8-KLeadership Changes

ADVANCED MICRO DEVICES INC 8-K Report, Executive Changes (Dec 28, 2015)

Filed December 28, 2015For Securities:AMD

Summary

This 8-K filing from Advanced Micro Devices, Inc. (AMD) on December 28, 2015, details a modification to the grant process for long-term incentive equity awards for key named executive officers. Specifically, the Compensation and Leadership Resources Committee and the Board of Directors elected to use the previously established August 2015 conversion price (based on a 180-day average closing stock price ending August 14, 2015) for the second tranche of equity awards, rather than a new conversion price based on a 180-day average ending December 25, 2015. The primary impact of this decision is that a higher conversion price resulted in a lower number of Restricted Stock Units (RSUs) and, in Dr. Lisa Su's case, stock options, being granted in the second tranche (awarded December 26, 2015) compared to what would have been granted using the later, lower conversion price. The stated rationale for this change was to ensure consistency with the conversion price used for other officer and employee grants made in August 2015.

Key Highlights

  • 1AMD is adjusting the conversion price for the second tranche of long-term incentive equity awards granted on December 26, 2015.
  • 2The company decided to use the August 2015 conversion price ($2.4267) instead of the December 2015 conversion price for these awards.
  • 3This decision means a higher effective stock price was used to convert target dollar values into equity grants.
  • 4Consequently, named executive officers (Devinder Kumar, Forrest E. Norrod, Mark D. Papermaster) received fewer RSUs in the second tranche.
  • 5Dr. Lisa Su also received fewer RSUs and stock options in the second tranche due to the same adjustment.
  • 6The stated reason for the change is to maintain consistency with the conversion price used for other officer and employee grants in August 2015.
  • 7No new grants were made; only the conversion price methodology for the second tranche was altered.

Frequently Asked Questions

AMD's Compensation and Leadership Resources Committee and Board of Directors decided to use the August 2015 conversion price for the second tranche of equity awards. The stated reason was to ensure consistency with the conversion price used for other officer and employee grants made in August 2015, even though a new, lower conversion price was available based on the 180-day average ending December 25, 2015.

Using the higher August conversion price ($2.4267) resulted in a lower number of Restricted Stock Units (RSUs) and, for Dr. Lisa Su, stock options, being granted in the second tranche on December 26, 2015. Essentially, the executives received fewer equity units for the same target dollar value of their awards.

No, this filing specifically addresses a change in the *methodology* for calculating the number of equity units granted, not a change in the overall compensation philosophy or the performance targets themselves. The target dollar values for the awards remained the same, as did the mix of PRSUs, RSUs, and options approved earlier in the year. The alteration was solely to the conversion price used for the second grant tranche.

The total *target dollar value* of the long-term incentive awards remains unchanged. However, the actual number of equity units received in the second tranche is lower than if the December conversion price had been used. This means the potential future value of these specific grants will be based on fewer shares, assuming the stock price recovers or increases.