AMD 2006 Annual Report Download - page 282

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
million for stock options during the years ended December 31, 2006 and December 25, 2005, respectively. The Company’s outstanding liability to AMD for
stock option reimbursements as of December 25, 2005 was approximately $17.1 million. On November 21, 2006, the Company closed a public offering of its
Class A common stock held by AMD and Fujitsu. As a result of the offering, AMD’s ownership interest in the Company dropped below 30 percent and, by their
terms all unvested AMD stock options and AMD RSU awards held by the Company’s employees were forfeited and cancelled. The Company wrote off its
remaining liability to AMD of approximately $9.2 million against additional paid-in capital, a component of stockholders’ equity, because the original agreed
upon value of these awards to be paid to AMD was recorded as a reduction of contributed capital, a component of stockholders’ equity. In addition, upon
cancellation of the options in the fourth quarter of fiscal 2006, the Company reversed approximately $6 million of previously recorded compensation expense
associated with these cancelled awards, which had been recorded using variable fair value accounting pursuant to ETIF Issues 98-16 and 00-12.
Spansion Stock-Based Incentive Compensation Plans
Plan Description
As of December 31, 2006, the Company had one stock-based incentive plan, the 2005 Equity Incentive Plan, under which 9,500,000 shares of Class A
common stock have been reserved and made available for issuance in the form of equity awards, including incentive and nonqualified stock options and RSU
awards. The 2005 Equity Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors, and that committee has the
authority to, among other things, grant awards, delegate certain of its powers, accelerate or extend the vesting or exercisability of awards and determine the date
of grant of an award. Shares that are subject to or underlie awards that expire or for any reason are cancelled, terminated or forfeited, or fail to vest will again be
available for grant under the 2005 Equity Incentive Plan. The maximum term of any stock option granted under the 2005 Equity Incentive Plan is 10 years from
the date of grant and the exercise price of each option is determined under the applicable terms and conditions as approved by the Compensation Committee.
The 2005 Equity Incentive Plan provides awards that may be granted to an officer or employee, a consultant or advisor, or a non-employee director of the
Company or its subsidiaries; provided that, the incentive stock options granted under the 2005 Equity Incentive Plan may only be granted to employees of the
Company or its subsidiaries. The exercise price of each incentive stock option is required to be not less than 100 percent of the fair market value of the
Company’s Class A common stock on the date of grant (not less than 110 percent if such stock option is granted to a person who has more than 10 percent of the
total voting power of all classes of the Company’s stock).
The 2005 Equity Incentive Plan provides for payment of the exercise price of options in the form of, among other things, cash, services rendered, notice
and third party payments as authorized by the Compensation Committee, delivery of shares of common stock and cashless exercise with a third party who
provides financing for the purposes of the purchase or exercise of the award.
The Compensation Committee may, in its discretion, accelerate vesting of awards under the plan under certain circumstances, including:
• the acquisition by a person other than AMD or its affiliates of more than 33 percent of either the then outstanding shares of the Company’s common
stock or the combined voting power entitled to vote in the election of directors, except for any such acquisition by Fujitsu or its affiliates so long as
such level of ownership is (1) less than AMD’s level of ownership in such securities and (2) not more than 40 percent of the Company’s outstanding
shares of the Company’s common stock or the combined power entitled to vote in the election of directors;
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007