AMD 2013 Annual Report Download - page 106

Stock Options. A stock option is the right to purchase shares of the Company’s common stock at a fixed
exercise price for a fixed period of time. Under the 2004 Plan, nonstatutory and incentive stock options may be
granted. The exercise price of the shares subject to each nonstatutory stock option and incentive stock option
cannot be less than 100% of the fair market value of the Company’s common stock on the date of the grant. The
exercise price of each option granted under the 2004 Plan must be paid in full at the time of the exercise.
Stock Appreciation Rights. Awards of stock appreciation rights may be granted pursuant to the 2004 Plan.
Stock appreciation rights may be granted to employees and consultants. No stock appreciation right may be
granted at less than fair market value of the Company’s common stock on the date of grant or have a term of over
ten years from the date of grant. Upon exercising a stock appreciation right, the holder of such right is entitled to
receive payment from the Company in an amount determined by multiplying (i) the difference between the
closing price of a share of the Company’s common stock on the date of exercise and the exercise price by (ii) the
number of shares with respect to which the stock appreciation right is exercised. The Company’s obligation
arising upon the exercise of a stock appreciation right may be paid in shares or in cash, or any combination
thereof.
Restricted Stock. Restricted stock can be granted to any employee, director or consultant. The purchase
price for an award of restricted stock is $0.00 per share. Restricted stock based on continued service may fully
vest with no minimum time requirements. Restricted stock that is performance based generally may not fully vest
for at least one year from the date of grant.
Restricted Stock Units. Restricted stock units are awards that can be granted to any employee, director or
consultant and that obligate the Company to issue a specific number of shares of the Company’s common stock
in the future if the vesting terms and conditions are satisfied. The purchase price for the shares is $0.00 per share.
Restricted stock units based on continued service may fully vest with no minimum time requirements.
Performance-based Restricted Stock Units. On July 22, 2013, the Company granted 2,450,000
performance-based restricted stock units (the pRSUs) to specified officers of the Company. Each pRSU award
reflects a target number of shares (Target Shares) that may be issued to the award recipient before adjusting
based on the Company’s financial performance and market conditions. The actual number of shares the recipient
receives is determined at the end of the specified performance period based on the actual financial results
achieved by the Company versus certain pre-established Company financial performance goals. Those goals are
AMD’s non-GAAP operating income plus interest expense over an 18-month performance period and total
shareholder return (TSR) relative to the S&P 500 IT Sector over the same 18-month performance period.
Depending on the results achieved during this time, the actual number of shares that a grant recipient receives at
the end of the period may range from 0% to 200% of the Target Shares granted, based on the calculations
described below. Restricted stock units that are performance based generally do not vest for at least one year
from the date of grant.
The non-GAAP operating income plus interest expense goal was established at the inception of the award.
At the end of the performance period, the number of actual shares to be awarded varies between 0%, if
performance is below the minimum level, and 160%, if performance is at or above the maximum level. For
performance between the minimum level and the maximum level, a proportionate percentage between 40% and
160% is applied based on relative performance between the minimum and the maximum levels.
The number of shares to be awarded at the end of the 18 month period is adjusted by a TSR modifier. The
TSR modifier varies between 75% for stock performance at or below the minimum level and 125% at or above
the maximum level. For performance between the minimum level and the maximum level, a proportionate TSR
modifier between 75% and 125% is applied based on relative performance between the minimum and the
maximum levels.
The earned shares vest 50% on June 30, 2015, six months after the performance period, and the remaining
50% on June 30, 2016. Target Shares subject to pRSU awards do not have dividend equivalent rights and do not
have the voting rights of common stock until earned and issued, following the end of the applicable requisite
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