AMD 2011 Annual Report Download - page 114

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. Effective 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 stock 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.
Market-based restricted stock units and stock options. During 2011, the Company granted restricted stock
units and stock options with both a market condition and a service condition (market-based restricted stock units
and stock options) to the Company’s new President and Chief Executive Officer, whom the Company hired in
August 2011. The market-based condition for these awards requires that AMD common stock maintains a
weighted average closing price during the three-year vesting period of equal to or greater than $11.00 per share
over any 30-day period. Provided the market-based condition is satisfied and our President and CEO remains an
employee of the Company, the grants will vest in three equal annual installments on the applicable vesting date.
The Company estimated the fair value of market-based restricted stock units and stock options using a Monte
Carlo simulation model on the date of grant. As of December 31, 2011, there were 287,000 market-based
restricted stock units and 739,000 market-based stock options outstanding with a grant date fair value of $1.3
million and $2.0 million respectively.
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