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INTUIT INC.

 

NOTICE OF 2009 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

You are cordially invited to attend our 2009 Annual Meeting of Stockholders, which will be held at 8:30 a.m. Pacific Standard Time on December 15, 2009 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://www.intuit.com/about_intuit/investors/webcast.jhtml.

 

We are holding the meeting to:

 

 

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 October 20, 2009 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. It is convenient and saves us significant postage and processing costs.

 

By order of the Board of Directors,

 

Laura A. Fennell

Senior Vice President, General Counsel and Corporate Secretary

 

Mountain View, California

October 30, 2009

INTUIT INC.

 

PROXY STATEMENT 2009 ANNUAL MEETING OF STOCKHOLDERS

 

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

 

PROXY STATEMENT FOR THE
2009 ANNUAL MEETING OF STOCKHOLDERS

 

INFORMATION ABOUT THE MEETING, VOTING AND PROXIES

 

Date, Time and Place of Meeting

 

Intuit’s Board of Directors is asking for your proxy for use at the Intuit Inc. 2009 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 Annual Meeting of Stockholders. We are holding the Meeting on Tuesday, December 15, 2009 at 8:30 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 October 30, 2009.

 

Internet Availability of Proxy Materials

 

As we did last year, we are now furnishing 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 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 anticipate that the Notice of Internet Availability will be mailed to stockholders on or about October 30, 2009.

 

Record Date, Outstanding Shares and Quorum

 

Only holders of record of Intuit common stock at the close of business on October 20, 2009 (called the “Record Date”) will be entitled to vote at the Meeting. On the Record Date, we had approximately 316,469,377 shares outstanding and entitled to vote, held by approximately 763 stockholders of record and approximately 83,990 beneficial owners, who may hold their shares through banks, brokers or other nominees. 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. Cumulative voting for directors is not permitted. 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.

 

Voting and Revoking Proxies

 

Intuit’s Board of Directors is soliciting proxies to vote your shares at the Meeting. All stockholders 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, phone or 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 voting instructions, 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.

 

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. Please note that if a broker, bank or other nominee is the record holder of your shares and 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. 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.

 

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. A majority of votes cast is required to approve Proposals 2, 3, and 4. 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. Proposal 1 (election of directors) and Proposal 2 (ratifying the appointment of our independent registered public accounting firm) should be treated as routine matters. If your broker votes on your behalf on these two proposals, your shares also will be counted as present for the purpose of determining a quorum. Proposals 3 and 4 are not considered routine matters, and without your instruction, your broker cannot vote your shares. If a broker, bank, custodian, nominee or other record holder of Intuit stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular matter, these shares (called “broker non-votes”) will also be counted as present in determining whether we have a quorum but will not be counted for the purpose of determining the number of votes cast on a specific proposal.

 

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 $7,500 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 our quarterly report on Form 10-Q for the fiscal quarter ending January 31, 2010.

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 U.S. Securities and Exchange Commission (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 of Proxy Materials, 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 continue receiving 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 Annual Meeting, this Proxy Statement and our annual report on Form 10-K for the fiscal year ended July 31, 2009 have been made available to all stockholders entitled to vote at the Annual Meeting and who received the Notice of Internet Availability of Proxy Materials. The annual report on Form 10-K can also be viewed at www.intuit.com/about_intuit/investors.

 

Paper copies of our annual report on Form 10-K (excluding exhibits) for the fiscal year ended July 31, 2009 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 11 directors, of whom 10 are standing for re-election. In October 2009, we announced that Stephen M. Bennett has decided not to stand for re-election and is expected to serve as a director until the date of the Meeting. We also announced that David H. Batchelder has been nominated to stand for election as director. The nominees for election include eight 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 11.

 

Incumbent Nominees

 

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

 

Christopher W. Brody (Age 64)
Chairman, Vantage Partners LLC

 

Mr. Brody has been an Intuit director since 1993 and is a member of the Acquisition Committee, the Compensation and Organizational Development Committee and chairs the Nominating and Governance Committee. Mr. Brody has been Chairman of Vantage Partners LLC, a private investment firm, since January 1999. From 1971 through 1998, Mr. Brody was a partner of Warburg, Pincus & Co., a venture capital and private equity

investment firm. Mr. Brody also serves as a director of several privately held companies. Mr. Brody holds a Bachelor of Arts in English Literature from Harvard College and a Master in Business Administration from Harvard Business School.

 

William V. Campbell (Age 69)
Chairman of the Board of Directors, Intuit Inc.

 

Mr. Campbell has been an Intuit director since 1994. He served as Intuit’s President and Chief Executive Officer from April 1994 through July 1998. He has served as Chairman of the Board since August 1998 and was Acting Chief Executive Officer from September 1999 until January 2000. Mr. Campbell also serves on the board of directors of Apple, Inc. Mr. Campbell holds a Bachelor of Arts in Economics and a Masters of Science from Columbia University, where he is Chair of the Board of Trustees. He is currently Non-Executive Chairman.

 

Scott D. Cook (Age 57)
Founder and Executive Officer of Intuit Inc.

 

Mr. Cook, a founder of Intuit, has been an Intuit director since 1984. He served as Intuit’s Chairman of the Board from February 1993 through July 1998. From April 1984 to April 1994, he served as Intuit’s President and Chief Executive Officer. Mr. Cook also serves on the boards of directors of eBay Inc. and The Procter & Gamble Company. 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.

 

Diane B. Greene (Age 54)
Former President and CEO, VMware, Inc.

 

Ms. Greene has been an Intuit director since August 2006 and is a member of the Audit and Risk Committee. She co-founded VMware, a developer and provider of software for virtualized desktops, servers, storage and networking, in 1998, and served as its chief executive officer and president until July 2008. Before co-founding VMware, Ms. Greene held technical leadership positions at Silicon Graphics, Tandem, and Sybase and was chief executive officer of VXtreme. Ms. Greene also serves as 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.

 

Michael R. Hallman (Age 64)
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 October 1992. Mr. Hallman was President and Chief Operating Officer of Microsoft Corporation from March 1990 through April 1992. Mr. Hallman holds both a Bachelor’s and a Master’s degree in Business Administration from the University of Michigan.

 

Edward A. Kangas (Age 65)
Non-Employee Chairman, Tenet Healthcare

 

Mr. Kangas has been a director of Intuit since July 2007 and is a member of the Acquisition Committee and the Compensation and Organizational Development Committee. He has been chairman of Tenet Healthcare, an owner/operator of acute care hospitals and related healthcare services, since July 2003 and served as a director since April 2003. From 1989 to 2000, Mr. Kangas was global chairman and chief executive officer of Deloitte. He also served as the managing partner of Deloitte & Touche (USA) from 1989 to 1994. Mr. Kangas is also a director of Eclipsys Corporation, Hovnanian Enterprises, Inc. and United Technologies Corporation. He holds a Bachelor’s degree and a Master’s degree in Business Administration from the University of Kansas.

Suzanne Nora Johnson (Age 52)
Former Vice-Chairman, The Goldman Sachs Group

 

Ms. Nora Johnson has been a director of Intuit since July 2007 and is a member of the Acquisition Committee and the Audit and Risk Committee. From 1985 to 2007, she held senior management and other positions with The Goldman Sachs Group, including vice-chairman of the firm, chairman of the firm’s global markets institute, head of the global investments research division, senior director and member of the firm’s management committee. Ms. Nora Johnson also serves on the boards of directors of American International Group, Inc., Pfizer Inc., and VISA Inc. Her non-profit board affiliations include, among others, the American Red Cross, the Brookings Institution, Carnegie Institution of Washington, the Markle Foundation 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.

 

Dennis D. Powell (Age 61)
Executive Advisor and former Chief Financial Officer, Cisco Systems, Inc.

 

Mr. Powell has been an Intuit director since February 2004 and is a member of the Acquisition Committee and the Chairman of the Audit and Risk Committee. He joined Cisco Systems, a provider of networking products and services, in 1997 and served as the Senior Vice President and Chief Financial Officer from May 2003 to February 2008, when he became an Executive Advisor to Cisco. From January 1997 to June 2002, he was Cisco’s Vice President, Corporate Controller, and from June 2002 to May 2003, he was Senior Vice President, Corporate Finance. Prior to joining Cisco, Mr. Powell was employed by Coopers & Lybrand LLP for 26 years, most recently as a senior partner. Mr. Powell also serves on the boards of directors of Applied Materials, Inc., a provider of fabrication services, equipment and software, and VMware, Inc., a developer and provider of software for virtualized desktops, servers, storage and networking. Mr. Powell holds a Bachelor of Science in Business Administration with a concentration in accounting from Oregon State University.

 

Stratton D. Sclavos (Age 48)
Partner, Radar Partners

 

Mr. Sclavos has been an Intuit director since 2001 and is a member of the Nominating and Governance Committee. He has been a partner at Radar Partners, an investment firm, since November 2007. Previously, he served as President, Chief Executive Officer and a director of VeriSign, Inc., a provider of intelligent infrastructure services for networks, from July 1995 to May 2007 and Chairman of its board of directors from December 2001 to May 2007. Mr. Sclavos is also a director of Juniper Networks, Inc. (an internet infrastructure systems provider), and Salesforce.com (a provider of customer relationship management services) and several private companies. Mr. Sclavos holds a Bachelor of Science in Electrical and Computer Engineering from the University of California, Davis.

 

Brad D. Smith (Age 45)
President and Chief Executive Officer, Intuit Inc.

 

Mr. Smith has been President and Chief Executive Officer and a member of the Board of Directors since January 2008. He was Senior Vice President and General Manager, Small Business Division from May 2006 to December 2007 and Senior Vice President and General Manager, QuickBooks from May 2005 to May 2006. He also served as Senior Vice President and General Manager, Consumer Tax Group from March 2004 until May 2005 and as Vice President and General Manager of Intuit’s Accountant Central and Developer Network from February 2003 to March 2004. Prior to joining Intuit in 2003, Mr. Smith was Senior Vice President of Marketing and Business Development of ADP, a provider of business outsourcing solutions, where he held several executive positions from 1996 to 2003. Mr. Smith holds a Bachelor’s degree in Business Administration from Marshall University and a Master’s degree in Management from Aquinas College.

New Nominee

 

Mr. Batchelder has been nominated for election by the Board of Directors upon recommendation by the Nominating and Governance Committee and has agreed to stand for election to a one-year term.

 

David H. Batchelder (Age 60)
Principal of Relational Investors LLC

 

Mr. Batchelder, a founder of Relational Investors LLC, an investment advisory firm, has been a principal of that firm since 1996. From 1988 to 2005, Mr. Batchelder was a principal of Relational Advisors LLC, a financial advisory and investment banking firm, which he founded. Prior to founding Relational Advisors and Relational Investors, Mr. Batchelder held various executive positions with Mesa Petroleum Co., an oil and gas production company, from 1978 to 1988, and served as its President and Chief Operating Officer from 1986 to 1988. He has served as a director of 10 different public companies, and currently serves on the board of directors of The Home Depot, Inc. Mr. Batchelder holds a Bachelor’s degree in Accounting from Oklahoma State University.

 

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. Withworth 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 Meeting.

 

Pursuant to the Letter Agreement, we agreed (a) to nominate Mr. Batchelder for election to our Board at the Meeting and (b) that, upon election, Mr. Batchelder will join the Acquisition Committee and Compensation and Organizational Development Committee of our Board. The Relational Group, which beneficially owns approximately 4% of our common stock, has agreed to vote for and publicly support and recommend the Board’s nominees for director at the Meeting.

 

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 the 2011 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, Board of Directors or policies of Intuit, or (d) own more than 9.9% of Intuit’s common stock.

 

If our Board determines, in its sole discretion, not to renominate Mr. Batchelder for election as a director at the 2010 Annual Meeting of Stockholders, the standstill provisions contained in the Letter Agreement will immediately terminate. If our Board determines to renominate Mr. Batchelder in connection with the 2010 Annual Meeting, the Relational Group has agreed to vote for and publicly support and recommend our Board’s nominees for director at the 2010 Annual 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 includes key information about corporate governance matters, including copies of our Corporate Governance Principles, our code of conduct and ethics for all employees, including our company’s senior executive and financial officers, our Board Code of Ethics 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. However, if the Chairman is also the Chief Executive Officer, then the Board has determined that it will appoint a lead independent director. 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 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 five meetings during fiscal 2009. The independent directors also meet in executive session without management present. During fiscal 2009, the independent directors held three 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 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 the company 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. Brody, Ms. Greene, Mr. Hallman, Mr. Kangas, Ms. Nora Johnson, Mr. Powell and Mr. Sclavos are independent directors. The Board has also determined that Mr. Batchelder, who is standing for election for the first time at the Meeting, will, upon election, be 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. Mr. Powell and Mr. Sclavos are, or were during fiscal 2009, directors 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. Ms. Nora Johnson sits on the board of a charitable organization to which Intuit has made employee matching contributions in amounts that are immaterial to both Intuit and the organization. Following review of these transactions, the Board determined that each of these directors is 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 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 2009, no director attended less than 75% of the aggregate number of meetings of the Board and the committees on which he or she served. Three directors attended the 2008 Annual Meeting of Stockholders. 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. 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 does not exceed the limits that may be established by the Board from time to time.

 

In fiscal 2009, the Acquisition Committee held eight 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.

 

In fiscal 2009, 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 43.

 

 

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 an “outside” director as defined in the Internal Revenue Code of 1986, as amended (the “Code”), and a “Non-Employee Director,” as defined in Rule 16(b)-3 under the Securities Exchange Act of 1934. The Compensation Committee met 10 times in fiscal 2009. 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.

 

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 19 and “Compensation Discussion and Analysis” beginning on page 19.

 

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. As part of its review of non-employee director compensation, the Compensation Committee generally receives input from an independent compensation consultant, currently Watson Wyatt, which measures and benchmarks our non-employee director compensation against a certain peer group of companies.

 

 

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 two meetings in fiscal 2009.

 

The 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 15). The committee will evaluate candidates properly recommended by stockholders in the same manner as candidates recommended by others. The 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, a review of available information concerning the candidate, qualifications for Board membership established by the Nominating and Governance Committee, 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.

 

 

No executive officer of Intuit during fiscal 2009 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.

 

Our non-employee directors receive a combination of equity and cash compensation for serving on our Board. Our three directors who are company employees — Mr. Smith, Mr. Cook and Mr. Campbell — do not receive board fees or equity for their Board service. The Compensation Committee is responsible for reviewing the equity and cash compensation for non-employee directors on an annual basis and making recommendations to the Board, in the event it determines changes are needed. The Compensation Committee worked with Watson Wyatt, its independent compensation consultant, to review non-employee director compensation during the summer of 2009. In October 2009, the Compensation Committee recommended to the Board that the equity component should be changed from options to restricted stock units, and from a fixed number of shares to a fixed dollar amount (as discussed under “New Director Equity Compensation Program” on page 15) in order for our director compensation program to provide an appropriate incentive to attract and retain qualified non-employee board members. If approved by the stockholders, the new non-employee director compensation program will go into effect for all grants made after December 15, 2009, the date of the Meeting.

 

The following table summarizes the fiscal 2009 compensation earned by each member of the Board other than Mr. Smith, whose compensation is described under “Executive Compensation” beginning on page 31. The compensation reported below was granted under the existing non-employee director compensation program, comprised of a combination of cash and options.

 

 

 

 

 

 

The following table shows each option grant made to our non-employee directors during fiscal 2009, including the grant date, number of shares, exercise price, and grant date fair value. All options have an exercise price equal to the fair market value of Intuit’s common stock on the date of grant.

 

 

 

 

 

The following table provides information on the outstanding equity awards for our directors, other than Mr. Smith, as of July 31, 2009.

 

 

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 options granted to non-employee directors in fiscal 2009 were made pursuant to a shareholder-approved non-discretionary formula set forth in our 2005 Equity Incentive Plan (the “Plan”). The exercise price for each option granted to a non-employee director is the fair market value of Intuit’s stock on the grant date. Pursuant to the terms of the Plan’s non-discretionary formula, each initial option grant is granted on the date a non-employee board member first becomes a member of the Board, each succeeding annual grant is granted on the anniversary of such date and each option grant awarded for committee service is granted on the date the non-employee board member is appointed to a committee or the anniversary thereof. The automatic option grant amounts for fiscal 2009 are listed in the following table:

 

Initial non-employee director option grants vest over four years, with 25% of the option shares vesting on the first anniversary of the grant date and the remaining 75% of the shares vesting pro rata over the next 36 months. Succeeding annual non-employee director option grants vest over two years, with 50% of the option shares vesting on the first anniversary of the grant date and the remaining 50% vesting pro rata over the next 12 months. Committee option grants vest pro rata over 12 months and are fully vested on the first anniversary of the grant date. The grants vest only while the recipient remains in service.

 

If Proposal No. 3 is approved, effective for all grants made after December 15, 2009, the date of the Annual Meeting, non-employee directors will receive equity grants in the form of restricted stock units (instead of options) for their Board and committee service. Grants of restricted stock units to non-employee directors will be made pursuant to a non-discretionary formula based on a fixed dollar amount rather than a fixed number of shares. The Compensation Committee believes this change is appropriate because it will help align non-employee directors’ interests with the interests of Intuit’s stockholders while continuing to be an incentive through possible declines in the price of Intuit’s common stock, as well as achieve consistency in our non-employee director compensation program both among directors and from year to year. Because the formula is based on a fixed dollar amount, the number of restricted stock units awarded to non-employee directors will vary, depending on the closing price of Intuit’s common stock on the date of grant. The restricted stock units will vest over approximately the same periods that the options currently granted to non-employee directors vest, but settlement of the awards can be deferred for up to five years if the non-employee director so elects. A non-employee director will receive committee grants for a maximum of two committees. For more information, including a detailed description of the vesting schedules and the deferral alternatives applicable to the grants of restricted stock units, see “Proposal No. 3 — Approval of an Amendment to the 2005 Equity Incentive Plan” on page 45.

 

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 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.

 

Stockholder Communications with the Board

 

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.

 

Stockholder Recommendations of Director Candidates

 

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 at http://investors.intuit.com/charters.cfm

Stockholder Proposals and Nominations for the 2010 Annual Meeting of Stockholders

 

Any stockholder who intends to present a proposal for inclusion in Intuit’s 2010 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 July 2, 2010. Any stockholder who wishes to bring a proposal or nominate a person for election to the Board at the 2010 Annual Meeting of Stockholders must provide written notice of the proposal or nomination to Intuit’s Corporate Secretary, at our principal executive offices, between September 1, 2010 and October 1, 2010. 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 September 30, 2009 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 319,649,504 shares of common stock outstanding on September 30, 2009. 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 September 30, 2009, and (2) shares issuable upon settlement of restricted stock units that are vested, or will become vested within 60 days of September 30, 2009. Those shares are deemed to be outstanding and beneficially owned by the person holding such option or restricted stock unit 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 our directors and executive officers, as well as beneficial owners of more than ten percent of Intuit’s common stock, to file with the SEC an initial report of ownership of our stock on Form 3 and reports of changes in ownership on Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. As a matter of practice, our administrative staff assists our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically files those reports on their behalf. Based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, we believe that during fiscal 2009 all of our executive officers and directors, as well as beneficial owners of more than ten percent of Intuit’s common stock, filed the required reports on a timely basis under Section 16(a), with the exception of one late filing in 2009 related to two equity grants made to Mr. Daniel Maurer in connection with his promotion to Senior Vice President and General Manager, Consumer Group.

 

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 ensure 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 2009, 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.

 

Michael R. Hallman (Chair)

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 2009 to the executive officers named below (the “Named Executive Officers”) and included in the “Summary Compensation Table” on page 31:

 

 

 

Compensation Philosophy and Objectives

 

The Compensation Committee determines compensation paid to 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. Our key measures of Company and individual performance are discussed in more detail below.

 

We carefully manage equity compensation to provide competitive rewards that are commensurate with results delivered, while limiting dilution to stockholders. The majority of our restricted stock units 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 restricted stock units (RSUs), and any adjustments to base salary.

 

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 for both short and long-term to assess the retentive value of the overall compensation package.

 

Executive Summary

 

Intuit delivered solid financial results in fiscal 2009 in the context of a serious economic downturn that impacted our most important customer groups: small businesses, consumers and banks. Although Intuit did not achieve its original revenue or operating income targets for fiscal 2009, the management team accomplished the following key objectives that enabled the Company to continue to grow and be profitable through the downturn:

 

 

In addition, Intuit kept its employee satisfaction scores near best-in-class levels. Because Intuit was able to continue to deliver these results in an extremely difficult business environment, the Compensation Committee determined that our Named Executive Officers would receive cash bonuses and equity grants in recognition of fiscal 2009 performance. However, the Compensation Committee determined that bonus amounts would be significantly less year-over-year and that our executives would not receive salary increases. In addition, certain performance-based RSUs held by our Named Executive Officers, among others, did not vest in fiscal 2009, although as discussed below, we amended these performance-based RSUs to provide incentives for future performance.

 

Specific Elements of Compensation: Base Pay

 

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. In July 2009, the Compensation Committee reviewed the base salaries of our Named Executive Officers in the context of the benchmarking provided by Watson Wyatt 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. 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.

 

Cash Bonuses

 

Our Named Executive Officers 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. 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 expressed as a percentage of base salary for our Named Executive Officers are: Mr. Smith — 120%; Mr. Williams — 75%; Mr. Patel — 100%; Mr. Lintner — 60%; and Mr. Goodarzi — 65%. The bonus targets of the Named Executive Officers were all set by the Compensation Committee based on scope and significance of their leadership roles as the leaders of Intuit. Mr. Patel’s bonus target was increased during fiscal 2009 to reflect his promotion in December 2008 to the role of Executive Vice President of the Small Business Group, which accounted for approximately 39% of Intuit’s fiscal 2009 revenue. The bonus targets of all other Named Executive Officers remained unchanged from fiscal 2008. The Named Executive Officer target amounts are used as a guideline for the determination of cash bonuses, but actual bonus payments for fiscal 2009 were less than these targets for reasons 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 2009, the Compensation Committee established a Company revenue target of $3.0 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 2009, 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. The Compensation Committee determined the actual amount of cash bonuses by dividing the awards into two components, one based on overall Company performance and one based on individual performance. The analysis of these two components is below:

 

 

Company Performance Component

 

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 and non-GAAP operating income targets for fiscal 2009:

 

Bonus Ranges for Fiscal 2009

 

 

Because the Company’s revenue grew 4% and non-GAAP operating income grew 9%, the component of each executive’s bonus based on overall Company performance was set by the Compensation Committee in the range of 50-90% of that executive’s target. The Compensation Committee, in consultation with the CEO, then made a subjective determination that this Company performance component of each executive’s bonus would be paid at 75% of target. The Compensation Committee chose this percentage close to the mid-point of the range because the

Company had grown revenue, increased customers in all of its core offerings and managed its spending effectively in the face of a challenging macro-economic environment.

 

Appendix A to this proxy statement includes a reconciliation of non-GAAP operating income to the most comparable GAAP measure.

 

Individual Performance Component

 

The Compensation Committee also used the matrix above to guide its judgment in setting the component of each Named Executive Officer’s cash bonus based on individual performance. The Committee approved payouts of this component to executives in the range of 65-90%, depending on the Committee’s subjective determination of each executive’s performance.

 

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.

 

 

 

 

Each of our Named Executive Officers was awarded a bonus that was less than 100% of target, and in the aggregate, all of our Named Executive Officers received $2,293,000 in cash bonuses for fiscal 2009, or $1,487,000 less than the $3,780,000 in cash bonuses they received for fiscal 2008, a decrease of approximately 40%.

 

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 committee earlier in fiscal 2009:

 

 

 

 

 

In assessing Mr. Smith’s performance of these one-year goals, the Committee noted that revenue grew 4% and non-GAAP operating income grew 9% in an extremely challenging macro-economic environment. The Committee also recognized excellent performance of Intuit’s technology infrastructure during tax season, the development of risk management plans and processes for each business unit and Intuit as a whole, the development and execution of a hosting strategy and migration path to our new data center, and the sustained focus on building software-as-a-service platforms. Under Mr. Smith’s leadership, Intuit also improved its customer satisfaction scores in TurboTax, Digital Insight, Quicken and Accounting Professionals offerings. With respect to talent management, Mr. Smith made several key hires, including a new Chief Technology Officer and Chief Strategy Officer and promoted Kiran Patel to the role of Executive Vice President, Small Business Group. In addition, employee satisfaction scores remained at or near best-in-class levels, and Mr. Smith took concrete steps to improve Intuit’s engineering culture. For example, he led a company-wide effort to focus on, and invest in, innovation and connected services and created a key engineer development and retention program. Throughout the year, Mr. Smith led a unified executive team that provided leadership to the entire company through the economic downturn.

 

The Compensation Committee also determined that Mr. Smith had delivered outstanding progress toward the following longer-term goals which were established by the Committee earlier in fiscal 2009:

 

 

 

 

 

In assessing Mr. Smith’s performance and progress toward these long-term goals, the Committee determined that he had continued to drive strong execution of the three-year strategic plan for each major business unit. The Committee also recognized that under Mr. Smith’s leadership, Intuit had grown its connected service business aggressively and was continuing to capitalize on social, mobile and global market catalysts. During fiscal 2009, Mr. Smith delivered on the company’s inorganic growth strategy by closing the acquisition of PayCycle, a software-as-a-service offering to reach non-QuickBooks users. 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 technical talent. As discussed above under Mr. Smith’s one-year goals, 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 of Directors 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 90% of target, at the upper end of the Company’s 50-90% bonus range. The Compensation Committee determined that this bonus award was consistent with Mr. Smith’s achievement of the goals described above, considering the economic downturn. 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 this component at the upper end of the 50-90% range.

 

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 CEO, which took into account the performance of each executive’s business unit or functional group; (2) the assessment of these individuals and their roles in Intuit provided by other members of management, including our Senior Vice President of Human Resources; and (3) 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.  The Compensation Committee determined that Mr. Williams had outstanding performance for fiscal 2009. He worked with Mr. Smith to define and execute the key objectives for continued growth and profitability through the economic downturn and was instrumental in making critical resource allocation decisions and taking cost-cutting actions early to manage overall spending and deliver operating income leverage. He defined and executed several structural changes, including greater efficiency with personnel, fewer rooftops and relocation of non-core operations offshore, that improved margin and are expected to reduce Intuit’s cost structure over the long term. He also developed and began a multi-year effort to reduce spending and transform the finance organization to improve its efficiency and effectiveness and build a solid foundation for maintaining operational rigor. Based on its review, the Compensation Committee determined that the individual performance component of Mr. Williams’ bonus would be paid out at 90% of target. When combined with the component of his bonus based on overall Company performance, Mr. Williams received a total cash bonus of $388,000.

 

Kiran Patel’s Bonus.  The Compensation Committee determined that Mr. Patel had outstanding performance for fiscal 2009, based on his role in leading both of Intuit’s largest business units during the year. Mr. Patel’s leadership of the Consumer Group during the first half of the year helped prepare that business for a successful tax season, which delivered 7% revenue growth in the Consumer Tax segment, well above the Company average, and grew federal TurboTax units by 12%. Mr. Patel was promoted to Executive Vice President of the Small Business Group in December 2008 and acted decisively to address the changing economy and product challenges. Although revenue growth for the Small Business Group was below plan, the group increased the number of customers and gained share in its key categories, while investing in innovation and streamlining its cost structure. Based on this assessment, the Compensation Committee determined that the individual performance component of Mr. Patel’s bonus would be paid out at 90% of target. When combined with the component of his bonus based on overall Company performance, Mr. Patel received a total cash bonus of $550,000.

 

Alexander Lintner’s Bonus.  Mr. Lintner, the head of our Global Businesses Division, led our Canada and U.K. small business units to increased revenue in local currency, despite challenging macro-economic conditions. Through his leadership, we continued to refine our go-to-market strategy in emerging markets and strengthened the engineering team at our India Development Center, where Intuit was selected as one of the best places to work in 2009. This positive momentum was in contrast to performance in the Canada Tax and Intuit Real Estate Solutions businesses, where external conditions and these units’ performance resulted in year-over-year declines in revenue and business unit contribution. Overall, the Compensation Committee determined that Mr. Lintner delivered strong performance in the face of these realities. Based on its review, the Compensation Committee determined that the individual performance component of Mr. Lintner’s bonus would be paid out at 65% of target. When combined with

the component of his bonus based on overall Company performance, Mr. Lintner received a total cash bonus of $237,000.

 

Sasan Goodarzi’s Bonus.  The Compensation Committee determined that Mr. Goodarzi also had outstanding performance based on his leadership of the Financial Institutions Division. Notwithstanding significant challenges in the banking industry during the past year, this division was able to grow revenue 4% year over year and exit the year at a growth rate of 6%, expand the number of financial institutions offering our services and increase active end-users, expand the reach of new innovative offerings and improve the customer experience. Based on its review, the Compensation Committee determined that the individual performance component of Mr. Goodarzi’s bonus would be paid out at 85% of target. When combined with the component of his bonus based on overall Company performance, Mr. Goodarzi received a total cash bonus of $290,000.

 

In determining the Individual Percentage to be paid to each executive, 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 Percentage with the 50-90% range for the Company’s cash bonuses.

 

Equity Incentives

 

Stock options and RSUs are a critical component of Intuit’s efforts to attract and retain executive officers and other employees. Generally, Intuit limits its option and RSU grants to new-hires, executive promotions and annual performance awards. 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, but because they do not have an exercise price, RSUs provide value to recipients regardless of Intuit’s stock price. Because of the different structure of RSUs, Intuit awarded slightly less than 50% of its total equity grants as RSUs in fiscal 2009.

 

Stock Options and RSU Grants to Executives for Fiscal 2009

 

As part of Intuit’s annual performance and compensation review process, the Compensation Committee approved the grant of stock options and RSUs to each Named Executive Officer in August 2009. Approximately 55% of the August 2009 RSUs are performance-based and will vest in August 2012 (or in the case of the CEO, in 2012 and 2014) as to a variable percentage of the underlying shares if, and to the extent that, Intuit achieves specified targets for year-over-year revenue growth and return on invested capital (“ROIC”) for the year ending July 31, 2010. The Compensation Committee continually seeks to align management incentives with shareholder value creation and this year decided to incorporate a balance-sheet metric into our established performance targets. In consultation with Watson Wyatt, the Compensation Committee determined that ROIC was the most common balance-sheet metric among our peers for aligning equity incentives with shareholder value creation.

 

The other 45% of the August 2009 RSUs will vest over time in equal increments in August 2011 and 2012 (or in the case of the CEO, in 2012 and 2014). The Compensation Committee issued both performance-based and time-based RSUs to achieve a balance of long-term incentives that reward strong performance while providing a degree of certainty and retentive value.

 

The Compensation Committee also believes that a mix of RSUs and stock options provides the greatest retentive value for Intuit, while delivering value to the recipient. For that reason, the Compensation Committee granted approximately 40% of the equity value in options because they only have value if Intuit’s stock price increases over the life of the option, thus providing a maximum of a seven year incentive (the full life of the stock options granted). The stock options vest over three years (or in the case of the CEO, five years).

The following table sets forth the number of options, performance-based RSUs and time-based RSUs granted to each of our Named Executive Officers in connection with the fiscal 2009 performance and compensation review process:

 

 

The sole factor used by the Committee in determining whether an executive was eligible to receive stock options and RSUs was that executive’s performance rating based on the same factors used to evaluate individual performance as described under “Cash Bonuses.” Based on their fiscal 2009 performance ratings, all of the Named Executive Officers were eligible to receive stock options and RSUs.

 

To determine the size of the equity awards for an executive, the Compensation Committee considered that executive’s performance rating. The performance rating is used by Compensation Committee members to assist them in exercising their judgment and discretion in approving specific award amounts. For any given role, a higher performance rating will generally result in a larger equity grant. However, the number of stock options and RSUs granted to a named executive officer is not dependent on any individual factor or specific formula, but is determined qualitatively, considering the performance rating and the Committee’s desire to ensure longer-term retention by providing significant future rewards tied to increased value for stockholders. In addition, in determining grant amounts, the Compensation Committee also considers the benchmarking data provided by Watson Wyatt, the Committee’s independent compensation advisor, to ensure that the value of equity awards is consistent with the Committee’s desire to be in the top quartile of our peer group for equity grant value and to provide comparable value to executives in the form of stock options and RSUs.

 

No individual factor determined the exact award amounts, but after weighing these considerations, the Committee exercised its judgment to determine grant amounts.

 

The Compensation Committee granted Mr. Smith equity awards to help create a total compensation package that is commensurate with other comparable CEO packages offered by the companies that comprise Intuit’s peer group and the survey companies (as discussed below under “Use of Competitive Data”). The Compensation Committee also wanted to create greater retention value for Mr. Smith and to tie a larger portion of his compensation to the value of Intuit’s stock. For these reasons, approximately 20% more of Mr. Smith’s aggregate total compensation (base salary, annual cash bonus and equity awards listed in the preceding table) is based on the value of his equity awards than the other Named Executive Officers. Mr. Smith’s equity awards are his primary long-term incentive and the terms of these awards differ from those of the other Named Executive Officers, because of the Compensation Committee’s desire to tie a larger portion of the CEO’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 in recognition of his fiscal 2009 performance vest over five years, with 50% vesting after three years and 50% after five years. The other Named Executive Officers’ stock options 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 50% of the shares vesting after two years and 50% vesting after three years. With regard to performance-based RSUs, all the Named Executive Officers have the same performance hurdles. However, upon achievement of those hurdles, Mr. Smith’s performance-based RSUs vest 50% after three years and 50% after five years, while the other Named Executive Officers’ performance-based RSUs vest 100% after three years.

 

Amendment of August 2008 Performance-Based RSUs

 

As part of its fiscal 2009 compensation review, the Compensation Committee approved amendments to the performance-based RSUs granted to the Named Executive Officers on August 11, 2008 to establish new performance targets for those RSUs. In light of the economic downturn, 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, and rather than losing the retentive value of these RSUs entirely, the Compensation Committee determined 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 CEO, in 2011 and 2013) as to a variable percentage of the total number of underlying shares if, and to the extent that, Intuit achieves specified targets for year-over-year revenue growth and ROIC for the year ending July 31, 2010. The amounts of these amended RSUs are shown in the table entitled “Grants of Plan-Based Awards in Fiscal 2009” on page 33.

 

Use of Competitive Data

 

In fiscal 2009, as in prior years, the Compensation Committee engaged Watson Wyatt to provide a comprehensive market study of compensation paid to Mr. Smith and Intuit’s senior leadership team. The data for this study came from two sources: (1) annual reports and proxy statements of a peer group of comparable companies described below; and (2) published surveys of companies with revenue in a comparable range, as described below. The peer group, approved by the Compensation Committee, consists primarily of technology companies, most of which compete with Intuit for business or for executive personnel. These companies also have one or more of the following attributes that make them similar to Intuit:

 

 

Watson Wyatt and representatives of Intuit’s Human Resources department then reviewed this data with the Compensation Committee. The following companies make up the peer group for which Watson Wyatt provided proxy data:

 

 

Several changes were made to our select peer group this year. Three companies that were included in our peer group for fiscal 2008, Cadence Design Systems, Qualcomm and VeriSign, fell outside of the size thresholds described above and were accordingly excluded from our 2009 peer group. To replace those companies, three other companies — Citrix Systems, Global Payments and McAfee — were added to our 2009 peer group based on their relevant size, industry and market focus.

 

In addition to proxy data, Watson Wyatt referenced market pay data from the following published executive compensation surveys to provide additional compensation information to the Compensation Committee:

 

 

Software companies with revenue greater than $1 billion
All survey companies (generally in technology sector) with revenue between $1 billion and $3 billion
All survey companies with revenue greater than $3 billion

 

The average revenue size of all survey sources used in benchmarking each executive position approximated that of Intuit’s.

 

 

Proxy data from the peer group companies were averaged with the survey data above to create the benchmarks reviewed by the Compensation Committee (“Watson Wyatt’s Fiscal 2009 Study”). These market analyses compared the value of Intuit’s pay arrangements to comparable market practices in terms of individual elements of pay and in aggregation. The individual elements of compensation included base salaries, bonuses, and long-term incentives. The benchmarking data provided to the Compensation Committee also included an assessment of Intuit’s financial performance for the short-term and long-term as compared to the companies in the 2009 peer group.

 

The Compensation Committee used this competitive data as a reference point in determining whether each executive’s compensation level properly reflects the executive’s role and scope of responsibilities relative to Intuit’s peers and companies with which Intuit competes for talent. The Compensation Committee reviewed Intuit’s executive compensation programs and practices, and analyzed each Named Executive Officer’s base pay, recommended cash bonus and equity awards. The Compensation Committee compared these compensation components to compensation at the peer group companies in an effort to set aggregate total compensation for each Named Executive Officer in the top quartile of peers surveyed. According to the competitive data reviewed, Intuit’s base pay, cash bonuses and long-term incentives for our Named Executive Officers were competitive with the market.

 

Intuit’s Management Stock Purchase Program

 

On January 1, 2007, as a method of encouraging ownership of Intuit’s stock by executives, Intuit launched a Management Stock Purchase Program (“MSPP”). Under the MSPP, employees with a title of director or above (including the Named Executive Officers) may elect to defer up to 15% of their annual incentive bonus, which is converted into RSUs, based on the fair market value of Intuit’s stock on the date the bonus is awarded. These RSUs are fully vested on the grant date, but are not issued in the form of shares until the earlier of the third anniversary of the grant date or the termination of employment with Intuit. Intuit also grants the employee an additional RSU for every RSU purchased through this deferral, up to set maximums. These matching RSUs vest as to 100% of the shares three years after the grant date, or on the recipient’s death or disability. This three-year vesting period is intended to assist Intuit in retaining key talent. The RSUs granted pursuant to the MSPP are issued under the 2005 Equity Incentive Plan.

 

Employee Benefits

 

Each of our employees with a title of director or above (including the Named Executive Officers) is eligible to participate in a number of programs which make up Intuit’s total compensation package, including health and welfare benefits, executive relocation benefits, our 401(k) Plan with a company-sponsored match component, our Employee Stock Purchase Plan, our Non-Qualified Deferred Compensation Plan and our MSPP. The Non-Qualified Deferred Compensation Plan and the MSPP provide an opportunity for deferral of compensation, in compliance with Section 409A of the Internal Revenue Code. As described in more detail above, the MSPP also encourages eligible employees to own Intuit stock. When determining executive compensation, the Compensation Committee considers all the components noted above and may use any and all of these programs to provide the appropriate level of total compensation to executives. Intuit’s only material perquisites for Named Executive Officers in fiscal 2009 relate to relocation and commuting benefits. Currently, Intuit does not offer a defined benefit or pension plan.

 

Termination Benefits

 

As discussed under “Potential Payments Upon Termination of Employment or Change in Control” on page 37, the Company has agreed to provide severance payments and accelerated vesting of equity awards to our Named Executive Officers if their employment is terminated under specific circumstances. The Company agreed to provide

these benefits in each Named Executive Officer’s negotiated employment agreement, as consideration for the executive’s agreement to provide services as an employee.

 

Role of Executive Officers, the Board and Compensation Consultants in Compensation Determinations

 

The Compensation Committee received support from Intuit’s Human Resources Department in analyzing and establishing Intuit’s compensation programs for fiscal 2009. In order to provide comprehensive support to the Compensation Committee, a representative of the Human Resources Department, usually the Senior Vice President of Human Resources or the Vice President in charge of compensation attended all regular meetings of the Compensation Committee. In addition, an Intuit attorney also attended all regular meetings of the Compensation Committee, in order to provide guidance regarding the legal implications for Intuit of certain compensation decisions. Mr. Campbell, the Chairman of the Board and an Intuit employee, also regularly participated in Compensation Committee meetings, providing management input on organizational structure and succession planning and executive development. Both Mr. Smith, our CEO, and Mr. Williams, our CFO, have provided the Compensation Committee with guidance and perspective from time to time. Mr. Williams provided analysis regarding Intuit’s achievement of financial performance hurdles and aided the Compensation Committee in determining appropriate revenue and operating income targets for the fiscal year for the SEIP. Additionally, Mr. Williams provided analysis regarding the financial impact of equity awards and appropriate performance hurdles which the Compensation Committee considered when making decisions regarding long-term incentives. Mr. Smith provided recommendations to the Compensation Committee regarding the cash and equity compensation of his executive staff (including Mr. Williams, Mr. Patel, Mr. Lintner and Mr. Goodarzi), succession planning, organizational development and how to use incentive compensation to drive Intuit’s growth. In addition, Mr. Smith provided a self-review to the Compensation Committee in order to aid their evaluation of his performance for the 2009 fiscal year.

 

The Compensation Committee determines the compensation for Mr. Smith after conferring with the Board, without Mr. Smith present. The Compensation Committee met 10 times in fiscal 2009 and held a portion of each meeting in closed session, with only the committee members, and on certain occasions, William Campbell, Chairman of the Board, and representatives of our outside compensation consultant present. In determining compensation for the Named Executive Officers other than the CEO, the Compensation Committee considered Mr. Smith’s recommendations. The Compensation Committee is, however, solely responsible for making the final decisions on compensation for the Named Executive Officers including the CEO. The Compensation Committee holds individual meetings with members of Mr. Smith’s executive staff on an annual basis to discuss organizational development and leadership strategy. The Compensation Committee also interacts frequently with members of the executive staff to discuss their business unit or functional group activities.

 

In making compensation decisions, the Compensation Committee also has the authority to engage the services of outside advisers, experts and others to assist the Compensation Committee, and, as noted above, has engaged Watson Wyatt. For this purpose, Watson Wyatt attended some of the meetings of the Compensation Committee, responding to committee members’ inquiries and refining their analysis based on these questions, but its day-to-day contact was Intuit’s Vice President in charge of compensation.

 

The Compensation Committee also periodically reviews Intuit’s key management from the perspectives of leadership development, organizational development and succession planning through Intuit’s High Performance Organization Review. As part of this process, the Compensation Committee also meets with key senior executives. The systemic assessment of Intuit’s organization and talent planning helped the Compensation Committee to evaluate Intuit’s effort at hiring, developing and retaining executives, with the goal of creating and growing Intuit’s “bench strength” at the most senior executive levels.

 

Policy Concerning Stockholder Advisory Vote on Executive Compensation

 

The Board and management believe that it is useful and appropriate to seek the views of stockholders when considering the design and implementation of executive compensation programs. In October 2009 the Board adopted a policy that, beginning with the Company’s annual meeting in 2010, will provide stockholders the opportunity to vote annually on an advisory basis whether they concur with the Company’s compensation

philosophy, policies and determinations for its named executive officers, as described in the “Compensation Discussion and Analysis” section of the Company’s annual proxy statement. The advisory vote on executive compensation will be non-binding but will be considered by the Compensation Committee in determining annual compensation for executive officers in subsequent periods.

 

Accounting and Tax Implications of Our Compensation Policies

 

In designing our compensation programs, the Compensation Committee considers the financial accounting and tax consequences to Intuit as well as the tax consequences to our employees. We account for equity compensation paid to our employees under authoritative share-based payments accounting guidance, which requires us to estimate and record expense over the service period of the award. The cost of outstanding equity awards is considered by management as part of our equity grant recommendations to the Compensation Committee.

 

Under Section 162(m) of the Internal Revenue Code, compensation in excess of $1,000,000 per year to those executives (other than the Chief Financial Officer) whose compensation is detailed in the “Summary Compensation Table” (see page 31) is not tax deductible to Intuit unless certain requirements are met. The $1,000,000 limit does not apply to compensation that is considered “performance-based” under applicable tax rules. Intuit has taken steps to ensure that most of the executive compensation paid under its incentive programs, including the stockholder approved SEIP and performance-based RSUs, is tax deductible. For instance, beginning with awards in fiscal year 2010, we amended the SEIP in light of IRS guidance to remove the Compensation Committee’s discretion to pay bonuses in the event of a participant’s retirement (which the Committee had never used) and to provide that certain terminated participants will only receive a prorated bonus in the year of termination based on actual achievement of Intuit’s pre-established performance goals. We believe it is important to preserve flexibility in administering compensation programs as corporate objectives may not always be consistent with the requirements for full deductibility. Accordingly, Intuit has not adopted a policy that all compensation must qualify as deductible under Section 162(m) and, while Intuit strives to award executive compensation that meets the deductibility requirements, Intuit may enter into compensation arrangements under which payments are not deductible under Section 162(m).

 

We also consider the tax impact to employees in designing our compensation programs, particularly our equity compensation programs. For example, while employees generally control the timing of taxation with respect to stock options, the timing of taxation of restricted stock is generally not within the employee’s control. As a result, as part of our restricted stock grant program, we “net issue” RSUs to employees in order to assist them with the applicable tax withholding requirements.

 

Stock Ownership

 

Intuit has a mandatory share ownership program that applies to senior vice presidents, the CEO and members of the Board. This program requires senior vice presidents to hold a minimum of 10,000 to 15,000 shares each, depending on their base salary levels, requires the CEO to hold a minimum of 100,000 shares, and requires Board members to hold a minimum of 10,000 shares. Individuals who are subject to these requirements must comply within five years after the date the individual is appointed to a position which is subject to the share ownership program, or July 2011, whichever is later. Unvested RSUs held by an executive officer are counted as shares when determining the number of shares owned. All of our Named Executive Officers currently comply with these guidelines.

 

Intuit’s Equity Granting Policy

 

Stock options and restricted stock units may be granted by either the Compensation Committee or, pursuant to the terms of its Charter, by its delegates, the CEO and the Senior Vice President of Human Resources. These individuals, acting independently, each have authority to grant stock options and RSUs to employees below the level of Vice President, up to a certain number of shares per individual specified by the Compensation Committee. The CEO and the Senior Vice President of Human Resources, acting jointly, may grant such awards to employees at the level of Vice President, up to a certain number of shares per individual specified by the Compensation Committee, provided such employees do not report to the CEO or to a committee of the Board. Equity grants made to Senior Vice Presidents or above, to individuals who report to the CEO or to a committee of the Board, or to individuals who receive amounts above the stated share limit per individual must be approved by the Compensation Committee.

Timing of Grants.  Equity awards are typically granted on regularly scheduled grant dates on the seventh business day of each month. The only exceptions to this are specifically approved by the Compensation Committee, as was the case with our broad-based grant of RSUs in February 2009 (which the Named Executive Officers did not participate in). The CEO and Senior Vice President of Human Resources do not have discretion to set other grant dates for awards made pursuant to their delegated authority. Our annual performance-related awards are made on a prospective date determined by the Compensation Committee well in advance of the close of the fiscal year based on Intuit’s annual performance review cycle, the Compensation Committee’s meeting schedule, the existing share reserve under our 2005 Equity Incentive Plan and the equity award utilization during each fiscal year.

 

Option Exercise Price.  The exercise price of a newly granted option (i.e., not an option assumed or substituted in connection with a corporate transaction) is the closing price on the NASDAQ stock market on the date of grant.

 

The following table shows compensation earned during fiscal 2009 by our CEO, our CFO, and our three other most highly compensated executive officers for fiscal 2009. We call these individuals our “Named Executive Officers.” For information about employment contracts, termination of employment and change-of-control arrangements between Intuit and the Named Executive Officers, see “Potential Payments Upon Termination of Employment or Change in Control” on page 37.

 

 

 

 

 

MSPP Deferrals:

 

 

 

The following table provides information about performance-based equity awards granted under our 2005 Equity Incentive Plan to the Named Executive Officers during fiscal 2009 and cash awards for which the Named Executive Officers were eligible in fiscal 2009 under our cash incentive plans.

 

 

 

 

The Named Executive Officers did not receive option grants during fiscal year 2009. In August 2009, the Named Executive Officers were granted option awards for their fiscal 2009 services.

 

The following table provides information with respect to outstanding stock options held by the Named Executive Officers as of July 31, 2009.

 

 

 

 

 

The following table provides information with respect to outstanding restricted shares and restricted stock units held by the Named Executive Officers as of July 31, 2009. The market value of the awards is determined by multiplying the number of unvested shares or units by $27.90, the closing price of Intuit’s common stock on NASDAQ on July 31, 2009.