AMD 2006 Annual Report Download - page 137

Table of Contents
the date of grant. Stock options expire at the times established by the Company’s Compensation Committee of the Board of Directors, but not later than ten years
after the grant date. In addition, unvested shares that are released from or reacquired by the Company from outstanding awards under the 2004 Plan become
available for grant under the 2004 Plan and may be reissued as new awards. The Company also has stock options outstanding under previous equity
compensation plans that were in effect before April 29, 2004. Stock options that were available for grant under these prior equity compensation plans were
consolidated into the 2004 Plan.
Under the 2004 Plan, the Company can grant fair market value awards or full value awards. Fair market value awards are awards granted at or above the
fair market value of our common stock on the date of grant. Full value awards are awards granted at less than the fair market value of our common stock on the
date of grant. Awards can consist of (i) stock options and stock appreciation rights granted at the fair market value of our common stock on the date of grant and
(ii) restricted stock or restricted stock units, as full value awards. Following is a description of the material terms of the awards that may be granted under the
2004 Plan:
Stock Options. A stock option is the right to purchase shares of AMD’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 percent of the fair market value of our 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 AMD
in an amount determined by multiplying (i) the difference between the closing price of a share of our 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. AMD’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 awards 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 not fully vest for three years from the date of grant. Restricted stock that is performance based
may not fully vest for 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 not fully vest for at least three years from the date of grant. Restricted stock units that
are performance based may not fully vest for at least one year from the date of grant.
In conjunction with the adoption of SFAS 123R, the Company reviewed its stock-based incentive programs and decided to issue primarily restricted stock
units in lieu of stock options. In October 2006, the Company completed the acquisition of ATI. In connection with the acquisition, the Company assumed
substantially all issued and outstanding ATI stock options, restricted stock units and other stock-based awards that were outstanding under existing ATI equity
plans as of October 24, 2006 by issuing options to purchase approximately 17.1 million shares of the Company’s common stock and approximately 2.2 million
comparable AMD restricted stock units in exchange. In addition, the Company also assumed certain outstanding ATI restricted stock units which will be settled
in cash upon vesting by issuing approximately 655,000 comparable AMD restricted stock units in exchange. These restricted stock units are accounted for as
liability awards under SFAS 123R.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007