DEF 14A 1 d659595ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                              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))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under Rule 14a-12

ADVANCED MICRO DEVICES, INC.

(Name of registrant as specified in its charter)

 

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box)

 

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (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):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  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.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


Table of Contents

LOGO

 

ADVANCED MICRO DEVICES, INC.

2485 AUGUSTINE DRIVE

SANTA CLARA, CALIFORNIA 95054

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

You are cordially invited to attend our 2019 annual meeting of stockholders (our “Annual Meeting”) to be held on Wednesday, May 15, 2019 at 9:00 a.m. Pacific Time at Advanced Micro Devices, Inc., 2485 Augustine Drive, Santa Clara, California 95054. We are holding our Annual Meeting to:

 

   

Elect the seven director nominees named in this 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, the “2004 Plan”) to: (i) increase the number of authorized shares that can be awarded to our employees, consultants and directors under the 2004 Plan by 29 million shares and (ii) update the plan for certain tax law changes;

 

   

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 U.S. Securities and Exchange Commission (the “SEC”); and

 

   

Transact any other business that properly comes before our Annual Meeting or any adjournment or postponement thereof.

We are pleased to provide access to our proxy materials over the Internet under the SEC’s “notice and access” rules. As a result, we are mailing to our stockholders (other than those who previously requested printed or emailed materials on an ongoing basis) a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of printed copies of our proxy materials. The Notice contains instructions on how to access our proxy materials on the Internet, how to vote on the Internet and how you can receive printed or emailed copies of our proxy materials. We believe that providing our proxy materials over the Internet will lower our Annual Meeting’s cost and environmental impact, while increasing the ability of our stockholders to access the information that they need.

Stockholders of record at the close of business on March 18, 2019 and holders of proxies for those stockholders may attend and vote at our Annual Meeting. To attend our Annual Meeting in person, you must present valid photo identification, and, if you hold shares through a broker, bank, trustee or nominee (i.e., in street name), you must also present a letter from your broker or other nominee showing that you were the beneficial owner of the shares on March 18, 2019.

This year, we are also pleased to offer a virtual annual meeting at which our stockholders can view our Annual Meeting at AMD.onlineshareholdermeeting.com. This virtual meeting will be in addition to our physical meeting. Stockholders at the close of business on March 18, 2019 may also ask questions and vote at the virtual meeting via the Internet. We hope this will allow our stockholders who are unable to attend our Annual Meeting in person to participate in the virtual meeting.

Sincerely,

 

LOGO

HARRY A. WOLIN

Senior Vice President, General Counsel and Corporate

Secretary

This notice of annual meeting is dated March 21, 2019 and will first be distributed and

made available to the stockholders of Advanced Micro Devices, Inc. on or about March 21, 2019.

 

YOUR VOTE IS IMPORTANT AND WE ENCOURAGE YOU TO VOTE PROMPTLY

Important notice regarding Internet availability of proxy materials: This proxy statement and our

Annual Report on Form 10-K for the fiscal year ended December 29, 2018 are available at

www.proxyvote.com and on the Investor Relations pages of our website at www.amd.com or ir.amd.com.


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

 

TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     1  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     6  

ITEM 1—ELECTION OF DIRECTORS

     7  

Director Experience, Skills and Qualifications

     7  

Consideration of Stockholder Nominees for Director

     12  

Communications with the Board or Non-Management Directors

     13  

Required Vote

     13  

Recommendation of the Board of Directors

     14  

CORPORATE GOVERNANCE

     15  

Independence of Directors

     15  

Compensation Committee Interlocks and Insider Participation

     15  

Board Leadership Structure

     15  

Risk Oversight

     16  

Code of Ethics

     17  

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

     18  

Board Meetings and Attendance

     18  

Board Committees

     18  

DIRECTORS’ COMPENSATION AND BENEFITS

     21  

PRINCIPAL STOCKHOLDERS

     25  

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

     26  

EXECUTIVE OFFICERS

     28  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     30  

EQUITY COMPENSATION PLAN INFORMATION

     31  

COMPENSATION DISCUSSION AND ANALYSIS

     32  

Executive Summary

     32  

Executive Compensation Policies and Practices

     36  

Response to 2018 “Say On Pay” Vote and Stockholder Engagement Process

     37  

Compensation Philosophy and Objectives

     38  

Fiscal 2018 Compensation Elements

     42  

Change in Control Agreements and Other Change in Control Arrangements

     48  

Severance and Separation Arrangements

     48  

Other Compensation Polices

     49  

COMPENSATION AND LEADERSHIP RESOURCES COMMITTEE’S REPORT

     51  

COMPENSATION POLICIES AND PRACTICES

     52  

EXECUTIVE COMPENSATION

     53  

2018 SUMMARY COMPENSATION TABLE

     53  

2018 NONQUALIFIED DEFERRED COMPENSATION

     55  

 


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

Table of Contents (continued)

 

 

 

     Page  

OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END

     56  

GRANTS OF PLAN-BASED AWARDS IN 2018

     58  

CHIEF EXECUTIVE OFFICER PAY RATIO

     59  

OPTION EXERCISES AND STOCK VESTED IN 2018

     60  

SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS

     60  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     67  

AUDIT AND FINANCE COMMITTEE’S REPORT

     69  

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

     70  

Required Vote

     70  

Recommendation of Board of Directors

     70  

Independent Registered Public Accounting Firm’s Fees

     70  

Pre-Approval Policies and Procedures

     71  

ITEM  3—APPROVAL OF THE AMENDMENT AND RESTATEMENT TO THE ADVANCED MICRO DEVICES, INC. 2004 EQUITY INCENTIVE PLAN

     72  

Why the Board is Seeking Approval of the Amended and Restated 2004 Plan

     72  

Provisions Designed to Protect Stockholders

     72  

Key Equity Metrics

     73  

Summary of the 2004 Plan

     73  

Change of Control

     76  

Federal Tax Aspects

     76  

Amendment and Termination of the 2004 Plan and Prohibition on Repricing or Exchange of Awards Without Stockholder Approval

     78  

New Plan Benefits

     78  

Existing Plan Benefits

     79  

Summary

     80  

Required Vote

     80  

Recommendation of the Board of Directors

     80  

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

     81  

Required Vote

     82  

Recommendation of the Board of Directors

     82  

INCORPORATION BY REFERENCE

     83  

AVAILABLE INFORMATION

     83  

EXHIBIT A—AMENDED AND RESTATED ADVANCED MICRO DEVICES, INC. 2004 EQUITY INCENTIVE PLAN

     A-1  

 


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

 

ADVANCED MICRO DEVICES, INC.

 

 

 

PROXY STATEMENT

 

2019 ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS

In this proxy statement, the words “AMD,” the “Company,” “we,” “ours,” “us” and similar terms refer to Advanced Micro Devices, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

 

 

 1.

 

 

 

 

Q:

 

 

  

 

WHY DID I RECEIVE A NOTICE IN THE MAIL REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A FULL SET OF PROXY MATERIALS?

    A:      In accordance with rules adopted by the SEC, commonly referred to as “Notice and Access,” we may furnish proxy materials by providing access to the documents on the Internet, instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice was mailed on or about March 21, 2019 to stockholders of record on March 18, 2019 (the “Record Date”) who have not previously requested to receive printed or emailed materials on an ongoing basis. The Notice instructs you as to how you may access our proxy materials on the Internet and how to vote on the Internet.
    

You may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis by following the instructions in the Notice. Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the environmental impact of our annual meetings. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

 

 

 2.

 

 

 

 

Q:

 

 

  

 

WHY AM I RECEIVING PROXY 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 Wednesday, May 15, 2019 at 9:00 a.m. Pacific Time at AMD, 2485 Augustine Drive, Santa Clara, California 95054 and virtually at AMD.onlineshareholdermeeting.com. Our stockholders as of the close of business on the Record Date are invited to attend or participate in our Annual Meeting and are requested to vote on the items described in this proxy statement. This proxy statement includes information that we are required to provide to you under SEC rules and is designed to assist you in voting your shares.

 

 

 3.

 

 

 

 

Q:

 

 

  

 

WHAT IS INCLUDED IN THE PROXY MATERIALS?

    A:     

The proxy materials for our Annual Meeting include the Notice, this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 29, 2018 (our “Annual Report”). If you received a printed copy of these materials, the proxy materials also include a proxy card or voting instruction form.

 

 

 4.

 

 

 

 

Q:

 

 

  

 

HOW CAN I ACCESS THE PROXY MATERIALS OVER THE INTERNET?

    A:     

The Notice, proxy card and voting instruction form contain instructions on how you may access our proxy materials on the Internet and how to vote on the Internet. Our proxy materials are also available at www.proxyvote.com and the Investor Relations page of our website at www.amd.com or ir.amd.com.

 

 

 5.

 

 

 

 

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 $30,000.

 

 

 6.

 

 

 

 

Q:

 

 

  

 

WHO IS ENTITLED TO VOTE?

    A:      Stockholders as of the close of business on the Record Date are entitled to vote on all items properly presented at our Annual Meeting. On the Record Date, 1,081,563,723 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 regular business hours at our headquarters, located at 2485 Augustine Drive, Santa Clara, California 95054, from our Corporate Secretary at least ten days before our Annual Meeting. The list of stockholders will also be available at the time and place of our Annual Meeting.

 

ADVANCED MICRO DEVICES, INC.  |  2019 Proxy Statement    1


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

Questions and Answers (continued)

 

 

 

 

 

 7.

 

 

 

 

Q:

 

 

  

 

WHAT AM I BEING ASKED TO VOTE ON?

    A:      You may vote on:
         Proposal 1: Election of the seven director nominees named in this proxy statement.
         Proposal 2: Ratification of the appointment of Ernst & Young LLP as 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”) to: (i) increase the number of authorized shares that can be awarded to our employees, consultants and directors under the 2004 Plan by 29 million shares and (ii) update the plan for certain tax law changes.
         Proposal 4: Approval on a non-binding, advisory basis of the compensation of our named executive officers (“Say-On-Pay”).
        

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

 

 

 8.

 

 

 

 

Q:

 

 

  

 

HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?

    A:      The Board recommends that you vote:
         FOR each of the seven 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 the Say-On-Pay proposal.

 

 

 9.

 

 

 

 

Q:

 

 

  

 

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?

    A:      Most of our stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
     Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to AMD or to vote at our Annual Meeting. If you requested to receive printed proxy materials, we have enclosed a proxy card for you to use, as described in the Notice and under Question 10 below. You may also vote on the Internet, or by telephone, as described in the Notice and under Question 10 below. You are also invited to attend our Annual Meeting in person or via the Internet.
    

Beneficial Owner. If your shares are held in an account in the name of a brokerage firm, bank, broker-dealer, trust or other similar organization (i.e., in street name), like the vast majority of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice should be forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker or other nominee how to vote your shares, and you are also invited to attend our Annual Meeting in person or via the Internet, as described in the Notice and under Question 12 below. You may not vote your shares in person at our Annual Meeting unless you obtain a “legal proxy” from the broker or other nominee that holds your shares giving you the right to vote the shares at our Annual Meeting and a letter from your broker or other nominee showing that you were the beneficial owner of your shares on the Record Date.

 

 

 10.

 

 

 

 

Q:

 

 

  

 

WHO CAN ATTEND THE ANNUAL MEETING? CAN I VOTE AT THE ANNUAL MEETING? CAN I ATTEND THE ANNUAL MEETING VIA THE INTERNET?

    A:      You can attend our Annual Meeting in person or you can attend and participate via the Internet.
     Attending in Person. Only stockholders as of the close of business on the Record Date, holders of valid proxies for those stockholders and other persons invited by us can attend our Annual Meeting in person. To attend our Annual Meeting in person, you must present valid photo identification, such as a driver’s license or passport, and if you were a beneficial owner, you must also present a letter from your broker or other nominee showing that you were the beneficial owner of the shares on the Record Date. If you were a stockholder of record on the Record Date, you may vote your shares in person at our Annual Meeting. If you were a beneficial owner on the Record Date, you must also bring a legal proxy from your broker or other nominee to vote your shares in person at our Annual Meeting.

 

2    ADVANCED MICRO DEVICES, INC.  |  2019 Proxy Statement


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

Questions and Answers (continued)

 

 

 

    

Attending and Participating via the Internet. Stockholders may also attend our Annual Meeting via the Internet at AMD.onlineshareholdermeeting.com. Stockholders of record and beneficial owners as of the close of business on the Record Date may also submit questions and vote while attending the meeting via the Internet. Instructions on how to attend and participate at our Annual Meeting via the Internet are posted at AMD.onlineshareholdermeeting.com. To demonstrate proof of stock ownership, you will need to enter the 12-digit control number received with your Notice or proxy materials to submit questions and vote at our Annual Meeting via the Internet. We have retained Broadridge Financial Solutions (“Broadridge”) to host our virtual annual meeting and to distribute, receive, count and tabulate proxies. On the day of our Annual Meeting, Broadridge may be contacted at 1(955) 449-0991, and will be available to answer your questions regarding how to attend and participate at our Annual Meeting via the Internet.

 

 

 11.

 

 

 

 

Q:

 

 

  

 

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

    A:      If you are a stockholder of record you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials, you can vote by mail, telephone (from the United States and Canada) or the Internet pursuant to instructions provided on the proxy card provided to you with your printed proxy materials.
    

You may also vote in person at our Annual Meeting. A ballot will be given to you upon request when you arrive at our Annual Meeting. You may also vote while attending our Annual Meeting via the Internet, as described in Question 10 above. Even if you plan to attend our Annual Meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend our Annual Meeting.

 

 

 12.

 

 

 

 

Q:

 

 

  

 

IF I AM A BENEFICIAL OWNER, HOW DO I VOTE?

    A:      If you are a beneficial owner, you may submit your voting instructions by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials, you can submit your voting instructions by following the instructions in the voting instruction form provided to you by your broker or other nominee. We urge you to instruct your broker or other nominee how to vote on your behalf. As described more fully under Question 14, your broker or other nominee cannot vote on certain items without your instructions.
    

Alternatively, you can vote in person at our Annual Meeting, but you must bring to our Annual Meeting a legal proxy from your broker or other nominee as the record holder and a letter from your broker or other nominee showing that you were the beneficial owner of your shares on the Record Date. You may also vote while attending our Annual Meeting via the Internet, as described in Question 10 above. Even if you plan to attend our Annual Meeting, we recommend that you also submit your voting instructions as described above so that your vote will be counted if you later decide not to attend our Annual Meeting.

 

 

 13.

 

 

 

 

Q:

 

 

  

 

WHAT IF I AM A STOCKHOLDER OF RECORD AND DO NOT SPECIFY A CHOICE FOR A MATTER WHEN RETURNING A PROXY CARD OR VOTING BY TELEPHONE OR THE INTERNET?

    A:     

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, your shares will be voted in accordance with the recommendations of the Board, as specified in Question 8 above. With respect to any other matter that properly comes before our Annual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, at their own discretion.

 

 

 14.

 

 

 

 

Q:

 

 

  

 

WHAT IF I AM A BENEFICIAL OWNER AND DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER OR OTHER NOMINEE? WHAT IS A BROKER NON-VOTE?

    A:      As a beneficial owner, in order to ensure your shares are voted, you must provide voting instructions to your broker or other nominee by the deadline provided in the materials you receive from your broker or other nominee. If you do not provide voting instructions to your broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.
     Non-Discretionary Items. The election of directors, the amendment and restatement of the 2004 Plan and the Say-on-Pay proposal are non-discretionary items and may not be voted on by brokers or other nominees who have not received specific voting instructions from beneficial owners. A broker non-vote occurs when your broker or other nominee has not received instructions from you as to how to vote your shares on a proposal and does not have discretionary authority to vote your shares on that proposal.

 

ADVANCED MICRO DEVICES, INC.  |  2019 Proxy Statement    3


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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

Questions and Answers (continued)

 

 

 

    

Discretionary Items. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year is a discretionary item. Generally, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on these proposals in their discretion.

 

 

 15.

 

 

 

 

 

 

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

 

 

 16.

 

 

 

 

Q:

 

 

  

 

WHAT IS A “QUORUM”?

    A:     

For the purposes of our Annual Meeting, a “quorum” is the presence, in person or by proxy, by the holders of a majority of the voting power of the outstanding shares entitled to vote at our Annual Meeting. There must be a quorum for our Annual Meeting to be held. Both abstentions and broker non-votes are counted for the purpose of determining the presence of a quorum.

 

 

 17.

 

 

 

 

Q:

 

 

  

 

WHAT IS THE VOTING REQUIREMENT FOR EACH PROPOSAL TO PASS?

    A:      Election of Directors. Each of the seven 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 and broker non-votes will have no effect on the outcome of these elections. Each director nominee has submitted a written resignation that will be effective if he or 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 Ernst & Young LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the shares of our common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Abstentions have the same effect as a vote against this proposal. Because brokers and other nominees 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 the shares of our common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Abstentions have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal.
    

Say-On-Pay Proposal. Approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, requires the affirmative vote of a majority of the shares of our common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Because your vote is advisory, it will not be binding on the Board, the Compensation and Leadership Resources Committee (the “Compensation Committee”) or us. However, the Board and the Compensation Committee will review the voting results and take them into consideration when making future decisions about our executive compensation program. Abstentions have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal.

 

 

 18.

 

 

 

 

Q:

 

 

  

 

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

    A:      We will announce preliminary voting results at our 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 our Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and the final voting results in an amendment to the Form 8-K as soon as they become available.

 

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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

Questions and Answers (continued)

 

 

 

 

 19.

 

 

 

 

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 as needed to permit Broadridge to tabulate and certify the vote and as required by law.

 

 

 20.

 

 

 

 

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 our Annual Meeting other than the items described in this proxy statement. If any other business is presented at our Annual Meeting, your proxy gives authority to each of Dr. Lisa T. Su, our President and Chief Executive Officer, and Harry Wolin, our Senior Vice President, General Counsel and Corporate Secretary, to vote on such matters at their discretion.

 

 

 21.

 

 

 

 

Q:

 

 

  

 

WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2020 ANNUAL MEETING DUE?

    A:     

For stockholder proposals to be considered for inclusion in the proxy statement for our 2020 annual meeting of stockholders, they must be submitted in writing to Advanced Micro Devices, Inc., 2485 Augustine Drive, Santa Clara, California 95054, Attention: Corporate Secretary and received by us on or before November 22, 2019. In addition, for directors to be nominated or other stockholder proposals to be properly presented at our 2020 annual meeting of stockholders (but not included in our proxy materials), a separate notice of any nomination or proposal must be received by us between January 16, 2020 and February 15, 2020. If our 2020 annual meeting of stockholders is not held within 30 days of May 15, 2020, to be timely, the stockholder’s notice must be received by us no 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 2020 annual meeting of stockholders was made or the notice of our 2020 annual meeting of stockholders is mailed. The public announcement of an adjournment or postponement of our 2020 annual meeting of stockholders will not trigger a new time period (or extend any time period) for the giving of a stockholder’s 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 under “Consideration of Stockholder Nominees for Director” below.

 

 

 22.

 

 

 

 

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 the Notice and, if applicable, our printed proxy materials 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 printed materials. This procedure reduces our printing costs, mailing costs and fees. Upon written or oral request, we will promptly deliver a separate copy of the Notice or, if applicable, the printed proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice or Annual Report or, if applicable, the printed proxy materials, contact us at 1 (408) 749-4000 or at Advanced Micro Devices, Inc., 2485 Augustine Drive, Santa Clara, California 95054, 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) 542-1061.

 

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  2019 NOTICE OF MEETING AND PROXY STATEMENT  

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements concerning Advanced Micro Devices, Inc. that involve risks, uncertainties and assumptions, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements are commonly identified by words such as “would,” “intends,” “believes,” “expects,” “may,” “will,” “should,” “seeks,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. Investors are cautioned that the forward-looking statements in this proxy statement are based on current beliefs, assumptions and expectations, speak only as of the date of this proxy statement and involve risks and uncertainties that could cause actual results to differ materially from current expectations. Investors are urged to review in detail the risks and uncertainties in our Securities and Exchange Commission filings, including but not limited to, our Annual Report on Form 10-K for the year ended December 29, 2018.

 

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ITEM 1—ELECTION OF DIRECTORS

Our Board currently consists of nine members. On the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the following seven nominees: Mr. John E. Caldwell, Ms. Nora M. Denzel, Mr. Mark Durcan, Mr. Joseph A. Householder, Mr. John W. Marren, Dr. Lisa T. Su and Mr. Abhi Y. Talwalkar for election to the Board at the Annual Meeting. Mr. Michael J. Inglis and Mr. Ahmed Yahia, currently members of the Board, are not being nominated for re-election, and after the Annual Meeting each will retire from our Board. The Board and Company thank Mr. Inglis and Mr. Yahia for their valuable service and many contributions over their respective tenures. The Board has approved reducing the authorized number of directors to seven effective as of the Annual Meeting. All directors are elected annually and serve a one-year term until our next annual meeting or until such director’s successor is appointed. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.

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. At the 2018 Annual Meeting of Stockholders, the directors in attendance were: Mr. Caldwell, Ms. Denzel, Mr. Nicholas M. Donofrio, Mr. Durcan, Mr. Householder, Mr. Marren, Dr. Su, Mr. Talwalkar and Mr. Yahia.

Director Experience, Skills and Qualifications

Our goal is to assemble a knowledgeable and highly-qualified Board that operates cohesively and works with management in a constructive way to deliver long-term value to our stockholders. We believe that the nominees set forth below, all of whom are currently directors of AMD, possess valuable experience necessary to guide us in the best interests of our 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, us and our key constituents, including our customers, stockholders and management. Most of our directors have broad technology sector experience, including expertise in semiconductor technology, innovation and strategy. Several members of the Board are current or former chief executive officers, thereby providing the Board with practical understanding of how large organizations operate, including the importance of employee development and retention. They also understand strategy and risk management and how these factors impact our operations.

Certain information regarding each of the 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 on the Board, as well as his or her principal occupation. Each nominee’s former directorships on public company boards during the past five years are included in a table set forth below—Former Directorships During the Last Five Years. The age of each director is as of our Annual Meeting.

 

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Item 1—Election of Directors (continued)

 

 

 

 

 John E. Caldwell

 Director since October 2006 and Chairman of the Board since May 2016

 Age: 69

 Board Committees: Nominating and Corporate Governance Committee (Chair) and Audit and Finance Committee

 

Mr. Caldwell served as President and Chief Executive Officer of SMTC Corporation (an electronics manufacturing services company) from March 2003 until he retired in March 2011. Before joining SMTC, Mr. Caldwell served as chair of the restructuring committee of the board of directors of The Mosaic Group (a marketing services provider) from October 2002 to September 2003, as President and Chief Executive Officer of GEAC Computer Corporation, Ltd. (a computer software company) from October 2000 to November 2001 and as President and Chief Executive Officer of CAE Inc. (a simulation technologies and integrated training solutions provider for the civil aviation and defense industries) from June 1993 to October 1999. In addition, Mr. Caldwell has 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. Mr. Caldwell has been a director of Faro Technologies, Inc. since 2002 and of IAMGOLD Corporation since 2006. Mr. Caldwell holds a Bachelor of Commerce degree from Carleton University, Ontario, and is a chartered professional accountant with the Chartered Professional Accountants of Ontario. Mr. Caldwell is an author and lecturer on the subject of board oversight of enterprise risk.

Director Qualifications: Mr. Caldwell brings to the Board extensive and diversified general management, financial management and risk assessment experience as a result of his experience at SMTC, his other executive management experience and his service as a director on the boards of directors of other public companies.

 

 

 Nora M. Denzel

 Director since March 2014

 Age: 56

 Board Committees: Compensation Committee (Chair) and Nominating and Corporate Governance Committee

 

Ms. Denzel served as interim Chief Executive Officer of Outerwall Inc. (an automated retail solutions provider) from January to August 2015. Prior to Outerwall, Ms. Denzel held various executive management positions from February 2008 through August 2012 at Intuit Inc. (a cloud financial management software company), including Senior Vice President of Big Data, Social Design and Marketing and Senior Vice President and General Manager of the QuickBooks Employee Management business unit. From 2000 to 2006, Ms. Denzel held several executive level positions at HP Enterprise, formerly, Hewlett-Packard Company (a technology software, services and hardware provider), including Senior Vice President and General Manager, Software Global Business Unit from May 2002 to February 2006 and Vice President of Storage Organization from August 2000 to May 2002. Prior to HP Enterprise, Ms. Denzel held executive positions at Legato Systems Inc. (a data storage management software company purchased by EMC) and IBM Corporation. Ms. Denzel has been a member of the board of directors of Ericsson since March 2013 and Talend S.A. since July 2017. She holds a Master of Business Administration degree from Santa Clara University and a Bachelor of Science degree in Computer Science from the State University of New York.

Director Qualifications: Ms. Denzel brings to the Board more than 25 years of technology, software and leadership experience as a result of her experience at Intuit, Hewlett-Packard and IBM and her experience on the boards of directors of other public companies.

 

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Item 1—Election of Directors (continued)

 

 

 

 

 Mark Durcan

 Director since October 2017

 Age: 58

 Board Committees: Compensation Committee, Innovation and Technology Committee and Nominating and Corporate Governance  Committee

 

Mr. Durcan served as an advisor of Micron Technology, Inc. (a memory and storage solutions company) from May 2017 to August 2017 and served as its Chief Executive Officer from February 2012 until his retirement in May 2017. During Mr. Durcan’s 32-year tenure at Micron Technology, he held a wide variety of senior leadership positions, including President and Chief Operating Officer from 2007 to 2012, Chief Operating Officer from 2006 to 2007, Chief Technical Officer from 1998 to 2006 and Vice President, Research and Development from 1996 to 1998. Mr. Durcan joined Micron Technology, in June 1984 as a Diffusion Engineer and held a series of increasingly responsible positions, including Process Integration Engineer, Process Integration Manager and Process Development Manager. Mr. Durcan holds approximately 100 U.S. patents and overseas patents. Mr. Durcan has been a member of the board of directors of AmerisourceBergen Corporation since 2015 and Veoneer, Inc. since 2018. He also serves as a Director of St. Luke’s Medical System, a not-for-profit hospital and health care system. Mr. Durcan holds a Bachelor of Science degree in Chemical Engineering and a Master of Chemical Engineering degree from Rice University.

Director Qualifications: Mr. Durcan is a seasoned business executive with 32 years of experience in the semiconductor industry. He brings to the Board substantial experience in the area of executive leadership, strategic planning, finance and corporate governance.

 

 Joseph A. Householder

 Director since September 2014

 Age: 63

 Board Committees: Audit and Finance Committee (Chair) and Nominating and Corporate Governance Committee

 

Mr. Householder is the President and Chief Operating Officer of Sempra Energy (a worldwide provider of energy infrastructure and gas and electric utilities) where he oversees Sempra Energy’s regulated U.S. utilities and the Sempra North American Infrastructure Group. Previously from 2017 to 2018, Mr. Householder served as Sempra Energy’s Corporate Group President, Infrastructure Businesses overseeing the company’s operations in midstream, liquefied natural gas and renewable energy and Mexico. From 2011 to 2016, Mr. Householder was the Executive Vice President and Chief Financial Officer of Sempra Energy. He also served as Chief Accounting Officer of Sempra Energy from 2007 to 2012. From 2006 to 2011, Mr. Householder was Senior Vice President and Controller of Sempra Energy responsible for financial reporting, accounting and controls and tax functions for all Sempra Energy companies. Prior to this role, he served as Vice President of Corporate Tax and Chief Tax Counsel for Sempra Energy. Prior to joining Sempra Energy in 2001, Mr. Householder was a partner at PricewaterhouseCoopers in the firm’s national tax office. From 1986 to 1999, he served in a number of legal and financial roles at Unocal Corporation, including ultimately as Vice President of Corporate Development and Assistant Chief Financial Officer, where he was responsible for worldwide tax planning, financial reporting and forecasting and mergers and acquisitions. He also serves on the board of directors of Infraestructura Energetica Nova (IEnova, a majority-owned subsidiary of Sempra Energy that is publicly traded in Mexico). In addition, Mr. Householder is a member of the Tax Executives Institute, the American Institute of Certified Public Accountants, the State Bar of California and the American Bar Association. He holds a Bachelor of Science degree in Business Administration from the University of Southern California and a Juris Doctor degree from Loyola Law School.

Director Qualifications: Mr. Householder brings to the Board significant financial and operational expertise as a result of his chief financial officer experience at Sempra Energy, his experience as a partner of PricewaterhouseCoopers and his experience at Unocal Corporation.

 

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Item 1—Election of Directors (continued)

 

 

 

 

 John W. Marren

 Director since February 2017

 Age: 56

 Board Committees: Audit and Finance Committee and Nominating and Corporate Governance Committee

 

Mr. Marren has served as Senior Managing Director, North America of Temasek (a sovereign wealth fund of the government of Singapore) since November 2017. Prior to joining Temasek, Mr. Marren was a Senior Partner and the Head of Technology Investments of TPG Capital (a private equity investment company) from 2000 until his retirement in December 2015. From 1996 through 2000, Mr. Marren was a Managing Director at Morgan Stanley (a global financial services company), most recently as Co-Head of the Technology Investment Banking Group. From 1992 to 1996, he was a Managing Director and Senior Semiconductor Research Analyst at Alex Brown & Sons (an investment company). While at Morgan Stanley and Alex Brown & Sons, Mr. Marren was a frequent member of the Institutional Investor All-American Research Team, which recognizes the top research analysts on Wall Street. Prior to Alex Brown, Mr. Marren spent seven years in the semiconductor industry working for VLSI Technology and Vitesse Semiconductor. Mr. Marren currently serves on the board of directors of Poshmark Inc., a private company. He is a Trustee of the University of California, Santa Barbara, and he serves on the US Olympic and Paralympic Foundation Board. Mr. Marren holds a Bachelor of Science degree in Electrical Engineering from the University of California, Santa Barbara.

Director Qualifications: Mr. Marren brings to the Board extensive financial knowledge and technology experience as a result of his prior work at TPG Capital and Morgan Stanley. Mr. Marren also provides the Board with valuable corporate governance insight from his past and present service on private and public company boards.

 

 Dr. Lisa T. Su

 Director since October 2014

 Age: 49

 

Dr. Lisa T. Su is AMD’s President and Chief Executive Officer, a position she has held since October 2014, and serves on our Board of Directors. Previously, from July 2014 to October 2014, she was Chief Operating Officer responsible for AMD’s business units, sales, and global operations teams. Dr. Su joined AMD in January 2012 as Senior Vice President and General Manager, global business units and was responsible for driving end-to-end business execution of AMD products and solutions. Prior to joining AMD, Dr. Su served as Senior Vice President and General Manager, Networking and Multimedia at Freescale Semiconductor, Inc. (a semiconductor manufacturing company), and was responsible for global strategy, marketing and engineering for the company’s embedded communications and applications processor business. Dr. Su joined Freescale in 2007 as Chief Technology Officer, where she led the company’s technology roadmap and research and development efforts. Dr. Su spent the previous 13 years at 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. Prior to IBM, she was a member of the technical staff at Texas Instruments Incorporated from 1994 to 1995. Dr. Su has a Bachelor of Science, Master of Science and Doctorate degrees in Electrical Engineering from the Massachusetts Institute of Technology (MIT). She has published more than 40 technical articles and was named a Fellow of the Institute of Electronics and Electrical Engineers in 2009. In 2017, Dr. Su was named one of the “World’s 50 Greatest Leaders” by Fortune Magazine and the “Top Ranked Semiconductor CEO” by Institutional Investor Magazine. In 2018, Dr. Su was elected to the National Academy of Engineering, was named the #6 “Business Person of the Year” by Fortune, was highlighted as one of “America’s Top 50 Women in Tech” by Forbes magazine, and received the Dr. Morris Chang Exemplary Leadership Award from the Global Semiconductor Alliance. Dr. Su has been a member of the board of Analog Devices Inc. since 2012. She also serves on the board of directors for the Semiconductor Industry Association, and is the chairperson of the board of the Global Semiconductor Alliance.

Director Qualifications: As our President and Chief Executive Officer, Dr. Su brings to the Board her expertise and proven leadership in the global semiconductor industry as well as valuable insight into our operations, management and culture, providing an essential link between the management and the Board on management’s perspectives.

 

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Item 1—Election of Directors (continued)

 

 

 

 

 Abhi Y. Talwalkar

 Director since June 2017

 Age: 55

 Board Committees: Compensation Committee and Nominating and Corporate Governance Committee

 

Mr. Talwalkar was President and Chief Executive Officer of LSI Corporation (a semiconductor and software company) from May 2005 until the completion of LSI’s merger with Avago Technologies Limited in May 2014. From 1993 to 2005, Mr. Talwalkar held a number of senior management positions at Intel Corporation (a semiconductor company), including Corporate Vice President and Co-General Manager of the Digital Enterprise Group, which was comprised of Intel’s corporate client, server, storage, and communications businesses, and Vice President and General Manager for the Intel Enterprise Platform Group, where he focused on developing, marketing, and driving Intel business strategies for server computing. Prior to Intel, Mr. Talwalkar held senior engineering and marketing positions at Sequent Computer Systems (a multiprocessing computer systems design and manufacturer that later became a part of IBM). He also held positions at Bipolar Integrated Technology, Inc. (a VLSI bipolar semiconductor company); and Lattice Semiconductor Inc. (a service-driven developer of programmable design solutions). He has been a member of the board of directors of Lam Research Corporation since 2011, iRhythm Technologies since 2016 and TE Connectivity since 2017. Mr. Talwalkar was also a member of the board of directors of LSI Corporation from 2005 to 2014 and the Semiconductor Industry Association. Additionally, he was a member of the U.S. delegation for World Semiconductor Council proceedings. Mr. Talwalkar holds a Bachelor of Science degree in Electrical Engineering from Oregon State University.

Director Qualifications: Mr. Talwalkar brings to the Board extensive CEO experience and significant public company technology industry experience. He also provides the Board with valuable public board governance insight from his past and present board service.

Biographies of Current Directors Not Nominated for Re-Election

 

 

 Michael J. Inglis

 Director since March 2014

 Age: 59

 Board Committees: Innovation and Technology Committee (Chair), Audit and Finance Committee and Nominating and Corporate  Governance Committee

 

Mr. Inglis held several senior executive positions between 2002 and 2013 at ARM Holdings plc (a semiconductor intellectual property supplier), including as Executive Vice President, Sales and Marketing, as Executive Vice President, General Manager, Processor Division, and as Chief Commercial Officer. Before joining ARM, Mr. Inglis was a Principal at A.T. Kearney (a global management consulting firm) from 1999 to 2001. Mr. Inglis served as General Manager, Smartcard Division and European Hi-End Microprocessor Operations Manager amongst various roles at Motorola Semiconductor from 1991 to 1998. In addition, Mr. Inglis has held a number of operational and marketing positions at Texas Instruments (a global semiconductor company), BIS Macintosh (an electronics market research firm) and Fairchild Camera and Instrument (a semiconductor company). Mr. Inglis served on the board of directors of IIika plc from July 2015 to December 2018 and ARM from 2002 until his retirement in March 2013. Mr. Inglis has been a member of the board of directors of BT Group plc since September 2015 and holds an advisory position with the Ilika Technical Advisory Board. Mr. Inglis has a Master of Business Administration degree from Cranfield School of Management and a Bachelor of Science degree in Electronic and Electrical Engineering from Birmingham University. In addition, Mr. Inglis is a Chartered Engineer and a Member of the Chartered Institute of Marketing.

Director Qualifications: Mr. Inglis has brought to the Board senior leadership, management, and sales and marketing expertise, as well as his experience gained from serving as a director on the boards of other public companies. He also provided his broad understanding of the semiconductor industry.

 

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Item 1—Election of Directors (continued)

 

 

 

 

 Ahmed Yahia

 Director since November 2012

 Age: 46

 Board Committee: Innovation and Technology Committee

 

Mr. Yahia has served as Chief Executive Officer of the Technology, Manufacturing & Mining global platform of Mubadala Investment Company PJSC (“Mubadala”) since May 2017, where he oversees Mubadala’s semiconductors, technology, metals & mining, agribusiness and biotechnology/biopharma portfolio. He is also a member of Mubadala’s Investment Committee, which is mandated 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. From March 2010 to April 2017, Mr. Yahia was Chief Executive Officer of the Technology & Industry platform of Mubadala Development Company PJSC. From March 2001 to February 2010, Mr. Yahia was a partner of McKinsey & Company (a management consulting company) where the central theme of his work was corporate performance transformations, business building and industrial sector development. Mr. Yahia was also the Managing Partner of McKinsey’s Abu Dhabi practice. Mr. Yahia serves on the board of directors of several private companies, including GLOBALFOUNDRIES Inc. and Emirates Global Aluminum PJSC. Mr. Yahia holds a Master of Science degree in Mechanical Engineering/product strategy from the MIT and a Bachelor of Science degree in Industrial Engineering from the Ecole Centrale Paris.

Director Qualifications: Mr. Yahia’s experience as the CEO of the Technology, Manufacturing & Mining global platform of Mubadala and as a former partner of McKinsey & Company provided the Board with expertise in corporate strategy development, corporate performance transformations and operations.

Former Directorships in Public Companies in the Last Five Years

The table below sets forth the list of public companies on which our director nominees formerly served over the last five years including the name of the company and duration of service. Our director nominees do not currently serve on the boards of the companies listed below.

 

 

Director

 

  

 

Name of the Company

 

  

 

Term of Past Directorship

 

 

John E. Caldwell

 

  

 

  

 

 

Nora M. Denzel

 

  

 

Outerwall Inc.

 

  

 

2013—2015

 

  

 

Overland Storage, Inc.

 

  

 

2008—2013

 

  

 

Saba Software, Inc.

 

  

 

2011—2015

 

 

Mark Durcan

 

  

 

Freescale Semiconductor

 

  

 

2014—2015

 

  

 

Micron Technology, Inc.

 

  

 

2012—2017

 

  

 

MWI Veterinary Supply, Inc.

 

  

 

2014—2015

 

 

Joseph A. Householder

 

  

 

Southern California Gas Company

 

  

 

2010—2015

 

 

John W. Marren

 

  

 

Freescale

 

  

 

2007—2015

 

  

 

Quantenna

 

  

 

2011—2014

 

 

Lisa T. Su

 

  

 

 

  

 

 

 

Ahbi Y. Talwalkar

 

  

 

LSI Corporation

 

  

 

2005—2014

 

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 the Board. Pursuant to our bylaws, stockholders who wish to nominate persons for election to the Board at our 2020 annual meeting of stockholders must be a stockholder of record, both when they give us notice and at our 2020 annual meeting, must be entitled to vote at our 2020 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 days nor more than 120 days before the anniversary date of the immediately preceding annual meeting. For our 2020 annual meeting of stockholders, the notice must be delivered between

 

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Item 1—Election of Directors (continued)

 

 

 

January 16, 2020 and February 15, 2020. However, if our 2020 annual meeting of stockholders is not held within 30 days of May 15, 2020, the stockholder’s notice must be delivered no 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 our 2020 annual meeting was made or the day the notice of our 2020 annual meeting is mailed. The public announcement of an adjournment or postponement of our 2020 annual meeting of stockholders 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 tenth day following the day on which we first make such public announcement. If necessary, 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, our shares, 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 our 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 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 in the section entitled “Meetings and Committees of the Board of Directors—Board Committees.” The nominee must be willing to provide a written questionnaire, representation and agreement, if requested by us, and any other information reasonably requested by us in connection with our evaluation of the nominee’s independence.

Communications with the Board or Non-Management Directors

Anyone who wishes to communicate with our Board or with non-management directors may send their communications in writing to Advanced Micro Devices, Inc., 2485 Augustine Drive, Santa Clara, California 95054, Attention: Corporate Secretary or send an email to Corporate.Secretary@amd.com. Our Corporate Secretary will forward all of these communications to our Chairman of the Board.

Required Vote

At our Annual Meeting, our directors will be elected using a majority vote standard with respect to uncontested elections, such as this election. This standard requires that each director receive 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

 

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Item 1—Election of Directors (continued)

 

 

 

number of votes cast “against” that director. Abstentions and broker non-votes will have no effect on the outcome of these director elections. Each director nominee has submitted a written resignation that will be effective if he or 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 Board committee or the Board.

Recommendation of the Board Directors

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

 

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CORPORATE GOVERNANCE

The Board has adopted the Governance Principles to address significant corporate governance issues. The Governance 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 Governance Principles and recommending any changes to the Governance Principles to the Board.

Independence of Directors

The Governance 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 rules of the Nasdaq Stock Market (“Nasdaq”). Among other criteria, no director qualifies as independent unless the Board determines that the director has no direct material relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. On an annual basis, the Board undertakes a review of director independence. The Board determined that all directors who served during fiscal 2018 and all of our director nominees, other than Mr. Yahia and Dr. Su, are independent in accordance with SEC and Nasdaq rules.

In making its independence determinations, the Board reviewed direct and indirect transactions and relationships between each director, or any member of his or her immediate family, and us or one of our subsidiaries or affiliates based on information provided by the director, our records and publicly available information. All of the reviewed transactions and arrangements were entered into in the ordinary course of business and none of the transactions or arrangements involved an amount that (i) exceeded the greater of 5% of the recipient entity’s revenues or $200,000 with respect to transactions where a director or any member of his or her immediate family or spouse served in any capacity other than as a director of a publicly held-corporation or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which our directors serve as professors or employees.

The Board determined that none of our directors currently has or has had any direct or indirect material interest in any transactions and arrangements that would interfere with their exercise of independent judgment as members of the Board.

The Board also determined that each of the members of the Audit and Finance, Nominating and Corporate Governance and Compensation Committees are independent in accordance with SEC and Nasdaq rules.

Compensation Committee Interlocks and Insider Participation

During fiscal 2018, Ms. Denzel and Messrs. Donofrio (until May 2018), Durcan (appointed October 2018) and Talwalkar served on the Compensation Committee. The current members of the Compensation Committee are Ms. Denzel and Messrs. Durcan and Talwalkar. None of the members of the Compensation Committee is or has been an executive officer or employee of AMD. In addition, none of our executive officers serves on the board of directors or compensation committee of a company which has an executive officer who serves on our Board or Compensation Committee.

Board Leadership Structure

The Governance Principles permit the roles of Chairman of the Board and Chief Executive Officer to be filled by the same or different individuals, based on our needs, best practices and the interests of our stockholders. This allows the Board flexibility to determine whether the two roles should be combined or separated based upon our needs and the Board’s assessment of its leadership from time to time. The Board has the experience of functioning effectively either way.

The Board believes that its current leadership structure, with an independent Chairman of the Board, separate from the Chief Executive Officer, is the most appropriate leadership structure for the Company at this time, is in the best interests of the stockholders and allows the Board to fulfill its duties effectively and efficiently based on our current needs.

Mr. Caldwell, who is independent in accordance with SEC and Nasdaq rules, is our Chairman of the Board. Mr. Caldwell presides at meetings of our stockholders and directors and leads the Board in fulfilling its responsibilities. The Board benefits from Mr. Caldwell’s extensive and diversified leadership experience, financial management and risk assessment experience. He also has strong public company board experience and has intimate familiarity with our history and business.

 

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Corporate Governance (continued)

 

 

 

Separating the roles of the Chairman of the Board and Chief Executive Officer also enables the independent directors to more meaningfully participate in the leadership of the Board. The Board believes this structure provides an appropriate degree of oversight and allows Dr. Su, our President and Chief Executive Officer, to focus on our business strategy and market opportunities, as well as on our organizational structure and execution capabilities.

Risk Oversight

The Board’s role in risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer and other members of management having responsibility for day-to-day risk management activities and processes, and our Board and its committees being actively involved in overseeing our risk management. The Board and management consider “risk” for these purposes to be the possibility of an undesired occurrence that could threaten the viability of the company, result in a material destruction of our assets or stockholder value, or materially impact our long-term performance. Examples of the types of risks faced by us include:

 

   

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

 

   

macroeconomic risks, such as adverse global economic conditions and global geo-political events; and

 

   

“event” risks, such as natural disasters and cybersecurity threats.

We engage in activities that seek to take calculated risks that protect the value of our existing assets and create new or future value. Management is responsible for day-to-day risk management activities and processes. Members of senior management participate in identifying and assessing 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 our business, including enterprise level risks and the risk management program and processes.

In fulfilling its oversight role, the Board focuses on understanding the nature of our enterprise risks, including risks in our operations, finance and strategy, organization, compliance and external exposures as well as the adequacy of our risk assessment and risk management processes. The Board has implemented a risk oversight model and periodically receives reports and updates from management. At least annually, the Board discusses with management the appropriate level of risk relative to our strategy and objectives and reviews with management our existing risk management processes and their effectiveness. The Board also receives periodic management updates on our operations, organization, financial position and 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 the following Board committee chairs regarding each 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 our enterprise risk management process as it relates to our financial and information technology (including security and cybersecurity) risk exposures; reviews our portfolio of risk; discusses with management significant financial, reporting, regulatory and legal compliance risks in conjunction with enterprise risk exposures as well as risks associated with our capital structure; and reviews our 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 applicable to all employees. It reviews with management whether our compensation programs may create incentives for our employees to take excessive or inappropriate risks which could be reasonably likely to have a material adverse effect on us. For additional details, see “Compensation Policies and Practices,” below. Additionally, the Compensation Committee oversees organizational risks, including leadership succession, talent capacity, capabilities, attraction, retention and culture.

 

   

The Nominating and Corporate Governance Committee considers potential risks related to the effectiveness of the Board, including succession planning for the Board and our overall governance and Board structure.

 

 

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Corporate Governance (continued)

 

 

 

   

The Innovation and Technology Committee assists the Board in its oversight responsibilities relating to technical and market risks associated with product development and investment as well as risk mitigation policies and procedures relating to products based on new technology or significant innovations to existing technology.

Code of Ethics

The Board has adopted a code of ethics that applies to all directors and employees entitled the “Worldwide Standards of Business Conduct,” which is 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 (including anti-corruption laws), fair dealing, protecting our property and confidentiality of our information and encourages the reporting of any behavior not in accordance with the Worldwide Standards of Business Conduct.

The Board 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

The table below shows the current chairs and membership of the Board and each standing Board committee, the independence status of each Board member and the number of Board and Board committee meetings held during fiscal 2018.

 

Director

 

 

Board of  

Directors  

 

 

Audit and

Finance

Committee

 

 

 

Nominating and

Corporate

Governance

Committee

 

 

 

Compensation
and Leadership
Resources

Committee

 

 

 

Innovation and
Technology

Committee

 

 

John E. Caldwell

 

  C     C        

 

Nora M. Denzel

 

          C    

 

Mark Durcan

 

           

 

Joseph A. Householder**

 

    C          

 

Michael J. Inglis

 

            C

 

John W. Marren

 

             

 

Lisa T. Su*

 

                 

 

Abhi Y. Talwalkar

 

             

 

Ahmed Yahia*

 

               

 

Number of 2018

meetings

 

  6   10   5   6   4

 

 C Chair                • Member                *  Non-Independent Director                **  Financial Expert

Board Meetings and Attendance

The Board held six meetings during fiscal 2018. During fiscal 2018, all members of the Board attended at least 75 percent of the meetings of the Board and Board committees on which they served. In addition, on at least an annual basis, the Board and management discuss our strategic direction, new business opportunities and product roadmap. Independent and non-management directors also meet regularly in scheduled executive sessions without 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 (including our Chief Executive Officer), industry leaders and customers on a periodic basis. In fiscal 2018, sessions of only our non-employee directors were held three times, and sessions of only our independent directors were held three times.

Board Committees

The Board has four standing committees: an Audit and Finance Committee, a Nominating and Corporate Governance Committee, a Compensation and Leadership Resources Committee and an Innovation and Technology Committee. The members of the Board committees and their Chairs are nominated by the Nominating and Corporate Governance Committee and appointed by the Board.

Each of the Board committees has adopted a written charter, which has been approved by the Board. You can access our current bylaws, committee charters, the Governance Principles, the Worldwide Standards of Business Conduct and the Code of Ethics on the Investor Relations pages of our website at www.amd.com or ir.amd.com.

Audit and Finance Committee.    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 our 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 head of our Internal Audit Department reports directly to the Chair of the Audit and Finance Committee and “dotted-line” to our Chief

 

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Financial Officer, and serves a staff function for the Audit and Finance Committee. The Audit and Finance Committee currently consists of Mr. Householder, as Chair, and Messrs. Caldwell, Inglis and Marren, each determined to be financially literate and “independent” under applicable SEC and Nasdaq rules. The Board also determined that Mr. Householder is an “audit committee financial expert,” as defined under applicable SEC rules. The Audit and Finance Committee held 10 meetings during fiscal 2018.

Nominating and Corporate Governance Committee.    The Nominating and Corporate Governance Committee assists the Board in 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 and the development and recommendation to the Board of corporate governance guidelines and principles, including the Governance Principles. In addition, the Nominating and Corporate Governance Committee oversees the Board’s annual review of its performance (including its composition and organization) and leads a process for our non-employee directors to evaluate the performance of our Chief Executive Officer. 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 currently consists of Mr. Caldwell, as Chair, Ms. Denzel and Messrs. Durcan, Householder, Inglis, Marren and Talwalkar, each determined by the Board to be “independent” under applicable SEC and Nasdaq rules. The Nominating and Corporate Governance Committee held five meetings during fiscal 2018 and one meeting during fiscal 2019 to consider director nominees for our Annual Meeting and other 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 boards 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 Nominating and Corporate Governance 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 our requirements, taking into consideration the diverse communities and geographies in which we operate. 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 and Leadership Resources Committee.    The Compensation Committee assists the Board in 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. 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, separation, Severance and Change and change of control agreements and our compensation plans, policies and strategies relating to talent management and development, including but not limited to those regarding talent acquisition, retention, talent development, succession planning, career progression, culture, diversity, and inclusion. With respect to our Section 16 officers, the Compensation Committee reviews and approves all grants to the Board, our executive officers, senior vice presidents, and Section 16 officers under our equity plans. To the extent permitted by its charter, the Compensation Committee may delegate certain authority and certain responsibilities to one or more of its members, our officers 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 our 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.

The Compensation Committee has the authority to engage independent advisors to assist it in carrying out its responsibilities. During fiscal 2018, the Compensation Committee retained Compensia, Inc. (“Compensia”), a

 

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national compensation consulting firm, as its independent compensation consultant to provide assistance on executive and director compensation matters. Compensia advised the Compensation Committee on a variety of compensation-related matters in fiscal 2018, including:

 

   

the competitiveness of our executive compensation program by providing market review of executive compensation, evaluating our compensation peer group composition and compensation at our compensation peer group companies;

 

   

the pay levels of our named executive officers by assessing and proposing equity and cash compensation guidelines for various executive job levels and assessing compensation levels for our executive officers;

 

   

our executive compensation program design, including short-term and long-term incentive plan design and pay mix, the framework for our long-term incentive awards and our retention strategies, and evaluation of our compensation recoupment (i.e., “clawback”) policies; and

 

   

the compensation arrangements for our Board.

The Compensation Committee is supported in its work by members of our management team—including Dr. Su, our President and Chief Executive Officer, our Senior Vice President Worldwide Marketing, Human Resources and Investor Relations, our Senior Vice President and Chief Human Resources Officer, our Senior Vice President, General Counsel and Corporate Secretary, and our Corporate Vice President, Compensation and Benefits. The Compensation Committee considers the input of these individuals to formulate the specific plan and award designs, including performance measures and performance levels, necessary to align our executive compensation program with our business objectives and strategies. These individuals did not attend either executive sessions or portions of any meetings of the Compensation Committee or our Board where their own compensation determinations were decided. Dr. Su does not participate in the determination of her own compensation.

The Compensation Committee currently consists of Ms. Denzel, as Chair, and Messrs. Durcan and Talwalkar, each determined to be “independent” under applicable SEC and Nasdaq rules. The Compensation Committee held six meetings during fiscal 2018.

Innovation and Technology Committee.    The Innovation and Technology Committee assists the Board in its oversight responsibilities regarding matters of innovation and technology. The Innovation and Technology Committee is responsible for reviewing, evaluating and making recommendations to the Board regarding our major technology plans and strategies, including our research and development activities, as well as the technical and market risks associated with product development and investment; reviewing, evaluating and making recommendations regarding talent and skills of our workforce supporting our technology and research and development activities; monitoring the performance of our technology development in support of our overall business strategy; monitoring and evaluating existing and future trends in technology that may affect our strategic plans; and assessing our risk mitigation policies and procedures relating to products based on new technology or significant innovations to existing technology. The Innovation and Technology Committee currently consists of Mr. Inglis, as Chair, and Messrs. Durcan and Yahia. The Innovation and Technology Committee held four meetings during fiscal 2018.

 

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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.

2018 Non-Employee Director Compensation.   The table below summarizes the compensation paid to our non-employee directors for fiscal 2018. Dr. Su, who is an employee director, did not receive any compensation for her service as a director on the Board. Mr. Donofrio’s service ended on May 2, 2018.

 

Name

Fees Earned or

Paid in Cash(1)

($)

Stock

Awards(2)(3)

($)

Total

($)

John E. Caldwell

  152,500   297,572   450,072

Nora M. Denzel

  120,000   198,381   318,381

Nicholas M. Donofrio

  47,308   0   47,308

Mark Durcan

  118,297   198,381   316,678

Joseph A. Householder

  130,000   198,381   328,381

Michael J. Inglis

  134,973   198,381   333,354

John W. Marren

  105,000   198,381   303,381

Abhi Y. Talwalkar

  105,000   198,381   303,381

Ahmed Yahia

  95,000   198,381   293,381

 

(1)

Amounts represent annual retainers for service as directors, annual retainers for Board committee service and annual retainers for serving as Board committee chairs, where applicable. See “—Cash Fees Paid to Non-Employee Directors” below for additional information.

(2)

Amounts represent equity awards in the form of restricted stock unit (“RSU”) awards granted under our Outside Director Equity Compensation Policy. See “—Equity Awards for Non-Employee Directors” below for additional information. Amounts reflect the aggregate grant date fair value of the respective director’s RSU awards computed in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standards Codification Topic 718 (“ASC Topic 718”). For a discussion of the assumptions made in the valuations reflected in this column, see Note 16 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K. The actual value that a director may realize from an 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.

The following table sets forth all RSUs granted to each non-employee director in fiscal 2018:

 

Name    Grant Date     

RSUs

Granted

(#)

    

Grant Date

Fair Value

($)

 

John E. Caldwell

     5/2/2018        27,126        297,572  

Nora M. Denzel

     5/2/2018        18,084        198,381  

Mark Durcan

     5/2/2018        18,084        198,381  

Joseph A. Householder

     5/2/2018        18,084        198,381  

Michael J. Inglis

     5/2/2018        18,084        198,381  

John W. Marren

     5/2/2018        18,084        198,381  

Abhi Y. Talwalkar

     5/2/2018        18,084        198,381  

Ahmed Yahia

     5/2/2018        18,084        198,381  

 

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(3)

The following table sets forth the aggregate number of outstanding RSUs held by our non-employee directors as of December 29, 2018, our fiscal year end. None of our non-employee directors held any options as of December 29, 2018. Pursuant to our Outside Director Equity Compensation Policy, Ms. Denzel and Messrs. Caldwell, Durcan, Householder, Inglis, Marren and Talwalkar have elected to defer the issuance of shares subject to RSU awards, respectively, until such time as the respective director ceases to serve on the Board. The deferred RSUs as of fiscal year end are included in the following table.

 

Name     

RSUs Outstanding

as of December 29,
2018

 

John E. Caldwell

       382,179  

Nora M. Denzel

       73,292  

Nicholas M. Donofrio

       0  

Mark Durcan

       32,028  

Joseph A. Householder

       203,578  

Michael J. Inglis

       239,844  

John W. Marren

       37,190  

Abhi Y. Talwalkar

       18,084  

Ahmed Yahia

       18,084  

Determining Non-Employee Director Compensation.  The Compensation Committee annually reviews our non-employee directors’ compensation. Based on this review, the Compensation Committee recommends any changes to our non-employee directors’ compensation to the Board for approval. In addition, the Board and Compensation Committee periodically evaluate how our director pay levels and pay policies compare to the competitive market. In fiscal 2018, the Board and Compensation Committee reviewed competitive market data regarding non-employee directors’ pay relative to our peer group (as described in more detail in the “Compensation Discussion and Analysis” section) as well as the broader market which was compiled by Compensia. While competitive market data is important to the evaluation of the directors’ compensation, such data 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. In fiscal 2018, in addition to the competitive market data, the Board considered the amount of time associated with Board and Board committee services as well as annual share usage under the 2004 Plan related to non-employee director compensation.

The Board continued the practice adopted in May 2014, to reallocate the mix of cash and equity compensation paid to our non-employee directors, with the goal of maintaining total average compensation per non-employee director at approximately the same level as had been previously paid and maintaining an affordable annual share usage. These changes are further described under “Cash Fees Paid to Non-Employee Directors” and “Equity Awards for Non-Employee Directors,” below.

Cash Fees Paid to Non-Employee Directors.  The cash fees our non-employee directors were eligible to receive in fiscal 2018 was composed of the following elements:

 

   

Annual retainer for services as a director;

 

   

Annual retainer for services on a Board committee; and

 

   

Annual retainer for services as a Board committee chair.

Annual Retainer for Service as Director.  Non-employee directors are paid an annual retainer for their service as directors. In fiscal 2018, other than our Chairman of the Board, the non-employee directors were paid an annual retainer of $75,000. The annual retainer for the Chairman of the Board for a full year of service is 1.5 times the amount of the other Board members annual retainer, or $112,500.

 

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Annual Retainer for Service on Board Committees.  During fiscal 2018, the Board continued the practice of paying additional annual retainers set forth below for service on a Board committee. These retainers were unchanged in fiscal 2018.

 

Audit and Finance Committee

   $ 20,000  

Compensation Committee

   $ 20,000  

Nominating and Corporate Governance Committee

   $ 10,000  

Innovation and Technology Committee

   $ 20,000  

Annual Retainer for Service as Board Committee Chair.  In addition, non-employee directors receive annual retainers for serving as a chair of a Board committee, which are set forth below. These retainers were unchanged in fiscal 2018.

 

Audit and Finance Committee

   $ 25,000  

Compensation Committee

   $ 15,000  

Nominating and Corporate Governance Committee

   $ 10,000  

Innovation and Technology Committee

   $ 15,000  

Equity Awards for Non-Employee Directors.  In order to align the long-term interests of our directors with those of our stockholders, a portion of director compensation is provided in the form of equity. Non-employee directors participate in our 2004 Equity Incentive Plan (as amended and restated, the “2004 Plan”) and are entitled to receive equity awards under our Outside Director Equity Compensation Policy, subject to the terms of the 2004 Plan. Non-employee directors are generally eligible to receive an annual RSU award (an “Annual RSU Award”) upon re-election at each annual meeting of stockholders, and, if a non-employee director is appointed to the Board on a date other than the date of an annual meeting of stockholders, such director is entitled to receive an initial RSU award on his or her appointment to the Board (an “Off-Cycle RSU Grant”).

Annual RSU Awards.  Under our current Outside Director Equity Compensation Policy, which was amended in October 2017, the Annual RSU Award for each non-employee director (other than the Chairman of the Board) who has served on the Board for at least six months prior to an annual meeting of stockholders is calculated based on the following formula, with no discretionary component: the quotient of (i) $185,000 (the “Target Equity Value”) divided by (ii) the average closing price of our common stock for the 30-trading day period preceding and ending with the date of the respective RSU grant. In fiscal 2018, the Chairman of the Board received an Annual RSU Award with a Target Equity Value of $277,500.

In addition, under our current Outside Director Equity Compensation Policy, if a non-employee director has served on the Board for less than six months prior to an annual meeting of stockholders, such director’s Annual RSU Award is pro-rated 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.

Off-Cycle Grants.  Under our current Outside Director Equity Compensation Policy, an Off-Cycle Grant is equal to the quotient of (i) $185,000 divided by (ii) the average closing price of our common stock for the 30-trading day period preceding and ending with the date of the respective RSU grant. The Annual RSU Awards and the Off-Cycle RSU Grants vest on the one-year anniversary of their grant dates.

In fiscal 2018, each of our directors, other than those who did not stand for re-election, received an Annual RSU Award under our current Outside Director Equity Compensation Policy.

Deferral.  Pursuant to our Outside Director Equity Compensation Policy, our non-employee directors may elect to defer the issuance of shares of our common stock that become issuable upon vesting of the RSUs granted pursuant to the 2004 Plan (and the recognition of taxable income associated with such RSUs) until such time as the director ceases to serve on our Board. A non-employee director can make this election by completing a Restricted Stock Unit Award Deferral Election Agreement before the scheduled date of an RSU grant. If a director makes this election, the issuance

 

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of the common stock subject to the RSUs may not be accelerated or changed once the Election Agreement is submitted to us. Any common stock deferred under our Outside Director Equity Compensation Policy is issued to the director, in one lump sum, within 30 days after his or her resignation from our Board.

Acceleration of Vesting.  Pursuant to our Outside Director Equity Compensation Policy, in the event of our change of control, all of our 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 his or her equity compensation awards will become fully vested, provided that such non-employee director served as a member of the Board for at least three years prior to the date of termination and satisfied our stock ownership guideline requirements during his or her service as a Board member.

Other Benefits for Non-Employee Directors.  We reimburse our 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.  Under our stock ownership guidelines, which were updated in August 2017, our non-employee directors are required to hold the lesser of (i) the number of shares equivalent to five times their 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 (in the case of non-employee directors other than the Chairman of our Board) or 45,000 shares (in the case of the Chairman of the Board).

The stock ownership guidelines must be achieved by each non-employee director within the later of (i) August 2022, which is the five-year anniversary of the adoption of our amended stock ownership guidelines, 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 requirements of our stock ownership guidelines are achieved, each non-employee director is encouraged to retain at least 10% of the “net shares” (as defined below) obtained through our stock incentive plans. Shares counted toward the minimum stock ownership requirements include (i) shares of common stock owned outright by a director and his or her immediate family members who share the same household, whether held individually or jointly; (ii) restricted stock where the restrictions have lapsed; (iii) shares acquired upon stock option exercise; (iv) shares purchased in the open market; (v) restricted stock units where the restrictions have lapsed but the issuance of the shares to the director has been deferred at the election of the director pursuant to a Company policy, plan or written agreement; and (vi) shares held in trust. “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.

As of December 29, 2018, all of our non-employee directors were holding the required number of shares under our stock ownership guidelines or had time remaining to do so within the established compliance time frame.

 

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PRINCIPAL STOCKHOLDERS

The following table shows each person or entity we know to be the beneficial owner of five percent or more of our common stock as of March 18, 2019.

 

Name and Address of Beneficial Owner   Number of Shares Beneficially Owned   

Percent

of Class(1)

 
   

The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355

 

106,394,838 (sole dispositive power as to 105,114,554 shares; shared dispositive power as to 1,280,284 shares; sole voting power as to 1,106,427 shares; shared voting power as to 193,731 shares)

     9.8
   

West Coast Hitech, L.P.(3)
190 Elgin Avenue George Town, Grand Cayman, KY1-9005
Cayman Islands

 

75,000,000

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

     6.9
   

BlackRock, Inc.(4)
40 East 52nd Street
New York, New York 10022

 

67,200,124

(sole voting power as to 60,028,484 shares; sole dispositive power as to all shares)

     6.2

 

(1)

Based on 1,081,563,723 shares of our common stock outstanding as of March 18, 2019.

(2)

Based on Amendment No. 7 of Schedule 13G filed with the SEC on February 11, 2019 by The Vanguard Group. The Vanguard Group is an investment adviser deemed to be the beneficial owner of 106,394,838 shares of our common stock. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 821,199 shares of our common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 733,430 shares of our common stock as a result of its serving as investment manager of Australian investment offerings.

(3)

Based on Amendment No. 11 of Schedule 13D filed with the SEC on February 7, 2019 by Mubadala, West Coast Hitech, L.P. (“WCH”) and West Coast Hitech G.P. Ltd. (“WCH GP”) 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. WCH, a Cayman Islands exempted limited partnership, and its general partner, WCH GP, a Cayman Islands corporation, are wholly-owned by Mubadala.

(4)

This information is based on Amendment No. 3 of Schedule 13G filed with the SEC on February 4, 2019 by BlackRock, Inc. and includes 67,200,124 shares of common stock owned by BlackRock and its subsidiaries.

 

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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The table below shows the number of shares of our common stock beneficially owned as of March 18, 2019 by our current directors, our director nominees, our Named Executive Officers (as defined in “Compensation Discussion and Analysis” below) and 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)

 

Lisa T. Su

     6,720,669        *  

John E. Caldwell

     456,851        *  

Nora M. Denzel

     239,844        *  

Mark Durcan

     32,028        *  

Joseph A. Householder

     203,578        *  

Michael J. Inglis

     239,844        *  

John W. Marren

     37,190        *  

Abhi Y. Talwalkar

     33,385        *  

Ahmed Yahia

     100,890        *  

Devinder Kumar

     1,814,950        *  

James R. Anderson

     551,338        *  

Forrest E. Norrod

     1,464,868        *  

Mark D. Papermaster

     2,698,723        *  

Harry A. Wolin

     2,052,324        *  

All current directors and executive officers as a group (15 persons)

     16,133,771        1.5%  

 

*

Less than one percent

(1)

Some of the individuals may share voting power with their spouses with respect to the listed shares. Mr. Anderson’s beneficial ownership is as of his last day of employment with the Company in September 2018.

(2)

Includes beneficial ownership of the following number of shares of our common stock that are issuable upon exercise of stock options that are exercisable by May 17, 2019 (within 60 days of March 18, 2019) and upon vesting of RSUs that are scheduled to vest by May 17, 2019. Also includes beneficial ownership of the following number of shares of our common stock issuable upon the vesting of RSUs that vested as of March 18, 2019 or for which the issuance of shares of our common stock upon vesting was deferred by the director (the “Deferred RSU Shares”) pursuant to our Outside Director Equity Compensation Policy until such director ceases to serve on the Board:

 

Name RSU Shares # (4)

Deferred

RSU Shares # (5)

Options # (6)

Lisa T. Su

      4,409,405

John E. Caldwell

  27,126   355,053  

Nora M. Denzel

  18,084   55,208  

Mark Durcan

  18,084   13,944  

Joseph A. Householder

  18,084   185,494  

Michael J. Inglis

  18,084   221,760  

John W. Marren

  18,084   19,106  

Abhi Y. Talwalkar

  18,084    

Ahmed Yahia

  18,084    

Devinder Kumar

      1,232,695

James R. Anderson

     

Forrest E. Norrod

      630,697

Mark D. Papermaster

      1,399,135

Harry A. Wolin

      703,517

All current directors and executive officers as a group (15 persons)

  153,714   850,565   8,379,097

 

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Security Ownership of Directors and Executive Officers (continued)

 

 

 

(3)

Based on 1,081,563,723 shares of our common stock outstanding as of March 18, 2019. Also, with respect to each individual, the calculation includes shares of our common stock that are issuable upon exercise of stock options held by that individual that are exercisable by May 17, 2019 and upon vesting of RSUs held by that individual that will vest by May 17, 2019 and Deferred RSU Shares, ignoring the withholding of shares of common stock to cover applicable taxes. These shares, however, were not deemed to be outstanding for the purpose of computing the percentage ownership of any other individual.

(4)

With respect to each individual, the calculation includes shares of our common stock that are issuable upon vesting of RSUs held by that individual that will vest by May 17, 2019, ignoring the withholding of shares of common stock to cover applicable taxes. These shares, however, were not deemed to be outstanding for the purpose of computing the percentage ownership of any other individual.

(5)

Shares deferred as of March 18, 2019. Mr. Inglis is not being nominated for re-election, and after the Annual Meeting, he will retire from our Board; all deferred shares held for Mr. Inglis as of May 15, 2019 will be issued upon his retirement.

(6)

With respect to each individual, the calculation includes shares of our common stock that are issuable upon exercise of stock options held by that individual that are exercisable by May 17, 2019, ignoring the withholding of shares of common stock to cover applicable taxes. These shares, however, were not deemed to be outstanding for the purpose of computing the percentage ownership of any other individual.

 

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EXECUTIVE OFFICERS

The following sets forth biographical information regarding our executive officers as of March 18, 2019. Biographical information about Dr. Su, who is both a director and an executive officer, may be found under “Item 1—Election of Directors” above. The age of each executive officer is as of our Annual Meeting.

 

Devinder Kumar

Senior Vice President, Chief Financial Officer and Treasurer

Age: 63

 

Mr. Kumar is our Senior Vice President, Chief Financial Officer and Treasurer. Mr. Kumar is responsible for the company’s global finance organization as well as global corporate services and facilities.

Mr. Kumar joined AMD in 1984 as a financial analyst. He spent 10 years in Asia as financial controller for AMD Penang and group finance director for AMD’s Manufacturing Services Group across Singapore, Thailand, China and Malaysia. Starting in 1998, Mr. Kumar assumed several corporate roles including leadership positions in Corporate Accounting and Corporate Finance. He was appointed Corporate Controller in 2001. He also served as AMD’s Assistant Treasurer and Treasurer between 2007 and 2010 and was previously Senior Vice President, Corporate Controller and interim CFO before being appointed Chief Financial Officer in January 2013 and Treasurer in April 2015.

Mr. Kumar serves as a member of the boards of directors of TF AMD Microelectronics (Penang) SDN. BHD. and Suzhou TF—AMD Semiconductor Co., Ltd. Mr. Kumar holds a Bachelor of Science degree in Ecology from the University of Malaya, Malaysia, a Master of Science degree in Biology from the University of California, Santa Barbara and an MBA in Finance from the University of California, Los Angeles.

 

Sandeep Chennakeshu

Executive Vice President, Computing and Graphics Business Group

Age: 60

 

Dr. Chennakeshu is our Executive Vice President, Computing and Graphics Business Group. In this role, he is responsible for managing all aspects of strategy, business management and engineering for PC, graphics, and semi-custom business lines. Dr. Chennakeshu joined AMD in January 2019. He has more than 30 years of industry experience and is known for his strong financial, technical innovation and operational leadership. Prior to joining AMD, he was president of BlackBerry Technology Solutions at BlackBerry Limited from August 2014 to October 2018. Prior to BlackBerry, Dr. Chennakeshu served in the following key executive roles: senior vice president and general manager of Freescale’s Wireless and Mobile business group, president of Ericsson Mobile Platforms and CTO at Sony Ericsson, Ericsson Mobile Phones, respectively and general manager of Ericsson Mobile Phones (North America).

Dr. Chennakeshu holds a Doctorate in Electrical Engineering from Southern Methodist University and a post graduate diploma in Industrial Management from the Indian Institute of Science. He is an IEEE Fellow, and a named inventor on 170 granted patents.

 

Darren Grasby

Senior Vice President and Chief Sales Officer, President EMEA

Age: 49

 

Mr. Grasby is our Senior Vice President, Chief Sales Officer and President of AMD EMEA. In this role, he is responsible for leading the global sales organization for all product lines, including computing, graphics, datacenter and embedded products. Mr. Grasby joined AMD in 2007 and has held several leadership roles focused on sales and marketing, including serving as Senior Vice President of Global Computing and Graphics Sales from July 2018 to January 2019. In that role, Grasby led teams responsible for successfully driving adoption of AMD Ryzen™, AMD Radeon™ and AMD EPYC™ processors globally. Prior to that, Mr. Grasby was our President EMEA and Global Channel Sales from October 2015 to July 2018 and Corporate Vice President, Global Sales and General Manager EMEA from November 2014 to October 2015. He was our Corporate Vice President and General Manager EMEA from August 2007 to November 2014. Mr. Grasby has nearly three decades of high-tech industry expertise focused on PCs, graphics and peripheral product sales.

 

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Executive Officers (continued)

 

 

 

Forrest E. Norrod

Senior Vice President and General Manager, Datacenter and Embedded Solutions Business Group

Age: 53

 

Mr. Norrod is our Senior Vice President and General Manager of the Datacenter and Embedded Solutions Business Group. In this role, he is responsible for managing all aspects of strategy, business management, engineering and sales for datacenter and embedded products. Mr. Norrod joined AMD in November 2014 and led the Enterprise, Embedded and Semi-Custom business group for his first three years. Mr. Norrod has more than 25 years of technology industry experience across a number of engineering and business management roles at both the chip and system level.

Mr. Norrod most recently was Vice President and General Manager of Dell Inc.’s server business from December 2009 to October 2014, driving the business to market share leadership in several key geographies and markets while delivering consistent revenue and profitability growth. In his role as Vice President and General Manager of Dell’s Data Center Solutions, Mr. Norrod successfully led the creation of the company’s first internal startup, which established Dell’s leadership presence in the hyper-scale datacenter market. He joined Dell as CTO of Client Products in August 2000, then led the company’s Enterprise Engineering before ultimately having responsibility for all of Dell’s global engineering teams.

Prior to Dell, Mr. Norrod worked at Cyrix Corp from 1993 to 1997 and National Semiconductor from 1997 to 2000 leading the integrated x86 CPU businesses.

Mr. Norrod holds Bachelor of Science and Master of Science degrees in Electrical Engineering from Virginia Tech and holds 12 US patents in computer architecture, graphics and system design. He served on the board of directors of Intersil Corporation from October 2014 until it was acquired in February 2017.

 

Mark D. Papermaster

Chief Technology Officer and Executive Vice President, Technology and Engineering

Age: 57

 

Mr. Papermaster is our Chief Technology Officer and Executive Vice President, Technology and Engineering responsible for corporate technical direction, and AMD’s intellectual property and system-on-chip product research and development. His more than 30 years of engineering experience includes significant leadership roles managing the development of a wide range of products spanning from mobile devices to high-performance servers.

Before joining AMD in October 2011, Mr. Papermaster was the leader of Cisco’s Silicon Engineering Group, the organization responsible for silicon strategy, architecture, and development for the company’s switching and routing businesses.

In prior roles, Mr. Papermaster served as Apple, Inc.’s Senior Vice President of Devices Hardware Engineering, where he was responsible for the iPod products and iPhone hardware development. He also held a number of senior leadership positions at IBM, serving on the company’s Technical Leadership Team and overseeing development of the company’s key microprocessor and server technologies.

Mr. Papermaster holds a Bachelor of Science degree in Electrical Engineering from the University of Texas at Austin and a Master of Science degree in Electrical Engineering from the University of Vermont. He is a member of the University of Texas, Cockrell School of Engineering Advisory Board, Olin College Presidents Council and the Juvenile Diabetes Research Foundation.

 

Harry A. Wolin

Senior Vice President, General Counsel and Corporate Secretary

Age: 57

 

Mr. Wolin is our Senior Vice President, General Counsel and Corporate Secretary. Prior to becoming General Counsel in 2003, Mr. Wolin was our Vice President, Intellectual Property. Before joining us in 2000, Mr. Wolin spent 12 years at Motorola, Inc. (now known as Motorola Solutions, Inc., a provider of technologies, products and services that enable a broad range of mobile, wireline, digital communication, information and entertainment experiences), where his last role was Vice President and Director of Legal Affairs for the Semiconductor Products Sector.

 

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Executive Officers (continued)

 

 

 

Mr. Wolin served as a member of the board of directors of GLOBALFOUNDRIES Inc. from February 2011 through March 2012. 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 holds a Bachelor of Science degree in Chemistry from the University of Arizona and a Juris Doctor degree from Arizona State University.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

We believe that during fiscal 2018, our directors, Section 16 officers or beneficial owners of more than 10% of our common stock complied with all Section 16(a) filing requirements. 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.

 

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 29, 2018 with respect to shares of our common stock that may be issued under our existing equity compensation plans. Our 2004 Plan and our 2017 Employee Stock Purchase Plan (the “2017 ESPP”), each of which was approved by our stockholders, are our only equity incentive plans available for the grant of new equity awards. Outstanding options and any full value awards are not transferable for consideration.

 

      Fiscal Year Ended December 29, 2018  
     

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))

 

Equity compensation plans approved by stockholders

  

 

38,313,512

(1) 

 
 

 

 

 

 

83,620,805

(5) 

 

Options

  

 

12,647,614

(2) 

 
 

$

5.33

 

 

 

 

Awards—RSUs and PRSUs

  

 

25,665,898

(3) 

 
 

 

 

 

 

 

Equity compensation plans not approved by stockholders

          

 

 

 

 

 

Options

  

 

2,018

(2)(4) 

 
 

$

0.30

 

 

 

 

Awards—RSUs and PRSUs

  

 

 

 

 

 

 

 

 

Total

  

 

38,315,530

 

         

 

83,620,805

 

 

(1)

Includes shares of our common stock issuable from performance-based restricted stock units (“PRSUs”), in each case representing the number of shares that could be earned assuming target achievement of the applicable performance conditions.

(2)

As of December 29, 2018, the aggregate weighted-average remaining contractual life of our outstanding stock options was 3.49 years with an aggregate weighted-average exercise price of $5.33.

(3)

Includes 23,340,120 RSU awards and 2,325,778 PRSU awards, based on target shares granted.

(4)

Represents shares of our common stock to be issued upon exercise of outstanding options assumed from SeaMicro, Inc. (“SeaMicro”) stock plans as part of our acquisition of SeaMicro in March 2012. We have not granted any awards under this plan and we do not intend to grant any awards under this plan in the future.

(5)

Includes 45,307,293 shares available for issuance under our 2017 ESPP, of which up to a maximum of 1,888,330 shares may be purchased in the current purchase period which runs until May 9, 2019 under the 2017 ESPP.

 

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation and Leadership Resources Committee of our Board (the “Compensation Committee”) oversees, among other things, the development and administration of our executive compensation program. This “Compensation Discussion and Analysis” describes our executive compensation philosophy and objectives, provides an overview of our executive compensation program, and reviews the fiscal 2018 compensation decisions for the following executive officers (our “Named Executive Officers”):

 

   
  Name   Title

  Lisa Su

 

President and Chief Executive Officer

  Devinder Kumar

 

Senior Vice President, Chief Financial Officer and Treasurer

 

  Forrest Norrod

 

 

 

Senior Vice President and General Manager, Datacenter and Embedded Solutions Business Group

 

 

  Mark Papermaster

 

 

 

Chief Technology Officer and Executive Vice President, Technology and Engineering

 

  Harry Wolin

 

Senior Vice President, General Counsel and Corporate Secretary

 

  James Anderson(1)

 

 

 

Former Senior Vice President and General Manager, Computing and Graphics Business Group

 

 

(1)

Mr. Anderson resigned effective September 3, 2018. He did not receive any severance or other benefits in connection with his resignation.

Executive Summary

Fiscal 2018 Company Performance

Fiscal 2018 marked another year of strong financial performance for us as we successfully delivered our second straight year of significant revenue growth, expanded gross margin and improved profitability based on our high-performance product portfolio, including our Ryzen™, EPYC™ and Radeon™ products. We strengthened our product portfolio throughout 2018 with the introduction of new high-performance products for the PC, gaming and datacenter markets.

We made great progress across our businesses in 2018 as we grew notebook, desktop and server market share while delivering record graphics revenue for the year. Customer adoption remained strong with over 60 Ryzen OEM design wins in fiscal 2018. In addition, we launched our first 7nm GPU products for the datacenter in fiscal 2018 and grew our server business exiting 2018 with mid-single digit unit share.

We improved our financial results in fiscal 2018 compared to fiscal 2017 as we grew annual revenue by more than $1.2 billion and recorded our highest profitability in seven years. In fiscal 2018, we grew revenue by 23% year-over-year to $6.5 billion, increased our operating income to $451 million compared to $127 million for fiscal 2017 and improved our net income to $337 million from a net loss of $33 million in the prior year. Cash, cash equivalents and marketable securities were down slightly year over year to $1.16 billion from $1.18 billion as was our principal amount of total debt at $1.53 billion as of December 29, 2018 compared to $1.70 billion at the end of fiscal 2017.

 

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Compensation Discussion and Analysis (continued)

 

 

 

In addition, we were the highest performing stock in the S&P 500 and the Philadelphia Semiconductor Sector Index in 2018. From the end of fiscal 2015 to the end of fiscal 2018, we saw our market capitalization appreciate to create approximately $15.6 billion in value for our stockholders. The following graphic compares the change in our market capitalization to the change in the S&P 500 and the Philadelphia Semiconductor Sector Index (“SOX”) from the end of fiscal 2015 through fiscal 2018:

 

LOGO

Key Features of Fiscal 2018 Executive Compensation Program

Our fiscal 2018 executive compensation program continued to reflect our longstanding practice of compensating our Named Executive Officers based on performance that aligns with and drives stockholder value. Also keeping with our historical compensation practice, our fiscal 2018 executive compensation program was structured to advance our business strategy and objectives, align with the interests of our stockholders and competitive practice, and promote sound corporate governance.

The key features of our fiscal 2018 executive compensation program were as follows:

 

   

Redesigned Performance-Based Restricted Stock Unit (“PRSU”) Awards.  We redesigned the PRSUs granted to our Named Executive Officers in fiscal 2018 to provide that the PRSUs pay out based primarily on our stock price performance for the three-year performance period beginning August 9, 2018, and ending August 9, 2021, as compared to the performance of the S&P 500 Index (which is generally considered to be representative of overall U.S. equity market performance) over the same period. In addition, payouts under the 2018 PRSUs are subject to (a) a positive performance multiplier of 125% or 150% if we meet or exceed challenging pre-defined non-GAAP earnings per share (“EPS”) growth targets for our 2018 through 2020 fiscal years, (b) a negative performance multiplier (in the form of a 50% reduction in payout) if our absolute stock price return over the performance period is negative, and (c) an award cap that limits the total dollar value payable (in shares) to the Named Executive Officers. Unlike the 2018 PRSUs, the 2017 PRSUs did not have an EPS growth multiplier and payouts were based primarily on our total shareholder return (“TSR”) as ranked against the TSRs of each of the companies in the Philadelphia Semiconductor Sector Index (which is comprised of 30 companies only in the semiconductor industry). We believe the redesigned 2018 PRSUs align with our business objectives and the interests of our stockholders by focusing our Named Executive Officers on long-term earnings growth and sustainable stockholder returns relative to the broader U.S. equity market and comparing to a more representative set of public technology companies. Further discussion of the design of our 2018 PRSUs is provided below on page 45 under “Fiscal 2018 Compensation Elements—Long-Term Equity Awards.”

 

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Compensation Discussion and Analysis (continued)

 

 

 

   

Pay for Performance.  As illustrated in the tables below, the fiscal 2018 target total direct compensation (defined below) delivered to our Named Executive Officers was heavily weighted towards performance-based compensation:

 

   

91% of our Chief Executive Officer’s target total direct compensation and 83% of the average target total direct compensation of our other Named Executive Officers was delivered in the form of variable or “at risk” compensation;

 

   

Long-term equity awards (the ultimate value of which depend on our stock price) continued to be the largest element of compensation, representing approximately 78% of our Chief Executive Officer’s target total direct compensation and 65% of the average target total direct compensation of our other Named Executive Officers; and

 

   

100% of the fiscal 2018 target annual incentive bonuses payable to our Named Executive Officers was tied to the achievement of pre-established annual financial and operational goals, which are aligned to our short-term and long-term objectives, as reflected in our annual operating plan.

 

LOGO   LOGO

As used in this Proxy Statement, a Named Executive Officer’s fiscal 2018 “target total direct compensation” is the sum of his or her fiscal 2018 base salary, target annual incentive bonus under our Executive Incentive Plan (“EIP”), and the aggregate intended target value of the long-term equity awards granted under our 2004 Equity Incentive Plan (the “2004 Plan”) (the accounting values (grant date fair value) of our long-term equity awards differ and are included in the “Grants of Plan-Based Awards in 2018” table below on page 58).

 

   

Alignment with Stockholders.  Our fiscal 2018 executive compensation program reinforced the alignment of interests between our Named Executive Officers and the long-term interests of our stockholders. Long-term equity awards represented the largest component of each Named Executive Officer’s fiscal 2018 target total direct compensation. Approximately 50% of the target value of each Named Executive Officer’s fiscal 2018 long-term equity award was in the form of PRSUs, the potential payouts of which are tied to the performance measures described above. The remaining 50% of the target value of each Named Executive Officer’s fiscal 2018 long-term equity award was made in the form of stock options (25% of award target value) and time-based restricted stock units (“RSUs”) (25% of award target value). The stock options and RSUs vest in three equal annual installments beginning on the first anniversary of the grant date. Further discussion of the design of our 2018 long-term equity awards is provided below on page 45 under “Fiscal 2018 Compensation Elements—Long-Term Equity Awards.”

 

   

Market Competitive Compensation.  Each Named Executive Officer’s fiscal 2018 target total direct compensation was generally set at competitive levels with compensation for executives in similar positions within our peer group, which our Compensation Committee believes reflects the current competitive market for executive talent. Our Compensation Committee also considers a number of other factors, such as job performance, retention considerations and business conditions, which are more fully described below.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Fiscal 2018 Realized Pay

The total pay of our Named Executive Officers, as reported in the 2018 Summary Compensation Table, reflects the accounting (grant date fair value) value of their annual long-term equity awards and not the economic value actually realized by our Named Executive Officers from these awards. Since a significant portion of the reported compensation of our Named Executive Officers represents potential future compensation, we believe it is useful to supplement the information provided in the 2018 Summary Compensation Table with a discussion of the pay our Named Executive Officers actually realized during the fiscal year.

As in previous years, the key drivers of the realized pay of our Named Executive Officers for fiscal 2018 were (i) the increase in our stock price and (ii) our actual performance against the pre-established financial targets and operating goals under the EIP.

The table below compares our market capitalization to the “realized pay” of our Chief Executive Officer and the average “realized pay” of our other Named Executive Officers for each of our last three fiscal years. As this table demonstrates, the compensation collectively “realized” by our Named Executive Officers in the aggregate from the end of fiscal year 2015 to the end of fiscal year 2018 represented 0.81% of the $15.6 billion in value created for our stockholders during that same period.

 

 

LOGO

 

(1)

Each Named Executive Officer’s “realized pay” is, for the applicable fiscal year, the sum of his or her earned base salary, actual EIP bonus, any discretionary or retention bonus amounts realized, other compensation, and W-2 income realized due to stock option exercises and the vesting of restricted stock units and performance-based awards under our equity plans. Additional information is provided below in the “2018 Summary Compensation Table” on page 53 and the “Option Exercises and Stock Vested in 2018” on page 60. Realized pay is not a substitute for total compensation. For more information on total compensation as calculated under SEC rules, see the notes accompanying the 2018 Summary Compensation Table below.

(2)

The fiscal 2016 and 2017 averages of the Other Named Executive Officers exclude Mr. Wolin who was not a Named Executive Officer during those years.

(3)

The AMD Market Capitalization amounts are as of the last day of each applicable fiscal year.

The fiscal 2018 realized pay of our Named Executive Officers was primarily attributable to (i) the vesting of long-term equity awards that were granted in prior years and (ii) their fiscal 2018 annual incentive bonuses under the EIP. The fiscal 2018 EIP bonuses of 86.0% compares to a fiscal 2017 EIP payout of 77.6% and a fiscal 2016 EIP payout of 32.5%, resulting in an average payout under the EIP for the previous three fiscal years of 65.4%. For a discussion of the fiscal 2018 EIP, see “Fiscal 2018 Compensation Elements—Annual Incentive Bonuses” below.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Executive Compensation Policies and Practices

We implement sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. During fiscal 2018, we maintained the following executive compensation policies and practices, which we believe drive superior performance and prohibit or minimize behaviors that we believe do not serve our stockholders’ long-term interests:

 

   
Policy/Practice   Summary

Recoupment (or “claw-back”) policy

 

Under our Worldwide Standards of Business Conduct, we expressly reserve the right to claw-back incentive-based or other compensation (including equity-based compensation) paid to an employee (including any Named Executive Officer) in the event of an employee’s direct involvement with fraud, misconduct or gross negligence which contributes to an accounting restatement as a result of our material noncompliance with any financial reporting laws.

 

In addition, all equity awards granted to our Named Executive Officers after October 2015 include a forfeiture-for-cause provision, which provides for potential claw-back of the equity award if the Named Executive Officer violates the non-competition, non-solicitation, or confidentiality covenants in the equity award agreement, or fails to comply with any agreement with us regarding inventions, intellectual property rights, or proprietary information or material.

 

One-year minimum vesting period for equity awards

 

Our 2004 Plan requires a minimum one-year vesting period for all awards granted after April 29, 2015, subject to limited exceptions such as death, disability, termination of employment or a change in control.

 

Cap on change in control payments and benefits

 

Since March 2010, we have not and will not enter into any change in control agreement or arrangement with a Named Executive Officer that provides for cash severance payments in excess of (i) two times the sum of base salary and target annual incentive bonus plus (ii) the prorated target annual incentive bonus for the year in which the termination of employment occurs. Further, these payments will only be made if there is a termination of employment following a change in control or constructive discharge, as described in the “Severance and Change in Control Arrangements” section.

 

No new excise tax gross-ups

 

Since April 2009, we have not and will not enter into any change in control agreement or arrangement with a Named Executive Officer that provides for an excise tax gross-up payment.

 

Limited perquisites

 

We provide limited perquisites or other personal benefits to our Named Executive Officers and provide air and other travel for our Named Executive Officers for business purposes only.

 

Anti-hedging and pledging policy

 

Our employees, including our Named Executive Officers, and our Directors are not permitted to hedge their economic exposure to our equity securities. Our employees, including our Named Executive Officers, and our Directors are not permitted to pledge our equity securities without the preapproval of the Nominating and Governance Committee of our Board which is only expected to be granted in very limited circumstances. None of our Named Executive Officers or Directors currently have pledged any shares.

 

Incentive compensation amounts are subject to payment thresholds and maximums

 

Our annual cash performance bonuses and the 2018 PRSUs have threshold performance requirements that must be achieved to receive payment and are subject to maximum payment “caps.”

 

Stock ownership requirements

 

Our stock ownership requirements provide that our Chief Executive Officer should attain an investment position in our common stock having a value that is equal to the lesser of (a) the number of shares equal to five times her base salary or (b) 350,000 shares. Our other Named Executive Officers should attain an investment position in our common stock having a value that is equal to the lesser of (x) the number of shares equal to two times their base salaries or (y) 80,000 shares.

 

 

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Compensation Discussion and Analysis (continued)

 

 

 

   
Policy/Practice   Summary

Independent compensation

consultant

 

Pursuant to its Charter, the Compensation Committee has the authority to engage independent advisors to assist it in carrying out its responsibilities. In fiscal 2018, the Compensation Committee retained Compensia, a national compensation consulting firm, as its compensation consultant to advise the Compensation Committee on its decisions regarding the compensation of our Named Executive Officers, and to keep the Compensation Committee apprised of compensation trends and best practices. Compensia performs no other services for us.

 

Compensation risk assessment

 

The Compensation Committee conducts an annual risk assessment of our compensation policies and company-wide practices to ensure that our programs are not reasonably likely to have a material adverse effect on us.

 

Response to 2018 “Say On Pay” Vote and Stockholder Engagement Process

The Compensation Committee seeks to align the objectives of our executive compensation program with the interests of our stockholders. In that respect, when evaluating our executive compensation program, the Compensation Committee carefully considers both the results of our annual advisory resolution on the compensation of our Named Executive Officers (the “say on pay” proposal) as well as direct feedback from our stockholders. At our 2018 annual meeting of stockholders, our “say on pay” proposal received support from approximately 95% of the votes cast on the proposal, reflecting overwhelming stockholder support for our fiscal 2018 executive compensation program. As we evaluated our compensation practices for 2018, we were mindful of the strong support our stockholders expressed for our program and ultimately decided to retain our general approach to the design of our executive compensation program.

During fiscal 2018, we continued our practice of proactive stockholder engagement regarding executive compensation and other corporate governance. The Company does not rely on proxy season as its active stockholder engagement season and instead prefers to actively and directly engage with stockholders throughout the fiscal year. After filing and disseminating our definitive proxy statement for our 2018 annual meeting of stockholders, we conducted conference calls, in-person meetings, or other discussions with several of our top 50 stockholders (which collectively represent approximately 53% of the shares of common stock entitled to vote at our annual meeting) to solicit feedback on the Company, including their views on our executive compensation structure and pay policies and practices. In the aggregate, feedback received during these discussions was generally supportive of our executive compensation program and our compensation plan design. In fiscal 2018 the Company also conducted an in-depth investor perception study where investor feedback and perceptions on many corporate topics was solicited. The Compensation Committee continues to encourage an active and meaningful dialogue with our stockholders regarding our executive compensation and governance practices.

Talent Management Focus

Developing, motivating, retaining and attracting talent is critical to guide and execute our strategy as well as to continue to grow our business. This is a strong focus of our executive compensation program and the Compensation Committee. Our executive compensation program aligns with our talent objectives and our compensation decisions not only consider individual and Company performance, but also long-term potential, key retention needs and organizational succession plans.

One of the Compensation Committee’s responsibilities described in its charter is to regularly review succession planning and talent development. The Compensation Committee at least annually reviews succession plans for the Chief Executive Officer and other senior executive positions. These reviews occur with input from the Chief Executive Officer and our Senior Vice President, Worldwide Marketing, Human Resources and Investor Relations. The Compensation Committee also reviews succession plans in executive session, with no members of management present. Succession planning for key executive roles consists of an assessment of internal candidates and their development plans, as well as potential external talent with considerations for alignment with AMD’s values for culture, diversity, and inclusion.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Compensation Philosophy and Objectives

Our executive compensation program is guided by the following principles:

 

   

 

Principle

 

 

 

Description

 

Business Driven

 

Compensation should be aligned to performance. Rewards should be directly tied to the achievement of specific financial, operational and strategic objectives that generally lead to increased and sustained stockholder value.

 

Performance Differentiated

 

Compensation should be structured to create an effective link between pay and performance at both the Company and individual level.

 

 

Market Competitive

 

Compensation should be competitive to attract, retain and motivate high-caliber senior leadership.

 

Ownership Oriented

 

Compensation should be fully aligned with stockholder interests by delivering meaningful equity awards tied to and balanced with stockholder value creation and by maintaining robust stock ownership requirements.

 

We continually assess and adjust our executive compensation program, policies and practices in light of these guiding principles and based on feedback obtained through our stockholder engagement efforts.

Pay for Performance

Our compensation philosophy centers on pay for performance and is driven by the following primary principles:

 

   

Our compensation practices should be designed to align with the interests of our stockholders.

 

   

Sustained, improved financial performance should result in increasing company valuation and stock price.

 

   

With improved company performance and increases in company valuation and stock price, our compensation programs should deliver higher rewards to our Named Executive Officers.

Competitive Compensation

We operate in a highly competitive business environment, therefore it is imperative that we recruit and retain top leadership and industry experts to guide and execute our business strategy. To do so requires that we offer competitive compensation. Accordingly, the Compensation Committee seeks to compensate our Named Executive Officers at competitive levels with compensation for executives in similar positions at a group of peer companies (set forth below), which the Compensation Committee believes reflects the current competitive market for executive talent. In making its compensation decisions, the Compensation Committee also considers a number of other factors, including the scope of responsibility of each Named Executive Officer, internal pay comparisons, and the in-the-money value (i.e., retention value) of each Named Executive Officer’s unvested long-term equity award holdings, as well as its assessment of each Named Executive Officer’s performance and expected future impact on the organization.

Generally, the Compensation Committee seeks to position each Named Executive Officer’s target total direct compensation between the 50th and 75th percentile of the competitive market (the “Target Positioning”). A Named Executive Officer’s target total direct compensation may vary from the Targeting Positioning depending on the other factors discussed above. The compensation realized by the Named Executive Officer will reach the Target Positioning only if applicable performance targets are achieved and our stock price matches index performance and does not decline. However, if performance targets are exceeded and our TSR surpasses the benchmark index, then the compensation realized by the Named Executive Officer could be substantially greater than the Target Positioning. For 2018, the actual total target direct compensation was generally consistent with our Target Positioning and the realized compensation was higher because of Company and stock price performance.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Align Pay Practices with Sound Risk Management

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

The Compensation Committee believes that our executive compensation program fosters our objectives while mitigating potentially excessive risk-taking through the following means:

 

 

Sound Risk Management

 

 

 

 

Compensation is an appropriate balance of “fixed” pay versus “variable” pay, as well as “short-term” versus “long-term” incentives

 

 

 

Performance-based compensation opportunities are capped

 

 

 

Our annual incentive plans include multiple Company-wide financial measures that are quantitative and measurable

 

 

 

Long-term equity awards are a balanced mix of time-based and performance-based vesting, both spanning multiple years

 

 

 

Long-term equity awards generally have a minimum vesting period of one year

 

 

 

Compensation is subject to recoupment (“claw-back”) policies and provisions

 

 

 

Our Named Executive Officers are subject to stock ownership requirements

How We Make Compensation Decisions

Role of the Compensation Committee and our Board

The Compensation Committee is responsible to our Board for developing and overseeing our executive compensation and benefits policies and programs. The Compensation Committee, which consists of three independent directors, is responsible for reviewing our executive compensation program annually to evaluate its alignment with the strategies and needs of our business, market trends and the interests of our stockholders. The Compensation Committee is responsible for formulating compensation recommendations to the non-management members of our Board regarding our Chief Executive Officer’s compensation and for approving the compensation of our other Named Executive Officers. This includes:

 

   

reviewing and approving the performance goals and objectives that relate to performance-based compensation awarded under the EIP and the 2004 Plan;

 

   

conducting an annual compensation risk assessment to evaluate our compensation policies and practices;

 

   

evaluating the competitiveness of each Named Executive Officer’s total compensation package; and

 

   

reviewing and approving any changes to a Named Executive Officer’s total compensation package, including, but not limited to, base salary, annual incentive bonus opportunities, annual long-term incentive award opportunities, and payouts and retention programs.

The Compensation Committee is supported in its work by members of our management team—including our Chief Executive Officer, our Senior Vice President, Worldwide Marketing, Human Resources and Investor Relations, our Senior Vice President and Chief Human Resources Officer, our Senior Vice President, General Counsel and Corporate Secretary and our Corporate Vice President, Compensation and Benefits. The Compensation Committee considers the input of these individuals to formulate the specific plan and award designs, including performance measures and performance levels, necessary to align our executive compensation program with our business objectives and strategies. These individuals did not attend either executive sessions or portions of any meetings of the Compensation Committee or our Board where their own compensation determinations were made.

The non-management members of our Board annually conduct a performance assessment of our Chief Executive Officer. The Compensation Committee reviews and considers our Board’s performance assessment in making its recommendations to the non-management members of our Board regarding the compensation and other terms of our Chief Executive Officer’s employment. Our Chief Executive Officer does not participate in the determination of her own compensation and no management recommendation is made regarding her compensation.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Role of Compensation Consultant

The Compensation Committee has the authority to engage independent advisors to assist it in carrying out its responsibilities. During fiscal 2018, the Compensation Committee retained Compensia, a national compensation consulting firm, as its compensation consultant to provide assistance on executive and director compensation matters. Compensia advised the Compensation Committee on a variety of compensation-related matters in fiscal 2018, including:

 

   

the competitiveness of our executive compensation program by providing a market review of executive compensation, evaluating our compensation peer group composition and analyzing the compensation at our compensation peer group companies;

 

   

the pay levels of our Named Executive Officers by assessing and advising on equity and cash compensation guidelines for various executive job levels and assessing compensation levels for our executive officers;

 

   

our executive compensation program design, including short-term and long-term incentive plan design and pay mix, the framework for our long-term equity awards and our retention strategies, evaluation of our stock ownership guidelines, and assessment of severance and change of control arrangements; and

 

   

the compensation arrangements for the non-management members of our Board.

Conflict of Interest Assessment for Compensation Consultant

The Compensation Committee recognizes the importance of receiving objective advice from its compensation consultant and, to that end, conducts an annual conflicts of interest assessment of its compensation consultant. In fiscal 2018, Compensia did not provide any services to or receive any payments from us, except in its capacity as a consultant to the Compensation Committee. In March 2019, the Compensation Committee considered whether the services provided by Compensia raised any conflicts of interest pursuant to the rules of the SEC and the listing rules of Nasdaq and concluded that the work performed by Compensia did not raise any conflicts of interest.

In the course of its engagement, Compensia attended all meetings of the Compensation Committee and, where applicable, presented its findings and recommendations for discussion. Compensia also consulted frequently with members of the Compensation Committee and met with members of senior management to obtain and validate market data, review materials, and discuss management’s compensation recommendations.

Role of the Chief Executive Officer

Generally, during the Compensation Committee’s annual review of executive compensation, our Chief Executive Officer reviews with the Compensation Committee her performance evaluations of each of our other Named Executive Officers and her compensation recommendations for those Named Executive Officers. The Compensation Committee considers these recommendations in its decision process.

Competitive Pay Analysis

Each year, the Compensation Committee reviews the compensation decisions of a custom group of peer companies, in combination with industry-specific compensation survey data, to develop an understanding of the “competitive market” with respect to current executive compensation levels and related policies and practices. The Compensation Committee then evaluates how our pay practices and our Named Executive Officers’ compensation levels compared to the competitive market. As part of this evaluation, the Compensation Committee also reviews the performance measures and related performance target levels generally used within the competitive market to reward performance. The Compensation Committee believes that it appropriately sets the compensation of our Named Executive Officers taking into account the practices of our peers and industry best practices.

Methodology Used to Perform the Competitive Pay Analysis

In preparation for fiscal 2018, the Compensation Committee requested that Compensia provide a competitive pay analysis for each Named Executive Officer using compensation data developed from (i) publicly available information (as of October 2017) of the companies included in a custom peer group (the “2018 Custom Peer Group”) and (ii) compensation data for a special peer data cut of the Radford Global Technology Survey (which includes all companies noted below in the 2018 Custom Peer Group who participate in the survey).

 

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Compensation Discussion and Analysis (continued)

 

 

 

To develop the 2018 Custom Peer Group, in October 2017, the Compensation Committee reviewed the group of companies comprising the then-existing compensation peer group, with particular reference to their industry (i.e., business segment), revenues (generally 50% to 200% of our revenues for the trailing four fiscal quarters) and market capitalization (generally 30% to 300% our market capitalization), in each case based on publicly available information as of October 2017. Based on this review, the Compensation Committee removed Amkor Technology, Inc. and Sanmina Corporation from the peer group because their market capitalizations were less than 30% our market capitalization. Also based on this review, and in order to improve the statistical sampling of the peer group, the Compensation Committee added Analog Devices, Inc., Microchip Technology Incorporated, and Seagate Technology plc., each of which fit within the applicable criteria for industry, revenues and market capitalization. Our revenues for the trailing four fiscal quarters ending December 29, 2017, would have placed us in approximately the 51st percentile of the 2018 Custom Peer Group based on publicly available information. The Compensation Committee believes that the composition of the 2018 Custom Peer Group reflects an appropriate set of comparator companies for purposes of assessing our executive compensation program.

The Compensation Committee used the 2018 Custom Peer Group competitive pay analysis developed by Compensia as its reference source in analyzing the competitiveness of our Named Executive Officers’ compensation. As compared to the 2018 Custom Peer Group, AMD’s fiscal 2018 and fiscal 2017 annual revenue was approximately $6.478 billion and $5.329 billion, respectively.

The companies comprising the 2018 Custom Peer Group are as follows: (1)

 

 

Company Name

  

 

Revenue

($MM)

 

Seagate Technology plc

  

 

$10,606

 

NVIDIA Corporation

  

 

$8,976

 

Lam Research Corporation

  

 

$8,859

 

ARRIS International, plc

  

 

$6,635

 

Motorola Solutions, Inc.

  

 

$6,306

 

Harris Corporation

  

 

$5,893

 

NetApp, Inc.

  

 

$5,632

 

ON Semiconductor Corp.

  

 

$5,271

 

Juniper Networks, Inc.

  

 

$5,173

 

Analog Devices, Inc.

  

 

$5,108

 

Symantec Corporation

  

 

$4,571

 

CA Technologies

  

 

$4,078

 

Microchip Technology Incorporated

  

 

$3,721

 

KLA-Tencor Corporation

  

 

$3,699

 

Skyworks Solutions, Inc.

  

 

$3,651

 

Ciena Corporation

  

 

$2,773

 

Xilinx, Inc.

  

 

$2,430

 

Marvell Technology Group Ltd.

  

 

$2,365

 

(1)

Table includes source data compiled by Compensia from publicly-available financial reports. Revenue data was obtained per S&P Research Insight as of December 1, 2017, and are for the four most recent fiscal quarters ended before December 1, 2017, for which the information was publicly available.

 

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Compensation Discussion and Analysis (continued)

 

 

 

Fiscal 2018 Compensation Elements

The principal elements of our fiscal 2018 executive compensation program, their objectives, and the factors influencing the amount ultimately provided to our Named Executive Officers, are as follows:

 

 

Element

 

 

 

Description

 

 

 

Objective

 

 

 

Factors Influencing Amount

 

 

 Base Salary

 

 

Fixed compensation delivered in cash; reviewed annually and adjusted if appropriate

 

 

Provides base amount of market competitive pay

 

 

Experience, market data, individual role and responsibilities and individual performance

 

 Annual Cash Performance

 Bonus (EIP Awards)

 

 

Variable cash compensation based on performance against annual goals of revenue, adjusted non-GAAP net income and adjusted free cash flow

 

 

Motivates and rewards achievement of key financial results for the year

 

 

Annual target bonus opportunity determined annually based on market data, individual role and responsibilities and individual performance; payout based on Company performance and individual performance

 

 Long-Term  

 Incentives  

 (2004 Plan  

 Awards)  

 

 

Performance-
Based
Restricted
Stock Units
(PRSUs)

 

 

Variable compensation with payout in shares based on (i) stock price performance (absolute and relative to the performance of the S&P 500 Index) over a three-year performance period, and (ii) AMD’s non-GAAP EPS growth from 2018 through 2020

 

 

Directly aligns interests of executives with long-term stockholder value creation by linking potential payouts to relative and absolute stock price performance; also promotes retention

 

 

Intended target value of all LTI awards is based on individual role and responsibilities and market data; generally, a minimum one year vesting for all LTI awards

 

 

Stock Options  

 

 

Variable compensation based on increase in stock price from date of grant, subject to exercise of the stock option; awards vest over three years

 

 

Directly aligns interests of executives with long-term stockholder value creation and provides upside potential over a seven year option term; also promotes retention

 

 

Restricted
Stock Units

(RSUs)

 

 

Variable compensation with payout in shares with time-based vesting; awards vest over three years

 

 

Directly aligns interests of executives with long-term stockholder value creation and promotes retention

 

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Compensation Discussion and Analysis (continued)

 

 

 

Other elements of our fiscal 2018 executive compensation program, including our deferred compensation plan, health, welfare and other personal benefits and post-employment compensation arrangements, are described below.

Base Salaries

The annual base salaries of our Named Executive Officers as of the beginning and end of fiscal 2018 are set forth in the table below. Effective July 1, 2018, (a) the Compensation Committee recommended, and the Board approved a salary increase for Dr. Su, and (b) the Compensation Committee approved increases to the base salaries of each of the other Named Executive Officers. These increases were in recognition of their past and expected future contributions to us, and improved the competitive positioning of their base salaries relative to the base salaries of the individuals holding comparable positions at the companies in the 2018 Custom Peer Group.

 

 

Named Executive Officer

 

 

Base Salary as of  
December 29,  
2018  

 

 

Base Salary as of  
December 31,  
2017  

  

 

Percentage  
Increase  

 

Lisa Su

   

 

 

 

$1,000,000

 

  

   

 

 

 

$925,000

 

  

    

 

 

 

8.1%

 

   

 

Devinder Kumar

   

 

 

 

$565,000

 

   

 

 

 

$550,000

 

    

 

 

 

2.7%

 

 

 

Forrest Norrod

   

 

 

 

$550,000

 

   

 

 

 

$530,000

 

    

 

 

 

3.8%

 

 

 

Mark Papermaster

   

 

 

 

$600,000

 

   

 

 

 

$575,000

 

    

 

 

 

4.3%

 

 

 

Harry Wolin

   

 

 

 

$520,000

 

   

 

 

 

$500,000

 

    

 

 

 

4.0%

 

 

 

James Anderson

   

 

 

 

$550,000

 

(1)

 
   

 

 

 

$530,000

 

    

 

 

 

3.8%

 

 

 

(1)

Represents base salary as of September 3, 2018, the date of Mr. Anderson’s resignation.

Annual Cash Performance Bonuses

Generally, short-term incentives in the form of an annual cash performance bonus are provided to our Named Executive Officers under the EIP. These bonuses are designed to reward, where earned, short-term performance and the achievement of the principal goals of our annual operating plan.

Under the EIP, the amount of each Named Executive Officer’s annual incentive bonus is calculated based on (i) his or her target annual cash performance bonus opportunity and (ii) our corporate financial performance for the applicable performance period as measured against one or more pre-established performance levels. The financial measures and related performance levels for the performance period are approved by the Compensation Committee shortly after the commencement of the fiscal year. Bonuses earned under the EIP are paid in a single lump-sum amount after the end of the fiscal year.

For fiscal 2018, each Named Executive Officer’s annual cash performance bonus under the EIP was determined based on our financial performance during fiscal 2018. The following illustrates how the 2018 annual cash performance bonuses under the EIP were calculated:

 

 

LOGO

Base Salary Earned During 2018 Target Bonus Opportunity (150% of Base Salary for Chief Executive Officer and 100% of Base Salary for other Named Executive Officers)2018 EIP Performance Factor 0% to 200% (Based on AMDs Performance relative to Fiscal 2018 Financial Targets (as weighted ))

 

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Compensation Discussion and Analysis (continued)

 

 

 

The Compensation Committee used the following financial performance measures and weightings for fiscal 2018 to determine the amount of each Named Executive Officer’s 2018 annual cash performance bonus under the EIP:

 

   
Financial Measure   Weighting  

  Adjusted Non-GAAP Net Income

    50

  Revenue

    25

  Adjusted Free Cash Flow

    25

The performance levels (threshold, target and maximum) for each financial performance measure were established by the Compensation Committee at the beginning of fiscal 2018, in each case in consultation with senior management. The performance levels were structured to align with our fiscal 2018 financial objectives taking into account overall affordability of the bonus opportunities provided under the EIP for fiscal 2018.

The Compensation Committee chose adjusted non-GAAP net income as a performance measure because it is a fair measure of our profitability and a valid metric for comparison, which the Compensation Committee believes is directly tied to enhanced stock price performance. The Compensation Committee assigned it a weight of 50% because it is a key short-term financial measure for the operation of our business and is a measure of significant importance to our stockholders. For purposes of the 2018 EIP, our “adjusted non-GAAP net income” was calculated by adjusting our fiscal 2018 GAAP net income for non-GAAP financial adjustments and amounts accrued for the fiscal 2018 bonuses.

The Compensation Committee chose revenue as a performance measure because it reflects our top-line growth, which the Compensation Committee believes is a strong indicator of our long-term ability to increase profitability, cash flow and improve stock price performance. For purposes of the 2018 EIP, our “revenue” was calculated as our GAAP net revenue for fiscal 2018.

Finally, the Compensation Committee chose adjusted free cash flow as a performance measure because it believes effective cash management is a key component of our strategy and our annual operating plan, the successful execution of which should lower indebtedness, increase financial flexibility and ultimately drive improved company valuation and stock price performance. For purposes of the 2018 EIP, our “adjusted free cash flow” was calculated by adjusting our GAAP net cash provided by (used in) operating activities for (i) purchases of property and equipment and (ii) cash payments for fiscal 2017 employee bonuses under the EIP and our Annual Incentive Plan, which were paid in March and April 2018.

The following table sets forth the fiscal 2018 performance levels and comparable actual results for the EIP:

 

 

2018 Executive Incentive Plan
Financial Targets

(in millions)

 

Financial Measure

  

 

(Threshold)  

  

 

(Target)  

  

 

(Maximum)  

  

 

Actual Performance  

 

Adjusted Non-GAAP Net Income

    

 

$

 

267

 

  

    

 

$

 

603

 

  

    

 

$

 

974

 

  

    

 

$

 

648

 

   

 

Revenue

    

 

$

 

5,300

 

    

 

$

 

6,233

 

    

 

$

 

7,165

 

    

 

$

 

6,475

 

 

 

Adjusted Free Cash Flow

    

 

$

 

195

 

    

 

$

 

326

 

    

 

$

 

491

 

    

 

$

 

(19)

 

 

The threshold, target and maximum performance levels for the 2018 EIP were determined by the Compensation Committee using our fiscal 2018 operating plan as a benchmark, and provide for appropriate payout above or below target. The fiscal 2018 EIP target level for each performance measure was determined by the Compensation Committee to be appropriately aggressive and aligned to our fiscal 2018 operating plan and objectives. The fiscal 2018 targets were set higher than the fiscal 2017 actual results. With respect to the adjusted non-GAAP net income and adjusted free cash flow performance measures, the level of performance required increases at an accelerating rate between each performance level. As a result, each incremental increase in potential payout under the 2018 EIP requires a slightly larger corresponding increase in our adjusted non-GAAP net income or adjusted free cash flow, as applicable. For the revenue performance measure, the level of performance required increases at a fixed rate between each performance level. Based on company performance against our fiscal 2018 financial targets, our EIP

 

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would have applied a performance factor of 87.7% for our Named Executive Officers. However, at the recommendation of management, the Compensation Committee approved an 86.0% performance factor to align with our Annual Incentive Plan. The fiscal 2018 annual cash performance bonuses under the EIP for each Named Executive Officer are set forth below:

 

    

 

2018 EIP Bonus Calculation

 

 

Named Executive
Officer

 

 

Base Salary Earned  
During Fiscal 2018  

 

 

Target Bonus  
Opportunity  

 

 

  2018 EIP Performance  
Factor

 

 

2018 EIP Bonus(2)  

 

Lisa Su

   

 

$

 

962,500

 

  

   

 

 

 

150.0%

 

   

       

 

$

 

1,241,625

 

  

 

Devinder Kumar

   

 

$

 

557,500

 

   

 

 

 

100.0%

 

 

       

 

$

 

479,450

 

 

Forrest Norrod

   

 

$

 

540,000

 

   

 

 

 

100.0%

 

 

   

 

 

 

86.0%

 

   

 

$

 

464,400

 

 

Mark Papermaster

   

 

$

 

587,500

 

   

 

 

 

100.0%

 

 

       

 

$

 

505,250

 

 

Harry Wolin

   

 

$

 

510,000

 

   

 

 

 

100.0%

 

 

             

 

$

 

438,600

 

 

James Anderson(1)

                          N/A                                           

 

 

(1)

Mr. Anderson resigned effective September 3, 2018; therefore, he was not eligible to receive an annual cash performance bonus under the EIP for fiscal 2018.

(2)

The amounts reported in this column reflect the bonus amounts approved by the Compensation Committee and paid to the Named Executive Officers.

The Compensation Committee reviews and certifies the level of achievement for each performance measure 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 annual cash performance bonus occurring in March of such year. Under the terms of the EIP, the Compensation Committee has discretion to reduce any Named Executive Officer’s annual cash performance bonus prior to payment.

Long-Term Equity Awards

We believe that long-term incentive compensation in the form of equity awards provide a strong alignment between the interests of our Named Executive Officers and our stockholders. The Compensation Committee generally seeks to provide equity award opportunities that are consistent with our compensation philosophy (with the potential for larger payments for exceptional performance). The Compensation Committee also believes that long-term equity awards are an essential tool in promoting executive retention.

In fiscal 2018, the Compensation Committee and, in Dr. Su’s case, the non-management members of our Board, approved the following awards under our 2004 Plan:

 

 

Named Executive
Officer

 

 

PRSUs  
(Target # of  
Shares)  

 

 

Time-Based  
RSUs  

  

 

Time-Based Stock  
Options  

  

 

Aggregate  
Intended Target  
Value  

 

Lisa Su

   

 

 

 

261,932

 

  

   

 

 

 

130,966

 

  

    

 

 

 

316,496

 

   

    

 

$

 

9,000,000

 

   

 

Devinder Kumar

   

 

 

 

61,117

 

   

 

 

 

30,558

 

    

 

 

 

73,849

 

 

    

 

$

 

2,100,000

 

 

 

Forrest Norrod

   

 

 

 

58,207

 

   

 

 

 

29,103

 

    

 

 

 

70,332

 

 

    

 

$

 

2,000,000

 

 

 

Mark Papermaster

   

 

 

 

87,310

 

   

 

 

 

43,655

 

    

 

 

 

105,498

 

 

    

 

$

 

3,000,000

 

 

 

Harry Wolin

   

 

 

 

43,655

 

   

 

 

 

21,827

 

    

 

 

 

52,749

 

 

    

 

$

 

1,500,000

 

 

 

James Anderson(1)

   

 

 

 

61,117

 

   

 

 

 

30,558

 

    

 

 

 

73,849

 

 

    

 

$

 

2,100,000

 

 

 

(1)

Upon his resignation on September 3, 2018, Mr. Anderson forfeited all of his then-unvested long-term equity awards equating to 205,800 stock options and 672,211 shares underlying RSU awards and PRSU awards (assuming maximum achievement), including 100% of his 2018 long-term equity award.

 

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The aggregate intended target value was converted into a mix of 50% PRSUs, 25% RSUs and 25% stock options using a conversion price of $17.18 (the greater of $8.00 and the average closing price of our common stock over the 30 trading-day period ending on August 9, 2018, the 2018 annual program’s grant date) and, for the stock options, also using a binomial factor of 41.38%. The amounts reported in the 2018 Summary Compensation Table represent the grant date fair values (i.e., accounting values) of the fiscal 2018 long-term equity awards computed in accordance with Accounting Standards Codification (ASC) Topic 718.

2018 PRSU Awards.  The 2018 PRSUs provide for a payout that will range from 0% to 250% of the target number of shares of our common stock subject to the award (the “Target Shares”), provided that the maximum number of shares that may be earned is capped (the “Award Cap”) at the number equal to (i) eight times the target value of the Named Executive Officer’s PRSU award, divided by (ii) the closing price of our common stock on the last day of the three-year performance period ending on August 9, 2021, or the date of a change of control of the Company, if earlier (as applicable, the “Performance Period”). Even though the maximum payout for the 2018 PRSUs is 250%, depending on the closing price of our common stock (as determined above) the Award Cap may limit the amount below the maximum. The Award Cap serves to avoid excessive gains and control the accounting expense of the 2018 PRSU awards. Subject to the Award Cap, the actual number of shares earned by each Named Executive Officer will be calculated as follows:

 

   

Each Named Executive Officer will earn between 0% and 200% of his or her target number of shares (the “Initial Earned Shares”) depending on the return on our stock price relative to the return on the S&P 500 Index, in each case over the Performance Period.

 

   

In alignment with our long-term growth strategy, we added EPS growth as an upside modifier to the award. If we meet or exceed challenging pre-defined non-GAAP EPS growth targets for our 2018 through 2020 fiscal years, award payouts will be increased to 125% or 150% of each Named Executive Officer’s Initial Earned Shares (if applicable, the “Adjusted Earned Shares”). In no event, however, will the Named Executive Officer’s Adjusted Earned Shares exceed 250% of his or her target number of shares.

 

   

If the return on our stock over the Performance Period is negative, then the total number of shares earned by each Named Executive Officer will be reduced to 50% of his or her Adjusted Earned Shares. If the return on the Company’s stock price over the Performance Period is equal to or greater than zero percent, then the total number of shares earned by each Named Executive Officer will be the number of his or her Adjusted Earned Shares.

Vested PRSUs will generally be settled on the later of August 16, 2021, or the date following the Compensation Committee’s certification of performance. Each Named Executive Officer must be continuously employed through the last day of the Performance Period to receive his or her earned shares, except to the extent an event triggers accelerated vesting of the 2018 PRSUs under the terms of his or her employment or other agreement, as applicable.

Stock Options.  Stock options are intended to align the interests of our Named Executive Officers with the interests of our stockholders because they will not realize any financial benefit from these awards unless our stock price increases above the exercise price over the seven-year option term. The stock options have an exercise price equal to 100% of the fair market value of our common stock on the grant date, which was $19.10 per share. The stock options vest (and become exercisable) as to 33 1/3% of the underlying shares on each of August 9, 2019, August 9, 2020 and August 9, 2021, subject to each Named Executive Officer’s continued employment with us through each vesting date (unless his or her employment agreement or other agreement with us provides otherwise). The service-based vesting requirements are intended to further our retention objectives. The stock options expire seven years after the grant date, subject to earlier expiration if his or her employment with us terminates.

RSUs.  RSUs are intended to encourage executive retention, manage share dilution, recognize individual performance and align the interests of our Named Executive Officers with our stockholders because the value of the awards is tied to the market value of our common stock at the time of vesting. All of the RSUs awarded to our Named Executive Officers in fiscal 2018 vest as to 33 1/3% of the underlying shares on each of August 9, 2019, August 9, 2020 and August 9, 2021, subject to each Named Executive Officer’s continued employment with us through each vesting date (unless his or her employment agreement or other agreement with us provides otherwise).

 

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Aggregate Intended Target Value of Fiscal 2018 Annual Equity Award Grants.  In determining the aggregate intended target value of each Named Executive Officer’s annual long-term equity award for fiscal 2018, the Compensation Committee reviewed data showing the market-competitive award levels based on the 2018 Custom Peer Group and the potential realizable value of each Named Executive Officer’s existing equity holdings. Additionally, in approving the fiscal 2018 equity awards for our Named Executive Officers, the Compensation Committee considered the potential realizable value of each Named Executive Officer’s existing equity holdings, executive retention objectives and continuity within senior management and the following high-level corporate goals: achieve fiscal 2018 annual operating plan, execute industry leading roadmap and meet customer commitments. The achievement of these high-level goals drive our overall Company strategy and, subsequently, the attainment of the performance objectives in our long-term incentive compensation program.

Accounting Considerations.  We follow ASC Topic 718 for our share-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our Named Executive Officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their share-based compensation awards in their income statements over the period that a recipient is required to render service in exchange for the option or other award.

In accordance with ASC Topic 718, the accounting value of the 2018 PRSUs was determined by an outside professional valuation consultant using a Monte-Carlo simulation model and based upon a discounted cash flow analysis of the probability-weighted payoffs of a share-based payment assuming a variety of possible stock price paths and represents the estimate of aggregate compensation cost to be recognized over the requisite service period determined as of the grant date under ASC Topic 718, except no assumptions for forfeitures are included.

Grant Timing Practices.  We have no practice or policy of coordinating or timing the release of company information around the grant date of our annual long-term equity awards. Our annual long-term equity awards are typically made in July or August. On occasion, we grant equity awards outside of our annual grant cycle for new hires, promotions, recognition, retention or other purposes. These “off cycle” grants are made only on a limited basis.

See the “2018 Summary Compensation Table” and the “Grants of Plan-Based Awards in 2018” table below for more information on the equity awards that we granted to our Named Executive Officers in fiscal 2018.

Deferred Compensation

In fiscal 2018, our Named Executive Officers were eligible to participate in our Deferred Income Account Plan (the “DIA Plan”). Participation in the DIA Plan is intended to assist our Named Executive Officers in their retirement planning as well as to restore Company contributions that are lost due to IRS limits applicable to contributions in our Section 401(k) plan. The Compensation Committee believes the opportunity to defer compensation is a competitive benefit that enhances our ability to attract and retain talented executives while building plan participants’ long-term commitment to the Company.

For further information about the DIA Plan, see the “2018 Nonqualified Deferred Compensation” table below.

Health, Welfare and Other Personal Benefits (Perquisites)

In fiscal 2018, a broad population of our U.S. employees, including our Named Executive Officers, were eligible to receive the following health, welfare, perquisites and other personal benefits:

 

   

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

 

   

matching contributions under our Section 401(k) plan, which were equal to 75% of an employee’s annual contribution, up to the first 6% of compensation deferred under the plan; and

 

   

patent awards, if earned.

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

 

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The health, welfare and other personal benefits described above are intended to be part of a competitive overall compensation program and help attract and retain executive talent.

For further information regarding the health, welfare and other personal benefits received by our Named Executive Officers during fiscal 2018, see the “2018 Summary Compensation Table” below.

Change in Control Agreements and Other Change in Control Arrangements

Our Chief Executive Officer has an employment agreement, effective October 8, 2014, approved by our Board that establishes her base salary and provides for annual incentive and long-term incentive awards under our approved plans (i.e., the EIP and 2004 Plan). In addition, the agreement provides for certain payments and benefits in the event of certain termination of employment scenarios, including following a change in control of the Company. For further information on this agreement, see the “Severance and Change in Control Arrangements” section beginning on page 60.

Each of our other Named Executive Officers is party to a change in control agreement (or, in Mr. Wolin’s case, a management continuity agreement) with us. These agreements and the change-in-control provisions of Dr. Su’s employment agreement are designed to encourage the continued services of the covered Named Executive Officer in the event of a potential change in control of the Company and to allow for a smooth leadership transition upon such a change in control. In addition, these agreements and the change-in-control provisions in Dr. Su’s employment agreement are intended to provide incentives to the covered Named Executive Officer to effectively execute the directives of our Board, even in the event that such actions may result in the elimination of the Named Executive Officer’s position.

In April 2009, AMD adopted a policy to not enter into any new management continuity agreements or change in control agreements containing an excise tax gross-up provision. Our Named Executive Officers’ change in control agreements do not provide for excise tax gross-ups except for Mr. Wolin’s management continuity agreement, which was entered into prior to April 2009 and has not been amended since that time.

Termination of Employment Required to Trigger Payments

Under the terms and conditions of these arrangements and agreements, each of our Named Executive Officers is eligible to receive certain specified payments and benefits only if (i) a “change in control” of us 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 transaction (a “double trigger” arrangement). The Compensation Committee believes this structure strikes a balance between our incentive arrangements and our executive hiring and retention objectives without providing “windfall” payments and benefits to any Named Executive Officers who continue employment with an acquiring entity following a change in control of the Company.

For a detailed description of these arrangements and agreements with our Named Executive Officers, as well as an estimate of the amounts payable under such arrangements as of the last day of fiscal 2018, see “Severance and Change in Control Arrangements” on page 60 below.

Severance and Separation Arrangements

Any post-employment compensation payable to our Chief Executive Officer is governed solely by her employment agreement, the terms of which were the result of arms-length negotiations between her and the Compensation Committee. Under her employment agreement, our Chief Executive Officer is eligible to receive certain specified payments and benefits in the event that her employment is involuntarily terminated. The Compensation Committee believes that the amount payable to our Chief Executive Officer pursuant to her employment agreement is reasonable and competitive and provides transition assistance in the event of her involuntary termination of employment, with the goal of keeping her focused on our business rather than her personal circumstances.

With the exception of our Chief Executive Officer, all of our other Named Executive Officers participate in our Executive Severance Plan for Senior Vice Presidents (the “SVP Severance Plan”). The SVP Severance Plan is designed to provide uniform treatment in the event of an involuntary termination of employment of our U.S. senior executives (except our Chief Executive Officer) and to provide transition assistance in such instances with the goal of keeping these senior executives focused on our business rather than their personal circumstances. A Named Executive Officer is

 

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not eligible to receive payments and benefits under the SVP Severance Plan if he or she receives severance payments and benefits in connection with a change in control of the Company pursuant to his or her change in control agreement. The Compensation Committee believes that the SVP Severance Plan provides the covered executives important protections and promotes our objectives of attracting and retaining executive talent.

For a detailed description of the post-employment compensation arrangements of our Named Executive Officers, as well as an estimate of the amounts payable under such arrangements as of the last day of fiscal 2018, see “Severance and Change in Control Arrangements” on page 60 below.

Other Compensation Policies

Compensation Recoupment (“Claw-back”) Policy

Our Worldwide Standards of Business Conduct provide that we may pursue all remedies available under applicable law to recover any incentive-based or other compensation (including equity awards) paid or granted to our employees or agents if we are required to prepare an accounting restatement as a result of our material noncompliance with any financial reporting laws.

In addition, the award agreement for each stock option, RSU, and PRSU granted since May 2010 to an employee at or above the level of senior vice president (which includes our Named Executive Officers) has included a compensation recoupment (“claw-back”) provision. The claw-back provides the Compensation Committee with the right to recover all or a portion of the compensation attributable to the award if the employee’s direct involvement with fraud, misconduct or his or her gross negligence contributes to or results in us being required to prepare an accounting restatement as a result of our material noncompliance with any financial reporting requirement under the federal securities laws. The claw-back does not apply to any award granted more than 18 months before the date of the first public issuance or SEC filing of the financial document embodying the reporting requirement. In addition, with respect to awards granted in and after August 2015, we may claw-back the award if the recipient violates the non-competition or non-solicitation terms of the award agreement as permitted under applicable law. The Compensation Committee may exercise these claw-back rights by cancellation, forfeiture, repayment or disgorgement of any profits realized by the employee from the sale of our securities.

We continue to monitor the rulemaking activities of the SEC and Nasdaq with respect to the development, implementation and disclosure of compensation recovery provisions/policies. We expect to revise our compensation recovery provisions/policies in the future if and as required by applicable law.

Stock Ownership Requirements

Our stock ownership requirements are designed to increase our Named Executive Officers’ stakes in us and to align their interests more closely with those of our stockholders.

These requirements provide that on or before the Ownership Achievement Date (as defined below), our President and Chief Executive Officer should attain an investment position in our common stock equal to the lesser of (a) five-times her annual base salary or (b) 350,000 shares, and our other Named Executive Officers should attain an investment position in our common stock equal to the lesser of (x) two-times their annual base salaries or (y) 80,000 shares.

Shares of our common stock counted toward the minimum stock ownership requirements include any shares held directly or indirectly by a Named Executive Officer.

The “Ownership Achievement Date” is the later of August 2, 2022, or five years from first appointment as an executive officer. In the case of an existing executive officer being appointed as our Chief Executive Officer, the “Ownership Achievement Date” is the later of August 2, 2020, or five years from the date of such appointment. Until the guideline is achieved, each Named Executive Officer is encouraged to retain at least 10% of the net shares (defined below) obtained through our stock incentive plans. For this purpose, the “net shares” are the number of shares received from the exercise of stock options or the vesting of restricted stock or restricted stock unit awards, less the number of shares the Named Executive Officer sells to cover the exercise price of stock options or sells or has withheld to pay taxes.

 

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As of December 29, 2018, each of our Named Executive Officers had satisfied his or her applicable stock ownership requirement.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (“Code”) generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to certain executive officers. While the Compensation Committee may consider the deductibility of awards as one factor in determining our executive compensation, it also considers other factors in making its executive compensation decisions and retains the flexibility to grant awards or pay compensation the Compensation Committee determines to be consistent with its goals for our executive compensation program, even if the awards may not be deductible for tax purposes.

The Tax Cuts and Jobs Act repealed the exception to the deductibility limit that was previously available for “qualified performance-based compensation” (including stock option grants, performance-based cash bonuses and performance-based equity awards, such as the PRSUs) effective for taxable years beginning after December 31, 2017. As a result, any compensation paid to certain of our Named Executive Officers for taxable years beginning after December 31, 2017 in excess of $1 million will be non-deductible unless it qualifies for transition relief afforded by the Tax Cuts and Jobs Act to compensation payable pursuant to certain binding arrangements in effect on November 2, 2017.

 

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COMPENSATION AND LEADERSHIP RESOURCES COMMITTEE’S REPORT

The Compensation and Leadership Resources Committee 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 this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 29, 2018.

COMPENSATION AND LEADERSHIP RESOURCES COMMITTEE

Nora Denzel, Chair

Mark Durcan

Abhi Talwalkar

 

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COMPENSATION POLICIES AND PRACTICES

In February 2019, 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 us.

In reaching this conclusion, the Compensation Committee, with the assistance of management, assessed our executive and broad-based compensation and benefits programs to determine if any of them created undesired or excessive risks of a material nature. The assessment included (i) a review of our 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 our business strategy and objectives. Although the Compensation Committee reviewed all of our 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 the EIP, Annual Incentive Plan, Long-Term Incentive Plan (“LTI”), Sales Incentive Plan and 2004 Plan.

In performing the assessment and reaching its conclusion, the Compensation Committee noted the following factors that the Compensation Committee believes may 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 the EIP, Annual Incentive Plan, LTI and Sales Incentive Plan have variability of payout, the Compensation Committee believes that any potential risks associated with such plans are controlled or mitigated by one or more of the following: (i) the performance goals being multi-dimensional (i.e., adjusted non-GAAP net income, adjusted non-GAAP free cash flow, revenue), thereby increasing the range of performance over which incentives are paid, (ii) the performance goals being aligned with our business objectives and being quantitative financial measures, (iii) the use of sliding payout scales, with the payouts in certain instances being linearly interpolated for performance falling between the performance levels set by the Compensation Committee, (iv) the ability of the Compensation Committee and/or management to exercise discretion to reduce payouts, (v) the existence of multiple internal controls and approval processes that are intended to prevent manipulation of outcomes by any employee, including the Named Executive Officers and (vi) the incentive opportunities being capped;

 

   

Although the grant of equity awards under the 2004 Plan could motivate our employees to, among other things, focus on increasing our short-term stock price rather than the creation of long-term stockholder value, the Compensation Committee believes that potential risks are controlled or mitigated by one or more of the following: (i) awarding a combination of PRSUs, RSUs and stock options, (ii) three-year vesting and performance period for PRSUs awarded in fiscal 2018, (iii) the vesting provisions of stock options and RSUs occurring over multi-year periods, (iv) caps on performance-based compensation opportunities, and (v) our stock ownership guidelines for our executive officers. In addition, we prohibit our employees, including Named Executive Officers, from engaging in hedging transactions in our securities; and

 

   

We have implemented claw-back provisions and policies, as described in more detail in “Compensation Discussion and Analysis” above.

 

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EXECUTIVE COMPENSATION

The following table shows, for fiscal 2018, 2017 and 2016, the compensation for our Named Executive Officers. Mr. Wolin was not a Named Executive Officer in 2017 or 2016 but became a Named Executive Officer in 2018.

For information on the role of each compensation component within the total compensation packages of the Named Executive Officers, see “Compensation Discussion and Analysis—Fiscal 2018 Compensation Elements.”

2018 SUMMARY COMPENSATION TABLE

 

               
Name and Principal Position Year

Salary

($)

Bonus

($)

Stock

Awards

($)(1)

Option

Awards

($)(2)

Non-Equity

Incentive Plan

Compensation

($)(3)

All Other

Compensation

($)(4)

Total ($)

 

  Lisa T. Su

 

             

President and Chief Executive Officer

 

 

 

 

2018

 

 

 

 

 

 

 

961,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,622,801

 

 

 

 

 

 

 

2,500,318

 

 

 

 

 

 

 

1,241,625

 

 

 

 

 

 

 

30,591

 

 

 

 

 

 

 

13,356,392

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

924,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,980,740

 

 

 

 

 

 

 

1,897,770

 

 

 

 

 

 

 

1,076,700

 

 

 

 

 

 

 

14,614

 

 

 

 

 

 

 

10,894,821

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

886,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,983,393

 

 

 

 

 

 

 

2,408,120

 

 

 

 

 

 

 

432,656

 

 

 

 

 

 

 

14,266

 

 

 

 

 

 

 

11,724,775

 

 

 

 

  Devinder Kumar

 

 

             

Senior Vice President, Chief Financial Officer and Treasurer

 

 

 

 

2018

 

 

 

 

 

 

 

557,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,011,962

 

 

 

 

 

 

 

583,407

 

 

 

 

 

 

 

479,450

 

 

 

 

 

 

 

13,859

 

 

 

 

 

 

 

3,645,882

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

539,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,745,181

 

 

 

 

 

 

 

474,441

 

 

 

 

 

 

 

419,040

 

 

 

 

 

 

 

13,615

 

 

 

 

 

 

 

3,191,892

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

530,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,280,965

 

 

 

 

 

 

 

688,034

 

 

 

 

 

 

 

172,250

 

 

 

 

 

 

 

13,337

 

 

 

 

 

 

 

3,684,591

 

 

 

 

  Forrest E. Norrod

 

 

             

Senior Vice President and General Manager, Datacenter and Embedded Solutions Business Group

 

 

 

 

2018

 

 

 

 

 

 

 

539,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,916,165

 

 

 

 

 

 

 

555,623

 

 

 

 

 

 

 

464,400

 

 

 

 

 

 

 

21,467

 

 

 

 

 

 

 

3,497,270

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

530,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,745,181

 

 

 

 

 

 

 

474,441

 

 

 

 

 

 

 

411,280

 

 

 

 

 

 

 

16,698

 

 

 

 

 

 

 

3,177,605

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

530,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,280,965

 

 

 

 

 

 

 

688,034

 

 

 

 

 

 

 

172,250

 

 

 

 

 

 

 

13,337

 

 

 

 

 

 

 

3,684,591

 

 

 

 

  Mark D. Papermaster

 

             

Chief Technology Officer and Executive Vice President, Technology and Engineering

 

 

 

 

2018

 

 

 

 

 

 

 

587,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,874,245

 

 

 

 

 

 

 

833,434

 

 

 

 

 

 

 

505,250

 

 

 

 

 

 

 

13,938

 

 

 

 

 

 

 

4,813,882

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

611,328

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

1,963,340

 

 

 

 

 

 

 

533,748

 

 

 

 

 

 

 

436,500

 

 

 

 

 

 

 

16,702

 

 

 

 

 

 

 

3,561,618

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

549,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,280,965

 

 

 

 

 

 

 

688,034

 

 

 

 

 

 

 

178,750

 

 

 

 

 

 

 

13,390

 

 

 

 

 

 

 

3,711,133

 

 

 

 

  Harry A. Wolin

 

 

             

Senior Vice President, General Counsel
and Corporate Secretary

 

 

 

 

2018

 

 

 

 

 

 

 

509,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,437,113

 

 

 

 

 

 

 

416,717

 

 

 

 

 

 

 

438,600

 

 

 

 

 

 

 

13,732

 

 

 

 

 

 

 

2,815,772

 

 

 

 

  James R. Anderson

 

 

             

Former Senior Vice President and General Manager, Computing and Graphics Business Group

 

 

 

 

2018

 

 

 

 

 

 

 

420,097

 

 

(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

2,011,962

 

 

 

 

 

 

 

583,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,638

 

 

 

 

 

 

 

3,035,104

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

514,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,745,181

 

 

 

 

 

 

 

474,441

 

 

 

 

 

 

 

399,640

 

 

 

 

 

 

 

16,846

 

 

 

 

 

 

 

3,150,528

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

499,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,280,965

 

 

 

 

 

 

 

688,034

 

 

 

 

 

 

 

162,500

 

 

 

 

 

 

 

22,707

 

 

 

 

 

 

 

3,654,196

 

 

 

 

(1)

Amounts shown in the column do not reflect dollar amounts actually received by the Named Executive Officers. Instead, these amounts represent the aggregate grant date fair value of the RSUs and PRSUs granted in the year indicated computed in accordance with ASC Topic 718. The grant date fair value (which is sometimes referred to in this proxy statement as the “accounting value”) is used to recognize the accounting expense for long-term equity awards. For a discussion of the assumptions made in the valuations reflected in this column, see Note 16 of the Notes to Consolidated Financial Statements in our Annual Report. For fiscal 2018, the amounts shown include the grant date fair value of the PRSUs awarded in fiscal 2018 to each Named Executive Officer, as set forth in the table below. The grant date fair value of the PRSUs is determined using a Monte-Carlo simulation model and based upon a discounted cash flow analysis of the probability-weighted payoffs of a share-based payment assuming a variety of possible stock price paths and represents the estimate of the most probable aggregate compensation cost to be recognized over the requisite service period determined as of the grant date under ASC Topic 718.

The aggregate accounting values of the PRSUs granted to our Named Executive Officers in fiscal 2018 are as follows:

 

       
Named Executive Officer Grant Date

Shares

Underlying

PRSUs at Target

(100%) (#)

Shares

Underlying

PRSUs at Maximum

(250%) (#)(7)

Grant Date

Fair Value

($)(8)

       

 

Lisa T. Su

 

 

 

8/9/2018

 

 

 

 

261,932

 

 

 

 

654,830

 

 

 

 

6,121,351

 

 

       

 

Devinder Kumar

 

 

 

8/9/2018

 

 

 

 

61,117

 

 

 

 

152,792

 

 

 

 

1,428,304

 

 

       

 

Forrest E. Norrod

 

 

 

8/9/2018

 

 

 

 

58,207

 

 

 

 

145,517

 

 

 

 

1,360,298

 

 

       

 

Mark D. Papermaster

 

 

 

8/9/2018

 

 

 

 

87,310

 

 

 

 

218,275

 

 

 

 

2,040,435

 

 

       

 

Harry A. Wolin

 

 

 

8/9/2018

 

 

 

 

43,655

 

 

 

 

109,137

 

 

 

 

1,020,217

 

 

       

 

James R. Anderson

 

 

 

8/9/2018

 

 

 

 

61,117

 

 

 

 

152,792

 

 

 

 

1,428,304

 

 

 

(2)

Amounts shown in this column do not reflect dollar amounts actually received by the Named Executive Officers. Instead, the amounts represent the aggregate grant date fair value of option awards granted in the year indicated computed in accordance with ASC Topic 718. For a

 

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2018 Summary Compensation Table (continued)

 

 

 

  discussion of the assumptions made in the valuations reflected in this column, see Note 16 of the Notes to Consolidated Financial Statements in our Annual Report.
(3)

Amounts represent cash performance bonuses paid under the EIP for fiscal 2018. See “Compensation Discussion and Analysis—Fiscal 2018 Compensation Elements—Annual Cash Performance Bonuses” above for more information about these payments, including the pre-established financial measures under the EIP.

(4)

The following table sets forth the components of the amounts presented in the All Other Compensation column for fiscal 2018:

 

         
Named Executive Officer

Matching

Contributions

to 401(k)

($)

Life Insurance

Premiums

Paid

By Company

($)

Spousal Travel at
Company  Request(9)

($)

Total

($)

       

 

  Lisa T. Su

 

 

 

 

 

12,375

 

 

 

 

 

 

 

2,556

 

 

 

 

 

 

 

15,660

 

 

 

 

 

 

 

30,591

 

 

 

       

 

  Devinder Kumar

 

 

 

 

 

12,375

 

 

 

 

 

 

 

1,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,859

 

 

 

       

 

  Forrest E. Norrod

 

 

 

 

 

12,375

 

 

 

 

 

 

 

1,436

 

 

 

 

 

 

 

7,656

 

 

 

 

 

 

 

21,467

 

 

 

       

 

  Mark D. Papermaster

 

 

 

 

 

12,375

 

 

 

 

 

 

 

1,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,938

 

 

 

       

 

  Harry A. Wolin

 

 

 

 

 

12,375

 

 

 

 

 

 

 

1,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,732

 

 

 

       

 

  James R. Anderson

 

 

 

 

 

10,417

 

 

 

 

 

 

 

986

 

 

 

 

 

 

 

8,235

 

 

 

 

 

 

 

19,638

 

 

 

 

(5)

For 2017, this amount includes $49,314 in connection with the payout of accrued vacation time due to Mr. Papermaster’s relocation from California to Texas per Company policy.

(6)

For 2018, this amount includes $47,596 in connection with the payout of accrued vacation time due to Mr. Anderson’s resignation in September 2018.

(7)

The maximum number of shares that may be earned is capped at the number equal to (i) eight times the target value of the Named Executive Officer’s PRSU award, divided by (ii) the closing price of our common stock on the last day of the three-year performance period ending on August 9, 2021, or the date of a change of control of the Company, if earlier. See “Compensation Discussion and Analysis—Fiscal 2018 Compensation Elements—Long-Term Equity Awards” above for more information.

(8)

In accordance with Instruction 3 to Item 402(c)(2)(v), the grant date fair values of the PRSUs granted to our Named Executive Officers in fiscal 2018 assuming that the highest level of performance conditions (within the meaning of ASC Topic 718) will be achieved are $7,374,695 for Dr. Su, $1,720,749 for Mr. Kumar, $1,638,818 for Mr. Norrod, $2,458,213 for Mr. Papermaster, $1,229,107 for Mr. Wolin and $1,720,749 for Mr. Anderson.

(9)

Amounts represent the direct costs of commercial airline flights and other travel-related expenses paid by the Company for the Named Executive Officer’s spouse, who accompanied such Named Executive Officer on business-related travel where the spouse’s participation was requested by the Company.

 

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2018 NONQUALIFIED DEFERRED COMPENSATION

The following table shows information for the Named Executive Officers who had accounts in the Deferred Income Account Plan (the “DIA”), a non-qualified deferred compensation plan, in fiscal 2018. Except for amounts deferred and vested prior to January 1, 2005, the DIA is subject to Section 409A of the Code.

 

         

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

($)

 

 
         

 

Devinder Kumar

 

   

 

 

 

 

   

 

 

 

 

   

 

(85,986

 

 

   

 

(81,349

 

 

   

 

1,655,140

 

 

 

         

 

Mark D. Papermaster

 

   

 

 

 

 

   

 

 

 

 

   

 

(1,138

 

 

   

 

 

 

 

   

 

23,506

 

 

 

         

 

Harry A. Wolin

 

   

 

 

 

 

   

 

 

 

 

   

 

(82,110

 

 

   

 

 

 

 

   

 

735,725

 

 

 

         

 

James R. Anderson

 

   

 

132,561

 

 

 

   

 

 

 

 

   

 

(13,721

 

 

   

 

 

 

 

   

 

208,662

 

 

 

 

(1)

Amount is included in the “Salary” column for fiscal 2018 of the “2018 Summary Compensation Table” above.

(2)

Represents the net amounts debited from the DIA accounts of Messrs. Kumar, Anderson and Papermaster 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 or preferential earnings (within the meaning of 17 CFR Section 229.402(c)(2)(viii)), and as a result are not reported in the “2018 Summary Compensation Table” above.

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 discretionary contribution to the participant’s account if his or her annual base salary, minus his or her Section 401(k) contribution before the deferral, is greater than the annual compensation limit for Section 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 or (ii) a discretionary percentage of the participant’s base salary in excess of the eligible Section 401(k) compensation limit for the year minus the participant’s Section 401(k) contributions. For fiscal 2018, our discretionary contribution percentage under option (ii) above was 4.5%. 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 as of 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. For 2018, we utilized investment funds in an array of asset classes, substantially aligned to those offered under our Section 401(k) plan. We have placed assets in mutual funds held in a Rabbi trust established for the DIA. For fiscal 2018, the investment return credited to Messrs. Kumar’s, Anderson’s, Papermaster’s and Wolin’s DIA accounts was -4.9%, -7.5%, -6.8% and -10.0%, respectively, based on their investment elections for their respective DIA accounts. This investment return was calculated by taking the aggregate loss in fiscal 2018 and dividing it by the aggregate balance as of the beginning of fiscal 2018.

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 or her deferral election, he or 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 or 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 of the DIA. An unscheduled payment may also be made, subject to the terms of the DIA.

 

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OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END

The following table shows all outstanding equity awards held by the Named Executive Officers as of December 29, 2018. The equity awards reported in the Option Awards column consist of non-qualified stock options. The equity awards in the Stock Awards column consist of RSUs and PRSUs.

 

     Option Awards     Stock Awards  
Name  

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)

 

 

Lisa T. Su

 

 
                                         

 

 

 

 

115,026(2)

 

 

 

 

 

 

 

 

 

2,049,763

 

 

 

 

               
                                         

 

 

 

 

98,619(3)

 

 

 

 

 

 

 

 

 

1,757,391

 

 

 

 

               
                                         

 

 

 

 

130,966(4)

 

 

 

 

 

 

 

 

 

2,333,814

 

 

 

 

               
                                         

 

 

 

 

862,510(5)

 

 

 

 

 

 

 

 

 

15,369,928