What is the main purpose of the new incentive plans?

The main purpose of the 2005 Long Term Incentive Plan (LTIP) and the 2005 Annual Incentive Plan is to provide performance-based compensation to officers and employees to align their interests with the company's strategic goals and reward them for achieving specific financial and operational objectives.

How are awards determined under the Long Term Incentive Plan (LTIP)?

Under the LTIP, awards are generally based on three-year performance cycles. The performance measures are determined by the Compensation Committee and for cycles beginning January 1, 2005, they include the Company's relative revenue growth compared to a selected group of semiconductor companies, and the Company's average operating income margin. Awards can be in the form of restricted stock units or cash, with payouts capped at 200% of the target award value.

What are the performance criteria for the Annual Incentive Plan?

For 2005 and thereafter, the Annual Incentive Plan bases awards on Committee-approved performance measures for two semi-annual periods each fiscal year. These measures include the Company's revenue and operating profit, as well as individual performance objectives. Incentive Awards are paid in cash and are capped at three times the participant's target Incentive Award amount.

Were any specific awards granted upon the approval of these plans?

Yes, on October 12, 2005, the Compensation Committee approved the grant of the maximum restricted stock units that can be earned under the LTIP for two 2005 award cycles to several officers. The vesting and realization of these restricted stock units are contingent on the achievement of specific performance levels detailed within the LTIP.

AMD 8-K: Material Agreements

Summary

Advanced Micro Devices, Inc. (AMD) filed an 8-K on October 13, 2005, reporting the Compensation Committee's approval of the 2005 Long Term Incentive Plan (LTIP) and the 2005 Annual Incentive Plan, both effective January 1, 2005. These new plans replace existing bonus structures for officers. The LTIP is designed for multi-year performance cycles, with awards based on relative revenue growth and average operating income margin compared to a peer group of semiconductor companies. The Annual Plan focuses on shorter-term incentives tied to semi-annual performance, based on revenue, operating profit, and individual objectives. The filing also details specific restricted stock unit grants awarded to certain officers under the LTIP for performance cycles spanning 2005-2006 and 2005-2007, with payout dependent on achieving specified performance levels.

Key Highlights

1AMD approved new 2005 Long Term Incentive Plan (LTIP) and 2005 Annual Incentive Plan, effective January 1, 2005.
2These plans replace previous bonus plans for officers.
3LTIP performance metrics include relative revenue growth and average operating income margin over three-year cycles.
4Annual Plan performance metrics are based on semi-annual revenue, operating profit, and individual objectives.
5Specific grants of restricted stock units under the LTIP were approved for officers for award cycles ending in 2006 and 2007.
6Award payouts for both plans are contingent upon meeting defined performance goals and continued employment.
7Grants to Dr. Hector Ruiz are pending Board approval of an amendment to his employment agreement.

ADVANCED MICRO DEVICES INC 8-K Report, Material Agreement (Oct 14, 2005)

Summary

Key Highlights

Frequently Asked Questions