SCHEDULE 14A INFORMATION
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Advanced Micro Devices, Inc.
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(Name of Registrant as Specified In Its Charter)
Advanced Micro Devices, Inc.
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Notes:
[LOGO OF AMD]
ADVANCED MICRO DEVICES, INC.
ONE AMD PLACE
P.O. BOX 3453
SUNNYVALE, CALIFORNIA 94088-3453
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
We will hold the Annual Meeting of Stockholders of Advanced Micro Devices,
Inc. at the St. Regis Hotel, 2 East 55th Street, New York, New York 10022, on
Thursday, April 26, 2001. The meeting will start at 10:00 a.m. local time. At
the meeting, we will:
. Elect eight directors,
. Ratify the appointment of Ernst & Young LLP as our independent auditors
for the current fiscal year,
. Approve amendments to the Advanced Micro Devices, Inc. 1996 Stock
Incentive Plan,
. Reapprove the performance goals under the Advanced Micro Devices, Inc.
1996 Executive Incentive Plan,
. Approve amendments to the Advanced Micro Devices, Inc. 2000 Employee
Stock Purchase Plan, and
. Transact any other business that properly comes before the meeting.
By Order of the Board of Directors,
THOMAS M. McCOY
Secretary
Sunnyvale, California
March 20, 2001
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. RETURNING YOUR PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF
YOU LATER DECIDE NOT TO ATTEND THE MEETING.
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERS.................................................... 1
ITEM 1--ELECTION OF DIRECTORS............................................ 4
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS........................ 6
DIRECTORS' COMPENSATION AND BENEFITS..................................... 7
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS................................................................. 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................. 9
EXECUTIVE COMPENSATION................................................... 9
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS..................... 14
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION............ 14
BOARD AUDIT COMMITTEE REPORT............................................. 18
PERFORMANCE GRAPH........................................................ 19
ITEM 2--RATIFICATION OF INDEPENDENT AUDITORS............................. 20
ITEM 3--APPROVAL OF AMENDMENTS TO THE ADVANCED MICRO DEVICES, INC. 1996
STOCK INCENTIVE PLAN..................................................... 20
ITEM 4--REAPPROVAL OF THE PERFORMANCE GOALS UNDER THE 1996 EXECUTIVE
INCENTIVE PLAN........................................................... 24
ITEM 5--APPROVAL OF AMENDMENTS TO THE ADVANCED MICRO DEVICES, INC. 2000
EMPLOYEE STOCK PURCHASE PLAN............................................. 26
ANNUAL REPORT AND FINANCIAL STATEMENTS................................... 28
ADVANCED MICRO DEVICES, INC.
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PROXY STATEMENT
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2001 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS
1. Q: WHO IS SOLICITING MY VOTE?
A: This proxy solicitation is being made by the Board of Directors of
Advanced Micro Devices, Inc. We have retained Georgeson Shareholder
Communications, Inc. and MacKenzie Partners, Inc., professional proxy
solicitors, to assist us with this proxy solicitation.
2. Q: WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
A: This proxy statement was first mailed to stockholders on or about March
20, 2001.
3. Q: WHAT MAY I VOTE ON?
A: You may vote on:
. The election of directors to serve on our Board of Directors,
. The approval of the appointment of our independent auditors for the
current fiscal year,
. The approval of the amendments to the Advanced Micro Devices, Inc.
1996 Stock Incentive Plan (1996 Stock Plan),
. The reapproval of the performance goals under the Advanced Micro
Devices, Inc. 1996 Executive Incentive Plan (the Incentive Plan), and
. The approval of the amendments to the Advanced Micro Devices, Inc.
2000 Employee Stock Purchase Plan (ESPP).
4. Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends that you vote:
. FOR each of the director nominees,
. FOR the appointment of Ernst & Young LLP as independent auditors for
the current fiscal year,
. FOR the amendments to the 1996 Stock Plan,
. FOR the reapproval of the performance goals under the Incentive Plan,
and
. FOR the amendments to the ESPP.
5. Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on February 26, 2001 (the
Record Date) are entitled to vote at the Annual Meeting. On the Record
Date, approximately 314,747,375 shares of our common stock were
outstanding. Every stockholder is entitled to one vote for each share of
common stock held. A list of these stockholders is kept at the offices
of our transfer agent, Fleet National Bank, c/o STARS, 100 William
Street-Galleria, New York, New York, 10038.
1
6. Q: HOW DO I VOTE BY MAIL?
A: If you complete and properly sign each proxy card you receive and return
it in the prepaid envelope to us, it will be voted by one of the
individuals indicated on the card (your "proxy") as you direct. If you
return your signed proxy card but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR the election of the director
nominees, FOR the ratification of the appointment of our auditors, FOR
the approval of the amendments to the 1996 Stock Plan, FOR the
reapproval of the performance goals under the Incentive Plan and FOR the
approval of the amendments to the ESPP.
7. Q: CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
A: If you live in the United States or Canada, you may submit your proxy by
following the Vote by Telephone instructions on the proxy card. If you
have Internet access, you may submit your proxy from any location in the
world by following the Vote by Internet instructions on the proxy card.
8. Q: CAN I VOTE AT THE MEETING?
A. Yes. If you wish to vote your shares in person at the Annual Meeting and
they are held by your broker (held in "street name"), you must bring a
letter from the broker to the meeting showing that you were the direct
or indirect ("beneficial") owner of the shares on February 26, 2001.
9. Q: CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD OR AFTER I HAVE VOTED
BY TELEPHONE OR ELECTRONICALLY?
A. Yes. You may revoke your proxy at any time before it is exercised by:
. Sending in another proxy with a later date (by mail, telephone or
over the Internet),
. Notifying our Corporate Secretary in writing before the Annual
Meeting that you wish to revoke your proxy, or
. Voting in person at the Annual Meeting.
10. Q: HOW DO I VOTE MY SHARES IF THEY ARE HELD IN STREET NAME?
A: If your shares are held by your broker, in "street name," you will
receive a form from your broker seeking instruction as to how your
shares should be voted. If you do not instruct your broker how to vote,
your broker will vote your shares at its discretion.
11. Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. They may be present
at the Annual Meeting or represented by proxy. There must be a quorum
for the Annual Meeting to be held. If you submit a properly executed
proxy card, even if you abstain from voting, you will be considered part
of the quorum.
12. Q: HOW ARE MATTERS PASSED OR DEFEATED?
A: The eight director nominees receiving the highest number of affirmative
votes will be elected. A properly executed proxy marked "WITHHOLD
AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is
a quorum. All the other matters must receive affirmative votes from more
than 50% of the shares that are voted to be adopted. An abstention has
the same effect as a vote AGAINST a proposal.
2
13. Q: WHO WILL COUNT THE VOTES?
A: Proxies will be tabulated by EquiServe, service representatives of our
transfer agent, Fleet National Bank.
14. Q: IS MY VOTE CONFIDENTIAL?
A: Proxy cards, ballots and voting tabulations that identify individual
stockholders are mailed or returned directly to EquiServe, and handled
in a manner that protects your voting privacy. Your vote will not be
disclosed except: (1) as needed to permit EquiServe to tabulate and
certify the vote, and (2) as required by law. However, comments written
on the proxy card may be forwarded to management. In that case, your
identity may not be kept confidential.
15. Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: Only stockholders as of the close of business on February 26, 2001,
holders of proxies for those stockholders and other persons invited by
us can attend.
16. Q: HOW WILL VOTING ON ANY BUSINESS NOT DESCRIBED ON THE NOTICE OF ANNUAL
MEETING BE CONDUCTED?
A: We do not know of any business to be considered at the Annual Meeting
other than the proposals described in this proxy statement. If any other
business is presented at the Annual Meeting, your signed proxy card
gives authority to W. J. Sanders III, our Chief Executive Officer, or
Thomas M. McCoy, our Senior Vice President, General Counsel and
Secretary, to vote on such matters at their discretion.
17. Q: WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING DUE?
A: All stockholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to Thomas M. McCoy,
Secretary, Advanced Micro Devices, Inc., One AMD Place, Sunnyvale,
California 94088 on or before November 20, 2001.
PLEASE NOTE: All of our common stock share numbers have been adjusted in
this Proxy Statement to give effect to our August 21, 2000
two-for-one stock split.
3
ITEM 1--ELECTION OF DIRECTORS
Eight directors will be elected at the Annual Meeting. All directors are
elected annually and serve a one-year term until the next Annual Meeting.
The Nominating Committee of the Board of Directors selected, and the Board
of Directors accepted, the following eight persons as nominees for election to
the Board: Mr. W. J. Sanders III, Dr. Hector de J. Ruiz, Dr. Friedrich Baur,
Mr. Charles M. Blalack, Dr. R. Gene Brown, Mr. Robert B. Palmer, Mr. Joe L.
Roby and Dr. Leonard M. Silverman. All of the nominees are currently directors
of AMD.
The Board of Directors expects all nominees named below to be available for
election. If a nominee declines or is unable to act as a director, your proxy
may vote for any substitute nominee proposed by the Board. Your proxy will vote
FOR the election of these nominees, unless you instruct otherwise.
The experience and background of each of the nominees follows.
W. J. Sanders III--Mr. Sanders, 64, has been a director since 1969. Mr.
Sanders is Chairman of the Board and Chief Executive Officer of AMD. Mr.
Sanders co-founded AMD in 1969.
Dr. Hector de J. Ruiz--Dr. Ruiz, 55, has been a director since 2000. Dr.
Ruiz joined AMD as President and Chief Operating Officer in January 2000.
Before joining AMD, Dr. Ruiz served as President of the Motorola, Inc.
Semiconductor Products Sector since May 1997. From 1991 to 1995, Dr. Ruiz was
Senior Vice President and General Manager of Motorola's paging and messaging
businesses, and in 1996 became Executive Vice President and General Manager of
those businesses. Dr. Ruiz joined Motorola in 1977, and from 1977 to 1991, he
held various executive positions in Motorola's Semiconductor Products Sector.
Before joining Motorola, Dr. Ruiz worked at Texas Instruments, Inc. from 1972
to 1977. Dr. Ruiz is a member of the Board of Directors of Eastman Kodak
Company and Darden Restaurants, Inc.
Dr. Friedrich Baur--Dr. Baur, 73, has been a director since 1994. Dr. Baur
has been President and Managing Partner of MST Beteiligungs und
Unternehmensberatungs GmbH, a German consulting firm, since 1990. Beginning in
1953, Dr. Baur held a variety of positions of increasing responsibility with
Siemens AG, retiring in 1982 as Executive Vice President and a Managing
Director. He also represented Siemens AG on the Board of Directors of AMD from
1978 until 1982. From 1982 to 1990, Dr. Baur was Chairman of the Board of
Zahnradfabrik Friedrichshafen AG.
Charles M. Blalack--Mr. Blalack, 74, has been a director since 1989. Mr.
Blalack is Chairman of the Board and Chief Executive Officer of Blalack and
Company, a registered investment advisor, and has been since 1969. From 1970
until 1991, Mr. Blalack was Chief Executive Officer of Blalack-Loop, Inc., an
investment banking firm and member of the National Association of Securities
Dealers. Prior to 1970, he was founder, Chairman and Chief Executive Officer of
BW & Associates, an investment banking firm and member of the New York Stock
Exchange. Mr. Blalack was a member of the Board of Directors of Monolithic
Memories, Inc. until it was acquired by AMD in 1987.
Dr. R. Gene Brown--Dr. Brown, 68, has been a director since 1969. Dr. Brown
is a private investor and financial and management consultant. He was a
director of Hagler Bailly, Inc. from 1998 to 2000. Dr. Brown was a non-employee
Managing Director of Putnam, Hayes & Bartlett, Inc., an economic and management
consulting firm, from 1975 to 1998, when it was acquired by Hagler Bailly, Inc.
From 1961 to 1968, Dr. Brown was a full-time professor in the graduate schools
of business at Harvard University and then Stanford University. From 1968 to
1974, Dr. Brown was Vice President of Corporate Development for Syntex
Corporation, and from 1974 to 1976, Dr. Brown was President of Berkeley
BioEngineering.
Robert B. Palmer--Mr. Palmer, 60, has been a director since 1999. Mr. Palmer
was the Chairman and Chief Executive Officer of Digital Equipment Corporation
(Digital), from 1995 to 1998. Mr. Palmer was appointed Chief Executive Officer
and President of Digital in October 1992. From 1985 to 1992, Mr. Palmer
4
served in various executive positions at Digital. Before Digital, Mr. Palmer
was Executive Vice President of Semiconductor Operations at United Technologies
Corporation (UTC), joining UTC in 1980 when it acquired Mostek Corporation,
where he was a member of the founding team in 1969. Mr. Palmer is on the Board
of Trustees of the Cooper Institute for Aerobic Research, a non-profit
preventative medicine research and education organization.
Joe L. Roby--Mr. Roby, 61, has been a director since 1991. Mr. Roby is the
Chairman of the Executive Board of Credit Suisse First Boston (CSFB). Before
Donaldson, Lufkin & Jenrette, Inc. (DLJ) was acquired by CSFB in 2000, Mr. Roby
was President, Chief Executive Officer and a director of DLJ. Mr. Roby was a
member of the Board of Directors of DLJ since 1989. He was appointed President
of DLJ in February 1996 and Chief Executive Officer in February 1998. Mr. Roby
served as the Chief Operating Officer of DLJ from November 1995 until February
1998. Previously, Mr. Roby was the Chairman of the Banking Group of Donaldson,
Lufkin & Jenrette Securities Corporation, a subsidiary of DLJ, a position he
had held since 1989. Mr. Roby is a member of the Board of Directors of Apogent
Technologies.
Dr. Leonard M. Silverman--Dr. Silverman, 61, has been a director since 1994.
Dr. Silverman is Dean of the School of Engineering of the University of
Southern California, and has held that position since 1984. He was elected to
the National Academy of Engineering in 1988 and is a Fellow of the Institute of
Electrical and Electronic Engineers. Dr. Silverman served on the Board of
Directors of Tandon Corporation from 1988 to 1993. Dr. Silverman is also a
member of the Board of Directors of Diodes, Inc.
Your Board of Directors unanimously recommends that you vote "FOR" the
proposed slate of directors for the current year. Unless you indicate
otherwise, your proxy will vote "FOR" the proposed nominees.
5
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held ten (10) regularly scheduled and special
meetings during the 2000 fiscal year. All Directors attended at least 75% of
the meetings of the Board of Directors and of the committees on which they
served during 2000. The Board has Audit, Nominating and Compensation
Committees. The members of the committees are appointed by the Board annually.
Audit Committee. The Audit Committee consists of Dr. R. Gene Brown, as
Chair, Mr. Robert B. Palmer and Mr. Charles M. Blalack, each a non-employee
director. The Audit Committee held ten (10) meetings during 2000. The Audit
Committee reviews our accounting policies, internal controls, financial
reporting practices, contingent risks and risk management strategies and plans,
including litigation issues, and the services and fees of our independent
auditors. In connection with these reviews, the Audit Committee meets alone
with our financial and legal personnel, and with our independent auditors, who
have free access to the Audit Committee at any time. The director of our
Internal Control Department reports directly to the Chair of the Audit
Committee and serves a staff function for the Audit Committee. The Audit
Committee recommends the selection of the independent auditors to serve the
following year in examining our accounts. The Audit Committee also annually
reviews the independence of the independent auditors as a factor in these
recommendations.
Nominating Committee. The Nominating Committee consists of Mr. W. J. Sanders
III, as Chair, Mr. Charles M. Blalack, Dr. R. Gene Brown, Mr. Robert B. Palmer
and Mr. Joe L. Roby. The Nominating Committee met once during 2000 to consider
nominees for the 2000 Annual Meeting. If you wish to submit names of
prospective nominees for consideration by the Nominating Committee you should
do so in writing to our Corporate Secretary. (Nomination procedures are
discussed in greater detail in our bylaws, which will be provided to you upon
written request).
Compensation Committee. The Compensation Committee consists of Mr. Charles
M. Blalack, as Chair, Dr. R. Gene Brown and Dr. Leonard M. Silverman, each a
non-employee director. The Compensation Committee recommends to the Board
proposed equity incentive plans, determines equity compensation for the Chief
Executive Officer and other executive officers, provides oversight of the
salaries of executive officers as determined by the Chief Executive Officer,
adopts executive bonus plans and grants equity awards to certain other
employees. The Chief Executive Officer and Senior Vice President, Human
Resources make recommendations to the Compensation Committee on the equity
compensation of executive officers other than themselves. During 2000, the
Compensation Committee met eighteen (18) times.
6
DIRECTORS' COMPENSATION AND BENEFITS
In 2000, we paid each director who was not an employee of AMD an annual fee
of $25,000, a fee of $1,500 for attendance at each regular or special meeting
of the Board, and a fee of $1,000 for attendance at each meeting of each
committee (other than the Nominating Committee) on which they served. In
addition, we paid the Chair of the Audit Committee an annual fee of $20,000 for
service in that capacity, and we paid the Chair of the Compensation Committee
an annual fee of $4,000 for service in that capacity. We also reimbursed
reasonable out-of-pocket expenses incurred by directors in connection with
attending meetings and performing other Board-related services for AMD, and, on
occasion, travel expenses of their spouses. Effective April 26, 2001, non-
employee director's fees will increase to an annual fee of $30,000, a fee of
$2,000 for attendance at each meeting and a fee of $1,200 for attendance at
committee meetings. In addition, the Chair of the Compensation Committee will
receive an annual fee of $10,000.
Under a non-discretionary formula approved by the stockholders, we grant
initial options to purchase 30,000 shares of common stock to non-employee
directors on their election to the Board. These options vest on July 15 of the
first, second, third and fourth calendar years following election in the
following amounts, respectively: 12,000, 9,000, 6,000 and 3,000. If the
director remains on the Board, we automatically grant annual supplemental
options to purchase 10,000 shares of common stock on each re-election.
Approximately one-third of these options vest on July 15 of each of the second,
third and fourth calendar years following re-election. The exercise price of
each option is the fair market value on the date of grant. The options expire
on the earlier of ten years plus one day from the grant date or twelve months
following termination of a director's service on the Board. In January and
March of 2001, the Board adopted amendments to the 1996 Stock Incentive Plan
(the 1996 Plan), subject to stockholder approval. These amendments provide for
initial options of 7,500 shares to be granted on April 30, July 31, October 31
and December 15, for a total of 30,000 shares, in the year of first election to
the Board. The initial option grants will vest one-third (2,500 shares each,
for a total of 10,000 shares) on April 30 of the year following grant, and the
remaining two-thirds will vest in monthly increments thereafter over the next
two years. The amendments also provide for annual supplemental options of 3,000
shares to be granted on April 30, July 31, October 31 and December 15, for a
total of 12,000 shares, in the year of re-election to the Board. The annual
supplemental option grants will vest one-third (1,000 shares each, for a total
of 4,000 shares) on April 30 of the year following grant, and the remaining
two-thirds will vest in monthly increments thereafter over the next two years.
Directors will have two years from the termination of their Board membership to
exercise these options. These options, with the new grant dates, vesting
schedules and exercisability provisions, will be granted only if stockholders
approve the proposed amendments to the 1996 Plan.
Any non-employee director may elect to defer receipt of all or a portion of
his annual fees and meeting fees, but may not defer less than $5,000. We credit
deferred amounts plus interest to an account for record-keeping purposes, and
we pay cash payments in a lump sum or in installments over a period of years,
as elected by the director. Except in the case of the director's death or
disability, payments commence upon the latest of the director's tenth
anniversary of his first deferral, age 55, or retirement from the Board, but in
no event later than age 70. The aggregate amount of retirement payments equals
the director's deferred fees plus the accumulation of interest based on the
annual dividend interest rate for the individual insurance policy on the
director's life. In the event of the director's death, his beneficiary will
receive the value of his account plus, in certain cases, a supplemental death
benefit of up to ten times the average annual amount of his deferred fees.
During 2000, Dr. Brown deferred fees in the amount of $20,000 pursuant to this
program. In addition, in lieu of his annual fee, Dr. Brown used an automobile
provided by us, valued at $22,548, which is taxable to him. We also provided
Dr. Brown with family medical and dental insurance benefits, which are valued
at $2,791 and are also taxable to him.
7
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Based on filings by our stockholders with the Securities and Exchange
Commission, as of February 26, 2001, no person or entity is known to us to be
the beneficial owner of more than five percent of our common stock.
The table below shows the number of shares of our common stock beneficially
owned as of February 26, 2001, by our directors, by the nominees for election
as directors, by each of our executive officers listed in the Summary
Compensation Table, below, and by all of our directors and executive officers
as a group. Except as otherwise indicated, each person has sole investment and
voting powers with respect to the shares shown as beneficially owned. Ownership
information is based upon information provided by the individuals.
Amount and Nature of Percent of
Name Beneficial Ownership(/1/) Class
---- ------------------------- ----------
W. J. Sanders III........................ 3,185,512(/2/) 1.01%
Dr. Hector de J. Ruiz.................... 504,000(/3/) *
Dr. Friedrich Baur....................... 9,552 *
Charles M. Blalack....................... 49,999(/4/) *
Dr. R. Gene Brown........................ 90,447(/5/) *
Robert B. Palmer......................... 16,000(/6/) *
Joe L. Roby.............................. 89,599(/7/) *
Dr. Leonard M. Silverman................. 39,999(/8/) *
Robert R. Herb(/9/)...................... 340,002(/10/) *
Dr. William T. Siegle(/11/).............. 233,857(/12/) *
Thomas M. McCoy(/13/).................... 242,980(/14/) *
All directors and executive officers as a
group (16 persons)...................... 6,038,149(/15/) 1.92%
- --------
* Less than one percent.
(1) Some of the individuals may share voting power with regard to the listed
shares with their spouses.
(2) Includes 2,950,000 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
(3) Includes 500,000 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
(4) Includes 33,999 shares subject to options that are exercisable on February
26, 2001 or become exercisable within 60 days thereafter.
(5) Includes 47,999 shares subject to options that are exercisable on February
26, 2001 or become exercisable within 60 days thereafter.
(6) Includes 12,000 shares subject to options that are exercisable on February
26, 2001 or become exercisable within 60 days thereafter.
(7) Includes 63,999 shares subject to options that are exercisable on February
26, 2001 or become exercisable within 60 days thereafter.
(8) Includes 39,999 shares subject to options that are exercisable on February
26, 2001 or become exercisable within 60 days thereafter.
(9) Mr. Herb, 39, is Executive Vice President and Chief Sales and Marketing
Officer of AMD.
(10) Includes 340,002 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
(11) Dr. Siegle, 62, is Senior Vice President, Technology and Manufacturing
Operations, Chief Scientist of AMD.
(12) Includes 179,750 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
(13) Mr. McCoy, 50, is Senior Vice President, General Counsel and Secretary of
AMD.
(14) Includes 230,000 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
(15) Includes 5,574,998 shares subject to options that are exercisable on
February 26, 2001 or become exercisable within 60 days thereafter.
8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors, our Section 16 officers and any persons holding more than ten
percent of our common stock to report to the Securities and Exchange Commission
and the New York Stock Exchange their initial ownership of our stock and any
changes in that ownership. No person holds more than ten percent of our common
stock. We believe that during fiscal year 2000, our directors and Section 16
officers filed all Section 16(a) reports on a timely basis. In making this
statement, we have relied upon the written representations of our directors and
Section 16 officers.
EXECUTIVE COMPENSATION
The following table shows compensation information for our Chief Executive
Officer and the four other most highly paid executive officers of the Company.
Summary Compensation Table (1998-2000)
Long-Term Compensation
Annual Compensation Awards
-------------------------------------------- ----------------------------
(a) (b) (c) (d) (e) (g) (i)
--- --- --- --- --- --- ---
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus(/1/) Compensation Options Compensation(/2/)
------------------ ---- ------ ---------- ------------ ---------- -----------------
W. J. Sanders III...... 2000 $1,000,000 $5,143,236(/3/) $ 417,284(/4/) 1,200,000 $627,377
Chairman and Chief 1999 $1,000,000 $2,000,000 $ 257,719(/4/) 0 $541,777
Executive Officer 1998 $1,000,000 $ 12,167 $ 274,427(/4/) 0 $516,503
Hector de J. Ruiz...... 2000 $ 752,915(/5/) $3,160,429 $ 0 2,000,000 $ 32,921
President and Chief 1999
Operating Officer 1998
Robert R. Herb......... 2000 $ 570,195 $2,692,239 $ 0 300,000 $ 53,054
Executive Vice 1999 $ 393,750 $ 512,813 $ 0 150,000 $ 15,253
President and Chief 1998 $ 361,298 $ 379,483 $ 55,701(/6/) 250,900 $ 8,974
Sales and Marketing
Officer
William T. Siegle...... 2000 $ 428,575 $1,010,134 $ 0 150,000 $ 55,074
Senior Vice President, 1999 $ 385,000 $ 349,300 $ 0 108,000 $ 22,576
Technology and 1998 $ 366,442 $ 148,745 $ 0 100,000 $ 18,743
Manufacturing
Operations, Chief
Scientist
Thomas M. McCoy........ 2000 $ 592,542(/7/) $ 452,737 $ 0 225,000 $ 52,450
Senior Vice President, 1999 $ 418,000(/7/) $ 226,000 $ 0 112,500 $ 12,247
General Counsel and 1998 $ 348,800 $ 4,095 $ 0 50,000 $ 12,363
Secretary
- --------
(1) Includes cash profit sharing in the following amounts for Messrs. Sanders,
Ruiz, Herb, Siegle and McCoy: for 2000, $143,236, $67,059, $71,735,
$53,846, and $49,993, respectively; for 1999, none; and for 1998, $12,167,
$0, $4,483, $4,370 and $4,095, respectively.
(2) Includes for 2000, 1999, and 1998 for Mr. Sanders, pursuant to his
agreement, $400,000 in deferred retirement compensation for each year and
$141,818, $93,697 and $64,943 as a deferred cost of living salary
adjustment. Includes for 2000 for Messrs. Sanders, Ruiz, Herb, Siegle and
McCoy, the Company's matching contributions to the Company's 401(k) Plan in
the amounts of $4,800, $4,800, $4,800, $4,800 and $4,800, respectively; the
Company's matching contributions to the deferred compensation program in
the amounts of $24,900, $0, $11,025, $8,040 and $7,113, respectively;
imputed income from the term life insurance provided by the Company in the
amounts of $4,360, $2,218, $829, $2,061 and $1,050,
9
respectively; and premiums paid by the Company for individual insurance
policies in the amount of $26,282, $6,580, $11,183, $14,956 and $14,269,
respectively; deferred profit sharing in the amount of $19,705, $14,158,
$19,705, $19,705 and $19,705, respectively and the Company's Excess 415 Plan
(nonqualified deferred compensation) in the amounts of $5,512, $5,165,
$5,512, $5,512 and $5,512, respectively. Includes for 1999 for Messrs.
Sanders, Herb, Siegle and McCoy, our matching contributions to our 401(k)
Plan in the amounts of $2,400, $2,800, $2,400 and $2,400, our matching
contributions to the deferred compensation program in the amounts of
$15,518, $4,383, $4,219 and $0, imputed income from term life insurance in
the amounts of $3,881, $611, $1,691 and $886 and premiums paid for
individual insurance policies in the amount of $26,282, $7,459, $14,266 and
$8,962. Includes for 1998 for Messrs. Sanders, Herb, Siegle and McCoy, our
matching contributions to our 401(k) Plan in the amounts of $2,400, $2,400,
$2,400 and $2,400, our matching contributions to the deferred compensation
program in the amounts of $13,574, $2,616, $3,113 and $0, imputed income
from term life insurance in the amounts of $9,304, $733, $2,413 and $1,001
and premiums paid for individual insurance policies in the amount of
$26,282, $3,225, $10,817 and $8,962.
(3) Mr. Sanders earned a bonus of $6,186,740 for 2000. Mr. Sanders' bonus
payment is capped at $5 million and the remaining $1,186,740 is carried
forward for three years if the cap is not reached in any of those years
(the Unpaid Contingent Bonus). If the Unpaid Contingent Bonus is not paid,
it is forfeited.
(4) Includes for 2000, 1999, and 1998, $129,645, $115,298, and $113,782, of in-
kind compensation in the form of company provided vehicles. Includes for
1999 and 1998, $79,754, and $96,061, reflecting the cost of providing
physical security services.
(5) Includes $46,182 for interest forgiveness on a loan to Dr. Ruiz.
(6) Includes for 1998, $36,943 of relocation assistance and $17,458 of in-kind
compensation in the form of a company provided vehicle.
(7) Includes for 2000, supplemental compensation of $195,000. Includes for
1999, $20,000 for loan forgiveness and supplemental compensation of
$38,000.
2000 Option Grants
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise For Option Term(/2/)
Options Employees in Price Per Expiration ---------------------------
Name Granted(/1/) Fiscal Year Share Date 0% 5% 10%
---- ------------ ------------ --------- ---------- -- ----------- -----------
W. J. Sanders III....... 1,200,000 5.77% $23.75 11/03/10 $ 0 $17,923,497 $45,421,660
Hector de J. Ruiz....... 2,000,000 9.62% $17.07 01/24/10 $ 0 $21,470,463 $54,410,368
Robert R. Herb.......... 100,000 .48% $32.10 08/16/10 $ 0 $ 2,018,752 $ 5,115,913
200,000 .96% $41.00 04/26/10 $ 0 $ 5,156,936 $13,068,688
William T. Siegle....... 50,000 .24% $32.10 08/16/10 $ 0 $ 1,009,376 $ 2,557,957
100,000 .48% $41.00 04/26/10 $ 0 $ 2,578,468 $ 6,534,344
Thomas M. McCoy......... 75,000 .36% $32.10 08/16/10 $ 0 $ 1,514,064 $ 3,836,935
150,000 .72% $41.00 04/26/10 $ 0 $ 3,867,702 $ 9,801,516
- --------
(1) For all optionees: Each option has a ten-year term. Each option is subject
to earlier termination upon the optionee's termination of employment, death
or disability. The exercise price may be paid in cash or in shares.
Withholding taxes due on exercise may be paid in cash, with previously
owned shares, or by having shares withheld. The options vest only if the
executive is employed by us on the vesting date. 350,000 of Mr. Sanders'
shares vested on November 15, 2000. Mr. Sanders' remaining shares vest as
follows: 350,000 shares on November 15, 2001; 250,000 shares on November
15, 2002; and 250,000 shares on November 15, 2003. 500,000 of Dr. Ruiz's
shares vested on January 24, 2001. Dr Ruiz's remaining shares vest in
increments of 500,000 shares on January 24 of 2002, 2003 and 2004. Mr.
Herb's shares vest as follows: 100,000 shares on July 25, 2003 and a total
of 100,000 shares will vest monthly thereafter through July 25, 2004;
50,000 shares on April 28, 2003 and a total of 50,000 shares will vest
monthly thereafter through April 28, 2004. Dr. Siegle's shares vest as
follows: 50,000 shares on July 25, 2002 and a total of 50,000 shares will
vest monthly thereafter through July 25, 2003; 25,000 shares on
10
April 28, 2002 and a total of 25,000 shares will vest monthly thereafter
through April 28, 2003. Mr. McCoy's shares vest as follows: 75,000 shares on
July 25, 2002 and a total of 75,000 shares will vest monthly thereafter
through July 25, 2003; 44,000 shares on April 28, 2002 and a total of 31,000
shares will vest monthly thereafter through April 28, 2003. Upon an
optionee's termination of employment, options may be exercised only to the
extent exercisable on the date of such termination of employment. Upon an
optionee's death or disability, certain options that vest during the year of
death or disability may become exercisable. Options may also become fully
exercisable upon a change in control of AMD as that term is defined under
AMD's stock incentive plans or in accordance with an optionee's management
continuity agreement. See the discussion under "Employment Agreements" and
"Change in Control Agreements."
(2) The 0%, 5% and 10% assumed rates of annual compound stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent our estimate or projection of future prices
of our common stock.
Aggregated Option Exercises in 2000
and Fiscal Year-End Option Values
Number of Number of Securities Value of Unexercised In-The-
Shares Underlying Unexercised Money Options at
Acquired Options at 12/31/00 12/31/00(/1/)
on Value ----------------------------- -----------------------------
Name Exercise Realized(/1/) (Exercisable) (Unexercisable) (Exercisable) (Unexercisable)
---- --------- ------------- ------------- --------------- ------------- ---------------
W. J. Sanders III....... 3,400,000 $85,057,766 2,950,000 1,250,000 $14,294,000 $2,572,000
Hector de J. Ruiz....... 0 $ 0 0 2,000,000 $ 0 $ 0
Robert R. Herb.......... 294,348 $ 6,495,005 247,264 800,000 $ 983,124 $2,110,400
William T. Siegle....... 174,750 $ 3,950,655 179,750 336,000 $ 746,337 $ 908,940
Thomas M. McCoy......... 226,316 $ 4,894,215 225,000 350,000 $ 342,000 $ 421,500
- --------
(1) Value for these purposes is based solely on the difference between market
value of underlying shares on the applicable date (i.e., date of exercise
or fiscal year-end) and the exercise price of options.
Employment Agreements
Chairman's Employment Agreement. In November 2000, we entered into an
amended and restated employment agreement with Mr. Sanders that provides for
his tenure as Chief Executive Officer through the annual stockholder meeting in
2002 and as Chairman through December 27, 2003. The 2000 agreement provides for
annual base compensation to Mr. Sanders of $1 million through the annual
stockholder meeting in 2002, $750,000 for the remainder of 2002 and $600,000 in
2003, with certain deferred adjustments for cost of living increases from 1996.
The 2000 agreement also provides for an annual incentive bonus equal to 0.6% of
our adjusted operating profit (as defined in the agreement) in excess of 20% of
adjusted operating profits for the preceding year for each year through 2002
and an incentive bonus of 0.2% of our adjusted operating profit in excess of
20% of adjusted operating profits for the preceeding year for 2003. The annual
bonus payment is capped at $5 million, with any excess carried over for three
years if the cap is not reached in any of those years. Mr. Sanders is also
eligible to receive discretionary bonuses, in amounts determined by the
Compensation Committee. Under the 2000 agreement, we granted Mr. Sanders an
option in 2000 to purchase 1,200,000 shares of our common stock with an
exercise price equal to the fair market value of our common stock on the date
of the grant ($23.75) with time-based vesting criteria. 350,000 of these shares
were vested as of February 26, 2001. If vested, this option may be exercised
after termination of employment for a period of: (i) five years after age 65,
or on death or disability; (ii) one year after a voluntary termination of
employment without the consent of the Board of Directors before age 65 (other
than a constructive termination of employment) which includes termination in
connection with a change in control; (iii) three years after a voluntary
termination of employment with the consent of the Board of Directors before age
65 (other than for a constructive termination); (iv) thirty days after a
termination "for good cause" (as defined in the agreement); (v) five years
after a termination of employment other than "for good cause" or a constructive
termination of employment.
11
If we terminate or constructively terminate Mr. Sanders' employment other
than "for good cause," Mr. Sanders will receive his salary and bonus for the
remaining term of the agreement and all of his unvested options will vest. Mr.
Sanders will receive a portion of these benefits if his employment terminates
by reason of death or disability.
If Mr. Sanders' employment terminates following a change in control (as
defined in the agreement and described on p. 13, below), he will receive:
. The greater of the salary payable for the remaining term of the agreement
or three times his current base salary,
. A bonus payment equal to the greater of the average of the two highest
annual bonuses paid during the past five years or the formula bonus
amounts for the year in which the termination occurred and the following
year, plus any amounts carried-over from previous years,
. Vesting of all stock-based awards, and
. An additional payment to reimburse him for federal excise taxes (and
taxes on those taxes).
Under the 2000 agreement, we continue to accrue $400,000 per year (with 9%
interest) from 1996 in deferred retirement compensation, payable to Mr. Sanders
if he is Chief Executive Officer on September 12, 2001 (or on a prorated basis
upon his earlier death or disability). This $2 million (plus interest) together
with the deferred cost of living adjustments on his salary will be paid to Mr.
Sanders in a manner that ensures that it is deductible under Section 162(m) of
the Internal Revenue Code (the Code). Following the termination or constructive
termination of Mr. Sanders' employment by us other than "for good cause," or
upon a change in control, retirement deferrals will accelerate. Mr. Sanders
will be entitled to health benefits for his life (and the life of his wife and
until his children reach age 21, together with any necessary tax gross-up),
following his termination by the Company, his retirement after attaining age
65, his death or disability or his retirement before attaining age 65 with the
consent of the Board. Mr. Sanders will then be entitled to the use of a
comparable office and secretarial services, an automobile and security driver,
up to $25,000 each year for financial and estate planning services and
continued access to Company facilities and services, including Company aircraft
(subject to the approval of the Company's chief executive officer), until
December 31, 2008.
President and Chief Operating Officer's Employment Agreement. In January
2000, we entered into an employment agreement with Dr. Ruiz that provides for
an initial annual base compensation of $750,000 and an annual incentive bonus
equal to 0.3% of our adjusted operating profit in excess of 20% of adjusted
operating profits for the preceding year. The annual bonus is capped at $5
million. Under the agreement, we granted Dr. Ruiz an initial option to purchase
2,000,000 shares of our common stock in January 2000 with an exercise price
equal to the fair market value on the date of grant. Under the agreement, Dr.
Ruiz will be eligible beginning in 2001 for base compensation increases and
entitled to annual grants of options to purchase 250,000 shares of common
stock.
In addition, under the agreement, we will pay Dr. Ruiz a retirement benefit
to replace the retirement benefit that he forfeited at the time he joined AMD.
The retirement benefit will be paid following his attainment of age 57. We will
pay all federal and state income or employment taxes on this retirement benefit
amount.
In the event we terminate Dr. Ruiz without cause, we will pay Dr. Ruiz a
lump sum severance payment equal to one year of his current annual base salary
and accelerate the vesting of the initial option grant by one year. In the
event that Dr. Ruiz resigns before 2002 because the Board of Directors has
determined that he will not become Chief Executive Officer of AMD following our
2002 Annual Meeting, he will receive a lump sum severance payment equal to two
years of his current annual base salary and we will accelerate the vesting of
his initial option by two years. In the event of a change in control (as
defined on p. 13, below), if we terminate Dr. Ruiz' employment without cause or
he resigns due to any diminution or adverse change in the circumstances of his
employment, he will receive a lump sum severance payment equal to three years
of his current annual base salary, the average of his two highest bonuses in
the past five years and full acceleration of all stock options
12
held by him at the time of termination. We will pay Dr. Ruiz an additional
payment to reimburse him for federal excise taxes (and taxes on those taxes).
Change in Control Arrangements
Management Continuity Agreements. We have entered into management continuity
agreements with each of our executive officers, except Mr. Sanders and Dr.
Ruiz, designed to ensure their continued services in the event of a change in
control. Mr. Sanders' employment agreement supersedes his management continuity
agreement and Dr. Ruiz' employment agreement addresses a change in control. Mr.
Sanders' and Dr. Ruiz' employment agreements are discussed in this proxy
statement in the section entitled, "Employment Agreements," beginning on p. 11,
above.
For purposes of the management continuity agreements, a change in control
includes any change of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended. A change in control is
conclusively presumed to have occurred on:
. Acquisition by any person, other than AMD, or any employee benefit plan
of ours, of beneficial ownership of more than 20% (35% in the case of Mr.
Sanders' and Dr. Ruiz' employment agreements and in the case of Mr.
Herb's management continuity agreement) of the combined voting power of
our then outstanding securities.
. A change of the majority of the Board of Directors during any two
consecutive years, unless certain conditions of Board approval are met.
. A determination by certain members of the Board within one year after an
event that such event constitutes a change in control.
The management continuity agreements provide that, in the event of a change
in control, we will reimburse the executive officer for any federal excise
taxes (and taxes on those taxes) payable as a result of benefits received from
us. The agreements provide that, if within two years after a change in control
the executive officer's employment is terminated by us or the executive officer
is constructively discharged, the executive officer will receive:
. A severance benefit equal to three times the sum of his rate of base
compensation plus the average of his two highest bonuses in the last five
years,
. Payment of his accrued bonus,
. Twelve months' continuation of other incidental benefits, and
. Full and immediate vesting of all unvested stock options, stock
appreciation rights and restricted stock awards.
Mr. Herb's management continuity agreement provides that he will receive
these benefits upon termination of his employment by him or the Company
following a change in control.
Vesting of Stock Options. All stock options granted and restricted stock
awarded under our stock incentive plans become fully vested on termination of
employment (other than for misconduct) or constructive termination within one
year following a change in control, as defined in the plans.
13
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Roby, director, was the President, Chief Executive Officer and a
director of Donaldson, Lufkin & Jenrette, Inc. (DLJ) before DLJ was acquired by
Credit Suisse First Boston (CSFB) in November 2000. In 2000, Donaldson, Lufkin
& Jenrette Securities Corporation, a wholly-owned subsidiary of DLJ, provided
investment banking services to us. W. J. Sanders III, Chairman of the Board of
AMD, was a director of DLJ before it was acquired by CSFB.
In January 2000, we loaned $2.5 million to Dr. Ruiz pursuant to a promissory
note bearing interest at 7.75% payable in full on July 26, 2000. The largest
amount owed by Dr. Ruiz during 2000 was $2,546,182. Dr. Ruiz repaid the
principal amount of $2.5 million in April 2000 and the interest was forgiven at
that time.
In March 1997, Mr. McCoy borrowed $450,000 from us pursuant to a promissory
note secured by a pledge of stock and a deed of trust on real property. Mr.
McCoy borrowed an additional $50,000 in April 1997 and $20,000 in May 1998. In
January 1999, the $20,000 loan was forgiven by AMD and the remaining loans were
restructured to extend the term to March 2002, change the interest rate to
4.57%, and require payment in four annual installments. The largest amount owed
by Mr. McCoy during 2000 was $351,574. Mr. McCoy repaid the principal and
interest in December 2000.
In connection with Mr. Francis P. Barton's initial employment by AMD as
Chief Financial Officer in 1998, we loaned him $200,000 pursuant to a
promissory note bearing interest at 5.43%, payable in four annual installments
beginning September 1, 1999, secured by a deed of trust on real property. The
largest amount owed by Mr. Barton during 2000 was $160,551. Mr. Barton's loan
balance was zero as of November 2000.
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following reports and
the Performance Graph on page 19 shall not be incorporated by reference into
any such filings, nor shall they be deemed to be soliciting material or deemed
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 2000, the Compensation Committee of AMD's Board of Directors
consisted of Mr. Blalack, as Chair, Dr. Brown and Dr. Silverman. The members of
the Compensation Committee are independent non-employee, non-affiliated
directors.
The Committee has overall responsibility for AMD's executive compensation
policies and practices. The Committee's functions include:
. Determining the compensation of the Chief Executive Officer of AMD,
. Reviewing and approving all other executive officers' compensation,
including salary and payments under the annual executive bonus plans, in
each case based in part upon the recommendation of the Chief Executive
Officer and the Senior Vice President, Human Resources of AMD, and
. Granting awards to executive officers and, depending on the size of the
award, to other employees under AMD's equity incentive plans.
Certain officers of AMD, outside counsel and consultants typically attend
meetings of the Committee. No officer of AMD is present during discussions or
deliberations regarding that officer's own compensation. The Committee
administers AMD's 2000 Stock Incentive Plan, 1998 Stock Incentive Plan, 1996
Executive Incentive Plan, 1996 Stock Incentive Plan, 1995 Stock Plan of NexGen,
Inc., and 1992 Stock Incentive Plan.
14
Compensation Philosophy and Policies. The Committee believes that long-term
corporate success, defined as sustained profitable growth, is best achieved in
an environment in which employees have the opportunity to be innovative and are
rewarded appropriately for that innovation. In order to provide a direct link
between corporate performance and compensation which will attract and retain
top-caliber employees, the Committee's compensation philosophy is to provide
total compensation opportunities that are highly competitive with the pay
practices of other industry-leading companies. Our compensation policies are
designed to address a number of objectives, and to both reward financial
performance and motivate executive officers to achieve significant returns for
our stockholders. Our policies rely on two principles. First, a large portion
of executive officers' cash compensation should be at risk and vary depending
upon meeting stated financial objectives. Second, a significant portion of
executive officers' total compensation should be in the form of stock and other
equity incentives.
When establishing salaries, bonus levels, and stock or equity awards for
executive officers, the Committee considers the individual's role, leadership
responsibilities and performance during the past year, and the amount of
compensation paid to executive officers in similar positions at companies that
compete with us for executives. The Committee has retained an outside
compensation consultant to make periodic reviews of competitive data obtained
from other independent consultants. The Committee's determinations take into
account our outside compensation consultant's reviews and the compensation
practices of those high technology companies that compete with us for executive
talent and have annual revenues generally in excess of $1 billion. Most of
these companies are included in the Technology-500 Index used in the
performance graph appearing in this proxy statement.
Because we want to attract and retain top-caliber employees, we typically
set base salary targets at or above the median for this group of companies.
Companies outside the semiconductor industry are selected for inclusion in this
review based upon the extent to which they satisfy a list of selection
criteria, which includes size, growth rates, similar financial performance,
leadership status in their industry, reputation for innovation and the extent
to which they compete with us for executives, not all of which may be satisfied
in any particular case. The Committee has instructed its compensation
consultant to include in its review companies other than those included in the
Technology-500 Index because we compete with them for executives, depending
upon the specific skills required for the position.
The Committee uses comparative data to set compensation targets that will
provide executive officers with compensation that exceeds the average amounts
paid to similar executives in years in which we achieve superior results, and
with compensation below the average of amounts paid to similar executives in
years in which we fail to achieve superior results. However, the Committee also
makes discretionary and subjective determinations of appropriate compensation
amounts to reflect, for example, our philosophy of compensating executives for
the success they achieve in managing specific enterprises. The Committee places
considerable weight upon the recommendations of the Chief Executive Officer in
the case of other executive officers. While decisions concerning specific 2000
salaries, bonus levels, and stock or equity awards for individual executive
officers were made within this broad framework, and in light of each executive
officer's level of responsibility, performance, and competitive pay position,
the awards were ultimately based upon the Committee's judgment regarding the
individual executive officer's performance, taking account of whether each
particular payment or award would provide an appropriate reward and incentive
for his contribution to the continuation of our long-term profit performance.
Base Salary. AMD entered into an employment agreement with Mr. Sanders
effective September 29, 1996 (the 1996 Agreement), that provided for Mr.
Sanders' service as Chief Executive Officer through 2001, as Chairman of the
Board of Directors through 2002, and as Vice Chairman or some other executive
position through 2003. Under the 1996 Agreement, Mr. Sanders received a 4.4%
increase to his base salary for 2000 as a cost of living adjustment. This 4.4%
will be deferred. Mr. Sanders was paid a base salary of $1 million for 2000.
The Company entered into an amended and restated agreement with Mr. Sanders
effective November 3, 2000 (the 2000 Agreement). The 2000 Agreement does not
change his base salary as Chief Executive Officer and is discussed in detail
above in the section entitled, "Employment Agreements" on p. 11.
15
In consultation with members of the Committee, the Chief Executive Officer
reviews annually every other executive officer's base salary, including those
officers who are also directors. When reviewing base salaries, he considers
individual and corporate performance, levels of responsibility and competitive
pay practices. These factors vary from individual to individual and the Chief
Executive Officer does not assign relative weight or priority to any one
factor.
Annual Cash Bonus Incentives. Annual cash bonus incentives allow us to
communicate key corporate goals to all employees and reward employees for
achieving those goals each fiscal year. As one example of these incentives, we
allocated up to 10% of operating profits to a profit sharing program in 2000 in
which all domestic and U.S. expatriate employees participated. We paid a
portion of this allocation in cash and contributed a portion to a tax-qualified
deferred profit sharing plan.
All senior executives with titles of vice president and above, other than
Mr. Sanders and Dr. Ruiz, were eligible in 2000 for formula-based bonus awards
under the Vice President Incentive Program, a 1996 Executive Incentive Plan
(Incentive Plan) program. The Vice President Incentive Program has a short-term
component and a long-term component. The amount payable under the short-term
component of the Vice President Incentive Program ranges from 0% to 100% of
base salary depending on the executive's level of responsibility. Under the
short-term component, a minimum of 75% of the targeted bonus is based on the
achievement of predetermined corporate operating income and Economic Value
Added (EVA) improvement goals beyond threshold levels of performance in
combination with the sales and profit success of our product lines. The
remainder of the short-term component is based on the executive's achievement
of various group, division and individual goals developed by the executive's
manager. Bonuses under the long-term component of the Vice President Incentive
Program are based on AMD's three-year average return on equity relative to that
of the S&P 500 Index, and on AMD's three-year sales growth relative to that of
the semiconductor industry, as published by Worldwide Semiconductor Trade
Statistics (WSTS). In order for an award to be paid under the long-term
component, we must achieve a threshold level of performance relative to the S&P
500 and WSTS indexes, which is established by management, approved by the
Committee and reviewed by the Board. The maximum amount payable under the long-
term component is 60% of base salary. During 2000, all eligible executives
earned only an award under the short-term component of the Vice President
Incentive Program.
For 2000, Mr. Sanders' received a formula-based annual incentive bonus
payable under the Incentive Plan equal to 0.6% of the Company's adjusted
operating profit in excess of 20% of the Company's adjusted operating profit
for 1999. The annual bonus payment is capped at $5 million. Any amount
exceeding the cap is carried forward for three years and added to the bonus for
any following year where the annual bonus does not exceed the $5 million cap.
Mr. Sanders earned a bonus of $6,186,740 for 2000; therefore, $5 million was
paid to him and $1,186,740 is carried forward to be paid on a first in, first
out basis in one or more of the next three years.
Dr. Ruiz' employment agreement provides for an annual incentive bonus
payable under the Incentive Plan equal to 0.3% of the Company's adjusted
operating profit in excess of 20% of the Company's adjusted operating profit
for the previous year. The annual bonus is capped at $5 million. Dr. Ruiz
earned a bonus of $3,093,370 for 2000.
Equity Incentive Awards. A fundamental tenet of AMD's compensation policy is
that significant equity participation creates a vital long-term partnership
between executive officers and other stockholders. As of February 26, 2001,
executive officers of AMD owned an aggregate of 365,551 shares of common stock
(including restricted shares) and had the right to acquire an additional
5,377,002 shares of common stock upon the exercise of employee stock options
which are exercisable by April 27, 2001. These interests, exclusive of other
outstanding options, represented in the aggregate 1.82% of AMD's outstanding
capital stock on February 26, 2001. We intend to continue our strategy of
encouraging our executive officers to become stockholders.
The number of shares of common stock subject to option grants or restricted
stock awards is based on AMD's business plans, the executive's level of
corporate responsibility, individual performance, historical award data, and
competitive practices of high technology companies that compete with us for
executives, with annual revenues generally in excess of $1 billion and
satisfying the other criteria set forth above. In making
16
these grants, the Committee exercises its discretion and does not assign any
relative weight to one or more of these factors. Further, the Committee
generally does not consider whether an executive has exercised previously
granted options. During 2000, executive officers received options to purchase a
total of 4,653,000 shares of common stock.
The Company entered into Mr. Sanders' 2000 Agreement as an inducement for
Mr. Sanders to remain as Chairman and Chief Executive Office through the 2002
Annual Stockholders Meeting, and as Chairman through 2003. As discussed in
detail above in the section entitled, "Employment Agreements" on p. 11, the
Committee, which had the responsibility for negotiating the 2000 Agreement,
believes Mr. Sanders is uniquely qualified to protect and enhance the best
interests of the Company and its stockholders during the next three years,
during which his role is expected to transition from the Chairman and Chief
Executive Officer position to Chairman. The Committee believed that entering
into the 2000 Agreement and providing an additional equity incentive to Mr.
Sanders would be of great value to AMD and its stockholders.
The Company awarded Mr. Sanders options for 1,200,000 shares at $23.75, the
fair market value on the date of grant, November 3, 2000, as additional
consideration and as an incentive for Mr. Sanders to enter into the 2000
Agreement and as consideration for past services. These options vest 350,000
shares on November 15, 2000, 350,000 shares on November 15, 2001, 250,000
shares on November 15, 2002 and 250,000 shares on November 15, 2003--provided
Mr. Sanders is providing services to the Company on the vesting date. The
November 2003 shares are not exercisable until Mr. Sanders ceases to be an
executive officer or an earlier date on which the gain from any exercise would
be deductible to the Company under Section 162(m) of the Internal Revenue Code
(the Code), but no later than June 30, 2004.
Before deciding to grant these options to Mr. Sanders, the Committee
consulted all other members of the Board of Directors, members of senior
management, our independent compensation consultant and our independent legal
counsel. In its deliberations, the Committee considered the Company's
succession plan for the CEO and other members of senior management, the
Company's long-term strategic plan, the desire to secure Mr. Sanders' active
leadership through 2003, Mr. Sanders' performance as CEO during the previous
several years, CEO compensation data showing a significant increase in CEO
compensation since Mr. Sanders' 1996 employment agreement, and Mr. Sanders'
vital role in the recruiting and retention of key executive personnel,
including his successor, during a period of leadership transition.
2000 Stock Incentive Plan. In October 2000, upon the recommendation of the
Committee, the Board of Directors approved a new stock incentive plan. The 2000
Stock Incentive Plan (the 2000 Plan) allows options to be granted for nine
million shares, of which 2.5 million may be granted at or below fair market
value and 6.5 million must be granted at fair market value on the date of
grant. Officers and directors are not eligible under the 2000 Plan to receive
more than 45 percent of the shares that are issued at below fair market value.
No more than 45 percent of all options granted under the 2000 Plan may be to
officers and directors, and employees who are not officers or directors must
receive more than 50 percent of the shares available for grant under the 2000
Plan. As of February 26, 2001, 583,450 options were granted under the 2000
Plan.
Tax Policy. Section 162(m) of the Code limits deductions for certain
executive compensation in excess of $1 million. Certain types of compensation
are deductible only if performance criteria are specified in detail and are
contingent on stockholder approval of the compensation arrangement. AMD has
endeavored to structure its compensation plans to achieve maximum deductibility
under Section 162(m) with minimal sacrifices in flexibility and corporate
objectives.
While the Committee will consider deductibility under Section 162(m) with
respect to future compensation arrangements with executive officers,
deductibility will not be the sole factor used in ascertaining appropriate
levels or modes of compensation. Since corporate objectives may not always be
consistent with the requirements for full deductibility, a portion of the
options granted to Mr. Sanders discussed above and certain compensation paid by
AMD in the future may not be fully deductible under Section 162(m).
Conclusion. The Committee believes that long-term stockholder value is
enhanced by corporate and individual performance achievements. Through the
plans and policies described above, a significant portion of
17
AMD's executive compensation is based on corporate and individual performance,
as well as competitive pay practices. The Committee believes equity
compensation, in the form of stock options and restricted stock, is vital to
the long-term success of AMD. The Committee remains committed to this policy,
recognizing the competitive market for talented executives and that the
cyclical nature of AMD's business may result in highly variable compensation
for a particular time period. Moreover, the Committee believes that AMD's
compensation philosophy in 2000 played a substantial part in enabling AMD to
retain its key executives and obtain record financial results in 2000. The
Committee believes that long-term stockholder value was enhanced by the
corporate and individual performance achievements of AMD's executives.
COMPENSATION COMMITTEE
Charles M. Blalack
R. Gene Brown
Leonard M. Silverman
BOARD AUDIT COMMITTEE REPORT
The Board has appointed an Audit Committee consisting of three directors.
Each of the members of the Audit Committee is "independent" as defined under
the New York Stock Exchange's listing standards and is financially literate as
that qualification is interpreted by the Board. In addition, at least one
member of the Audit Committee has accounting or related financial management
expertise, as the Board interprets that qualification. The Board has adopted a
written charter with respect to the Audit Committee's roles and
responsibilities. A copy of the charter is attached as Exhibit A to this Proxy
Statement.
The Audit Committee oversees the Company's internal and independent auditors
and assists the Board in fulfilling its oversight responsibilities on matters
relating to accounting, financial reporting, internal controls and auditing by
meeting regularly with the independent auditors, internal auditing and
financial management personnel. Management is responsible for preparing the
Company's financial statements. The independent auditors are responsible for
expressing an opinion on conformity of the Company's audited financial
statements to generally accepted accounting principles.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed the Company's audited financial statements for the fiscal year
ended December 31, 2000 with the Company's management and Ernst & Young LLP,
the Company's independent auditors. The Audit Committee also discussed with
Ernst & Young LLP the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees, as amended by Statement
on Auditing Standards No. 90 (Audit Committee Communications). This included a
discussion of the independent auditors' judgments as to the quality, not just
the acceptability, of the Company's accounting principles, and such other
matters that generally accepted auditing standards require to be discussed with
the Audit Committee. The Audit Committee also received the written disclosures
and the letter from Ernst & Young LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the Audit
Committee discussed the independence of Ernst & Young LLP with that firm.
Based on the Audit Committee's review and discussions noted above, the Audit
Committee recommended to the Board, and the Board approved, the audited
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000 for filing with the Securities and
Exchange Commission.
The Audit Committee and the Board also have recommended, subject to
stockholder approval, the selection of Ernst & Young LLP as the Company's
independent auditors for fiscal 2001.
AUDIT COMMITTEE
R. Gene Brown
Charles M. Blalack
Robert B. Palmer
18
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ADVANCED MICRO DEVICES, S&P 500 INDEX AND
TECHNOLOGY-500 INDEX
The following graph shows a five-year comparison of cumulative total return
on our common stock, the S&P 500 Index and the Technology-500 Index from
December 31, 1995 through December 31, 2000. The past performance of our common
stock is no indication of future performance.
[PERFORMANCE GRAPH]
This graph was plotted using the following data:
Year ending December 31,
--------------------------------------------
1995 1996 1997 1998 1999 2000
---- ------- ------- ------- ------- -------
AMD.............................. . $100 $156.06 $107.58 $175.56 $175.38 $167.42
S&P 500 Index...................... $100 $122.96 $163.98 $210.85 $255.21 $231.98
Technology-500 Index............... $100 $141.87 $178.89 $309.44 $541.92 $325.42
19
ITEM 2--RATIFICATION OF INDEPENDENT AUDITORS
Unless you indicate otherwise, your proxy will vote FOR the ratification of
the appointment of Ernst & Young LLP as the independent auditors for the
current year. Ernst & Young LLP has been our independent auditors since our
incorporation in 1969.
Audit services of Ernst & Young LLP during the 2000 fiscal year included the
examination of our consolidated financial statements and services related to
filings with the Securities and Exchange Commission (SEC) and other regulatory
bodies. Fees for the last annual audit were $1.5 million and all other fees
were $1.9 million, including audit related services of $1.4 million and non-
audit services of $0.5 million. Audit related services generally include fees
for statutory audits, accounting consultations, internal audits, employee
benefits plan audits, business dispositions and SEC registration statements.
Our Audit Committee meets with Ernst & Young LLP several times a year. At
such times, the Audit Committee reviews both audit and non-audit services
performed by Ernst & Young LLP for the preceding year, as well as the fees
charged for such services. Among other things, the Committee examines the
effect that the performance of non-audit services may have upon the
independence of the auditors.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement if he or she so
desires. He or she will also be available to respond to appropriate questions
from stockholders.
Your Board of Directors unanimously recommends that you vote "FOR" the
ratification of the appointment of Ernst & Young LLP as the independent
auditors for the current year. Unless you indicate otherwise, your proxy will
vote "FOR" ratification.
ITEM 3--APPROVAL OF AMENDMENTS TO THE ADVANCED MICRO DEVICES, INC. 1996 STOCK
INCENTIVE PLAN
The Company's stockholders are also being asked to approve amendments to the
Advanced Micro Devices, Inc. 1996 Stock Incentive Plan (the 1996 Plan) to
increase the numbers of shares authorized for issuance under the 1996 Plan, to
increase the number of stock options awarded to non-employee members of the
Board of Directors (Outside Directors) and to change the grant dates, vesting
and exercisability of new stock option grants to Outside Directors. These
amendments will provide us with an additional 8,000,000 shares of common stock
that can be awarded to our employees, consultants and advisors. These
amendments will also increase the total number of shares granted and change the
grant dates and vesting schedule of stock options automatically granted to
Outside Directors upon their re-election to the Board (the Annual Option) as
follows: 3,000 shares will be granted on April 30, July 31, October 31 and
December 15, for a total of 12,000 shares, in the year of re-election to the
Board. The Annual Option grants will vest one-third (1,000 shares each, for a
total of 4,000 shares) on April 30 of the year following grant, and the
remaining two-thirds will vest in monthly increments thereafter over the next
two years. The new formula option grants upon a Board member's initial election
(the First Option) will be granted and vest as follows: 7,500 shares will be
granted on April 30, July 31, October 31 and December 15, for a total of 30,000
shares, in the year of first election to the Board. The First Option grants
will vest one-third (2,500 shares each, for a total of 10,000 shares) on April
30 of the year following grant, and the remaining two-thirds will vest in
monthly increments thereafter over the next two years. Finally, these
amendments provide that Outside Directors will have two years from the
termination of their Board membership to exercise these new options.
The purpose of the 1996 Plan is to enable us to recruit and retain capable
employees and consultants for the successful conduct of our business and to
provide an additional incentive to officers and other eligible key employees,
consultants and advisors and Outside Directors upon whom rest major
responsibilities for our successful operation and management. The 1996 Plan is
intended to enable us to attract qualified personnel in a highly competitive
labor market. We intend future increases in the value of securities granted
under the 1996 Plan to form part of the compensation for services to be
rendered by these persons in the future.
20
As of February 26, 2001, approximately 11,668,936 shares were available for
future grants, 43,516,660 shares were subject to outstanding options and
298,546 shares of restricted stock were outstanding from all of our stock
incentive plans. The weighted average exercise price and weighted average
remaining term of the outstanding options were $20.81 and $8.07, respectively.
The stockholders approved the 1996 Plan on April 24, 1996, with an effective
date of February 7, 1996. Our Board of Directors approved amendments to the
1996 Plan in October 1996 and in April 1998. The stockholders approved these
amendments on April 24, 1997 and April 30, 1998, respectively. Our Board of
Directors approved the proposed amendments to the 1996 Plan, to be voted on at
the 2001 Annual Meeting of Stockholders in January and March 2001. A summary of
the 1996 Plan follows.
Summary Description of the 1996 Plan
Number of Shares Subject to the 1996 Plan. The 1996 Plan reserves for
issuance up to 34,900,000 shares of AMD common stock pursuant to the exercise
of options granted under the plan. If the stockholders approve the amendment to
the plan, an additional 8,000,000 shares may be issued pursuant to the exercise
of options under the plan. The number of shares is subject to adjustment for
any future stock dividends, splits, mergers, combinations, or other changes in
capitalization as described in the 1996 Plan. The market value of the Company's
common stock on the New York Stock Exchange as of February 26, 2001 was $22.83
per share.
Administration and Duration of the 1996 Plan. Authority to administer the
1996 Plan and to grant awards rests with the Board of Directors. The Board has
delegated its authority to grant awards to any employee (including officers who
are members of the Board) to the Compensation Committee. The Board has also
delegated authority to senior management to grant awards up to 50,000 shares
per year to any employee who is not also an officer or member of the Board.
The 1996 Plan will terminate on February 7, 2006, but the Board retains the
right to suspend, terminate or amend the 1996 Plan at any time. On termination
of the 1996 Plan, outstanding awards remain in effect until they expire by
their terms, are forfeited or otherwise terminate.
Eligibility for Participation. Options may be granted under the 1996 Plan to
our key full- or part-time employees, officers, consultants and advisors. The
maximum number of shares that may be granted to an individual under the 1996
Plan is four million. As of February 26, 2001, approximately 3,800 persons were
eligible to receive options under the 1996 Plan. 6,347,534 shares had been
issued upon the exercise of options under the 1996 Plan, and 27,533,874 shares
were subject to outstanding options under the 1996 Plan. As of February 26,
2001, 1,018,592 shares were available for future option grants under the 1996
Plan.
Over the term of the 1996 Plan through February 26, 2001, the following
executive officers have been granted the following options to purchase shares
under the 1996 Plan: Mr. Sanders, 4,000,000 shares; Dr. Ruiz, 1,500,000 shares;
Mr. Herb, 524,000 shares; Dr. Siegle, 490,000 shares; and Mr. McCoy, 625,000
shares. During this period, our executive officers as a group have been granted
options to purchase an aggregate of 8,987,000 shares, and all employees as a
group (excluding executive officers) have been granted options to purchase an
aggregate of 33,300,062 shares under the 1996 Plan. During this period, our
current directors as a group (excluding executive officers) have been granted
options to purchase 270,000 shares under the 1996 Plan.
Terms of Options. Options granted to employees may be either incentive stock
options (ISOs) which satisfy the requirements of Code Section 422 or
nonstatutory options (NSOs) which are not intended to satisfy such
requirements. Options granted to Outside Directors, consultants and advisors
may only be NSOs.
The exercise price of options granted under the 1996 Plan may not be less
than the fair market value of the Company's common stock on the date of grant.
Payment of the exercise price may be made in cash, by certified check,
promissory note, other shares of our common stock, or through a same day sale
program. In addition, the Board may authorize loans and loan guarantees for the
exercise price. The term of an ISO may not exceed ten years. The term of an NSO
may not exceed ten years plus one day. We did not grant any ISOs in 2000.
21
Options granted to employees generally are made exercisable in one
installment of 25 percent and monthly for the three years thereafter, although
the actual dates of exercise may be modified by the Board or its delegate so
long as the option holder's interest is not diminished without his/her consent.
Options may be made exercisable only under the conditions the Board or its
delegate may establish, such as, if the optionee remains employed until a
specified date, or if specified performance goals have been met. If an
optionee's employment terminates because of misconduct, the option terminates
immediately. If an optionee's employment terminates for any reason other than
misconduct, the option remains exercisable for a fixed period of three months
(twelve months in the case of vice presidents or where employment has
terminated because of death or disability) or a longer period to be fixed by
the Board or its delegate up to the remainder of the option's term. In no case
may an option be exercised after the expiration of its term. An option may be
exercised by the optionee or his/her guardian or legal representative.
Outside Director Option Program. If these amendments are approved by
stockholders, an Outside Director who has not previously been elected or
appointed as a member of the Board will be granted a First Option as follows:
7,500 shares will be granted on April 30, July 31, October 31 and December 15,
for a total of 30,000 shares, in the year of first election to the Board. The
First Option grants will vest one-third (2,500 shares each, for a total of
10,000 shares) on April 30 of the year following grant, and the remaining two-
thirds will vest in monthly increments thereafter over the next two years. Upon
re-election to the Board, an Outside Director will automatically be granted an
Annual Option as follows: 3,000 shares will be granted on April 30, July 31,
October 31 and December 15, for a total of 12,000 shares. The Annual Option
grants will vest one-third (1,000 shares each, for a total of 4,000 shares) on
April 30 of the year following grant, and the remaining two-thirds will vest in
monthly increments thereafter over the next two years. These new options may be
exercised for up to two years following termination of their service on the
Board to the extent the options are vested on the date of termination. Options
which are not vested on the date of termination are canceled. Options held by
Outside Directors will become fully vested for exercise upon a change of
control. See the section entitled "Acceleration in Connection with a Change of
Control" below.
Acceleration in Connection with a Change of Control. If a participant's
employment is terminated for any reason other than for cause (or, with respect
to certain participants who are executive officers as defined in the 1996 Plan,
there is a constructive termination of their employment) within one year after
a change of control, all options held by that participant become fully vested.
A constructive termination occurs if the participant resigns because of a
diminution or adverse change in his or her conditions of employment. Options
held by Outside Directors become fully vested upon a change of control without
regard to termination of their service as a director. In general, a "Change of
Control" will be deemed to have occurred upon the acquisition of more than 20%
of either the then outstanding shares of AMD common stock or the combined
voting power of our then outstanding securities, a change in two-thirds of the
Board of Directors over a two-year period, certain mergers or corporate
transactions in which we are not the surviving entity, or a liquidation of the
Company or a sale of substantially all of our assets. The 1996 Plan change of
control provisions are not applicable to options granted to Mr. Sanders or Dr.
Ruiz.
Plan Benefits Table. The following table shows in the aggregate the Annual
Options that will be granted to Outside Directors under the 1996 Plan in 2001,
if these amendments are approved by the stockholders. Since all current Outside
Directors are incumbent directors, no Outside Director who is elected at the
2001 Annual Meeting of Stockholders will receive a First Option. Because future
awards to our executive officers and employees are discretionary and cannot be
determined at this time, the table does not reflect any of those awards.
Name and Position Exercise Price (per share) Number of Shares
----------------- ---------------------------------- ----------------
All current directors who
are not executive officers
as a group (6 persons).... Fair market value on date of grant 72,000
22
Federal Tax Consequences--Nonstatutory Options. No taxable income is
recognized by an optionee upon the grant of an NSO. The optionee generally will
recognize ordinary income in the year in which the option is exercised equal to
the excess of the fair market value of the purchased shares at the date of
exercise over the exercise price, and the optionee will be required to satisfy
the tax withholding requirements applicable to such income which the optionee
may elect to satisfy by having us withhold shares from the shares otherwise due
or by delivering a sufficient number of previously owned shares of our common
stock to us. On ultimate sale of the shares, the optionee will generally
recognize as capital gain or loss the difference between the fair market value
on the date of exercise and the ultimate sales price.
Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the grant of an ISO and, except in determining alternative minimum
tax, no taxable income is recognized at the time the ISO is exercised. The
optionee will, however, recognize taxable income or loss in the year in which
the shares are otherwise disposed of or sold.
For federal tax purposes, dispositions of ISOs are divided into two
categories: qualifying and disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other taxable disposition of
such shares is made more than two years after the grant date of the option and
more than one year after the exercise date. If the optionee fails to satisfy
either of these two holding periods before the sale or other disposition of the
shares, then a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
mid-term capital gain or long-term capital gain in an amount equal to the
excess of (i) the amount realized upon the sale or other disposition over (ii)
the option price paid for the shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the fair market value of the shares at
the date of exercise (or, if lower, the fair market value of the shares on the
date of disposition) over (ii) the option price paid will be taxable as
ordinary income. Any additional gain recognized upon the disposition will be a
capital gain, and that gain will be mid-term if the shares have been held for
more than one year following exercise of the option and long-term if the shares
have been held for more than eighteen months following exercise of the option.
Alternative Minimum Tax. The difference between the fair market value of
shares subject to an ISO on the date of exercise and the exercise price of the
shares is an adjustment to income for purposes of the alternative minimum tax
(the AMT). The AMT (imposed to the extent it exceeds the taxpayer's regular
tax) is 26% on the portion of an individual taxpayer's alternative minimum
taxable income that would otherwise be ordinary income (28% in the case of
alternative minimum taxable income in excess of $175,000). A maximum 20% AMT
rate applies to the portion of alternative minimum taxable income that would
otherwise be treated as net capital gain. Alternative minimum taxable income is
determined by adjusting regular taxable income for certain items, increasing
that income by certain tax preference items (including the difference between
the fair market value of the shares subject to the ISO on the date of exercise
and the exercise price) and reducing this amount by the applicable exemption
amount ($45,000 in case of a joint return, subject to reduction under certain
circumstances). If a disqualifying disposition of the shares subject to an ISO
occurs in the same calendar year as exercise of the ISO, there is no AMT
adjustment with respect to those shares. Also, upon a sale of shares that is a
qualifying disposition, alternative minimum taxable income is reduced in the
year of sale by the excess of the fair market value of the shares subject to
the ISO at exercise over the amount paid for the shares.
Deduction to the Company. We will be entitled to an income tax deduction
equal to the amount of ordinary income recognized by the optionee in connection
with the exercise of an NSO. The deduction generally will be allowed for our
taxable year in which occurs the last day of the calendar year in which the
optionee recognizes ordinary income in connection with the exercise.
If the optionee makes a disqualifying disposition of the shares purchased on
exercise of an ISO, then we will be entitled to an income tax deduction for the
taxable year in which the disposition occurs, equal to the amount which is
taxable to the employee as ordinary income. In no other instance will we be
allowed a deduction with respect to the optionee's disposition of the shares
purchased upon exercise of an ISO.
Your Board of Directors unanimously recommends that you vote "FOR" approval
of the amendments to the 1996 Plan. Unless you indicate otherwise, your proxy
will vote "FOR" approval.
23
ITEM 4--REAPPROVAL OF THE PERFORMANCE GOALS UNDER THE 1996 EXECUTIVE INCENTIVE
PLAN
Our stockholders are being asked to reapprove the performance goals under
the 1996 Executive Incentive Plan (the Incentive Plan). The Board adopted the
Incentive Plan effective February 7, 1996. The Incentive Plan was approved by
the stockholders on April 25, 1996.
Under Section 162(m) of the Code, the federal income tax deductibility of
compensation paid to our Chief Executive Officer and to each of our next four
most highly compensated executive officers may be limited to the extent that it
exceeds $1,000,000 in any one year. We can deduct compensation in excess of
that amount if it qualifies as "performance-based compensation" under Section
162(m) of the Code. For compensation paid under the Incentive Plan to qualify
as "performance-based compensation," the Incentive Plan must be approved by
stockholders. Regulations under Section 162(m) require that stockholders
reapprove performance goals under the Incentive Plan every five years.
Therefore, we are asking our stockholders to reapprove the performance goals at
this time. The Incentive Plan is intended to permit us to pay incentive
compensation which qualifies as performance-based compensation, thereby
permitting us to continue to receive a federal income tax deduction for the
payment of this incentive compensation.
If stockholders reapprove the performance goals, awards will continue to be
made under the Incentive Plan in 2002 and thereafter. Performance goals may be
based on business criteria including: return on net assets, net income,
earnings per share, return on equity, return on investment, market share,
operating income, strategic positioning programs, cash flow, stockholder
return, revenue, new product releases and revenue growth.
We have had a longstanding practice of linking key employees' compensation
to corporate performance. This increases employee motivation to improve
stockholder value--the employee's reward is directly related to our success. A
performance-based incentive plan rewards key employees for achieving objectives
for our financial performance. The purposes of the Incentive Plan are to
motivate key employees to improve stockholder value by linking a portion of
their cash compensation to our financial performance, reward key employees for
improving our financial performance and help attract and retain key employees.
Summary Description of the Incentive Plan
The Incentive Plan is administered by the Compensation Committee. The
members of the Compensation Committee must qualify as "outside directors" under
Section 162(m) in order for cash awards under the Incentive Plan to qualify as
deductible performance-based compensation under Section 162(m). Subject to the
terms of the Incentive Plan, the Compensation Committee has the sole discretion
to determine the key employees who shall be granted awards, and the amounts,
terms and conditions of each award. During any fiscal year no participant may
receive an award of more than $5,000,000.
In selecting participants for the Incentive Plan, the Compensation Committee
chooses our key employees who are likely to have a significant effect on our
success. The actual number of employees who will receive awards under the
Incentive Plan cannot be determined because eligibility for participation is in
the discretion of the Compensation Committee. However, for 2000, there were 43
employees approved for participation in the Vice President Incentive Program.
Participation in future years will be in the discretion of the Compensation
Committee, but we currently expect that a similar number of employees will
participate in each year.
Under the Incentive Plan, the Compensation Committee will determine the
fiscal year or other performance period for measuring actual performance (the
performance period). The Compensation Committee will establish (a) the
performance goals which are to be monitored during the performance period and
the target level of performance for each business criterion and (b) a formula
for calculating a participant's award depending on how actual performance
compared to the pre-established performance goals. Performance goals
24
may be based on business criteria including: return on net assets, net income,
earnings per share, return on equity, return on investment, market share,
operating income, strategic positioning programs, cash flow, stockholder
return, revenue, new product releases and revenue growth.
The Compensation Committee may set performance periods and performance goals
which differ from participant to participant. For example, the Compensation
Committee may choose performance goals based on either company-wide or business
unit results, as deemed appropriate in light of the participant's specific
responsibilities. For purposes of qualifying awards as performance-based
compensation under Section 162(m), the Compensation Committee may (but is not
required to) specify performance goals for the entire company and/or one of our
business units.
After the end of each performance period, a determination will be made as to
the extent to which the performance goals applicable to each participant were
achieved or exceeded. The actual award (if any) for each participant will be
determined by the level of actual performance which was achieved. However the
Compensation Committee retains discretion to eliminate or reduce the actual
award payable to any participant below that which otherwise would be payable
under the applicable formula. Awards under the Incentive Plan generally will be
payable in cash after the end of the performance period during which the award
was earned.
Given that payments under the Incentive Plan are determined by comparing
actual performance to the performance goals established by the Compensation
Committee, it is not possible to conclusively state the amount of benefits
which will be paid under the Incentive Plan for any performance period. The
following table sets forth the awards that would have been earned by each of
the following persons and groups under the Incentive Plan in 2001. Because the
2001 performance goals have not yet been established the amounts in the table
have been calculated by applying the performance goals that were adopted by the
Compensation Committee for 2000 under our current bonus plan based on 2000
results.
Projected Dollar
Value Based on
Name and Position 2000 Objectives
----------------- ----------------
W. J. Sanders III........................................ $ 5,000,000
Chairman and Chief Executive Officer
Hector de J. Ruiz........................................ $ 3,093,370
President and Chief Operating Officer
Robert R. Herb........................................... $ 2,620,504
Executive Vice President and Chief Sales and Marketing
Officer
William T. Siegle........................................ $ 956,288
Senior Vice President, Technology and Manufacturing
Operations,
Chief Scientist
Thomas M. McCoy.......................................... $ 402,804
Senior Vice President, General Counsel and Secretary
All executive officers as a group (10 persons)........... $16,463,545
All other Vice President Incentive Program participants
(33 persons)............................................ $ 6,085,684
The Compensation Committee may amend or terminate the Incentive Plan at any
time and for any reason, as required or appropriate, in order to continue the
plan's qualification under Section 162(m). Material amendments to the Incentive
Plan will be subject to stockholder approval.
As discussed above, if the stockholders reapprove the performance goals of
the Incentive Plan, the compensation payable under the Incentive Plan is
expected to qualify as "performance-based compensation" and be fully deductible
by us.
Your Board of Directors unanimously recommends that you vote "FOR"
reapproval of the performance goals of the Incentive Plan. Unless you indicate
otherwise, your proxy will vote "FOR" reapproval.
25
ITEM 5--APPROVAL OF THE AMENDMENTS TO THE ADVANCED MICRO DEVICES, INC. 2000
EMPLOYEE STOCK PURCHASE PLAN
In February 2000, our Board of Directors adopted the 2000 Employee Stock
Purchase Plan (ESPP) effective February 1, 2001, authorizing 500,000 shares of
our common stock to be issued to employees under the ESPP. The ESPP was
approved by the stockholders at the 2000 Annual Meeting of Stockholders. In
2001, we are expanding participation in the ESPP to include international
locations. As of February 26, 2001, there were 500,000 shares of AMD common
stock remaining available for issuance under the ESPP. Our stockholders are
being asked to approve amendments to the ESPP to increase the total number of
shares authorized to be issued under the ESPP from 500,000 to 7,500,000 and to
include part-time employees and employees with less than five months of service
as eligible participants under the ESPP. The essential features of the ESPP, as
proposed, are outlined below.
Summary Description of the ESPP
Purpose. The purpose of the ESPP is to provide our employees (including
officers) and participating subsidiaries with an opportunity to purchase our
common stock through payroll deductions. The Board of Directors believes that
equity participation in the ESPP provides employees at all levels with a
greater incentive to contribute to our success.
Administration. The ESPP will be administered by a committee appointed by
the Board. Offerings under the ESPP will have a duration of three months and
commence on the first business day on or after February 1, May 1, August 1 and
November 1 of each year, unless otherwise specified by the Board of Directors.
Eligibility and Participation. If these amendments are approved by
stockholders, any employee, including those who are customarily employed for
less than 20 hours per week and less than five months per calendar year by us
or our participating subsidiaries, will be eligible to participate in the ESPP.
Employees will become participants in the ESPP by delivering to us a
subscription agreement within a specified period of time before the
commencement of each offering period.
No employee who owns 5% or more of the total combined voting power or value
of all classes of shares of our stock or our subsidiaries' stock, including
shares which may be purchased under the ESPP or pursuant to any other options,
will be permitted to purchase shares under the ESPP. In addition, no employee
will be entitled to purchase more than $25,000 worth of shares under the ESPP
in any calendar year based on the fair market value of the shares at the time
the option is granted.
We estimate approximately 14,000 of our or our participating subsidiaries'
current employees will be eligible to participate in the ESPP, as amended. We
are not presently able to determine the amount of benefits which may be
received by employees under the ESPP.
Payroll Deductions. The purchase price of the shares will be accumulated by
payroll deductions over each offering period. The deductions may not be greater
than 20% of a participant's compensation, nor less than a minimum established
by the Board or its delegate. Compensation, for purposes of the ESPP, includes
salary, shift differential, and lead pay, but excludes bonuses, special awards,
50% of certain commissions, overtime, income attributable to option exercises,
reimbursements and allowances. A participant may increase or decrease his/her
rate of payroll deductions once during each offering period.
All payroll deductions or contributions of a participant will be credited to
his/her account under the ESPP and become our general funds. These funds may be
used for any corporate purpose. No charges for administrative or other costs
may be made by us against the payroll deductions or contributions.
26
Purchase Price. The price at which shares will be sold under the ESPP is the
lower of 85% of the fair market value of our common stock at the beginning of
the offering period or 85% of the fair market value of our common stock as of
the end of such period.
Number of Shares. The ESPP authorizes a total of 7,500,000 shares of our
common stock for issuance under the ESPP, subject to stockholder approval. The
market value of our common stock on the New York Stock Exchange as of February
26, 2001 was $22.83 per share.
Withdrawal from the ESPP. A participant may terminate his/her interest in a
given offering by withdrawing all of the accumulated payroll deductions
credited to the participant's account five business days before the end of the
offering period. The withdrawal of accumulated payroll deductions or
contributions automatically terminates the employee's interest in that
offering. As soon as practicable after withdrawal, the payroll deductions
credited to a participant's account are returned to the participant without
interest. A participant's withdrawal from an offering does not have any effect
upon the participant's eligibility to participate in subsequent offerings under
the ESPP.
Termination of Employment. Termination of a participant's employment for any
reason, including retirement or death, cancels his or her participation in the
ESPP immediately. In such event, the payroll deductions or contributions
credited to the participant's account will be returned to the participant, or
in the case of death, to the person or persons entitled thereto, without
interest.
Changes in Capitalization. In the event of any stock dividend, stock split,
spin-off, recapitalization, merger, consolidation, exchange of shares or other
change in capitalization, the number of shares then subject to an option and
the number of authorized shares remaining available to be sold shall be
increased or decreased appropriately, with other adjustment as may be deemed
necessary or equitable by the Board, including adjustments to the price per
share.
Transferability. No rights or accumulated payroll deductions of an employee
under the ESPP may be pledged, assigned or transferred for any reason, and any
attempt to do so may be treated by us as an election to withdraw from the ESPP.
Amendment and Termination of the Plan. The Board of Directors may at any
time amend or terminate the ESPP, except that termination cannot affect options
previously granted nor may any amendment make any change in an existing option
which adversely affects the rights of any participant without the participant's
consent. No amendment may be made to the ESPP without prior or subsequent
stockholder approval, if stockholder approval would be required to meet the
requirements of Section 423 of the Code or to satisfy the requirements of a
stock exchange on which our shares are listed.
United States Federal Income Tax Consequences. The ESPP, and the right of
participants to make purchases thereunder, is intended to qualify as an
"employee stock purchase plan" in the United States under the provisions of
Section 423 of the Code. This section describes only the United States federal
tax consequences of the ESPP. Under Section 423 of the Code, no income will be
taxable to a U. S. participant at the time of grant of the option or purchase
of shares. We will be entitled to a deduction for amounts taxed as ordinary
income to a U. S. participant only to the extent that ordinary income must be
reported upon disposition of shares by the U. S. participant before the
expiration of the holding period described below. A U. S. participant may
become liable for tax upon disposition of the shares acquired, as summarized
below.
1. If the shares are sold or disposed of, including by way of gift, at
least two years after the date of the beginning of the offering period the
participant will recognize ordinary income in an amount equal to the lesser
of (a) the excess of the value of the shares at the time of such
disposition over the purchase price of the shares or (b) 15% of the value
of the shares at the beginning of the offering period. Any further gain
upon such disposition will be treated as long-term capital gain. If the
sale price is less than the purchase price, there is no ordinary income and
the participant has a capital loss for the difference.
27
2. If the shares are sold or disposed of, including by way of gift or
exchange, before the expiration of the two-year period described above, the
excess of the value of the shares on the date of purchase over the purchase
price will be treated as ordinary income to the participant. This amount
will constitute ordinary income in the year of sale or other disposition
even if no gain is realized on the sale or other disposition. A capital
loss will be recognized if the sale price is lower than the value of the
shares on the date of purchase but any such loss will not affect the
ordinary income recognized upon the disposition.
Your Board of Directors unanimously recommends that you vote "FOR" approval
of the amendments to the ESPP. Unless you indicate otherwise, your proxy will
vote "FOR" approval.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Our 2000 Annual Report, which includes our audited financial statements for
the fiscal year ended December 31, 2000, has accompanied or preceded this proxy
statement. We will provide, without charge, upon your written request, a copy
of our most recent Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission. Requests should be directed to our Corporate Secretary at
Advanced Micro Devices, Inc., One AMD Place, P.O. Box 3453, Sunnyvale,
California 94088-3453.
AMD, the AMD logo and combinations thereof and Advanced Micro Devices are
either registered trademarks or trademarks of Advanced Micro Devices, Inc.
28
EXHIBIT A
ADVANCED MICRO DEVICES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
The Audit Committee of the Board of Directors assists the Board in
fulfilling its responsibilities to the shareholders and the investment
community relating to overseeing and monitoring the integrity of the corporate
accounting, auditing and reporting practices of the Company. The Audit
Committee shall be composed of at least three directors all of whom are
financially literate (generally knowledgeable in financial and auditing
matters), and at least one of whom has accounting or related financial
management expertise. Members of the Audit Committee shall be free of any
relationship to the Company that may interfere with the exercise of their
independent judgement. The Audit Committee is expected to maintain free and
open communication with the independent auditors, internal auditors and the
management of the Company. The Audit Committee will investigate any matter
brought to its attention within the scope of its duties, with the power to
retain outside counsel or other experts for this purpose. The Committee's
activities shall have a Chairperson, and shall meet at least four times
annually. This charter will be reviewed and reassessed annually.
Responsibilities
The Audit Committee's responsibilities include:
. Reviewing and recommending to the Board the selection and retention of
the independent auditors that audit the financial statements of the
Company. The Committee will ensure that the independent auditors have a
clear understanding that they are ultimately accountable to the Board and
the Committee. The Committee will review the independent auditor's
written communication delineating their relationships and professional
services and will take appropriate action to ensure the continuing
independence of the auditors. The Committee will provide the opportunity,
at least annually, for the internal and independent auditors to meet with
the members of the Committee without members of management present.
. Meeting with the independent auditors and financial management of the
Company to review the scope of the proposed audit, timely quarterly
reviews, the audit procedures to be utilized and the adequacy of the
independent auditor's compensation. At the conclusion of the annual
audit, the Committee will review any comments or recommendations of the
independent auditors.
. Reviewing with the independent auditors, the Company's internal auditor
and financial and accounting personnel, the adequacy and effectiveness of
the accounting and financial controls of the Company.
. Reviewing and concurring with the appointment, termination or replacement
of the director of internal control, who reports to the Chairman of the
Audit Committee. The Committee will review the internal audit function,
including the proposed audit plans and the coordination of those plans
with the independent auditors. The Committee will review progress reports
on and results from internal audit activities.
. At least annually, submitting a signed report for inclusion in the
Company's proxy materials with respect to the Committee and its
functioning, as required by applicable SEC rules.
. Reviewing reports received from outside auditors under any applicable
auditing standard and reports received from regulators, and other legal
and regulatory matters that may have a material effect on the financial
statements or related Company compliance policies.
. Inquiring of management, the internal auditor, and the independent
auditors about significant risks or exposures. The Committee will assess
the steps management has taken to minimize such risks to the Company.
. Reviewing accounting and financial human resources and succession
planning within the Company.
. Reporting on the meetings of the Audit Committee to the full Board of
Directors.
A-1
1770-PS-01
AMD-24513A
APPENDIX ONE
ADVANCED MICRO DEVICES, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to encourage key personnel, Outside Directors
and advisors whose long-term service is considered essential to the Company's
continued progress, to remain in the service of the Company or its Affiliates.
By means of the Plan, the Company also seeks to attract new key employees,
Outside Directors and advisors whose future services are necessary for the
continued improvement of operations. The Company intends future increases in
the value of securities granted under this Plan to form part of the compensation
for services to be rendered by such persons in the future. It is intended that
this purpose will be effected through the granting of Options.
2. DEFINITIONS
The terms defined in this Section 2 shall have the respective meanings set
forth herein, unless the context otherwise requires.
(a) "Affiliate" The term "Affiliate" shall mean any corporation,
partnership, joint venture or other entity in which the Company holds an equity,
profits or voting interest of thirty percent (30%) or more.
(b) "Board" The term "Board" shall mean the Company's Board of Directors
or its delegate as set forth in Sections 3(d) and 3(e) below.
(c) "Change of Control" Unless otherwise defined in a Participant's
employment agreement, the term "Change of Control" shall be deemed to mean any
of the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company or any of its
Affiliates) representing more than 20% of either the then outstanding shares of
the Common Stock of the Company or the combined voting power of the Company's
then outstanding voting securities; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board and
any new director (other than a director designated by a person who has entered
into an agreement or arrangement with the Company to effect a transaction
described in clause (i) or (ii) of this sentence) whose appointment, election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) there is consummated a merger or
consolidation of the Company or subsidiary thereof with or into any other
corporation, other than a merger or
consolidation which would result in the holders of the voting securities of the
Company outstanding immediately prior thereto holding securities which represent
immediately after such merger or consolidation more than 50% of the combined
voting power of the voting securities of either the Company or the other entity
which survives such merger or consolidation or the parent of the entity which
survives such merger or consolidation; or (iv) the stockholders of the Company
approve a plan of complete liquidation of the Company or there is consummated
the sale or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 80% of the
combined voting power of the voting securities of which are owned by persons in
substantially the same proportions as their ownership of the Company immediately
prior to such sale. Notwithstanding the foregoing (i) unless otherwise provided
in a Participant's employment agreement, no "Change of Control" shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
prior to such transaction or series of transactions and (ii) unless otherwise
provided in a Participant's employment agreement, "Change of Control" shall
exclude the acquisition of securities representing more than 20% of either the
then outstanding shares of the Common Stock of the Company or the combined
voting power of the Company's then outstanding voting securities by the Company
or any of its wholly owned subsidiaries, or any trustee or other fiduciary
holding securities of the Company under an employee benefit plan now or
hereafter established by the Company.
(d) "Code" The term "Code" shall mean the Internal Revenue Code of 1986,
as amended to date and as it may be amended from time to time.
(e) "Company" The term "Company" shall mean Advanced Micro Devices, Inc.,
a Delaware corporation.
(f) "Constructive Termination" The term "Constructive Termination" shall
mean a resignation by a Participant who has been elected by the Board as a
corporate officer of the Company due to diminution or adverse change in the
circumstances of such Participant's employment with the Company, as determined
in good faith by the Participant; including, without limitation, reporting
relationships, job description, duties, responsibilities, compensation,
perquisites, office or location of employment. Constructive Termination shall
be communicated by written notice to the Company, and such termination shall be
deemed to occur on the date such notice is delivered to the Company.
(g) "Disinterested Director" The term "Disinterested Director" shall mean
a member of the Board who has not, during the one year prior to service as an
administrator of the Plan, or during such service, been granted or awarded
equity securities of the Company pursuant to this Plan (except for automatic
grants of options to Outside Directors pursuant to Section 8 hereof) or any
other plan of the Company or any of its Affiliates.
(h) "Fair Market Value per Share" The term "Fair Market Value per Share"
shall mean as of any day (i) the closing price for Shares on the New York Stock
Exchange as reported
2
on the composite tape on the day as of which such determination is being made
or, if there was no sale of Shares reported on the composite tape on such day,
on the most recently preceding day on which there was such a sale, or (ii) if
the Shares are not listed or admitted to trading on the New York Stock Exchange
on the day as of which the determination is made, the amount determined by the
Board or its delegate to be the fair market value of a Share on such day.
(i) "Insider" The term "Insider" means an officer or director of the
Company or any other person whose transactions in the Company's Common Stock are
subject to Section 16 of the Exchange Act.
(j) "ISO" The term "ISO" shall mean a stock option described in Section
422(b) of the Code.
(k) "NSO" The term "NSO" shall mean a nonstatutory stock option not
described in Section 422(b) of the Code.
(l) "Option" The term "Option" shall mean (except as herein otherwise
provided) a stock option granted under this Plan.
(m) "Outside Director" The term "Outside Director" shall mean a member of
the Board of Directors of the Company who is not also an employee of the Company
or an Affiliate.
(n) "Participant" The term "Participant" shall mean any person who holds
an Option or Restricted Stock Award granted under this Plan.
(o) "Plan" The term "Plan" shall mean this Advanced Micro Devices, Inc.
1996 Stock Incentive Plan, as amended from time to time.
(p) "Shares" The term "Shares" shall mean shares of Common Stock of the
Company and any shares of stock or other securities received as a result of the
adjustments provided for in Section 11 of this Plan.
3. ADMINISTRATION
(a) The Board, whose authority shall be plenary, shall administer the Plan
and may delegate part or all of its administrative powers with respect to part
or all of the Plan pursuant to Section 3(d); provided, however, that the Board
shall delegate administration of the Plan to the extent required by Section
3(e).
(b) Except for automatic grants of Options to Outside Directors pursuant to
Section 8 hereof, the Board or its delegate shall have the power, subject to and
within the limits of the express provisions of the Plan:
(1) To grant Options pursuant to the Plan.
(2) To determine from time to time which of the eligible persons shall
be granted Options under the Plan, the number of Shares for which each
Option shall be granted, the term of each granted Option and the time or
times during the term of each
3
Option within which all or portions of each Option may be exercised (which
at the discretion of the Board of its delegate may be accelerated.)
(3) To prescribe the terms and provisions of each Option granted
(which need not be identical) and the form of written instrument that shall
constitute the Option agreement.
(4) To take appropriate action to amend any Option hereunder,
including to amend the vesting schedule of any outstanding Option, or to
cause any Option granted hereunder to cease to be an ISO, provided that no
such action adverse to a Participant's interest may be taken by the Board
or its delegate without the written consent of the affected Participant.
(5) To determine whether and under what circumstances an Option may be
settled in cash or Shares.
(c) The Board or its delegate shall also have the power, subject to and
within the limits of the express provisions of this Plan:
(1) To construe and interpret the Plan and Options granted under the
Plan, and to establish, amend and revoke rules and regulations for
administration of the Plan. The Board or its delegate, in the exercise of
this power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission or
inconsistency in the Plan or in any Option agreement in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective.
(2) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company.
(d) The Board may, by resolution, delegate administration of the Plan
(including, without limitation, the Board's powers under Sections 3(b) and (c)
above), under either or both of the following:
(1) with respect to the participation of or granting of Options to an
employee, consultant or advisor who is not an Insider, to a committee of
one or more members of the Board, whether or not such members of the Board
are Disinterested Directors;
(2) with respect to matters other than the selection for participation
in the Plan, substantive decisions concerning the timing, pricing, amount
or other material term of an Option, to a committee of one or more members
of the Board, whether or not such members of the Board are Disinterested
Directors, or to one or more Insiders.
(e) Unless each member of the Board is a Disinterested Director, the Board
shall, by resolution, delegate administration of the Plan with respect to the
participation in the Plan of employees who are Insiders, including its powers to
select such employees for participation in the Plan, to make substantive
decisions concerning the timing, pricing, amount or any other material term of
an Option, to a committee of two or more Disinterested Directors who are also
4
"outside directors" within the meaning of Section 162(m) of the Code. Any
committee to which administration of the Plan is so delegated pursuant to this
Section 3(e) may also administer the Plan with respect to an employee described
in Section 3(d)(1) above.
(f) Except as required by Section 3(e) above, the Board shall have complete
discretion to determine the composition, structure, form, term and operations of
any committee established to administer the Plan. If administration is
delegated to a committee, unless the Board otherwise provides, the committee
shall have, with respect to the administration of the Plan, all of the powers
and discretion theretofore possessed by the Board and delegable to such
committee, subject to any constraints which may be adopted by the Board from
time to time and which are not inconsistent with the provisions of the Plan.
The Board at any time may revest in the Board any of its administrative powers
under the Plan, except under circumstances where a committee is required to
administer the Plan under Section 3(e) above.
(g) The determinations of the Board or its delegate shall be conclusive and
binding on all persons having any interest in this Plan or in any awards granted
hereunder.
4. SHARES SUBJECT TO PLAN
Subject to the provisions of Section 11 (relating to adjustments upon
changes in capitalization), the Shares which may be available for issuance under
the Plan shall not exceed in the aggregate 42,900,000 Shares of the Company's
authorized Common Stock and may be unissued Shares or reacquired Shares or
Shares bought on the market for the purposes of issuance under the Plan. If any
Options granted under the Plan shall for any reason be forfeited or canceled,
terminate or expire, the Shares subject to such Options shall be available again
for the purposes of the Plan. Shares which are delivered or withheld from the
Shares otherwise due on exercise of an Option shall become available for future
awards under the Plan. Shares that have actually been issued under the Plan,
upon exercise of an Option shall not in any event be returned to the Plan and
shall not become available for future awards under the Plan.
5. ELIGIBILITY
Options may be granted only to full or part-time employees, officers,
directors, consultants and advisors of the Company and/or of any Affiliate;
provided such consultants and advisors render bona fide services not in
- --------
connection with the offer and sale of securities in a capital-raising
transaction. Outside Directors shall not be eligible for the benefits of the
Plan, except as provided in Section 8 hereof. Any Participant may hold more
than one Option at any time; provided that the maximum number of shares which
--------
are subject to Options granted to any individual shall not exceed in the
aggregate four million (4,000,000) Shares over the full ten-year life of the
Plan.
6. STOCK OPTIONS -- GENERAL PROVISIONS
(a) Except for automatic grants of Options to Outside Directors under
Section 8 hereof, each Option granted pursuant to the Plan may, at the
discretion of the Board, be granted either as an ISO or as an NSO. No Option
may be granted alternatively as an ISO and as an NSO.
5
(b) To the extent that the aggregate exercise price for ISOs which are
exercisable for the first time by a Participant during any calendar year (under
this Plan or any other plans of the Company or its subsidiaries or parent (as
such terms are defined in Section 424 of the Code) exceeds $100,000, such
Options shall be treated as NSOs.
(c) No ISO may be granted to a person who, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of the Company or
any of its subsidiaries or parent (as such terms are defined in Section 424 of
the Code) unless the exercise price is at least 110% of the Fair Market Value
per Share of the stock subject to the Option and the term of the Option does not
exceed five (5) years from the date such ISO is granted.
(d) Notwithstanding any other provision in this Plan, no term of this Plan
relating to ISOs will be interpreted, amended or altered, nor will any
discretion or authority granted under this Plan be exercised, so as to
disqualify this Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify an ISO under Section 422 of the Code.
7. TERMS OF OPTION AGREEMENT
Except as otherwise required by the terms of Section 8 hereof, each Option
agreement shall be in such form and shall contain such terms and conditions as
the Board from time to time shall deem appropriate, subject to the following
limitations:
(a) The term of any NSO shall not be greater than ten (10) years and one
day from the date it was granted. The term of any ISO shall not be greater than
ten (10) years from the date it was granted.
(b) The exercise price of each ISO shall be not less than the Fair Market
Value per Share of the stock subject to the Option on the date the Option is
granted. NSOs may be granted at an exercise price that is not less than Fair
Market Value per Share of the Shares at the time an NSO is granted.
(c) Unless otherwise specified in the Option agreement, no Option shall be
transferable otherwise than by will, pursuant to the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, or as otherwise permitted by regulations and interpretations under
Section 16 of the Exchange Act.
(d) Except as otherwise provided in paragraph (e) of this Section 7 or in a
Participant's employment agreement, the rights of a Participant (other than an
Outside Director) to exercise an Option shall be limited as follows:
(1) DEATH OR DISABILITY: If a Participant's service is terminated by
death or disability, then the Participant or the Participant's estate, or
such other person as may hold the Option, as the case may be, shall have
the right for a period of twelve (12) months following the date of death or
disability, or for such other period as the Board may fix, to exercise the
Option to the extent the Participant was entitled to exercise such Option
on the date of his death or disability, or to such extent as may otherwise
be
6
specified by the Board (which may so specify after the date of his death or
disability but before expiration of the Option), provided the actual date
of exercise is in no event after the expiration of the term of the Option.
A Participant's estate shall mean his legal representative or any person
who acquires the right to exercise an Option by reason of the Participant's
death or disability.
(2) MISCONDUCT: If a Participant is determined by the Board to have
committed on act of theft, embezzlement, fraud, dishonesty, a breach of
fiduciary duty to the Company (or Affiliate), or deliberate disregard of
the rules of the Company (or Affiliate), or if a Participant makes any
unauthorized disclosure of any of the trade secrets or confidential
information of the Company (or Affiliate), engages in any conduct which
constitutes unfair competition with the Company (or Affiliate), induces any
customer of the Company (or Affiliate) to break any contract with the
Company (or Affiliate), or induces any principal for whom the Company (or
Affiliate) acts as agent to terminate such agency relationship, then,
unless otherwise provided in a Participant's employment agreement, neither
the Participant, the Participant's estate nor such other person who may
then hold the Option shall be entitled to exercise any Option with respect
to any Shares whatsoever, after termination of service, whether or not
after termination of service the Participant may receive payment from the
Company (or Affiliate) for vacation pay, for services rendered prior to
termination, for services rendered for the day on which termination occurs,
for salary in lieu of notice, or for any other benefits. In making such
determination, the Board shall give the Participant an opportunity to
present to the Board evidence on his behalf. For the purpose of this
paragraph, unless otherwise provided in a Participant's employment
agreement, termination of service shall be deemed to occur on the date when
the Company dispatches notice or advice to the Participant that his service
is terminated.
(3) TERMINATION FOR OTHER REASONS: If a Participant's service is
terminated for any reason other than those mentioned above under "DEATH OR
DISABILITY" or "MISCONDUCT," the Participant, the Participant's estate, or
such other person who may then hold the Option may, within three months
following such termination, or within such longer period as the Board may
fix, exercise the Option to the extent such Option was exercisable by the
Participant on the date of termination of his employment or service, or to
the extent otherwise specified by the Board (which may so specify after the
date of the termination but before expiration of the Option) provided the
date of exercise is in no event after the expiration of the term of the
Option.
(4) EVENTS NOT DEEMED TERMINATIONS: Unless otherwise provided in a
Participant's employment agreement, the service relationship shall not be
considered interrupted in the case of (i) a Participant who intends to
continue to provide services as a director, employee, consultant or advisor
to the Company or an Affiliate; (ii) sick leave; (iii) military leave; (iv)
any other leave of absence approved by the Board, provided such leave is
--------
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing; or (v) in
the case of transfer between locations of the Company
7
or between the Company or its Affiliates. In the case of any employee on an
approved leave of absence, the Board may make such provisions respecting
suspension of vesting of the Option while on leave from the employ of the
Company or an Affiliate as it may deem appropriate, except that in no event
shall an Option be exercised after the expiration of the term set forth in
the Option.
(e) Unless otherwise provided in a Participant's employment agreement, if
any Participant's employment is terminated by the Company for any reason other
than for Misconduct or, if applicable, by Constructive Termination, within one
year after a Change of Control has occurred, then all Options held by such
Participant shall become fully vested for exercise upon the date of termination,
irrespective of the vesting provisions of the Participant's Option agreement.
For purposes of this subsection (e), the term "Change of Control" shall have the
meaning assigned by this Plan, unless a different meaning is defined in an
individual Participant's Option agreement or employment agreement.
(f) Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Board or its delegate shall
deem appropriate.
(g) The Board may modify, extend or renew outstanding Options and authorize
the grant of new Options in substitution therefore; provided that any such
--------
action may not, without the written consent of a Participant, impair any such
Participant's rights under any Option previously granted.
8. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS
(a) Each Outside Director shall be granted an Option to purchase 7,500
Shares under the Plan (the "First Option") on April 30, July 31, October 31 and
December 15 or the first business day following such date, in the year that such
Outside Director is first elected or appointed as a member of the Board;
provided that an Outside Director who has previously been elected as a member of
- --------
the Board on the Effective Date set forth in Section 14 below shall not be
granted a First Option under the Plan. Thereafter, on April 30, July 31,
October 31 and December 15 or the first business day following such date, each
Outside Director reported as being elected at the annual meeting of the
Company's stockholders shall be granted an additional Option to purchase 3,000
Shares under the Plan (the "Annual Option"). Further, subject to the right of
any Outside Director who has not previously been elected as a member of the
Board to receive a First Option, if there are insufficient Shares available
under the Plan for each Outside Director who is eligible to receive an Annual
Option (as adjusted) in any year, the number of Shares subject to each Annual
Option in such year shall equal the total number of available Shares then
remaining under the Plan divided by the number of Outside Directors who are
eligible to receive an Annual Option on such date, as rounded down to avoid
fractional Shares. All Options granted to Outside Directors shall be subject to
the following terms and conditions of this Section 8.
(b) All Options granted to Outside Directors pursuant to the Plan shall be
NSOs.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, may consist entirely of (i) cash,
(ii) certified or
8
cashier's check, (iii) other Shares which (x) either have been owned by the
Participant for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a Fair Market
Value per Share on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised, (iv) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, or (v) any combination of the foregoing
methods of payment.
(d) Each Option granted to an Outside Director shall be for a term of ten
years plus one day. Each First Option shall vest and become exercisable
according to the following schedule: one-third on April 30 of the calendar year
following the date of grant; the remaining two-thirds vest in monthly increments
thereafter, through April 30 of the third calendar year following the date of
grant. Each Annual Option shall vest and become exercisable according to the
following schedule: one-third on April 30 of the calendar year following the
date of grant; the remaining two-thirds vest in monthly increments thereafter,
through April 30 of the third calendar year following the date of grant. Any
Shares acquired by an Outside Director upon exercise of an Option shall not be
freely transferable until six months after the date stockholder approval
referred to in Section 14 hereof is obtained.
(e) If an Outside Director's tenure on the Board is terminated for any
reason, then the Outside Director or the Outside Director's estate, as the case
may be, shall have the right for a period of twenty-four months following the
date such tenure is terminated to exercise the Option to the extent the Outside
Director was entitled to exercise such Option on the date the Outside Director's
tenure terminated; provided the actual date of exercise is in no event after the
expiration of the term of the Option. An Outside Director's "estate" shall mean
the Outside Director's legal representative or any person who acquires the right
to exercise an Option by reason of the Outside Director's death or disability.
(f) Upon a Change of Control, all Options held by an Outside Director shall
become fully vested and exercisable upon such Change of Control, irrespective of
any other provisions of the Outside Director's Option agreement.
(g) The automatic grants to Outside Directors pursuant to this Section 8
shall not be subject to the discretion of any person. The other provisions of
this Plan shall apply to the Options granted automatically pursuant to this
Section 8, except to the extent such other provisions are inconsistent with this
Section 8.
9. PAYMENTS AND LOANS UPON EXERCISE OF OPTIONS
With respect to Options other than Options granted to Outside Directors
pursuant to Section 8, the following provisions shall apply:
(a) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the Board
or its delegate (and, in the case of an ISO, shall be determined at the time of
grant) and may consist entirely of (i) cash, (ii) certified or cashier's check,
(iii) promissory note, (iv) other Shares which (x) either have been owned by the
Participant for more than six months on the date of surrender or were
9
not acquired, directly or indirectly, from the Company, and (y) have a Fair
Market Value per Share on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised, (v) delivery of
a properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, or (vi) any combination of the foregoing
methods of payment. Any promissory note shall be a full recourse promissory note
having such terms as may be approved by the Board and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483, 1274 or 7872 of the
Code; provided that Participants who are not employees or directors of the
--------
Company will not be entitled to purchase Shares with a promissory note unless
the note is adequately secured by collateral other than the Shares; provided
--------
further, that the portion of the exercise price equal to the par value, if any,
- -------
of the Shares must be paid in cash;
(b) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual Participants, including Insiders, on such
terms as may be approved by the Board for the purpose of financing the exercise
of Options granted under the Plan and the payment of any taxes that may be due
by reason of such exercise.
10. TAX WITHHOLDING
(a) Where, in the opinion of counsel to the Company, the Company has or
will have an obligation to withhold federal, state or local taxes relating to
the exercise of any Option, the Board may in its discretion require that such
tax obligation be satisfied in a manner satisfactory to the Company. With
respect to the exercise of an Option, the Company may require the payment of
such taxes before Shares deliverable pursuant to such exercise are transferred
to the holder of the Option.
(b) With respect to the exercise of an Option, a Participant may elect (a
"Withholding Election") to pay his minimum statutory withholding tax obligation
by the withholding of Shares from the total number of Shares deliverable
pursuant to the exercise of such Option, or by delivering to the Company a
sufficient number of previously acquired Shares, and may elect to have
additional taxes paid by the delivery of previously acquired Shares, in each
case in accordance with rules and procedures established by the Board.
Previously owned Shares delivered in payment for such additional taxes must have
been owned for at least six months prior to the delivery or must not have been
acquired directly or indirectly from the Company and may be subject to such
other conditions as the Board may require. The value of Shares withheld or
delivered shall be the Fair Market Value per Share on the date the Option
becomes taxable. All Withholding Elections are subject to the approval of the
Board must be made in compliance with rules and procedures established by the
Board.
11. ADJUSTMENTS OF AND CHANGES IN CAPITALIZATION
If there is any change in the Common Stock of the Company by reason of any
stock dividend, stock split, spin-off, split up, merger, consolidation,
recapitalization, reclassification, combination or exchange of Shares, or any
other similar corporate event, then the Board shall make appropriate adjustments
to the number of Shares theretofore appropriated or thereafter subject or which
may become subject to an Option under the Plan. Outstanding Options shall
10
also be automatically converted as to price and other terms if necessary to
reflect the foregoing events. No right to purchase fractional Shares shall
result from any adjustment in Options pursuant to this Section 11. In case of
any such adjustment, the Shares subject to the Option shall be rounded down to
the nearest whole Share. Notice of any adjustment shall be given by the Company
to each holder of any Option which shall have been so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.
12. PRIVILEGES OF STOCK OWNERSHIP
No Participant will have any rights of a stockholder with respect to any
Shares until the Shares are issued to the Participant. After Shares are issued
to the Participant, the Participant will be a stockholder and have all the
rights of a stockholder with respect to such Shares, including the right to vote
and receive all dividends or other distributions made or paid with respect to
such Shares.
13. EXCHANGE AND BUYOUT OF AWARDS; RULE 16b-3
The Board or its delegate may, at any time or from time to time, authorize
the Company, with the consent of the respective Participants, to issue new
Options in exchange for the surrender and cancellation of any or all outstanding
Options, except as otherwise provided in Section 7(i) with respect to Insiders.
The Board or its delegate may at any time buy from a Participant an Option
previously granted with payment in cash, Shares or other consideration, based on
such terms and conditions as the Board or its delegate and the Participant may
agree. Grants of Options to Insiders are intended to comply with the applicable
provisions of Rule 16b-3 and such Options shall contain such additional
conditions or restrictions, if any, as may be required by Rule 16b-3 to be in
the written agreement relating to such Options in order to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
14. EFFECTIVE DATE OF THE PLAN
This Plan will become effective when adopted by the Board (the "Effective
Date"). This Plan must be approved by the stockholders of the Company,
consistent with applicable laws, within twelve (12) months before or after the
Effective Date. Upon the Effective Date, the Board or its delegate may grant
Options pursuant to this Plan; provided that no Option may be exercised prior to
the initial stockholder approval of this Plan. In the event that stockholder
approval is not obtained within the time period provided herein, all Options
granted hereunder will be canceled. So long as Insiders are Participants, the
Company will comply with the requirements of Rule 16b-3 with respect to
stockholder approval.
15. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan;
provided that, except as provided in Section 11 (relating to adjustments upon
- --------
changes in capitalization), no amendment for which stockholder approval is
required shall be effective unless such approval is
11
obtained within the required time period. Whether stockholder approval is
required shall be determined by the Board.
(b) It is expressly contemplated that the Board may, without seeking
approval of the Company's stockholders, amend the Plan in any respect necessary
to provide the Company's employees with the maximum benefits provided or to be
provided under Section 422 of the Code or Section 16 of the Exchange Act and the
regulations promulgated thereunder and/or to bring the Plan or Options granted
under it into compliance therewith.
(c) Rights and obligations under any Option granted before any amendment of
the Plan shall not be altered or impaired by amendment of the Plan, except with
the consent of the person who holds the Option, which consent may be obtained in
any manner that the Board or its delegate deems appropriate.
(d) To the extent required by Rule 16b-3, the Board may not amend the
provisions of Section 8 hereof more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder.
16. REGISTRATION, LISTING, QUALIFICATION, APPROVAL OF STOCK AND OPTIONS
An award under this Plan will not be effective unless such award is in
compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange
or automated quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the award and also on the
date of exercise or other issuance. Notwithstanding any other provision in this
Plan, the Company will have no obligation to issue or deliver certificates for
Shares under this Plan prior to: (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and/or (b)
completion of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the Securities and Exchange Commission or
to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
17. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any Option shall be deemed to confer on any
employee any right to continue in the employ of the Company or any Affiliate or
to limit the rights of the Company or its Affiliates, which are hereby expressly
reserved, to discharge an employee at any time, with or without cause, or to
adjust the compensation of any employee.
18. MISCELLANEOUS
The use of any masculine pronoun or similar term is intended to be without
legal significance as to gender.
12
Appendix 2
Advanced Micro Devices, Inc.
Executive Incentive Plan
February, 1996
1. Purposes
The purposes of the Advanced Micro Devices, Inc. (AMD) Executive Incentive Plan
are to motivate the Company's key employees to improve stockholder value by
linking a portion of their cash compensation to the Company's financial
performance, reward key employees for improving the Company's financial
performance, and help attract and retain key employees.
2. Definitions
A. "Award" means any cash incentive payment made under the Plan.
B. "Code" means the Internal Revenue Code of 1986, as amended.
C. "Committee" means the Compensation Committee of AMD's Board of
Directors, or such other committee designated by that Board of
Directors, which is authorized to administer the Plan under Section 3
hereof. The Committee shall be comprised solely of directors who are
outside directors under Section 162(m) of the Code.
D. "Company" means AMD and any corporation or other business entity of
which AMD (i) directly or indirectly has an ownership interest of 50%
or more, or (ii) has a right to elect or appoint 50% or more of the
board of directors or other governing body.
E. "Key Employee" means any employee of the Company whose performance the
Committee determines can have a significant effect on the success of
the Company.
F. "Participant" means any Key Employee to whom an Award is granted under
the Plan.
G. "Plan" means this Plan, which shall be known as the AMD Executive
Incentive Plan.
3. Administration
A. The Plan shall be administered by the Committee. The Committee shall
have the authority to:
(i) interpret and determine all questions of policy and
expediency pertaining to the Plan;
(ii) adopt such rules, regulations, agreements and instruments as
it deems necessary for its proper administration;
(iii) select Key Employees to receive Awards;
(iv) determine the terms of Awards;
(v) determine amounts subject to Awards (within the limits
prescribed in the Plan);
(vi) determine whether Awards will be granted in replacement of
or as alternatives to any other incentive or compensation
plan of the Company or an acquired business unit;
(vii) grant waivers of Plan or Award conditions (other than Awards
intended to qualify under Section 162(m) of the Code);
(viii) accelerate the payment of Awards (but with respect to Awards
intended to qualify under Section 162(m) of the Code, only
as permitted under that Section);
(ix) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award notice;
(x) take any and all other actions it deems necessary or
advisable for the proper administration of the Plan;
(xi) adopt such Plan procedures, regulations, subplans and the
like as it deems are necessary to enable Key Employees to
receive Awards; and
(xii) amend the Plan at any time and from time to time, provided
however that no amendment to the Plan shall be effective
unless approved by the Company's stockholders, to the extent
such stockholder approval is required under Section 162(m)
of the Code with respect to Awards which are intended to
qualify under that Section.
B. The Committee may delegate its authority to grant and administer
Awards to a separate committee; however, only the Committee may grant
and administer Awards which are intended to qualify as performance-
based compensation under Section 162(m) of the Code.
4. Eligibility
Only Key Employees as designated by the Committee are eligible to become
Participants in the Plan.
page 2
5. Performance Goals
A. The Committee shall establish performance goals applicable to a
particular fiscal year (or performance period) prior to its start,
provided, however, that such goals may be established after the start of
the fiscal year (or performance period) but while the outcome of the
performance goal is substantially uncertain if such a method of
establishing performance goals is permitted under proposed or final
regulations issued under Code Section 162(m).
B. Each performance goal applicable to a fiscal year shall identify one or
more business criteria of the Company and/or any business unit that are
to be monitored during the fiscal year (or performance period), such as:
. Net income . Stockholder return
. Earnings per share . Revenue
. Return on investment . Revenue growth
. Operating income . Market share
. Strategic positioning . Return on net assets
programs . Return on equity
. Cash flow . New product releases
C. The Committee shall determine the target level of performance that must
be achieved with respect to each criterion that is identified in a
performance goal in order for a performance goal to be treated as
attained.
D. The Committee may base performance goals on one or more of the foregoing
business criteria. In the event performance goals are based on more than
one business criterion, the Committee may determine to make Awards upon
attainment of the performance goal relating to any one or more of such
criteria, provided the performance goals, when established, are stated
as alternatives to one another at the time the performance goal is
established.
6. Awards
A. Awards may be made on the basis of Company and/or business unit
performance goals and formulas determined by the Committee. During any
fiscal year of the Company, no Participant shall receive an Award of
more $5,000,000.
B. The Committee, in its discretion, may reduce or eliminate a
Participant's Award at any time before it is paid, whether or not
calculated on the basis of pre-established performance goals or
formulas.
page 3
C. The payment of an Award requires that the Participant be on the
Company's payroll as of the last day of the fiscal year (or performance
period). The Committee may make exceptions to this requirement in the
case of retirement, death or disability, as determined by the Committee
in its sole discretion.
D. The Company shall withhold all applicable federal, state, local and
foreign taxes required by law to be paid or withheld relating to the
receipt or payment of any Award.
E. At the discretion of the Committee, payment of an Award or any portion
thereof may be deferred until a time established by the Committee.
Deferrals shall be unfunded and shall be made in accordance with
guidelines established by the Committee to ensure that such deferrals
comply with applicable requirements of the Code and its regulations.
Deferrals shall be initiated by the delivery of a written, irrevocable
election by the Participant to the Committee or its nominee. Such
election shall be made prior to the date specified by the Committee. The
Committee may also credit earnings on cash payments that are deferred
and set the rates of such interest.
7. General
A. The Plan shall become effective as of January 1, 1996, subject to
stockholder approval of the Plan prior to January 1, 1996 or within
twelve months thereafter.
B. Any rights of a Participant under the Plan shall not be assignable by
such Participant, by operation of law or otherwise, except by will or
the laws of descent and distribution. No Participant may create a lien
on any funds or rights to which he or she may have an interest under the
Plan, or which is held by the Company for the account of the Participant
under the Plan.
C. Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company. Further, the adoption of this Plan
shall not be deemed to give any Key Employee or other individual the
right to be selected as a Participant or to be granted an Award.
D. To the extent any person acquires a right to receive payments from the
Company under this Plan, such rights shall be no greater than the rights
of an unsecured creditor of the Company.
E. The Plan shall be governed by and construed in accordance with the laws
of the State of California.
F. The Board may amend or terminate the Plan (i) at any time and for any
reason subject to stockholder approval and (ii) at any time and for any
reason if and to the extent the Plan's qualification under Section
162(m) of the Code would not be adversely affected.
page 4
Appendix 3
ADVANCED MICRO DEVICES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the Advanced Micro
Devices, Inc. 2000 Employee Stock Purchase Plan as amended and restated as of
October 19, 2000 (the "Plan"). The terms "Corporation" and "AMD" refer to
Advanced Micro Devices, Inc. and, where appropriate, any Participating
Subsidiary of Advanced Micro Devices, Inc.
1. Purpose. The purpose of the Plan is to foster continued cordial
-------
employee relations by providing employees of the Corporation and Participating
Subsidiaries with an opportunity to purchase Common Stock of the Corporation
through options to acquire the stock on favorable terms and to elect to exercise
such options through payroll deductions. It is the intention of the Corporation
that the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). In addition, the
Plan authorizes the grant of options and issuance of Common Stock which do not
qualify under Section 423 of the Code pursuant to sub-plans or special rules
adopted by the Board or the Committee designed to achieve desired tax or other
objectives in particular locations outside the United States.
2. Definitions.
-----------
(a) "Affiliate" means (i) any Participating Subsidiary and (ii) any
other entity in which the Corporation has an equity interest or significant
business relationship and which has been designated as an "Affiliate" by the
Board or the Committee for purposes of the Plan.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Business Day" means a day on which AMD Common Stock is publicly
traded.
(d) "Committee" means the committee designated by the Board pursuant
to Paragraph 13(a) below to administer this Plan.
(e) "Common Stock" means the common stock of Advanced Micro Devices,
Inc., par value $0.01.
(f) "Compensation" in connection with qualified options under Section
423 of the Code, means salaries, 50% of non-executive sales incentives, shift
differential and lead pay. Bonuses, overtime, special awards, 100% of executive
sales incentives, 50% of non-executive sales incentives, cash profit sharing,
income attributable to the exercise of a stock option and reimbursements and
allowances are excluded. For options not intended to be qualified under Section
423 of the Code, "Compensation" may vary as determined by the Board or the
Committee.
1
(g) "Employee" means any person, including an officer, employed by
the Corporation or its Participating Subsidiaries or Affiliates. Individuals who
provide services to the Corporation or any of its Participating Subsidiaries or
Affiliates as independent contractors, who are reclassified as common law
employees for any reason other than for federal income and employment tax
purposes, are not eligible Employees. "Employee" shall not mean any individual
who is not classified as an Employee on the payroll records of the Corporation
or an Affiliate (including, but not limited to, an individual who is a leased
employee, who is classified as a consultant, independent contractor, or other
non-employee category), even if such classification is determined to be
erroneous, or is retroactively revised by a governmental agency, by court order
or as a result of litigation, or otherwise. In the event the classification of
an individual is determined to be erroneous or is retroactively revised, the
individual shall nonetheless continue to be excluded from participation in the
Plan for all periods prior to the date the Committee determines to classify such
individual as an Employee.
(h) "Participating Subsidiary" means any company during any period in
which it is a "subsidiary corporation" as that term is defined in Code section
424(f) with respect to the Corporation and which has been designated as a
"Participating Subsidiary" by the Board or the Committee.
(i) "Offering Period" shall have meaning assigned by Paragraph 4.
(j) "Option Grant Date" means the first Business Day of each Offering
Period of the Plan.
(k) "Purchase Date" means the last Business Day of each Offering
Period of the Plan.
3. Eligibility. Any Employee who shall be employed by the Corporation,
-----------
its Participating Subsidiaries or an Affiliate on the first day of an Offering
Period, shall be eligible to participate in such Offering Period under the Plan,
subject to the requirements of Paragraph 5. All Employees who participate in
the Plan shall have the same rights and privileges under the Plan except for
differences which may be mandated by local law and which are consistent with
Code Section 423(b)(5); provided, however, that Employees participating in a
sub-plan adopted pursuant to Paragraph 13(b) which is not designed to qualify
under Code Section 423 need not have the same rights and privileges as Employees
participating in the Code Section 423 Plan. The Board or the Committee may
impose restrictions on eligibility and participation of Employees who are
officers and directors to facilitate compliance with federal or state securities
laws or foreign laws.
4. Offering period. Absent action by the Board, each Offering Period
---------------
shall extend for three calendar months commencing on the first Business Day on
or after February 1, May 1, August 1 and November 1 of each year and ending on
the last Business Day of the third month.
5. Participation.
-------------
2
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deduction or electing to
make contributions in a form acceptable to the Board or the Committee on the
form provided by the Corporation and filing it with the designated Corporation
office not later than the 15th day of the month prior to a new Offering Period
or such other date as may be determined by the Board or the Committee; provided
that participants who go on a leave of absence are subject to the special rules
set forth in Paragraph 10(c) hereof; and provided further that an Employee who
commences employment in the month prior to a new Offering Period may complete a
subscription agreement on the date he commences employment. An Employee who
becomes eligible to participate in the Plan on or after an Option Grant Date may
not participate until the next Offering Period.
(b) If applicable, payroll deductions for a participant for any
offering period shall commence with the first payroll following the Option Grant
Date and shall end with the Purchase Date of the offering, unless sooner
terminated by the participant as provided in Paragraph 10, or by the
Corporation.
(c) Notwithstanding any other provisions of the Plan to the contrary,
in locations where local law prohibits payroll deductions, an eligible employee
may elect to participate through contributions to his account under the Plan in
a form acceptable to the Board or the Committee.
6. Payroll Deductions/Contributions.
--------------------------------
(a) At the time a participant files his subscription agreement, he
shall elect to have payroll deductions made on each payday during the Offering
Period at a rate not exceeding twenty percent (20%) of the Compensation which he
would otherwise receive on such payday, provided that the aggregate of such
payroll deductions during the Offering Period shall not exceed twenty percent
(20%) of the aggregate compensation which he would otherwise have received
during said Offering Period. The Board or the Committee shall determine whether
the amount to be deducted from each paycheck is to be designated as a specific
dollar amount, or as a percentage of the eligible Compensation being paid on
such pay day, or as either, and may also establish a minimum percentage or
amount for such payroll deductions.
(b) In countries where local law prohibits payroll deductions, at the
time a participant files his subscription agreement, he shall elect to make
contributions on each payday during the Offering Period at a rate not exceeding
twenty percent (20%) of the Compensation which he receives on such payday,
provided that the aggregate of such contributions during the Offering Period
shall not exceed twenty percent (20%) of the aggregate compensation which he
would receive during said Offering Period. The Board or the Committee shall
determine whether the amount to be contributed is to be designated as a specific
dollar amount, or as a percentage of the eligible Compensation being paid on
such payday, or as either, and may also establish a minimum percentage or amount
for such contributions.
3
(c) All payroll deductions authorized by a participant shall be
credited to his account under the Plan.
(d) A participant may discontinue his participation in the Plan as
provided in Paragraph 10, and may decrease or increase the rate of his payroll
deductions only one time during the Offering Period by completing and filing
with the Corporation a new authorization for payroll deduction. The change in
rate shall become effective no later than the next available pay period after
the Corporation's receipt of the new authorization.
7. Grant of Option
---------------
(a) On the Option Grant Date of each Offering Period, each
participant during such Offering Period shall be granted an option to purchase
on each Purchase Date the number of shares of Common Stock determined by
dividing the payroll deductions or contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the applicable option price as set forth in Paragraph 7(c) below; provided,
however, that such purchase shall be subject to the limitations set forth in
Paragraphs 6(b) and 12(a) hereof and the following additional limits:
(i) The number of shares which may be purchased by any Employee for
the first Offering Period to occur in any calendar year may not
exceed the number of shares determined by dividing $25,000 by
the fair market value of a share of Common Stock on the first
day of such Offering Period.
(ii) The number of shares which may be purchased by an Employee for
any subsequent Offering Period which occurs in the same calendar
year (as referred to in subsection (i) above) shall not exceed
the number of shares determined by performing the calculation
below:
Step One: The number of shares purchased by the Employee during
any previous Offering Period in the same calendar year shall be
multiplied by the fair market value of a share of Common Stock
on the first day of such previous Offering Period in which such
shares were purchased.
Step Two: The amount determined in Step One shall be subtracted
from $25,000.
Step Three: The amount determined in Step Two shall be divided
by the fair market value of a share of Common Stock on the first
day of such subsequent Offering Period (for which the maximum
number of shares which may be purchased is being determined by
this calculation) occurs. The quotient thus obtained shall be
the
4
maximum number of shares which may be purchased by any Employee
for such subsequent Offering Period.
(b) Notwithstanding any provisions of the Plan to the contrary, any
option granted to an Employee shall be limited so that immediately after the
grant, such Employee would not own stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the
Corporation or of any Participating Subsidiary of the Corporation (including
stock which the employee may purchase under outstanding options and stock, the
ownership of which is attributed to the Employee under Section 424 (d) of the
Code).
(c) The purchase price per share of such shares shall be the lower
of: (i) 85% of the fair market value of a share of the Corporation's Common
Stock at the Option Grant Date; or (ii) 85% of the fair market value of a share
of the Corporation's Common Stock at the Purchase Date. The fair market value of
the Corporation's Common Stock on said dates shall be the closing price on the
New York Stock Exchange for such date, or if no sale is made on such date, the
corresponding closing price on the first preceding date on which the
Corporation's Common Stock was sold.
(d) Any excess contributions remaining in the Employee's account
after the purchase of the shares on the Purchase Date will be returned to the
employee, or at the employee's election may be rolled over for use in future
Offering Periods in locations where the Board or the Committee have determined
that such rollover is available under the Plan.
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in Paragraph 10, his option for the purchase of shares will be
exercised automatically for the number of whole and fractional shares which the
accumulated payroll deductions in his account could purchase at the applicable
option price on the Purchase Date. During his lifetime, a participant's option
to purchase shares hereunder is exercisable only by him.
9. Delivery. As promptly as practicable after the Purchase Date of each
--------
offering, the Corporation shall arrange the delivery to the participant's
account at the Corporation's approved brokerage firm, the number of shares
purchased on exercise of his option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A participant may withdraw all, but not less than all, the funds
credited to his account under the Plan at any time before five (5) business days
before the Purchase Date by giving written notice to the Corporation on a form
provided for such purpose. All of the participant's funds credited to his
account will be paid to him promptly after receipt of his notice of withdrawal,
his option for the current Offering Period will be automatically cancelled, and
if contributions were elected to be made through payroll
5
deductions, no further payroll deductions for the purchase of shares will be
made during the Offering Period.
(b) Upon termination of the participant's employment for any reason,
including retirement, permanent disability or death, the funds credited to his
account will be returned to him or, in the case of his death, to his estate, and
his option will be automatically cancelled.
(c) If local law allows for exclusion of part-time employees, in the
event an Employee fails to remain in the continuous employ of the Corporation or
its Participating Subsidiaries or Affiliates for customarily at least twenty
(20) hours per week during an Offering Period, he will be deemed to have elected
to withdraw from the Plan and the funds credited to his account will be returned
to him and his option cancelled; provided that a participant who goes on an
unpaid leave of absence shall be permitted to remain in the Plan with respect to
an Offering Period which commenced prior to the beginning of such leave of
absence. If such participant is not guaranteed reemployment by contract or
statute and the leave of absence extends beyond 90 days, such participant shall
be deemed to have terminated employment on the 91st day of such leave of
absence. If the participant elected to make contributions to the Plan through
payroll deductions, the payroll deductions for a participant who has been on an
unpaid leave of absence will resume at the same rate as in effect prior to such
leave upon return to work unless changed by such participant or unless the
participant has been on an unpaid leave of absence either throughout an entire
Offering Period or for more than ninety (90) days, in which cases the
participant shall not be permitted to re-enter the Plan until a subscription
agreement is filed with respect to a subsequent Offering Period which commences
after such participant has returned to work from the unpaid leave of absence.
(d) A participant's withdrawal from an offering will not have any
effect upon his eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Corporation.
11. No Interest. No interest shall accrue on the payroll deductions or
-----------
contributions of a participant in the Plan unless local law requires that
payroll deductions or contributions be held in an interest-bearing account.
12. Stock.
-----
(a) The maximum number of shares of the Corporation's Common Stock
which may be sold pursuant to options exercised under the Plan shall be
7,500,000 shares, subject to adjustment upon changes in capitalization of the
Corporation as provided in Paragraph 18. The shares to be sold to participants
in the Plan may be, at the election of the Corporation, either treasury shares
or shares authorized but unissued. In addition, the officers of the Corporation
are authorized to acquire shares of the Corporation's Common Stock in the open
market for resale under this Plan. If the total number of shares which would
otherwise be subject to options granted pursuant to Paragraph 7(a) hereof at the
Option Grant Date exceeds the number of shares then
6
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Corporation shall make a pro rata
allocation of the shares remaining available for option grant in as uniform and
equitable a manner as is practicable. In such event, the Corporation may reduce
the rate of contributions as appropriate.
(b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in street name in the participant's
account at the Corporation's approved brokerage firm.
13. Administration.
--------------
(a) The Plan shall be administered by the Board or a Committee
appointed by the Board. The Board may from time to time remove members from or
add members to the Committee. Vacancies on the Committee, however caused, shall
be filled by the Board. Acts taken or approved by a majority of the Committee
at which a quorum is present, or acts approved in writing by all members of the
Committee, shall be the valid acts of the Committee.
(b) The Board or the Committee may adopt rules or procedures relating
to the operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality of
the foregoing, the Board or the Committee is specifically authorized to adopt
rules and procedures regarding handling of payroll deductions, payment of
interest, conversion of local currency, payroll tax, withholding procedures and
handling of stock certificates which vary with local requirements. The Board or
the Committee may adopt such rules, guidelines and forms as the applicable laws
allow to accomplish the transfer of secondary Class 1 National Insurance
Contributions ("NIC") in the United Kingdom ("UK") from the employer to the
participants in the UK and to make such transfer of NIC liability a condition to
the exercise of options in the UK.
(c) The Board or the Committee may also adopt sub-plans applicable to
particular Participating Subsidiaries, Affiliates or locations, which sub-plans
may be designed to be outside the scope of Code Section 423. The rules of such
sub-plans may take precedence over other provisions of this Plan, with the
exception of Paragraph 12(a) above, but unless otherwise superseded by the terms
of such sub-plan, the provisions of this Plan shall govern the operation of such
sub-plan.
(d) The administration, interpretation or application of the Plan by
the Board or the Committee shall be final, conclusive and binding upon all
participants. Members of the Board or the Committee who are eligible Employees
are permitted to participate in the Plan.
7
(e) No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under it. In addition to such other rights of indemnification as
they may have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding the Committee member seeking indemnification shall in
writing offer the Corporation the opportunity, at its own expense, to handle and
defend the same.
(f) All costs and expenses incurred in administering the Plan shall
be paid by the Corporation. The Board or the Committee, if any is appointed, may
request advice or assistance or employ such other persons as are necessary for
proper administration of the Plan.
14. Transferability. Neither funds credited to a participant's account
---------------
nor any rights with regard to the exercise of an option or to receive shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of in
any way (other than by will, the laws of descent and distribution) by the
participant and options granted hereunder are exercisable, during the
participant's lifetime, only by the participant. Any such attempt at
assignment, transfer, pledge or other disposition, shall be void and without
effect, except that the Corporation may treat such act as an election to
withdraw funds in accordance with Paragraph 10.
15. Use of Funds. All funds received or held by the Corporation under the
------------
Plan may be used by the Corporation for any corporate purpose, and the
Corporation shall not be obligated to segregate such funds unless segregation of
accounts is required by local law.
16. Statements. Statements of account will be given to participating
----------
Employees promptly following each Purchase Date, which statements will set forth
the amounts of payroll deductions or funds accumulated in the Employees'
account, the per share purchase price, the number of shares purchased and any
excess contributions.
17. Changes in Capitalization. In the event of any stock dividend, stock
-------------------------
split, spin-off, recapitalization, merger, consolidation, exchange of shares or
the like, the number of shares then subject to option and the number of
authorized shares remaining available
8
to be sold shall be increased or decreased appropriately, with such other
adjustment as may be deemed necessary or equitable by the Board.
18. Amendment. The Board of Directors may at any time amend the Plan. No
---------
such amendment may make any change in any option previously granted which
adversely affects the rights of any participant without such participant's
consent. No amendment for which shareholder approval is required shall be
effective unless such approval is obtained within the required time period.
Whether shareholder approval is required shall be determined by the Board or the
Committee and consistent with the rules of the Securities Exchange Commission,
the Code or the stock exchange(s) on which the Corporation's shares are listed,
as such rules are in effect at the time the Plan amendment becomes effective.
19. Termination. The Board of Directors of Advanced Micro Devices, Inc.
-----------
may at any time terminate the Plan. No such termination will affect options
previously granted. Unless sooner terminated by the Board, this Plan shall
terminate February 1, 2011.
20. Notices. All notices or other communications by a participant to the
-------
Corporation in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Corporation at the location, or by
the person, designated by the Corporation for the receipt thereof.
21. Government and Other Regulations. The Plan, and the grant and
--------------------------------
exercise of the rights to purchase shares hereunder, and the Corporation's
obligation to sell and deliver shares upon the exercise of rights to purchase
shares, shall be subject to all applicable federal, state and foreign laws,
rules and regulations, and to such approvals by any regulatory or government
agency as may, in the opinion of counsel for the Corporation, be required. Any
amendments requiring shareholder approval shall take effect only subject to such
approval.
22. Applicable Law. The interpretation, performance and enforcement of
--------------
this Plan shall be governed by the laws of the State of California.
9
[AMD LOGO]
One AMD Place
Sunnyvale, Ca 94088
(408) 732-2400
You are cordially invited to attend the Annual Meeting of Stockholders of
Advanced Micro Devices, Inc. to be held at 10:00 a.m. on Thursday, April 26,
2001, at the St. Regis Hotel at 2 East 55th Street, New York, New York. Detailed
information regarding the business to be transacted at the meeting is contained
in the accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you either vote by telephone or by the
------ --
Internet or sign and return your proxy card as soon as possible in the envelope
--
provided.
DETACH HERE
PROXY
ADVANCED MICRO DEVICES, INC.
Annual Meeting of Stockholders - April 26, 2001
This Proxy is solicited on behalf of the Board of Directors
The undersigned appoints W.J. SANDERS III AND THOMAS M. MCCOY and each of them
as proxies for the undersigned, with full power of substitution to represent and
to vote all the stock of the undersigned on the following matters as described
in the Proxy Statement accompanying the Notice of Meeting, receipt of which
hereby acknowledged, and according to their discretion on all other matters that
may be properly presented for action at the Annual Meeting of Stockholders of
Advanced Micro Devices, Inc. to be held on Thursday, April 26, 2001, and at any
adjournment(s) or postponement(s) thereof. If properly executed, this proxy
shall be voted in accordance with the instructions given. To the extent no
directions are given on a proposal, the proxyholders will vote FOR the nominees
listed on the reverse side, FOR the ratification of the appointment of
independent auditors, FOR the amendments to the 1996 Stock Incentive Plan, FOR
the reapproval of the performance goals under the 1996 Executive Incentive Plan,
FOR the approval of the amendments to the 2000 Employee Stock Purchase Plan, and
in the discretion of the proxyholders on other matters which may properly be
presented at the meeting. The undersigned may revoke this proxy at any time
prior to its exercise or may attend the meeting and vote in person.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
AMD Logo
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
- -----------------
Vote by Telephone
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683)
- -----------------------------------------------------------
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus
and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683). For stockholders
residing outside the United States call collect on a
touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control Number located on
your Proxy Card above your name.
4. Follow the recorded instructions.
- -----------------------------------------------------------
Your vote is important!
Call 1-877-PRX-VOTE anytime!
- ----------------
Vote by Internet
- ----------------
It's fast, convenient, and your vote is immediately confirmed
and posted.
- -----------------------------------------------------------
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus
and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/amd
3. Enter your 14-digit Voter Control Number located on
your Proxy Card above your name.
4. Follow the instructions provided.
- -----------------------------------------------------------
Your vote is important!
Go to http://www.eproxyvote.com/amd anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
. RECEIVE FUTURE AMD PROXY MATERIALS VIA THE INTERNET!
Consider receiving future AMD Annual Report and Proxy materials (as well as all
other Company communications) in electronic form rather than in printed form.
While voting via the Internet, just click the box to give your consent* and
thereby save AMD the future costs of producing, distributing and mailing these
materials.
Accessing AMD's Annual Report and Proxy materials via the Internet may result in
charges to you from your Internet service provider and/or telephone companies.
If you do not consent to access AMD's Annual Report and Proxy materials via the
Internet, you will continue to receive them in the mail.
* IN ORDER TO CONSENT TO ELECTRONIC DISTRIBUTION, YOU WILL ALSO NEED YOUR
ACCOUNT NUMBER WHICH IS PRINTED JUST BELOW THE PERFORATION AND IS THE FIRST
SET OF NUMBERS THAT IS NINE DIGITS LONG.
DETACH HERE
[X] Please mark votes as in this example.
Unless otherwise specified, this proxy will be voted for the listed nominees FOR
Directors, FOR Ratification of Ernst & Young LLP as the Company's independent
auditors, FOR Approval of the amendments to the 1996 Stock Incentive Plan, FOR
Reapproval of performance goals under the 1996 Executive Incentive Plan, and FOR
Approval of the amendments to the 2000 Employee Stock Purchase Plan.
The Board of Directors recommends a vote FOR items 1, 2, 3, 4 and 5.
Nominees for Directors:
(01) W.J. Sanders III, (02) Hector de J. Ruiz, (03) Charles M. Blalack,
(04) R. Gene Brown, (05) Robert B. Palmer, (06) Joe L. Roby,
(07) Friedrich Baur, (08) Leonard Silverman
1. Election of [_] FOR [_] WITHHELD
directors. ALL FROM ALL
NOMINEES NOMINEES
[_] ______________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Ratification of appointment of [_] [_] [_]
independent auditors.
3. Approval of amendments to the 1996 [_] [_] [_]
Stock Incentive Plan.
4. Reapprove performance goals under [_] [_] [_]
the 1996 Executive Incentive Plan.
5. Approval of amendments to the 2000 [_] [_] [_]
Employee Stock Purchase Plan.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
Please sign exactly as the name or names appear in this proxy. If the stock
is issued in the name of two or more persons, all of them should sign the
proxy. A proxy executed by a corporation should be signed in its name by an
authorized officer. Executor, administrators and trustees so indicate when
signing.
Signature:__________________ Date:________________ Signature:__________________