8-K/ALeadership Changes

ADVANCED MICRO DEVICES INC 8-K/A Report, Executive Changes (May 4, 2015)

Filed May 4, 2015For Securities:AMD

Summary

This 8-K/A filing by Advanced Micro Devices, Inc. (AMD) primarily addresses the re-issuance of equity awards to CEO Lisa T. Su, aimed at fully restoring her compensation to pre-rescission levels. Previously, certain performance-based restricted stock units granted in 2014 were voided due to a technical violation of the company's 2004 Equity Incentive Plan regarding per-year share limits. The company opted to rescind these awards to avoid litigation. Following this initial rescission, AMD began a phased approach to return Dr. Su's equity compensation. This filing announces the final step: a grant of 230,364 performance-based restricted stock units. The ultimate number of shares earned will be contingent on both adjusted non-GAAP operating income performance over a two-year period (2014-2015) and AMD's total shareholder return (TSR) relative to the S&P 500 IT Sector. This move signifies the company's intent to ensure Dr. Su's compensation remains aligned with its commitments and market standards.

Key Highlights

  • 1AMD is re-issuing performance-based restricted stock units (PSUs) to CEO Lisa T. Su, totaling 230,364 shares on a target basis.
  • 2These awards are intended to fully restore Dr. Su's equity compensation to levels prior to certain awards being voided in December 2014.
  • 3The initial voiding of awards was due to a technical breach of the company's 2004 Equity Incentive Plan's per-year share limit.
  • 4The number of earned PSUs is subject to achievement of pre-established adjusted non-GAAP operating income targets over a two-year performance period (2014-2015).
  • 5Earned PSUs will also be adjusted based on AMD's Total Shareholder Return (TSR) relative to the S&P 500 IT Sector.
  • 6If AMD's TSR is at or above the 75th percentile, Dr. Su will earn 125% of the initial target; between the 25th and 75th percentile, a proportionate adjustment applies.
  • 7Vesting of earned PSUs occurs in two tranches: 50% upon completion of the performance period and 50% one year later.

Frequently Asked Questions

The initial equity awards granted to Dr. Su in August and October 2014 were voided because they exceeded the per-calendar-year individual share limit stipulated in AMD's 2004 Equity Incentive Plan. The company chose to rescind these awards to avoid potential litigation regarding this technical issue.

This filing announces the final step in AMD's plan to fully restore Dr. Su's equity compensation to the level it was before the prior awards were voided. The company believes the original compensation package was appropriate and aligned with stockholder interests.

The actual number of shares earned will depend on two key performance metrics. First, AMD must achieve certain adjusted non-GAAP operating income targets over a two-year performance period (January 1, 2014, to December 31, 2015). Second, the company's Total Shareholder Return (TSR) over the same period will be compared to the TSR of the S&P 500 IT Sector, potentially adjusting the number of shares awarded upward or downward.

The performance period for these awards began on January 1, 2014, and ends on December 31, 2015. Once the performance period concludes, 50% of the earned units will vest. The remaining 50% will vest on the one-year anniversary of the completion of the performance period.