AMD 2007 Annual Report Download - page 139

Table of Contents
The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is a derived
output of the lattice-binomial model. The expected term of employee stock options is impacted by all of the underlying assumptions and calibration of the
lattice-binomial model. The lattice-binomial model assumes that employees’ exercise behavior is a function of the option’s remaining vested term and the extent
to which the option is in-the-money. The lattice-binomial model estimates the probability of exercise as a function of these two variables based on the past ten
year history of exercises, post-vesting cancellations, and outstanding options on all option grants other than pre-vesting forfeitures made by the Company.
The following table summarizes stock option activity and related information for the fiscal years presented:
Year Ended
December 29, 2007
Year Ended
December 31, 2006
Year Ended
December 25, 2005
Number
of
Shares
Weighted-
Average
Exercise
Price
Number
of
Shares
Weighted-
Average
Exercise
Price
Number
of
Shares
Weighted-
Average
Exercise
Price
(In thousands except share price)
Options:
Outstanding at beginning of year 47,663 $ 16.50 45,928 $ 15.14 53,684 $ 13.58
Granted 3,293 $ 14.09 18,985 $ 17.30 8,145 $ 18.42
Canceled (4,459) $ 18.30 (1,779) $ 22.28 (1,063) $ 15.22
Exercised (3,012) $ 9.67 (15,471) $ 12.77 (14,838) $ 11.31
Outstanding at end of year 43,485 $ 16.61 47,663 $ 16.50 45,928 $ 15.14
Exercisable at end of year 35,091 $ 16.44 35,200 $ 15.66 36,832 $ 14.94
As of December 29, 2007, the weighted average remaining contractual life of stock options outstanding was 3.57 years and their aggregate intrinsic value
was $3 million. As of December 29, 2007, the weighted average remaining contractual life of stock options exercisable was 3.20 years and their aggregate
intrinsic value was $3 million. The total intrinsic value of stock options exercised for 2007, 2006 and 2005 was $18 million, $341 million, and $161 million.
Restricted Stock Units and Awards. Restricted stock and restricted stock units vest in accordance with the terms and conditions established by the
Compensation Committee of the Board of Directors, and are based either on continued service or continued service and performance. The cost of restricted stock
units and restricted stock awards is determined using the fair value of the Company’s common stock on the date of the grant, and the compensation expense is
recognized over the service period.
Certain Company employees have been granted performance-based restricted stock and performance-based restricted stock units. The number of shares
ultimately received under these awards depends on actual performance against specified performance goals. The performance period is generally one to three
years from the date of grant.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008