AMD 2005 Annual Report Download - page 116

Table of Contents
NOTE 11: Stock-Based Incentive Compensation Plans
Stock-Based Incentive Program Description. The Company’s stock based incentive programs are intended to attract, retain and motivate highly qualified
employees. On April 29, 2004, the Company’s stockholders approved the 2004 Equity Incentive Plan (the 2004 Plan), which had previously been approved by
our Board of Directors. Stock options available for grant under the Company’s equity compensation plans that were in effect before April 29, 2004, (the Prior
Plans), including those that were not approved by our stockholders, were consolidated into the 2004 Plan. As of April 29, 2004, equity awards are made only
from the 2004 Plan. Under the Company’s Prior Plans key employees generally were, and under the 2004 Plan key employees generally have been, granted
nonqualified stock options (NSOs) to purchase the Company’s common stock. Generally, options vest and become exercisable over a four-year period from the
date of grant and expire five to ten years after the date of grant. Any incentive stock options (ISOs) granted under the Prior Plans or the 2004 Plan have exercise
prices of not less than 100 percent of the fair market value of the common stock on the date of grant. Exercise prices of NSOs ranged from $0.01 to the fair
market value of the common stock on the date of grant.
Under the 2004 Plan, we can also grant up to a total of 9 million shares where the exercise price is less than the fair market value of our common stock on
the date of grant. These types of grants can consist of the following awards:
Restricted Stock. Restricted stock can be granted to any employee or consultant. Restricted stock that vests based on continued service does not fully vest
for three years from the date of grant. Restricted stock that vests based on performance does not vest for at least one year from the date of grant.
Restricted Stock Units. Restricted stock units are awards that obligate us to issue a specific number of shares of our common stock in the future if the
vesting terms and conditions are satisfied. Restricted stock units based on continued service may not vest for three years from the date of grant. Restricted stock
units that are performance based may not vest for at least one year from the date of grant.
Discount Stock Options. Discount stock options may be subject to the same requirements and conditions as are applicable to regular NSOs described
above except that the fixed exercise price may be granted at up to 85 percent of fair market value on the date of grant, if the discount is in lieu of a portion of
salary or cash bonus. Options cannot be exercised until they become vested. Options expire not later than 10 years after the date of grant.
On June 27, 2003, the Company filed a Tender Offer Statement with the SEC and made an offer, which was approved by the Company’s stockholders to
exchange certain stock options to purchase shares of common stock outstanding under eligible option plans and held by eligible employees, for replacement
options to be granted no sooner than six months and one day from the cancellation of the surrendered options. The offer to exchange expired on July 25, 2003.
Options to purchase approximately 19 million shares of the Company’s common stock were tendered for exchange and cancelled on July 28, 2003. On
January 30, 2004, the Company granted options to purchase approximately 12 million shares of the Company’s common stock at an exercise prices which
represented the closing price of the Company’s common stock on that date, in exchange for options cancelled. The Company did not record compensation
expense as a result of the exchange.
See Note 2 and Note 3 for a discussion of the two stock option accelerations which occurred during 2005.
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006