AMD 2014 Annual Report Download - page 104

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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. The Company also can grant performance-based restricted
stock units (the pRSUs). The performance metrics can be financial performance, non-financial performance and/
or market condition.
Financial Performance and Market-based Restricted Stock Units. During 2014 and 2013, the Company
granted 4,108,000 and 2,450,000 restricted stock units, respectively, with the Company’s financial performance,
a market condition and a service condition (financial performance and market-based restricted stock units) to the
Company’s senior executives. Such 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 adjusted non-GAAP operating income plus
interest expense over the performance period and total shareholder return (TSR) relative to the S&P 500 IT
Sector over the same 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 adjusted 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 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 performance 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.
For these pRSUs granted in 2014, the earned shares vest 50% on December 31, 2015, at the end of the
performance period, and the remaining 50% on December 31, 2016. For these pRSUs granted in 2013, 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 these 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 service
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