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 2007 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

You are cordially invited to attend our 2007 Annual Meeting of Stockholders, which will be held at 8:30 a.m. Pacific Standard Time on December 14, 2007 at our offices at 2600 Casey Avenue, Building 9, Mountain View, California. 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:

 

1. Elect ten directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected;

 

2. Ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2008;

 

3. Approve an amendment to our 2005 Equity Incentive Plan to (1) extend the term of the plan by an additional year; and (2) add 10,000,000 shares to cover awards under the plan through its amended term;

 

4. Approve the adoption of our Senior Executive Incentive Plan; and

 

5. Consider any other matters that may properly be brought before the meeting.

 

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 19, 2007 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, CA 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

November 1, 2007

 

INTUIT INC.

 

PROXY STATEMENT 2007 ANNUAL MEETING OF STOCKHOLDERS

 

 

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

 

PROXY STATEMENT FOR THE
2007 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. 2007 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 Friday, December 14, 2007 at 8:30 a.m. Pacific Standard Time at our offices at 2600 Casey Avenue, Building 9, Mountain View, California. We have first released this proxy statement to Intuit stockholders beginning on November 1, 2007.

 

Internet Availability of Proxy Materials

 

Under the rules recently adopted by the U.S. Securities and Exchange Commission (“SEC”), 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 on the Internet. The Notice of Internet Availability also instructs you as to how you may access your proxy card to 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 November 1, 2007.

 

Record Date, Outstanding Shares and Quorum

 

Only holders of record of Intuit common stock at the close of business on October 19, 2007 (called the “Record Date”) will be entitled to vote at the Meeting. On the Record Date, we had approximately 335,299,597 shares outstanding and entitled to vote, held by approximately 842 stockholders of record and approximately 85,447 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 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 for use 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. Whether your proxy is submitted via the Internet, by phone or by mail, if it is properly completed and submitted and if you do not revoke it prior to the Meeting, your shares will be voted at the Meeting in the manner set forth in this proxy statement or as otherwise specified by you.

 

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 $8,500 plus their expenses, which we estimate will be approximately $7,500. We will ask brokers, custodians, nominees and other record holders to prepare and send a Notice of Internet Availability of Proxy Materials to people 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, 2008.

 

Delivery of Voting Materials to Stockholders Sharing an Address

 

To reduce the expense of delivering duplicate materials to stockholders sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name and don’t 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. 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, 2007 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) 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 OF DIRECTORS AND NOMINEES

 

Our Board currently consists of eleven directors, of whom ten are standing for election. The nominees for election include seven independent directors, as defined in the applicable rules for companies traded on the NASDAQ Global Select Market (NASDAQ), and three directors who are employees of Intuit. Stockholders elect all directors annually. In July 2007, Suzanne Nora Johnson and Edward A. Kangas were appointed to the Board of Directors upon the recommendation of the Nominating and Governance Committee, and both directors are standing for election at the annual meeting. Ms. Nora Johnson was brought to the attention of the Nominating and Governance Committee as a candidate by a third-party search firm, which provided assistance in identifying and evaluating Board candidates. Mr. Kangas was brought to the attention of the Nominating and Governance Committee as a candidate by a member of the Board who is an executive officer of Intuit. In October 2007, we announced that L. John Doerr has decided not to stand for re-election and is expected to serve as a director until the date of the annual meeting.

 

Directors Standing for Election

 

The authorized number of directors is currently eleven, and effective immediately prior to the annual meeting, this number will be reduced to ten by resolution of the Board, as provided in our Bylaws. Intuit has announced that

on January 1, 2008, Brad D. Smith will become President and Chief Executive Officer of Intuit and will be appointed as a director on that date by resolution of the Board, as provided in our Bylaws.

 

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 nominees for director is provided below.

 

Stephen M. Bennett (Age 53)
President and Chief Executive Officer, Intuit Inc.

 

Mr. Bennett has been President and Chief Executive Officer and a member of Intuit’s Board of Directors since 2000. Prior to joining Intuit, Mr. Bennett spent 23 years with General Electric Corporation. From December 1999 to January 2000, Mr. Bennett was an Executive Vice President and a member of the board of directors of GE Capital, the financial services subsidiary of General Electric Corporation. From July 1999 to November 1999, he was President and Chief Executive Officer of GE Capital e-Business, and he was President and Chief Executive Officer of GE Capital Vendor Financial Services from April 1996 through June 1999. Mr. Bennett also serves on the board of directors of Sun Microsystems, Inc. He holds a Bachelor of Arts in Finance and Real Estate from the University of Wisconsin. On January 1, 2008, Mr. Bennett will be stepping down as President and Chief Executive Officer, and will remain a member of Intuit’s Board of Directors, if re-elected by stockholders at the annual meeting.

 

Christopher W. Brody (Age 62)
Chairman, Vantage Partners LLC

 

Mr. Brody has been an Intuit director since 1993 and is a member of the Compensation and Organizational Development Committee and the Nominating and Governance Committee. He was also a member of the Audit Committee until October 2007. 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 67)
Chairman of the Board of Directors, Intuit Inc.

 

Mr. Campbell has been an Intuit director since 1994. He has served as Chairman of the Board since August 1998 and was Acting Chief Executive Officer from September 1999 through January 2000. He served as Intuit’s President and Chief Executive Officer from April 1994 through July 1998. Mr. Campbell also serves on the board of directors of Apple Inc. and Highlands Acquisition Corp., a blank check company formed for the purpose of acquiring one or more operating businesses. 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.

 

Scott D. Cook (Age 55)
Chairman of the Executive Committee, Intuit Inc.

 

Mr. Cook, a founder of Intuit, has been an Intuit director since 1984 and has been Chairman of the Executive Committee since August 1998. 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 52)
President and Chief Executive Officer, VMware, Inc.

 

Ms. Greene has been an Intuit director since August 2006 and is a member of the Audit Committee. She is co-founder, President, Chief Executive Officer and a director of VMware, Inc., a developer and provider of software for virtualized desktops, servers, storage and networking. Before co-founding VMware in 1998, Ms. Greene held technical leadership positions at Silicon Graphics, Tandem, and Sybase and was chief executive officer of VXtreme. 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 62)
President, The Hallman Group

 

Mr. Hallman has been an Intuit director since 1993 and is Chairman of the Compensation and Organizational Development Committee. He was also a member of the Audit Committee until October 2007. 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 is also a director of InFocus Corporation, a maker of computer-operated projection products. Mr. Hallman holds both a Bachelor’s and a Master’s degree in Business Administration from the University of Michigan.

 

Edward A. Kangas (Age 63)
Non-Executive Chairman, Tenet Healthcare

 

Mr. Kangas has been a director of Intuit since July 2007. He has been Chairman of Tenet Healthcare, an owner and operator of acute care hospitals and related healthcare services, since July 2003 and has served as a director since April 2003. From 1989 to 2000, Mr. Kangas was global chairman and Chief Executive Officer of Deloitte Touche Tohmatsu, a global provider of audit, tax, consulting and financial advisory services. He also served as the managing partner of Deloitte & Touche (USA) from 1989 to 1994. Mr. Kangas is also a director of Eclipsys Corporation, Electronic Data Systems Corporation and Hovnanian Enterprises, Inc. He holds a Bachelor’s degree and a Master’s degree in Business Administration from the University of Kansas.

 

Suzanne Nora Johnson (Age 50)
Senior Director, The Goldman Sachs Group

 

Ms. Nora Johnson has been a director of Intuit since July 2007. Since 1985, she has held senior management and other positions with The Goldman Sachs Group, a leading global investment banking, securities and investment management firm. Before becoming a Senior Director, she was Vice Chairman of the firm, Chairman of the firm’s global markets institute, head of the global investment research division, and a member of the firm’s management committee. Ms. Nora Johnson also serves on the boards of Pfizer Inc., a research-based biomedical and pharmaceutical company, and Visa Inc., a provider of products, services and infrastructure supporting global commerce. Her non-profit board affiliations include, among others, the American Red Cross, Brookings Institution, Carnegie Institution of Washington, 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 59)
Senior Vice President, Chief Financial Officer, Cisco Systems, Inc.

 

Mr. Powell has been an Intuit director since 2004 and is the Chairman of the Audit Committee. He joined Cisco Systems, a provider of networking products and services, in 1997 and has served as the Senior Vice President and Chief Financial Officer since May 2003. 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 board of Applied Materials, Inc., a provider of fabrication services, equipment and software. Mr. Powell holds a Bachelor of Science in Business Administration with a concentration in accounting from Oregon State University.

Stratton D. Sclavos (Age 46)
Former President, Chief Executive Officer and Chairman, VeriSign, Inc.

 

Mr. Sclavos has been an Intuit director since 2001 and is a member of the Nominating and Governance Committee. He most recently 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 as Chairman of Verisign’s 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, Inc., a provider of customer relationship management services. Mr. Sclavos holds a Bachelor of Science in Electrical and Computer Engineering from the University of California, Davis.

 

CORPORATE GOVERNANCE

 

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 Principles and periodically making recommendations to the Board regarding any changes. These Principles address, among other things, our policy on retirement, succession planning and senior leadership development, 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 www.intuit.com/about_intuit/investors/corporate_gov.

 

Board Responsibilities and Structure

 

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 current or 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 an 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 ten meetings during fiscal 2007 and also acted by written consent. The independent directors meet without management present at regularly scheduled executive sessions at each quarterly Board meeting. During fiscal 2007, the independent directors held four executive sessions. With respect to independent director sessions, 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.

 

Director Independence

 

Our Board currently includes eight independent directors, seven 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, Mr. Doerr, Ms. Greene, Mr. Hallman, Mr. Kangas, Ms. Nora Johnson, Mr. Powell and Mr. Sclavos are independent directors. Mr. Bennett, Mr. Campbell and Mr. Cook are employees of Intuit and are therefore not considered independent.

 

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. Doerr, Ms. Greene, Ms. Nora Johnson, Mr. Powell and Mr. Sclavos are, or were during fiscal 2007, directors or executive officers 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 3 fiscal years that exceed 5% of Intuit’s or any of the other parties’ consolidated gross revenues. Mr. Kangas sits on the board of a charitable foundation to which Intuit has made employee matching contributions in amounts that are immaterial to both Intuit and the foundation. Following review of these transactions and other relevant standards, the Board determined that each of these directors is independent under NASDAQ rules.

 

Attendance at Board, Committee and Annual Stockholders Meetings

 

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

 

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 2006 Annual Meeting of Stockholders. Under the Corporate Governance Principles, all directors are encouraged to attend the annual meetings of Intuit’s stockholders.

 

Board Committees and Charters

 

The Board currently has a standing Audit 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 www.intuit.com/about_intuit/investors/corporate_gov. Current committee members are identified in the following table.

 

 

Audit Committee

 

The Audit 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 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. The Audit Committee also includes at least one member — Dennis D. Powell — who has 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 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 Audit Committee or the Board.

 

In fiscal 2007, the Audit Committee held 12 meetings and also acted by written consent. The responsibilities and activities of the Audit Committee are described in greater detail in “Report of the Audit Committee” beginning on page 40.

 

Compensation and Organizational Development Committee

 

The Compensation and Organizational Development 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 committee met 11 times in fiscal 2007 and also acted by written consent. 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, and representatives of our outside compensation consultant, present. For more information, see the “Compensation Committee Report” on page 17 and “Compensation Discussion and Analysis” beginning on page 17.

 

In connection with the acquisition of Digital Insight Corporation in February 2007, the Board established a special compensation committee to approve the compensation and employment agreement for Mr. Stiefler, the former Chief Executive Officer of Digital Insight, and equity awards for certain other former employees of Digital Insight. This special committee, which completed its work and was dissolved in March 2007, consisted solely of independent disinterested directors, and did not include Mr. Hallman, who was also a member of the Digital Insight board through February 2007. This special committee did not have a written charter.

 

Nominating and Governance Committee

 

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 2007 and also acted by written consent.

 

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” below). 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’s qualifications.

 

Compensation Committee Interlocks and Insider Participation

 

No executive officer of Intuit during fiscal 2007 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 and Organizational Development Committee.

 

DIRECTOR COMPENSATION

 

Overview

 

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. Bennett, Mr. Cook and Mr. Campbell — do not receive board fees or equity for their Board service. The Compensation and Organizational Development 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 they determine changes are needed. The Compensation and Organizational Development Committee last reviewed non-employee director compensation in July 2007 and determined that the current mix and size of equity and cash awards provide the appropriate incentive to attract and retain qualified non-employee board members. The following table summarizes the fiscal 2007 compensation earned by each member of the Board other than Mr. Bennett, whose compensation is described under “Executive Compensation” beginning on page 27.

 

Director Summary Compensation

 

 

 

 

 

Option Grants to Non-Employee Directors During Fiscal Year 2007

 

The following table shows each option grant made to our non-employee directors during fiscal 2007, including the grant date, number of shares, exercise price, and grant date fair value, as calculated under SFAS 123R. All options have an exercise price equal to the fair market value of Intuit’s common stock on the date of grant.

 

 

Outstanding Option Awards for Directors at Fiscal Year-End 2007 (Exercisable and Unexercisable)

 

The following table provides information on the outstanding equity awards for our directors, other than Mr. Bennett, as of July 31, 2007.

 

 

Annual Retainer for Non-Employee Directors

 

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.

 

Automatic Option Grants to Non-Employee Directors Under the 2005 Equity Incentive Plan

 

All options granted to non-employee directors in fiscal year 2007 were made pursuant to a stockholder-approved non-discretionary formula set forth in our 2005 Equity Incentive Plan (the “Plan”), which our stockholders approved in December 2004 and amended in 2005 and 2006. The Board subsequently amended the Plan on July 26, 2006, to reduce the number of shares subject to the options granted to directors for service on the board or a committee under the formula by 25%, except for the size of each option grant awarded for a director’s service as a board-designated Committee chair. 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 are as set forth in the following table:

 

 

Initial non-employee director 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 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 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.

 

Director Stock Ownership Requirement

 

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 MATTERS

 

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 www.intuit.com/about_intuit/investors/corporate_gov. 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 www.intuit.com/about_intuit/investors/corporate_gov. You may also find a copy of a document entitled “Process of Identifying and Evaluating Nominees for Director” on that web page.

 

Stockholder Proposals and Nominations for the 2008 Annual Meeting of Stockholders

 

Any stockholder who intends to present a proposal for inclusion in Intuit’s 2008 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 5, 2008. Any stockholder who wishes to bring a proposal or nominate a person for election to the Board at the 2008 Annual Meeting of Stockholders must provide written notice of the proposal or nomination to Intuit’s Corporate Secretary, at our principal executive offices, between August 31, 2008 and September 30, 2008. 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.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Security Ownership Table

 

The following table shows shares of Intuit’s common stock that we believe are owned as of September 30, 2007 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 338,123,389 shares of common stock outstanding on September 30, 2007. 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, 2007 and (2) shares issuable upon settlement of restricted stock units that are vested, or will become vested within 60 days of September 30, 2007. Those shares are deemed to be outstanding and beneficially owned by the person holding such option 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) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act requires Intuit’s directors, executive officers, and greater-than-10% stockholders to file forms with the SEC to report their ownership of Intuit shares and any changes in ownership. Anyone required to file forms with the SEC must also send copies of the forms to Intuit. We have reviewed all forms provided to us. Based on that review and on written information given to us by our executive officers and directors, we believe that all Section 16(a) filing requirements were met during fiscal 2007.

 

COMPENSATION AND ORGANIZATIONAL DEVELOPMENT COMMITTEE REPORT

 

Set out below is the Compensation Discussion and Analysis, which is a discussion of Intuit’s executive compensation programs and polices 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 continuously review and monitor senior management’s compensation, as well as their development, to produce the greatest value for Intuit’s three stakeholders — employees, customers and stockholders. To this end, the Compensation Committee has reviewed the components of compensation paid to each of Intuit’s officers for fiscal 2007, 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

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The Compensation and Organizational Development Committee (the “Compensation Committee”) administers Intuit’s executive compensation program. To that end, the Compensation Committee oversees Intuit’s compensation plans and policies, reviews and approves compensation decisions for officers and administers Intuit’s stock compensation plans.

 

The Compensation Committee focuses primarily on rewarding four areas of performance: revenue growth, operating income growth, creating a great place to work and developing talent to ensure the continued growth of Intuit. To accomplish this, the Compensation Committee believes that performance-based compensation is a key success factor because it emphasizes improvements in these measures. Our position has been to provide the compensation necessary to acquire and retain talented executives with proven experience in accomplishing these objectives and incentive bonus opportunities that are tied to the successful accomplishment of our operating goals. We manage long-term compensation tightly to ensure an appropriate dilution level and to provide competitive rewards that are commensurate with results delivered. Toward that end, we grant equity awards in the form of restricted stock units and stock options. The majority of the restricted stock units granted to our senior executives vest only upon achievement of our designated goals. The stock options granted only provide value to the extent Intuit’s stock price increases following the date of grant.

 

As described further below, the Compensation Committee considered Intuit’s fiscal 2007 financial performance in making compensation decisions for our senior executives.

 

In summary, our fiscal 2007 financial results were excellent, including:

 

 

 

      ^* For a quantitative reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, see Appendix A to this Proxy Statement.

 

Those senior executives listed in the Summary Compensation Table in this proxy statement whose compensation is discussed in this CD&A are referred to as the “Named Executive Officers.” For fiscal 2007, our Named Executive Officers are:

 

 

General Compensation Philosophy and Objectives

 

Intuit’s compensation programs are designed to attract, motivate and retain talented executives responsible for Intuit’s success and are developed within a framework that rewards both individual and company performance. Intuit implements a pay-for-performance and performance management approach to executive compensation by tying a large portion of each executive officer’s compensation to performance-based annual incentive bonuses and performance-based long-term equity awards. In applying this approach, we seek to balance the interests of our three key stakeholders — employees, customers and stockholders by:

 

 

Based on the Compensation Committee’s evaluation of each of the above criteria, compensation varies between Named Executive Officers in any given year and as to each Named Executive Officer on a year-over-year basis, based on the individual’s performance. The Compensation Committee conducts its annual review process near the end of Intuit’s fiscal year and determines each employee’s base salary for the coming year, incentive bonus amount for the prior year and the grant of any equity awards based on objective criteria, including Intuit’s revenue and operating income growth, and subjective criteria, including leadership and individual performance.

 

Elements of Compensation

 

Each major compensation component is structured to provide significant differentiation based on individual performance and to incentivize both short and long-term performance. Intuit’s primary compensation components are:

 

 

The Compensation Committee believes that a mix of both cash and equity incentives is appropriate, as cash incentives reward Named Executive Officers in the near term for achieving superior performance and equity incentives motivate Named Executive Officers to achieve superior performance in the longer term. In determining the amount of the incentives awarded, the committee considers the Named Executive Officer’s total compensation for both the short and long-term to assess the retentive value of the compensation package. The percentage of a Named Executive Officer’s compensation opportunity that is performance-based is determined primarily on his role at Intuit. Named Executive Officers with direct ability to influence overall company performance, such as Messrs. Bennett, Patel, Smith, Stiefler and, formerly, Mr. Henske, have a greater portion of their pay at risk through short and long-term incentive programs than most other Intuit employees.

Competitive Data

 

In fiscal 2007, as in prior years, the Compensation Committee engaged Watson Wyatt to provide a comprehensive market study of compensation paid to Mr. Bennett and Intuit’s senior leadership team. The data for this study came from two sources: (1) pertinent data from annual reports and proxy statements from the peer group companies; and (2) the surveys described below. The peer group and survey companies reviewed and approved by the Compensation Committee are primarily technology companies, some of which compete with Intuit for business or for executive personnel. The Compensation Committee’s intent was to choose peer group members or surveys featuring companies that have one or more attributes significantly similar to Intuit, including size, location, general industry or products. None of the Named Executive Officers participated in the selection of the comparable companies. Watson Wyatt and representatives of Intuit’s Human Resources/Compensation and Legal departments then reviewed this data with the Compensation Committee. The following companies make up the peer group for which Watson Wyatt provided data:

 

 

Data from the following surveys were also used by Watson Wyatt to provide additional compensation information to the Compensation Committee:

 

 

The data from the peer group companies was averaged with the survey data above to create the benchmarks reviewed by the Compensation Committee (“Watson Wyatt’s Fiscal 2007 Study”). This benchmarking data covered Intuit’s financial performance for the short and long term as compared to the companies in the peer group above.

 

The Compensation Committee used this competitive data as one of several factors in its decisions regarding compensation. Generally the data is used as a reference point in making decisions as to whether the contributions of each executive are properly reflected in his compensation. The Compensation Committee also gives great weight to business performance, including Intuit’s revenue and operating income growth, and individual performance as described below.

 

The Compensation Committee reviewed Intuit’s executive compensation programs and practices, and analyzed, for each Intuit Named Executive Officer, all existing elements of compensation (including base pay, cash bonus awards and long-term compensation in the form of equity awards) during the fourth quarter of fiscal 2007. The Compensation Committee compared these compensation components separately, and in total, to compensation at the peer group companies in an effort to set each element of compensation at a level such that the aggregate total compensation for each Named Executive Officer is at or above the top quartile of peers surveyed, due to Intuit’s performance and desire to retain and motivate our most talented and experienced executives.

 

Specific Elements of Compensation:
Base Pay

 

Intuit provides base salaries to all of its employees, including the Named Executive Officers to provide them, throughout the year, with the security of a fixed cash amount for services rendered. Watson Wyatt’s Fiscal 2007 Study (which was based on fiscal 2006 data) showed that Intuit’s base pay and cash incentive compensation

opportunities for our Named Executive Officers, including its Chief Executive Officer, were competitive with the market, with Intuit’s total compensation opportunities in the top quartile of the peer companies for analogous positions at peer companies. The Compensation Committee considered that fact when reviewing base salaries for fiscal 2008.

 

At the close of fiscal 2007, the Compensation Committee determined that the base salaries of our Named Executive Officers were appropriately competitive based on the competitive data and therefore the Compensation Committee did not increase base salaries for this group, except for Mr. Lintner. Mr. Lintner’s salary was increased by 3.7% to $560,000 for fiscal 2008 to reward his outstanding performance during fiscal 2007, including his implementation of strategic initiatives which remain ongoing at Intuit and his leadership of Intuit’s Strategy and Corporate Development Group. Among other accomplishments, this group led the acquisition of Digital Insight Corporation and led extensive customer segmentation work for our Small Business Division.

 

Based on the importance of Mr. Stiefler to the continued success of Digital Insight post-acquisition as a subsidiary of Intuit, Mr. Stiefler’s base salary was set at $600,000 by the special compensation committee discussed above on page 9. In setting Mr. Stiefler’s salary, the special committee considered Mr. Stiefler’s public company leadership experience, his importance to ensuring the successful integration of Digital Insight with Intuit and the salary levels of the leaders of Intuit’s other significant business units. At the close of the 2007 fiscal year, Mr. Stiefler was not given an increase in his base compensation because of his recent hiring.

 

Cash Incentive Bonus Awards

 

In keeping with its pay-for-performance culture, Intuit strives to base a substantial portion of each employee’s total compensation on annual performance. Most of Intuit’s employees have an annual bonus target that is a stated percentage of their base pay, which is based generally on the employee’s level and position within Intuit. Mr. Bennett has a bonus target of 160% of base salary; Messrs. Henske, Patel, Smith and Stiefler each have a bonus target of 75% of base salary; and Mr. Lintner has a bonus target of 60% of base salary. The bonus targets of Messrs. Henske, Patel and Smith were all set based on the scope and significance of their roles as leaders of Intuit’s largest business units or, in Mr. Patel’s case, as the CFO. In fiscal 2007, these leadership roles were the most significant at Intuit after the role of the CEO. These bonus targets remained unchanged from fiscal 2006 and reflect Intuit’s long-standing practice of setting bonus targets based on executive’s level and position. Mr. Stiefler’s target was set by the special compensation committee, as noted above, at 75% based on both the significance of his role and the negotiation of his employment offer as part of the Digital Insight acquisition. Mr. Lintner’s target was set at 60% due to his role as a Senior Vice President who does not lead a major business unit. The Named Executive Officer target amounts are used as a guideline for the determination of bonus awards and are at or near market median, but actual bonus payments vary significantly from these targets, depending on company and individual performance.

 

Annual bonuses are paid out under one of Intuit’s two performance bonus plans: (1) the Senior Executive Incentive Plan (“SEIP”) or (2) the Intuit Performance Incentive Plan (“IPI”). Messrs. Bennett, Patel, Henske, Lintner and Smith participated in the SEIP. Mr. Stiefler participated in the IPI. Whether a bonus is paid under the SEIP or IPI, the Compensation Committee believes that it is important to exercise judgment and discretion, within the boundaries of the plan guidelines, in determining bonus payments. For this reason, annual bonuses are not paid out according to a pre-determined mathematical formula, but rather with careful analysis and balancing of many factors, including the competitive environment, individual performance, overall corporate performance, prior year compensation and the other factors discussed below. No one factor was assigned specific weighting.

 

The SEIP is a bonus plan administered by the Compensation Committee for a select group of senior executives. As described more fully in Proposal 4 on page 50, the SEIP is a stockholder-approved plan designed to comply with the exception under Section 162(m) of the Internal Revenue Code to the non-deductibility of compensation over $1,000,000 per year for specified individuals. Each year, the Compensation Committee sets a performance target which must be achieved in order for participants in the SEIP to receive a cash bonus award. During the first quarter of fiscal 2007, the Compensation Committee established a revenue target for the SEIP of $2.342 billion, which had to be achieved in order for participants to qualify for a bonus under the SEIP. At the close of the fiscal year, Intuit had exceeded the revenue target. Based on the achievement of this performance hurdle, the Compensation Committee exercised its discretion to determine the amount of bonus to be paid to participants, up to a maximum of $5,000,000

per executive. Though no other performance was required for SEIP participants to receive a bonus under this plan in fiscal 2007, the Compensation Committee considered other factors when determining the actual incentive bonuses awarded. The factors evaluated by the Compensation Committee in establishing specific SEIP bonus amounts with respect to each participant who is a Named Executive Officer are described in more detail below.

 

The IPI is a broad-based discretionary cash bonus plan which, by its terms, is approved and funded on an annual basis by the Compensation Committee based on Intuit’s performance. The plan has a maximum funding limit based on the Company’s operating income performance. Historically, IPI bonuses have been awarded based generally upon Intuit’s funding of the IPI plan and target bonus amounts, but there is no specific performance hurdle which must be achieved in order for individual bonus payments to be made. Individual payout amounts depend on multiple performance criteria, including, but not limited to, evaluations of personal job performance, Intuit’s desire to retain specific employees and Intuit’s performance measured against our annual business and financial plans. As needed to reward and retain key employees, an individual’s actual bonus payments made under the IPI may exceed individual target bonus amounts. The factors evaluated by the Compensation Committee in establishing Mr. Stiefler’s IPI bonus amount are described in more detail below.

 

CEO Cash Incentive Bonus Award

 

Mr. Bennett has served as President and CEO since January 2000. As described above, the Compensation Committee engaged Watson Wyatt to provide a market analysis of Mr. Bennett’s compensation and to assist the Compensation Committee in its review and assessment of Mr. Bennett’s performance and compensation for the fiscal 2007 annual review cycle.

 

In determining the amount of Mr. Bennett’s annual cash incentive bonus award for fiscal 2007 under the SEIP, the Compensation Committee considered many factors, including achievement of fiscal year 2007 financial measures by Intuit and its major business units as well as achievement of long-term strategic and financial goals by Intuit and its major business units.

 

Intuit’s performance against key financial measures for fiscal 2007 is illustrated below:

 

 

Intuit’s performance against key financial measures for the past five years is illustrated below:

 

 

 

*  For a quantitative reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, see Appendix A to this Proxy Statement.

The Committee determined that Intuit’s performance in these areas was outstanding and used this as a factor in determining Mr. Bennett’s annual bonus amount. In addition to the short-term and long-term financial measures above, the Compensation Committee also assessed Mr. Bennett on:

 

 

This is how Mr. Bennett performed against these goals:

 

 

The Compensation Committee considered Mr. Bennett’s performance on all the short-term and long-term financial and individual criteria above and applied its judgment in determining Mr. Bennett’s specific incentive bonus amount. Based on an in-depth review of these factors, the Compensation Committee, after consultation with the Board of Directors without Mr. Bennett present, awarded Mr. Bennett a $3,250,000 incentive bonus for fiscal 2007. The Compensation Committee determined that this bonus award was consistent with Mr. Bennett’s outstanding performance based on short-term and long-term financial and individual criteria established by the Compensation Committee earlier in the fiscal year, as described above. This amount also reflected a year-over-year increase from Mr. Bennett’s fiscal 2006 bonus, which the Compensation Committee felt was merited in light of Intuit’s continued growth. Mr. Bennett’s bonus exceeds that of the other Named Executive Officers because of his responsibility as the leader of Intuit as a whole.

 

Named Executive Officer Cash Incentive Bonus Awards

 

In addition to Intuit’s short-term and long-term financial performance noted in the discussion above regarding Mr. Bennett’s bonus, the Compensation Committee considered a number of other factors in determining the amount of bonus to be paid each other Named Executive Officer. Considerations included the following: (1) the executive pay recommendations made by the Chief Executive Officer with respect to each of the Named Executive Officers; (2) the talent and organizational assessment of these individuals provided by other members of management, including our Senior Vice President of Human Resources; and (3) the scope of the executive’s responsibilities, performance, and anticipated impact or contribution to Intuit’s success and growth.

 

Based on these criteria, the Compensation Committee determined that Mr. Smith delivered a year of successful financial results for the Small Business Division, while leading efforts to improve the division’s long term potential, as demonstrated by improved new user growth in both Intuit’s QuickBooks and Payroll businesses and the improved focus resulting from the sale of a subset of our payroll customers to ADP. In addition, he played a major leadership role within Intuit, including executive sponsorship of the Digital Insight acquisition. Based upon these successes, the Compensation Committee awarded Mr. Smith an incentive bonus of $765,000.

 

The Compensation Committee determined that Mr. Patel played a major leadership role throughout the year as our Chief Financial Officer, and then, in order to continue to help Intuit grow, Mr. Patel took on the leadership of the

Consumer Tax Group in June 2007, while continuing as acting CFO. Based this assessment, the Compensation Committee awarded Mr. Patel an incentive bonus of $683,000.

 

As noted above in the discussion of Mr. Lintner’s base salary increase, the Compensation Committee determined that Mr. Lintner’s strategic business guidance and business development expertise were key to Intuit’s achievement of its long-term objectives. The Compensation Committee reviewed Mr. Lintner’s performance, as described above and determined that he would receive an incentive bonus of $460,000.

 

As noted above, Mr. Stiefler’s bonus was paid under the IPI plan, and, according to the terms of this plan, his actual bonus payment was pro-rated based on his having joined Intuit in February 2007, midway through our fiscal year. Mr. Stiefler was determined by the Compensation Committee to have performed well during his six months with Intuit based on his leadership in integrating Digital Insight with Intuit’s Financial Institutions Division. Based on this performance, Mr. Stiefler’s incentive bonus was $259,000.

 

Mr. Henkse’s employment terminated effective August 10, 2007. Due to his prior role as the Senior Vice President of our Consumer Tax Group, he was eligible to receive a bonus as part of his Transition Terms Agreement with Intuit described under “Potential Payments Upon Termination of Employment or Change in Control” on page 35 below. Based on the strong year and sales growth of the Consumer Tax Group, under Mr. Henske’s leadership, the Compensation Committee awarded him an incentive bonus of $720,000.

 

Long-Term 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 evenly 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 less than 25% of its total equity grants as RSUs in fiscal 2007. For all Senior Vice Presidents, including all of the Named Executive Officers other than the CEO, since fiscal 2006, Intuit has granted RSUs that vest after three years of service, but only if an initial performance hurdle is satisfied by the end of the fiscal year of the date of grant (the “Performance-Based RSUs”).

 

At the end of fiscal 2007, the Compensation Committee determined the amount of stock options and Performance-Based RSUs to be awarded to each Named Executive Officer, based on the performance of Intuit and the individual and the share reserve available. At that same time, the Compensation Committee also determined whether the performance hurdles were achieved for the Performance-Based RSUs awarded in 2006. The stock options awarded were granted at the end of fiscal 2007. The RSUs awarded were granted at the beginning of fiscal 2008, and their vesting is contingent on the achievement of performance hurdles for fiscal 2008.

 

The hurdles for the Performance-Based RSUs awarded in fiscal 2006 and granted in fiscal 2007 required that Intuit’s revenue grow by 10% from fiscal 2006 to fiscal 2007 and that Intuit’s non-GAAP operating income grow by 12% from fiscal 2006 to fiscal 2007. For fiscal 2007, Intuit exceeded both the Performance-Based RSU revenue growth target and non-GAAP operating income growth target. Based on Intuit’s results for fiscal 2007, the Compensation Committee certified the achievement of both hurdles, and therefore certain of the Named Executive Officers will vest in their Performance-Based RSUs awarded in fiscal 2006 on August 1, 2009, provided they continue to provide service to Intuit through that date.

 

Based on fiscal 2007 performance, the Compensation Committee awarded Messrs. Lintner, Patel and Smith options to purchase 50,000, 75,000 and 100,000 shares, respectively. The material terms of these options are described beginning on page 29 under “Grants of Plan-Based Awards in Fiscal Year 2007.” Also based on fiscal 2007 performance, the Compensation Committee awarded Messrs. Lintner, Patel and Smith 17,000, 25,000 and 34,000 Performance-Based RSUs, respectively. As described above, these RSUs were granted in fiscal 2008. The

size of the equity awards for Messrs. Patel and Smith were set based on their roles as leaders of Intuit’s major business units, in proportion to their cash compensation and taking into account their fiscal 2006 equity awards. The size of Mr. Lintner’s equity awards were determined based on his role as a Senior Vice President who does not lead a major business unit and in proportion to his relatively lower cash compensation.

 

As part of Mr. Stiefler’s employment agreement, he was awarded a 100,000 share option grant and 100,000 RSUs in March 2007. In order to incentivize Mr. Stiefler to remain engaged in the integration process in the initial period following the acquisition of Digital Insight Corporation, these options vest over twenty-four months. In an effort to encourage Mr. Stiefler to remain highly motivated to continue the success of Digital Insight Corporation once it became a part of Intuit, Mr. Stiefler’s RSUs vest only upon the achievement of certain revenue and operating income targets set forth for the Intuit Financial Institutions Division. If these targets are achieved by the thirty month anniversary of Intuit’s Acquisition of Digital Insight Corporation, Mr. Stiefler will become 100% vested in these RSUs. Because Mr. Stiefler received these two awards in March 2007, the Compensation Committee did not grant him any additional equity awards during the annual performance review cycle.

 

CEO Long-Term Incentive Awards

 

Throughout his tenure at Intuit, the Compensation Committee has tried to create a total compensation package for Mr. Bennett that is specifically tailored to provide him with both short and long-term incentives. Mr. Bennett’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.

 

In fiscal 2005, Mr. Bennett was granted a 100,000-share RSU with performance-based vesting criteria based on growth of Intuit’s net revenue and non-GAAP operating income for fiscal 2006. These criteria were satisfied in fiscal 2006 and Mr. Bennett was scheduled to vest in the 100,000 shares on July 29, 2008. Because Mr. Bennett entered into a Transition Agreement on August 21, 2007, as described more fully under the “Potential Payments Upon Termination of Employment or Change in Control” on page 35 below, 80,555 of the 100,000 shares will vest upon Mr. Bennett’s ceasing to be CEO on January 1, 2008. Mr. Bennett will vest in the remaining 19,445 shares on July 31, 2008, provided he continues to provide service to Intuit through that date.

 

In fiscal 2007, Mr. Bennett was granted 100,000 RSUs with performance-based vesting criteria based on growth of Intuit’s net revenue and non-GAAP operating income for fiscal 2007 and fiscal 2008. Mr. Bennett vested in 50% of the shares on July 31, 2007 because the performance hurdles for those RSUs were reached, as discussed above. Because Mr. Bennett entered into a Transition Agreement on August 21, 2007, as described more fully under “Potential Payments Upon Termination of Employment or Change in Control” beginning on page 35 below, 20,833 of the remaining 50,000 RSUs will vest upon Mr. Bennett’s ceasing to be CEO on January 1, 2008. Mr. Bennett will vest in the remaining 29,167 shares on July 31, 2008 if certain financial performance criteria for fiscal 2008 are reached (including increased net revenue and increased non-GAAP operating income), provided Mr. Bennett continues to provide service to Intuit through that date.

 

Pursuant to the terms of the Transition Agreement Intuit entered into with Mr. Bennett on August 21, 2007, as described more fully beginning on page 35, Mr. Bennett was granted an additional 50,000 stock options and 50,000 RSUs on August 24, 2007 once the CEO transition plan was put into place. These awards were granted to Mr. Bennett by the Compensation Committee in order to retain and motivate Mr. Bennett for the transition year and ensure his engagement in succession planning and seamless execution of Intuit’s fiscal 2008 strategy, as Mr. Smith assumes the CEO role on January 1, 2008.

 

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”) which replaced Intuit’s prior matching award program. Under the MSPP, employees with a title of director or above (including the Named Executive Officers) have the opportunity to elect to defer up to 15% of their annual incentive bonus. This deferral is converted into RSUs, based on the fair market value of Intuit’s stock on the date such bonus is awarded. Intuit will grant the executive an additional RSU for every RSU purchased through such deferral, up to set maximums. These matching RSUs will vest as to 100% of

the shares subject to the award 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, in accordance with the terms and conditions set forth therein.

 

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 2007 relate to relocation benefits.

 

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

 

The Compensation Committee was supported by Intuit’s Human Resources Department. 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, a representative of Intuit’s Legal and Compliance Organization 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 development and succession planning. Both Mr. Bennett, our CEO, and Mr. Patel, our CFO, have provided the Compensation Committee with guidance and perspective from time to time. The CFO 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 and the Performance-Based RSUs. Mr. Bennett provided recommendations to the Compensation Committee regarding the cash and equity compensation of his executive staff and met informally with members of the Compensation Committee and the chairman to discuss succession planning and organizational development. In addition, Mr. Bennett provided a written self-review to the Compensation Committee in order to aid their evaluation of his performance for the 2007 fiscal year.

 

The Compensation Committee determines the compensation for Mr. Bennett after conferring with the Board, without Mr. Bennett present. In determining compensation for the Named Executive Officers other than the CEO, the Compensation Committee considered Mr. Bennett’s recommendations. The Compensation Committee is, however, solely responsible for making the final decisions on compensation for the Named Executive Officers including the CEO.

 

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 VP, 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. This review resulted in the identification and appointment of Mr. Smith as Mr. Bennett’s successor and certain other executive appointments throughout fiscal 2007.

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 SFAS 123(R), which requires us to estimate and record and expense over the service period of the award. The SFAS 123(R) cost of outstanding equity awards is considered by management as part of our equity grant recommendations to the Compensation Committee. Beginning in fiscal 2006, we generally reduced our use of stock options and increased our use of restricted stock awards in order to reduce our SFAS 123(R) expense.

 

Under Section 162(m) of the Internal Revenue Code, compensation in excess of $1,000,000 per year to those executives whose compensation is detailed in the Summary Compensation Table (see page 27) 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. Although not required by law to do so, Intuit has taken steps so that most executive compensation is deductible, including the use of performance-based equity incentives and the stockholder approved Senior Executive Incentive Plan. Our Performance-Based RSUs are intended to qualify as “performance-based,” so that compensation attributable to those awards is fully tax deductible. Although we currently provide compensation to executives in forms that do not meet the requirements for “performance-based” compensation, such as base salary, annual incentive pay and restricted stock, Mr, Bennett is our only executive with non-performance based compensation in excess of the Section 162(m) tax deduction limit. Certain income received by the CEO in fiscal 2006 when he vested in part of two restricted stock grants that he received when he was hired in January 2000 were not deductible by Intuit under Section 162(m).

 

Intuit does not expect that the deductibility of compensation to officers other than the CEO will be affected by the limitations of Section 162(m) in fiscal 2007. Intuit expects that the only significant amount of non-deductible compensation paid to the CEO in fiscal 2007 will be the $100,000 of his base salary in excess of $1,000,000. However, since corporate objectives may not always be consistent with the requirements for full deductibility, it is conceivable that 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 pay programs, particularly our equity pay 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 provide a “net issue” opportunity to employees to assist them with the tax withholding requirements that apply to restricted stock.

 

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. In the event an executive is promoted within this five year period, the individuals’ share ownership requirement increases.

 

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. 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.

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table shows compensation earned during fiscal 2007 by our CEO, our CFO, our three other most highly compensated executive officers for fiscal 2007 and one former executive officer. 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 35.

 

 

 

 

MSPP Deferrals:

 

 

 

Grants of Plan-Based Awards in Fiscal Year 2007

 

The following table provides information about performance-based equity awards granted under our 2005 Equity Incentive Plan to the Named Executive Officers during fiscal 2007 and cash awards for which the Named Executive Officers were eligible in fiscal 2007 under our cash incentive plans.

 

 

 

 

The following table provides information about stock options granted under our 2005 Equity Incentive Plan to the Named Executive Officers during fiscal 2007.

 

 

 

 

 

Outstanding Equity Awards at Fiscal 2007 Year-End

 

The following table provides information with respect to outstanding stock options held by the Named Executive Officers as of July 31, 2007.

 

 

 

 

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, 2007. The market value of the awards is determined by multiplying the number of unvested shares or units by $28.64, the closing price of Intuit’s common stock on NASDAQ on July 31, 2007.

 

 

 

 

Option Exercises and Stock Vested in Fiscal Year 2007

 

The following table shows information about stock option exercises and vesting of RSUs and restricted shares for each of the Named Executive Officers during fiscal 2007, including the value realized upon exercise or vesting.

 

 

 

 

Non-Qualified Deferred Compensation for Fiscal Year 2007

 

The following table shows the non-qualified deferred compensation activity for each Named Executive Officer during fiscal year 2007.

 

 

 

 

In 2007, we adopted a new Non-Qualified Deferred Compensation Plan (the “NQDCP”) that will become effective January 1, 2008. We adopted the NQDCP to meet the requirements of the new restrictions on deferred compensation under Section 409A of the Internal Revenue Code. The NQDCP was designed to generally track the provisions of our 2005 Non-Qualified Deferred Compensation Plan, effective January 1, 2005, and the original Executive Deferred Compensation Plan that became effective March 15, 2002. All deferrals for compensation that

would otherwise be payable on or after January 1, 2008 and employer contributions made on or after January 1, 2008 are credited to participants under the new NQDCP. No new deferrals or contributions will be made to the 2005 Non-Qualified Deferred Compensation Plan or the original plan. The NQDCP and the 2005 Non-Qualified Deferred Compensation Plan provide that executives who meet minimum compensation requirements are eligible to defer up to 50% of their salaries and up to 90% of their bonuses. We have agreed to credit the participants’ contributions with earnings that reflect the performance of certain independent investment funds. We may also make discretionary employer contributions to participant accounts in certain circumstances. The timing, amounts and vesting schedules of employer contributions are at the sole discretion of the Compensation Committee or its delegate. The benefits under this plan are unsecured and are general assets of Intuit. Participants are generally eligible to receive payment of their vested benefit at the end of their elected deferral period or after termination of their employment with Intuit for any reason or at a later date to comply with the restrictions of Section 409A. Discretionary company contributions and the related earnings vest completely upon the participant’s disability, death or a change of control of Intuit.

 

Potential Payments Upon Termination of Employment or Change in Control

 

Described below are the individual arrangements Intuit has entered into with each of our Named Executive Officers and the estimated payments and benefits that would be provided under such arrangements, assuming that the executive’s employment terminated under certain circumstances as of July 31, 2007, and using the closing price of our common stock on July 31, 2007 ($28.64 per share).

 

As a general matter, certain benefits which are included in the tables provided below are provided to all recipients of Intuit equity awards, not solely to Named Executive Officers. For example, Intuit’s options and RSUs generally provide for 100% acceleration of vesting upon termination due to death or disability. Additionally, Intuit’s options generally provide for one year of accelerated vesting upon a recipient’s involuntary termination within one year following a change in control (“CIC”), as defined in our 2005 Equity Incentive Plan. Intuit’s RSUs generally provide for pro rata accelerated vesting upon a recipient’s involuntary termination within one year following a change in control or upon a recipient’s retirement, as defined in the applicable plan document. None of the Named Executive Officers would have been eligible for retirement, for purposes of such RSU vesting acceleration, had they been terminated as of July 31, 2007.

 

Intuit does not provide for any special severance payments or acceleration of equity upon a Named Executive’s termination for cause or resignation without good cause. Upon termination of employment for any reason, participants in the NQDCP will be eligible to receive their vested benefits under that plan, as described above under “Non-Qualified Deferred Compensation for Fiscal Year 2007.”

 

In April 2007, Intuit put in place a Long-Term Executive Disability Plan (the “Executive Disability Plan”) for employees with the title of director or above. Under the Executive Disability Plan, if a participant suffers a long-term disability, as defined in the applicable plan document, this insured plan provides for salary restoration up to $8,000 per month over the benefits provided by Intuit’s Long-Term Disability Plan for all employees, until the earlier of the cessation of the disability or the participant reaching age 65. None of the Named Executive Officers would have been eligible for benefits under the Executive Disability Plan if they had terminated due to disability on July 31, 2007, because the plan’s initial eligibility period had not been completed.

 

Stephen M. Bennett