AMD 2010 Annual Report Download - page 125
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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. The lattice- binomial model estimates the probability of exercise as a function of this
variable 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 outstanding options are assumed to be
exercised at the midpoint of the current date (if vested) or the vesting date (if unvested) and the expiration date.
The following table summarizes stock option activity and related information:
2010 2009 2008
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
Number
of Shares
Weighted-
Average
Exercise
Price
(In millions, except share price)
Options:
Outstanding at beginning of year ...... 42 $ 8.65 58 $11.97 43 $16.61
Granted .......................... 5 $ 7.77 10 $ 4.24 24 $ 4.38
Cancelled ......................... (6) $16.92 (25) $14.20 (9) $14.53
Exercised ......................... (4) $ 3.35 (1) $ 3.09 — $ 5.85
Outstanding at end of year ................ 37 $ 7.77 42 $ 8.65 58 $11.97
Exercisable at end of year ................ 28 $ 8.24 24 $12.04 33 $16.77
As of December 25, 2010, the weighted average remaining contractual life of outstanding stock options was
3.96 years and their aggregate intrinsic value was $91 million. As of December 25, 2010, the weighted average
remaining contractual life of exercisable stock options was 3.42 years and their aggregate intrinsic value was
$74 million. The total intrinsic value of stock options exercised for 2010, 2009 and 2008 was $22 million, $5
million and $0.2 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.
Historically, certain Company employees had been granted performance-based restricted stock and
performance-based restricted stock units. The number of shares ultimately received under these awards depended
on actual performance against specified performance goals. The performance period was generally one to three
years from the date of grant.
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