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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

ADVANCED MICRO DEVICES, INC.

(Name of Registrant as Specified In Its Certificate)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Notes:

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ADVANCED MICRO DEVICES, INC.

ONE AMD PLACE

P.O. BOX 3453

SUNNYVALE, CALIFORNIA 94088-3453

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

We will hold the 2011 Annual Meeting of Stockholders of Advanced Micro Devices, Inc. at the Hyatt Regency Austin, 208 Barton Springs Road, Austin, Texas, on Tuesday, May 3, 2011. The meeting will start at 9 a.m. CDT. At the meeting, we will ask you to:

By Order of the Board of Directors,

HARRY A. WOLIN

Corporate Secretary

This proxy statement is dated March 10, 2011 and will first be mailed to the stockholders of

Advanced Micro Devices, Inc. on or about March 14, 2011.

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ADVANCED MICRO DEVICES, INC.

PROXY STATEMENT

2011 ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS

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If you do not wish to vote in person or if you will not attend the Annual Meeting, you may vote by proxy. If you complete and properly sign each proxy card you received and return it to us in the prepaid envelope, it will be voted by one of the individuals indicated on the card (your “proxy”) as you direct. If you are a stockholder of record and you return a properly executed proxy card or vote by proxy over the Internet but do not mark the boxes showing how you wish to vote, the proxy holders will vote in accordance with the recommendations of the Board, as specified in Question 5 above, except with respect to Proposal 5, which will be voted as an “abstain” vote. With respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, at their own discretion.

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.

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Alternatively, you can vote in person at the Annual Meeting, but you must bring to the Annual Meeting a proxy from your broker as the record holder and a letter from your broker showing that you were the beneficial owner of your shares on March 7, 2011.

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Ratification of the Appointment of our Independent Registered Public Accounting Firm. Ratification of the appointment of our independent registered public accounting firm must receive affirmative votes from the majority of the shares of common stock entitled to vote and represented, in person or by proxy, at the meeting. Abstentions have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of the ratification of the appointment of our independent registered public accounting firm.

Approval of the 2011 Executive Incentive Plan. The proposal to approve the 2011 Executive Incentive Plan requires the affirmative vote of a majority of votes cast on the proposal. Abstentions will not be counted as a vote “for” or “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal.

Advisory Vote on the Compensation of Named Executive Officers. An affirmative vote from the majority of the shares of common stock entitled to vote and represented, in person or by proxy, at the meeting is necessary to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement pursuant to the Compensation disclosure rules of the Securities Exchange Commission (“Say-On-Pay”). Because your vote is advisory, it will not be binding on the Board of Directors, the Compensation Committee or the Company. However, the Board of Directors will review the voting results and take them into consideration when making future decisions about executive compensation. Abstentions have the same effect as a vote against this proposal. Broker non-votes will have no effect on the outcome of this proposal.

Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of Named Executive Officers. You may vote to approve, on an advisory basis, the frequency of a Say-On-Pay vote every 1 year, every 2 years or every 3 years, or you may abstain from voting on this proposal. We have determined to view the frequency vote that receives the greatest number of votes cast by the holders of our common stock entitled to vote at the meeting as the recommendation of stockholders on this proposal. Because your vote is advisory, it will not be binding on the Board of Directors, the Compensation Committee or the Company. However, the Board of Directors will review the voting results and take them into consideration when determining the frequency of a Say-On-Pay vote. Abstentions and broker non-votes will have no effect on the outcome of this proposal.

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A number of brokerage firms have instituted householding. If you hold your shares in “street name,” please contact your bank, broker or other holder of record to request information about householding.

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ITEM 1—ELECTION OF DIRECTORS

Nine 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 and Corporate Governance Committee of the Board of Directors selected, and the Board of Directors approved, the following nine persons as nominees for election to the Board: Mr. Bruce L. Claflin, Dr. W. Michael Barnes, Mr. John E. Caldwell, Mr. Henry WK Chow, Mr. Craig A. Conway, Mr. Nicholas M. Donofrio, Ms. H. Paulett Eberhart, Mr. Waleed Al Muhairi and Mr. Robert B. Palmer. All of the nominees are currently directors of AMD. Mr. Al Muhairi was appointed to our Board of Directors on March 2, 2009, pursuant to our agreement with Advanced Technology Investment Corporation (“ATIC”) and West Coast Hitech L.P. (“WCH”) that provides that until such time as WCH and its permitted transferees beneficially own, in the aggregate, less than 10% of the outstanding shares of our common stock, WCH has the right to designate a representative to our Board of Directors. Mr. Chow was recommended as a potential candidate for our Board of Directors by a third-party search firm and two of our non-management directors. The number of authorized directors is currently fixed at nine.

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. Directors are strongly encouraged to attend annual meetings of our stockholders, and we expect all of our current Board member nominees to be present at the 2011 Annual Meeting. All of the Board member nominees set forth in our 2010 Proxy Statement, with the exception of Mr. Donofrio, were present at the 2010 Annual Meeting.

Certain information regarding each of our nominees is set forth below, including his or her experience, qualifications, attributes and skills that led the Nominating and Corporate Governance Committee and the Board to conclude that the individual should serve as a director for the Company and his or her principal occupation and directorships during the past five years. Our goal is to assemble a Board that operates cohesively and works with management in a constructive way so as to deliver long term shareholder value. We believe that the nominees set forth below, all of whom are currently directors of AMD, possess valuable experience necessary to guide AMD in the best interests of the stockholders. Our current Board consists of individuals with proven records of success in their chosen professions. They all have the highest integrity and a keen intellect. They are collegial yet independent in their thinking, and are committed to the hard work necessary to be informed about the semiconductor industry, our company, and its key constituents including customers, stockholders and management. Most of our directors have broad technology sector experience, including expertise in semiconductor technology, innovation and strategy. Several members of our Board also have extensive experience in the management of public companies, corporate restructurings, risk assessment, accounting and finance.

Bruce L. Claflin—Mr. Claflin, 59, has been a director since 2003. On March 2, 2009, he was appointed as the Chairman of the Board, and on January 10, 2011, upon the resignation of our Chief Executive Officer, he was appointed as the Executive Chairman of the Board. Mr. Claflin was President, Chief Executive Officer, and a member of the Board of Directors of 3Com Corporation (“3Com”), a provider of voice and data networking products and services, from January 2001 until he retired in 2006. He joined 3Com as President and Chief Operating Officer in August 1998. Prior to 3Com, Mr. Claflin served as Executive Vice President, Sales, and prior to that as General Manager of the PC Business Unit for Digital Equipment Corporation. Mr. Claflin also worked for 22 years at International Business Machines Corporation (“IBM”), where he held various sales, marketing and senior management positions, including General Manager of IBM PC Company’s worldwide research and development, product and brand management and President of IBM PC Company, Americas. He was also responsible for the introduction of IBM’s highly successful ThinkPad line of products. In addition to his general management experience, Mr. Claflin has held senior positions where he has been responsible for almost every operation of a global, high technology company, including sales, marketing, research and development and manufacturing. This experience allows Mr. Claflin to provide valuable insight and guidance to the Company

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during our search for a new Chief Executive Officer. Also, while with IBM, Mr. Claflin lived and worked in Hong Kong and Tokyo and was responsible for IBM’s Asia/South Pacific Area. While at 3Com, Mr. Claflin established a joint venture in China in partnership with a leading Chinese global telecom solutions provider. Mr. Claflin’s extensive experience in Asia, particularly China, is important to AMD because China has been our largest single market since 2006. Mr. Claflin was named a distinguished alumnus by Pennsylvania State University. He is also founder, director and President of Kids First! a Virgin Islands non-profit corporation that supports the education of children in St. John, U.S. Virgin Islands. He has been a member of the Board of Directors of Ciena Corporation since 2006.

Dr. W. Michael Barnes—Dr. Barnes, 68, has been a director since 2003. Dr. Barnes brings extensive financial management experience and a strong understanding of semiconductor technologies to our Board. Between 1968 and 2001, Dr. Barnes held several senior executive positions at Rockwell International Corporation (now Rockwell Automation, Inc.), a major American manufacturing corporation that has included divisions in aircraft, defense electronics, commercial electronics, automotive components, printing presses, and industrial automation, including Senior Vice President, Finance and Planning and Chief Financial Officer from 1991 through 2001. Dr. Barnes was also a key member of the management team of Rockwell’s Semiconductor Products division and Vice President and General Manager of the Rockwell Communications Systems division. He was named a distinguished alumnus by Texas A&M University College of Engineering in 1992, is a member of the Texas A&M University Chancellor’s Century Council and is on the university’s Engineering Advisory Board. Dr. Barnes has been a member of the Board of Directors of MetroPCS Communications, Inc. since 2004.

John E. Caldwell—Mr. Caldwell, 61, has been a director since October 2006. Mr. Caldwell brings extensive general management, financial management and risk assessment experience to our Board. Since 2003, he has been a member of the Board of Directors and President and Chief Executive Officer of SMTC Corporation, an electronics manufacturing services company. Before joining SMTC, Mr. Caldwell held positions in The Mosaic Group, a marketing services provider, as Chair of the Restructuring Committee of the Board, from October 2002 to September 2003, in GEAC Computer Corporation Limited, a computer software company, as President and Chief Executive Officer from October 2000 to December 2001 and in CAE Inc, a provider of simulation and modeling technologies and integrated training solutions for the civil aviation and defense industries, as President and Chief Executive Officer from June 1993 to October 1999. In addition, Mr. Caldwell served in a variety of senior executive positions in finance, including Senior Vice President of Finance and Corporate Affairs of CAE and Executive Vice President of Finance and Administration of Carling O’Keefe Breweries of Canada. Over the course of his career, Mr. Caldwell has served on the audit committees of ten public companies, which allows him to impart significant expertise to our Board and Audit and Finance Committee. Also, for the past several years, Mr. Caldwell has been a lecturer on board oversight responsibility for enterprise risk as part of an accredited board of director education program through McMaster University in Canada. Mr. Caldwell has been a director of Faro Technologies, Inc., a producer of three dimensional manufacturing measurement systems, since 2002 and of IAMGOLD Corporation, a mid-tier gold producer, since 2006. Mr. Caldwell also served on the board of directors of ATI Technologies Inc. from 2003 to 2006, Rothmans Inc. from 2004 to 2008, Cognos Inc. from 2000 to 2008, Stelco Inc. from 1997 to 2006 and Sleeman Breweries Ltd. from 2003 to 2005. Mr. Caldwell has informed SMTC that he intends to retire as its President and Chief Executive Officer and member of its Board of Directors as of the end of March 2011.

Henry WK Chow—Mr. Chow, 65, has been a director since February 2011. Mr. Chow brings to our Board his extensive experience and insight in operating a technology business in the Asia Pacific region as well as his significant expertise in general management and operations. Since July 2009, Mr. Chow has acted as a corporate business advisor to IBM, working approximately 30 hours per month. Prior to this role, during his 41-year career at IBM, Mr. Chow held a variety of management positions in the services, systems engineering, sales and marketing and human resources divisions across IBM’s Asia Pacific operations, including as General Manager of IBM’s Greater China Group from 1995 until 2007, where he was responsible for IBM’s operations in China, Hong Kong and Taiwan, and most recently as Chairman of IBM’s Greater China Group, from January 2007 until his retirement from this position in June 2009. Prior to serving in these positions, Mr. Chow served in a variety of

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general management positions, including General Manager of IBM China Company Limited and General Manager of IBM PC Company, Asia Pacific South, where he was responsible for IBM’s PC business throughout the Asia Pacific region, excluding Japan. Mr. Chow also held positions as Assistant Managing Director of Services for IBM Australia, General Manager of IBM Taiwan, and Director of Operations for IBM Hong Kong. From 2005 until 2009, Mr. Chow served as an observer for IBM at the meetings of the Board of Directors of Lenovo Group Limited, which acquired IBM’s PC business in 2005.

Craig A. Conway—Mr. Conway, 56, has been a director since September 2009. Mr. Conway brings to our Board his significant general management and operations experience, having served as the president and chief executive officer of three technology companies. Mr. Conway served as a member of the Board of Directors and President and Chief Executive Officer of PeopleSoft, Inc., a provider of software for customer relationship management, human resources, financial management and supply chain management, from March 1999 until he retired in November 2004, just prior to the company’s acquisition by Oracle Corporation. Prior to PeopleSoft, Mr. Conway was President and Chief Executive Officer of One Touch Systems, a high bandwidth network communications company, from November 1996 to February 1999. Mr. Conway was also President and Chief Executive Officer of TGV Software Inc., a provider of internet protocol and applications, from September 1993 to March 1996 prior to its acquisition by Cisco Systems. Earlier in his career, Mr. Conway held executive management positions at a variety of leading technology companies including Executive Vice President at Oracle Corporation. Mr. Conway has been a director of Salesforce.com, a provider of customer relationship management solutions, since 2005 and Pegasystems Inc., a rules-based business process management software company since April 2009. Mr. Conway also served on the board of directors of Unisys Corporation from August 2007 to May 2009.

Nicholas M. Donofrio—Mr. Donofrio, 65, has been a director since November 2009. Mr. Donofrio brings to our Board significant expertise in the area of semiconductor technology and manufacturing, system design and integration, and is able to provide the Company with valuable insight and guidance regarding technological strategy and innovation. During his 44-year career at IBM, Mr. Donofrio held a variety of leadership roles in IBM’s server, advanced workstations, personal computing, manufacturing and semiconductor development divisions, including as Senior Vice President, Technology and Manufacturing from 1997 to 2005, and most recently as Executive Vice President, Innovation and Technology from 2005 until his retirement in September 2008. Mr. Donofrio holds seven technology patents and is a member of numerous technical and science honor societies. He is a Senior Fellow at the Kaufman Foundation, a Fellow of the Institute for Electrical and Electronics Engineers, a Fellow of the UK-based Royal Academy of Engineering and he serves on the Board of Trustees at Rensselaer Polytechnic Institute and as co-chair of the New York Hall of Science Board of Trustees. Mr. Donofrio is a member of the U.S.-based National Academy of Engineering and the American Academy of Arts and Sciences. In 2002, Mr. Donofrio was recognized by the Institution of Electrical Engineers, the largest professional engineering society in Europe, with the Mensforth International Gold Medal for outstanding contributions to the advancement of manufacturing engineering. In 2003, he was named Technology Leader of the Year by IndustryWeek magazine, the Technical Executive of the Year by the University of Arizona, and he received the Rodney D. Chipp Memorial Award by the Society of Women Engineers for his contributions to the advancement of women in the engineering field. In addition to being on the board or advisory board of several private companies and organizations, including Liberty Mutual Holding Company Inc., the Secretary of Energy’s Advisory Board, Pennsylvania State University’s School of International Affairs Advisory Board and the Prime Minister of Taiwan’s Science and Technology Advisory Group, Mr. Donofrio has been a director of The Bank of New York Mellon Corporation since 1998.

H. Paulett Eberhart—Ms. Eberhart, 57, has been a director since 2004. Ms. Eberhart brings to our Board her significant general management experience, financial and accounting expertise and a strong background in global markets and channels in the services sector. Since January 2011, she has been President, CEO and a member of the Board of Directors of CDI Corp., a leading provider of engineering and information technology outsourcing solutions and professional staffing. From 2009 until January 2011, she was Chairman and Chief Executive Officer of HMS Ventures, a private real estate and services company. From 2007 until 2009,

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Ms. Eberhart was President and Chief Executive Officer of Invensys Process Systems, an enterprise technology, software and consulting firm offering processes to optimize operations and profitability in manufacturing, plant utilization, business operations and enterprise performance. Before joining Invensys, Ms. Eberhart was Senior Vice President—Electronic Data Systems (“EDS”) and President—Americas of EDS, a leading technology company that provided a broad portfolio of information technology, applications and business process outsourcing services for clients in over 70 countries, from 2003 until she retired in 2004. Ms. Eberhart had been an employee of EDS since 1978. Prior to serving as President—Americas, Ms. Eberhart was the Senior Vice President—EDS and President of EDS Solutions Consulting, a business with 40,000 people operating in 60 countries. She also held various other executive, operating and financial positions at EDS. She was a member of the Board of Directors of AT Kearney, a global management consulting services firm and a subsidiary of EDS, from 1995 to 1998. Ms. Eberhart is a certified public accountant and is a member of the Financial Executives Institute and American Institute of Certified Public Accountants. Ms. Eberhart has been a director of Anadarko Petroleum Corporation since 2004. Ms. Eberhart also served on the board of directors of Solectron Corporation from 2005 to 2007 and Fluor Corporation from 2010 to February 2011.

Waleed Al Muhairi—Mr. Al Muhairi, 36, has been a director since March 2009. Mr. Al Muhairi brings to our Board his experience in international markets and channels relevant to our business as well as his expertise in operations, finance and strategic consulting. Since 2006, Mr. Al Muhairi has been the Chief Operating Officer of Mubadala Development Company PJSC (“Mubadala”), a strategic investment and development company owned by the Government of Abu Dhabi, United Arab Emirates, where he oversees Mubadala’s broad investment portfolio and is responsible for its strategic, operational and business development activities. Mr. Al Muhairi is also a member of Mubadala’s Investment Committee, whose mandate is to develop Mubadala’s investment policies, establish investment guidelines and review all proposed projects and investments to ensure they are in line with Mubadala’s business objectives. Since September 2008, Mr. Al Muhairi has been the Chairman of Advanced Technology Investment Company LLC (“ATIC”), a company wholly owned by the Government of Abu Dhabi, mandated to make significant investments in the advanced technology sector, locally and internationally, with a view of delivering long-term economic and social benefits to the Emirate of Abu Dhabi, the Middle East and beyond. Prior to his roles with Mubadala and ATIC, Mr. Al Muhairi worked with the UAE Offsets Program Bureau as a Senior Projects Manager and with McKinsey & Company as a commercial and governmental consultant. Mr. Al Muhairi also serves as a director on several private and public company boards in the United Arab Emirates and abroad, including Chairman of the Board of Directors of Alyah Satellite Communications (Yahsat), Mubadala Infrastructure Partners and Cleveland Clinic Abu Dhabi; Vice Chairman of National Central Cooling Company (Tabreed) and Piaggio Aero Industries SpA and a director of Abu Dhabi Future Energy Company (Masdar), Emirates Integrated Telecommunications Company PJSC, Tamouh Investments and Al Maabar International Investments LLC. Mr. Al Muhairi is also a trustee of Sheikh Khalifa University. Mr. Al Muhairi holds a Masters degree from Harvard University and a Bachelor of Science in Foreign Service from Georgetown University.

Robert B. Palmer—Mr. Palmer, 70, has been a director since 1999. Mr. Palmer brings to our Board his significant general management experience and his extensive experience in the semiconductor industry. Mr. Palmer was the Chairman and Chief Executive Officer of Digital Equipment Corporation, a pioneering company in the computer industry, from 1995 until his retirement in 1998. Mr. Palmer was appointed Chief Executive Officer and President of Digital in October 1992. From 1985 to 1992, Mr. Palmer served in various executive positions at Digital, including Vice President for Semiconductor Operations. 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. In 1980, Mr. Palmer was honored by SEMI, the global industry association serving the manufacturing supply chains for the microelectronic, display and photovoltaic industries, as one of the most significant contributors to the development of semiconductor technologies. Mr. Palmer is on the Board of Trustees of the Cooper Institute for Aerobic Research, a non-profit preventative medicine research and education organization. From March 2009 until January 2010, Mr. Palmer also served as a member of the Board of Directors of GLOBALFOUNDRIES Inc., a private manufacturing joint venture between AMD, ATIC and WCH formed in March 2009.

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Consideration of Stockholder Nominees for Director

The policy of the Nominating and Corporate Governance Committee is to consider properly submitted stockholder nominations for candidates to serve on our Board. Pursuant to our bylaws, stockholders who wish to nominate persons for election to the Board of Directors at the 2012 Annual Meeting must be a stockholder of record both when they give us notice and at the 2012 Annual Meeting , must be entitled to vote at the 2012 Annual Meeting and must comply with the notice provisions in our bylaws. A stockholder’s notice must be delivered to our Corporate Secretary not less than 90 nor more than 120 days before the anniversary date of the immediately preceding annual meeting. For our 2012 Annual Meeting, the notice must be delivered between January 4, 2012 and February 3, 2012. However, if our 2012 Annual Meeting is not within 30 days of May 3, 2012, the notice must be delivered no later than the close of business on the 10^th day following the earlier of the day on which the first public announcement of the date of the 2012 Annual Meeting was made or the day the notice of the 2012 Annual Meeting is mailed. The public announcement of an adjournment or postponement of the 2012 Annual Meeting will not trigger a new time period (or extend any time period) for the giving of a stockholder notice as described in this proxy statement. Notwithstanding the foregoing, if the number of directors to be elected to the Board at an annual meeting is increased and we do not make a public announcement naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, the stockholder’s notice will be considered timely, but only with respect to nominees for any new positions created by the increase, if it is delivered to our Corporate Secretary not later than the close of business on the 10^th day following the day on which we first make such public announcement. The stockholder’s notice must be updated and supplemented as set forth in our bylaws. The stockholder’s notice must include the following information for the person making the nomination:

The stockholder’s notice must also include the following information for each proposed director nominee:

The Chair of the Annual Meeting will determine if the procedures in the bylaws have been followed, and if not, declare that the nomination be disregarded. If the nomination was made in accordance with the procedures in our bylaws, the Nominating and Corporate Governance Committee of the Board of Directors will apply the same criteria in evaluating the nominee as it would any other Board nominee candidate and will recommend to the Board whether or not the stockholder nominee should be nominated by the Board and included in our proxy

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statement. These criteria are described below in the description of the Nominating and Corporate Governance Committee on page 14. The nominee must be willing to provide a written questionnaire, representation and agreement, if requested by us, and any other information reasonably requested by the Nominating and Corporate Governance Committee in connection with its evaluation of the nominee’s independence.

Communications with the Board or Non-Management Directors

Interested parties who wish to communicate with our Board of Directors or with non-management directors may send their communications in writing to our Corporate Secretary, 7171 Southwest Parkway, M/S 100, Austin, Texas 78735 or send an email to Corporate.Secretary@amd.com. Our Corporate Secretary will forward all of these communications to our Executive Chairman of the Board.

The Board of Directors unanimously recommends that you vote “FOR” each of the director nominees. Unless you indicate otherwise, your proxy will vote “FOR” the proposed nominees.

CORPORATE GOVERNANCE

The Board of Directors has adopted Principles of Corporate Governance (the “Principles”) to address significant corporate governance issues. The Principles provide a framework for our corporate governance matters and include topics such as Board and Board committee composition and evaluation. The Nominating and Corporate Governance Committee is responsible for reviewing the Principles and reporting and recommending any changes to the Principles to the Board of Directors.

Independence of Directors

The Principles provide that a substantial majority of the members of the Board must meet the criteria for independence as required by applicable law and the listing standards of the NYSE. No director qualifies as independent unless the Board of Directors determines that the director has no direct or indirect material relationship with us. On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire which requires disclosure of any transactions with us in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. We also review our relationship to any entity employing a director or on which the director currently serves as a member of the Board of Directors. Our Board of Directors has determined that all directors who served during our 2010 fiscal year and all of our director nominees, other than Mr. Al Muhairi, are independent in accordance with SEC and NYSE rules.

In determining that Mr. Chow is independent, the Board considered our payments to and from IBM in the last three fiscal years. Mr. Chow retired as Chairman of IBM’s Greater China Group in June 2009. Since July 2009, he has acted as a corporate business advisor to IBM, working approximately 30 hours per month. Mr. Chow does not work on any business related to AMD, and IBM does not currently provide any professional services to AMD. In addition, in determining that Mr. Chow is independent, the Board considered payments we made to Deutsche Bank Trust Company and HSBC Group in the last three fiscal years. Immediate family members of Mr. Chow are employees of Deutsch Bank, London, and HSBC, London. However, neither are executive officers nor have they been involved in providing any services to AMD. Deutsche Bank Trust Company holds the assets for AMD’s 401(k) plan, which are managed by the trustee for the 401(k) plan. HSBC Group does not currently provide any services to AMD.

In determining that Mr. Conway is independent, the Board considered our payments to each of Pegasystems Inc. and Salesforce.com in the last three fiscal years. Mr. Conway is a member of the board of directors of each of Pegasystems Inc. and Salesforce.com.

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In determining that Mr. Donofrio is independent, the Board considered our payments to and from IBM in the last three fiscal years as well as our payments to a private company, TopCoder, Inc. Mr. Donofrio is a member of the board of directors of TopCoder, Inc. Mr. Donofrio was employed by IBM until September 2008, most recently as Executive Vice President, Innovation and Technology. However, Mr. Donofrio did not become a member of our Board of Directors until November 2009.

In determining that Ms. Eberhart is independent, the Board considered our payments to PRTM Management Consultants in the last three fiscal years. Ms. Eberhart’s son is an employee of PRTM Management Consultants. However, he is not an executive officer, and he has not been involved in providing consulting services to us. Also, the Board considered a payment of approximately $6,500 made by us to a subsidiary of CDI Corp. in 2008. Ms. Eberhart became President and CEO of CDI in January 2011.

In considering whether Mr. Palmer is independent, the Board considered Mr. Palmer’s service on the GLOBALFOUNDRIES board of directors from March 2009 through January 2010.

The Board concluded that there are no business relationships that are material or that would interfere with the exercise of independent judgment by any of the independent directors in his or her service on our Board of Directors or the Audit and Finance Committee.

Board Leadership Structure

Mr. Claflin, who is independent in accordance with SEC and NYSE rules, is our Executive Chairman of the Board. Mr. Claflin presides at meetings of our stockholders and directors and leads the Board in fulfilling its responsibilities. For the reasons set forth below, the Board of Directors has determined that its current leadership structure, including an independent Chairman of the Board, is appropriate at the present time and allows the Board to fulfill its duties effectively and efficiently based on AMD’s current needs.

Historically, our Board of Directors relied on a lead independent director who worked with our Chief Executive Officer who was also the Chairman of the Board. However, with the transition to a new Chief Executive Officer, Derrick R. Meyer, in 2008 and the retirement of our Executive Chairman and Chairman of the Board in March 2009, our Board of Directors determined that it was appropriate, based on the condition of the Company and overall industry environment, to appoint an independent Chairman of the Board. Our new Chief Executive Officer was assuming his position at time when the PC industry was facing its worst recession in history, and AMD was experiencing a number of financial and operational challenges. In addition, during 2009 and continuing in 2010 our Chief Executive Officer was managing an array of strategic, yet time-consuming, initiatives. At the same time, our Board was pursuing a number of governance initiatives in order to optimize our practices and assure that we factored into account the changing landscape of stockholder rights as well as SEC and NYSE pronouncements. This resulted in adjusting the roles of our Board committees, changing the chairs of these committees and recruiting new members to our Board in 2009. In January 2011, Mr. Meyer resigned as our President and Chief Executive Officer and member of our Board. Thomas J. Seifert, who joined AMD in October 2009 as our Senior Vice President and Chief Financial Officer, was appointed interim Chief Executive Officer. At the same time, Mr. Claflin was appointed as our Executive Chairman of the Board in order to provide additional oversight during the transition period while also leading the CEO recruitment process on behalf of the full Board. Mr. Seifert will maintain his current responsibilities as CFO while also performing his interim CEO responsibilities. In light of the foregoing, we believe that at this time a structure that relies on a dedicated, independent Chairman is appropriate.

Risk Oversight

Management is responsible for day to day risk management activities and processes while our Board of Directors is actively involved in overseeing risk management for AMD. In fulfilling this oversight role, our Board focuses on understanding the nature of our enterprise risks, including risk in our operations, finances and

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strategic direction as well as the adequacy of our risk assessment and risk management processes. Our Board performs this oversight function primarily through management reports and committees of the Board. The Board receives full reports from each committee chair regarding the committee’s considerations and actions. As well, the Board receives management updates on our business operations, financial results and strategy and, as appropriate, discusses and provides feedback with respect to risks related to these topics.

The Audit and Finance Committee reviews the Company’s portfolio of risk, discusses with management significant financial, reporting, regulatory and legal compliance risks in conjunction with enterprise risk exposures, the Company’s policies with respect to risk assessment and risk management and the actions management has taken to limit, monitor or control financial and enterprise risk exposure. The Audit and Finance Committee meets with members of our Internal Audit department to discuss any issues that warrant attention.

The Compensation Committee oversees risk management as it relates to our compensation policies and practices and has reviewed with management whether our compensation programs may create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on the Company.

The Nominating and Corporate Governance Committee adopted a framework for the oversight of enterprise risk pursuant to which it works with management to identify, categorize and evaluate enterprise risks, and also to develop risk mitigation and response strategies.

Majority Vote Standard

Our directors are elected using a majority vote standard with respect to uncontested elections. The standard requires each director to receive the affirmative vote of a majority of the votes cast to be elected. A majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. In contested elections, where the number of nominees exceeds the number of directors to be elected, the vote standard will be a plurality of votes cast. Each incumbent director has submitted a written resignation to the Board which will be effective if he/she does not receive a majority of the votes cast and the resignation is accepted by the Board.

Code of Ethics

The Board of Directors has adopted a code of ethics that applies to all directors and employees entitled, “Worldwide Standards of Business Conduct,” which we designed to help directors and employees resolve ethical issues encountered in the business environment. The Worldwide Standards of Business Conduct covers topics such as conflicts of interest, compliance with laws, fair dealing, protecting AMD property and confidentiality of AMD information and encourages the reporting of any behavior not in accordance with the Worldwide Standards of Business Conduct.

The Board of Directors has also adopted a Code of Ethics for our Executive Officers and all other senior finance executives. The Code of Ethics covers topics such as financial reporting, conflicts of interest and compliance with laws, rules, regulations and our policies.

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

Each of the Committees described below has adopted a charter, which has been approved by the Board of Directors. You can access our bylaws, the latest Committee Charters, the Principles, the Worldwide Standards of Business Conduct and the Code of Ethics on the Investor Relations Web page of our Web site at www.amd.com. Please note that information contained on our Web site is not incorporated by reference in, or considered to be a part of, this document.

The Board of Directors held four regularly scheduled meetings during fiscal 2010. All members of the Board in 2010 attended at least 75 percent of the meetings of the Board of Directors and Committees of the Board on which they served in fiscal 2010. Typically, meetings of the Board of Directors and the Committees of the Board take place over a two-day period. In addition, on an annual basis, the Board holds a formal strategy meeting with management during which the Board and management discuss matters such as the strategic direction of AMD, new business opportunities and the product roadmap. Independent and non-management directors also meet regularly in scheduled executive sessions with our chief executive officer and other members of senior management. In addition to these formal meetings, members of our Board of Directors informally interact with senior management, the Chief Executive Officer, industry leaders and customers on a periodic basis. The Board has an Audit and Finance Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. The members of the Committees and their Chairs are selected by the Nominating and Corporate Governance Committee and then appointed by the Board. Sessions of the non-management directors were held six times in fiscal 2010, and at least one of these sessions was comprised of only independent, non-management directors.

Audit and Finance Committee.    The Audit and Finance Committee consists of Dr. W. Michael Barnes, as Chair, Mr. John E. Caldwell and Mr. Robert B. Palmer. The Board of Directors determined that each of the committee members are financially literate and “independent” under the applicable SEC and NYSE rules and designated Dr. Barnes and Mr. Caldwell as “audit committee financial experts.” The Audit and Finance Committee assists the Board with its oversight responsibilities regarding the integrity of our financial statements, our compliance with legal and regulatory requirements, risk assessment, the performance of our internal audit function, our financial affairs and policies and the nature and structure of major financial commitments. The Audit and Finance Committee is also directly responsible for the appointment, independence, compensation, retention and oversight of the work of the independent registered public accounting firm, which reports directly to the Audit and Finance Committee. The Audit and Finance Committee meets alone with our senior management, our financial, legal and internal audit personnel, and with our independent registered public accounting firm, which has free access to the Audit and Finance Committee. Through November 2010, the director of our Internal Audit Department reported directly to the Chair of the Audit and Finance Committee and “dotted-line” to our Chief Financial Officer and served a staff function for the Audit and Finance Committee. The director of our Internal Audit department resigned for personal reasons in November 2010, and we are conducting a search for a replacement. The manager of our Internal Audit department is handling the department’s day to day operations. He is reporting to our Senior Vice President and Corporate Controller. The Audit and Finance Committee held 13 meetings during fiscal 2010. All members of the Audit and Finance Committee attended at least 75 percent of the meetings of the Audit and Finance Committee in fiscal 2010.

Nominating and Corporate Governance Committee.    The Nominating and Corporate Governance Committee consists of Mr. Bruce L. Claflin, as Chair, Dr. W. Michael Barnes, Mr. John E. Caldwell, Mr. Henry WK Chow, Mr. Craig A. Conway, Mr. Nicholas M. Donofrio, Ms. H. Paulett Eberhart and Mr. Robert B. Palmer, each determined by the Board of Directors to be “independent” under the applicable SEC and NYSE rules. Mr. Chow was appointed to the Nominating and Corporate Governance Committee in March 2011. Mr. Claflin serves as Chair of the Committee. The Nominating and Corporate Governance Committee assists the Board in discharging its responsibilities regarding the identification of qualified candidates to become Board members, the selection of nominees for election as directors at the next annual meeting of stockholders (or special meeting of stockholders at which directors are to be elected), the selection of candidates to fill any vacancies on the Board,

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the development and recommendation to the Board of corporate governance guidelines and principles, including the Principles, oversight of the evaluation of the Board and management and oversight of an enterprise risk process. In addition, the Nominating and Corporate Governance Committee oversees the Board of Directors’ annual review of its performance (including its composition and organization), leads a process for the non-management directors to evaluate the performance of our Chief Executive Officer and provides input regarding the evaluation of other Section 16 officers. The Nominating and Corporate Governance Committee retains a search firm for the purpose of obtaining information regarding potential candidates for Board membership.

The Nominating and Corporate Governance Committee met four times in fiscal 2010. The Nominating and Corporate Governance Committee met once during 2011 to consider director nominees for the 2011 Annual Meeting and other corporate governance matters. In evaluating candidates to determine if they are qualified to become Board members, the Nominating and Corporate Governance Committee looks principally for the following attributes: personal and professional character, integrity, ethics and values; general business experience and leadership profile, including experience in corporate management, such as serving as an officer or former officer of a publicly held company; strategic planning abilities and experience; aptitude in accounting and finance; expertise in domestic and international markets; experience in our industry and with relevant social policy concerns; understanding of relevant technologies; expertise in an area of our operations; communication and interpersonal skills; and practical and mature business judgment. The Nominating and Corporate Governance Committee also considers Board members’ and nominees’ service on the Board of other public companies. Although we do not have a formal diversity policy, to foster and maintain a diversity of viewpoints, backgrounds and experience on the Board, the Committee evaluates the mix of skills and experience of the directors and assesses nominees and potential candidates in the context of the current composition of the Board and the requirements of the Company, taking into consideration the diverse communities and geographies in which the Company operates. Although the Nominating and Corporate Governance Committee uses these and other criteria to evaluate potential nominees, there are no stated minimum criteria for nominees. The Nominating and Corporate Governance Committee uses the same standards to evaluate all director candidates, regardless of who proposes them. All directors that were members of the Nominating and Corporate Governance Committee in fiscal 2010 attended at least 75 percent of the meetings of the Nominating and Corporate Governance Committee in fiscal 2010.

Compensation Committee.    The Compensation Committee consists of Ms. H. Paulett Eberhart, as Chair, Mr. Craig A. Conway and Mr. Nicholas M. Donofrio. Mr. Donofrio was appointed to the Compensation Committee in February 2010. The Board determined that each of the members of the committee is “independent” under the applicable SEC and NYSE rules. During fiscal 2010, the Compensation Committee met 13 times. The Compensation Committee assists the Board in discharging its responsibilities relating to the compensation of all Section 16 officers, members of the Board of Directors and such other employees as delegated from time to time by the Board of Directors. In consultation with management, the Board of Directors and the Compensation Committee’s compensation consultant, the Compensation Committee designs, recommends to the Board of Directors for approval and evaluates employment, severance and change of control agreements and our compensation plans, policies and programs with respect to our Section 16 officers. To the extent permitted by its charter, the Compensation Committee may delegate certain authority and certain responsibilities to one or more of its members, the officers of the Company or a subcommittee of the Compensation Committee. The Compensation Committee aims to structure our compensation program to encourage high performance, promote accountability and align employee interests with the Company’s strategic goals and with the interests of our stockholders. The Compensation Committee also oversees risk management as it relates to our compensation policies and practices for employees generally. All members of the Compensation Committee attended at least 75 percent of the meetings of the Compensation Committee in fiscal 2010.

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DIRECTORS’ COMPENSATION AND BENEFITS

The table below summarizes the compensation paid by us to non-employee directors for serving as directors for the fiscal year ended December 25, 2010.

2010 NON-EMPLOYEE DIRECTOR COMPENSATION

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Further, the table below shows the grant date fair value computed in accordance with FASB ASC Topic 718 (except no assumptions for forfeitures were included) of each equity award granted to each non-employee director in fiscal 2010.

Our directors play a critical role in guiding our strategic direction and overseeing our management. In order to compensate them for their substantial time commitment, we provide a mix of cash and equity-based compensation. In order to align the long-term interests of our directors with those of stockholders, a substantial portion of director compensation is provided in the form of equity. We do not provide pension or retirement plans for non-employee directors. Our former employee director, Derrick R. Meyer, did not receive separate compensation for Board service.

Determining Director Compensation.    In 2010, Semler Brossy Consulting Group, LLC (“Semler Brossy”), our former compensation consultant, advised the Compensation Committee on a variety of compensation-related issues, including Board member compensation levels. To assist the Compensation Committee and Board in its annual review of the non-employee directors’ compensation, Semler Brossy provided the Compensation Committee and Board competitive market data derived from a custom peer group, which was the same custom peer group used to evaluate the Company’s executive compensation. The custom peer group used to evaluate director compensation was comprised of the following companies:

For further information on the peer companies, see the section titled “Compensation Discussion and Analysis—AMD’s Executive Compensation Framework” below.

The Board reviews the Compensation Committee’s recommendation and determines the amount of director compensation. While the competitive market data derived from the custom peer group is crucial to the evaluation of the non-employee directors’ compensation, it is just one of several factors considered by the Board in approving such compensation and the Board has discretion in determining the nature and extent of its use.

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Cash Retainer and Meeting Fees for Non-Employee Directors.    During fiscal year 2010, each of our non-employee directors, with the exception of the Chairman of the Board, received an annual retainer of $65,000 for serving as a director and each of the applicable fees and additional retainers set forth below for serving as a chair of one of the committees of the Board. During fiscal year 2010, Mr. Claflin was our Chairman of the Board. The Board of Directors determined that Mr. Claflin should receive an annual retainer of $140,000 for his service as Chairman of the Board and his equity award should be two times the normal equity award for a non-employee director. Effective January 10, 2011, upon the resignation of Mr. Derrick R. Meyer as our President and Chief Executive Officer, the Board of Directors appointed Mr. Claflin as its Executive Chairman. In connection with Mr. Claflin’s appointment as the Executive Chairman of the Board, the Board of Directors determined that Mr. Claflin should receive compensation of $16,250 per month of service as the Executive Chairman of the Board. In addition, the Board determined that Mr. Claflin should receive 10,345 RSUs for the period commencing on January 10, 2011 and ending on the Annual Meeting, at which time the Compensation Committee will determine if additional RSUs should be granted. The number of RSUs granted to Mr. Claflin was based upon the same methodology as set forth in the Advanced Micro Devices, Inc. Outside Director Equity Compensation Policy, described below, and these RSUs vest in equal one-third installments over three years from the date of grant, which is the same vesting schedule as all other RSU grants to non-employee directors.

In addition, when the Board or a committee has met more than eight times during the year, we pay an attendance fee to our non-employee directors for each additional meeting attended, in the following amounts:

Equity Grant.    Non-employee directors also participate in our 2004 Equity Incentive Plan (the “2004 Plan”). Effective May 3, 2007, our Outside Director Equity Compensation Policy provides that non-employee directors’ annual equity awards shall be made in the form of RSUs. Pursuant to the policy, at each annual meeting of our stockholders, provided that the director has served on the Board for at least six months prior to the annual meeting, a non-employee director is granted the number of RSUs equal to the lesser of (A) the quotient of (i) $225,000 divided by (ii) the trailing average closing sale prices of our common stock for the 180-day period preceding and ending with the date of the RSU grant or (B) such number of RSUs as the Board may determine based on additional criteria such as business conditions and/or company performance, outside director compensation practices at peer companies and advice from our outside compensation consultant.

New non-employee directors appointed to the Board other than at an annual meeting of our stockholders become entitled to an initial RSU grant equal to the RSU grant made to each non-employee director at the immediately preceding annual meeting of our stockholders. The non-employee directors’ RSUs vest in equal one-third installments over three years from the date of grant. In addition, each director may defer the issuance of the underlying shares subject to the RSUs until the termination of his or her directorship.

Acceleration of Vesting.    Pursuant to our Outside Director Equity Compensation Policy, in the event of a change of control of AMD, all of the non-employee directors’ equity compensation awards will become fully vested. In addition, in the event of the termination of a non-employee director’s service to the Board as a result of death, disability or retirement, all of the non-employee director’s equity compensation awards will become fully vested, provided that the non-employee director served as a member of the Board for at least three years prior to the date of termination and the non-employee director satisfied our equity ownership guidelines during his or her service as a Board member. Mr. Clegg retired from the Board in April 2010. Although Mr. Clegg, who was appointed to the Board of Directors as of May 24, 2007, had not served as a member of the Board of Directors for the full three-year period, given the proximity of his three year anniversary and his valuable contributions, the Board of Directors approved the full acceleration of Mr. Clegg’s 64,584 unvested RSUs, effective as of April 28, 2010.

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Other Benefits.    We reimburse the directors for their travel and expenses in connection with attending Board meetings and Board-related activities, such as AMD site visits and sponsored events, as well as for continuing education programs.

Stock Ownership Guidelines.    Under our stock ownership guidelines, each non-employee director is required to acquire and hold 15,000 shares by the first quarter of 2013 (five years from the establishment of the stock ownership guidelines) or five years from the director’s first appointment to the Board, except that the Chairman is required to acquire and hold 37,000 shares by such time frame. In February 2011, the Compensation Committee amended the stock ownership guidelines to clarify that RSUs that have vested but where the issuance of the shares to the director has been deferred by election pursuant to our Outside Director Equity Compensation Policy count towards the satisfaction of the guidelines. As of December 25, 2010, all non-employee directors were on target to meet their ownership guideline within the appropriate time frame.

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PRINCIPAL STOCKHOLDERS

The following table shows each person or entity we know to be the beneficial owner of more than five percent of our common stock as of March 1, 2011.

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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The table below shows the number of shares of our common stock beneficially owned as of March 1, 2011, by our current directors, by our Named Executive Officers (as defined in the “Compensation Discussion and Analysis” section below) and by all of our current directors and executive officers as a group. Except as otherwise indicated, each person has sole investment and voting power with respect to the shares shown as beneficially owned. Ownership information is based upon information provided by the individuals.

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EXECUTIVE OFFICERS

The following persons were our executive officers as of March 1, 2011:

Thomas J. Seifert—Mr. Seifert, 47, is our Senior Vice President, Chief Financial Officer and interim Chief Executive Officer. Mr. Seifert joined AMD in October 2009 as our Senior Vice President and Chief Financial Officer. He was appointed our interim Chief Executive Officer on January 10, 2011. From October 2008 until joining AMD, Mr. Seifert served as chief operating officer and chief financial officer of Qimonda AG, a German memory chip manufacturer, where he led the formation and subsequent initial public offering of the company. From April 2006 to October 2008, Mr. Seifert served as Chief Operating Officer of Qimonda AG. Qimonda generated net sales of Euro 1.79 billion in fiscal 2008 and had, prior to commencing insolvency proceedings in early 2009, approximately 12,200 employees worldwide. From 2001 to April 2006, Mr. Seifert was Senior Vice President and General Manager of the Wireline Business Group at Infineon AG. He has also held executive positions at Siemens AG, White Oak Semiconductor, and Altis Semiconductor, a joint venture launched in 1992 between IBM and Siemens Semiconductor. He currently serves on the board of Virginia Commonwealth University’s School of Engineering.

Rick Bergman— Mr. Bergman, 47, is our Senior Vice President and General Manager of the Products Group, with responsibility for managing the graphics and microprocessor product development groups. Prior to being appointed to his current position in May 2009, Mr. Bergman was Senior Vice President and General Manager, Graphics Product Group, from October 2006 to May 2009. Mr. Bergman joined AMD via our acquisition of ATI Technologies Inc., a company that was engaged in the design, manufacture and sale of 3D graphics and digital media silicon solutions, in October 2006. While at ATI, Mr. Bergman served in several positions, including as Senior Vice President and General Manager, PC Group just prior to our acquisition of ATI. He joined ATI in January 2001, from S3 Graphics, a division of SonicBlue Inc., where he served as Chief Operating Officer. Prior to S3 Graphics, Mr. Bergman served in a number of marketing and management roles within the North American technology industry, including Vice President, Marketing at Exponential Inc. and Marketing Manager at Texas Instruments, Inc. He began his engineering career at IBM.

Emilio Ghilardi—Mr. Ghilardi, 52, is our Senior Vice President and Chief Sales Officer. Mr. Ghilardi joined AMD in August 2008 as Senior Vice President and General Manager, AMD’s EMEA region. He became our Chief Sales Officer in January 2009. From August 2005 to August 2008, he was Vice President and General Manager of the EMEA Consumer Business Unit of Hewlett-Packard Company (“HP”), where he managed the consumer PC and imaging and printing business. From 2003 to 2005, he was HP’s EMEA Vice President and General Manager of Commercial Hardware within the Imaging and Printing Group. He also served as the Vice President and General Manager responsible for HP’s EMEA Consumer PC Product categories. Mr. Ghilardi, who joined HP in 1982, served as chairman of HP Italy’s Board of Directors from 2001 through 2008 in addition to holding several other management positions during his 25-year tenure at HP.

Harry A. Wolin—Mr. Wolin, 48, is our Senior Vice President, General Counsel and Corporate Secretary. Mr. Wolin was appointed as our Corporate Secretary on April 28, 2010. Prior to becoming General Counsel in 2003, Mr. Wolin was our Vice President, Intellectual Property and managed AMD’s Technology Law Department. Before he joined AMD in 2000, Mr. Wolin spent twelve years at Motorola, where his last role was Vice President and Director of Legal Affairs for the Semiconductor Products Sector. Mr. Wolin received the 2008 Magna Stella award for innovative management from the Texas General Counsel Forum. He is a member of the State Bars of Arizona and Texas and is registered to practice before the United States Patent and Trademark Office. Mr. Wolin has been a member of the Board of Directors of GLOBALFOUNDRIES Inc. since February 2011.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

We believe that during fiscal 2010, our directors, Section 16 officers and beneficial owners of more than 10% of our common stock complied with all Section 16(a) filing requirements. In making the above statement, we have relied solely upon a review of information provided to us and upon the written representations of our directors and Section 16 officers.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 25, 2010 with respect to shares of our common stock that may be issued under our existing equity compensation plans. Our 2004 Equity Incentive Plan, which was approved by our stockholders, is our only equity incentive plan available for the grant of new equity awards. Outstanding options and any full value awards are not transferable for consideration.

Equity Compensation Plan Information

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COMPENSATION DISCUSSION AND ANALYSIS

OVERVIEW OF 2010

We entered 2010 with significant momentum and exited the year having achieved many of our goals. Entering 2010, our most important objectives were: to deliver winning platform products; to differentiate ourselves with our graphics technology, to initiate shipments of the AMD Fusion family of APUs and to demonstrate the success of our financial and business models.

We believe that our financial results in 2010 demonstrate the strength of our business model. On a macroeconomic level, consumer demand for end-user PC products grew in the first half of 2010, but the pace of that growth slowed in the second half of 2010. Despite the more challenging economic environment in the latter half of 2010, we were profitable in 2010.

We improved financial performance in 2010, and we believe that the Named Executive Officers (as defined below) were instrumental in achieving profitability. Consistent with the economic environment discussed above and in an effort to, among other things, reward financial or individual performance, drive the creation of sustainable stockholder value and align the interests of the Named Executive Officers and stockholders, the Compensation Committee took the following key compensation actions:

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EXECUTIVE MANAGEMENT CHANGES IN 2010 AND JANUARY 2011

Thomas M. McCoy resigned as Executive Vice President, Legal and Public Affairs of AMD effective June 30, 2010 and he ceased being an AMD employee effective December 31, 2010.

Derrick R. Meyer resigned as President and Chief Executive Officer and director of AMD effective January 10, 2011. On January 10, 2011, AMD appointed Thomas J. Seifert as interim Chief Executive Officer. Mr. Seifert also continues to serve as Senior Vice President, Chief Financial Officer of AMD.

This compensation discussion and analysis provides information regarding our executive compensation program in 2010 for the following executive officers: Derrick R. Meyer, our former President and Chief Executive Officer; Thomas J. Seifert, our interim Chief Executive Officer and Senior Vice President, Chief Financial Officer; Emilio Ghilardi, our Senior Vice President, Chief Sales Officer; Rick Bergman, our Senior Vice President and General Manager, Product Group; Harry A. Wolin, our Senior Vice President, General Counsel and Secretary; and Thomas M. McCoy, our former Executive Vice President, Legal and Public Affairs (collectively referred to herein as the “Named Executive Officers”).

HIGHLIGHTS OF AMD’S EXECUTIVE COMPENSATION PROGRAM

In designing and implementing AMD’s executive compensation program, the Compensation Committee is guided by the following principles:

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AMD’S EXECUTIVE COMPENSATION FRAMEWORK

AMD’s Executive Compensation Philosophy and Objectives

Our executive compensation philosophy is to provide compensation and benefit programs that enable us to attract, retain, and motivate high caliber executive officers, to motivate these executive officers to achieve our short-term and long-term business strategies and objectives, and to support career development and succession goals.

To implement this philosophy, the Compensation Committee has established the following objectives:

Role of the Compensation Committee

The Compensation Committee regularly reviews the alignment of our executive compensation program with the strategies and needs of our business, market trends, changes in competitive practices, individual performance, Company performance, and the interests of our stockholders. Based on this review, the Compensation Committee approves the compensation of the Named Executive Officers, including base salary, short-term incentive awards (which are in the form of a cash performance bonus), long-term equity awards, and benefits and perquisites.

Generally, compensation decisions, together with individual performance reviews, are made at the first and second regularly scheduled Compensation Committee meetings of the fiscal year. The short-term incentive goals and targets are approved at the Compensation Committee meeting shortly after the commencement of the applicable performance period, the intent of which is to comply with Section 162(m) of the Internal Revenue Code regarding performance-based pay.

Role of Management

The Compensation Committee believes that even the best advice of a compensation consultant or other outside advisors must be combined with the input from senior management and the Compensation Committee’s own individual experiences and best judgment to arrive at the proper alignment of compensation philosophy, objectives, and programs. The Chief Executive Officer, Chief Financial Officer, Chief Talent Officer, General Counsel and Corporate Secretary are the members of senior management who interact most closely with the Compensation Committee. These individuals provide the Compensation Committee with their perspectives on the design and administration of AMD’s executive compensation program and awards. In particular, these individuals work together with the Compensation Committee to enable the Compensation Committee to formulate the specific plan and award designs, performance measures, and performance levels (i.e., threshold, target, and maximum) necessary to align AMD’s executive compensation program with its business strategies and objectives.

The Chief Executive Officer reviews with the Compensation Committee his performance evaluations of each of the other Named Executive Officers and his recommendations (except with respect to his own compensation) regarding base salary adjustments, short-term incentive awards, and long-term equity awards for the other Named Executive Officers to ensure alignment with the Compensation Committee’s pay-for-performance design principle. However, all final decisions regarding the compensation of the Named

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Executive Officers are made by the Compensation Committee. The Compensation Committee conducts its own performance assessment of the Chief Executive Officer and no management recommendation is made with regard to his compensation.

While certain members of management attend the Compensation Committee’s meetings upon invitation, they do not attend either executive sessions or portions of any other meetings of the Compensation Committee where their executive compensation determinations are made by the Compensation Committee.

Assessment of Individual Performance

The Named Executive Officers’ compensation is impacted by individual performance. The Board of Directors regularly evaluates the performance of the Chief Executive Officer and the Compensation Committee annually assesses the performance of the Chief Executive Office based upon the Board of Director’s evaluation. Additionally, the Compensation Committee annually assesses the performance of the other Named Executive Officers based upon the Chief Executive Officer’s report and evaluation of such officers’ individual performance.

The assessment of the Named Executive Officers’ individual performance is a subjective assessment of accomplishment and contribution to AMD. In approving the compensation of the Named Executive Officers in 2010, the Compensation Committee considered the following accomplishments and contributions:

In light of Mr. McCoy resigning as Executive Vice President, Legal and Public Affairs of AMD effective June 30, 2010, the Compensation Committee did not perform a traditional, performance evaluation of Mr. McCoy as it did for the other Named Executive Officers. However, see the section titled “2010 Executive Compensation Decisions–Elements of Compensation” below for a discussion of Mr. McCoy’s personal contributions that were considered by the Compensation Committee in approving his special performance bonus.

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Role of the Compensation Consultant

During the first eight months of 2010, the Compensation Committee retained Semler Brossy as its compensation consultant to obtain objective, expert advice on executive and director compensation. Semler Brossy advised the Compensation Committee on a variety of compensation-related issues in 2010, including:

In September 2010, the Compensation Committee retained Compensia, Inc. as its compensation consultant. With respect to AMD’s 2010 executive compensation program, Compensia’s role was limited to reviewing the amount of each of the Named Executive Officer’s 2010 cash performance bonus and assessing the competitiveness of such bonus payment.

In the course of conducting their respective activities, Semler Brossy and Compensia attended meetings of the Compensation Committee and presented their findings and recommendations for discussion. During 2010, Semler Brossy and Compensia also met with senior management to obtain and validate data and review materials.

In 2010, neither Semler Brossy nor Compensia provided any services to AMD, or received any payments from AMD, other than in their capacity as a consultant to the Compensation Committee.

Competitive Pay Analysis

The Compensation Committee annually evaluates how the Named Executive Officers’ compensation levels and pay practices compare to the market. Each year the Compensation Committee reviews a custom-developed group of peer companies, in combination with industry-specific survey data, to develop a reasonable representation of the “competitive market” with respect to our executive pay levels and pay practices.

To evaluate the competitiveness of the Named Executive Officers’ base salary, target cash performance bonus, and target long-term equity awards for 2010, Semler Brossy provided the Compensation Committee competitive market data derived from a custom peer group (the “Custom Peer Group”) and the following industry specific surveys (collectively, the “Industry Specific Survey Data”):

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The companies comprising the Custom Peer Group for 2010 included:

Our compensation consultant, under the direction of the Compensation Committee, annually reviews the companies comprising the Custom Peer Group in order to maintain its appropriateness for the competitive pay analysis. The companies were generally selected based upon their (i) classification as “information technology” companies by the Global Industry Classification Standards, (ii) annual revenues (roughly 1/2x to 2x AMD’s revenues with the exception of Intel), (iii) similarities of business model with particular attention to fab-less semiconductor companies, and (iv) comparable product offerings. While Intel’s revenues were significantly greater than our revenues, Intel was included in the Custom Peer Group due to its dominant industry position. There were no changes in the Custom Peer Group composition from 2009 to 2010.

The Compensation Committee used the Custom Peer Group as its primary source in analyzing the competitiveness of the Named Executive Officers’ compensation, and used the Industry-Specific Survey Data to validate the Custom Peer Group.

Additionally, the Compensation Committee instructed Semler Brossy not to perform a competitive pay analysis of Mr. McCoy’s 2010 compensation due to his possible resignation from AMD. Semler Bossy did assist the Compensation Committee in determining the appropriateness of Mr. McCoy’s special performance bonus as further discussed below.

In using the Industry-Specific Survey Data to validate the competitive market data of the Custom Peer Group, the Compensation Committee did not apply a specific weighting to any of the four industry-specific surveys identified above, nor did it generally favor one survey over another. Instead, the Compensation Committee used its subjective judgment, without any formulaic approach, and developed a “market consensus” of the competitive market data derived from the four industry-specific surveys.

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While the competitive market data is crucial to the Compensation Committee’s approval process, it is just one of several factors considered by the Compensation Committee in approving executive compensation and the Compensation Committee has discretion in determining the nature and extent of its use. Accordingly, while the Compensation Committee aims to set each Named Executive Officer’s total direct compensation (i.e., base salary, target cash performance bonus, and target long-term equity awards) between the 50^th and 75^th percentile of the Custom Peer Group, such objective is just one point of reference and not the determinative factor in setting our executives’ compensation. The purpose of the comparison is not to supplant the individual performance of a Named Executive Officer, AMD’s performance, a Named Executive Officer’s roles and responsibilities within AMD, or internal pay equity considerations when the Compensation Committee approves executive compensation. Accordingly, any Named Executive Officer’s total direct compensation may vary from the 50^th and 75^th percentile of the Custom Peer Group due to one or more of these other factors.

2010 EXECUTIVE COMPENSATION DECISIONS

Elements of Compensation

Our executive compensation program is comprised of several pay elements. In general, the amount of each pay element is influenced by the Named Executive Officers’ role and responsibilities within AMD, competitive market data, individual performance, Company performance and internal pay equity considerations. Additionally, each pay element is structured in accordance with any contractual arrangements we have entered into with the Named Executive Officers.

Generally, the Compensation Committee reviews and considers each pay element before making any executive compensation decisions. During fiscal 2010, our executive compensation consisted of the following pay elements:

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