Why is AMD increasing executive compensation?

AMD is increasing executive compensation, including base salaries, bonus targets, and long-term equity incentives, to retain its key leadership talent, align executive interests with shareholder value creation, and incentivize performance against demanding company objectives in a competitive market.

What is the performance criteria for the new long-term incentive awards?

The long-term incentive awards, particularly the Performance-based Restricted Stock Units (PRSUs), are tied to two key performance metrics: the company's stock price return relative to the S&P 500 index over a defined period, and the company's non-GAAP earnings per share (EPS) for fiscal year 2023 compared to fiscal year 2021 target EPS. Payouts can range from 0% to 250% of the target award based on achieving these metrics.

How is the value of the long-term incentive awards determined?

The target award values are set by the Compensation Committee and are then converted into a mix of PRSUs, Stock Options, and RSUs. The number of each type of award is determined by dividing a percentage of the target value (50% for PRSUs, 25% for Stock Options, 25% for RSUs) by a conversion price, which is based on the average closing stock price over a 30-day period ending on the grant date, with a floor of $36.00.

What is the vesting schedule for these new equity awards?

The time-based Stock Options and RSUs vest in equal thirds on August 9, 2022, August 9, 2023, and August 9, 2024. Earned PRSUs are generally subject to continued employment through August 9, 2024, with settlement typically occurring around August 15, 2024.

AMD 8-K: Leadership Changes

Summary

This 8-K filing from Advanced Micro Devices, Inc. (AMD) details significant adjustments to the compensation packages for its named executive officers, effective July 1, 2021, and August 9, 2021. The core of the announcement involves increases in base salaries for all named executives, with CEO Lisa T. Su receiving a notable raise. Additionally, Dr. Su's target annual bonus opportunity has been significantly enhanced, increasing from 170% to 200% of her base salary. These changes underscore the company's commitment to retaining and motivating its key leadership team during a period of anticipated growth and intense market competition. The filing also outlines substantial long-term incentive awards in the form of equity, to be granted on August 9, 2021. These awards, comprising performance-based restricted stock units (PRSUs), time-based stock options, and restricted stock units (RSUs), are designed to align executive pay with long-term company performance and shareholder value. The PRSUs, in particular, are subject to challenging performance metrics including stock price relative to the S&P 500 and fiscal 2023 non-GAAP earnings per share, with potential payouts ranging from 0% to 250% of the target award, further emphasizing a performance-driven compensation structure.

Key Highlights

1Effective July 1, 2021, base salaries for named executive officers (NEOs) have been increased.
2CEO Lisa T. Su's annual base salary increased from $1,055,000 to $1,097,000.
3CEO Lisa T. Su's target annual bonus opportunity increased from 170% to 200% of her base salary.
4On August 9, 2021, NEOs will receive substantial long-term incentive awards valued between $3.6 million (CFO) and $18.4 million (CEO).
5Equity awards consist of 50% Performance-based Restricted Stock Units (PRSUs), 25% Stock Options, and 25% Restricted Stock Units (RSUs).
6PRSU payout potential ranges from 0% to 250% of target, contingent on stock performance vs. S&P 500 and fiscal 2023 non-GAAP EPS.
7Time-based stock options and RSUs will vest in equal thirds over three years, starting August 9, 2022.

ADVANCED MICRO DEVICES INC 8-K Report, Executive Changes (Jun 24, 2021)

Summary

Key Highlights

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