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 2008 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

You are cordially invited to attend our 2008 Annual Meeting of Stockholders, which will be held at 8:30 a.m. Pacific Standard Time on December 16, 2008 at our offices at 2600 Casey Avenue, Building 9, Mountain View, California 94043. We will also offer a webcast of the annual meeting at http://www.intuit.com/about_intuit/investors/webcast.jhtml.

 

We are holding the meeting to:

 

 

Items 1 through 3 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 21, 2008 may vote at the meeting, or at any adjournment or postponement of the meeting. For 10 days prior to the annual meeting, a list of stockholders eligible to vote at the meeting will be available for review during our regular business hours at our headquarters at 2700 Coast Avenue, Mountain View, California 94043. If you would like to view the stockholder list, please call Intuit Investor Relations at (650) 944-3560 to schedule an appointment.

 

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials, over the Internet or by telephone, as promptly as possible. You may also request a paper proxy card to submit your vote by mail, if you prefer. We encourage you to vote via the Internet. It is convenient and saves us significant postage and processing costs.

 

By order of the Board of Directors,

 

 

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

 

Mountain View, California

October 31, 2008

INTUIT INC.

 

PROXY STATEMENT 2008 ANNUAL MEETING OF STOCKHOLDERS

 

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

 

PROXY STATEMENT FOR THE
2008 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. 2008 Annual Meeting of Stockholders (the “Meeting”) and at any adjournment or postponement of the Meeting for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. We are holding the Meeting on Tuesday, December 16, 2008 at 8:30 a.m. Pacific Standard Time at our offices at 2600 Casey Avenue, Building 9, Mountain View, California 94043. We have first released this proxy statement to Intuit stockholders beginning on October 31, 2008.

 

Internet Availability of Proxy Materials

 

As we did last year, we are now furnishing proxy materials to our stockholders on the Internet, rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice of Internet Availability will instruct you as to how you may access and review the proxy materials and cast your vote on the Internet. If you received a Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability.

 

We anticipate that the Notice of Internet Availability will be mailed to stockholders on or about October 31, 2008.

 

Record Date, Outstanding Shares and Quorum

 

Only holders of record of Intuit common stock at the close of business on October 21, 2008 (called the “Record Date”) will be entitled to vote at the Meeting. On the Record Date, we had approximately 322,534,622 shares outstanding and entitled to vote, held by approximately 792 stockholders of record and approximately 78,984 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 to vote your shares at the Meeting. All stockholders have three options for submitting their vote prior to the Meeting:

 

 

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

 

If you sign and return your proxy card but do not give any voting instructions, your shares will be voted in favor of the election of each of the director nominees listed in Proposal 1 and in favor of Proposals 2 and 3. 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 and 3. 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. Proposal 3 is not considered a routine matter, and without your instruction, your broker cannot vote your shares. If a broker, bank, custodian, nominee or other record holder of Intuit stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular matter, these shares (called “broker non-votes”) will also be counted as present in determining whether we have a quorum but will not be counted for the purpose of determining the number of votes cast on a specific proposal.

 

Soliciting Proxies

 

Intuit will pay all expenses of soliciting proxies to be voted at the Meeting. After the proxies are initially distributed, Intuit and/or its agents may also solicit proxies by mail, electronic mail, telephone or in person. We have hired a proxy solicitation firm, Innisfree M&A Incorporated, to assist us in soliciting proxies. We will pay Innisfree a fee of $7,500 plus their expenses, which we estimate will be approximately $7,000. We will ask brokers, custodians, nominees and other record holders to prepare and send a Notice of Internet Availability of Proxy

Materials to people 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, 2009.

 

Delivery of Voting Materials to Stockholders Sharing an Address

 

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

 

How to Obtain a Separate Set of Voting Materials

 

If you received a householded mailing this year, and you would like to have additional copies of our Notice of Internet Availability of Proxy Materials, annual report on Form 10-K and proxy materials, as applicable, mailed to you, please submit your request to Investor Relations, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California, 94039-7850, or call (650) 944-3560. 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, 2008 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 currently consists of eleven directors, all of whom 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), three directors who are employees of Intuit, and one director who was an employee of Intuit during fiscal 2008. Stockholders elect all directors annually.

 

The authorized number of directors is currently eleven. 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 54)
Former President and Chief Executive Officer, Intuit Inc.

 

Mr. Bennett served as Intuit’s President and Chief Executive Officer from January 2000 to January 2008 and has been a member of Intuit’s Board of Directors since January 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 boards of directors of Qualcomm Incorporated and Sun Microsystems, Inc. He holds a Bachelor of Arts in Finance and Real Estate from the University of Wisconsin.

 

Christopher W. Brody (Age 63)
Chairman, Vantage Partners LLC

 

Mr. Brody has been an Intuit director since 1993 and is a member of the Acquisition Committee, the Compensation and Organizational Development Committee and the Nominating and Governance Committee. Mr. Brody has been Chairman of Vantage Partners LLC, a private investment firm, since January 1999. From 1971 through 1998, Mr. Brody was a partner of Warburg, Pincus & Co., a venture capital and private equity investment firm. Mr. Brody also serves as a director of several privately held companies. Mr. Brody holds a Bachelor of Arts in English Literature from Harvard College and a Master in Business Administration from Harvard Business School.

 

William V. Campbell (Age 68)
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 until January 2000. He also 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. 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 56)
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 Chairman of the Board of Intuit 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 53)
Former President and CEO, VMware, Inc.

 

Ms. Greene has been an Intuit director since August 2006 and is a member of the Audit Committee. She co-founded VMware, a developer and provider of software for virtualized desktops, servers, storage and networking, in 1998, and served as its chief executive officer and president until July 2008. Before co-founding VMware, Ms. Greene held technical leadership positions at Silicon Graphics, Tandem, and Sybase and was chief executive officer of VXtreme. Ms. Greene is a member of The MIT Corporation, the board of trustees of the Massachusetts Institute of Technology, and serves on the Stanford School of Engineering Advisory Board. 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 63)
President, The Hallman Group

 

Mr. Hallman has been an Intuit director since 1993 and is the Chairman of the Compensation and Organizational Development Committee. Mr. Hallman has been President of The Hallman Group, a management consulting firm, since October 1992. Mr. Hallman was President and Chief Operating Officer of Microsoft Corporation from March 1990 through April 1992. Mr. Hallman 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 64)
Non-employee Chairman, Tenet Healthcare

 

Mr. Kangas has been a director of Intuit since July 2007 and is a member of the Compensation and Organizational Development Committee. He has been chairman of Tenet Healthcare, an owner/operator of acute care hospitals and related healthcare services, since July 2003 and served as a director since April 2003. From 1989 to 2000, Mr. Kangas was global chairman and chief executive officer of Deloitte. He also served as the managing partner of Deloitte & Touche (USA) from 1989 to 1994. Mr. Kangas is also a director of United Technologies Corporation, Eclipsys 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 51)
Senior Director, The Goldman Sachs Group

 

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

 

Dennis D. Powell (Age 60)
Executive Advisor and former Chief Financial Officer, Cisco Systems, Inc.

 

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

 

Stratton D. Sclavos (Age 47)
Partner, Radar Partners

 

Mr. Sclavos has been an Intuit director since 2001 and is a member of the Nominating and Governance Committee. He has been a partner at Radar Partners since November 2007. Previously, he served as President, Chief Executive Officer and a director of VeriSign, Inc., a provider of intelligent infrastructure services for networks, from July 1995 to May 2007, and Chairman of its board of directors from December 2001 to May 2007. Mr. Sclavos is also a director of Juniper Networks, Inc. (an internet infrastructure systems provider), and Salesforce.com (a

provider of customer relationship management services). Mr. Sclavos holds a Bachelor of Science in Electrical and Computer Engineering from the University of California, Davis.

 

Brad D. Smith (Age 44)
President and Chief Executive Officer, Intuit Inc.

 

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

 

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

 

We maintain a corporate governance page on our company website that includes key information about corporate governance matters, including copies of our Corporate Governance Principles, our code of conduct and ethics for all employees, including our company’s senior executive and financial officers, our Board Code of Ethics and the charter for each Board committee. The link to this corporate governance page can be found at www.intuit.com/about_intuit/investors/corporate_gov.

 

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 seven meetings during fiscal 2008. The independent directors meet without management present at regularly scheduled executive sessions at each quarterly Board meeting. During fiscal 2008, 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.

 

Our Board currently includes seven independent directors, all of whom are standing for election. To be considered independent under NASDAQ rules, a director may not be employed by Intuit or engage in certain types of business dealings with Intuit. In addition, as required by NASDAQ rules, the Board has made a determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the directors and by the company with regard to each director’s business and personal activities as they relate to Intuit and Intuit’s management. Based on this review, the Board has determined that Mr. Brody, Ms. Greene, Mr. Hallman, Mr. Kangas, Ms. Nora Johnson, Mr. Powell and Mr. Sclavos are independent directors.

 

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. Ms. Greene, Ms. Nora Johnson, Mr. Powell and Mr. Sclavos are, or were during fiscal 2008, 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 and Ms. Nora Johnson sit on the boards of charitable foundations to which Intuit has made employee matching contributions in amounts that are immaterial to both Intuit and the foundations. Following review of these transactions and other relevant standards, the Board determined that each of these directors is independent under NASDAQ rules.

 

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

 

No director attended less than 75% of the aggregate number of meetings of the Board and the committees on which he or she served, with the exception of Diane Greene who attended approximately 68% of the aggregate number of meetings of the Board and the committees on which she served during fiscal 2008. Three directors attended the 2007 Annual Meeting of Stockholders. Under the Corporate Governance Principles, all directors are encouraged to attend the annual meetings of Intuit’s stockholders.

 

The Board currently has a standing Acquisition Committee, Audit 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.

 

 

The Acquisition Committee was established on January 16, 2008 to review and approve acquisition, divestiture and investment transactions proposed by Intuit’s management in which the total consideration to be paid or received by Intuit does not exceed the limits that may be established by the Board from time to time.

 

In fiscal 2008, the Acquisition Committee held two meetings.

 

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 2008, the Audit Committee held twelve meetings. The responsibilities and activities of the Audit Committee are described in greater detail in “Audit Committee Report” on page 39.

 

The Compensation and Organizational Development Committee (the “Compensation Committee”) assists the Board in the review and approval of executive compensation and the oversight of organizational and management development for executive officers and other employees of Intuit. Each member of this committee is independent under NASDAQ listing standards and is an “outside” director as defined in the Internal Revenue Code of 1986, as amended (the “Code”), and a “Non-Employee Director,” as defined in Rule 16(b)-3 under the Securities Exchange Act of 1934. The committee met ten times in fiscal 2008. 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 on the responsibilities and activities of the Compensation Committee, including the committee’s processes for determining executive compensation, see the “Compensation and Organizational Development Committee Report” on page 17 and “Compensation Discussion and Analysis” beginning on page 17.

 

The Compensation Committee is also responsible for reviewing the compensation for non-employee directors on an annual basis and making recommendations to the Board, in the event they determine changes are needed. As part of its review of non-employee director compensation, the Compensation Committee generally receives input from a variety of research sources including an independent compensation consultant, currently Watson Wyatt. The consultant regularly provides the Compensation Committee with general market practices and trends. In addition, we periodically measure and benchmark our non-employee director compensation against a certain peer group of companies.

 

The Nominating and Governance Committee reviews and makes recommendations to the Board regarding Board composition and appropriate governance standards. The Nominating and Governance Committee held two meetings in fiscal 2008.

 

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.

 

No executive officer of Intuit during fiscal 2008 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.

 

Our non-employee directors receive a combination of equity and cash compensation for serving on our Board. Our three directors who are company employees — Mr. Smith, Mr. Cook and Mr. Campbell — do not receive board fees or equity for their Board service. In addition, Mr. Bennett did not receive board fees or equity for his Board service in fiscal 2008 because he was an employee or consultant of Intuit during the entire fiscal year. He will receive board fees and equity for his Board service beginning in fiscal 2009. 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 October 2008 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 2008 compensation earned by each member of the Board other than Mr. Smith and Mr. Bennett, whose compensation is described under “Executive Compensation” beginning on page 27.

 

 

 

 

 

The following table shows each option grant made to our non-employee directors during fiscal 2008, 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.

 

 

The following table provides information on the outstanding equity awards for our directors, other than Mr. Smith and Mr. Bennett, as of July 31, 2008.

 

 

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

 

 

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

 

All options granted to non-employee directors in fiscal 2008 were made pursuant to a shareholder-approved non-discretionary formula set forth in our 2005 Equity Incentive Plan (the “Plan”). The exercise price for each option granted to a non-employee director is the fair market value of Intuit’s stock on the grant date. Pursuant to the terms of the Plan’s non-discretionary formula, each initial option grant is granted on the date a non-employee board member (who is not a former employee of Intuit) 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. If Proposal No. 3 is approved, non-employee directors who are former employees of Intuit will be entitled to receive the automatic option grants for their Board and committee service. For more information, see “Proposal No. 3 — Approval of an

Amendment to the 2005 Equity Incentive Plan” beginning on page 42. The automatic option grant amounts are listed 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.

 

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

 

 

Stockholder Communications with the Board

 

The Nominating and Governance Committee is responsible for receiving stockholder communications on behalf of the Board. Any stockholder may send communications by mail to the Board or individual directors c/o Corporate Secretary, Intuit Inc., P.O. Box 7850, Mail Stop 2700, Mountain View, California 94039-7850 or via our website at 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 2009 Annual Meeting of Stockholders

 

Any stockholder who intends to present a proposal for inclusion in Intuit’s 2009 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 3, 2009. Any stockholder who wishes to bring a proposal or nominate a person for election to the Board at the 2009 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, 2009 and September 30, 2009. 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 Table

 

The following table shows shares of Intuit’s common stock that we believe are owned as of September 30, 2008 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 324,098,018 shares of common stock outstanding on September 30, 2008. 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, 2008, and (2) shares issuable upon settlement of restricted stock units that are vested, or will become vested within 60 days of September 30, 2008. 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 2008.

 

Set out below is the Compensation Discussion and Analysis, which is a discussion of Intuit’s executive compensation programs and policies written from the perspective of how we and management view and use such policies and programs. We strive to ensure that Intuit’s compensation programs are fiscally responsible, market responsive and performance based. Guided by these principles we regularly review and monitor senior management’s compensation, as well as their potential for larger leadership roles, to produce the greatest value for Intuit’s three stakeholders — employees, customers and stockholders. To this end, the Compensation and Organizational Development Committee has reviewed the components of compensation paid to each of Intuit’s officers for fiscal 2008, including annual base salary, target incentive bonus and equity compensation.

 

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

 

Michael R. Hallman (Chair)

Christopher W. Brody

Edward A. Kangas

 

The Compensation and Organizational Development Committee (the “Compensation Committee”) oversees Intuit’s compensation plans and policies, approves the compensation of our executive officers and administers our stock compensation plans. This Compensation Discussion and Analysis (“CD&A”) contains a discussion and analysis of the compensation approved by the Compensation Committee and paid for fiscal 2008 to the executive officers named below (the “Named Executive Officers”) and included in the “Summary Compensation Table” on page 27:

 

 

Compensation Philosophy and Objectives

 

The Compensation Committee awards compensation to our executives based primarily on the following areas of corporate and individual performance: revenue growth, operating income growth, and progress toward operational and strategic plans that position Intuit for continued growth. Tying rewards to success in advancing these three objectives demonstrates the Compensation Committee’s focus on performance-based compensation. Our compensation packages are designed to help Intuit acquire, retain and motivate talented executives with proven

experience in achieving these objectives, and a large portion of each executive’s cash bonus and long-term equity compensation is tied to the accomplishment of these objectives. We carefully manage equity compensation to provide competitive rewards that are commensurate with results delivered, while limiting dilution to stockholders as much as possible. The majority of our restricted stock units granted to senior executives vest only upon achievement of designated financial targets, and our stock options provide value to our executives only if Intuit’s stock price increases following the date of grant.

 

In making compensation decisions for our senior executives, the Compensation Committee considered the following measures of Intuit’s strong fiscal 2008 financial performance:

 

 

Historically, we have used non-GAAP operating income in making compensation decisions because we believe it best measures Intuit’s financial performance. On a GAAP basis, Intuit’s operating income grew 2% over fiscal 2007. Appendix A to this proxy statement includes a reconciliation of non-GAAP operating income to the most comparable GAAP measure.

 

Compensation varies each year among our senior executives and varies year-over-year for each executive 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 executive’s base salary for the coming year, incentive cash bonus for the prior year and the amount of any long-term equity awards. These compensation decisions are based on objective criteria of revenue and operating income growth, and on more subjective criteria of overall leadership in the executive’s business or functional area and the executive’s impact on Intuit’s operational and strategic plans, including development of talent and leadership and employee engagement.

 

Using these criteria, the Compensation Committee rewarded the key executives for Intuit’s strong performance in fiscal 2008 and provided incentives designed to retain and motivate our most talented and experienced executives for the longer term.

 

Elements of Compensation

 

Each major component of compensation is structured to provide significant differentiation among our executive officers 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 executives in the near term for achieving strong performance, while equity incentives motivate executives to sustain strong performance and increase stockholder value in the longer term. In determining the amount of the cash and equity incentives, the Compensation Committee considers each officer’s total compensation for both the short and long-term to assess the retentive value of the compensation package. The percentage of a Named Executive Officer’s potential compensation award that is performance-based is determined primarily by the executive’s role and scope of responsibilities at Intuit. Our Named Executive Officers have the ability to directly influence overall company performance and, as a result, have a greater portion of their pay tied to short and long-term incentive programs than most other Intuit employees.

 

Significant changes in our senior leadership team during fiscal 2008 also affected the compensation decisions for certain of our executive officers. In particular, Intuit announced in August 2007 that Mr. Smith would become Intuit’s new CEO, succeeding Mr. Bennett in January 2008. In September 2007, Mr. Goodarzi was promoted to Senior Vice President to lead our Financial Institutions Division, and in January 2008, Mr. Williams became Intuit’s new CFO. The effects of these decisions on compensation are discussed in more detail later in this CD&A.

Competitive Data

 

In fiscal 2008, as in prior years, the Compensation Committee engaged Watson Wyatt to provide a comprehensive market study of compensation paid to Mr. Smith and Intuit’s senior leadership team. The data for this study came from two sources: (1) annual reports and proxy statements of a peer group of comparable companies described below; and (2) published surveys of companies in the technology sector with revenue in a comparable range, as described below. The peer group and survey companies approved by the Compensation Committee are primarily technology companies, most of which compete with Intuit for business or for executive personnel. These companies also have one or more of the following attributes that make them similar to Intuit:

 

 

Watson Wyatt and representatives of Intuit’s Human Resources/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:

 

 

Several changes were made to our select peer group this year. Three companies that were included in our peer group for fiscal 2007, BEA Systems, Checkfree and First Data Corp., were acquired by other companies in the last year and were accordingly excluded from our 2008 peer group. Two companies, Cisco Systems and Sun Microsystems, significantly exceed our revenue parameter and were excluded as a result. Two other 2007 peer group companies, McAfee and Synopsys, were excluded due to their smaller size and growth rates. DST Systems was also eliminated due to its lesser degree of comparability in business and location.

 

Five new companies were added to our 2008 peer group to replace or better represent comparable companies to Intuit. Autodesk, Metavante, Western Union, VMware, and Qualcomm were selected based on their relevant size, industry and market focus.

 

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 2008 Study”). This benchmarking data provided to the Compensation Committee also included an assessment of 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 was used as a reference point in determining whether each executive’s compensation level and opportunity properly reflects the executive’s role and scope of responsibilities. In establishing compensation levels, the Compensation Committee also gave significant weight to factors related to the individual’s accomplishments, skills and capabilities as well as their leadership skills and performance.

 

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 2008. The Compensation Committee compared these compensation components separately, and in total, to compensation at the peer group companies in an effort to set aggregate total compensation for each Named Executive Officer in the top quartile of peers surveyed. As a result, according to the competitive data reviewed, Intuit’s base pay and cash incentive compensation opportunities for our Named Executive Officers, were highly competitive with the market, and Intuit’s total compensation opportunities were in the top quartile of the peer companies for analogous positions at peer companies.

 

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 payment for services rendered. For Named Executive Officers, as is the case for all other employees, base salaries are evaluated at year-end and may be increased to reflect strong or outstanding performance. In the event of a promotion during the year, base salaries may be increased at mid-year to reflect increased responsibilities.

 

Mr. Smith was promoted to President and Chief Executive Officer effective January 1, 2008. In October 2007, we entered into a new employment contract with Mr. Smith which specified the terms of his compensation as CEO, including an increase in his base salary from $600,000 to $800,000. The Committee analyzed Mr. Smith’s compensation at that time and determined it was appropriate in light of the competitive market for CEO talent and Mr. Smith’s expanded responsibilities as CEO.

 

Mr. Goodarzi was promoted to Senior Vice President and General Manager of our Financial Institutions Division effective September 1, 2007, and the Compensation Committee approved a salary increase from $425,000 to $540,000 (and a bonus target increase from 50% to 65%) at that time, to reflect Mr. Goodarzi’s expanded role and responsibilities as leader of this significant business unit, which required Mr. Goodarzi to relocate from Texas to California.

 

Mr. Lintner’s role was also expanded during 2008 to include leadership of our newly created Global Business Division, in addition to leadership of our Strategy and Corporate Development Group. In consideration of the expanded responsibilities of Mr. Lintner in this dual role, the Compensation Committee approved an increase in his salary from $560,000 to $585,000, effective in August 2008.

 

In July 2008, near the end of our fiscal year, the Compensation Committee reviewed the base salaries of our Named Executive Officers and determined that the salaries of Mr. Smith, Mr. Patel, and Mr. Goodarzi were appropriately competitive and would not be increased, based on the committee’s evaluation of the competitive data. The Compensation Committee increased Mr. Williams’ salary from $550,000 to $600,000, effective in August 2008, based on the committee’s determination that Mr. Williams had performed at an outstanding level during his first seven months at Intuit.

 

Cash Incentive Bonus Awards

 

Each of Intuit’s Named Executive Officers has an annual bonus target that is a stated percentage of base pay, which is determined by the executive’s role within Intuit. Mr. Smith has a bonus target of 120% of base salary; Messrs. Williams and Patel, each have a bonus target of 75% of base salary; Mr. Goodarzi has a bonus target of 65% of base salary and Mr. Lintner has a bonus target of 60% of base salary. The bonus targets of the Named Executive Officers were all set by the Compensation Committee based on the scope and significance of their roles as the leaders of Intuit, its most significant business units or its major functions. The bonus targets for Mr. Patel and

Mr. Lintner remained unchanged from fiscal 2007. Mr. Smith’s target increased from 75% to 120% in connection with his appointment as CEO. Mr. Goodarzi’s target increased from 50% to 65% in connection with his promotion to Senior Vice President and General Manager of Intuit’s Financial Institutions Division. 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 for fiscal 2008 exceeded these targets, based on individual and overall company performance.

 

In general, 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”). The SEIP is a bonus plan administered by the Compensation Committee for a select group of senior executives and 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 to receive a cash bonus award under the SEIP. By contrast, the IPI is a broad-based discretionary cash bonus plan that is approved and funded on an annual basis by the Compensation Committee based on Intuit’s performance. Unlike the SEIP, there is no specific performance hurdle that must be achieved for bonus payments to be made under the IPI. Individual payout amounts are based on performance criteria, including personal job performance, Intuit’s desire to retain the specific employee and Intuit’s business and financial performance. Messrs. Smith, Patel, Lintner and Goodarzi participated in the SEIP, while Mr. Williams participated in the IPI for 2008.

 

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 overall corporate performance, based on revenue and operating income growth, and individual performance, based on leadership and impact on operational and strategic plans for growth. The factors are not assigned specific weights.

 

During the first quarter of fiscal 2008, the Compensation Committee established a target of $2.8 billion in Company revenue as the performance hurdle for the SEIP. At the close of fiscal 2008, the Compensation Committee certified that Intuit had exceeded the revenue target, and the committee exercised its discretion to determine the specific cash bonuses to be paid to SEIP participants, subject to a limitation of $5,000,000 per executive.

 

Though no other performance was required for SEIP participants to receive a bonus under this plan in fiscal 2008, the Compensation Committee also considered the following key financial measures in determining the actual incentive bonuses awarded to individual executives.

 

 

The Committee determined that Intuit’s performance in these areas was strong and used this as a factor in determining the Named Executive Officer’s annual bonus amounts.

 

The Compensation Committee also considered each Named Executive Officer’s leadership and impact on progress toward one-year operational and longer-term strategic plans in the context of the executive’s respective business unit or functional area. The committee’s goal in setting cash bonus amounts was to reward leaders for their roles in building and reinforcing operational and strategic plans that position Intuit for growth and enhance stockholder value over time.

 

In determining the amount of Mr. Smith’s annual cash incentive bonus award for fiscal 2008 under the SEIP, the Compensation Committee considered his impact on one-year operational and longer-term strategic plans. In

particular, the Compensation Committee determined that Mr. Smith had delivered outstanding performance on the following one-year operational goals which were established by the committee earlier in the year:

 

 

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

 

 

The Compensation Committee evaluated Mr. Smith’s performance based on his leadership and achievement of these short-term and long-term goals and, after consulting with the Board of Directors without Mr. Smith present, the committee applied its judgment to determine that Mr. Smith would receive a cash incentive bonus of $1,700,000 for fiscal 2008. The committee determined that this bonus award was consistent with Mr. Smith’s outstanding performance of the goals described above. Mr. Smith’s bonus exceeds that of the other Named Executive Officers because of his responsibility as the leader of Intuit as a whole.

 

The Compensation Committee also determined the cash bonuses paid to our other executive officers, based on Intuit’s revenue and operating income growth and each executive’s leadership and progress toward one-year operational and longer-term strategic plans in the context of their respective business units or functional areas. In evaluating executive performance, the Compensation Committee considered: (1) the performance evaluation and pay recommendations made by the CEO; (2) the assessment of these individuals and their roles in Intuit provided by other members of management, including our Senior Vice President of Human Resources; and (3) the scope of the executive’s responsibilities.

 

Based on these criteria, the Compensation Committee determined that Mr. Patel played a major leadership role throughout the year as leader of our Consumer Tax Group for the entire year and as acting Chief Financial Officer for five months of the year. Based on this assessment, the Compensation Committee awarded Mr. Patel an incentive bonus of $800,000.

 

The Compensation Committee determined that Mr. Lintner delivered outstanding performance in both his role as Senior Vice President of Strategy and Corporate Development and his expanded role in leading the Global Business Division. The committee determined that his strategic business guidance and business development expertise were key to Intuit’s achievement of its long-term objectives. Based on its review, the Compensation Committee determined that Mr. Lintner would receive a cash bonus of $485,000.

In connection with Mr. Goodarzi’s expanded responsibilities as the general manager of our Financial Institutions Division, and based on his leadership of that division, Mr. Goodarzi received a cash bonus of $395,000 under the SEIP.

 

The Compensation Committee also awarded Mr. Williams a cash bonus of $400,000, as guaranteed under his employment agreement dated November 2, 2007. This bonus was paid under Intuit’s IPI Plan, rather than the SEIP, because Mr. Williams joined Intuit after the performance targets had been established for the SEIP.

 

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 monthly over the following two years.

 

RSUs also provide a long-term incentive for executives to remain with Intuit, but because they do not have an exercise price, RSUs provide some amount of value to recipients regardless of Intuit’s stock price. Because of the different structure of RSUs, Intuit awarded less than 30% of its total equity grants as RSUs in fiscal 2008. In general, RSUs granted to our Named Executive Officers, other than the CEO, vest after three years, but only if an initial performance hurdle is satisfied by the end of the first year.

 

Stock Options and Performance-Based RSU Grants for Fiscal 2008

 

In July 2008, the Compensation Committee determined the number of stock options and performance-based RSUs to be awarded to each Named Executive Officer, based on the individual and company performance for fiscal 2008 and on the share reserve available under our equity plan. The stock options were granted at the end of fiscal 2008, and the RSUs were granted at the beginning of fiscal 2009, with vesting of the RSUs dependent on the achievement of performance targets in fiscal 2009.

 

The Compensation Committee awarded Mr. Smith 185,000 stock options and 65,000 performance-based RSUs in recognition of his fiscal 2008 performance. These RSUs vest 50% after three years and 50% after five years, but, as is the case with the other performance-based RSUs, only if an initial performance hurdle is satisfied by the end of the first year. The Compensation Committee also awarded Messrs. Williams, Patel, Lintner and Goodarzi options to purchase 50,000, 75,000, 50,000 and 30,000 shares, respectively, and performance-based RSUs representing 17,000, 25,000, 17,000, and 10,000 shares, respectively. The Compensation Committee considered several factors in determining the size of the equity awards, including: (1) each Named Executive Officer’s role and scope of responsibilities; (2) his current cash compensation; (3) his fiscal 2008 performance ratings; and (4) his current Intuit equity holdings. In setting Mr. Goodarzi’s equity awards, the Compensation Committee also took into account the fact that he had received stock options and RSUs earlier in fiscal 2008, at the time of his promotion to Senior Vice President.

 

In addition to the equity awards described above, in early fiscal 2009, the Compensation Committee granted Mr. Patel a special retention award of 100,000 RSUs. The Compensation Committee considered the important leadership role held by Mr. Patel as the general manager of Intuit’s Consumer Tax business. In particular, during Mr. Patel’s first year as leader of that business, Consumer Tax revenue grew by 14% year-over-year. This special retention award vests over a period of five years, which is longer than Intuit’s standard three-year vesting schedule.

 

The Compensation Committee also awarded Mr. Williams 100,000 stock options and 30,000 RSUs when he joined Intuit in January 2008 under the terms of his employment agreement.

 

In addition to the equity awards noted above, in February 2008, in recognition of Mr. Smith’s promotion to President and CEO, the Compensation Committee granted him an option to purchase 260,000 shares which vests as to 50% of the shares after three years and 50% after five years. Mr. Smith also received 130,000 RSUs which vest as to 50% of the shares after two years and as to 50% after four years. The Compensation Committee granted these

awards to help create a total compensation package for Mr. Smith that is commensurate with other comparable CEO packages offered by the companies that comprise Intuit’s peer group and the survey companies (as discussed above under “Competitive Data”). The Compensation Committee also wanted to create greater retention value for Mr. Smith and to tie a larger portion of his compensation to the value of Intuit’s stock. In light of Mr. Smith’s promotion to the role of President and Chief Executive Officer, the Compensation Committee has created a total compensation package for Mr. Smith that is specifically tailored to provide him with both short and long-term incentives, which provide retentive value over and above the awards he received as a Senior Vice President of Intuit. Mr. Smith’s equity awards are his primary long-term incentive and the terms of these awards differ from those of the other Named Executive Officers, because of the Compensation Committee’s desire to tie a larger portion of the CEO’s compensation more closely to Intuit’s performance.

 

Achievement of Targets for 2008 Performance-Based RSUs

 

At the end of fiscal 2008, the Compensation Committee certified that Intuit had achieved the performance hurdles established for the performance-based RSUs awarded in August 2007. The hurdles were revenue growth of 10% from fiscal 2007 to fiscal 2008 and non-GAAP operating income growth of 10% from fiscal 2007 to fiscal 2008. Because these hurdles were achieved or exceeded, the performance-based RSUs awarded in August 2007 to certain of the Named Executive Officers (as reported in our 2007 proxy statement) will vest on August 1, 2010, so long as the officers continue to provide service to Intuit through that date.

 

Transition Compensation for Mr. Bennett

 

On August 21, 2007, Intuit entered into a Transition Agreement with Mr. Bennett providing for certain payments and benefits for Mr. Bennett in connection with his resignation as President and Chief Executive Officer of Intuit. Under the agreement, Mr. Bennett became a full-time consultant to Intuit until July 31, 2008, at a monthly rate of $91,700, equal to his previous base salary. On January 1, 2008, Intuit paid Mr. Bennett $550,000, equal to six months of his base salary, and he received an annual bonus of $1,760,000 in August 2008 in connection with his services to Intuit during fiscal 2008. Mr. Bennett was also granted 50,000 stock options and 50,000 RSUs, all of which vested on July 31, 2008. Under the agreement, Mr. Bennett also received accelerated vesting of restricted stock, RSUs and stock options on various dates between January 1, 2008 and August 1, 2008. The summary of these benefits is qualified in its entirety by reference to the text of the Transition Agreement, which was filed with the SEC on a Form 8-K on August 22, 2007.

 

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) may elect to defer up to 15% of their annual incentive bonus, which is converted into RSUs, based on the fair market value of Intuit’s stock on the date the bonus is awarded. These RSUs are fully vested on the grant date, but are not issued in the form of shares until the earlier of the third anniversary of the grant date or the termination of employment with Intuit. Intuit also grants the employee an additional RSU for every RSU purchased through this deferral, up to set maximums. These matching RSUs vest as to 100% of the shares three years after the grant date, or on the recipient’s death or disability. This three-year vesting period is intended to assist Intuit in retaining key talent. The RSUs granted pursuant to the MSPP are issued under the 2005 Equity Incentive Plan.

 

Employee Benefits

 

Each of our employees with a title of director or above (including the Named Executive Officers) is eligible to participate in a number of programs which make up Intuit’s total compensation package, including health and welfare benefits, executive relocation benefits, our 401(k) Plan with a company-sponsored match component, our Employee Stock Purchase Plan, our Non-Qualified Deferred Compensation Plan and our MSPP. The Non-Qualified Deferred Compensation Plan and the MSPP provide an opportunity for deferral of compensation, in compliance with Section 409A of the Internal Revenue Code. As described in more detail above, the MSPP also encourages eligible employees to own Intuit stock. When determining executive compensation, the Compensation Committee

considers all the components noted above and may use any and all of these programs to provide the appropriate level of total compensation to executives. Intuit’s only material perquisites for Named Executive Officers in fiscal 2008 relate to relocation benefits.

 

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

 

The Compensation Committee received support from Intuit’s Human Resources Department in analyzing and establishing Intuit’s compensation programs for fiscal 2008. In order to provide comprehensive support to the Compensation Committee, a representative of the Human Resources Department, usually the Senior Vice President of Human Resources or the Vice President in charge of compensation attended all regular meetings of the Compensation Committee. In addition, an Intuit attorney also attended all regular meetings of the Compensation Committee, in order to provide guidance regarding the legal implications for Intuit of certain compensation decisions. Mr. Campbell, the Chairman of the Board and an Intuit employee, also regularly participated in Compensation Committee meetings, providing management input on organizational development and succession planning. Both Mr. Smith, our CEO, and Mr. Williams, our CFO, have provided the Compensation Committee with guidance and perspective from time to time, as did their predecessors, Mr. Bennett and Mr. Patel, respectively. 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. Additionally, the CFO provided analysis regarding the financial impact of equity awards which the Compensation Committee considered when making decisions regarding executive’s long-term incentives. Mr. Smith provided recommendations to the Compensation Committee regarding the cash and equity compensation of his executive staff (including Messrs. Williams, Patel, Lintner and Goodarzi), succession planning, organizational development and how to use incentive compensation to drive Intuit’s growth. In addition, Mr. Smith provided a written self-review to the Compensation Committee in order to aid their evaluation of his performance for the 2008 fiscal year.

 

The Compensation Committee determines the compensation for Mr. Smith after conferring with the Board, without Mr. Smith present. The Compensation Committee met ten times in fiscal 2008 and held a portion of each meeting in closed session, with only the committee members, and on certain occasions, William Campbell, Chairman of the Board, and representatives of our outside compensation consultant present. In determining compensation for the Named Executive Officers other than the CEO, the Compensation Committee considered Mr. Smith’s recommendations. The Compensation Committee is, however, solely responsible for making the final decisions on compensation for the Named Executive Officers including the CEO.

 

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 in charge of compensation.

 

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

 

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 123R, which requires us to estimate and record an expense over the service period of the award. The SFAS 123R 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 123R 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. Intuit has taken steps to ensure that most of the executive compensation paid under its incentive programs, including the stockholder approved SEIP and performance-based RSUs, is tax deductible. We believe it is important to preserve flexibility in administering compensation programs as corporate objectives may not always be consistent with the requirements for full deductibility. Accordingly, Intuit has not adopted a policy that all compensation must qualify as deductible under Section 162(m) and, while Intuit strives to award executive compensation that meets the deductibility requirements, Intuit may enter into compensation arrangements under which payments are not deductible under Section 162(m).

 

We also consider the tax impact to employees in designing our 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. Unvested RSUs held by an executive officer are counted as shares when determining the number of shares owned.

 

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.

 

The following table shows compensation earned during fiscal 2008 by our CEO, our CFO, our three other most highly compensated executive officers for fiscal 2008 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” beginning on page 34.

 

 

 

 

MSPP Deferrals:

 

 

 

The following table provides information about equity awards granted under our 2005 Equity Incentive Plan to the Named Executive Officers during fiscal 2008 and cash awards for which the Named Executive Officers were eligible in fiscal 2008 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 2008.

 

 

 

 

The following table provides information with respect to outstanding stock options held by the Named Executive Officers as of July 31, 2008.

 

 

 

 

 

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, 2008. The market value of the awards is determined by multiplying the number of unvested shares or units by $27.33, the closing price of Intuit’s common stock on NASDAQ on July 31, 2008.