DEF 14A 1 d306562ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

Filed by the Registrant    x      Filed by a Party other than the Registrant    ¨

 

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12

 

ADVANCED MICRO DEVICES, INC.


(Name of Registrant as Specified In Its Certificate)

 


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

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  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

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¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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Notes:


LOGO

 

ADVANCED MICRO DEVICES, INC.

ONE AMD PLACE

P.O. BOX 3453

SUNNYVALE, CALIFORNIA 94088-3453

 


 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 


 

We will hold the 2012 Annual Meeting of Stockholders of Advanced Micro Devices, Inc. at The Fairmont San Jose, 170 South Market Street, San Jose, California, 95113, on Thursday, May 10, 2012. The meeting will start at 9 a.m. PDT. At the meeting, we will ask you to:

 

   

Elect the ten director nominees named in the proxy statement;

 

   

Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year;

 

   

Approve the amendment and restatement of the Advanced Micro Devices, Inc. 2004 Equity Incentive Plan, as amended and restated, which amends the existing plan to increase the number of shares authorized for issuance thereunder by 23,000,000 shares;

 

   

Approve on a non-binding, advisory basis the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission; and

 

   

Transact any other business that properly comes before the meeting or any adjournment or postponement thereof.

 

By Order of the Board of Directors,

 

HARRY A. WOLIN

Corporate Secretary

 

This proxy statement is dated March 15, 2012 and will first be mailed to the stockholders of

Advanced Micro Devices, Inc. on or about March 19, 2012.

 

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOUR VOTE IS IMPORTANT AND WE ENCOURAGE YOU TO VOTE PROMPTLY. YOU MAY VOTE YOUR SHARES VIA A TOLL-FREE TELEPHONE NUMBER OR OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS CONTAINED IN THE PROXY CARD. YOU MAY ALSO SIGN, DATE AND MAIL THE PROXY CARD IN THE ENVELOPE PROVIDED. INSTRUCTIONS REGARDING METHODS OF SUBMITTING A PROXY ARE CONTAINED ON THE PROXY CARD.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 10, 2012: OUR PROXY STATEMENT AND ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011 ARE AVAILABLE ELECTRONICALLY AT WWW.PROXYVOTE.COM.


TABLE OF CONTENTS

 

     Page

 

QUESTIONS AND ANSWERS

     1   

ITEM 1—ELECTION OF DIRECTORS

     6   

CORPORATE GOVERNANCE

     12   

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

     15   

DIRECTORS’ COMPENSATION AND BENEFITS

     17   

PRINCIPAL STOCKHOLDERS

     22   

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

     23   

EXECUTIVE OFFICERS

     25   

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     26   

EQUITY COMPENSATION PLAN INFORMATION

     27   

COMPENSATION DISCUSSION AND ANALYSIS

     28   

COMPENSATION COMMITTEE REPORT

     47   

COMPENSATION POLICIES AND PRACTICES

     48   

EXECUTIVE COMPENSATION

     49   

2011 SUMMARY COMPENSATION TABLE

     49   

2011 NONQUALIFIED DEFERRED COMPENSATION

     51   

OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-END

     53   

GRANTS OF PLAN-BASED AWARDS IN 2011

     57   

OPTION EXERCISES AND STOCK VESTED IN 2011

     58   

EMPLOYMENT AND RELATED AGREEMENTS

     59   

CHANGE IN CONTROL ARRANGEMENTS

     62   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     66   

AUDIT AND FINANCE COMMITTEE REPORT

     69   

ITEM 2—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     70   

ITEM 3—APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE 2004 EQUITY INCENTIVE PLAN

     71   

ITEM  4—APPROVAL ON A NON-BINDING, ADVISORY BASIS OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)

     78   

AVAILABLE INFORMATION

     80   

EXHIBIT:

        

EXHIBIT A—AMENDED AND RESTATED 2004 EQUITY INCENTIVE PLAN

        


ADVANCED MICRO DEVICES, INC.

 


 

PROXY STATEMENT

 


 

2012 ANNUAL MEETING OF STOCKHOLDERS

 

QUESTIONS AND ANSWERS

 

1. Q:

WHY AM I RECEIVING THESE MATERIALS?

 

  A: Our Board of Directors (the “Board”) is providing these materials to you in connection with the Board’s solicitation of proxies for use at our annual meeting, which will take place on May 10, 2012 at The Fairmont San Jose, 170 South Market Street, San Jose, California 95113, at 9 a.m. PDT (the “Annual Meeting”). Our stockholders as of the close of business on March 12, 2012, the record date for our Annual Meeting, are invited to attend the Annual Meeting and are requested to vote on the items described in this proxy statement.

 

2. Q:

WHO IS SOLICITING MY VOTE?

 

  A: This proxy solicitation is being made by the Board of Advanced Micro Devices, Inc. We have retained MacKenzie Partners, Inc., professional proxy solicitors, to assist us with this proxy solicitation. We will pay the entire cost of this solicitation, including MacKenzie’s fees and expenses, which we expect to be approximately $100,000.

 

3. Q:

WHEN WERE MATERIALS MAILED TO STOCKHOLDERS?

 

  A: The proxy materials will first be mailed to stockholders on or about March 19, 2012.

 

4. Q:

WHAT AM I BEING ASKED TO VOTE ON?

 

  A: You may vote on:

 

   

Proposal 1: Election of directors to serve on our Board;

 

   

Proposal 2: Ratification of the appointment of our independent registered public accounting firm for the current fiscal year;

 

   

Proposal 3: Approval of the amendment and restatement of the Advanced Micro Devices, Inc. 2004 Equity Incentive Plan, as amended and restated (the “2004 Plan”);

 

   

Proposal 4: Approval on a non-binding, advisory basis of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (“Say-On-Pay”); and

 

   

Such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

5. Q:

HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?

 

  A: The Board recommends that you vote:

 

   

FOR each of the director nominees named in this proxy statement.

 

   

FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year.

 

   

FOR the approval of the amendment and restatement of the 2004 Plan.

 

   

FOR Say-On-Pay.

 

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6. Q:

WHO IS ENTITLED TO VOTE?

 

  A: Stockholders as of the close of business on March 12, 2012, the record date for our Annual Meeting, are entitled to vote on all items properly presented at the Annual Meeting. On the record date, approximately 699,393,018 shares of our common stock were outstanding. Every stockholder is entitled to one vote for each share of common stock held on the record date. A list of these stockholders will be available during ordinary business hours at the principal place of business of AMD, located at One AMD Place, M/S 68, Sunnyvale, California, 94088 from the Assistant Corporate Secretary of the Company at least ten days before the Annual Meeting. The list of stockholders will also be available at the time and place of the Annual Meeting.

 

7. Q:

IF I AM A STOCKHOLDER OF RECORD, HOW DO I VOTE?

 

  A: If you are a stockholder of record, you may vote in person at the Annual Meeting. We will give you a ballot when you arrive at the Annual Meeting.

 

If you do not wish to vote in person or if you will not attend the Annual Meeting, you may vote by proxy. If you complete and properly sign each proxy card you received and return it to us in the prepaid envelope, it will be voted by one of the individuals indicated on the card (your “proxy”) as you direct. If you are a stockholder of record and you return a properly executed proxy card or vote by proxy over the Internet but do not mark the boxes showing how you wish to vote, the proxy holders will vote in accordance with the recommendations of the Board, as specified in Question 5 above. With respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, at their own discretion.

 

If you live in the United States or Canada, you may submit your proxy by following the Vote by Telephone instructions on the proxy card. If you have Internet access, you may submit your proxy from any location in the world by following the Vote by Internet instructions on the proxy card.

 

8. Q:

WHO CAN ATTEND THE ANNUAL MEETING?

 

  A: Only stockholders as of the close of business on March 12, 2012, holders of proxies for those stockholders and other persons invited by us can attend. If your shares are held by your broker in “street name,” you must bring a letter from your broker to the Annual Meeting showing that you were the beneficial owner of the shares on March 12, 2012 to attend the Annual Meeting.

 

9. Q:

CAN I VOTE AT THE MEETING?

 

  A: Yes. If you held your shares in your own name on the record date, you may vote your shares in person at the Annual Meeting. If you wish to vote your shares in person at the Annual Meeting and they are held by your broker in “street name,” you must bring to the Annual Meeting a proxy from your broker as the record holder and a letter from your broker showing that you were the beneficial owner of the shares on March 12, 2012.

 

10. Q:

CAN I CHANGE MY VOTE AFTER I HAVE VOTED?

 

  A: Yes. You may change your vote at any time before the voting concludes at the Annual Meeting. You may vote again on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), or by signing and returning a new proxy card with a later date or by attending the Annual Meeting and voting in person. However, your attendance in person at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked.

 

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11. Q:

HOW DO I VOTE MY SHARES IF THEY ARE HELD IN STREET NAME?

 

  A: If your shares are held by your broker in “street name,” you will receive a form from your broker seeking instruction as to how your shares should be voted. We urge you to complete this form and instruct your broker how to vote on your behalf.

 

Alternatively, you can vote in person at the Annual Meeting, but you must bring to the Annual Meeting a proxy from your broker as the record holder and a letter from your broker showing that you were the beneficial owner of your shares on March 12, 2012.

 

12. Q:

WHAT IS A “QUORUM”?

 

  A: For the purposes of the Annual Meeting, a “quorum” is the presence, in person or by proxy, by the holders of a majority in voting power of the outstanding shares entitled to vote at the meeting. There must be a quorum for the Annual Meeting to be held. If you voted on the Internet, by telephone or by properly submitting a proxy card, even if you abstain from voting, your shares will be considered part of the quorum.

 

13. Q:

WHAT IS BROKER “DISCRETIONARY” VOTING, AND WHAT IS A “BROKER NON-VOTE”?

 

  A: Under the rules of the New York Stock Exchange (“NYSE”), if you hold your shares through a broker, your broker has the discretion to vote your shares on matters that are considered routine. If the matter to be voted on is determined to be non-routine, the broker may not vote the shares without specific instructions from the stockholder. If a broker holds your shares in its name, the broker is permitted to vote your shares on Proposal 2 in its discretion if it has transmitted the proxy materials to you and has not received voting instructions from you on how to vote your shares before the deadline set by your broker. Under the NYSE rules, your broker does not have discretionary authority to vote on Proposals 1, 3 and 4, so it is very important that you instruct your broker how to vote on these proposals. A broker non-vote occurs when your broker has not received instructions from you as to how to vote your shares on a proposal and does not have discretionary authority to vote on the proposal.

 

14. Q:

WHAT IS THE REQUIRED VOTE?

 

  A: Election of Directors. Each of the ten director nominees will be elected if each of them receives the affirmative vote of a majority of the votes cast. A majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. Abstentions will not be counted in the determination of the majority of votes cast and will thus have no effect on this proposal. Broker non-votes will have no effect on the outcome of the election of directors. Each incumbent director has submitted a written resignation that will be effective if he/she does not receive a majority of the votes cast for such director and the resignation is accepted by the Nominating and Corporate Governance Committee, another authorized committee of the Board or the Board.

 

Ratification of the Appointment of our Independent Registered Public Accounting Firm. Ratification of the appointment of our independent registered public accounting firm must receive affirmative votes from the majority of the shares of common stock entitled to vote and represented, in person or by proxy, at the meeting. Abstentions have the same effect as a vote against this proposal. Because brokers have discretionary authority to vote on the ratification, we do not expect any broker non-votes in connection with this item.

 

Amendment and Restatement of the 2004 Plan. The proposal to amend and restate the 2004 Plan requires the affirmative vote of a majority of votes cast, provided that the total vote cast on the proposal represents over 50% of the outstanding common stock entitled to vote on the proposal.

 

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Abstentions will not be counted as a vote “for” or “against” this proposal, but will be counted for purposes of determining whether the total vote cast on the proposal represents over 50% of the outstanding common stock entitled to vote on the proposal. Broker non-votes are not considered votes cast under the NYSE rules, but the underlying shares are considered shares entitled to vote on the proposal.

 

Advisory Vote on the Compensation of Named Executive Officers. An affirmative vote from the majority of the shares of common stock entitled to vote and represented, in person or by proxy, at the meeting is necessary to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities Exchange Commission (“SEC”). Because your vote is advisory, it will not be binding on the Board, the Compensation Committee or the Company. However, the Board will review the voting results and take them into consideration when making future decisions about executive compensation. Abstentions have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal.

 

15. Q:

WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?

 

  A: We will announce preliminary voting results at the Annual Meeting and publish voting results in a Current Report on Form 8-K, which will be filed with the SEC within four business days after the Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.

 

16. Q:

IS MY VOTE CONFIDENTIAL?

 

  A: Proxy cards, ballots and voting tabulations that identify individual stockholders are mailed or returned directly to Broadridge and handled in a manner that protects your voting privacy. Your vote will not be disclosed except (1) as needed to permit Broadridge to tabulate and certify the vote and (2) as required by law. However, comments written on the proxy card may be forwarded to management. In that case, your identity may not be kept confidential.

 

17. Q:

HOW WILL VOTING ON ANY BUSINESS NOT DESCRIBED IN THIS PROXY STATEMENT BE CONDUCTED?

 

  A: We do not know of any business to be considered at the Annual Meeting other than the items described in this proxy statement. If any other business is presented at the Annual Meeting, your proxy gives authority to Rory P. Read, our President and Chief Executive Officer, and Harry A. Wolin, our Senior Vice President, General Counsel and Corporate Secretary, to vote on such matters at his discretion.

 

18. Q:

WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2013 ANNUAL MEETING DUE?

 

  A:

Under SEC rules, for stockholder proposals to be considered for inclusion in the proxy statement for the 2013 Annual Meeting, they must be submitted in writing to our Corporate Secretary, Advanced Micro Devices, Inc., 7171 Southwest Parkway, M/S 100, Austin, Texas, 78735 on or before November 20, 2012. In addition, our bylaws provide that for directors to be nominated or other proposals to be properly presented at the 2013 Annual Meeting, a separate notice of any nomination or proposal must be received by us between January 10, 2013 and February 9, 2013. If our 2013 Annual Meeting is not held within 30 days of May 10, 2013, to be timely, the notice by the stockholder must not be received by us later than the close of business on the tenth day following the earlier of the day on which the first public announcement of the date of the 2013 Annual Meeting was made or the notice of the 2013 Annual Meeting is mailed. The public announcement of an adjournment or postponement

 

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of the 2013 Annual Meeting will not trigger a new time period (or extend any time period) for the giving of a stockholder notice as described in this proxy statement. More information about the notice period and information required to be included in a stockholder’s notice of a nomination is included in this proxy statement under the section “Consideration of Stockholder Nominees for Director,” below.

 

19. Q:

WILL YOU WEBCAST THE ANNUAL MEETING?

 

  A. Yes. The Annual Meeting will be webcast live. You can access it by going to our Investor Relations Web site at: www.amd.com or ir.amd.com. The webcast will enable you to listen only. You will not be able to ask questions or vote. The Annual Meeting audio webcast will be available on our Web site for a period of time after the meeting.

 

20. Q:

WHAT IS HOUSEHOLDING AND HOW DO I OBTAIN A SEPARATE SET OF PROXY MATERIALS IF I SHARE AN ADDRESS WITH OTHER STOCKHOLDERS?

 

  A. We have adopted a procedure called “householding,” which has been approved by the SEC. Under this procedure, we will deliver only one copy of our Annual Report on Form 10-K (the “Annual Report”) and proxy statement to stockholders of record who share the same address (if they appear to be members of the same family) unless we have received contrary instructions from an affected stockholder. A separate proxy card for each stockholder of record will be included in the materials. This procedure reduces our printing costs and mailing costs and fees. Upon written or oral request, we will promptly deliver a separate Annual Report and proxy statement to any stockholder at a shared address to which a single copy of either of those documents was delivered. To receive a separate copy of the Annual Report or this proxy statement, contact us at (408) 749-4000 or at Advanced Micro Devices, Inc., 7171 Southwest Parkway, M/S 100, Austin, Texas 78735, attention: Corporate Secretary, or by email to Corporate.Secretary@amd.com. If you would like to revoke your householding consent or you are a stockholder eligible for householding and would like to participate in householding, please contact Broadridge at 1-800-842-1061.

 

A number of brokerage firms have instituted householding. If you hold your shares in “street name,” please contact your bank, broker or other holder of record to request information about householding.

 

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ITEM 1—ELECTION OF DIRECTORS

 

Ten directors will be elected at the Annual Meeting. All directors are elected annually and serve a one-year term until the next Annual Meeting.

 

The Nominating and Corporate Governance Committee of the Board selected, and the Board approved, the following ten persons as nominees for election to the Board: Mr. Bruce L. Claflin, Dr. W. Michael Barnes, Mr. John E. Caldwell, Mr. Henry WK Chow, Mr. Craig A. Conway, Mr. Nicholas M. Donofrio, Ms. H. Paulett Eberhart, Mr. Waleed Muhairi, Mr. Robert B. Palmer and Mr. Rory P. Read. All of the nominees are currently directors of AMD. Mr. Muhairi was first appointed to our Board on March 2, 2009, pursuant to our agreement with Advanced Technology Investment Corporation (“ATIC”) and West Coast Hitech L.P. (“WCH”) that provides that until such time as WCH and its permitted transferees beneficially own, in the aggregate, less than 10% of the outstanding shares of our common stock, WCH has the right to designate a representative to our Board. The number of authorized directors is currently fixed at ten.

 

The Board expects all nominees named below to be available for election. If a nominee declines or is unable to act as a director, your proxy may vote for any substitute nominee proposed by the Board. Your proxy will vote FOR the election of these nominees, unless you instruct otherwise. Directors are strongly encouraged to attend annual meetings of our stockholders, and we expect all of our current Board member nominees to be present at the Annual Meeting. All of the Board member nominees set forth in our 2011 Proxy Statement were present at the 2011 annual meeting of stockholders.

 

Certain information regarding each of our nominees is set forth below, including his or her experience, qualifications, attributes and skills that led the Nominating and Corporate Governance Committee and the Board to conclude that the individual should serve as a director for the Company as well as his or her principal occupation and directorships during the past five years. Our goal is to assemble a Board that operates cohesively and works with management in a constructive way to deliver long term shareholder value. We believe that the nominees set forth below, all of whom are currently directors of AMD, possess valuable experience necessary to guide AMD in the best interests of the stockholders. Our current Board consists of individuals with proven records of success in their chosen professions. They possess the highest integrity and a keen intellect. They are collegial yet independent in their thinking, and are committed to the hard work necessary to be informed about the semiconductor industry, our company, and its key constituents, including customers, stockholders and management. Most of our directors have broad technology sector experience, including expertise in semiconductor technology, innovation and strategy. Several members of our Board also have extensive experience in the management of public companies, corporate restructurings, risk assessment, accounting and finance.

 

Bruce L. Claflin—Mr. Claflin, 60, has been a director since 2003. On March 2, 2009, he was appointed as the Chairman of the Board. On January 10, 2011, upon the resignation of our Chief Executive Officer, he was appointed as non-employee Executive Chairman of the Board, and he held that position until our new Chief Executive Officer was appointed on August 25, 2011, when he resumed acting as our Chairman of the Board. During his tenure as Executive Chairman, Mr. Claflin provided additional oversight during the transition period while also leading the CEO recruitment process on behalf of the Board. During this time, Mr. Claflin was neither an officer nor an employee of the Company, and he did not receive any compensation from the Company other than in connection with his Board service. Mr. Claflin was President, Chief Executive Officer, and a member of the Board of Directors of 3Com Corporation (“3Com”), a provider of voice and data networking products and services, from January 2001 until he retired in 2006. He joined 3Com as President and Chief Operating Officer in August 1998. Prior to 3Com, Mr. Claflin served as Executive Vice President, Sales, and prior to that as General Manager of the PC Business Unit for Digital Equipment Corporation. Mr. Claflin also worked for 22 years at International Business Machines Corporation (“IBM”), where he held various sales, marketing and senior management positions, including General Manager of IBM PC Company’s worldwide research and development, product and brand management and President of IBM PC Company, Americas. He was also responsible for the introduction of IBM’s highly successful ThinkPad line of products. In addition to his general management

 

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experience, Mr. Claflin has held senior positions where he has been responsible for almost every operation of a global, high technology company, including sales, marketing, research and development and manufacturing. This experience allowed Mr. Claflin to provide valuable insight and guidance to the Company during our search for a new Chief Executive Officer. Also, while with IBM, Mr. Claflin lived and worked in Hong Kong and Tokyo and was responsible for IBM’s Asia/South Pacific Area. While at 3Com, Mr. Claflin established a joint venture in China in partnership with a leading Chinese global telecom solutions provider. Mr. Claflin’s extensive experience in Asia, particularly China, is important to AMD because China has been our largest single market since 2006. Mr. Claflin was named a distinguished alumnus by Pennsylvania State University. He is also founder, director and President of Kids First! a Virgin Islands non-profit corporation that supports the education of children in St. John, U.S. Virgin Islands. He has been a member of the Board of Directors of Ciena Corporation since 2006. Mr. Claflin holds a bachelor of arts degree in political science from Pennsylvania State University.

 

Dr. W. Michael Barnes—Dr. Barnes, 69, has been a director since 2003. Dr. Barnes brings extensive financial management experience and a strong understanding of semiconductor technologies to our Board. Between 1968 and 2001, Dr. Barnes held several senior executive positions at Rockwell International Corporation (now Rockwell Automation, Inc.), a major manufacturing corporation that has included divisions in aircraft, defense electronics, commercial electronics, automotive components, printing presses, and industrial automation, including Senior Vice President, Finance and Planning and Chief Financial Officer from 1991 through 2001. Dr. Barnes was also a key member of the management team of Rockwell’s Semiconductor Products division and Vice President and General Manager of the Rockwell Communications Systems division. He was named a distinguished alumnus by Texas A&M University College of Engineering in 1992, is a member of the Texas A&M University Chancellor’s Century Council and is on the university’s Engineering Advisory Board. Dr. Barnes has been a member of the Board of Directors of MetroPCS Communications, Inc. since 2004.

 

John E. Caldwell—Mr. Caldwell, 62, has been a director since October 2006. Mr. Caldwell brings extensive general management, financial management and risk assessment experience to our Board. He was President and Chief Executive Officer of SMTC Corporation, an electronics manufacturing services company from 2003 until he retired in March 2011. Before joining SMTC, Mr. Caldwell held positions in The Mosaic Group, a marketing services provider, as Chair of the Restructuring Committee of the Board, from October 2002 to September 2003, in GEAC Computer Corporation Limited, a computer software company, as President and Chief Executive Officer from October 2000 to December 2001 and in CAE Inc., a provider of simulation and modeling technologies and integrated training solutions for the civil aviation and defense industries, as President and Chief Executive Officer from June 1993 to October 1999. In addition, Mr. Caldwell served in a variety of senior executive positions in finance, including Senior Vice President of Finance and Corporate Affairs of CAE and Executive Vice President of Finance and Administration of Carling O’Keefe Breweries of Canada. Over the course of his career, Mr. Caldwell has served on the audit committees of ten public companies. Also, for the past several years, Mr. Caldwell has been a lecturer on board oversight responsibility for enterprise risk as part of an accredited board of director education program through McMaster University in Canada. Mr. Caldwell has been a director of Faro Technologies, Inc., a producer of three dimensional manufacturing measurement systems, since 2002 and of IAMGOLD Corporation, a mid-tier gold producer, since 2006. Mr. Caldwell also served on the board of directors of SMTC from 2003 to 2011, ATI Technologies Inc. from 2003 to 2006, Rothmans Inc. from 2004 to 2008, Cognos Inc. from 2000 to 2008, Stelco Inc. from 1997 to 2006 and Sleeman Breweries Ltd. from 2003 to 2005. Mr. Caldwell holds a bachelor of commerce degree from Carleton University, Ontario, and is a registered chartered accountant with the Ontario Institute of Chartered Accountants.

 

Henry WK Chow—Mr. Chow, 66, has been a director since February 2011. Mr. Chow brings to our Board his extensive experience and insight in operating a technology business in the Asia Pacific region, a strategic market for AMD, as well as his significant expertise in general management and operations. From July 2009 through August 2011, Mr. Chow acted as a corporate business advisor to IBM, working approximately 30 hours per month. Prior to this role, during his 41-year career at IBM, Mr. Chow held a variety of management positions

 

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in the services, systems engineering, sales and marketing and human resources divisions across IBM’s Asia Pacific operations, including as General Manager of IBM’s Greater China Group from 1995 until 2007, where he was responsible for IBM’s operations in China, Hong Kong and Taiwan, and most recently as Chairman of IBM’s Greater China Group, from January 2007 until his retirement from this position in June 2009. Prior to serving in these positions, Mr. Chow served in a variety of general management positions, including General Manager of IBM China Company Limited and General Manager of IBM PC Company, Asia Pacific South, where he was responsible for IBM’s PC business throughout the Asia Pacific region, excluding Japan. Mr. Chow also held positions as Assistant Managing Director of Services for IBM Australia, General Manager of IBM Taiwan, and Director of Operations for IBM Hong Kong. From 2005 until 2009, Mr. Chow served as an observer for IBM at the meetings of the board of directors of Lenovo Group Limited, which acquired IBM’s PC business in 2005. Since September 2011, Mr. Chow has been a Vice Chairman of the Advisory Board for Guangtong International Clinical Research Center, a Government owned research center, and since October 2011, he has been a member of the European Advisory Committee for Bridgepoint, an international private equity firm. Mr. Chow completed a one year fellowship in Advanced Leadership Initiative at Harvard and holds a bachelor of science degree in electrical engineering from the University of Hong Kong.

 

Craig A. Conway—Mr. Conway, 57, has been a director since September 2009. Mr. Conway brings to our Board his significant general management and operations experience, having served as the president and chief executive officer of three technology companies. Mr. Conway served as a member of the Board of Directors and President and Chief Executive Officer of PeopleSoft, Inc., a provider of software for customer relationship management, human resources, financial management and supply chain management, from March 1999 until he retired in November 2004, just prior to the company’s acquisition by Oracle Corporation. Prior to PeopleSoft, Mr. Conway was President and Chief Executive Officer of One Touch Systems, a high bandwidth network communications company, from November 1996 to February 1999. Mr. Conway was also President and Chief Executive Officer of TGV Software Inc., a provider of internet protocol and applications, from September 1993 to March 1996 prior to its acquisition by Cisco Systems. Earlier in his career, Mr. Conway held executive management positions at a variety of leading technology companies, including Executive Vice President at Oracle Corporation. Mr. Conway has been a director of Salesforce.com, a provider of customer relationship management solutions, since 2005 and Guidewire Software, Inc., a provider of end-to-end claims management system software to the insurance industry, since December 2010. Mr. Conway also served on the board of directors of Unisys Corporation from August 2007 to May 2009 and PegaSystems Inc. from April 2009 to July 2011. Mr. Conway holds a bachelor of science degree in computer science and mathematics from State University of New York at Brockport.

 

Nicholas M. Donofrio—Mr. Donofrio, 66, has been a director since November 2009. Mr. Donofrio brings to our Board significant expertise in the area of semiconductor technology and manufacturing, system design and integration, and is able to provide the Company with valuable insight and guidance regarding technological and innovation strategies as well as the development and retention of our technical employee population. During his 44-year career at IBM, Mr. Donofrio held a variety of technical management positions, and later, executive positions, in IBM’s server, advanced workstations, personal computing, manufacturing and semiconductor development divisions, including as Senior Vice President, Technology and Manufacturing from 1997 to 2005, and most recently as Executive Vice President, Innovation and Technology from 2005 until his retirement in September 2008. Mr. Donofrio holds seven technology patents and is a member of numerous technical and science honor societies. He is a Senior Fellow at the Kaufman Foundation, a Fellow of the Institute for Electrical and Electronics Engineers, a Fellow of the UK-based Royal Academy of Engineering, and a Fellow of the American Academy of Arts and Sciences. He also serves on the Board of Trustees at Rensselaer Polytechnic Institute, Syracuse University and The MITRE Corporation and as co-chair of the New York Hall of Science Board of Trustees. Mr. Donofrio is also a member of the U.S.-based National Academy of Engineering. Mr. Donofrio is the recipient of numerous awards. For example, in 2006, he was named among Business Week magazine’s 25 Top Innovation Champions, and in 2008 he was awarded the Excellence in Leadership Award by the U.S. Chamber of Commerce and the Renaissance Engineer Award by the Society of Hispanic Professional Engineers for his commitment and promotion of Science, Technology, Engineering and Mathematics for the U.S. Hispanic

 

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Community. In 2003, he was named Technology Leader of the Year by IndustryWeek magazine, the Technical Executive of the Year by the University of Arizona, and he received the Rodney D. Chipp Memorial Award by the Society of Women Engineers for his contributions to the advancement of women in the engineering field. In 2002, he was recognized by the Institution of Electrical Engineers, the largest professional engineering society in Europe, with the Mensforth International Gold Medal for outstanding contributions to the advancement of manufacturing engineering. Mr. Donofrio has a bachelor of science degree in Electrical Engineering from Rensselaer Polytechnic Institute and a master of science in the same discipline from Syracuse University.

 

In addition to being on the board or advisory board of several private companies and organizations, including Liberty Mutual Holding Company Inc., Sproxil, Inc., TopCoder, Inc., the Secretary of Energy’s Advisory Board, Pennsylvania State University’s School of International Affairs Advisory Board and the Workforce Opportunity Services Academic Advisory Board, Mr. Donofrio has been a director of The Bank of New York Mellon Corporation since 1998 and a director of Delphi Automotive PLC, a global vehicle components manufacturer and provider of electrical and electronic, powertrain, safety and thermal technology solutions, since 2009.

 

H. Paulett Eberhart—Ms. Eberhart, 58, has been a director since 2004. Ms. Eberhart brings to our Board her significant general management experience, financial and accounting expertise and a strong background in global markets and channels in the services sector. Since January 2011, she has been President, CEO and a member of the board of directors of CDI Corp., a leading provider of engineering and information technology outsourcing solutions and professional staffing. From 2009 until January 2011, she was Chairman and Chief Executive Officer of HMS Ventures, a private real estate and services company. From 2007 until 2009, Ms. Eberhart was President and Chief Executive Officer of Invensys Process Systems, an enterprise technology, software and consulting firm offering processes to optimize operations and profitability in manufacturing, plant utilization, business operations and enterprise performance. Before joining Invensys, Ms. Eberhart was Senior Vice President—Electronic Data Systems (“EDS”) and President—Americas of EDS, a leading technology company that provided a broad portfolio of information technology, applications and business process outsourcing services for clients in over 70 countries, from 2003 until she retired in 2004. Ms. Eberhart was an employee of EDS since 1978. Prior to serving as President—Americas, Ms. Eberhart was the Senior Vice President—EDS and President of EDS Solutions Consulting, a business with 40,000 people operating in 60 countries. She also held various other executive, operating and financial positions at EDS. She was a member of the board of directors of AT Kearney, a global management consulting services firm and a subsidiary of EDS, from 1995 to 1998. Ms. Eberhart is a certified public accountant and is a member of the Financial Executives Institute and American Institute of Certified Public Accountants. Ms. Eberhart has been a director of Anadarko Petroleum Corporation since 2004. Ms. Eberhart also served on the board of directors of Solectron Corporation from 2005 to 2007 and Fluor Corporation from 2010 to February 2011. Ms. Eberhart has a bachelor of science degree in accounting from Bowling Green State University.

 

Waleed Muhairi—Mr. Muhairi, 37, has been a director since March 2009. Mr. Muhairi brings to our Board his experience in international markets and channels relevant to our business as well as his expertise in operations, finance and strategic consulting. Since 2006, Mr. Muhairi has been the Chief Operating Officer of Mubadala Development Company PJSC (“Mubadala”), a strategic investment and development company owned by the Government of Abu Dhabi, United Arab Emirates, where he oversees Mubadala’s broad investment portfolio and is responsible for its strategic, operational and business development activities. Mr. Muhairi is also a member of Mubadala’s Investment Committee, whose mandate is to develop Mubadala’s investment policies, establish investment guidelines and review all proposed projects and investments to ensure they are in line with Mubadala’s business objectives. Since September 2008, Mr. Muhairi has been the Chairman of Advanced Technology Investment Company LLC, a company wholly owned by Mubadala, mandated to make significant investments in the advanced technology sector, locally and internationally, with a view of delivering long-term economic and social benefits to the Emirate of Abu Dhabi, the Middle East and beyond. Prior to his roles with Mubadala and ATIC, Mr. Muhairi worked with the UAE Offsets Program Bureau as a Senior Projects Manager and with McKinsey & Company as a commercial and governmental consultant. Mr. Muhairi also serves as a

 

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director on several private and public company boards in the United Arab Emirates and abroad, including Chairman of the Board of Directors of Alyah Satellite Communications (Yahsat), Mubadala Infrastructure Partners and Cleveland Clinic Abu Dhabi; Chairman of National Central Cooling Company (Tabreed) and Piaggio Aero Industries SpA and a director of Abu Dhabi Future Energy Company (Masdar), Emirates Integrated Telecommunications Company PJSC, Tamouh Investments, Al Maabar International Investments LLC and GLOBALFOUNDRIES Inc., a privately held semiconductor foundry company formed in March 2009 as a manufacturing joint venture between AMD, ATIC and WCH. Mr. Muhairi is also a trustee of Sheikh Khalifa University. Mr. Muhairi holds a masters degree from Harvard University and a bachelor of science in Foreign Service from Georgetown University.

 

Robert B. Palmer—Mr. Palmer, 71, has been a director since 1999. Mr. Palmer brings to our Board his significant general management experience and his extensive experience in the semiconductor industry. Mr. Palmer was the Chairman and Chief Executive Officer of Digital Equipment Corporation, a pioneering company in the computer industry, from 1995 until his retirement in 1998. Mr. Palmer was appointed Chief Executive Officer and President of Digital in October 1992. From 1985 to 1992, Mr. Palmer served in various executive positions at Digital, including Vice President for Semiconductor Operations. Before Digital, Mr. Palmer was Executive Vice President of Semiconductor Operations at United Technologies Corporation (“UTC”), joining UTC in 1980 when it acquired Mostek Corporation, where he was a member of the founding team in 1969. In 1980, Mr. Palmer was honored by SEMI, the global industry association serving the manufacturing supply chains for the microelectronic, display and photovoltaic industries, as one of the most significant contributors to the development of semiconductor technologies. Mr. Palmer shares a patent in semiconductor processing that was the basis for the award. Mr. Palmer is on the Board of Trustees of the Cooper Institute for Aerobic Research, a non-profit preventative medicine research and education organization. He is the chairman of the investment committee for the Institute. From March 2009 until January 2010, Mr. Palmer also served as a member of the Board of Directors of GLOBALFOUNDRIES Inc. Mr. Palmer graduated with high honors with a bachelor of science degree in mathematics and a master of science degree in physics from Texas Tech University. He was also honored by the state legislature of Massachusetts, which approved his honorary degree as a Doctor of Commercial Science from Bentley University.

 

Rory P. Read—Mr. Read, 50, has been a director since August 2011. Mr. Read is our President and Chief Executive Officer. Mr. Read joined AMD as President and Chief Executive Officer on August 25, 2011. Before joining AMD, Mr. Read served as President and Chief Operating Officer of Lenovo Group, Ltd., a manufacturer and provider of computers and information technology management software, from February 2009 to August 2011, where he was responsible for leading day-to-day global operations while overseeing the development and implementation of Lenovo’s growth strategy. Prior to serving as Lenovo’s President and Chief Operating Officer, Mr. Read served as Lenovo’s Senior Vice President, Operations, from July 2006 to February 2009. During his five years at Lenovo, Mr. Read helped take the company into dynamic new markets, including Lenovo’s entry into the tablet and smartphone markets, while growing market share and expanding profitability. Prior to Lenovo, Mr. Read had a 23-year career at IBM, where he held various management positions, including Managing Partner for IBM’s Business Consulting Services division where he led the division through a successful turnaround, and Executive Vice President of Global Business Transformation, IBM Global Services, where he was responsible for worldwide leadership of IT initiatives and business transformation. Mr. Read graduated magna cum laude with a bachelor’s degree in Information Systems from Hartwick College.

 

Consideration of Stockholder Nominees for Director

 

The policy of the Nominating and Corporate Governance Committee is to consider properly submitted stockholder nominations for candidates to serve on our Board. Pursuant to our bylaws, stockholders who wish to nominate persons for election to the Board of Directors at the 2013 Annual Meeting must be a stockholder of record both when they give us notice and at the 2013 Annual Meeting, must be entitled to vote at the 2013 Annual Meeting and must comply with the notice provisions in our bylaws. A stockholder’s notice must be delivered to our Corporate Secretary not less than 90 nor more than 120 days before the anniversary date of the

 

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immediately preceding annual meeting. For our 2013 Annual Meeting, the notice must be delivered between January 10, 2013 and February 9, 2013. However, if our 2013 Annual Meeting is not within 30 days of May 10, 2013, the notice must be delivered no later than the close of business on the 10th day following the earlier of the day on which the first public announcement of the date of the 2013 Annual Meeting was made or the day the notice of the 2013 Annual Meeting is mailed. The public announcement of an adjournment or postponement of the 2013 Annual Meeting will not trigger a new time period (or extend any time period) for the giving of a stockholder notice as described in this proxy statement. Notwithstanding the foregoing, if the number of directors to be elected to the Board at an annual meeting is increased and we do not make a public announcement naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, the stockholder’s notice will be considered timely, but only with respect to nominees for any new positions created by the increase, if it is delivered to our Corporate Secretary not later than the close of business on the 10th day following the day on which we first make such public announcement. The stockholder’s notice must be updated and supplemented as set forth in our bylaws. The stockholder’s notice must include the following information for the person making the nomination:

 

   

name, age, nationality, business and residence addresses;

 

   

principal occupation and employment;

 

   

the class and number of shares owned beneficially or of record;

 

   

any derivative, swap or other transaction which gives economic risk similar to ownership of shares;

 

   

any proxy, agreement, arrangement, understanding or relationship that confers a right to vote any shares;

 

   

any agreement, arrangement, understanding or relationship engaged in to increase or decrease the level of risk related to, or the voting power with respect to, shares of the Company, or that provides the opportunity to profit from a decrease in price or value of shares;

 

   

any performance-related fees that the nominating person is entitled to based on any increase or decrease in the value of any shares; and

 

   

any other information required by the SEC to be disclosed in a proxy statement.

 

The stockholder’s notice must also include the following information for each proposed director nominee:

 

   

financial or other material relationships between the nominating person and the nominee during the past three years;

 

   

the same information as for the nominating person (see above); and

 

   

all information required to be disclosed in a proxy statement in connection with election of directors.

 

The Chair of the Annual Meeting will determine if the procedures in the bylaws have been followed, and if not, declare that the nomination be disregarded. If the nomination was made in accordance with the procedures in our bylaws, the Nominating and Corporate Governance Committee of the Board will apply the same criteria in evaluating the nominee as it would any other Board nominee candidate and will recommend to the Board whether or not the stockholder nominee should be nominated by the Board and included in our proxy statement. These criteria are described below in the description of the Nominating and Corporate Governance Committee beginning on page 15. The nominee must be willing to provide a written questionnaire, representation and agreement, if requested by us, and any other information reasonably requested by the Nominating and Corporate Governance Committee in connection with its evaluation of the nominee’s independence.

 

Communications with the Board or Non-Management Directors

 

Interested parties who wish to communicate with our Board or with non-management directors may send their communications in writing to our Corporate Secretary, 7171 Southwest Parkway, M/S 100, Austin, Texas 78735 or send an email to Corporate.Secretary@amd.com. Our Corporate Secretary will forward all of these communications to our Chairman of the Board.

 

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The Board of Directors unanimously recommends that you vote “FOR” each of the director nominees. Unless you indicate otherwise, your proxy will vote “FOR” the proposed nominees.

 

CORPORATE GOVERNANCE

 

The Board has adopted the Principles of Corporate Governance (the “Principles”) to address significant corporate governance issues. The Principles provide a framework for our corporate governance matters and include topics such as Board and Board committee composition and evaluation. The Nominating and Corporate Governance Committee is responsible for reviewing the Principles and reporting and recommending any changes to the Principles to the Board.

 

Independence of Directors

 

The Principles provide that a substantial majority of the members of the Board must meet the criteria for independence as required by applicable law and the listing standards of the NYSE. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with us. On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire which requires disclosure of any transactions with us in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. We also review our relationship to any entity employing a director or on which the director currently serves as a member of the Board.

 

In determining that Mr. Conway is independent, the Board considered our payments to Salesforce.com in 2011. Mr. Conway is a member of the board of directors of Salesforce.com.

 

In determining that Mr. Donofrio is independent, the Board considered our payments to Liberty Mutual Insurance Company, a subsidiary of Liberty Mutual Holding Company Inc. (LMHC). Mr. Donofrio is a member of the board of directors of LMHC.

 

The Board concluded that there are no business relationships that are material or that would interfere with the exercise of independent judgment by any of the independent directors in his or her service on our Board of Directors or the Audit and Finance Committee, and determined that all directors who served during 2011 and all of our director nominees, other than Mr. Muhairi and Mr. Read, are independent in accordance with SEC and NYSE rules.

 

Board Leadership Structure

 

Mr. Claflin, who is independent in accordance with SEC and NYSE rules, is our Chairman of the Board. Mr. Claflin presides at meetings of our stockholders and directors and leads the Board in fulfilling its responsibilities. For the reasons set forth below, the Board has determined that its current leadership structure, including an independent Chairman of the Board, is appropriate at the present time and allows the Board to fulfill its duties effectively and efficiently based on AMD’s current needs.

 

Historically, our Board relied on a lead independent director who worked with our Chief Executive Officer who was also the Chairman of the Board. However, with the transition to a new Chief Executive Officer, Derrick R. Meyer, in 2008 and the retirement of our Executive Chairman and Chairman of the Board in March 2009, our Board of Directors determined that it was appropriate, based on the condition of the Company and overall industry environment, to appoint Mr. Claflin as our independent Chairman of the Board. Mr. Meyer assumed his position at time when the PC industry was facing its worst recession in history, and AMD was experiencing a number of financial and operational challenges. In January 2011, Mr. Meyer resigned as our President and Chief Executive Officer and member of our Board, and Thomas J. Seifert, who joined AMD in October 2009 as our

 

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Senior Vice President and Chief Financial Officer, was appointed interim Chief Executive Officer. At the same time, Mr. Claflin was appointed as our independent, non-employee Executive Chairman of the Board. During his tenure as Executive Chairman, Mr. Claflin provided additional oversight during the transition period while also leading the CEO recruitment process on behalf of the Board. However, Mr. Claflin was neither an officer nor an employee of the Company, and he did not receive any compensation from the Company other than in connection with his Board service. Mr. Seifert and Mr. Claflin served in these interim positions until August 25, 2011. On August 25, 2011, Mr. Rory P. Read was appointed as our new President and Chief Executive Officer and a member of our Board. Since assuming these roles, Mr. Read has been focusing on AMD’s strategy and market opportunities as well as on AMD’s organizational structure and execution capabilities. Given the time-consuming nature of these activities and in light of the senior leadership transition during 2011, we believe that at this time a structure that relies on a dedicated, independent Chairman is appropriate. Mr. Claflin resumed his position as Chairman of the Board on August, 25, 2011.

 

Risk Oversight

 

Management is responsible for day to day risk management activities and processes while our Board of Directors is actively involved in overseeing risk management for AMD. The Board and management consider “risk” for these purposes to be the possibility that an undesired event could occur that might adversely affect the achievement of our objectives. Examples of the types of risks faced by AMD include:

 

   

business-specific risks related to relationships with our third party manufacturing suppliers, competition in the microprocessor and graphics markets, our ability to develop new products and services, our strategic position in key existing and new markets, operational execution and infrastructure;

 

   

macro-economic risks, such as adverse global economic conditions; and

 

   

“event” risks, such as natural disasters.

 

AMD engages in activities that seek to take calculated risks that protect the value of its existing assets and create new or future value. Management is responsible for day to day risk management activities and processes. A risk management committee, comprised of members of AMD management from various functional groups, is responsible for developing risk management standards, methodologies and tools for documenting and managing risks; with input from our Chief Executive Officer and the Board, identifying, consolidating and assessing emerging enterprise risks and mapping risks to company strategy; monitoring risk mitigation activities and escalating matters, as needed, to the Chief Executive Officer and the Board. The risk management committee also conducts the annual enterprise risk assessment. Members of senior management participate in identifying risks and risk controls, developing recommendations to determine the appropriate manner in which to control risk and implementing risk mitigation activities. Our Chief Executive Officer has ultimate responsibility for management of AMD’s business, including enterprise level risks and the risk management program and processes.

 

In fulfilling its oversight role, our Board focuses on understanding the nature of our enterprise risks, including reputational risk, risk in our operations, finances and strategic direction as well as the adequacy of our risk assessment and risk management processes. Our Board performs this oversight function primarily through management reports and committees of the Board. At least annually, our Board discusses with management and the risk management committee the appropriate level of risk relative to our corporate strategy and business objectives and reviews with management and the risk management committee our existing risk management processes and their effectiveness. As well, the Board receives periodic management updates on our business operations, financial results and strategy and, as appropriate, discusses and provides feedback with respect to risks related to these topics. In addition, the Board receives full reports from each committee chair regarding the committee’s considerations and actions related to the specific risk topics over which the committee has oversight.

 

The Audit and Finance Committee assists the Board in overseeing the Company’s enterprise risk management process; reviews the Company’s portfolio of risk; discusses with management significant financial,

 

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reporting, regulatory and legal compliance risks in conjunction with enterprise risk exposures; reviews the Company’s policies with respect to risk assessment and risk management and the actions management has taken to limit, monitor or control financial and enterprise risk exposure. The Audit and Finance Committee meets with members of our Internal Audit department to discuss any issues that warrant attention.

 

The Compensation Committee oversees risk management as it relates to our compensation policies and practices and has reviewed with management whether our compensation programs may create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on the Company. For additional detail regarding the Compensation Committee’s review of the risks related to our compensation policies and practices, see the section titled “Compensation Policies and Practices,” below.

 

Majority Vote Standard

 

Our directors are elected using a majority vote standard with respect to uncontested elections. The standard requires each director to receive the affirmative vote of a majority of the votes cast to be elected. A majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. In contested elections, where the number of nominees exceeds the number of directors to be elected, the vote standard will be a plurality of votes cast. Each incumbent director has submitted a written resignation which will be effective if he/she does not receive a majority of the votes cast for such director and the resignation is accepted by the Nominating and Corporate Governance Committee, another authorized committee of the Board or the Board.

 

Code of Ethics

 

The Board of Directors has adopted a code of ethics that applies to all directors and employees entitled, “Worldwide Standards of Business Conduct,” which we designed to help directors and employees resolve ethical issues encountered in the business environment. The Worldwide Standards of Business Conduct covers topics such as conflicts of interest, compliance with laws, fair dealing, protecting AMD property and confidentiality of AMD information and encourages the reporting of any behavior not in accordance with the Worldwide Standards of Business Conduct.

 

The Board of Directors has also adopted a Code of Ethics for our executive officers and all other senior finance executives. The Code of Ethics covers topics such as financial reporting, conflicts of interest and compliance with laws, rules, regulations and our policies.

 

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

 

Each of the Committees described below has adopted a charter, which has been approved by the Board. You can access our bylaws, the latest Committee Charters, the Principles, the Worldwide Standards of Business Conduct and the Code of Ethics on the Investor Relations Web page of our Web site at www.amd.com or ir.amd.com. Please note that information contained on our Web site is not incorporated by reference in, or considered to be a part of, this document.

 

The Board held seven meetings during 2011. All members of the Board attended at least 75 percent of the meetings of the Board and Committees of the Board on which they served in 2011. Typically, meetings of the Board and the Committees of the Board take place over a two-day period. In addition, on at least an annual basis, the Board holds a formal strategy meeting with management during which the Board and management discuss matters such as the strategic direction of AMD, new business opportunities and the product roadmap. Independent and non-management directors also meet regularly in scheduled executive sessions with our Chief Executive Officer and other members of senior management. In addition to these formal meetings, members of our Board informally interact with senior management, the Chief Executive Officer, industry leaders and customers on a periodic basis. The Board has an Audit and Finance Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. The members of the Committees and their Chairs are selected by the Nominating and Corporate Governance Committee and appointed by the Board. Sessions of the non-management directors were held four times in 2011, and one of these sessions was comprised of only independent directors.

 

Audit and Finance Committee.    The Audit and Finance Committee consists of Dr. W. Michael Barnes, as Chair, Mr. Henry WK Chow and Mr. Robert B. Palmer. Mr. Caldwell served on the Committee until May 2011. Mr. Henry WK Chow was appointed to the Committee in May 2011. The Board determined that each of the committee members that served during 2011 was, and that each of the current committee members is, financially literate and “independent” under the applicable SEC and NYSE rules and designated Dr. Barnes as the “audit committee financial expert.” Prior to Mr. Caldwell’s departure from the Committee, he was also designated as an “audit committee financial expert.” The Audit and Finance Committee assists the Board with its oversight responsibilities regarding the integrity of our financial statements, our compliance with legal and regulatory requirements, risk assessment, the performance of our internal audit function, our financial affairs and policies and the nature and structure of major financial commitments. The Audit and Finance Committee is also directly responsible for the appointment, independence, compensation, retention and oversight of the work of the independent registered public accounting firm, which reports directly to the Audit and Finance Committee. The Audit and Finance Committee meets alone with our senior management, our financial, legal and internal audit personnel, and with our independent registered public accounting firm, which has free access to the Audit and Finance Committee. The Corporate Vice President of our Internal Audit Department reports directly to the Chair of the Audit and Finance Committee and “dotted-line” to our Chief Financial Officer and serves a staff function for the Audit and Finance Committee. The Audit and Finance Committee held 12 meetings during 2011.

 

Nominating and Corporate Governance Committee.    The Nominating and Corporate Governance Committee consists of Mr. Bruce L. Claflin, as Chair, Dr. W. Michael Barnes, Mr. John E. Caldwell, Mr. Henry WK Chow, Mr. Craig A. Conway, Mr. Nicholas M. Donofrio, Ms. H. Paulett Eberhart and Mr. Robert B. Palmer, each determined by the Board of Directors to be “independent” under the applicable SEC and NYSE rules. Mr. Chow was appointed to the Nominating and Corporate Governance Committee in March 2011. Mr. Claflin serves as Chair of the Committee. The Nominating and Corporate Governance Committee assists the Board in discharging its responsibilities regarding the identification of qualified candidates to become Board members, the selection of nominees for election as directors at the next annual meeting of stockholders (or special meeting of stockholders at which directors are to be elected), the selection of candidates to fill any vacancies on the Board, the development and recommendation to the Board of corporate governance guidelines and principles, including the Principles, and oversight of the evaluation of the Board and management. In addition, the Nominating and Corporate Governance Committee oversees the Board of Directors’ annual review of its performance (including

 

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its composition and organization), leads a process for the non-management directors to evaluate the performance of our Chief Executive Officer and provides input regarding the evaluation of other Section 16 officers. The Nominating and Corporate Governance Committee retains a search firm for the purpose of obtaining information regarding potential candidates for Board membership.

 

The Nominating and Corporate Governance Committee met four times in 2011. The Nominating and Corporate Governance Committee met one time during 2012 to consider director nominees for the 2012 Annual Meeting and other corporate governance matters. In evaluating candidates to determine if they are qualified to become Board members, the Nominating and Corporate Governance Committee looks principally for the following attributes: personal and professional character, integrity, ethics and values; general business experience and leadership profile, including experience in corporate management, such as serving as an officer or former officer of a publicly held company; strategic planning abilities and experience; aptitude in accounting and finance; expertise in domestic and international markets; experience in our industry and with relevant social policy concerns; understanding of relevant technologies; expertise in an area of our operations; communication and interpersonal skills; and practical and mature business judgment. The Nominating and Corporate Governance Committee also considers Board members’ and nominees’ service on the Board of other public companies. Although we do not have a formal diversity policy, to foster and maintain a diversity of viewpoints, backgrounds and experience on the Board, the Committee evaluates the mix of skills and experience of the directors and assesses nominees and potential candidates in the context of the current composition of the Board and the requirements of the Company, taking into consideration the diverse communities and geographies in which the Company operates. Although the Nominating and Corporate Governance Committee uses these and other criteria to evaluate potential nominees, there are no stated minimum criteria for nominees. The Nominating and Corporate Governance Committee uses the same standards to evaluate all director candidates, regardless of who proposes them.

 

Compensation Committee.    The Compensation Committee consists of Ms. H. Paulett Eberhart, as Chair, Mr. Craig A. Conway, Mr. John E. Caldwell and Mr. Nicholas M. Donofrio. Mr. Caldwell was appointed to the Compensation Committee in May 2011. Each of the members of the committee is “independent” under the applicable SEC and NYSE rules. During 2011, the Compensation Committee held eight formal meetings and one informal meeting. The Compensation Committee assists the Board in discharging its responsibilities relating to the compensation of all Section 16 officers, members of the Board and such other employees as delegated from time to time by the Board of Directors. In consultation with management, the Board and the Compensation Committee’s compensation consultant, the Compensation Committee designs, recommends to the Board for approval and evaluates employment, severance and change of control agreements and our compensation plans, policies and programs with respect to our Section 16 officers. The Compensation Committee reviews and approves all grants under our equity plans, including grants to persons who are not Section 16 officers. To the extent permitted by its charter, the Compensation Committee may delegate certain authority and certain responsibilities to one or more of its members, the officers of the Company or a subcommittee of the Compensation Committee. The Compensation Committee aims to structure our compensation program to encourage high performance, promote accountability and align employee interests with AMD’s strategic goals and with the interests of our stockholders. The Compensation Committee also oversees risk management as it relates to our compensation policies and practices for employees generally.

 

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DIRECTORS’ COMPENSATION AND BENEFITS

 

Our directors play a critical role in guiding our strategic direction and overseeing our management. In order to compensate them for their substantial time commitment, we provide a mix of cash and equity-based compensation. We do not provide pension or retirement benefits to our non-employee directors.

 

Key Directorship Changes in 2011.

 

Effective January 10, 2011, Derrick R. Meyer, our former President and Chief Executive Officer, resigned from the Board and Bruce L. Claflin was appointed Executive Chairman of the Board.

 

Effective February 26, 2011, Henry WK Chow was appointed as a member of the Board.

 

Effective August 25, 2011, Rory P. Read, our current President and Chief Executive Officer, was appointed as a member of the Board, and Mr. Claflin resumed his duties as Chairman of the Board.

 

Non-Employee Director Compensation. The table below summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31, 2011. Messrs. Meyer and Read did not receive any compensation for their service as a director of the Company.

 

2011 NON-EMPLOYEE DIRECTOR COMPENSATION

 

Name

(a)


   Fees Earned or
Paid in  Cash(1)
$
(b)


     Stock
Awards(2)(3)
$
(c)


    Total
$
(h)


 

W. Michael Barnes

   $ 94,800       $ 238,691      $ 333,491   

John E. Caldwell

   $ 65,000       $ 238,691      $ 303,691   

Henry WK Chow

   $ 48,750       $ 261,281 (4)    $ 310,031   

Bruce L. Claflin

   $ 178,750       $ 572,453 (5)    $ 751,203   

Craig A. Conway

   $ 66,200       $ 238,691      $ 304,891   

Nicholas M. Donofrio

   $ 65,000       $ 238,691      $ 303,691   

H. Paulett Eberhart

   $ 81,200       $ 238,691      $ 319,891   

Waleed Muhairi

   $ 65,000       $ 238,691      $ 303,691   

Robert B. Palmer

   $ 69,800       $ 238,691      $ 308,491   

(1) The amounts reflected in this column consist of the annual retainer, additional retainers for directors who chair a Board committee and attendance fees, where applicable. Mr. Chow was appointed to our Board in February 2011, and his annual retainer was pro-rated.
(2) This column reflects the aggregate grant date fair value of the respective director’s 2011 RSU award(s) computed in accordance with FASB ASC Topic 718, except no assumptions for forfeitures were included. For a discussion of the assumptions made in the valuations reflected in this column, see Note 14 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. The actual value that a director may realize from a RSU award is contingent upon the satisfaction of the conditions to vesting of that award. Thus, there is no assurance that the value, if any, eventually realized by the director will correspond to the amounts shown.

 

17


     The following table reflects each RSU awarded to each non-employee director in 2011, together with the aggregate grant date fair value of such awards computed in accordance with FASB ASC Topic 718 (except no assumptions for forfeitures were included):

 

Name


   Grant Date

     Restricted Stock Units
Granted
#


   Grant Date Fair Value of
Restricted Stock Units
$


 

W. Michael Barnes

     5/3/2011       27,124    $ 238,691   

John E. Caldwell

     5/3/2011       27,124    $ 238,691   

Henry WK Chow

     2/26/2011       28,125    $ 261,281   

Bruce L. Claflin

     1/10/2011       10,345    $ 95,071   
        
       5/3/2011       54,248    $ 477,382   

Craig A. Conway

     5/3/2011       27,124    $ 238,691   

Nicholas M. Donofrio

     5/3/2011       27,124    $ 238,691   

H. Paulett Eberhart

     5/3/2011       27,124    $ 238,691   

Waleed Muhairi

     5/3/2011       27,124    $ 238,691   

Robert B. Palmer

     5/3/2011       27,124    $ 238,691   

 

(3) The aggregate number of outstanding stock awards which consisted of RSUs and stock options held by our non-employee directors as of December 31, 2011 are in the following table. Messrs. Caldwell and Palmer elected to defer the issuance of the underlying shares subject to RSU awards until the termination of their directorship pursuant to our Outside Director Equity Compensation Policy.

 

Name


   RSUs Outstanding
as of December 31,
2011


     Option Awards
Outstanding as of
December 31,
2011


 

W. Michael Barnes

     62,545         103,710   

John E. Caldwell

     133,374         50,000   

Henry WK Chow

     28,125         0   

Bruce L. Claflin

     155,501         117,500   

Craig A. Conway

     62,545         0   

Nicholas M. Donofrio

     43,794         0   

H. Paulett Eberhart

     95,875         72,224   

Waleed Muhairi

     51,084         0   

Robert B. Palmer

     133,374         88,890   

 

(4) As further discussed below under “Equity Awards,” Mr. Chow was eligible to receive 28,125 RSUs on February 26, 2011, the date he was initially appointed to the Board, which was equal to the annual RSU award granted to the non-employee directors at the 2010 annual meeting of stockholders; however, he was not eligible to receive the Annual RSU Award (as defined below) on the date of the 2011 annual meeting of stockholders held on May 3, 2011, as he had not served on the Board for at least 6 months prior to such date.
(5) As Chairman, Mr. Claflin’s annual 2011 RSU award was two times the annual RSU award of the other non-employee directors, or 54,248 RSUs. In connection with his appointment as non-employee Executive Chairman in January 2011, as further discussed below, the Board awarded Mr. Claflin an additional 10,345 RSUs.

 

Determining Non-Employee Director Compensation.     The Compensation Committee annually recommends the non-employee directors’ compensation to the Board for approval. During 2011, the Compensation Committee retained Compensia, Inc., as its compensation consultant to obtain objective, expert advice on executive and director compensation.

 

The Compensation Committee evaluates how our director pay levels and pay policies compare to the competitive market. Specifically, the Compensation Committee reviews competitive market data compiled by its compensation consultant from a custom group of peer companies. While the competitive market data derived from the custom peer group is important to the evaluation of the directors’ compensation, it is just one of several factors considered by the Board in approving director compensation and the Board has discretion in determining the nature and extent of its use. For further discussion of the custom peer group, see the section titled “Compensation Discussion and Analysis—AMD’s Executive Compensation Framework” below.

 

18


For 2011, there were no changes to the non-employee directors’ compensation from 2010, other than related to the Chairman of the Board, as further discussed below.

 

Cash Retainer and Meeting Fees for Non-Employee Directors.     During 2011, each of our non-employee directors, with the exception of the Chairman of the Board, received an annual retainer of $65,000 for serving as a director and each of the applicable additional retainers and attendance fees set forth below for serving as a chair of one of the committees of the Board.

 

Additional Retainers for Committee Chairs:

        

Audit and Finance Committee

   $ 25,000   

Compensation Committee

   $ 15,000   

Nominating and Corporate Governance Committee

   $ 0   

 

In addition, when the Board or a Board committee has met more than eight times during the year, we pay an attendance fee to our non-employee directors for each additional meeting attended, in the following amounts:

 

Board meeting attendance

   $ 2,000   

Committee meeting attendance

   $ 1,200   

 

For his service as Chairman of the Board, Mr. Claflin received an annual cash retainer of $140,000. In connection with Mr. Claflin’s appointment as Executive Chairman of the Board in January 2011, the Board increased his annual retainer to $16,250 per month, or $195,000 annually, and approved an additional award of 10,345 RSUs. Upon Mr. Read’s appointment as our President and Chief Executive Officer and director in August 2011, Mr. Claflin resumed his position as Chairman of the Board.

 

In October 2011, based upon the competitive market data provided to the Board by Compensia, the Board determined that the Chairman of the Board’s annual retainer should be 1.5 times the annual retainer of the other non-employee directors. Accordingly, the Board reduced Mr. Claflin’s annual retainer to $97,500, effective as of October 2011.

 

Equity Awards.     In order to align the long-term interests of our directors with those of stockholders, a substantial portion of director compensation is provided in the form of equity. Non-employee directors participate in our 2004 Plan and are generally eligible to receive an annual equity award in the form of RSUs (the “Annual RSU Award”) at each annual meeting of stockholders. For 2011, our Outside Director Equity Compensation Policy provided that at each annual meeting of our stockholders, each non-employee director who had served on the Board for at least six months prior to such annual meeting was granted the number of RSUs equal to the lesser of (A) the quotient of (i) $225,000 divided by (ii) the trailing average closing price of our common stock for the 180-day period preceding and ending with the date of the RSU grant or (B) such number of RSUs as the Board may have determined based on additional criteria such as business conditions and/or Company performance, outside director compensation practices at peer companies and advice from our compensation consultant. As discussed further below, the calculation of the Annual RSU Award will change commencing with the Annual Meeting.

 

If a non-employee director is appointed to the Board other than on the date of an annual meeting of stockholders, as was the case with Mr. Chow in 2011, such director is entitled to receive an initial RSU award (each, an “Off-Cycle RSU Grant”) equal to the Annual RSU Award granted to the other non-employee director at the immediately preceding annual meeting of stockholders.

 

For 2011, the non-employee directors’ RSUs vest in equal one-third installments over three years from the date of grant.

 

19


Acceleration of Vesting.     Pursuant to our Outside Director Equity Compensation Policy, in the event of a change of control of AMD, all of the non-employee directors’ equity compensation awards will become fully vested. In addition, in the event of the termination of a non-employee director’s service to the Board as a result of death, disability or retirement, all of the non-employee director’s equity compensation awards will become fully vested, provided that the non-employee director served as a member of the Board for at least three years prior to the date of termination and the non-employee director satisfied our equity ownership guidelines during his or her service as a Board member.

 

Other Benefits.     We reimburse the directors for their travel and expenses in connection with attending Board meetings and Board-related activities, such as AMD site visits and sponsored events, as well as for continuing education programs.

 

Stock Ownership Guidelines.     In October 2011, the Compensation Committee increased the ownership levels under AMD’s stock ownership guidelines to strengthen the alignment of the interests of our executive officers, directors and stockholders. Under our amended stock ownership guidelines, non-employee directors, other than the Chairman of the Board, are required to hold the lesser of (i) the number of shares equivalent to three times the then-current annual retainer divided by the average closing price of our common stock for the 30-day period immediately preceding and ending with the date of the annual meeting of stockholders or (ii) 30,000 shares. The ownership guideline for the non-employee Chairman of the Board is the lesser of (i) the number of shares equivalent to three times the then-current annual retainer divided by the average closing price of our common stock for the 30-day period immediately preceding and ending with the date of the annual meeting of stockholders or (ii) 45,000 shares.

 

The amended stock ownership guidelines must be achieved by each non-employee director within the later of (i) the five-year anniversary of the adoption of the amended stock ownership guidelines (October 2016) or (ii) the five-year anniversary of the respective director’s first election or appointment to the Board or first appointment as Chairman of the Board, as applicable.

 

Until the stock ownership guidelines are achieved, each director is encouraged to retain at least 10% of the “net shares” (as defined below) obtained through the Company’s stock incentive plans. Shares counted toward the minimum stock ownership requirements include (i) shares held directly by a director, (ii) RSUs that have vested, but where the issuance of the shares have been deferred by the director pursuant to our Outside Director Equity Compensation Policy and (iii) 50% of exercisable, “in the money” stock options.

 

“Net shares” are the number of shares from the sale of stock options or the vesting of restricted stock, less the number of shares the director sells to cover the exercise price of stock options and sells or has withheld to pay taxes.

 

All of the non-management directors were either in compliance with or on target to meet their previous stock ownership guidelines before they were revised in October 2011, and, as of December 31, 2011, all of the non-management directors were on target to meet the revised stock ownership guidelines within the established compliance time frame.

 

2012 Non-Employee Director Compensation.     With the assistance of Compensia, the Board made the following changes to the non-employee directors’ compensation, effective from the Annual Meeting:

 

   

The Chair of the Nominating and Corporate Governance Committee is entitled to an additional retainer of $10,000; provided, however, the additional retainer is subject to waiver if the Chairman of the Board also serves as the Chair of the Nominating and Corporate Governance Committee; and

 

20


   

The Company’s Outside Director Equity Compensation Policy is amended to provide that:

 

  (i) the Annual RSU Award will be calculated based on the following formula, with no discretionary component: the quotient of (i) $225,000 divided by (ii) the trailing average closing price of our common stock for the 30-day period preceding and ending with the date of the RSU grant;

 

  (ii) in the case of a non-employee director who has served on the Board for less than six months prior to an annual meeting of stockholders, such director’s Annual RSU Award shall be prorated based on the number of months of service before the respective annual meeting of stockholders. For purposes of the pro-rata calculation, service during any portion of a month, counts as a full month of service; and

 

  (iii) commencing with the Annual Meeting, the RSUs granted pursuant to an Off-Cycle RSU Grant or an Annual RSU Award vest as to 100% and becomes fully exercisable on the one-year anniversary of the respective grant date.

 

21


PRINCIPAL STOCKHOLDERS

 

The following table shows each person or entity we know to be the beneficial owner of more than five percent of our common stock as of March 5, 2012.

 

Name and Address of Beneficial Owner


  

Number of Shares Beneficially Owned


   Percent
of  Class(1)


 

West Coast Hitech, L.P.(2)

   142,000,000      19.34

P.O. Box 309 GT

Ugland House, South Church Street

George Town, Grand Cayman, Cayman Islands

  

(shared voting and shared dispositive power as to all shares)

        

Ameriprise Financial, Inc.(3)

   79,787,776      11.41

145 Ameriprise Financial Center

Minneapolis, Minnesota 55474

  

(shared voting power as to 33,625,393 shares; shared dispositive power as to all shares)

        

(1) Based on 699,268,761 shares of common stock outstanding as of March 5, 2012.
(2) This information is based on Amendment No. 2 of Schedule 13D filed with the SEC on July 24, 2009 by Mubadala Development Company PJSC, West Coast Hitech L.P., and West Coast Hitech G.P. Ltd. pursuant to a joint filing agreement. Mubadala is a public joint stock company incorporated in the Emirate of Abu Dhabi, United Arab Emirates and is wholly-owned by the Government of the Emirate of Abu Dhabi. The 142,000,000 shares are held as of record by West Coast Hitech, L.P., a Cayman Islands limited partnership of which West Coast Hitech G.P., Ltd., a Cayman Islands corporation and wholly-owned subsidiary of Mubadala, is the general partner. The shares include warrants to purchase an additional 35,000,000 shares of our common stock at an exercise price of $0.01 per share held by West Coast Hitech L.P. The warrants are currently exercisable and have a ten-year term.
(3) This information is based on Amendment No. 3 of Schedule 13G filed with the SEC on February 14, 2012 by Ameriprise Financial, Inc. (“AFI”) and Columbia Management Investment Advisers, LLC (“CMIA”) pursuant to a joint filing agreement. CMIA, a wholly-owned subsidiary of AFI, is an investment advisor and has shared voting power with AFI as to 33,625,393 shares and shared dispositive power with AFI as to 79,787,776 shares of our common stock. AFI, as the parent company of CMIA, may be deemed to beneficially own the shares reported herein by CMIA. Accordingly, the shares reported herein by AFI include the shares reported by CMIA. Each of AFI and CMIA disclaims beneficial ownership of any of these shares.

 

22


SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

 

The table below shows the number of shares of our common stock beneficially owned as of March 5, 2012, by our current directors, by our Named Executive Officers (as defined in the “Compensation Discussion and Analysis” section below) and by all of our current directors and executive officers as a group. Except as otherwise indicated, each person has sole investment and voting power with respect to the shares shown as beneficially owned. Ownership information is based upon information provided by the individuals.

 

Name


   Amount and
Nature

of Beneficial
Ownership(1)(2)


     Percent
of  Class(3)


 

Rory P. Read

     0         *   

Dr. W. Michael Barnes

     196,680         *   

John E. Caldwell

     62,500         *   

Henry WK Chow

     0         *   

Bruce L. Claflin

     316,226         *   

Craig A. Conway

     39,745         *   

Nicholas M. Donofrio

     42,371         *   

H. Paulett Eberhart

     132,430         *   

Waleed Muhairi(5)

     142,029,666         19.34

Robert B. Palmer

     201,000         *   

Emilio Ghilardi

     217,647         *   

Mark D. Papermaster

     0         *   

Thomas J. Seifert

     560,830         *   

Harry A. Wolin

     611,154         *   

Rick Bergman

     572,291         *   

Derrick R. Meyer(4)

     2,581,250         *   

All directors and current executive officers as a group (14 persons)

     144,048,693         19.58

* Less than one percent
(1) Some of the individuals may share voting power with their spouses with regard to the listed shares.
(2) Includes beneficial ownership of the following number of shares that may be acquired because stock options are vested or will vest, or RSUs will vest, by May 4, 2012 (within 60 days of March 5, 2012) pursuant to our 2004 Plan:

 

     Shares

 

Rory P. Read

     0   

Dr. W. Michael Barnes

     112,751   

John E. Caldwell

     50,000   

Henry WK Chow

     0   

Bruce L. Claflin

     147,312   

Craig A. Conway

     9.041   

Nicholas M. Donofrio

     9,041   

H. Paulett Eberhart

     81,265   

Waleed Muhairi

     35,009,041   

Robert B. Palmer

     88,890   

Emilio Ghilardi

     210,891   

Mark D. Papermaster

     0   

Thomas J. Seifert

     333,324   

Harry A. Wolin

     449,915   

Rick Bergman

     474,837   

Derrick R. Meyer

     2,581,250   

All directors and current executive officers as a group (14 persons)

     36,290,580   

 

23


(3) Based on 699,268,761 shares of common stock outstanding as of March 5, 2012.
(4) Mr. Meyer resigned as our President and Chief Executive Officer and member of our Board of Directors, effective January 10, 2011. The vesting of Mr. Meyer’s RSUs and stock option awards was accelerated, and all his equity awards became fully vested, in connection with his resignation and pursuant to the terms of his employment agreement with us dated July 17, 2008 and his separation agreement and release dated January 10, 2011. Mr. Meyer received the shares issuable under the fully vested RSUs on January 18, 2011, the effective date of his release pursuant to the Age Discrimination in Employment Act of 1967, as amended ( the (“ADEA release) per the terms of the separation agreement.
(5) The shares include 107,000,000 shares and warrants to purchase an additional 35,000,000 shares of our common stock at an exercise price of $0.01 per share (the “WCH Shares”) held by West Coast Hitech L.P., a Cayman Islands limited partnership of which West Coast Hitech G.P., LTD., a Cayman Islands corporation and wholly-owned subsidiary of Mubadala Development Company PJSC (Mubadala) is the general partner. Mr. Muhairi is the COO of Mubadala and disclaims beneficial ownership of the WCH Shares. The warrants are currently exercisable and have a ten-year term.

 

24


EXECUTIVE OFFICERS

 

The following persons were our executive officers as of March 5, 2012:

 

Rory P. Read—Mr. Read, 50, is our President and Chief Executive Officer. He is also a member of our Board of Directors. Mr. Read joined AMD as President and Chief Executive Officer on August 25, 2011. Before joining AMD, Mr. Read served as President and Chief Operating Officer of Lenovo Group, Ltd., a manufacturer and provider of computers and information technology management software, from February 2009 to August 2011, where he was responsible for leading day-to-day global operations while overseeing the development and implementation of Lenovo’s growth strategy. Prior to serving as Lenovo’s President and Chief Operating Officer, Mr. Read served as Lenovo’s Senior Vice President, Operations, from July 2006 to February 2009. During his five years at Lenovo, Mr. Read helped take the company into dynamic new markets, including Lenovo’s entry into the tablet and smartphone markets, while growing market share and expanding profitability. Prior to Lenovo, Mr. Read had a 23-year career at IBM, where he held various management positions, including Managing Partner for IBM’s Business Consulting Services division where he led the division through a successful turnaround, and Executive Vice President of Global Business Transformation, IBM Global Services, where he was responsible for worldwide leadership of IT initiatives and business transformation. Mr. Read graduated magna cum laude with a bachelor’s degree in Information Systems from Hartwick College.

 

Thomas J. Seifert—Mr. Seifert, 48, is our Senior Vice President and Chief Financial Officer. Mr. Seifert joined AMD in October 2009 and served as our interim Chief Executive Officer from January 10, 2011 until August 25, 2011. From October 2008 until joining AMD, Mr. Seifert served as chief operating officer and chief financial officer of Qimonda AG, a German memory chip manufacturer, where he led the formation and subsequent initial public offering of the company. From April 2006 to October 2008, Mr. Seifert served as Chief Operating Officer of Qimonda AG. Qimonda generated net sales of Euro 1.79 billion in fiscal 2008 and had, prior to commencing insolvency proceedings in early 2009, approximately 12,200 employees worldwide. From 2001 to April 2006, Mr. Seifert was Senior Vice President and General Manager of the Wireline Business Group at Infineon AG. He has also held executive positions at Siemens AG, White Oak Semiconductor, and Altis Semiconductor, a joint venture launched in 1992 between IBM and Siemens Semiconductor. Mr. Seifert has a bachelor’s degree and a master’s degree in business administration from Friedrich Alexander University and a master’s degree in mathematics and economics from Wayne State University. He currently serves on the board of Virginia Commonwealth University’s School of Engineering.

 

Mark D. Papermaster—Mr. Papermaster, 50, is our Senior Vice President and Chief Technology Officer. Mr. Papermaster joined AMD in October 2011. From November 2010 to October 2011, Mr. Papermaster served as Vice President of the Silicon Engineering Group of Cisco Systems, Inc., a company that designs, manufactures and sells Internet Protocol-based networking and other products related to the communications and IT industry, where he was responsible for the silicon strategy, architecture, and development for the company’s switching and routing businesses. Prior to Cisco, Mr. Papermaster served as Senior Vice President of Device Hardware Engineering at Apple Inc. from November 2008 to August 2010 responsible for iPod and iPhone hardware development. Prior to his employment at Apple, Mr. Papermaster held a number of senior leadership roles at IBM, most recently as VP of Blade Server Development from October 2006 to October 2008. He also served on the company’s technical leadership team and oversaw development of key microprocessors and blade server technologies. Mr. Papermaster has a bachelor’s degree in electrical engineering from The University of Texas at Austin and a master’s degree in electrical engineering from The University of Vermont. He is a member of the University of Texas Cockrell School of Engineering Advisory Board and the Juvenile Diabetes Research Foundation IT Advisory Committee. He has also served on the Technical Advisory Board of Philips Lumileds Lighting Company, a leading manufacturer of high-power LEDs and a pioneer in the use of solid-state lighting solutions, since 2011.

 

Lisa Su—Dr. Su, 42, is our Senior Vice President and General Manager, Global Business Units. Dr. Su joined AMD in January 2012. Prior to AMD, Dr. Su served as Senior Vice President and General Manager,

 

25


Networking and Multimedia at Freescale Semiconductor, Inc., a company that designs and manufactures embedded processors, where she led the embedded communications and applications processor businesses. Dr. Su joined Freescale in 2007 as chief technology officer, where she led the company’s technology roadmap and research and development efforts. She was promoted to senior vice president and general manager, networking and multimedia in September 2008. Prior to her employment with Freescale, Dr. Su spent thirteen years with IBM in various engineering and business leadership positions, including vice president of the Semiconductor Research and Development Center responsible for the strategic direction of IBM’s silicon technologies, joint development alliances and semiconductor R&D operations. Dr. Su has bachelor’s, master’s and doctorate degrees in electrical engineering from the Massachusetts Institute of Technology (MIT), has been published in more than 40 technical publications, and was named a Fellow of the Institute of Electronics and Electrical Engineers (IEEE) in 2009. Dr. Su was also named in MIT Technology Review’s Top 100 Young Innovators in 2002.

 

Harry A. Wolin—Mr. Wolin, 49, is our Senior Vice President, General Counsel and Corporate Secretary. Mr. Wolin was appointed as our Corporate Secretary in April 2010. Prior to becoming General Counsel in 2003, Mr. Wolin was our Vice President, Intellectual Property. Before joining AMD in 2000, Mr. Wolin spent twelve years at Motorola, Inc. (now known as Motorola Mobility Holdings, Inc.), a provider of technologies, products and services that enable a broad range of mobile and wireline, digital communication, information and entertainment experiences, where his last role was Vice President and Director of Legal Affairs for the Semiconductor Products Sector. Mr. Wolin received the 2008 Magna Stella award for innovative management from the Texas General Counsel Forum. He is a member of the State Bars of Arizona and Texas and is registered to practice before the United States Patent and Trademark Office. Mr. Wolin has a bachelor’s degree in chemistry from the University of Arizona and a juris doctor degree from Arizona State University. Mr. Wolin served as a member of the Board of Directors of GLOBALFOUNDRIES Inc. from February 2011 through March 4, 2012.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

We believe that during 2011, none of our directors, Section 16 officers and beneficial owners of more than 10% of our common stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act. In making the above statement, we have relied solely upon a review of information provided to us and upon the written representations of our directors and Section 16 officers.

 

26


EQUITY COMPENSATION PLAN INFORMATION

 

The following table provides information as of December 31, 2011 with respect to shares of our common stock that may be issued under our existing equity compensation plans. Our 2004 Plan, which was approved by our stockholders, is our only equity incentive plan available for the grant of new equity awards. Outstanding options and any full value awards are not transferable for consideration.

 

Equity Compensation Plan Information

 

     Fiscal Year Ended December 31, 2011

 
     Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights


    Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights


     Number of
Securities
Remaining
Available for
Future Issuance Under
Equity Compensation
Plans (excluding
securities reflected in
column(a))


 
     (a)

    (b)

     (c)

 

Equity compensation plans approved by stockholders

     56,504,982        —           10,395,376   

Options

     32,927,462      $ 7.14         —     

Awards

     23,577,520        —           —     

Equity compensation plans not approved by stockholders

     1,475,496 (1)      —           0   

Options

     1,475,496      $ 12.39         0   

Awards

     0        —           0   
    


 


  


Total

     57,980,478                 10,395,376   

(1) Includes 36,000 shares outstanding from treasury stock issued in 2002 as non-plan grants and 456,430 shares assumed from ATI Technologies Inc. (“ATI”) stock plans with a weighted average exercise price of $12.39 as a result of our acquisition of ATI. We have not made any grants under the ATI stock plans since our acquisition of ATI and do not intend to grant any awards under these plans in the future. See Note 14 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011 for additional information.

 

27


COMPENSATION DISCUSSION AND ANALYSIS

 

This compensation discussion and analysis provides information regarding our executive compensation program in 2011 for the following executive officers (collectively, the “Named Executive Officers”):

 

   

Rory P. Read, our President and Chief Executive Officer;

 

   

Derrick R. Meyer, our former President and Chief Executive Officer;

 

   

Thomas J. Seifert, our Senior Vice President and Chief Financial Officer and former interim Chief Executive Officer;

 

   

Emilio Ghilardi, our Senior Vice President and Chief Sales Officer;

 

   

Mark D. Papermaster, our Senior Vice President and Chief Technology Officer;

 

   

Harry A. Wolin, our Senior Vice President, General Counsel and Secretary; and

 

   

Rick Bergman, our former Senior Vice President and General Manager, Products Group.

 

KEY EXECUTIVE MANAGEMENT CHANGES IN 2011 AND FEBRUARY 2012

 

Derrick R. Meyer resigned as President and Chief Executive Officer and director of AMD effective January 10, 2011. On January 10, 2011, AMD appointed Thomas J. Seifert as interim Chief Executive Officer. Mr. Seifert also continued to serve as Senior Vice President and Chief Financial Officer of AMD.

 

On August 25, 2011, Rory P. Read was appointed President and Chief Executive Officer of AMD. Mr. Read succeeded Mr. Seifert, who continues to serve as Senior Vice President and Chief Financial Officer of AMD.

 

On September 27, 2011, Rick Bergman resigned as Senior Vice President and General Manager, Products Group of AMD.

 

Effective October 24, 2011, Mark D. Papermaster was appointed Senior Vice President and Chief Technology Officer of AMD.

 

Effective February 7, 2012, Emilio Ghilardi left the Company.

 

OVERVIEW OF 2011

 

Addressing the challenges of replacing AMD’s Chief Executive Officer, the Compensation Committee’s major decisions in 2011 were aimed at retaining and motivating AMD’s leaders to reinforce AMD’s position as a design and innovation leader within the semiconductor industry. This included approving compensation that encouraged retention and continuity within AMD’s senior leadership team, which was imperative during the transition to a new Chief Executive Officer. These decisions were taken, as in the past, within the framework of the Compensation Committee’s overall objective of linking a significant percentage of our executives’ compensation to the achievement of AMD’s objectives and strategies.

 

Even in the midst of these events, in 2011 AMD remained profitable and improved its competitive position as a design and innovation leader within the semiconductor industry through the development and launch of a number of key products, including certain AMD Fusion family of accelerated processor unit (APU) products and a number of competitive graphics processor products. The Compensation Committee believes that during 2011 our executive compensation program played a significant role in driving AMD’s financial results and other performance objectives.

 

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The Compensation Committee took the following key actions with respect to the compensation of the Named Executive Officers in 2011:

 

   

Maintained Base Salaries at 2010 Levels, with Two Exceptions. The Compensation Committee did not increase the base salaries of any of the Named Executive Officers in 2011 other than Messrs. Seifert and Bergman. Mr. Seifert’s base salary was increased 15.4% in recognition of, among other things, retention and continuity considerations and his financial leadership during 2010 and 2011 as further discussed below. Mr. Bergman’s base salary was increased 5% in recognition of retention and continuity considerations.

 

   

Paid significantly lower Cash Performance Bonuses under the 2011 Executive Incentive Plan. Due to the decrease in AMD’s non-GAAP operating income in 2011, as compared to 2010, Messrs. Seifert and Wolin each earned a cash performance bonus significantly below their target level.

 

   

The Target Value of Equity Awards either Decreased or Remained Flat, with One Exception. In 2011, the Compensation Committee either reduced or kept flat the target value of equity awards for the then-incumbent Named Executive Officers (i.e., Messrs. Ghilardi, Wolin and Bergman), except for Mr. Seifert. In recognition of, among other things, Mr. Seifert’s financial leadership and expected contributions as a member of our senior leadership team in the future, the target value of his equity awards was increased 25% in 2011.

 

   

Awarded Mr. Seifert a Special Performance Bonus. In recognition of Mr. Seifert’s service as interim Chief Executive Officer of AMD from January 10, 2011 through August 25, 2011, the Compensation Committee awarded him a special performance bonus of $746,000. This bonus was in recognition of Mr. Seifert’s critically important interim leadership and specific achievements in, among other things, (i) providing the leadership necessary for AMD to achieve its first and second quarter earnings guidance for 2011, (ii) accelerating growth in China, and (iii) implementing plans for efficient, repeatable, and scalable systems for key operational processes. Except for this performance bonus, Mr. Seifert did not earn any other compensation for his service as interim Chief Executive Officer of AMD.

 

   

Mr. Read Hired as President and Chief Executive Officer. After an extended and thorough search, Mr. Read was appointed as President and Chief Executive Officer of AMD on August 25, 2011. The terms and conditions of Mr. Read’s employment agreement were the result of arms-length negotiations between him and the Compensation Committee, resulting in 81% of his new-hire compensation package being “at-risk.” The Compensation Committee believes it designed Mr. Read’s new-hire compensation package to be aligned with our stockholders’ interests such that his compensation increases to the extent the Company’s performance increases as further discussed below.

 

   

Mr. Papermaster Hired as Senior Vice President and Chief Technology Officer. Mr. Papermaster was appointed as Senior Vice President and Chief Technology Officer of AMD effective October 24, 2011. The terms and conditions of Mr. Papermaster’s employment were the result of arms-length negotiations, resulting in 75% of his new-hire pay package being “at-risk.”

 

As further discussed in the section titled “Other Aspects of AMD’s Executive Compensation Program” below, the Compensation Committee previously took the following additional actions: (i) implemented “claw-back” provisions/policies, (ii) eliminated, on a going forward basis, excise tax gross-ups with respect to change in control arrangements, and (iii) limited, on a going forward basis, cash severance payments with respect to change in control arrangements to an amount no greater than (A) two times the sum of the respective executive officer’s base salary and target cash bonus, plus (B) a prorated cash bonus for the year in which termination occurs assuming performance at target level. During 2011, the Compensation Committee continued to implement these actions.

 

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2011 STOCKHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

The Compensation Committee has reviewed the voting results from our 2011 advisory vote on executive compensation. Based upon the Inspector of Election’s report, the advisory vote on executive compensation received the favorable support of 94% of the votes cast thereon, reflecting strong stockholder support for our executive compensation program in 2011.

 

In the first quarter of 2012, the Compensation Committee nevertheless made the following changes with respect to our annual cash performance bonuses under the EIP:

 

   

Changed the weighting of the first and second six-month performance periods for all of our senior vice presidents’ (which includes the participating Named Executive Officers’) cash performance bonuses from 33.33% and 66.67%, respectively, to 50% and 50%, respectively, to better align the weighting of the performance periods to current market practices;

 

   

Increased the number of performance measures for which the cash performance bonuses are based upon for all of our senior vice presidents (which includes the participating Named Executive Officers) from only non-GAAP operating income to include revenue, non-GAAP gross margin and non-GAAP net income to reflect AMD’s key objectives for 2012; and

 

   

Messrs. Seifert’s and Wolin’s target cash performance bonus opportunities under the EIP were reduced from 150% to 100% of their respective base salary to effectively balance their pay mix.

 

RORY P. READ’S EMPLOYMENT AGREEMENT

 

In connection with Mr. Read’s appointment as President and Chief Executive Officer of the Company, he entered into an employment agreement, which provides for “at-will” employment. Pursuant to the terms of his employment agreement, Mr. Read is entitled to receive the following compensation and benefits:

 

   

Base Salary. An initial base salary of $1 million. With respect to Mr. Read’s initial base salary, the Compensation Committee reviewed certain competitive market data compiled by Compensia, Inc., its compensation consultant. Mr. Read’s base salary fell within the 50th and 75th percentile of the competitive market data compiled from our custom peer group.

 

   

Sign-On Bonus (Cash). A lump-sum, sign-on bonus of $1 million, up to half of which must be repaid if Mr. Read is not employed with the Company on the two-year anniversary of his hire date for any reason other than a Covered Termination. This sign-on bonus was provided in recognition of foregone bonus payments available to Mr. Read from his prior employer. For the definition of “Covered Termination,” see the section titled “Employment and Related Agreements” below.

 

   

Sign-On Bonus (Equity). A sign-on equity award of 143,000 restricted stock units, which vest 100% on the one-year anniversary of his hire date. This sign-on bonus was provided in recognition of forfeited equity awards when Mr. Read terminated his employment with his prior employer and joined AMD.

 

   

2011 Cash Bonus. A cash bonus equal to 150% of the portion of his base salary payable from August 25, 2011 through December 31, 2011. As a condition of his hire, Mr. Read negotiated for his 2011 cash bonus to be guaranteed. However, commencing in 2012, Mr. Read will participate in the EIP with an initial target bonus opportunity of 150% of his base salary and his cash performance bonus, if any, will be based on our achievement of specified performance goals. The Compensation Committee approved of Mr. Read’s cash bonus being guaranteed at “target” because he joined the Company during the third quarter of 2011.

 

   

Equity Awards. Additional equity awards consisting of (collectively, the “New-Hire Equity Awards”): (i) 717,000 time-based restricted stock units, which vest in three equal annual installments; (ii) 287,000 restricted stock units, which vest in three equal annual installments if (a) the volume weighted average closing price of our common stock over any 30-day period during the three-year vesting period is equal to or greater than $11.00 per share (the “Performance Target”) and (b) Mr. Read continues his employment with us through each applicable vesting date; (iii) 1,847,000 time-based stock options, which vest in three

 

30


 

equal annual installments; and (iv) 739,000 stock options, which vest in three equal annual installments if (a) the Performance Target is satisfied and (b) Mr. Read continues his employment with us through each applicable vesting date.

 

In approving the New-Hire Equity Awards, the Compensation Committee reviewed certain new-hire CEO compensation data compiled by Compensia. The new-hire CEO compensation data was compiled from the following 16 high-technology companies, all of which had revenues between $2 billion and $20 billion and had hired a Chief Executive Officer since 2007: AOL, CA Technologies, Covergys, U.S. Cellular, Electronic Arts, First Solar, Freescale Semiconductor, Juniper Networks, MEMC Electronic Materials, NII Holdings, Qwest Communications, SYNNEX, Unisys, VMware, Xilinx, and Yahoo!. The target value of Mr. Read’s New-Hire Equity Awards fell within the 50th and 75th percentile of the new-hire CEO compensation data.

 

   

Relocation Benefits. Relocation benefits consisting of: (i) two house hunting trips; (ii) packing, moving, and storage costs; (iii) trips between his prior home in Raleigh, North Carolina and Austin, Texas; (iv) temporary living and car rental; (v) an incidental allowance of $12,500; (vi) marketing assistance with the sale of his home; (vii) home loss protection to the extent the sale price of his home is less than the original purchase price; (viii) a home buyout option in the event Mr. Read is unable to sell his home within the first 12 months of his employment with the Company; (ix) a tax gross-up on the home loss protection; (x) normal non-recurring closing costs on the sale of his prior residence and purchase of his new residence; and (xi) other approved reasonable expenses. These relocation expenses, other than the home loss protection and tax gross-up on the home loss protection, are subject to a claw-back provision in the event Mr. Read’s employment is terminated within two years of his hire date.

 

In light of the Compensation Committee’s extended efforts in attracting a high-caliber new Chief Executive Officer and to accelerate Mr. Read’s mobility and advance his productivity, the Compensation Committee determined that it was in the best interests of AMD and our stockholders to extend Mr. Read these relocation benefits as a part of his compensation arrangements. The Compensation Committee believes the above relocation benefits were appropriate under the circumstances to attract Mr. Read to AMD.

 

   

Severance. Certain severance payments and benefits as further described in the section titled “Executive Compensation–Employment and Related Agreements” below.

 

The following graph illustrates the relative weighting of the various pay elements of Mr. Read’s new-hire compensation package.

 

LOGO

 

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MARK D. PAPERMASTER’S OFFER LETTER

 

In connection with Mr. Papermaster’s appointment as Senior Vice President and Chief Technology Officer of the Company, he entered into an employment offer letter with us. Pursuant to the terms of his offer letter, which provides for “at-will” employment, Mr. Papermaster is entitled to receive the following compensation and benefits:

 

   

Base Salary. An initial base salary of $550,000.

 

   

Sign-On Bonus (Cash). A lump-sum, sign-on bonus of $450,000. This sign-on bonus was intended to compensate Mr. Papermaster for forfeited equity awards that he was eligible to receive from his prior employer and the portion of his sign-on bonus from his prior employer that he was required to repay upon accepting employment with the Company. This sign-on bonus is subject to a claw-back provision that provides if Mr. Papermaster’s employment with the Company terminates less than 12 full months after his hire date, he will be required to repay the full amount of the sign-on bonus, less 8.33% for each full month of employment completed.

 

   

2011 Cash Performance Bonus. Eligibility to participate in the EIP for 2011. Mr. Papermaster’s initial target bonus opportunity was set at 100% of his base salary.

 

   

Equity Awards. Equity awards consisting of : (i) 279,661 time-based restricted stock units, which vest in three equal annual installments and (ii) 446,993 time-based stock options, which vest over three years, 33.33% on the one-year anniversary of the grant date and then 8.33% quarterly over the following 24 months.

 

With respect to approving Mr. Papermaster’s initial base salary, target cash performance bonus, and target long-term equity awards, the Compensation Committee reviewed competitive market data compiled by Compensia. Mr. Papermaster’s total direct compensation fell within the 50th and 75th percentile of the competitive market data compiled from our custom peer group.

 

HIGHLIGHTS OF AMD’S EXECUTIVE COMPENSATION PROGRAM

 

In designing and implementing AMD’s executive compensation program, the Compensation Committee is guided by the following principles:

 

Design Principle


  

Discussion


Pay-for-performance is fundamental   

The Compensation Committee places a strong emphasis on performance-based compensation, which is intended to drive the creation of sustainable stockholder value. To this end, a significant portion of the Named Executive Officers’ total direct compensation opportunity is delivered in the form of a cash performance bonus and long-term equity awards.

 

The following graph illustrates the allocation of the total direct compensation opportunity of the Named Executive Officers that remained employed with AMD at the end of 2011:

 

LOGO

 

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Design Principle


  

Discussion


    

The above graph does not include (i) Messrs. Read’s and Papermaster’s sign-on bonuses, (ii) Mr. Read’s sign-on equity award of 143,000 RSUs and 2011 cash bonus and (iii) Mr. Seifert’s special performance bonus, as these elements of compensation are not included in the definition of total direct compensation as further discussed below.

 

The Compensation Committee believes that the above compensation structure and mix strikes an appropriate balance for 2011 by promoting achievement of AMD’s objectives and strategies that drive long-term stockholder value without motivating or rewarding excessive risk-taking.

Competitive compensation is important   

The Compensation Committee generally aims to set each Named Executive Officer’s total direct compensation (i.e., base salary, target cash performance bonus, and target long-term equity awards) between the 50th and 75th percentile of the competitive market data. However, the purpose of the competitive pay analysis is not to supplant retention and continuity considerations within the senior leadership team of AMD, among other things, when the Compensation Committee approves executive compensation.

 

Accordingly, each Named Executive Officer’s total direct compensation may vary from the 50th and 75th percentile of the competitive market data due to one or more factors that the Compensation Committee deems fundamental to the best interests of the Company and its stockholders.

 

In light of the transition in the composition of AMD’s senior leadership team in 2011, the Compensation Committee determined that it was in the best interests of the Company and its stockholders to encourage retention and continuity within AMD’s existing senior leadership team rather than restrict the total direct compensation of Messrs. Seifert, Ghilardi, Wolin and Bergman fell within the 50th and 75th percentile of the competitive market data.

Claw-back provisions/policies are in effect   

AMD has adopted the following claw-back provisions/policies:

 

•    Form of Stock Option and Restricted Stock Unit Agreements. For stock option and restricted stock unit awards granted in May 2010 and thereafter, the Compensation Committee approved the inclusion of a “claw-back” provision in AMD’s form of stock option agreement and form of restricted stock unit agreement for senior vice presidents and above, which includes all of the Named Executive Officers. This claw-back provision provides that in the event AMD is required to prepare an accounting restatement due to AMD’s material noncompliance with any financial reporting requirement under the securities laws, the Compensation Committee will review all equity-based compensation awarded to any employee at the senior vice president level and above. If the Compensation Committee (in its sole discretion) determines that any such employee was directly involved with fraud, misconduct, and/or gross negligence that contributed to or resulted in such accounting restatement, the Compensation Committee may, to the extent permitted by governing law and as appropriate under the circumstances, recover for the benefit of AMD all or a portion of the equity-based compensation awarded to such employee, including, without limitation, by cancelation, forfeiture, repayment, and/or disgorgement of profits realized from the sale of AMD’s securities; provided,

 

33


Design Principle


  

Discussion


    

however, the Compensation Committee will not have the authority to recover any equity-based compensation awarded more than 18 months prior to the date of the first public issuance or filing with the Securities and Exchange Commission (whichever first occurs) of the financial document embodying such financial reporting requirement.

 

• Worldwide Standards of Business Conduct. AMD’s Worldwide Standards of Business Conduct provide that, among other things, in the event AMD is required to prepare an accounting restatement due to AMD’s material noncompliance with any financial reporting laws, AMD may pursue all remedies to recover any incentive-based or other compensation (including equity awards) paid or granted to its employees or agents to the extent required by and permitted under applicable law.

 

AMD continues to monitor the rule-making actions of the SEC and NYSE with respect to the development, implementation, and disclosure of claw-back provisions/policies. AMD will revise its claw-back provisions/policies in the future as required by applicable law.

Align pay practices with sound risk management   

The Compensation Committee endeavors to structure AMD’s executive compensation program to motivate and reward the Named Executive Officers for appropriately balancing opportunity and risk, such as investment in key initiatives designed to accelerate AMD’s growth in existing and new markets, while at the same time avoiding pay practices that incentivize excessive risk-taking.

 

The Compensation Committee believes that AMD’s executive compensation program fosters AMD’s objectives and strategies while maintaining appropriate risk mitigators, such as:

 

•    Multiple internal controls and approval processes intended to prevent manipulation of outcomes;

 

•    Pay mix that represents an appropriate balance of base pay versus variable pay and short-term versus long-term incentives;

 

•    Caps on performance-based compensation opportunities;

 

•    Incentive programs that incorporate company-wide financial goals (e.g., non-GAAP operating income) that are quantitative and measurable;

 

•    Claw-back policies/provisions; and

 

•    Stock ownership guidelines.

 

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Design Principle


  

Discussion


The Named Executive Officers are subject to stock ownership guidelines    In October 2011, the Compensation Committee increased the ownership levels under AMD’s stock ownership guidelines to strengthen the alignment of the interests of our executive officers and stockholders and to increase visibility of our executive officers’ stock ownership. All executive officers are subject to the revised stock ownership guidelines, including the Named Executive Officers. Set forth below are the current minimum stock ownership requirements for our executive officers:
    

President and/or

Chief Executive Officer:

   The lesser of (i) the number of shares equivalent to three times the then-current annual base salary divided by the average of the closing stock prices of AMD’s common stock for the 30-day period up to and including the Officer Achievement Date (as defined below) or (ii) the number of shares equivalent to three times the then-current annual base salary divided by the average of the closing stock prices of AMD’s common stock for the 30-day period immediately preceding and ending on the date that the President and/or the CEO was appointed, rounded to the nearest 5,000 shares.
    

Other Executive Officers:

   The lesser of (i) the number of shares equivalent to one and one-half times the then-current annual base salary divided by the average of the closing stock prices of AMD’s common stock for the 30-day period up to and including the Officer Achievement Date or (ii) the number of shares equivalent to one and one-half times the then-current annual base salary divided by the average of the closing stock prices of AMD’s common stock for the 30-day period immediately preceding and ending on the date that the respective executive officer was appointed, rounded to the nearest 5,000 shares.
    

Shares counted toward the minimum stock ownership requirements include any shares held directly or indirectly by an executive officer and shares underlying vested but unexercised stock options, with 50% of the in-the-money value or shares (as applicable) of such stock options being used for this calculation.

 

The time frame for compliance is five years from the establishment of the revised guidelines in October 2011, which is October 2016, or five years from first becoming an executive officer of AMD, whichever is later (the “Officer Achievement Date”).

 

The Named Executive Officers were either in compliance with or on target to meet the previous stock ownership guidelines before they were revised in October 2011, and, as of December 31, 2011, all of the Named Executive Officers that remained employed with AMD were on target to meet the revised stock ownership guidelines within the established compliance time frame.

The Named Executive Officers are prohibited from engaging in certain hedging transactions    AMD prohibits its employees, including the Named Executive Officers that remain employed with AMD, from engaging in certain hedging transactions in its common stock.

 

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AMD’S EXECUTIVE COMPENSATION FRAMEWORK

 

AMD’s Executive Compensation Philosophy and Objectives

 

Our executive compensation philosophy is to provide compensation and benefit programs that enable us to attract, retain, and motivate high caliber executive officers, to motivate these executive officers to achieve our short-term and long-term objectives and strategies, and to support career development and succession goals.

 

To implement this philosophy, the Compensation Committee has established the following objectives:

 

   

Link rewards to achievement of AMD’s objectives and strategies to drive the creation of sustainable stockholder value;

 

   

Provide the opportunity to reward superior individual and Company performance;

 

   

Manage pay structure and programs globally, while recognizing local market practices and conditions;

 

   

Mitigate incentives for executive officers to undertake excessive risks by, among other things, balancing fixed and variable pay;

 

   

Provide an appropriate return on investment on the overall program spending; and

 

   

Encourage equity ownership to align the interests of our executive officers and stockholders.

 

Role of the Compensation Committee

 

The Compensation Committee regularly reviews the alignment of our executive compensation program with the strategies and needs of our business, market trends, changes in competitive practices, individual performance, Company performance, and the interests of our stockholders. Based on this review, the Compensation Committee approves the compensation of the Named Executive Officers, including, without limitation, base salary, short-term incentive awards (which are in the form of a cash performance bonus), long-term equity awards, and other benefits.

 

Role of Management

 

The Compensation Committee believes that even the best advice of a compensation consultant or other outside advisors must be combined with the input from senior management and the Compensation Committee’s own individual experiences and judgment to arrive at the proper alignment of compensation philosophy, objectives, and programs. In 2011, the Chief Executive Officer, interim Chief Executive Officer, Chief Talent Officer and General Counsel and Corporate Secretary worked closely with the Compensation Committee. These individuals worked with the Compensation Committee in formulating the specific plan and award designs, performance measures, and performance levels (i.e., threshold, target, and maximum) necessary to align AMD’s executive compensation program with its objectives and strategies. Mr. Seifert served as interim Chief Executive Officer of AMD from January 2011 to August 2011, and in such role, Mr. Seifert worked closely with the Compensation Committee.

 

Generally, the Chief Executive Officer reviews with the Compensation Committee his performance evaluations of each of the other Named Executive Officers and his recommendations (except with respect to his own compensation) regarding base salary adjustments, short-term incentive awards, and long-term equity awards for the other Named Executive Officers to ensure alignment with the Compensation Committee’s pay-for-performance design principle. However, all final decisions regarding the compensation of the Named Executive Officers are made by the Compensation Committee. The Board and Compensation Committee conduct their own performance assessment of the Chief Executive Officer and no management recommendation is made with regard to his compensation. In light of the transition in the composition of AMD’s senior leadership team in 2011, Mr. Seifert, as acting Chief Executive Officer, also conducted performance evaluations of the Named Executive Officers.

 

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While certain members of management attended the Compensation Committee’s meetings in 2011 upon invitation, they did not attend either private sessions or portions of any other meetings of the Compensation Committee where executive compensation determinations were made by the Compensation Committee.

 

Assessment of Individual Performance

 

The Named Executive Officers’ compensation is impacted by individual performance. At least annually, the Board of Directors evaluates the performance of the Chief Executive Officer. For the purpose of setting compensation, the Compensation Committee annually assesses the performance of the Chief Executive Officer based upon the Board of Director’s evaluation. Additionally, the Compensation Committee annually assesses the performance of the other Named Executive Officers based upon the Chief Executive Officer’s report and evaluation of such officers’ individual performance.

 

The assessment of the Named Executive Officers’ individual performance is an objective and subjective assessment of accomplishment and contribution to AMD. For a further description of the individual performance factors that impacted the Named Executive Officers’ compensation in 2011, see the section titled “2011 Executive Compensation Decisions” below.

 

Role of the Compensation Consultant

 

During 2011, the Compensation Committee retained Compensia, Inc., as its compensation consultant to obtain objective, expert advice on executive and director compensation. Compensia advised the Compensation Committee on a variety of compensation-related issues in 2011, including:

 

   

Competitive pay analysis on executive compensation;

 

   

Pay levels of the Named Executive Officers;

 

   

AMD’s executive compensation program design, including short-term incentive plan design, long-term incentive plan design, and pay mix; and

 

   

Pay levels of the Board of Directors.

 

In addition to the above, Compensia assisted the Compensation Committee in performing a comprehensive reassessment of the methodology used in evaluating AMD’s executive compensation, as further described in the section titled “—Competitive Pay Analysis” below.

 

In 2011, Compensia did not provide any services to AMD, or receive any payments from AMD, other than in its capacity as a consultant to the Compensation Committee.

 

In the course of conducting its activities, Compensia attended meetings of the Compensation Committee and presented its findings and recommendations for discussion. During 2011, Compensia also met with senior management to obtain and validate data and review materials.

 

Competitive Pay Analysis

 

The Compensation Committee generally aims to set each Named Executive Officer’s total direct compensation (i.e., base salary, target cash performance bonus, and target long-term equity awards) between the 50th and 75th percentile of the competitive market data. However, the purpose of the competitive pay analysis is not to supplant retention and continuity considerations within the senior leadership team of AMD, among other things, when the Compensation Committee approves executive compensation. Accordingly, each Named Executive Officer’s total direct compensation may vary from the 50th and 75th percentile of the competitive market data due to one or more factors that the Compensation Committee deems fundamental to the best interests of the Company and its stockholders.

 

37


Each year, the Compensation Committee evaluates how our pay practices and the Named Executive Officers’ compensation levels compare to the competitive market for executive talent. Each year the Compensation Committee generally reviews a custom group of peer companies, in combination with industry-specific survey data, to develop a reasonable representation of the “competitive market” with respect to AMD’s executive pay levels and pay policies and practices.

 

Reassessment of the Methodology Used to Perform the Competitive Pay Analysis

 

In 2011, the Compensation Committee, with the assistance of Compensia, performed a comprehensive reassessment of the methodology used in analyzing AMD’s executive compensation. Specifically, the Compensation Committee made significant changes to AMD’s custom peer group, survey sources, and market position matches as follows:

 

   

AMD’s Custom Peer Group.

 

In 2011, the Compensation Committee modified the composition of its custom peer group by deleting the smallest and largest peer companies and adding seven new peer companies generally more consistent with AMD’s size parameters. The following table illustrates the principal differences between the 2010 and 2011 custom peer groups.

 

    

2010 Peer
Companies


  

2011 Peer
Companies


Number of Companies

   15    20

Median/Average Revenue

   $6.3B/$10.0B    $5.7B/$7.0B

Median/Average Market Capitalization

   $12.6B/$26.7B    $12.8B/$18.3B

 

   

Survey Sources and Market Position Matches

 

The Compensation Committee (i) used a survey source that provided competitive market data of companies closer in size to AMD, and (ii) referred only to functional position matches, instead of referencing peer company proxy position ranks.

 

Accordingly, in 2011 Compensia conducted a competitive pay analysis for the Compensation Committee using data derived from (i) a custom peer group (the “Custom Peer Group”) and (ii) a custom cut of the Radford Global Technology Survey covering all of the companies included in the Custom Peer Group, except for Corning (the “Industry Specific Survey Data”).

 

The companies comprising the Custom Peer Group for 2011 were as follows:

 

Company


  

GICS Sub-Industry


Agilent

   Electronic Equipment & Instruments

Applied Materials

   Semiconductor Equipment

Broadcom

   Semiconductors

CA

   Systems Software

CommScope

   Communications Equipment

Corning

   Electronic Components

EMC

   Computer Storage & Peripherals

Harris

   Communications Equipment

Juniper Networks

   Communications Equipment

Lexmark

   Computer Storage & Peripherals

Marvell Technology

   Semiconductors

Micron Technology

   Semiconductors

NetApp

   Computer Storage & Peripherals

NVIDIA

   Semiconductors

QUALCOMM

   Communications Equipment

SanDisk

   Computer Storage & Peripherals

Seagate Technology

   Computer Storage & Peripherals

Symantec

   Systems Software

Texas Instruments

   Semiconductors

Western Digital

   Computer Storage & Peripherals

 

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The composition of the Custom Peer Group changed in 2011 with the addition of seven new companies (i.e., CA; CommScope; Juniper Networks; Marvell Technology; NetApp; Symantec; and Western Digital) and the removal of two companies (Intel Corp. and LSI). The 2011 peer companies were primarily selected based upon their (i) industry, (ii) revenues (roughly .05x to 2.5x AMD’s revenues) and (iii) market capitalization. The Compensation Committee believes that the composition of the 2011 Custom Peer Group better reflects industry-comparable companies of AMD.

 

In general, the Compensation Committee used the Custom Peer Group as its primary source in analyzing the competitiveness of Named Executive Officers’ compensation, and used the Industry-Specific Survey Data to supplement the Custom Peer Group to develop a “market consensus” of the competitive market data. The comprehensive reassessment of the methodology used in our executive compensation analysis resulted in a decrease in the compensation reference points at the 50th and 75th percentiles for the incumbent Named Executive Officers, in comparison to 2010.

 

In light of the transition in the composition of AMD’s senior leadership team in 2011, the Compensation Committee determined that it was in the best interests of the Company and its stockholders to encourage retention and continuity within AMD’s existing senior leadership team rather than ensure the total direct compensation of Messrs. Seifert, Ghilardi, Wolin and Bergman fell within the 50th and 75th percentile of the competitive market data. Notwithstanding this objective, all of the Compensation Committee’s decisions in 2011 were taken, as in the past, within the framework of the Compensation Committee’s overall objective of linking a significant percentage of our executives’ compensation to the achievement of AMD’s objectives and strategies.

 

2011 EXECUTIVE COMPENSATION DECISIONS

 

Elements of Compensation

 

Our executive compensation program is comprised of several pay elements. Generally, the Compensation Committee reviews and considers each pay element before making any executive compensation decisions. For 2011, our executive compensation consisted of the following pay elements:

 

Pay Element


  

Basis of Design


Base Salary

   Base salaries are provided to the Named Executive Officers as compensation for day-to-day responsibilities and services to AMD and to attract and retain key talent needed to run our business. Base salaries also provide the Named Executive Officers with a consistent cash flow assuming acceptable levels of individual performance and ongoing employment. The base salaries of the Named Executive Officers as of the beginning and end of 2011, including any adjustments made during the year, were as follows:

 

Named Executive Officer


   Base
Salary
as of
12/25/10


     Base Salary
as of
12/31/11


     Percentage
increase


 

Rory P. Read(1)

President and Chief Executive Officer

     —         $ 1,000,000         —     

Derrick R. Meyer(2)

Former President and Chief Executive Officer

   $ 950,000         —           —     

Thomas J. Seifert

Senior Vice President and Chief Financial Officer and former interim Chief Executive Officer

   $ 525,000       $ 606,000         15.4

Emilio Ghilardi

Senior Vice President and Chief Sales Officer

   $ 597,400       $ 597,400         —     

Mark D. Papermaster(3)

Senior Vice President and Chief Technology Officer

     —         $ 550,000         —     

Harry A. Wolin

Senior Vice President, General Counsel and Secretary

   $ 475,000       $ 475,000         —     

Rick Bergman

Former Senior Vice President and General Manager, Products Group

   $ 500,000                 5.0 %(4) 

 

39


Pay Element


  

Basis of Design


    

(1)    Mr. Read was appointed President and Chief Executive Officer of AMD effective August 25, 2011.

(2)    Mr. Meyer resigned from AMD effective January 10, 2011.

(3)    Mr. Papermaster was appointed Senior Vice President and Chief Technology Officer of AMD effective October 24, 2011.

(4)    Mr. Bergman resigned from AMD effective September 27, 2011.

 

Effective July 1, 2011, Mr. Seifert received a 15.4% increase in his base salary in recognition of (i) retention and continuity considerations within the senior leadership team, (ii) his financial leadership in 2010 and 2011, (iii) the fact that he did not receive a merit increase in 2010, and (iv) to increase the competitiveness of his base salary.

 

Effective July 1, 2011, Mr. Bergman received a 5% increase in his base salary in recognition of retention and continuity considerations within the senior leadership team. Thus, at the time he resigned from AMD, Mr. Bergman’s base salary was $525,000.

 

Short-Term Incentives

(in the form of a cash

performance bonus)

  

Generally, short-term incentives, in the form of a cash performance bonus, are provided to the Named Executive Officers under the EIP and are intended to focus the Named Executive Officers on AMD’s short-term objectives. The short-term incentive goals and related target levels are approved at the Compensation Committee meeting shortly after the commencement of the applicable performance period, the intent of which is to comply with Section 162(m) of the Internal Revenue Code regarding performance-based compensation.

 

For 2011, only Messrs Seifert, Ghilardi, Papermaster, Wolin and Bergman participated in the EIP. Mr. Meyer resigned from AMD in January 2011 and, therefore, was not eligible to participate in the EIP for 2011. Pursuant to the terms of his employment agreement, Mr. Read’s participation in the EIP commences in 2012.

 

For 2011, the Compensation Committee approved short-term incentive award opportunities under the EIP, based upon our achievement of predetermined “non-GAAP operating income” goals over two six-month performance periods (i.e., December 26, 2010 to July 2, 2011 and July 3, 2011 to December 31, 2011). While the amount of the 2011 short-term incentive award was measured and calculated based upon AMD’s performance over two six-month performance periods, the participating Named Executive Officers’ award, if earned, was paid in a single payment after the end of the year.

 

For 2011, the Compensation Committee selected non-GAAP operating income as the performance measure for the short-term incentive award to incentivize the participating Named Executive Officers to focus on improving AMD’s profitability, a key objective for 2011. The Compensation Committee views non-GAAP operating income as a multi-dimensional measure that encourages the Named Executive Officers to focus on maximizing revenue while, at the same time, controlling expenses.

 

For purposes of the EIP, “Non-GAAP operating income” was calculated as AMD’s operating income (calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”)) excluding the impact of (i) amortization expense incurred in 2011 relating to intangible assets we acquired in the ATI Technologies, Inc. acquisition, (ii) a charge related to a payment made to GLOBALFOUNDRIES Inc. in the first quarter of 2011, (iii) a charge related to a legal settlement in the first quarter of 2011, and (iv) restructuring charges.

 

The Compensation Committee and senior management both believe that AMD’s non-GAAP operating income better reflects AMD’s profitability than GAAP operating income because it excludes items that are not indicative of AMD’s core operating performance. Specifically, the adjustments are intended to:

 

•    Align the short-term incentive award with the underlying performance of AMD’s core business;

 

•    Avoid volatile, artificial inflation or deflation of the short-term incentive award due to either unusual items in the performance period or items that are not indicative of AMD’s core operating performance; and

 

40


Pay Element


  

Basis of Design


 
    

•    Eliminate certain counterproductive short-term incentives – for example, incentives to refrain from acquiring new technologies to protect bonus payments.

 

These adjustments are consistent with the adjustments made in AMD’s earnings releases, as publicly reported to the investment community, which are reviewed by the Audit and Finance Committee of our Board of Directors.

 

The following tables show the predetermined performance goals for non-GAAP operating income for each of the two six-month performance periods for 2011, together with AMD’s actual performance for 2011.

       

    

   

  

 

First Six-Month Period (December 26, 2010 to July 2, 2011)
Performance Measure

 

   

  

Performance Levels Established

by the Compensation Committee


 
  

Performance Measure


   Threshold

     Target

     Maximum

     Actual
Performance

 
  

Non-GAAP Operating Income

   $ 133,000,000       $ 242,000,000       $ 388,000,000       $ 206,000,000   
  

 

Second Six-Month Period (July 3, 2011 to December 31, 2011)
Performance Measure

 

   

  

Performance Levels Established
by the Compensation Committee


 
  

Performance Measure


   Threshold

     Target

     Maximum

     Actual
Performance

 
  

Non-GAAP Operating Income

   $ 390,000,000       $ 620,000,000       $ 927,000,000       $ 318,000,000   
    

 

As reflected in the above tables, our non-GAAP operating income for the first six-month performance period in 2011 fell between the threshold and target levels, while our non-GAAP operating income for the second six-month performance in 2011 was below the threshold level. Accordingly, cash performance bonuses, to the extent earned in 2011, were all attributable to the Company’s performance in the first six-month performance period in 2011.

 

The bonus funding was weighted one-third in the first half of 2011 and two-thirds in the second half of 2011 to reflect our seasonal sale patterns. Each of the participating Named Executive Officer’s cash performance bonus, to the extent earned, was based upon (i) his respective base salary at the end of the respective six-month performance period and (ii) the applicable bonus percentage (the “Bonus Opportunity”) assigned to the level (threshold, target, or maximum) of our actual non-GAAP operating income for the respective performance period. Accordingly, for 2011 the cash performance bonus formula was as follows:

 

    

First Portion of the 2011 Bonus

  =    Base Salary
in Effect at
7/2/2011
  X    Bonus Opportunity
(based upon AMD’s actual Non-GAAP Operating Income)
    X         1/3 weighting   
     Second Portion of the 2011 Bonus   =    Base Salary
in Effect at
12/31/2011
  X    Bonus Opportunity
(based upon AMD’s actual Non-GAAP
Operating Income)
  X      2/3 weighting  

 

41


Pay Element


  

Basis of Design


     Each participating Named Executive Officer’s target performance bonus, together with his actual performance bonus, for the two six-month performance periods in 2011 were as follows:

 

Named

Executive Officer


  Base Salary

    Bonus Opportunity
(% of base salary)
Based Upon
AMD’s Actual
Non-GAAP
Operating
Income(1) 


    First
Portion of
2011
Potential
Award
Range as
Percentage
of Target


    Second
Portion of
2011
Potential
Award
Range as
Percentage
of Target


    Target
Performance
Bonus


    Actual
Performance
Bonus Paid


 
  As of
7/2/2011


    As of
12/31/2011


    Thres

    Target

    Max

         

Thomas J. Seifert

  $ 606,000      $ 606,000        37.5     150     450     0 to 33.33     0 to 66.67   $ 909,000      $ 227,945   

Emilio Ghilardi

  $ 597,400      $ 597,400        37.5     150     450     0 to 33.33     0 to 66.67   $ 896,100        —   (2) 

Mark D. Papermaster

    —        $ 550,000        25     100     300     —          0 to 66.67   $ 122,222 (3)    $ 0 (4) 

Harry A. Wolin

  $ 475,000      $ 475,000        37.5     150     450     0 to 33.33     0 to 66.67   $ 712,500      $ 178,670   

Rick Bergman

  $ 525,000      $ 525,000        37.5     150     450     0 to 33.33     0 to 66.67   $ 787,500        —   (5) 

 

 

    

(1)    If AMD’s performance falls between the threshold, target, and maximum achievement levels, the Bonus Opportunity is linearly interpolated to determine the actual bonus payment.

(2)    In connection with Mr. Ghilardi leaving the Company in February 2012, he was no longer eligible to receive a cash performance bonus for 2011.

(3)    Mr. Papermaster’s target cash performance bonus was prorated based upon the time he served as Senior Vice President and Chief Technology Officer of AMD in 2011.

(4)    Mr. Papermaster was appointed Senior Vice President and Chief Technology Officer of AMD effective on October 24, 2011, and, therefore, Mr. Papermaster was not eligible to earn a cash performance bonus for the first six-month performance period in 2011. As our non-GAAP operating income fell below the threshold level for the second six-month performance period, he did not earn a cash performance bonus for 2011. Additionally, Mr. Papermaster’s target Bonus Opportunity of 100% for the second half of 2011, as compared to the other participating Named Executive Officers’ of 150%, was aligned with the competitive market data.

(5)    Mr. Bergman was not eligible to receive a cash performance bonus for 2011 due to his resignation from AMD on September 27, 2011.

 

The Compensation Committee designed the short-term incentive awards to reward superior performance by providing for progressively increasing payments as our performance exceeded the target level, and correspondingly providing for no payment unless a threshold level of performance was achieved. The Compensation Committee reviews and certifies our achievement of the performance goals before any payments are made. This review and certification is generally performed at the first regularly scheduled Compensation Committee meeting following the end of the year with any payout of the short-term incentive award occurring shortly thereafter. Under the terms of the EIP, the Compensation Committee has the authority to reduce any participating Named Executive Officer’s short-term incentive award prior to payment. For 2011, the Compensation Committee did not exercise this authority in connection with any of the participating Named Executive Officers.

 

For further information about the participating Named Executive Officers’ cash performance bonus under the EIP for 2011, see the “2011 Summary Compensation Table” below.

 

42


Pay Element


  

Basis of Design


Special Performance Bonus   

In connection with Mr. Seifert’s service as interim Chief Executive Officer of AMD from January 10, 2011 to August 24, 2011, he was eligible to receive a special performance bonus. The amount of the special performance bonus was in the Compensation Committee’s sole discretion; provided that it could not exceed $100,000 per month in which Mr. Seifert served as interim Chief Executive Officer.

 

In recognition of Mr. Seifert’s contributions as interim Chief Executive Officer, he received a special performance bonus of $746,000, paid in lump-sum. The Compensation Committee believes the special performance bonus was reasonable and appropriate to recognize Mr. Seifert’s critically important interim leadership and specific achievements in (i) his leadership during the first half of 2011 in which AMD was able to achieve its first and second quarter earnings guidance for 2011, (ii) his efforts in accelerating AMD’s growth in China, (iii) his implementation of plans for efficient, repeatable, and scalable systems for key operational processes, (iv) his successful handling of staff performance issues, and (v) working productively with the Board of Directors. Except for this performance bonus, Mr. Seifert did not receive any other compensation for his service as interim Chief Executive Officer of AMD.

 

Long-Term Incentives

(in the form of stock options and RSUs)

  

For 2011, the Compensation Committee granted the Named Executive Officers (other than Mr. Meyer) equity awards under our long-term incentive program. These awards were granted under our 2004 Plan.

 

Messrs. Seifert, Ghilardi, Papermaster, Wolin and Bergman each received time-based stock options and time-based RSUs. Mr. Read, under the terms of his employment agreement, received time-based stock options, performance-based stock options, time-based RSUs and performance-based RSUs.

 

The time-based stock options are intended to align the Named Executive Officers’ interests with our stockholders’ interests, because there is no financial gain to a Named Executive Officer unless our stock price appreciates. In general, time-based stock options are granted with an exercise price equal to 100% of the fair market value of our common stock on the grant date, vest over a three year period, and expire seven years after the grant date.

 

The time-based RSU awards are intended to encourage executive retention, manage share dilution, recognize individual performance, and align the Named Executive Officers’ interests with our stockholders’ interests, because the value of the award is tied to the market value of our common stock. In general, time-based RSUs vest in three equal annual installments commencing approximately one year from the grant date, except for Mr. Read’s sign-on RSU award that vests 100% on the one-year anniversary of his hire date.

 

For 2011, the Compensation Committee generally believed that an equivalent value of time-based stock options and time-based RSUs offered the Named Executive Officers a competitive level of equity-based compensation, while balancing the retention value of RSUs with the performance aspect of stock options.

 

In an effort to increase the competitiveness of Mr. Read’s new-hire compensation package, while at the same time reinforcing the link of his new-hire equity awards to the creation of stockholder value, Mr. Read was also granted a performance-based stock option and performance-based RSU award. The performance-based stock option has an exercise price equal to 100% of the fair market value of our common stock on the grant date and vests in three equal annual installments commencing on the first anniversary of the grant date if (i) the market-base component is satisfied meaning that the weighted average closing price of our common stock over any 30-day period during the three-year vesting period is equal to or greater than $11.00 per share and (ii) Mr. Read continues his employment with AMD through the applicable vesting date. Similarly, the performance-based RSU award vests in three equal annual installments commencing on the first anniversary of the grant date if (i) the market-base component is satisfied meaning that the weighted average closing price of our common stock over any 30-day period during the three-year vesting period is equal to or greater than $11.00 per share and (ii) Mr. Read continues his employment with AMD through the applicable vesting date (collectively, the “Performance-Award Vesting Requirements”).

 

43


Pay Element


  

Basis of Design


For 2011, the Compensation Committee approved the following equity awards for the Named Executive Officers:

 

Named Executive Officer


   Shares
Underlying
Options
Approved
for
Grant
in 2011(1)(2)


    Shares
Underlying
RSUs
Approved
for
Grant
in 2011(3)


    Target Value
of the Stock
Options and
RSUs
Approved
for Grant
in 2011(4)


 

Rory P. Read

     2,586,000 (5)      1,147,000 (6)    $ 14,000,000   

Thomas J. Seifert

     306,748        153,374      $ 2,500,000   

Emilio Ghilardi(7)

     184,050        92,025      $ 1,500,000   

Mark D. Papermaster

     446,993 (8)      279,661 (9)    $ 2,500,000   

Harry A. Wolin

     184,050        92,025      $ 1,500,000   

Rick Bergman(10)

     245,398        122,699      $ 2,000,000   

 

  (1) Except for the stock options of Messrs. Read and Papermaster, the stock options reported in this column for the other Named Executive Officers were granted on June 15, 2011, and vest 33 1/3% on May 15, 2012 and 8.33% per quarter over the next eight following quarters.
  (2) The fourth installment of Messrs. Seifert’s, Ghilardi’s, Wolin’s and Bergman’s option grant for 2010, which was granted on February 15, 2011, is omitted from this table.
  (3) Except for the RSU awards of Messrs. Read and Papermaster, the RSUs reported in this column for the other Named Executive Officers were granted on June 15, 2011, and vest 1/3 on each of May 9, 2012, May 9, 2013, and May 9, 2014.
  (4) This column reflects the target value of the Named Executive Officers’ stock options and RSU awards for 2011, which may be greater or less than the aggregate grant date fair value of such awards or the value that the respective Named Executive Officer realizes upon exercise of the stock options and vesting of the RSU awards.
  (5) Mr. Read’s 2,586,000 stock options were granted on August 25, 2011 and include (i) 1,847,000 time-based stock options, which vest 1/3 on each of August 25, 2012, August 25, 2013, and August 25, 2014 and (ii) 739,000 performance-based stock options, which vest 1/3 on each of August 25, 2012, August 25, 2013, and August 25, 2014 assuming the Performance-Award Vesting Requirements are satisfied during the three-year vesting period.
  (6) Mr. Read’s 1,147,000 RSUs were granted on August 25, 2011 and include (i) 717,000 time-based RSUs, which vest 1/3 on each of August 25, 2012, August 25, 2013, and August 25, 2014, (ii) 287,000 performance-based RSUs, which vest 1/3 on each of August 25, 2012, August 25, 2013, and August 25, 2014 assuming the Performance-Award Vesting Requirements are satisfied during the three-year vesting period and (iii) 143,000 time-based RSUs, which vest 100% on August 25, 2012.
  (7) In connection with Mr. Ghilardi leaving the Company in February 2012, he forfeited all of his stock options and RSUs awarded for 2011.
  (8) Mr. Papermaster’s 446,993 stock options were granted on November 15, 2011 and vest 1/3 on November 15, 2012 and 8.375% per quarter over the next eight following quarters.
  (9) Mr. Papermaster’s 279,661 RSUs were granted on November 15, 2011 and vest 1/3 on each of November 9, 2012, November 9, 2013, and November 9, 2014.
  (10) In connection with Mr. Bergman’s resignation from AMD on September 27, 2011, he forfeited all of his stock options and RSUs awarded for 2011.

 

    

In formulating the target value of the 2011 equity awards for Messrs. Seifert, Ghilardi, Wolin and Bergman, the Compensation Committee initially conducted an assessment of the competitive market data to subjectively develop a competitive aggregate grant date fair value for such awards. The Compensation Committee then converted the competitive aggregate grant date fair value into an equal mix of stock options and RSUs, with (i) the number of RSUs determined by dividing half of the aggregate grant date fair value by the 30-day trailing average closing price of our common stock on the grant date, and (ii) the number of stock options determined by multiplying the number of RSUs by two.

 

In approving the 2011 equity awards for Messrs. Seifert, Ghilardi, Wolin and Bergman, the Compensation Committee also considered AMD’s concerns regarding its affordable annual share usage and executive retention and continuity, as well as, in the case of Messrs. Seifert and Wolin, the following individual performance factors:

 

•    Thomas J. Seifert – Mr. Seifert’s effective management and oversight of the financial functions of the Company in 2010 and 2011 and his expected contributions as a member of our senior leadership team in the future; and

 

44


Pay Element


  

Basis of Design


    

•    Harry A. Wolin – Mr. Wolin’s leadership and advocacy in managing our regulatory and legal matters in 2011.

 

Except for Mr. Seifert, the Compensation Committee either reduced or kept flat the target value of Messrs. Ghilardi’s, Wolin’s and Bergman’s equity awards in 2011, compared to their 2010 value. The target value of Mr. Seifert’s equity awards increased by 25% in 2011 as a result of his individual performance factors set forth above.

 

The total value of Mr. Read’s 2011 equity awards was subjectively determined by the Compensation Committee, with reference to its alignment and competitiveness with the compensation of newly-hired CEOs based on data developed by Compensia.

 

The total value of Mr. Papermaster’s 2011 equity awards was subjectively determined by the Compensation Committee, with reference to its alignment and competitiveness with the competitive market data compiled from our custom peer group.

 

Deferred Compensation   

In 2011, all of the Named Executive Officers were eligible to participate in our Deferred Income Account Plan (the “DIA”). Participation in the DIA is intended to assist the Named Executive Officers in their retirement planning, as well as restore Company contributions that are lost due to IRS limits applicable to contributions in our Section 401(k) plan.

 

For further information about the DIA, see the “2011 Nonqualified Deferred Compensation Table” below.

Perquisites and Other Benefits   

In 2011, a broad population of our employees, which included the Named Executive Officers, were eligible to receive the following perquisites and other benefits:

 

•    Participation in our U.S. benefit programs, including our Section 401(k) plan, health care coverage, paid time-off, and paid holidays;

 

•    Company matching contributions under our Section 401(k) plan, which were equal to 75% of the employee contributions up to the first 6% of pay deferred under the plan;

 

•    Patent awards, if earned; and

 

•    Reimbursed for certain relocation expenses.

 

In addition to the above, the Named Executive Officers were eligible to receive an annual physical examination, executive life insurance and executive disability coverage.

 

The perquisites and other benefits described above are designed to be competitive with overall market practices and to attract and retain employee talent.

 

For further information regarding the perquisites and other benefits paid to the Named Executive Officers during 2011, see the “2011 Summary Compensation Table” below.

 

OTHER ASPECTS OF AMD’S EXECUTIVE COMPENSATION PROGRAM

 

Management Continuity Agreements, Change in Control Agreements, or Change in Control Arrangements

 

We have entered into a management continuity agreement, change in control agreement or other change in control arrangement with each of the Named Executive Officers. These arrangements are designed to encourage the Named Executive Officers’ continued services in the event of a potential change in control of AMD and to allow for a smooth leadership transition upon a change in control of AMD. In addition, these arrangements are intended to provide incentives to the Named Executive Officers to execute the wishes of our Board of Directors, even in the event that the Board of Directors takes an action that may result in the elimination of a Named Executive Officer’s position with AMD.

 

45


Under the terms of these arrangements, a Named Executive Officer is entitled to certain compensatory payments and benefits only if (i) a “change in control” of AMD occurs and (ii) the Named Executive Officer’s employment is terminated, or the Named Executive Officer is constructively discharged, within two years of the change in control of AMD. The Compensation Committee believes this structure strikes a balance between incentives and executive hiring and retention without providing payments and benefits to the Named Executive Officers who continue to enjoy employment with an acquiring company in the event of a change in control of AMD.

 

In April 2009, AMD adopted a policy to, in general, not enter into any new management continuity agreements or change in control agreements containing an excise tax gross-up provision. In accordance with emerging best practices, in February 2011, AMD adopted a policy clarifying that it will not enter into any new change in control arrangements containing an excise tax gross-up provision. Messrs. Read’s, Seifert’s, and Papermaster’s change in control agreements do not provide for excise tax gross-ups and Mr. Wolin entered into his management continuity agreement prior to April 2009.

 

In March 2010, AMD adopted a policy to not enter into any change in control arrangements with any executive officer that provide him or her with a cash severance payment (upon both a change in control of AMD and a subsequent termination of employment) in excess of (i) two times the sum of the respective executive officer’s base salary and target cash bonus, plus (ii) a prorated cash bonus for the year in which termination occurs assuming performance at target level. Mr. Read’s change in control arrangement and Messrs. Seifert’s and Papermaster’s change in control agreements comply with this limitation. Mr. Wolin entered into his management continuity agreement prior to the adoption of this policy.

 

For a detailed description of the payments and benefits payable under these arrangements, see the section titled “Executive Compensation—Change in Control Arrangements” below.

 

Severance Arrangements

 

In connection with Mr. Meyer’s resignation in January 2011, Mr. Meyer and AMD entered into a Separation Agreement and Release. The terms of Mr. Meyer’s severance payments and benefits under the Separation Agreement and Release were fully consistent with his employment agreement and are described in the section titled “Executive Compensation—Employment and Related Agreements” below.

 

Additionally, under the terms of Mr. Read’s employment agreement and Mr. Ghilardi’s offer letter, they are entitled to certain severance payments and benefits as further described in the section titled “Executive Compensation—Employment and Related Agreements” below.

 

Except for Messrs. Meyer, Read and Ghilardi and as discussed in the section titled “—Management Continuity Agreements, Change in Control Agreements, or Change in Control Arrangements” above, AMD is not under any contractual obligation to provide severance payments and benefits to any of the Named Executive Officers.

 

Deductibility of Executive Compensation

 

Section 162(m) of the Internal Revenue Code limits the deductibility of nonperformance-based compensation paid to the Chief Executive Officer and any of the three other most highly compensated executive officers of AMD, other than the Chief Financial Officer, to $1 million in any tax year. In establishing total compensation for such executives, the Compensation Committee considers the effect of Section 162(m).

 

Our objectives and strategies may not always be consistent with the requirements of Section 162(m) for full deductibility. Therefore, deductibility under Section 162(m) is just one consideration and not the determinative factor in setting our executives’ compensation, and certain compensation paid by AMD in the future may not be fully deductible under Section 162(m).

 

46


Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings, including this proxy statement, in whole or in part, the following report will not be incorporated by reference into any such filings, nor will it be deemed to be soliciting material or deemed filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in AMD’s proxy statement for our 2012 Annual Meeting of Stockholders.

 

COMPENSATION COMMITTEE

March 6, 2012

H. Paulett Eberhart, Chair

John E. Caldwell

Craig A. Conway

Nicholas M. Donofrio

 

47


COMPENSATION POLICIES AND PRACTICES

 

The Compensation Committee reviewed our compensation policies and practices for employees generally and concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on AMD.

 

In reaching this conclusion, the Compensation Committee, with the assistance of management, assessed the Company’s executive and broad-based compensation programs to determine if any of them created undesired or excessive risks of a material nature. The assessment included (i) a review of the Company’s compensation policies and practices for employees generally, (ii) identification of the risks that could result from such policies and practices, (iii) identification of the risk mitigators and controls, and (iv) analysis of the potential risks against the risk mitigators and controls and AMD’s business strategy and objectives. Although the Compensation Committee reviewed all of AMD’s compensation programs, the Compensation Committee focused on the programs that have variability of payout and in which employees could directly affect the payout of incentives. These programs included AMD’s 2011 EIP, 2005 Annual Incentive Plan, Sales Incentive Plan and 2004 Plan.

 

In performing the assessment and reaching its conclusion, the Compensation Committee noted the following factors that reduce the likelihood of undesired or excessive risk-taking:

 

   

Our overall compensation levels are competitive with the market.

 

   

Our compensation practices and policies appropriately balance base pay versus variable pay and short-term versus long-term incentives.

 

   

Although AMD’s 2011 EIP, 2005 Annual Incentive Plan and Sales Incentive Plan have variability of payout, any potential risks associated with such plans are controlled or mitigated by: (i) the performance goals being multi-dimensional, thereby increasing the range of performance over which incentives are paid; (ii) the performance goals being aligned with AMD’s business strategies and objectives and/or being company-wide financial goals that are quantitative and measurable; (iii) the use of sliding payout scales, with the payouts linearly interpolated for performance falling between threshold, target and maximum achievement levels; (iv) the ability of the Compensation Committee and/or management to exercise discretion to reduce payouts, including in connection with extraordinary or unanticipated company events; (v) the existence of multiple internal controls and approval processes that are intended to prevent manipulation of performance; and (vi) the incentive opportunities being capped.

 

   

Although the grant of equity awards under AMD’s 2004 Plan could incentivize employees to, among other things, focus on increasing AMD’s short-term stock price rather than the creation of sustainable stockholder value, that risk is controlled by: (i) awarding a combination of stock options and RSUs; (ii) the vesting provisions being aligned with stockholders’ interests; and (iii) AMD’s stock ownership guidelines for our executive officers. In addition, AMD prohibits its employees, including the Named Executive Officers that remain employed with AMD, from engaging in certain hedging transactions in its common stock.

 

   

We have implemented claw-back provisions and policies, as described in more detail above.

 

48


EXECUTIVE COMPENSATION

 

The following table shows compensation information for the individuals serving as our Chief Executive Officer (including our former Chief Executive Officer) and Chief Financial Officer during 2011, our three most highly compensated executive officers other than our Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of the 2011 and our former Senior Vice President and General Manager, Products Group, because he was an executive officer during 2011 and disclosure would have been provided for him if he were serving as an executive officer at the end of 2011.

 

2011 SUMMARY COMPENSATION TABLE

 

Name and Principal Position


  Year

    Salary
($)(1)


    Bonus
($)(2)


    Stock
Awards
($)(3)


    Option
Awards
($)(4)


    Non-Equity
Incentive Plan
Compensation
($)


    All Other
Compensation
($)(5)


    Total
($)


 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (i)     (j)  

Rory P. Read(6)

    2011      $ 353,847      $ 1,530,770      $ 6,746,597 (7)    $ 6,953,314 (8)    $ 0      $ 25,823      $ 15,610,351   

President and Chief Executive Officer

                                                               

Thomas J. Seifert

    2011      $ 566,046      $ 746,000      $ 1,150,305      $ 1,079,262      $ 227,945      $ 14,902      $ 3,784,460   

Senior Vice President, Chief Financial Officer, Former Interim Chief Executive Officer

    2010      $ 524,992      $ 207,506      $ 1,100,000      $ 590,718      $ 842,494      $ 139,629      $ 3,405,339   
    2009      $ 121,152      $ 150,000      $ 773,750      $ 666,354      $ 0      $ 29,629      $ 1,740,885   

Emilio Ghilardi(9)

    2011      $ 597,397      $ 0      $ 690,188      $ 731,045      $ 0      $ 39,461      $ 2,058,091   

Former Senior Vice President, Chief Sales Officer

    2010      $ 588,836      $ 0      $ 1,100,000      $ 772,087      $ 942,865      $ 10,256      $ 3,414,044   
    2009      $ 514,195      $ 271,750      $ 451,125      $ 372,943      $ 897,252      $ 63,404      $ 2,570,669   

Mark D. Papermaster(10)

    2011      $ 105,768      $ 450,000      $ 1,610,847      $ 1,105,324      $ 0      $ 342      $ 3,272,281   

Senior Vice President, Chief Technology Officer

                                                               

Harry A. Wolin(11)

    2011      $ 484,829      $ 0      $ 690,188      $ 678,867      $ 178,670      $ 15,730      $ 2,048,284   

Senior Vice President, General Counsel and Secretary

    2010      $ 516,751      $ 110,113      $ 825,000      $ 563,951      $ 734,085      $ 7,317      $ 2,757,217   

Rick Bergman(12)

    2011      $ 429,719      $ 0      $ 920,243      $ 905,151      $ 0      $ 21,410      $ 2,276,523   

Former Senior Vice President and General Manager, Products Group

    2010      $ 510,754      $ 165,344      $ 1,100,000      $ 772,087      $ 779,656      $ 88,944      $ 3,416,785   

Derrick R. Meyer(13)

    2011      $ 83,623      $ 0      $ 0      $ 0      $ 0      $ 8,680,658      $ 8,764,281   

Former President and Chief Executive Officer

    2010      $ 925,381      $ 0      $ 2,530,000      $ 2,084,128      $ 0      $ 10,329      $ 5,549,838   
    2009      $ 792,685      $ 45,000      $ 1,804,500      $ 1,897,864      $ 0      $ 7,478      $ 4,547,527   

(1) For 2011, salary amounts also reflect the following: for Mr. Wolin, $9,820 representing a cash out of a portion of accrued vacation; for Mr. Bergman, $54,438 representing a cash out of accrued vacation upon resignation; and for Mr. Meyer, $61,700 representing a cash out of accrued vacation upon resignation. For 2010, salary amounts also reflect the following: for Mr. Bergman, $23,062 representing a cash out of a portion of accrued vacation; and for Mr. Wolin, $22,856 representing a cash out of a portion of accrued vacation and $34,154 representing a payment for four weeks of an eight week sabbatical for which Mr. Wolin had satisfied eligibility requirements.
(2) For 2011, bonus amounts consist of: for Mr. Read, his sign-on bonus of $1,000,000 and his performance bonus for 2011 of $530,770; for Mr. Seifert, a special performance bonus for his service as Interim CEO from January 10, 2011 to August 25, 2011; and for Mr. Papermaster, his sign-on bonus. For 2010, bonus amounts represent special performance bonuses for Messrs. Seifert, Bergman and Wolin in recognition of strong individual performance in 2010. See “2010 Compensation Discussion and Analysis,” for further information. For 2009, bonus amounts represent a one-time payment to restore 2009 base salaries for September through November 2009 to pre-reduction levels. All AMD employees, including the named executive officers, who participated in the salary reduction in February 2009 received this one-time payment. For Mr. Ghilardi, the 2009 bonus amount also includes his sign-on bonus of $250,000. Mr. Seifert did not participate in the salary reduction, and his 2009 bonus amount represents his sign-on bonus.
(3) Amounts shown represent the aggregate grant date fair value of the RSUs granted in the year indicated computed in accordance with FASB ASC Topic 718, except no assumptions for forfeiture were included. For a discussion of the assumptions made in the valuations reflected in this column, see Note 14 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011. The actual value that may be realized from an award is contingent upon the satisfaction of the conditions to vesting in that award. Thus, there is no assurance that the value, if any, eventually realized will correspond to the amount shown.
(4)

Amounts shown represent the aggregate grant date fair value of option awards granted in the year indicated computed in accordance with FASB ASC Topic 718, except no assumptions for forfeiture were included. For a discussion of the assumptions made in the valuations reflected in this column, see Note 14 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011. The actual value, if any, that may be realized from an option award is contingent upon the satisfaction of the conditions to vesting of that award, and upon the excess of the stock price over the exercise price, if any, on the date the option award is

 

49


 

exercised. There is no assurance that the value, if any, eventually realized will correspond to the amount shown. Amounts shown include the fourth installment of Messrs. Seifert’s, Ghilardi’s, Wolin’s and Bergman’s option grant for 2010, which was granted on February 15, 2011.

(5) All Other Compensation consists of the following amounts:

 

For Mr. Meyer, a matching contribution by AMD to his 401(k) of $1,644, $197 for life insurance premiums paid by us prior to his resignation as our President and Chief Executive Officer on January 10, 2011, and a payment of $8,678,817 in connection with his resignation, which consists of a separation payment of $8,550,000, six months of interest on this amount, calculated based on the applicable short-term Applicable Federal Rate, of $15,818, our cost of providing COBRA and life insurance benefits to Mr. Meyer from January 10, 2011 through December 31, 2011 of $71,456, our payment of income taxes due by Mr. Meyer as a result of our payment of these benefits on Mr. Meyer’s behalf of $40,984 and our payment of income taxes due by Mr. Meyer as a result of imputed income related to a secondary, company owned life insurance policy of $559. These payments and benefits are consistent with Mr. Meyer’s employment agreement and separation agreement and release. See the section titled “Employment and Related Agreements,” below, for more information.

 

For the other Named Executive Officers:

 

Name


   Matching
Contributions
to 401(k)

     Life
Insurance
Premiums
Paid by
Company


     Relocation and
Related
Expenses


     2011
Tax
Gross
Up(14)


     Company
Contribution

Under
Deferred
Income
Account
Plan


     Total

 

Rory P. Read

   $ 0       $ 1,035       $ 22,356       $ 2,432       $ 0       $ 25,823   

Thomas J. Seifert

   $ 11,025       $ 1,405       $ 2,472       $ 0       $ 0       $ 14,902   

Emilio Ghilardi

   $ 11,025       $ 1,484       $ 12,084       $ 0       $ 14,868       $ 39,461   

Mark D. Papermaster

   $ 0       $ 342       $ 0       $ 0       $ 0       $ 342   

Harry A. Wolin

   $ 11,025       $ 1,180       $ 0       $ 3,525       $ 0       $ 15,730   

Rick Bergman

   $ 11,025       $ 1,273       $ 5,791       $ 3,321       $ 0       $ 21,410   

(6) Mr. Read joined AMD in August 2011.
(7) Amounts shown include the grant date fair value of the 287,000 RSUs awarded in 2011 that vest in three equal annual installments if (a) the volume weighted average closing price of the Company’s common stock over any 30-day period during such three-year vesting period is equal to or greater than $11.00 per share (i.e., the market-based component) and (b) Mr. Read continues his employment with the Company through the applicable vesting date; such grant date fair value is based upon the probable outcome of the market-based component, , and is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, except no assumptions for forfeitures were included (the “Performance RSUs”). The amount related to the Performance RSUs, or $1,268,397, assumes the highest level of the market-based component will be achieved.
(8) Amounts shown include the grant date fair value of the 739,000 stock options awarded in 2011 that vest in three equal annual installments if (a) the volume weighted average closing price of the Company’s common stock over any 30-day period during such three-year vesting period is equal to or greater than $11.00 per share (i.e., the market-based component) and (b) Mr. Read continues his employment with the Company through the applicable vesting date; such grant date fair value is based upon the probable outcome of the market-based component and is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, except no assumptions for forfeitures were included (the “Performance Options”). The amount related to the Performance Options, or $2,046,020, assumes the highest level of the market-based component will be achieved.
(9) Mr. Ghilardi ceased being an AMD employee effective February 7, 2012.
(10) Mr. Papermaster joined AMD in October 2011.
(11) Mr. Wolin was designated an executive officer by our Board of Directors during 2010. Therefore, we only included compensation information for Mr. Wolin for 2010 and 2011.
(12) Mr. Bergman was designated an executive officer by our Board of Directors during 2010. He resigned from AMD, effective September 27, 2011. Therefore, we only included compensation information for Mr. Bergman for 2010 and 2011.
(13) Mr. Meyer resigned as our President and Chief Executive Officer and member of our Board of Directors effective January 10, 2011.
(14) For Messrs. Read and Bergman, this amount represents a tax gross up for a portion of their relocation expenses. For Mr. Wolin, this amount represents a tax gross-up for Section 409A taxes that Mr. Wolin is obligated to remit to the Internal Revenue Service resulting from an inadvertent failure by the third party administrator of the Deferred Income Account Plan to distribute balances in 2009 as elected by Mr. Wolin and the resulting correction made under Section 409A of the Internal Revenue Code (“Code”). The plan’s third party administrator reimbursed AMD for all expenses and costs AMD incurred due to this error, including the entirety of the tax gross-up amount AMD paid to Mr. Wolin.

 

50


2011 NONQUALIFIED DEFERRED COMPENSATION

 

Messrs. Ghilardi, Wolin, Bergman and Meyer were the only Named Executive Officers with activity in their Deferred Income Account Plan (“DIA”), a non-qualified deferred compensation plan, during 2011. Except for amounts deferred and vested prior to January 1, 2005, the DIA is subject to Section 409A of the Code. The following table shows certain information for these executives under the DIA for 2011.

 

Name


   Executive
Contributions
in Last FY(1)
($)


     Registrant
Contributions
in Last FY
($)


    Aggregate
Earnings
in Last
FY ($)(2)


    Aggregate
Withdrawals/
Distributions
($)


    Aggregate
Balance at
Last FYE
($)(3)


 
(a)    (b)      (c)     (d)     (e)     (f)  

Emilio Ghilardi

   $ 149,349       $ 14,868 (4)    $ (10,524   $ 0      $ 138,825 (5) 

Harry A. Wolin

   $ 0       $ 0      $ (12,335   $ 11,201 (7)    $ 378,281   

Rick Bergman(6)

   $ 22,275       $ 0      $ (2,088   $ 0      $ 62,078   

Derrick R. Meyer

   $ 0       $ 0      $ 3,538      $ 334,303      $ 0   

(1) This amount is included in the “Salary” column of the 2011 Summary Compensation Table.
(2) Represents the net amounts credited to the DIA accounts of Messrs. Ghilardi, Wolin, Bergman and Meyer as a result of the performance of the investment vehicles in which their accounts were deemed invested, as more fully described in the narrative disclosure below. These amounts do not represent above-market earnings, and thus are not reported in the 2011 Summary Compensation Table.
(3) These amounts include $0, $0 and $18,289 for Messrs. Ghilardi, Wolin and Bergman, respectively, that was previously reported as compensation in the Summary Compensation Table in previous years.
(4) This amount is included in the “All Other Compensation” column of the 2011 Summary Compensation Table and reflects contributions by AMD that posted in 2012 but are applicable to 2011.
(5) Does not include amount in column (c) because our contribution to Mr. Ghilardi’s DIA posted in 2012, although it was applicable to 2011.
(6) Mr. Bergman resigned from AMD, effective September 27, 2011. Pursuant to the terms of the DIA, participants must be employed with AMD as of the end of the applicable year to be eligible to receive a contribution to their DIA account from AMD. Therefore, Mr. Bergman did not receive a contribution for 2011. In addition, pursuant to the terms of the DIA, Mr. Bergman will receive a lump-sum distribution of his DIA account balance in 2012.
(7) This amount represents distributions made in 2011 pursuant to the consummation of the corrections procedure under Section 409A of the Code resulting from an inadvertent failure by the DIA’s third party administrator to distribute balances in 2009 as elected by Mr. Wolin.

 

We maintain the DIA which allows eligible employees, including the Named Executive Officers, to voluntarily defer receipt of a portion of their salary, bonus and any commission payments until the date or dates selected by the participant. Participants may defer up to 50% of annual base salary and/or 100% of commissions and bonuses. Earnings on the deferred accounts are based on the performance of the investment funds selected by the participants. Participants make a deferral election prior to the year in which the compensation is earned that may not be terminated or changed during the year for which it was made. Generally, we make a contribution to the participant’s account if his/her annual base salary minus Section 401(k) contribution before the deferral is greater than the compensation limit for 401(k) plans. The contribution, if any, is equal to the lesser of (i) 50% of the deferred compensation credited to the participant’s account for the year and (ii) a discretionary percentage of the participant’s base salary in excess of the eligible 401(k) compensation limit for the year minus the participant’s 401(k) contributions. For 2011, AMD’s discretionary contribution percentage under option (ii) above was 4.5%. For 2011, Messrs. Wolin and Meyer did not elect to contribute to the DIA; therefore, pursuant to the terms of the DIA, we did not make any contributions to their accounts for 2011. We did not make any contributions to Mr. Bergman’s account for 2011 because pursuant to the terms of the DIA participants must be employed with AMD as of the end of the fiscal year to receive a matching contribution, and Mr. Bergman resigned as an employee in September 2011. Participants are 100% vested in the value of their accounts. Participants may select their desired benchmark investment fund(s) in which their accounts are deemed to be invested and may change their investment elections at any time, with such change effective from the next business day. The amount of investment gain or loss that is credited to the participant’s account depends on the participant’s investment election. Currently, we are utilizing the investment funds, except the Lifestyle Funds, available under variable life insurance policies insured by John Hancock Life as the benchmark investment funds. For Messrs. Wolin, Bergman and Meyer, the investment return was calculated by taking the aggregate

 

51


gain or loss in 2011 and dividing it by aggregate balance as of the beginning of 2011. Because Mr. Ghilardi began participating in the DIA during 2011and did not have a balance in his account at the beginning of 2011, we calculated his investment return by using the dollar weighted rate of return, also known as the internal rate of return. For 2011, the investment return credited to the DIA accounts of Messrs. Ghilardi, Wolin, Bergman and Meyer were -13.7%, -3.1%, -5.0% and 1.1%, respectively, based on their investment elections for their DIA accounts.

 

The DIA accounts are distributed following a participant’s termination of employment with us unless the participant has elected an in-service withdrawal (scheduled or hardship withdrawal). At the time a participant makes his/her deferral election, he/she may elect a different form of distribution for such year’s deferred compensation. The participant may elect a single lump sum distribution or annual installment distributions over three to ten years. The default form of distribution is a single lump sum. A participant may change the form of distribution election, subject to the terms of the DIA.

 

A participant may elect to withdraw all or part of his/her account while employed by us, subject to the terms of the DIA. The in-service withdrawal date must be at least two years after the plan year in which the election was made. An in-service withdrawal date may be changed, subject to the terms under the DIA. An unscheduled payment may also be made, subject to the terms of the DIA.

 

52


OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-END

 

The following table shows all outstanding equity awards held by the Named Executive Officers as of December 31, 2011.

 

Name


  Option Awards

    Stock Awards

 
  Number of
Securities
Underlying
Unexercised
Options
(#)  Exercisable


    Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable


    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)


    Option
Exercise
Price
($)


    Option
Expiration
Date


    Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)


    Market
Value of
Shares or
Units
of Stock
That Have
Not Vested
($)(1)


    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
(#)


    Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(1)


 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  

Rory P. Read

                                            717,000 (2)    $ 3,871,800                   
                                              143,000 (3)    $ 72,200                   
                                                              287,000 (4)    $ 1,549,800   
      0        1,847,000 (5)            $ 6.37        08/25/2018                                   
      0                739,000 (6)    $ 6.37        08/25/2018                                   

Thomas J. Seifert

                                            41,676 (7)    $ 225,050                   
                                              83,338 (8)    $ 450,020                   
                                              153,374 (9)    $ 828,228                   
      166,666        83,334 (10)            $ 6.19        10/15/2016                                   
      31,248        31,252 (11)            $ 8.80        5/15/2017                                   
      31,248        31,252 (11)            $ 6.49        8/15/2017                                   
      31,249        31,251 (11)            $ 7.57        11/15/2017                                   
      31,248        31,252 (11)            $ 8.60        2/15/2018                                   
      0        306,748 (12)            $ 7.50        6/15/2018                                   

Emilio Ghilardi(19)

                                            37,508 (15)    $ 202,543                   
                                              83,338 (8)    $ 450,025                   
                                              92,025 (9)    $ 496,935                   
      26,668        0              $ 5.18        9/15/2015                                   
      9,374        9,374 (13)            $ 4.01        5/15/2016                                   
      9,375        9,375 (13)            $ 3.69        8/15/2016                                   
      46,875        9,375 (13)            $ 6.53        11/15/2016                                   
      46,874        9,376 (13)            $ 7.87        2/15/2017                                   
      31,248        31,252 (11 )            $ 8.80        5/15/2017                                   
      10,417        31,252 (11)            $ 6.49        8/15/2017                                   
      31,249        31,251 (11)            $ 7.57        11/15/2017                                   
      31,248        31,252 (11)            $ 8.60        2/15/2018                                   
      0        184,050 (12)            $ 7.50        6/15/2018                                   

Mark D. Papermaster

                                            279,661 (18)    $ 1,510,169                   
      0        446,993 (14)            $ 5.76        11/15/2018                                   

 

53


Name


  Option Awards

    Stock Awards

  Number of
Securities
Underlying
Unexercised
Options
(#)  Exercisable


    Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable


    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)


  Option
Exercise
Price
($)


    Option
Expiration
Date


    Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)


    Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)(1)


    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
(#)


  Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(1)


(a)   (b)     (c)     (d)   (e)     (f)     (g)     (h)     (i)   (j)

Harry A. Wolin

                                        25,006 (15)    $ 135,032           
                                          62,504 (8)    $ 337,522           
                                          92,025 (9)    $ 496,935           
      360        0          $ 5.92        10/24/2012                           
      360        0          $ 5.92        10/24/2012                           
      2,292        0          $ 6.67        12/18/2012                           
      10,000        0          $ 6.45        2/15/2015                           
      99,900        0          $ 2.21        12/15/2015                           
      72        0          $ 3.80        4/24/2012                           
      240        0          $ 3.80        7/24/2012                           
      1,250        0          $ 3.80        5/1/2013                           
      3,750        0          $ 3.80        2/2/2014                           
      795        0          $ 3.80        2/3/2012                           
      2,456        0          $ 3.80        4/28/2012                           
      1,116        0          $ 3.80        7/27/2012                           
      795        0          $ 3.80        5/4/2013                           
      795        0          $ 3.80        7/25/2013                           
      795        0          $ 3.80        10/24/2013                           
      1,750        0          $ 3.80        2/15/2014                           
      1,334        0          $ 3.80        5/15/2014                           
      1,334        0          $ 3.80        8/15/2014                           
      1,334        0          $ 3.80        11/15/2014                           
      666        0          $ 3.80        5/15/2014                           
      666        0          $ 3.80        8/15/2014                           
      666        0          $ 3.80        11/15/2014                           
      18,750        0          $ 7.41        5/15/2015                           
      18,750        0          $ 5.64        8/15/2015                           
      18,750        0          $ 2.43        11/15/2015                           
      18,750        0          $ 2.42        2/15/2016                           
      31,250        6,250 (13)        $ 4.01        5/15/2016                           
      31,250        6,250 (13)        $ 3.69        8/15/2016                           
      31,250        6,250 (13)        $ 6.53        11/15/2016                           
      31,249        6,251 (13)        $ 7.87        2/15/2017                           
      23,436        23,439 (11)        $ 8.80        5/15/2017                           
      23,436        23,439 (11)        $ 6.49        8/15/2017                           
      23,436        23,439 (11)        $ 7.57        11/15/2017                           
      23,436        23,439 (11)        $ 8.60        2/15/2018                           
      0        184,050 (12)        $ 7.50        6/15/2018                           

 

54


Name


  Option Awards

    Stock Awards

  Number of
Securities
Underlying
Unexercised
Options
(#)  Exercisable


    Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable


    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)


  Option
Exercise
Price
($)


    Option
Expiration
Date


    Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)


    Market
Value
of
Shares
or Units
of Stock
That
Have
Not
Vested
($)(1)


    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
(#)


  Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(1)


(a)   (b)     (c)     (d)   (e)     (f)     (g)     (h)     (i)   (j)

Rick Bergman(16)

                                        0      $ 0           
      90,000        0          $ 2.21        9/27/2012                           
      6,978        0          $ 3.80        5/2/2012                           
      917        0          $ 3.80        9/27/2012                           
      917        0          $ 3.80        9/27/2012                           
      917        0          $ 3.80        9/27/2012                           
      3,721        0          $ 3.80        9/27/2012                           
      3,056        0          $ 3.80        9/27/2012                           
      5,555        0          $ 3.80        9/27/2012                           
      25,000        0          $ 5.64        9/27/2012                           
      25,000        0          $ 2.43        9/27/2012                           
      25,000        0          $ 2.42        9/27/2012                           
      11,111        0          $ 3.80        9/27/2012                           
      1,527        0          $ 3.80        9/27/2012                           
      858        0          $ 3.80        9/27/2012                           
      458        0          $ 3.80        9/27/2012                           
      458        0          $ 3.80        9/27/2012                           
      458        0          $ 3.80        9/27/2012                           
      42,189        0          $ 4.01        9/27/2012                           
      42,187        0          $ 3.69        9/27/2012                           
      42,187        0          $ 6.53        9/27/2012                           
      42,186        0          $ 7.87        9/27/2012                           
      26,039        0          $ 8.80        9/27/2012                           
      26,039        0          $ 6.49        9/27/2012                           
      26,040        0          $ 7.57        9/27/2012                           
      26,039        0          $ 8.60        9/27/2012                           

Derrick R. Meyer(17)

    —          —              —          —          —          —             
      9,000        0          $ 11.69        4/24/2012                           
      37,500        0          $ 15.20        10/31/2013                           
      37,500        0          $ 14.64        2/2/2014                           
      37,500        0          $ 14.16        4/28/2012                           
      37,500        0          $ 20.10        7/27/2012                           
      18,750        0          $ 33.95        5/4/2013                           
      18,750        0          $ 17.81        7/25/2013                           
      18,750        0          $ 20.32        10/24/2013                           
      18,750        0          $ 14.83        2/15/2014                           
      50,000        0          $ 15.40        5/15/2014                           
      50,000        0          $ 11.95        8/15/2014                           
      50,000        0          $ 12.70        11/15/2014                           
      50,000        0          $ 6.45        2/15/2015                           
      100,000        0          $ 7.41        5/15/2015                           
      79,000        0          $ 5.64        8/15/2015                           
      280,000        0          $ 5.64        8/15/2015                           
      82,500        0          $ 5.64        8/15/2015                           
      45,000        0          $ 2.43        11/15/2015                           
      44,000        0          $ 2.43        11/15/2015                           
      17,500        0          $ 5.64        11/15/2015                           
      45,000        0          $ 2.42        1/10/2016                           
      44,000        0          $ 2.42        1/10/2016                           
      79,000        0          $ 4.01        1/10/2016                           
      225,000        0          $ 4.01        1/10/2016                           
      225,000        0          $ 3.69        1/10/2016                           
      225,000        0          $ 6.53        1/10/2016                           
      225,000        0          $ 7.87        1/10/2016                           
      143,750        0          $ 8.80        1/10/2016                           
      143,750        0          $ 6.49        1/10/2016                           
      143,750        0          $ 7.57        1/10/2016                           

 

55



(1) The dollar value of these awards is calculated by multiplying the number of units by $5.40 per share, the last reported sales price of our common stock on December 30, 2011, the last trading day of 2011.
(2) This award vests 33 1/3% on 8/25/2012 then vests 33 1/3% annually for the next two years.
(3) This award vests 100% on 8/25/2012.
(4) This Performance RSU vests in three equal annual installments from the grant date if the market-based component is satisfied, meaning that the weighted average closing price of the Company’s common stock over any 30-day period during the three-year vesting period is equal to or greater than $11.00 per share and Mr. Read continues his employment with the Company through the applicable vesting date.
(5) This option vests 33 1/3% on 8/25/2012 then vests 33 1/3% annually for the next two years.
(6) This Performance Option vests in three equal installments from the grant date if the market-based component is satisfied, meaning that the weighted average closing price of the Company’s common stock over any 30-day period during the three-year vesting period is equal to or greater than $11.00 per share and Mr. Read continues his employment with the Company through the applicable vesting date.
(7) This award vested 33 1/3% on 11/9/2010 then vests 33 1/3% annually for next two years.
(8) This award vested 33 1/3% on 5/9/2011 then vests 33 1/3% annually for next two years.
(9) This award vests 33 1/3% on 5/9/2012 then vests 8.33% quarterly for the next two years.
(10) This option vested 33 1/3% on 11/15/2010 then vests 8.33% quarterly for the next two years.
(11) This option vested 33 1/3% on 5/15/2011 then vests 8.33% quarterly for the next two years.
(12) This option vests on 5/15/2012 then vests 8.33% quarterly for the next two years.
(13) This option vested 33 1/3% on 5/15/2010 then vests 8.33% quarterly for the next two years.
(14) This option vests 33 1/3% on 11/15/2012 then vests 8.33% quarterly for the next two years.
(15) This award vested 33 1/3% on 8/9/2010 then vests 33 1/3% annually for next two years.
(16) Mr. Bergman’s stock options and RSUs ceased vesting upon his resignation from AMD on September 27, 2011. His vested and unexercised stock options must be exercised by him no later than the earlier of the expiration date of the option or September 27, 2012. Any vested and unexercised stock options not exercised as of such time will expire.
(17) The vesting of Mr. Meyer’s RSUs and stock option awards was accelerated, and all his equity awards became fully vested in connection with his resignation as President, Chief Executive Officer and member of our Board of Directors, effective January 10, 2011 and pursuant to the terms of his employment agreement with us dated July 17, 2008 and his separation agreement and release dated January 10, 2011. Mr. Meyer received the shares issuable under the vested RSUs on January 18, 2011, the effective date of the ADEA release per the terms of his separation agreement and release. His vested and unexercised stock options must be exercised by him no later than the earlier of the expiration date of the option or January 10, 2016.
(18) This award vests 33 1/3% on 11/9/2012 then 33 1/3% annually for the next two years.
(19) Mr. Ghilardi’s stock options and RSUs ceased vesting when he ceased being an employee of AMD, effective February 7, 2012. His vested and unexercised stock options must be exercised by him no later than the earlier of the expiration date of the option or February 5, 2013. Any vested and unexercised stock options not exercised as of such time will expire.

 

56


GRANTS OF PLAN-BASED AWARDS IN 2011

 

The following table shows all plan-based awards granted to the Named Executive Officers in 2011. We have not included any information for Mr. Derrick R. Meyer, who resigned as our President and Chief Executive Officer on January 10, 2011, because he was not granted any awards in 2011.

 

Name


  Grant
Date


    Compensation
Committee
Action Date(1)


    Estimated Possible Payouts
Under
Non-Equity Incentive Plan
Awards(2)


    Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards


    All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)


    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)


    Exercise
or Base
Price of
Option
Awards
($/
Share)


    Grant
Date Fair
Value of
Stock and
Option
Awards
($)(5)


 
      Threshold
($)


    Target
($)


    Maximum
($)


    Target
(#)


         
(a)   (b)           (c)     (d)     (e)     (g)     (i)     (j)     (k)     (l)  

Rory P. Read

                  $ (6)    $ (6)    $ (6)                                         
      8/25/2011        8/25/2011                                                1,847,000 (10)      6.37      $ 4,907,294   
      8/25/2011        8/25/2011                                739,000 (11)                      6.37      $ 2,046,020   
      8/25/2011        8/25/2011                                        717,000 (12)                    $ 4,567,290   
      8/25/2011        8/25/2011                                        143,000 (13)                    $ 910,910   
      8/25/2011        8/25/2011                                287,000 (14)                            $ 1,268,397   

Thomas J. Seifert

                  $ 227,250      $ 909,000      $ 2,727,000                                           
      2/15/2011        5/14/2010                                                62,500 (7)      8.60      $ 208,711   
      6/15/2011        5/2/2011                                                306,748 (9)      7.50      $ 870,551   
      6/15/2011        5/2/2011                                        153,374 (20)                    $ 1,150,305   

Emilio Ghilardi

                  $ 224,025 (21)    $ 896,100 (21)    $ 2,688,300 (21)                                         
      2/15/2011        5/14/2010                                                62,500 (7)      8.60      $ 208,711   
      6/15/2011        5/2/2011                                                184,050 (9)      7.50      $ 522,334   
      6/15/2011        5/2/2011                                        92,025 (20)                    $ 690,188   

Mark D. Papermaster

                  $ 30,556      $ 122,222      $ 366,667                                           
      11/15/2011        9/17/2011                                        279,661 (8)                    $ 1,610,847   
      11/15/2011        9/17/2011                                                446,993 (15)      5.76      $ 1,105,324   

Harry A. Wolin

                  $ 178,125      $ 712,500      $ 2,137,500                                           
      2/15/2011        5/14/2010                                                46,875 (7)      8.60      $ 156,533   
      6/15/2011        5/2/2011                                                184,050 (9)      7.50      $ 522,334   
      6/15/2011        5/2/2011                                        92,025 (20)                    $ 690,188   

Rick Bergman

                  $ 196,875 (16)    $ 787,500 (16)    $ 2,362,500 (16)