8-KLeadership Changes

ADVANCED MICRO DEVICES INC 8-K Report, Executive Changes (Aug 11, 2015)

Filed August 11, 2015For Securities:AMD

Summary

This 8-K filing from Advanced Micro Devices (AMD) on August 10, 2015, details significant equity awards granted to its named executive officers. The Compensation and Leadership Resources Committee and the Board of Directors approved these awards on August 5th and 6th, 2015, respectively. These awards are designed to incentivize and retain key leadership talent by tying a substantial portion of their compensation to the company's performance and stock price over multi-year periods. The awards consist of a mix of performance-based restricted stock units (PRSUs), time-based restricted stock units (RSUs), and stock options. The PRSUs are particularly notable, with payout potential ranging from 50% to 250% of the target number of units based on three-year compounded annual growth rate milestones related to the company's stock price. This structure aims to align executive interests directly with shareholder value creation over the long term.

Key Highlights

  • 1Significant equity awards approved for key executive officers, including the CEO, CFO, CTO, and business group General Manager.
  • 2CEO Lisa T. Su receives the largest award with a target value of $6,000,000.
  • 3Other named executive officers (Devinder Kumar, Forrest E. Norrod, Mark D. Papermaster) each receive awards with a target value of $2,000,000.
  • 4Awards are structured as a mix of Performance-Based Restricted Stock Units (PRSUs), Restricted Stock Units (RSUs), and Stock Options.
  • 5PRSUs have a three-year performance period (August 2015 - August 2018) with potential payouts from 50% to 250% of target based on stock price growth milestones.
  • 6Stock options and RSUs have defined vesting schedules, with options vesting over approximately three years and RSUs vesting over three years.
  • 7All awards are granted under the Advanced Micro Devices, Inc. 2004 Equity Incentive Plan, as amended and restated.

Frequently Asked Questions

The primary purpose of these equity awards is to attract, retain, and motivate key executive officers by aligning their compensation with the long-term performance and stock price appreciation of Advanced Micro Devices (AMD). The performance-based nature of a significant portion of these awards directly links executive compensation to shareholder value creation.

The target value of each award is set in U.S. dollars. This target value is then converted into a mix of PRSUs, RSUs, and stock options. The number of units and options granted is calculated by dividing portions of the target value by a "Conversion Price," which is the average closing stock price for the 180 days preceding the grant date, and a binomial factor for stock options.

The performance-based restricted stock units (PRSUs) are tied to achieving specific three-year compounded annual growth rate (CAGR) milestones related to AMD's closing stock price. The performance period runs from August 15, 2015, to August 15, 2018, and potential payouts can range from 50% to 250% of the target number of PRSUs granted, depending on the stock price performance.

The vesting schedules vary by award type. PRSUs vest in two tranches: 50% upon certification of performance level achievement (but not before August 15, 2016) and the remaining 50% at the end of the performance period (August 15, 2018), subject to continued employment. Stock options vest in stages over approximately three years from the grant date. RSUs vest in equal thirds on each of the first, second, and third anniversaries of their grant date.