AMD 2010 Annual Report Download - page 123

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 as well as equity
compensation plans that the Company assumed as part of its acquisition of ATI. Reserved shares that were
available for grant under the Company’s prior equity compensation plans were consolidated into the 2004 Plan
but none of the reserved shares from the ATI 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 the Company’s common stock on the date
of grant. Full value awards are awards granted at less than the fair market value of the Company’s 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 the Company’s 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 the Company’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% of the fair market value of the Company’s 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 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 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 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.
Prior to May 7, 2009, restricted stock units based on continued service may not fully vest for three years from the
date of grant. As of May 7, 2009, restricted stock units based on continued service may fully vest with no
minimum time requirements. Restricted stock units that are performance based generally do not vest for at least
one year from the date of grant.
Option Exchange. In June 2009, the Company launched a tender offer to exchange certain outstanding
stock options with an exercise price greater than $6.34 per share, a grant date on or before June 28, 2008 and an
expiration date after July 27, 2010, held by eligible employees for replacement options to be granted under the
2004 Plan (the Option Exchange). The Option Exchange expired on July 27, 2009. As a result, employees
tendered options to purchase 14.6 million shares of common with a weighted-average exercise price of $14.70
per share, and the Company cancelled and replaced those options on July 27, 2009 with options to purchase
4 million shares of common stock with an exercise price of $3.80 per share, which was the closing price of the
Company common stock on the New York Stock Exchange on July 27, 2009. The Option Exchange resulted in
an incremental stock-based compensation charge of approximately $1 million. This incremental charge along
with unamortized expenses associated with the cancelled options are being recognized over the new vesting
periods of the replacement options which range from one to two years.
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