AMD 2015 Annual Report Download - page 106

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Restricted Stock. Restricted stock 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 Units. Restricted stock units (RSUs) 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.
Performance-based Restricted Stock Units. Performance-based Restricted Stock Units (PRSUs) can be
granted to certain of the Company’s senior executives. The performance metrics can be financial performance,
non-financial performance and/or market condition. Each PRSU award reflects a target number of shares (Target
Shares) that may be issued to an award recipient before adjusting based on the Company’s financial performance,
non-financial performance and/or market conditions. The actual number of shares that a grant recipient receives
at the end of the period may range from 0% to 250% of the Target Shares granted, depending upon the degree of
achievement of the performance target designated by each individual award.
Stock options, stock appreciation rights, restricted stock, RSUs and PRSUs granted after April 29, 2015,
generally may not vest in less than one year following the date of grant.
Valuation and Expense Information
Stock-based compensation expense related to employee stock options, restricted stock and restricted stock
units was allocated in the consolidated statements of operations as follows:
2015 2014 2013
(In millions)
Cost of sales ........................................... $ 3 $ 3 $ 5
Research and development ................................ 36 44 48
Marketing, general, and administrative ....................... 24 34 38
Total stock-based compensation expense, net of tax of $0 ........ $ 63 $ 81 $ 91
During 2015, 2014 and 2013, the Company did not realize any excess tax benefits related to stock-based
compensation and therefore the Company did not record any effects relating to financing cash flows. The
Company did not capitalize stock-based compensation cost as part of the cost of an asset because the cost was
immaterial.
Stock Options. The Company uses the lattice-binomial model in determining the fair value of the
employee stock options.
The weighted-average estimated fair value of employee stock options granted for the years ended
December 26, 2015, December 27, 2014 and December 28, 2013 was $1.02, $1.46 and $1.52 per share,
respectively, using the following weighted-average assumptions:
2015 2014 2013
Expected volatility ..................................... 60.14% 53.36% 59.03%
Risk-free interest rate ................................... 1.29% 1.15% 0.79%
Expected dividends .................................... — % — % — %
Expected life (in years) ................................. 3.91 3.86 3.83
The Company used a combination of the historical volatility of its common stock and the implied volatility
for publicly traded options on the Company’s common stock as the expected volatility assumption required by
the lattice-binomial model. The risk-free interest rate assumption is based upon observed interest rates
100