8-K/ALeadership ChangesExhibits & Filings

ADVANCED MICRO DEVICES INC 8-K/A Report, Executive Changes (Oct 14, 2014)

Filed October 14, 2014For Securities:AMD

Summary

This Form 8-K/A filing from Advanced Micro Devices, Inc. (AMD) provides crucial details regarding the separation agreement for former CEO Rory P. Read and the employment agreement for new CEO Dr. Lisa T. Su. Following Mr. Read's departure on October 8, 2014, the company finalized his separation terms, which include a $5 million cash payment, accelerated vesting of certain stock options and RSUs, and continued salary and benefits until December 31, 2014. He is also subject to non-compete and non-solicitation clauses. Concurrently, the agreement for Dr. Su, who has taken over as President and CEO, outlines her compensation package. This includes an $850,000 base salary, with a target annual bonus of at least 150% of base salary starting in 2015. She is also set to receive significant equity awards for fiscal year 2014, comprising performance-based and time-based RSUs, and stock options, totaling approximately $7 million in grant date fair value. The filing also details severance provisions for Dr. Su in case of termination without cause or constructive termination, including enhanced equity vesting and cash payments.

Key Highlights

  • 1Rory P. Read's separation agreement includes a $5 million cash payment and accelerated vesting of a substantial portion of his unvested stock options and RSUs.
  • 2Mr. Read will continue to receive his salary and benefits through December 31, 2014, with employment formally ending on that date.
  • 3Dr. Lisa T. Su's employment agreement as CEO includes an $850,000 base salary and a target annual bonus of at least 150% of base salary from 2015 onwards.
  • 4Dr. Su is set to receive significant equity compensation for fiscal year 2014, with an aggregate grant date fair value of approximately $7 million, split between performance-based RSUs, time-based RSUs, and stock options.
  • 5The separation agreement for Mr. Read includes a 2-year non-compete and non-solicitation clause.
  • 6Dr. Su's employment agreement outlines severance packages for termination without cause or constructive termination, including accelerated vesting of equity and cash payments equivalent to two times her base salary.
  • 7Enhanced severance terms for Dr. Su are in place if termination occurs in proximity to a Change of Control event, including acceleration of all equity and higher cash severance multiples.

Frequently Asked Questions

Rory P. Read will receive a $5 million lump-sum cash payment and continued salary and benefits until December 31, 2014. Additionally, a significant portion of his unvested stock options and RSUs will become fully vested on his termination date. Some stock options and RSUs granted on August 12, 2014, will be partially forfeited, while performance-based RSUs will be earned based on actual performance.

Dr. Lisa T. Su's employment agreement establishes an annual base salary of $850,000. Beginning January 1, 2015, she is eligible for an annual cash performance bonus with a target of at least 150% of her base salary. Her 2014 bonus will be prorated based on her salary for different periods within the year.

For the 2014 fiscal year, Dr. Su will receive an annual equity award valued at approximately $5 million. This award consists of 50% performance-based RSUs, 25% time-based RSUs, and 25% stock options. Additionally, she will receive a promotional equity award of approximately $2 million, structured similarly (50% performance-based RSUs, 25% time-based RSUs, 25% stock options).

In the event of an Involuntary Termination Without Cause or Constructive Termination, Dr. Su would receive her earned salary and benefits, an additional 12 months of service credit for vesting of equity awards granted after October 8, 2014 (and 24 months for awards granted before), a lump-sum cash payment equal to two times her base salary, and 24 months of COBRA premium reimbursement. Severance is enhanced in the event of a Change of Control.