AMD 2009 Annual Report Download - page 129

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The expected term of employee stock options represents the weighted-average period the stock options are
expected to remain outstanding and is a derived output of the lattice-binomial model. The expected term of
employee stock options is impacted by all of the underlying assumptions and calibration of the lattice-binomial
model. The lattice-binomial model assumes that employees’ exercise behavior is a function of the option’s
remaining vested term and the extent to which the option is in-the-money. The lattice- binomial model estimates
the probability of exercise as a function of these two variables based on the past ten year history of exercises,
post-vesting cancellations, and outstanding options on all option grants other than pre-vesting forfeitures made
by the Company.
The following table summarizes stock option activity and related information:
Year Ended
December 26, 2009
Year Ended
December 27, 2008
Year Ended
December 29, 2007
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
(In thousands except share price)
Options:
Outstanding at beginning of
year ....................... 58,145 $11.97 43,485 $16.61 47,663 $16.50
Granted ...................... 10,410 $ 4.24 23,724 $ 4.38 3,293 $14.09
Canceled ..................... (25,308) $14.20 (8,915) $14.53 (4,459) $18.30
Exercised .................... (813) $ 3.09 (149) $ 5.85 (3,012) $ 9.67
Outstanding at end of year ........... 42,434 $ 8.65 58,145 $11.97 43,485 $16.61
Exercisable at end of year ............ 24,493 $12.04 33,429 $16.77 35,091 $16.44
As of December 26, 2009, the weighted average remaining contractual life of stock options outstanding was
4.21 years and their aggregate intrinsic value was $164 million. As of December 26, 2009, the weighted average
remaining contractual life of stock options exercisable was 3.20 years and their aggregate intrinsic value was
$57 million. The total intrinsic value of stock options exercised for 2009, 2008 and 2007 was $5 million, $0.2
million and $18 million.
Restricted Stock Units and Awards. Restricted stock and restricted stock units vest in accordance with the
terms and conditions established by the Compensation Committee of the Board of Directors, and are based either
on continued service or continued service and performance. The cost of restricted stock units and restricted stock
awards is determined using the fair value of the Company’s common stock on the date of the grant, and the
compensation expense is recognized over the service period.
Certain Company employees have been granted performance-based restricted stock and performance-based
restricted stock units. The number of shares ultimately received under these awards depends on actual
performance against specified performance goals. The performance period is generally one to three years from
the date of grant.
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