Summary
Advanced Micro Devices, Inc. (AMD) has filed an 8-K report detailing an amended and restated employment agreement with its Chief Executive Officer, Dr. Hector de J. Ruiz. The primary driver for this amendment is to ensure compliance with or exemption from Section 409A of the Internal Revenue Code, which governs deferred compensation. This filing is crucial for investors as it clarifies the terms of Dr. Ruiz's compensation, particularly concerning his base salary, bonus opportunities, and long-term incentive awards. The agreement also addresses potential implications for termination benefits if Dr. Ruiz is classified as a "specified employee" under Section 409A, outlining potential payment delays.
Key Highlights
- 1AMD has amended and restated its CEO's employment agreement (Dr. Hector de J. Ruiz) dated December 11, 2007.
- 2The primary purpose of the amendment is to comply with or obtain an exemption from Section 409A of the Internal Revenue Code regarding deferred compensation.
- 3Dr. Ruiz's current annual base salary is confirmed at $1,124,000.
- 4Annual bonus and long-term incentive awards for Dr. Ruiz are capped at an aggregate maximum of $10 million per fiscal year.
- 5The agreement clarifies that acceleration of vesting provisions will apply to all equity awards except for performance vesting awards.
- 6Dr. Ruiz has an option to receive his annual retirement benefit as a single lump sum payment if elected by December 31, 2007.
- 7Termination benefits for Dr. Ruiz may be delayed for six months following termination if he is deemed a "specified employee" under Section 409A.
Frequently Asked Questions
The main reason for the amendment is to ensure that certain payments to be made under the original employment agreement comply with or are exempt from the requirements of Section 409A of the Internal Revenue Code, which deals with deferred compensation rules.
The amended agreement reflects Dr. Ruiz's current annual base salary of $1,124,000. His annual bonus opportunity and long-term incentive plan awards are capped at an aggregate maximum of $10 million per fiscal year, as per the terms of the Long Term Incentive Plan.
If Dr. Ruiz is considered a "specified employee" under Section 409A at the time of his termination, any termination benefits will not be paid until six months after his termination date, or upon his death, whichever occurs first. The company is cooperating to ensure benefits comply with Section 409A.
Yes, under the amended agreement, Dr. Ruiz has the option to elect to receive his annual Retirement Benefit in a single lump sum payment, provided he makes this election by December 31, 2007.