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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Check the appropriate box:

ADVANCED MICRO DEVICES, INC.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

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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

You are cordially invited to attend our 2015 annual meeting of stockholders (our “Annual Meeting”) to be held on Wednesday, April 29, 2015 at 10:00 a.m. Eastern Time at the Andaz Wall Street Hotel, 75 Wall Street, New York, New York 10005. We are holding our Annual Meeting to:

We are pleased to provide access to our proxy materials over the Internet under the SEC’s “notice and access” rules. As a result, we are mailing to our stockholders (other than those who previously requested printed or emailed materials on an ongoing basis) a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of printed copies of our proxy materials. The Notice contains instructions on how to access our proxy materials on the Internet, how to vote on the Internet and how you can receive printed or emailed copies of our proxy materials. We believe that providing our proxy materials over the Internet will lower our Annual Meeting’s cost and environmental impact, while increasing the ability of our stockholders to access the information that they need.

Stockholders of record at the close of business on March 2, 2015 and holders of proxies for those stockholders may attend and vote at our Annual Meeting. To attend our Annual Meeting in person, you must present valid photo identification, and, if you hold shares through a broker, bank, trustee or nominee (i.e., in street name), you must also present a letter from your broker or other nominee showing that you were the beneficial owner of the shares on March 2, 2015.

This year, we are also pleased to offer a virtual annual meeting at which our stockholders can view our Annual Meeting at www.virtualshareholdermeeting.com/AMD15. Stockholders at the close of business on March 2, 2015 may also ask questions and vote at our Annual Meeting via the Internet. We hope this will allow our stockholders who are unable to attend our Annual Meeting in person to participate in our Annual Meeting.

Sincerely,

HARRY A. WOLIN

Senior Vice President, General Counsel & Secretary

This notice of annual meeting and proxy statement are dated March 12, 2015 and will first be distributed and made available to the stockholders of Advanced Micro Devices, Inc. on or about March 18, 2015.

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In this proxy statement, the words “AMD,” the “Company,” “we,” “ours,” “us” and similar terms refer to Advanced Micro Devices, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

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ADVANCED MICRO DEVICES, INC.

PROXY STATEMENT

2015 ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS

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ITEM 1—ELECTION OF DIRECTORS

Our Board currently consists of 12 members: Mr. Bruce L. Claflin, Dr. W. Michael Barnes, Mr. John E. Caldwell, Mr. Henry WK Chow, Ms. Nora Denzel, Mr. Nicholas M. Donofrio, Mr. Martin L Edelman, Mr. John R. Harding, Mr. Joseph A. Householder, Mr. Michael J. Inglis, Dr. Lisa T. Su and Mr. Ahmed Yahia. Dr. Barnes will retire at the end of his current term and will not stand for re-election at our Annual Meeting. We expect the Board to reduce the size of the Board to 11 members following the Annual meeting. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

The Nominating and Corporate Governance Committee of the Board selected, and the Board approved, the remaining 11 current members of our Board as nominees for election to the Board at the Annual Meeting. All directors are elected annually and serve a one-year term until our next annual meeting or until such director’s success.

Mr. Edelman was first appointed to the Board on February 22, 2013, pursuant to our agreement with Mubadala Technology Investments LLC, formerly known as Advanced Technology Investment Corporation (“Mubadala Tech”), and West Coast Hitech L.P. (“WCH”), which 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. Mr. Householder was first appointed to the Board on September 15, 2014 and was recommended as a potential candidate for the Board by a third-party search firm. On October 8, 2014, Dr. Su was appointed to the Board in connection with her appointment as our President and Chief Executive Officer, succeeding Mr. Rory P. Read, our former President and Chief Executive Officer and member of the Board.

The Board 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. All of the director nominees were present at our 2014 annual meeting of stockholders except Dr. Su and Mr. Householder, who were appointed to the Board after the 2014 annual meeting, and Mr. Edelman.

Director Experience, Skills and Qualifications

Our goal is to assemble a Board that operates cohesively and works with management in a constructive way to deliver long-term value to our stockholders. We believe that the nominees set forth below, all of whom are currently directors of AMD, possess valuable experience necessary to guide us in the best interests of our stockholders. Our current Board consists of individuals with proven records of success in their chosen professions. They possess 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, us and our key constituents, including our customers, stockholders and management. Most of our directors have broad technology sector experience, including expertise in semiconductor technology, innovation and strategy. Several members of the Board are current or former chief executive officers, thereby providing the Board with practical understanding of how large organizations operate, including the importance of employee development and retention. They also understand strategy and risk management and how these factors impact our operations.

Certain information regarding each of the 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 on the Board, as well as his or her principal occupation and directorships during the past five years. The age of each director is as of our Annual Meeting.

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Mr. Claflin served as President, Chief Executive Officer and a member of the board of directors of 3Com Corporation (a voice and data networking products and services provider) from January 2001 until his retirement in 2006. He joined 3Com as President and Chief Operating Officer in August 1998. Prior to 3Com, Mr. Claflin worked at Digital Equipment Corporation (a computer systems vendor) as Executive Vice President, Sales and as General Manager of the PC Business Unit. Mr. Claflin also worked at International Business Machines Corporation (“IBM”) for 22 years, where he held various senior management positions of increasing responsibility and was responsible for almost every operation of the global, high tech company, including sales, marketing, research and development and manufacturing. Also, while employed by IBM, Mr. Claflin lived and worked in Hong Kong and Tokyo and was responsible for IBM’s Asia/South Pacific Area, and, while employed by 3Com, Mr. Claflin established a joint venture in China in partnership with a leading Chinese global telecom solutions provider. Mr. Claflin was first appointed as our Chairman of the Board in March 2009 and was appointed as our non-employee Executive Chairman of the Board in January 2011. He held that position until August 2011, when he resumed acting as our Chairman of the Board. He has been a member of the board of directors of Ciena Corporation since 2006. He is also founder, director and President of Kids First! (a U.S. Virgin Islands non-profit corporation). Mr. Claflin holds a bachelor of arts degree in political science from Pennsylvania State University.

Director Qualifications: Mr. Claflin brings to the Board extensive experience in the IT industry, having held a wide range of senior operating and executive positions at large IT providers. Mr. Claflin has run large PC operations and has extensive global experience, particularly in China, which is our largest single market. As a former chief executive, he is familiar with the challenges faced by our senior management, and as a director of a major telecommunications company, he has insights into a segment of the IT industry that strongly influences how technology is used.

Mr. Caldwell served as President and Chief Executive Officer of SMTC Corporation (an electronics manufacturing services company) from March 2003 until he retired in March 2011. Before joining SMTC, Mr. Caldwell served as chair of the restructuring committee of the board of directors of The Mosaic Group (a marketing services provider) from October 2002 to September 2003, as President and Chief Executive Officer of GEAC Computer Corporation, Ltd. (a computer software company) from October 2000 to December 2001 and as President and Chief Executive Officer of CAE Inc. (a simulation technologies and integrated training solutions provider for the civil aviation and defense industries) from June 1993 to October 1999. In addition, Mr. Caldwell has 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. Mr. Caldwell has been a director of Faro Technologies, Inc. since 2002 and of IAMGOLD Corporation since 2006. Mr. Caldwell also served on the board of directors of SMTC from 2003 to March 2011. Mr. Caldwell holds a bachelor of commerce degree from Carleton University, Ontario, and is a chartered professional accountant with the Chartered Professional Accountants of Ontario. Mr. Caldwell is an author and lecturer on the subject of board oversight of enterprise risk.

Director Qualifications: Mr. Caldwell brings to the Board extensive and diversified general management, financial management and risk assessment experience as a result of his experience at SMTC, his other executive management experience and his service as a director on the boards of directors of other public companies.

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Mr. Chow acted as a corporate business advisor to IBM from July 2009 through August 2011. 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 Chairman of IBM’s Greater China Group from January 2007 until June 2009 and as General Manager of IBM’s Greater China Group from 1995 until January 2008, where he was responsible for IBM’s operations in China, Hong Kong and Taiwan. Prior to serving in these positions, Mr. Chow served in a variety of general management positions, including General Manager of IBM China Company Limited and General Manager of IBM PC Company, Asia Pacific South. From 2005 until 2009, Mr. Chow served as an observer for IBM at meetings of the board of directors of Lenovo Group Limited, which acquired IBM’s PC business in 2005. Mr. Chow has been a member of the board of directors of Trina Solar Limited since July 2012. In addition, Mr. Chow has been Vice Chairman of the Advisory Board for Guangtong International Clinical Research Center (a government-owned research center) since September 2011 and a member of the European Advisory Committee for Bridgepoint (a private equity firm) since October 2011. Mr. Chow completed a one-year fellowship in Advanced Leadership Initiative at Harvard University and holds a bachelor of science degree in electrical engineering from the University of Hong Kong.

Director Qualifications: Mr. Chow brings to the Board his extensive experience and insight in operating a technology business in the Asia Pacific region, a strategic market for us, as well as his significant expertise in general management and operations.

Ms. Denzel has served as the interim Chief Executive Officer of Outerwall Inc. (an automated retail solutions provider) since January 2015. Ms. Denzel held various executive management positions from February 2008 through August 2012 at Intuit Inc. (a cloud financial management software company), including Senior Vice President of Big Data, Social Design and Marketing and Senior Vice President and General Manager of the QuickBooks Employee Management business unit. From 2000 to 2006, Ms. Denzel held several executive level positions at Hewlett-Packard Company (a technology software, services and hardware provider), including Senior Vice President and General Manager Software Global Business Unit from May 2002 to February 2006 and Vice President of Storage Organization from August 2000 to May 2002. Prior to Hewlett-Packard, Ms. Denzel held executive positions at Legato Systems Inc. (a data storage management software company purchased by EMC) and IBM. Ms. Denzel has served as a member of the board of directors of Saba Software, Inc. since November 2011, Ericsson since March 2013 and Outerwall Inc. since March 2013. Ms. Denzel also served on the board of directors of Overland Storage Inc. from 2008 until February 2013. Ms. Denzel also serves on the board of directors of FirstRain (a private company). She holds a master of business administration degree from Santa Clara University and a bachelor of science degree in computer science from the State University of New York.

Director Qualifications: Ms. Denzel brings to the Board more than 25 years of technology, software and leadership experience as a result of her experience at Intuit, Hewlett-Packard and IBM and her experience on the boards of directors of other public companies.

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Mr. Donofrio held a variety of executive and technical management positions during his 44-year career at IBM in its server, advanced workstations, personal computing, manufacturing and semiconductor development divisions, including as Senior Vice President, Technology and Manufacturing from 1997 to 2005 and 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 fellow of the Institute for Electrical and Electronics Engineers, the UK-based Royal Academy of Engineering and the American Academy of Arts and Sciences. He also serves as chairman of the New York Youth Hall of Science, Syracuse University and The MITRE Corporation (a non-profit organization), and serves on the advisory boards of the Secretary of Energy, Pennsylvania State University’s School of International Affairs and the Workforce Opportunity Services Academic Advisory Board. Mr. Donofrio is also a member of the U.S.-based National Academy of Engineering. Mr. Donofrio is the recipient of numerous awards. For example, in 2006, he was named among Business Week magazine’s 25 Top Innovation Champions, and in 2008 was awarded the Renaissance Engineer Award by the Society of Hispanic Professional Engineers for his commitment and promotion of Science, Technology, Engineering and Mathematics for the U.S. Hispanic Community. In 2003, 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 of several private companies, including Liberty Mutual Holding Company Inc. and Sproxil, Inc., Mr. Donofrio has been a director of The Bank of New York Mellon Corporation since 1998 and a director of Delphi Automotive PLC since 2009. Mr. Donofrio has a bachelor of science degree in electrical engineering from Rensselaer Polytechnic Institute and a master of science in the same discipline from Syracuse University.

Director Qualifications: Mr. Donofrio brings to the Board significant expertise in the areas of semiconductor technology and manufacturing, system design and integration, and is able to provide us with valuable insight and guidance regarding technological and innovation strategies as well as the development and retention of our technical employee population.

Mr. Edelman has served as Of Counsel to Paul, Hastings, Janofsky & Walker LLP (a law firm) since 2000. Mr. Edelman was a partner with Battle Fowler LLP (a law firm), which merged with Paul, Hastings, Janofsky & Walker, LLP, from 1972 to 1993 and was Of Counsel to Battle Fowler LLP from 1994 to 2000. In addition, Mr. Edelman is a senior advisor to Mubadala Development Company PJSC (a strategic investment and development company headquartered in the Emirate of Abu Dhabi, “Mubadala”). In addition to serving on the boards of several private corporations and charitable entities, Mr. Edelman served as a member of the board of directors of Ashford Hospitality Trust Inc. from 2003 until 2014 and Blackstone Mortgage Trust, Inc. since 1997. He also served on the board of directors of Avis Budget Group, Inc. from 1997 until March 2013 and is currently on the board of Morgans Hotel Group and Equity Commonwealth EQC. Mr. Edelman also serves as a member of the board of directors of Aldar Property Group (publicly traded in Abu Dhabi). Mr. Edelman holds a bachelor of law degree from Columbia Law School and a bachelor of arts degree from Princeton University.

Director Qualifications: Mr. Edelman brings to the Board an extensive legal background as a result of over 40 years of experience in the legal profession and his considerable experience in structuring and negotiating complex transactions.

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Mr. Harding co-founded and is President and Chief Executive Officer of eSilicon Corporation (a privately held company that designs and manufactures complex, custom chips). Before starting eSilicon in 2000, Mr. Harding served as President, Chief Executive Officer and director of Cadence Design Systems, Inc. (a global electronic design automation company). Mr. Harding also held a variety of senior management positions at Zycad Corporation, and his career also includes positions with TXL and IBM. Mr. Harding has also held leadership roles at Drew University and Indiana University, where he was Vice Chairman of the Board of Trustees and a member of the School of Public and Environmental Affairs Advisory Board, respectively. In addition, Mr. Harding has served as a member of the Steering Committee at the U.S. Council on Competitiveness and was a former National Academies’ Committee member for Software, Growth and Future of the U.S. Economy. In 2012, Mr. Harding was re-elected as the value chain producer director to the board of directors of the Global Semiconductor Alliance. He has been a director of the Global Semiconductor Alliance since 2007. Mr. Harding has served as a member of the board of directors of RF Micro Devices, Inc. since 2006. He has also served on the advisory board of Atrenta, Inc. (a private company) since 2007. Mr. Harding holds a bachelor of arts degree in chemistry and economics from Drew University.

Director Qualifications: Mr. Harding’s experience as President and Chief Executive Officer of eSilicon provides the Board with a deep understanding of the challenges and issues facing semiconductor companies. In addition, Mr. Harding brings to the Board substantial general management and operational experience and expertise in corporate strategy development gained from serving as President and Chief Executive Officer of two technology companies and from his experience as an entrepreneur.

Mr. Householder is Executive Vice President and Chief Financial Officer of Sempra Energy (a worldwide provider of energy infrastructure and gas and electric utilities). From 2006 to 2011, Mr. Householder was Senior Vice President, Controller and Chief Accounting Officer of Sempra Energy responsible for financial reporting, accounting and controls and tax functions for all Sempra Energy companies. Prior to this role, he served as Vice President of Corporate Tax and Chief Tax Counsel for Sempra Energy. Prior to joining Sempra Energy in 2001, Mr. Householder was a partner at PricewaterhouseCoopers in the firm’s national tax office. From 1986 to 1999, he served in a number of legal and financial roles at Unocal Corporation, including ultimately as Vice President of Corporate Development and Assistant Chief Financial Officer, where he was responsible for worldwide tax planning, financial reporting and forecasting and mergers and acquisitions. Mr. Householder serves on the board of directors of the Southern California Gas Company and the San Diego Gas & Electric Company, which are wholly-owned subsidiaries of Sempra Energy. He also serves on the board of directors of Infraestructura Energetica Nova (IEnova, a majority-owned subsidiary of Sempra Energy that is publicly traded in Mexico) and the San Diego Regional Economic Development Corporation (a non-profit corporation). In addition, Mr. Householder is a member of the Tax Executives Institute, the American Institute of Certified Public Accountants, the State Bar of California and the American Bar Association. He holds a bachelor of science degree in business administration from the University of Southern California and a juris doctor degree from Loyola Law School.

Director Qualifications: Mr. Householder brings to the Board significant financial and operational expertise as a result of his chief financial officer experience at Sempra Energy, his experience as a partner of PricewaterhouseCoopers and his experience at Unocal Corporation.

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Mr. Inglis held several senior executive positions between 2002 and 2013 at ARM Holdings plc (a semiconductor intellectual property supplier), including as Executive Vice President, Sales and Marketing, as Executive Vice President, General Manager, Processor Division, and as Chief Commercial Officer. Before joining ARM, Mr. Inglis was a Principal at A.T. Kearney (a global management consulting firm) from 1999 to 2001. Mr. Inglis served as General Manager, Smartcard Division and European Hi-End Microprocessor Operations Manager amongst various roles at Motorola Semiconductor from 1991 to 1998. In addition, Mr. Inglis has held a number of operational and marketing positions at Texas Instruments (a global semiconductor company), BIS Macintosh (an electronics market research firm) and Fairchild Camera and Instrument (a semiconductor company). Mr. Inglis served on the board of directors of ARM from 2002 until his retirement in March 2013. Mr. Inglis was also a member of the board of directors of Pace plc (publicly traded on the London Stock Exchange) from 2008 until April 2013 and was re-appointed as a director to the Pace board of directors in March 2014. Mr. Inglis has a master of business administration degree from Cranfield School of Management and a bachelor of science degree in electronic and electrical engineering from Birmingham University. In addition, Mr. Inglis is a Chartered Engineer and a Member of the Chartered Institute of Marketing.

Director Qualifications: Mr. Inglis brings to the Board senior leadership, management, and sales and marketing expertise, as well as his experience gained from serving as a director on the boards of other public companies. He also provides his broad understanding of the semiconductor industry.

Dr. Su is our President and Chief Executive Officer. Dr. Su served as our Chief Operating Officer from July 2014 until October 2014 and as our Senior Vice President and General Manager, Global Business Units since she started with us in January 2012. Prior to joining us, Dr. Su served as Senior Vice President and General Manager, Networking and Multimedia at Freescale Semiconductor, Inc. (an embedded processor manufacturer), where she was responsible for global strategy, marketing, product management and engineering for their embedded communications and applications processor businesses. Dr. Su joined Freescale in 2007 as Chief Technology Officer, leading the company’s technology roadmap and R&D efforts. Prior to her employment with Freescale, Dr. Su spent 13 years with IBM in various engineering and business leadership positions, including Vice President of the Semiconductor Research and Development Center, responsible for the strategic direction of IBM’s silicon technologies, joint development alliances and semiconductor R&D operations. Dr. Su has served on the board of directors of Analog Devices since June 2012. Dr. Su holds bachelor’s, master’s and doctorate degrees in electrical engineering from the Massachusetts Institute of Technology (MIT), has been published in more than 40 technical publications and was named a fellow of the Institute of Electronics and Electrical Engineers (IEEE) in 2009. Dr. Su was also named in MIT Technology Review’s Top 100 Young Innovators in 2002.

Director Qualifications: As our President and Chief Executive Officer, Dr. Su brings to the Board her expertise and proven leadership in the global semiconductor industry as well as valuable insight into our operations, management and culture, providing an essential link between the management and the Board on management’s perspectives.

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Mr. Yahia is CEO of the Technology & Industry global platform of Mubadala, where he oversees Mubadala’s technology, metals, mining and utilities portfolio. He is also a member of Mubadala’s Investment Committee, which is mandated 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. He also leads a number of corporate efforts across the Mubadala portfolio, including Enterprise Risk Management, Asset Management/Value Creation and Learning & Development. From March 2001 to February 2010, Mr. Yahia was a partner of McKinsey & Company where the central theme of his work was corporate performance transformations, business building and industrial sector development. Mr. Yahia was also the Managing Partner of McKinsey’s Abu Dhabi practice. Mr. Yahia serves on the boards of directors on several private companies, including GLOBALFOUNDRIES Inc., Emirates Global Aluminum PJSC and Mubadala Petroleum LLC. Mr. Yahia also serves as a non-executive director of National Central Cooling Company (Tabreed) (publicly traded in the United Arab Emirates) and served as a director of SMN Power Holding SAOG (publicly traded on the Muscat (Oman) Stock Exchange) from May 2011 until July 2013. Mr. Yahia holds a master of science degree in mechanical engineering/product strategy from the Massachusetts Institute of Technology and a bachelor of science degree in industrial engineering from the Ecole Centrale Paris.

Director Qualifications: Mr. Yahia’s experience as the CEO of the Technology and Industry global platform of Mubadala and as a former partner of McKinsey & Company provides the Board with expertise in corporate strategy development, corporate performance transformations and operations.

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 the Board. Pursuant to our bylaws, stockholders who wish to nominate persons for election to the Board at our 2016 annual meeting of stockholders must be a stockholder of record, both when they give us notice and at our 2016 annual meeting, must be entitled to vote at our 2016 annual meeting and must comply with the notice provisions in our bylaws. A stockholder’s notice must be delivered to our Secretary not less than 90 nor more than 120 days before the anniversary date of the immediately preceding annual meeting. For our 2016 annual meeting of stockholders, the notice must be delivered between December 31, 2015 and January 30, 2016. However, if our 2016 annual meeting of stockholders is not held within 30 days of April 29, 2016, the stockholder’s notice must be delivered no later than the close of business on the tenth day following the earlier of the day on which the first public announcement of the date of our 2016 annual meeting was made or the day the notice of our 2016 annual meeting is mailed. The public announcement of an adjournment or postponement of our 2016 annual meeting of stockholders 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 Secretary not later than the close of business on the tenth 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:

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

The Chair of our 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 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 statement. These criteria are described below in the description of the Nominating and Corporate Governance Committee in the section entitled “Meetings and Committees of the Board of Directors–Board Committees.” The nominee must be willing to provide a written questionnaire, representation and agreement, if requested by us, and any other information reasonably requested by us in connection with our evaluation of the nominee’s independence.

Communications with the Board or Non-Management Directors

Anyone who wishes to communicate with our Board or with non-management directors may send their communications in writing to One AMD Place, Sunnyvale, California 94088, Attention: Secretary or send an email to Corporate.Secretary@amd.com. Our Secretary will forward all of these communications to our Chairman of the Board.

Required Vote

At our Annual Meeting, our directors will be elected using a majority vote standard with respect to uncontested elections, such as this election. This standard requires that each director receive the affirmative vote of a majority of the votes cast. 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. Abstentions and broker non-votes will have no effect on the outcome of these director elections. Each director nominee has submitted a written resignation that will be effective if he or she does not receive a majority of the votes cast for such director and the resignation is accepted by the Nominating and Corporate Governance Committee, another authorized Board committee or the Board.

Recommendation of the Board Directors

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.

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CORPORATE GOVERNANCE

The Board has adopted the Principles of Corporate Governance to address significant corporate governance issues. The Governance 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 Governance Principles and recommending any changes to the Governance Principles to the Board.

Director Independence

The Principles of Corporate Governance 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 rules of The Nasdaq Stock Market (“Nasdaq”). Among other criteria, no director qualifies as independent unless the Board determines that the director has no direct material relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. On an annual basis, the Board undertakes a review of director independence. In determining that Mr. Donofrio is independent, the Board considered our payments to Liberty Mutual Insurance Company, a subsidiary of Liberty Mutual Holding Company Inc., in fiscal 2014. Mr. Donofrio is a member of the board of directors of Liberty Mutual Holding Company Inc.

The Board determined that all directors who served during fiscal 2014, other than Messrs. Edelman, Harding, Read and Yahia and Dr. Su, and all of our director nominees, other than Messrs. Edelman, Harding and Yahia and Dr. Su, are independent in accordance with SEC and Nasdaq rules. The Board also determined that each of the members of the Audit and Finance, Nominating and Corporate Governance and Compensation Committees are independent in accordance with SEC and Nasdaq rules.

Compensation Committee Interlocks and Insider Participation

During fiscal 2014, Messrs. Caldwell and Donofrio and Mses. Denzel and H. Paulett Eberhart served on the Compensation Committee. Ms. Eberhart resigned from the Compensation Committee on May 8, 2014. None of the members of the Compensation Committee is or has been an executive officer or employee of us. In addition, none of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on the Board or the Compensation Committee.

Board Leadership Structure

The Governance Principles permit the roles of Chairman of the Board and Chief Executive Officer to be filled by the same or different individuals, based on our needs, best practices and the interests of our stockholders. This allows the Board flexibility to determine whether the two roles should be combined or separated based upon our needs and the Board’s assessment of its leadership from time to time. The Board has the experience of functioning effectively either way.

Mr. Claflin, who is independent in accordance with SEC and Nasdaq rules, is our Chairman of the Board. The Board first appointed Mr. Claflin as our independent Chairman of the Board in 2009. Mr. Claflin presides at meetings of our stockholders and directors and leads the Board in fulfilling its responsibilities. The Board benefits from Mr. Claflin’s leadership experience as a technology industry veteran, significant public company board experience and intimate familiarity with our history and business. The Board believes that its current leadership structure, with an independent Chairman of the Board, separate from the Chief Executive Officer, is appropriate at this time and allows the Board to fulfill its duties effectively and efficiently based on our current needs. The Board believes that this structure allows Dr. Su, our President and Chief Executive Officer, to focus on our business strategy and market opportunities, as well as on our organizational structure and execution capabilities.

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Risk Oversight

The Board’s role in risk oversight is consistent with our leadership structure, with our Chief Executive Officer and other members of management having responsibility for day-to-day risk management activities and processes, and our Board and its committees being actively involved in overseeing our risk management. The Board and management consider “risk” for these purposes to be the possibility that an undesired event could occur that might adversely affect the achievement of our objectives. Examples of the types of risks faced by us include:

We engage in activities that seek to take calculated risks that protect the value of our existing assets and create new or future value. Management is responsible for day-to-day risk management activities and processes. Members of senior management participate in identifying risks and risk controls, developing recommendations to determine the appropriate manner in which to control risk and implementing risk mitigation activities. Our Chief Executive Officer has ultimate responsibility for management of our business, including enterprise level risks and the risk management program and processes.

In fulfilling its oversight role, the Board focuses on understanding the nature of our enterprise risks, including reputational risk and risks in our operations, finances and strategic direction, as well as the adequacy of our risk assessment and risk management processes. The Board implements its oversight function primarily through management reports and committees of the Board. At least annually, the Board discusses with management the appropriate level of risk relative to our corporate strategy and objectives and reviews with management our existing risk management processes and their effectiveness. As well, the Board receives periodic 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. In addition, the Board receives full reports from the following Board committee chairs regarding the committee’s considerations and actions related to the specific risk topics over which the committee has oversight:

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Code of Ethics

The Board has adopted a code of ethics that applies to all directors and employees entitled “Worldwide Standards of Business Conduct,” which is 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 (including anti-corruption laws), fair dealing, protecting our property and confidentiality of our information and encourages the reporting of any behavior not in accordance with the Worldwide Standards of Business Conduct.

The Board 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

The table below shows the current chairs and membership of the Board and each standing Board committee, the independence status of each Board member and the number of Board and Board committee meetings held during fiscal 2014.

 C Chair                — Member                 * Non-Independent Director                ** Financial Expert

Board Meetings and Attendance

The Board held eight meetings during fiscal 2014. During fiscal 2014, all members of the Board attended at least 75 percent of the meetings of the Board and Board committees on which they served. In addition, on at least an annual basis, the Board and management discuss our strategic direction, new business opportunities and 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 informally interact with senior management (including our Chief Executive Officer), industry leaders and customers on a periodic basis. In fiscal 2014, sessions of only our non-employee directors were held six times, and sessions of only our independent directors were held three times.

Board Committees

The Board has four standing committees: an Audit and Finance Committee, a Nominating and Corporate Governance Committee, a Compensation Committee and an Innovation and Technology Committee. The members of the Board committees and their Chairs are nominated by the Nominating and Corporate Governance Committee and appointed by the Board.

Each of the Board committees has adopted a written charter, which has been approved by the Board. You can access our current bylaws, committee charters, the Principles of Corporate Governance, the Worldwide Standards of Business Conduct and the Code of Ethics on the Investor Relations pages of our Web site at www.amd.com or ir.amd.com.

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Audit and Finance Committee.    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 our 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. The Corporate Vice President of our Internal Audit Department reports directly to the Chair of the Audit and Finance Committee and “dotted-line” to our Chief Financial Officer, and serves a staff function for the Audit and Finance Committee. The Audit and Finance Committee currently consists of Dr. Barnes, as Chair, and Messrs. Chow, Householder and Inglis, each determined to be financially literate and “independent” under applicable SEC and Nasdaq rules. The Board also determined that Dr. Barnes and Mr. Householder are each an “audit committee financial expert,” as defined under applicable SEC rules. The Audit and Finance Committee held 20 meetings during fiscal 2014.

Nominating and Corporate Governance 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 and the development and recommendation to the Board of corporate governance guidelines and principles, including the Governance Principles. In addition, the Nominating and Corporate Governance Committee oversees the Board’s annual review of its performance (including its composition and organization), leads a process for our non-employee 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 currently consists of Mr. Claflin, as Chair, Dr. Barnes, Messrs. Caldwell, Chow, Donofrio, Householder and Inglis and Ms. Denzel, each determined by the Board to be “independent” under applicable SEC and Nasdaq rules. The Nominating and Corporate Governance Committee held four meetings during fiscal 2014 and one meeting during fiscal 2015 to consider director nominees for our Annual Meeting and other 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 boards 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 Nominating and Corporate Governance 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 our requirements, taking into consideration the diverse communities and geographies in which we operate. 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.

Compensation Committee.    The Compensation Committee assists the Board in discharging its responsibilities relating to the compensation of all Section 16 officers, members of the Board and such other employees as delegated from time to time by the Board. In consultation with management, the Board and the

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Compensation Committee’s compensation consultant, the Compensation Committee designs, recommends to the Board for approval and evaluates employment, separation, severance and change of control agreements and our compensation plans, policies and programs with respect to our Section 16 officers. The Compensation Committee reviews and approves all grants under our equity plans, including grants to persons who are not 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, our officers 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 our 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. The Compensation Committee currently consists of Mr. Caldwell, as Chair, Ms. Denzel and Mr. Donofrio, each determined to be “independent” under applicable SEC and Nasdaq rules. During fiscal 2014, the Compensation Committee held 12 meetings.

Innovation and Technology Committee.    The Innovation and Technology Committee assists the Board in its oversight responsibilities regarding matters of innovation and technology. The Innovation and Technology Committee is responsible for reviewing, evaluating and making recommendations to the Board regarding our major technology plans and strategies, including our research and development activities, as well as the technical and market risks associated with product development and investment; reviewing, evaluating and making recommendations regarding talent and skills of our workforce supporting our technology and research and development activities; monitoring the performance of our technology development in support of our overall business strategy; monitoring and evaluating existing and future trends in technology that may affect our strategic plans; and assessing our risk mitigation policies and procedures relating to products based on new technology or significant innovations to existing technology. The Innovation and Technology Committee consists of Mr. Donofrio, as Chair, and Messrs. Harding, Inglis and Yahia. During fiscal 2014, the Innovation and Technology Committee held four meetings.

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DIRECTORS’ COMPENSATION AND BENEFITS

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. We do not provide pension or retirement benefits to our non-employee directors.

Ms. Denzel and Mr. Inglis were appointed to the Board on March 19, 2014, Mr. Householder was appointed to the Board on September 15, 2014 and Dr. Su was appointed to the Board on October 8, 2014. As of May 8, 2014, Ms. Eberhart no longer served as a member of the Board, as she did not stand for re-election at our 2014 annual meeting of stockholders in order to focus on other matters. On October 8, 2014, Mr. Read stepped down from his position as our Chief Executive Officer and President and member of the Board.

2014 Non-Employee Director Compensation. The table below summarizes the compensation paid to our non-employee directors for fiscal 2014. Mr. Read and Dr. Su, who are each employee directors, did not receive any compensation for their services as a director on the Board.

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The following table sets forth all RSUs granted to each non-employee director in fiscal 2014.

Determining Non-Employee Director Compensation.  The Compensation Committee annually reviews our non-employee directors’ compensation. Based on this review, the Compensation Committee recommends any changes to our non-employee directors’ compensation to the Board for approval. In addition, the Board and Compensation Committee periodically evaluate how our director pay levels and pay policies compare to the competitive market. In fiscal 2014, the Board and Compensation Committee reviewed competitive market data compiled by Compensia, Inc., the Compensation Committee’s independent compensation consultant (“Compensia”). While competitive market data is important to the evaluation of the directors’ compensation, it is just one of several factors considered by the Board in approving director compensation, and the Board has

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discretion in determining the nature and extent of its use. In fiscal 2014, in addition to the competitive market data, the Board considered the amount of time associated with Board and Board committee services as well as annual share usage under the 2004 Plan related to non-employee director compensation.

Key Changes to Non-Employee Director Compensation.  In May 2014, the Board approved changes to the compensation paid to our non-employee directors based on the Compensation Committee’s recommendations and the considerations described above. The changes reallocated the mix of cash and equity compensation paid to our non-employee directors, with the goals of maintaining total average compensation per non-employee director at approximately the same level as had been previously paid and maintaining an affordable annual share usage. These changes are further described under “—Cash Fees Paid to Non-Employee Directors” and “—Equity Awards for Non-Employee Directors,” below.

Cash Fees Paid to Non-Employee Directors.  As a result of the Board-approved changes to our non-employee director compensation, the cash fees our non-employee directors were eligible to receive in fiscal 2014 was composed of the following elements:

Annual Retainer for Service as Director. Non-employee directors are paid an annual retainer for their service as our directors. Effective May 1, 2014, the Board approved an increase in the annual retainer for our non-employee directors (other than our Chairman of the Board) from $65,000 to $75,000 as part of the Board’s reallocation of the mix of cash and equity compensation (described above under “—Key Changes to Non-Employee Director Compensation”). In addition, the Board approved an increase in the annual retainer for our Chairman of the Board from $130,000 to $210,000, in recognition of the fact that the amount of time and effort required of our Chairman of the Board has increased significantly.

As a result, in fiscal 2014, the annual retainers that we paid to our non-employee directors’ were pro-rated for December 29, 2013 until April 30, 2014 and for May 1, 2014 until December 27, 2014 based on the annual retainers in effect for the respective periods. In addition, the annual retainers for Mses. Denzel and Eberhart and Messrs. Inglis and Householder were pro-rated based on the timing of their respective appointments to and resignations from the Board. For purposes of this pro-rata calculation, service during any portion of a month counts as a full month of service.

Annual Retainer for Service on Board Committees. Effective May 1, 2014, the Board approved additional annual retainers set forth below for service on a Board committee. As a result, in fiscal 2014, non-employee Board members who served on Board committees received pro-rated annual retainers for their service on committees from the later of May 1, 2014 or their respective appointment to a committee until December 27, 2014. We did not pay annual retainers for Board committee service prior to May 1, 2014.

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Annual Retainer for Service as Board Committee Chair. In addition, non-employee directors receive annual retainers for serving as a chair of a Board committee, which are set forth below. These retainers were unchanged in fiscal 2014.

Meeting Attendance Fees. Effective May 1, 2014, the Board eliminated meeting attendance fees. Previously, if the Board or a Board committee, other than the Innovation and Technology Committee, met more than eight times during the year, we would pay an attendance fee to our non-employee directors for each additional meeting attended, in the amounts set forth below.

In addition, members of the Innovation and Technology Committee received $1,200 for each Innovation and Technology Committee meeting that they attended. In fiscal 2014, we paid Board meeting attendance fees with respect to one Audit and Finance Committee meeting and one Innovation and Technology Committee meeting.

Equity Awards for Non-Employee Directors.    In order to align the long-term interests of our directors with those of stockholders, a portion of director compensation is provided in the form of equity. Non-employee directors participate in our 2004 Plan and are entitled to receive equity awards under our Outsider Director Equity Compensation Policy. Non-employee directors are generally eligible to receive an annual RSU award (an “Annual RSU Award”) upon re-election at each annual meeting of stockholders, and, if a non-employee directors is appointed to the Board on a date other than the date of an annual meeting of stockholders, such director is entitled to receive an initial RSU award on his or her appointment to the Board (an “Off-Cycle RSU Grant”). Effective May 8, 2014, the Board amended our Outside Director Equity Compensation Policy to reduce the size of the Annual RSU Awards and Off-Cycle RSU Grants and to make administrative amendments.

Annual RSU Awards.  Under our current Outside Director Equity Compensation Policy, effective as of our 2014 annual meeting of stockholders, the Annual RSU Award for each non-employee director (other than the Chairman of the Board) who has served on the Board for at least six months prior to an annual meeting of stockholders is calculated based on the following formula, with no discretionary component: the quotient of (i) $185,000 (the “Target Equity Value”) divided by (ii) the trailing average closing price of our common stock for the 30-day period preceding and ending with the date of the respective RSU grant. Under our prior Outside Director Equity Compensation Policy, the Target Equity Value was $225,000, but the Annual RSU Award was otherwise calculated in an identical manner. In fiscal 2014, the Chairman of the Board received an Annual RSU Award with a Target Equity Value of $370,000, two times the Annual RSU Award received by the other non-employee directors.

In addition, under our current and prior Outside Director Equity Compensation Policies, if a non-employee director has served on the Board for less than six months prior to an annual meeting of stockholders, such director’s Annual RSU Award is pro-rated based on the number of months of service before the respective annual meeting of stockholders. For purposes of the pro-rata calculation, service during any portion of a month counts as a full month of service.

Off-Cycle Grants.  Under our current Outside Director Equity Compensation Policy, an Off-Cycle Grant is equal to the quotient of (i) $185,000 divided by (ii) the trailing average closing price of our common stock for the 30-day period preceding and ending with the date of the respective RSU grant. Under our prior Outside Director

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Equity Compensation Policy, Off-Cycle RSU Grants were equal to the Annual RSU Award granted to the other non-employee director at the immediately preceding annual meeting of stockholders. The Annual RSU Awards and the Off-Cycle RSU Grants vest on the one-year anniversary of their respective grant date.

In fiscal 2014, each of our directors, other than Mr. Householder, received an Annual RSU Award under our current Outside Director Equity Compensation Policy. Mr. Householder received an Off-Cycle RSU Grant under our current Outside Director Equity Compensation Policy, and Ms. Denzel and Mr. Inglis each received an Off-Cycle RSU Grant under our prior Outside Director Equity Compensation Policy. See “2014 Non-Employee Director Compensation” table, above, for the equity awards received by our non-employee directors in fiscal 2014.

Deferral.    Pursuant to our Outside Director Equity Compensation Policy, our non-employee directors may elect to defer the issuance of shares of our common stock that become issuable upon vesting of the RSUs granted pursuant to the 2004 Plan (and the recognition of taxable income associated with such RSUs) until such time as the director ceases to serve on our Board. A non-employee director can make this election by completing a Restricted Stock Unit Award Deferral Election Agreement before the scheduled date of an RSU grant. If a director makes this election, the issuance of the common stock subject to the RSUs may not be accelerated or changed once the Election Agreement is submitted to us. Any common stock deferred under our Outside Director Equity Compensation Policy is issued to the director, in one lump sum, within 30 days after his or her resignation from our Board.

Acceleration of Vesting.    Pursuant to our Outside Director Equity Compensation Policy, in the event of our change of control, all of our 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 his or her non-employee director’s equity compensation awards will become fully vested, provided that such non-employee director served as a member of the Board for at least three years prior to the date of termination and satisfied our stock ownership guideline requirements during his or her service as a Board member.

Other Benefits for Non-Employee Directors.    We reimburse our 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, our non-employee directors are required to hold the lesser of (i) the number of shares equivalent to three times the then-current annual retainer divided by the average closing price of our common stock for the 30-day period immediately preceding and ending with the date of the annual meeting of stockholders or (ii) 30,000 shares (in the case of non-employee directors other than the Chairman of our Board) or 45,000 shares (in the case of the Chairman of the Board).

The stock ownership guidelines must be achieved by each non-employee director within the later of (i) October 2016, which is the five-year anniversary of the adoption of our current stock ownership guidelines, or (ii) the five-year anniversary of the respective director’s first election or appointment to the Board or first appointment as Chairman of the Board, as applicable.

As of December 27, 2014, all of our non-employee directors were on target to meet the requirements of our stock ownership guidelines within the established compliance time frame.

Until the requirements of our stock ownership guidelines are achieved, each non-employee director is encouraged to retain at least 10% of the “net shares” (as defined below) obtained through our stock incentive plans. Shares counted toward the minimum stock ownership requirements include (i) shares held directly by a director, (ii) RSUs that have vested, but where the issuance of the shares have been deferred by the director pursuant to our Outside Director Equity Compensation Policy, and (iii) 50% of exercisable, “in the money” stock options. “Net shares” are the number of shares from the sale of stock options or the vesting of restricted stock, less the number of shares the director sells to cover the exercise price of stock options and sells or has withheld to pay taxes.

As of December 27, 2014, all of our non-employee directors retained at least 10% of the net shares obtained through our stock incentive plans.

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PRINCIPAL STOCKHOLDERS

The following table shows each person or entity we know to be the beneficial owner of five percent or more of our common stock as of February 20, 2015.

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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 February 20, 2015 by our current directors, our Named Executive Officers (as defined in “Compensation Discussion and Analysis” below) and 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 sets forth biographical information regarding our executive officers as of February 20, 2015. Biographical information about Dr. Su, who is both a director and an executive officer, may be found in under “Item 1—Election of Directors” above. The age of each executive officer is as of our Annual Meeting.

Mr. Kumar is our Senior Vice President and Chief Financial Officer. Prior to being appointed as our Senior Vice President and Chief Financial Officer in January 2013, Mr. Kumar was our Senior Vice President, Interim Chief Financial Officer and Corporate Controller. He was appointed as Interim Chief Financial Officer in September 2012, as Senior Vice President in 2006 and as Corporate Controller in 2001. Mr. Kumar also served as our Treasurer from April 2009 to July 2010 and as our Assistant Treasurer from February 2007 to April 2009. Mr. Kumar joined us in 1984 and spent ten years in Asia as financial controller for AMD Penang and group finance director for our Manufacturing Services Group across Singapore, Thailand, China and Malaysia. Starting in 1998, Mr. Kumar assumed several corporate roles including leadership positions in Corporate Accounting and Corporate Finance. Mr. Kumar holds a bachelor’s degree in ecology from the University of Malaya, Malaysia, a master’s degree in biology from the University of California, Santa Barbara, and an MBA in finance from the University of California, Los Angeles.

Mr. Norrod is our Senior Vice President and General Manager, Enterprise, Embedded and Semi-Custom Business Group. Mr. Norrod joined us in October 2014. Prior to joining us, Mr. Norrod was Vice President and General Manager of Dell’s server business. Prior to that role, from October 2006 to December 2009 he led the creation of Dell’s first internal startup focused on the hyper-scale datacenter market as the Vice President and General Manager, Data Center Solutions. Mr. Norrod held several engineering leadership roles previously at Dell, starting as CTO of Client Products before leading the company’s Enterprise Engineering and ultimately having responsibility for all of Dell’s global engineering teams. Prior to Dell, he ran the integrated x86 CPU business at Cyrix and National Semiconductor. Mr. Norrod also serves on the board of directors of Intersil Corporation. He also holds 11 U.S. patents in computer architecture, graphics and system design. Mr. Norrod has a Bachelor of Science and a Master of Science in electrical engineering from Virginia Tech.

Mr. Papermaster is our Chief Technology Officer and Senior Vice President—Technology and Engineering. Mr. Papermaster joined us in this role in October 2011. From November 2010 to October 2011, Mr. Papermaster served as Vice President of the Silicon Engineering Group of Cisco Systems, Inc. (a designer and manufacturer of Internet Protocol-based networking and other products related to the communications and IT industry), where he was responsible for the silicon strategy, architecture and development of the company’s switching and routing businesses. Prior to Cisco, Mr. Papermaster served as Senior Vice President of Device Hardware Engineering at Apple Inc. from November 2008 to August 2010, where he was responsible for iPod and iPhone hardware development. Prior to Apple, Mr. Papermaster held a number of senior leadership roles at IBM, most recently as VP of Blade Server Development from October 2006 to October 2008. He also served on IBM’s technical leadership team and oversaw development of key microprocessors and blade server technologies. Mr. Papermaster is a member of the University of Texas Cockrell School of Engineering Advisory

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Board, the Olin College President’s Council and the Juvenile Diabetes Research Foundation IT Advisory Committee. From 2011 to 2012, he also served on the Technical Advisory Board of Philips Lumileds Lighting Company. Mr. Papermaster holds a bachelor’s degree in electrical engineering from The University of Texas at Austin and a master’s degree in electrical engineering from The University of Vermont.

Mr. Wolin is our Senior Vice President, General Counsel and Secretary. Mr. Wolin was appointed as our Secretary in April 2010. Prior to becoming General Counsel in 2003, Mr. Wolin was our Vice President, Intellectual Property. Before joining us in 2000, Mr. Wolin spent 12 years at Motorola, Inc. (now known as Motorola Mobility Holdings, Inc., a provider of technologies, products and services that enable a broad range of mobile, wireline, digital communication, information and entertainment experiences), where his last role was Vice President and Director of Legal Affairs for the Semiconductor Products Sector. Mr. Wolin served as a member of the board of directors of GLOBALFOUNDRIES Inc. from February 2011 through March 2012. 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 holds a bachelor’s degree in chemistry from the University of Arizona and a juris doctor degree from Arizona State University.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

We believe that during fiscal 2014, none of our directors, Section 16 officers or beneficial owners of more than 10% of our common stock failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended. 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.

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 27, 2014 with respect to shares of our common stock that may be issued under our existing equity compensation plans. Our 2004 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.

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee has oversight responsibility for the development and administration of our executive compensation policies and programs. This “Compensation Discussion and Analysis” describes the material parts of our executive compensation program in fiscal 2014 for the following executive officers (the “Named Executive Officers”):

Executive Summary

Overview of our 2014 Financial and Operational Performance and Pay/Performance Alignment 

In fiscal 2014, we made good progress strengthening the Company. As part of our multi-year strategy, we further diversified our business, introduced strong new products, and improved our non-GAAP financial performance year over year while continuing to invest in the next generation of technologies that we believe will fuel future success. In fiscal 2014, we derived approximately 40% of our annual revenues from high-growth markets. We also took important steps to improve the financial foundation of the Company, reducing our annual non-GAAP operating expenses by approximately 11% and re-profiling our near-term debt maturities. As a result we achieved annual revenue growth for the first time since 2011. Net revenue for fiscal 2014 was $5.5 billion, an increase of 4% compared to 2013 net revenue of $5.3 billion, primarily due to an increase in Enterprise, Embedded and Semi-Custom segment net revenue, partially offset by a decrease in Computing and Graphics segment net revenue. While we believe the pace of the decline in the PC market is slowing, our annual Computing and Graphics segment results reflect the ongoing challenges of a competitive consumer PC market and some PC channel downstream inventory challenges. We made significant progress with our multi-year strategy to reshape the Company but we recognize there is more work to be done.

There is a strong correlation between the realized pay of our Named Executive Officers and the key drivers of compensation which are our actual performance against financial targets and the change in the Company’s stock price. Based on these key factors, for 2014 our Named Executive Officers (excluding Mr. Norrod, who began employment in October 2014, but including Dr. Su in her roles prior to her promotion to Chief Executive Officer in October 2014) averaged “realized income” of 44% of total “realizable compensation.” Realizable compensation for each Named Executive Officer is comprised of base salary (prorated, as applicable), target cash performance bonus under our Executive Incentive Program (“EIP”) (prorated, as applicable), and the target grant date “fair value” of the long-term equity awards granted in 2014 (excluding the equity awards made to Dr. Su in October 2014 in connection with her appointment as our President and Chief Executive Officer and Mr. Byrne’s special retention award in October 2014). Realized income represents base salary paid in fiscal 2014, actual fiscal 2014 bonus earned under the EIP, any discretionary or retention bonus amounts realized, other compensation, income realized due to equity transactions involving shares awarded under our equity plans and the monetary value of outstanding performance equity awards (vested or unvested) calculated using the assumed financial payout projections. See “2014 Summary Compensation Table” and “Option Exercises and Stock Vested in 2014” table below.

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The cash and equity earned under our fiscal 2014 executive compensation program demonstrate the strong alignment between pay and performance. The annual cash incentive bonuses earned by the Named Executive Officers under the EIP were 33% of target largely driven by 2014 PC market declines that adversely affected our revenue, earnings and cash. These payouts are based on our actual financial results relative to the target levels achieved for the year with respect to adjusted non-GAAP net income, revenue, adjusted non-GAAP free cash flow and adjusted non-GAAP gross margin financial goals for the second half of 2014. Further discussion is provided below under “—Compensation Philosophy, Practices and Program Design Inputs—Annual Cash Performance Bonuses.”

In addition, our Named Executive Officers (excluding Mr. Norrod, who began his employment with us in October 2014) will receive 37.5% of the target number of shares under the PRSUs awarded in fiscal 2013 (the “2013 PRSUs”). One-half of the shares earned under the 2013 PRSUs will be settled on June 30, 2015, and the remaining half will be settled on June 30, 2016, provided that the Named Executive Officer, with the exception of Mr. Read, continues to be a service provider through each vesting date. The payout percentage under the 2013 PRSUs is as a result of achieving (i) non-GAAP operating income plus interest expense of 50% of target and (ii) total stockholder return at below the 25th percentile of the S&P 500 IT Sector, in each case over the 18-month performance period ended December 31, 2014. Further discussion is provided below under “—Compensation Philosophy, Practices and Program Design Inputs—Long-Term Equity Awards.”

In fiscal 2014, the Compensation Committee continued to emphasize performance-based compensation designed to link rewards to the achievement of objectives that are intended to drive the creation of stockholder value by delivering a substantial portion of the Named Executive Officers’ 2014 target total direct compensation opportunity in the form of a cash performance bonus opportunity and long-term equity awards, the majority of which is tied, in part, to performance. The following charts illustrate the allocation of the 2014 target total direct compensation opportunity for Dr. Su and the average allocation of the 2014 target total direct compensation opportunity for the other Named Executive Officers except Mr. Read, who stepped down in October 2014, and Mr. Norrod (who began his employment with us in October 2014).

For purposes of Dr. Su’s Chief Executive Officer illustration, her fiscal 2014 target total direct compensation opportunity includes non-prorated 2014 base salary per her promotion to Chief Executive Officer, annual target cash performance bonus opportunity (non-prorated) and the target value of long-term equity awards associated with her promotion and appointment as Chief Executive Officer, the values of which are included the “Grants of Plan-Based Awards in 2014” table below. For the illustration depicting the average of target total direct compensation opportunity for other Named Executive Officers, the calculation included non-prorated base salary associated with the last promotion or salary adjustment, as applicable, during fiscal 2014, annual target cash performance bonus opportunity (non-prorated) and the target value of annual long-term equity awards, but excluding any grants associated with non-reoccurring promotion or retention awards, the values of which are also reflected in the “Grants of Plan Based Awards in 2014” table.

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2014 Executive Compensation Program

Pay Elements

The actual compensation received by our Named Executive Officers is a function of our operational, financial and stock price performance, as reflected through annual incentive payments, payouts of performance-based restricted stock units and the value of long-term incentive awards at vesting. It is intended to vary above or below target levels commensurate with our performance.

Our fiscal 2014 executive compensation program included a mix of the following fixed and variable elements:

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Talent Management Focus

We have a strong focus on talent development which ensures that our executive compensation program is designed to retain the talent required to execute our strategy. Our pay decisions support our talent objectives by not only considering individual and Company performance, but also long-term potential, key retention needs and organizational succession plans.

Chief Executive Officer Transition

On October 8, 2014, Dr. Lisa Su was appointed as our President and Chief Executive Officer. Dr. Su replaced Mr. Read, who stepped down as our President and Chief Executive Officer on October 8, 2014. Mr. Read continued his employment with us in a non-executive advisory role through December 31, 2014, when his employment ended. From July 1, 2014 and until her appointment as our President and Chief Executive Officer, Dr. Su served as our Senior Vice President and Chief Operating Officer, and from January 2012 to July 2014, Dr. Su served as our Senior Vice President and General Manager, Global Business Units.

In connection with Dr. Su’s appointment, the Compensation Committee (with the assistance of Compensia, its independent compensation consultant) developed, and the members of our Board, excluding the Chief Executive Officer, approved, a compensation structure that strongly aligns with our stockholders’ interests in that 90% of the target total direct compensation opportunity (i.e., base salary, annual target cash performance bonus opportunity and target value of equity awards) of her compensation package is variable “at-risk” compensation tied to our and her performance.

Within the broader framework of our overall executive compensation strategy (as discussed below), the Compensation Committee considered several factors in developing Dr. Su’s compensation package, including the competitive market data compiled by Compensia for the chief executive officers of our peer group companies, the retention and performance incentives provided by the long-term equity awards previously granted to Dr. Su during her employment with us, and the fact that Dr. Su was an internal promotion rather than an external new hire. Dr. Su’s compensation is comprised of the following principal elements:

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In determining the target value of mix of these equity awards the Compensation Committee considered current market data as well as the annual equity award Dr. Su received in August 2014 in her role as our Senior Vice President and Chief Operating Officer and Dr. Su’s other company equity holdings. As discussed in detail under “—Compensation Philosophy, Practices and Program Design Inputs—Dr. Su’s Employment Agreement,” below, the PRSUs and a portion of the RSUs were voided and rescinded in December 2014. With the exception of a PRSU award covering a target number of 230,364 shares, these equity awards were re-granted to Dr. Su in February 2015. The Board intends to return the remaining PRSU award to Dr. Su at or near the earliest available and practicable opportunity, subject to law and the terms of our 2004 Equity Incentive Plan.

We entered into an “at-will” employment agreement with Dr. Su in connection with her appointment as our President and Chief Executive Officer. The terms and conditions of Dr. Su’s employment agreement, which were approved by the members of our Board, excluding the Chief Executive Officer, were the result of arms-length negotiations between Dr. Su and the Compensation Committee. For a detailed description of these payments and benefits, see “—Compensation Philosophy, Practices and Program Design Inputs—Dr. Su’s Employment Agreement” below.

In connection with Mr. Read’s stepping down as our President and Chief Executive Officer, the members of the Board, excluding the Chief Executive Officer, approved the terms of a Transition, Separation Agreement and Release that provides certain severance and other benefits to Mr. Read in consideration of, among other things, the terms of his employment agreement executed in August 2011, a full release of claims against us and a two-year non-compete and non-solicitation covenant. Further discussion of this agreement is provided below under “—Compensation Philosophy, Practices and Program Design Inputs—Mr. Read’s Transition, Separation Agreement and Release.”

Other Leadership Changes

On October 27, 2014, Mr. Norrod joined us as our Senior Vice President and General Manager, Enterprise, Embedded and Semi-Custom Business Group and was appointed as a Section 16 Officer on November 4, 2014. Mr. Norrod replaced Dr. Su, who held that position on an interim basis since July 2014. In connection with his appointment, we entered into an offer letter with Mr. Norrod, the terms of which were approved by the Compensation Committee. For a detailed description of the payments and benefits provided under Mr. Norrod’s offer letter, see “—Compensation Philosophy, Practices and Program Design Inputs—Mr. Norrod’s Offer Letter” below.

On July 1, 2014, Mr. Byrne was promoted to Senior Vice President and General Manager, Computing and Graphics Business Group. Mr. Byrne served as our Senior Vice President and Chief Sales Officer immediately prior to this appointment. On January 12, 2015, Mr. Byrne stepped down as our General Manager, Computing and Graphics Business Group. Mr. Byrne will continue his employment with us as a non-executive employee until March 31, 2015, when his employment will end. Following the termination of his employment in 2015, Mr. Byrne will be eligible to receive severance payments in accordance with our Executive Severance Plan for Senior Vice Presidents, which provides for 12 months of base salary and COBRA medical insurance premiums for up to 12 months following his separation date.

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Other 2014 Key Compensation Decisions

Our Board and the Compensation Committee made the following other key compensation decisions with respect to our Named Executive Officers in fiscal 2014 in addition to those discussed above:

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Executive Compensation Policies and Practices

We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. During fiscal 2014, we maintained the following executive compensation policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behaviors that we do not believe serve our stockholders’ long-term interests:

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Response to 2014 Stockholder Vote and Stockholder Engagement Process

The Compensation Committee has reviewed the results of the stockholder advisory vote (commonly referred to as the “say-on-pay” vote) on the fiscal 2013 compensation of our then-named executive officers, which was conducted at our 2014 annual meeting of stockholders. At this meeting, our stockholders approved our fiscal 2013 named executive officer compensation, with 70.88% of shares voted in favor of this proposal. The Compensation Committee carefully considered the outcome of the vote when making decisions about our executive compensation program moving forward.

During fiscal 2014, we intensified our practice of proactive engagement with our stockholders to discuss executive compensation and other governance matters. After filing and disseminating our 2014 proxy statement, our Corporate Vice President of Investor Relations conducted conference calls and other discussions with our top 50 stockholders, representing approximately 48% of the shares entitled to vote at our Annual Meeting to solicit their views on our executive compensation structure and pay practices. We also conducted several “in-person” presentations with our major stockholders. The Chairman of the Board, the Chair of the Compensation Committee, our Senior Vice President, General Counsel and Secretary and other members of our senior management took part in our proactive engagement effort. A variety of compensation, governance and corporate strategy topics were discussed with our stockholders during these engagements.

Based on these discussions we learned that these stockholders generally believed our executive compensation program was aligned with their interests, although they expressed a desire to see us adopt a longer performance period for our long-term incentive awards. The Compensation Committee responded to this feedback by extending the performance period for PRSUs awarded in 2014 to two years (as compared to the 18-month performance period for the 2013 PRSUs). The Compensation Committee continues to advocate an active dialogue with our stockholders regarding compensation and governance practices.

Compensation Philosophy, Practices and Program Design Inputs

Compensation Philosophy

Our executive compensation program is guided by the following overarching principles:

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We continually assess and adjust our executive compensation program, policies and practices in light of these overarching principles and feedback obtained through our stockholder engagement efforts.

Pay for Performance

The tenets of our compensation philosophy strongly center on pay for performance. We align to the following primary principles:

We have been fundamentally transforming our business model away from the traditional PC business to pursue higher growth, higher margin businesses in which we have a competitive advantage. This change is based in part upon the recognition that the PC industry is undergoing fast-paced structural change characterized by greater commoditization, lower pricing and margin deterioration. Aligned with this transformational change has been a greater shift towards incentive, performance-based compensation.

Competitive Compensation

The Compensation Committee generally seeks to position each Named Executive Officer’s target total direct compensation (“TDC”) opportunity (i.e., base salary, annual target cash performance bonus opportunity and target value of annual long-term equity awards, but excluding special retention awards and non-recurring new hire awards) between the 50^th and 75^th percentile of the competitive market (the “Target Positioning”). The Compensation Committee believes that seeking to set target pay within this range is appropriate given our high pay-for-performance orientation and furthers our goals of attracting and retaining highly talented individuals, and motivating them to achieve objectives that promote stockholder value creation. Aligning with a percentile range for target TDC opportunity allows us to meet our objectives while retaining flexibility to tailor compensation based on individual circumstances. Each individual component of compensation varies and is not necessarily targeted to a percentile range. A Named Executive Officer’s target TDC opportunity may vary from the Target Positioning depending on the Named Executive Officer’s scope of responsibility, job performance, skill set, prior experience, expected future contributions to our business, internal pay equity considerations, retention considerations and business conditions. For fiscal 2014, the Named Executive Officers (excluding Mr. Norrod, who began his employment in October 2014, but including Dr. Su in her roles prior to her promotion to Chief Executive Officer in 2014) averaged 44% of their realizable pay. This was primarily the result of our actual performance against financial targets and the change in our stock price. At the time the performance goals under the 2013 PRSUs and the EIP for fiscal 2014 were established, the Compensation Committee subjectively believed that the “target” levels of performance would be challenging amid a rapidly changing environment.

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Align Pay Practices with Sound Risk Management

The Compensation Committee seeks to structure our executive compensation program to motivate and reward the Named Executive Officers for appropriately balancing opportunity and risk, such as investment in key initiatives designed to advance our growth in existing and new markets, while at the same time avoiding pay practices that encourage excessive risk-taking.

The Compensation Committee believes that our executive compensation program fosters our objectives while mitigating potentially excessive risk-taking, through the following means:

Executive Compensation Decision Process

Role of the Board and the Compensation Committee

The Compensation Committee regularly reviews our executive compensation program to evaluate its alignment 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 makes a recommendation to the members of our Board, excluding the Chief Executive Officer, regarding our Chief Executive Officer’s compensation, and approves the compensation of the other Named Executive Officers.

At least annually, the Compensation Committee also assesses the performance of our other Named Executive Officers, taking into consideration our Chief Executive Officer’s evaluation of their individual performance. In general, our Named Executive Officers’ compensation is influenced by their individual performance and market position. The Compensation Committee considers a combination of objective and subjective measures in the overall assessment of each of the Named Executive Officer’s individual accomplishments and contributions to us during the year, including a Named Executive Officer’s individual performance against pre-determined financial, operational or business goals. The Compensation Committee also assesses a Named Executive Officer’s success and progress against strategic objectives or leadership results, which cannot be scored by numeric or formulaic application of measurable criteria.

The members of our Board, excluding the Chief Executive Officer, and the Compensation Committee each conduct their own performance assessment of our Chief Executive Officer, and no management recommendation is made with regard to his or her compensation. The Compensation Committee will review and consider our Board’s evaluation in making its recommendations to the members of our Board, excluding the Chief Executive Officer, regarding the compensation and other terms of employment of our Chief Executive Officer. Our Chief Executive Officer does not participate in the determination of his or her own compensation.

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Role of Compensation Consultant

The Compensation Committee has the authority to engage independent advisors to assist it in carrying out its responsibilities. During fiscal 2014, the Compensation Committee retained Compensia, a national compensation consulting firm, as its compensation consultant to provide assistance on executive and director compensation matters. Compensia advised the Compensation Committee on a variety of compensation-related matters in fiscal 2014, including:

In fiscal 2014, Compensia did not provide any services to or receive any payments from us, except in its capacity as a consultant to the Compensation Committee. In February 2015, the Compensation Committee assessed whether the services provided by Compensia raised any conflicts of interest pursuant to the rules of the SEC and the listing rules of Nasdaq and concluded that the work performed by Compensia did not raise any conflicts of interest.

In the course of its engagement, Compensia attended all meetings of the Compensation Committee and presented its findings and recommendations for discussion. Compensia also consulted frequently with members of the Compensation Committee and also met with senior management to obtain and validate market data, review materials and discuss management’s compensation recommendations.

Role of Management

The Compensation Committee works with members of our management team – our President and Chief Executive Officer, our Senior Vice President and Chief Human Resources Officer, our Senior Vice President, General Counsel and Secretary and our Corporate Vice President, Compensation and Benefits – to formulate the specific plan and award designs, including performance measures and performance levels, necessary to align our executive compensation program with our business objectives and strategies.

Generally, at the beginning of each year the Chief Executive Officer reviews with the Compensation Committee his or her performance evaluations of each of our other Named Executive Officers and his or her recommendations regarding base salary adjustments, short-term incentive awards, and long-term equity awards for our other Named Executive Officers to ensure that the Compensation Committee’s decision reflect our corporate financial and operational results as well as the performance of each individual. All final decisions regarding the compensation of our Chief Executive Officer are made by the members of our Board (excluding the Chief Executive Officer). All final decisions regarding the compensation of our other Named Executive Officers are made by the Compensation Committee.

While certain members of management attended the meetings of the Compensation Committee and the Board in fiscal 2014 upon invitation, they did not attend either executive sessions or portions of any meetings of the Compensation Committee or the Board where their own executive compensation determinations were made.

Competitive Pay Analysis

Each year, the Compensation Committee reviews the compensation data and pay practices of a custom group of peer companies, in combination with industry-specific compensation survey data, to develop a

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subjective representation of the “competitive market” with respect to current executive compensation levels and related policies and practices. The Compensation Committee then evaluates how our pay practices and our Named Executive Officers’ compensation levels compare to the competitive market. As part of this evaluation, the Compensation Committee also reviews the performance measures and performance goals generally used within the competitive market to reward performance.

Methodology Used to Perform the Competitive Pay Analysis

In preparation for fiscal 2014, the Compensation Committee requested that Compensia provide a competitive pay analysis for each Named Executive Officer using (i) compensation data developed from publicly available information (as of December 2013) of companies included in a custom peer group (the “2014 Custom Peer Group”) and (ii) compensation data for the companies of similar size and business segments as reported in the Radford Global Technology Survey published by Radford, an Aon Hewitt consulting company.

To develop the 2014 Custom Peer Group, the Compensation Committee reviewed the group of companies comprising the then-existing compensation peer group, with particular reference to their industry and revenues (generally 50 to 200 percent our revenues), in each case based on publicly available information as of September 2013.

Based on the review conducted in October 2013, the Compensation Committee removed Seagate Technology plc, Texas Instruments Incorporated and Western Digital Corporation from the then-existing custom peer group because of their revenues exceeded the desired range and added Lam Research Corporation, LSI Corporation and Vishay Intertechnology, Inc. to the 2014 Custom Peer Group. Our revenues for the four fiscal quarters ending September 28, 2013, would have placed us in approximately the 56^th percentile of the 2014 Custom Peer Group based on publicly available information. The Compensation Committee believes that the composition of the 2014 Custom Peer Group reflects an appropriate set of comparator companies for purposes of assessing our executive compensation program.

The Compensation Committee used the 2014 Custom Peer Group competitive pay analysis developed by Compensia as its reference source in analyzing the competitiveness of Named Executive Officers’ compensation.

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The companies comprising the 2014 Custom Peer Group are as follows: ⁽¹⁾

Base Salary

The base salary increases during fiscal 2014 were recommended and approved based on market data, individual performance and comparison among internal peers. Factors influencing Mr. Norrod’s new hire base pay included his most recent salary at his former employer, market data and positioning against internal peers. The annual base salaries of our Named Executive Officers as of the beginning and end of fiscal 2014, including any adjustments made during the year, were as follows:

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Annual Cash Performance Bonuses

Generally, short-term incentives in the form of an annual cash performance bonus are provided to our Named Executive Officers under the EIP. These bonuses are designed to reward, where earned, short-term performance and the achievement of the goals of our annual operating plan.

Under the EIP, the amount of our Named Executive Officers’ annual cash performance bonus is calculated based on (i) each Named Executive Officer’s target annual cash performance bonus opportunity and (ii) our corporate financial performance for the applicable performance period as measured against pre-established performance levels. The financial measures and related performance levels for a given performance period are approved by the Compensation Committee shortly after the commencement of the performance period. Bonuses earned under the EIP are paid in a single lump-sum amount after the end of the fiscal year.

For fiscal 2014, each Named Executive Officer’s annual cash performance bonus under the EIP was determined based on our performance during two semi-annual performance periods: (i) the period beginning December 29, 2013 and ending June 28, 2014 (i.e., the first and second quarters of our fiscal 2014, the “First-Half Performance Period”) and (ii) the period beginning June 29, 2014 and ending December 27, 2014 (i.e., the third and fourth quarters of our fiscal 2014, the “Second-Half Performance Period”). The First-Half Performance Period was weighted at 33% and the Second-Half Performance Period was weighted at 67%, consistent with the seasonality of our annual sales. Even though performance is measured semi-annually, payouts (if any) are made only after the end of the entire year.

The following illustrates how the 2014 annual cash performance bonuses under the EIP were calculated:

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The Compensation Committee used the following financial measures and weightings for the First-Half Performance Period and the Second-Half Performance Period to determine the amount of each Named Executive Officer’s 2014 bonus under the EIP:

The Compensation Committee believes using non-GAAP basis makes it easier for investors to compare its operating results for current and historical periods and also because the Company believes it assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance.

The performance levels for each financial measure were established by the Compensation Committee at the beginning of fiscal 2014, in consultation with senior management. The performance levels were structured to align with our fiscal 2014 financial objectives under our ongoing transformation plan and our annual operating plan. At the time these performance levels were set, the Compensation Committee subjectively believed that the “target” level of performance would be challenging amid a rapidly changing enviroment.

The Compensation Committee chose the measure of adjusted non-GAAP net income because it reflects our bottom-line financial performance or profitability, which the Compensation Committee believes is directly tied to stockholder value creation on a short-term basis.

The Compensation Committee chose revenue as a financial measure because it reflects our top-line growth, which the Compensation Committee believes is a strong indicator of our long-term ability to create stockholder value.

The Compensation Committee chose the measure of adjusted non-GAAP free cash flow because it believes effective cash management is a key component of our transformation plan and our annual operating plan, the successful execution of which should lower indebtedness, increase financial flexibility and ultimately drive growth of stockholder value. In addition, the Compensation Committee believes that the measure avoids artificial deflation of the annual bonus due to unusual items in the performance period and items that are not indicative of operating performance or the underlying performance of our core business.

The Compensation Committee chose adjusted non-GAAP gross margin as a financial measure because it reflects how well we control our production costs and reflects the value of incremental sales.

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The following tables set forth (i) the performance targets for each of the financial measures for the First-Half Performance Period and the Second-Half Performance Period and (ii) our actual performance with respect to those financial measures. The threshold, target and maximum levels for the 2014 EIP were determined based upon our annual operating plan and an appropriate acceleration or deceleration above or below target. A steep interpolation exists between the threshold and target level and between the target and maximum level for each measure.

We achieved our financial goals at or above target in the first half of fiscal 2014, other than the adjusted non-GAAP gross margin, which was between threshold and target performance; and, actual performance for the second half of 2014 were generally below target and/or threshold levels of performance. Based on those results, the relevant weighting of each half and the full year performance against our financial goals, management recommended a bonus payout that was lower than the amount that would have otherwise been paid for the year under the EIP. The Compensation Committee agreed with management’s recommendation and approved a 33% bonus payout for fiscal 2014.

Notwithstanding the adjusted non-GAAP net income, revenue, adjusted non-GAAP free cash flow and adjusted non-GAAP gross margin financial measures, funding and payment of any annual cash performance bonus under the EIP was contingent upon our maintaining a cash balance (i.e., cash, cash equivalents and marketable securities) of at least $600 million on the last day of each quarter of fiscal 2014. We exceeded this cash balance on the last day of each quarter of fiscal 2014.

Our “adjusted non-GAAP net income” was calculated by adjusting our GAAP net loss for the applicable performance period for:

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Our “revenue” was calculated as our GAAP net revenue for the applicable performance period.

Our “adjusted non-GAAP free cash flow” was calculated by adjusting our GAAP net cash provided by (used in) operating activities for the applicable performance period for:

Our “adjusted non-GAAP gross margin” was calculated as our GAAP gross margin for the applicable performance period, adjusted for lower of cost or market inventory adjustment.

The 2014 EIP bonus amounts for each Named Executive Officer are set forth below:

The Compensation Committee reviews and certifies our level of achievement for each performance measure before any payments are made. This review and certification is generally performed at the first regularly scheduled Compensation Committee meeting following the end of the year with any payout of the annual cash performance bonus occurring in March 2015. Under the terms of the EIP, the Compensation Committee has the

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authority to reduce any Named Executive Officer’s annual cash performance bonus prior to payment. For 2014, the Compensation Committee did not exercise this authority in connection with any of our Named Executive Officers.

Long-Term Equity Awards

We believe that long-term equity awards provide a strong alignment between the interests of our Named Executive Officers and our stockholders. The Compensation Committee generally seeks to provide equity award opportunities that are consistent with our compensation philosophy, with the potential for larger payments for exceptional financial performance. The Compensation Committee also believes that long-term equity awards are an essential tool in promoting executive retention.

In August 2014, the Compensation Committee approved annual equity awards to each of Dr. Su and Messrs. Read, Kumar, Papermaster and Byrne. In October 2014, the Compensation Committee approved an additional annual equity award and a one-time promotional equity award to Dr. Su in connection with her appointment as our President and Chief Executive Officer. These annual and promotional equity awards were comprised of 50% PRSUs, 25% RSUs and 25% stock options (for Dr. Su, these exclude the Excess Awards and include the Replacement Awards, as discussed in more detail below).

2014 PRSU Awards.  All of the PRSUs awarded to our Named Executive Officers in fiscal 2014 (“2014 PRSUs”) provide for a payout (if any) at the end of the performance period ranging from 0% to 200% of the target number of shares covered by the award (the “Target Shares”) depending on (i) our adjusted non-GAAP operating income plus interest expense and (ii) our total stockholder return (“TSR”) relative to the TSRs of the companies comprising the S&P 500 IT Sector, in each case over the two-year performance period beginning January 1, 2014 and ending December 31, 2015. The Compensation Committee chose these performance measures because it believes they are strong indicators of our performance against internal financial targets and external comparison to industry peers’ stockholder return. We lengthened the duration of the performance period for the 2014 PRSUs to two years, as compared to an 18-month performance period for the 2013 PRSUs, both in response to stockholder comments regarding the duration of the 2013 PRSU performance period and to further promote retention.

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The threshold, target and maximum performance levels for the adjusted non-GAAP operating income plus interest expense measure were established at the inception of the award. At the end of the performance period, the initial number of shares will vary between 0% of the Target Shares, if performance is below the threshold level, and 160% of the Target Shares, if performance is at or above the maximum level. For performance between the threshold level and maximum level, a proportionate percentage between 60% and 160% is applied to the Target Shares based on relative performance between the threshold and maximum levels. We are not disclosing specific threshold, target and maximum performance levels used in this calculation because we believe such disclosure would cause us competitive harm, and we consider this information to be confidential business information. We believe that the target level is reasonably challenging to achieve, while the threshold level is more likely to be achieved and the maximum level more difficult to achieve as the threshold, target and maximum levels are aligned with our annual operating plan.

The number of shares earnable from the adjusted non-GAAP operating income plus interest expense financial performance measure is then adjusted based on our TSR relative to the TSRs of the companies comprising the S&P 500 IT Sector over the performance period. If our TSR for the performance period is at or below the 25^th percentile, then actual number of shares earned will be 75% of the number of shares earnable from the financial performance measure. If our TSR for the performance period is at or above the 75^th percentile, then the actual number of shares earned will be 125% of the number of shares earnable from the financial performance measure. If our TSR for the performance period is above the 25^th percentile and below the 75^th percentile, a proportionate adjustment between 75% and 125% is applied to the number of shares earnable from the financial performance measure based on relative performance between the 25^th and 75^th percentile.

Fifty percent of the actual number of shares earned will be settled on December 31, 2015 and the remaining 50% will be settled on December 31, 2016, in each case generally subject to the Named Executive Officer’s continued employment with us through each settlement date, unless the Named Executive Officer’s employment agreement or other agreement with us provides otherwise.

2013 PRSU Awards.  As set forth in the table below, based on our performance over the 18-month performance period ended December 31, 2014, the Compensation Committee determined that 37.5% of the target number of shares subject to the 2013 PRSUs had been earned.

Half of the actual number of shares earned under the 2013 PRSUs will be settled on June 30, 2015 and the remaining half of the shares will be settled on June 30, 2016, in each case subject to the Named Executive Officer’s continued employment with us through each settlement date, unless the Named Executive Officer’s employment agreement or other agreement with us provides otherwise.

Stock Options.  The stock options are intended to align our Named Executive Officers’ interests with our stockholders’ interests, because they will not realize any financial benefit from these awards unless our stock

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price appreciates over the option term. The stock options have an exercise price equal to 100% of the fair market value of our common stock on the grant date. The stock options vest over three years, 33 ¹⁄₃% on or about the first anniversary of the grant date (or such later date as may be selected by the Compensation Committee) and thereafter 8 ¹⁄₃% per quarter for the next following eight quarters, subject to the Named Executive Officer’s continued employment with us through each vesting date (unless a Named Executive Officer’s employment agreement or other agreement with us provides otherwise). The service vesting requirements are designed to act as a retention device. The stock options expire seven years after the grant date.

RSUs. The RSUs are intended to encourage executive retention, manage share dilution, recognize individual performance and align the Named Executive Officers’ interests with our stockholders’ interests, because the value of the awards is tied to the market value of our common stock. Excluding certain RSUs awarded to Mr. Norrod as part of his new hire compensation package (discussed below), all of the RSUs awarded to our Named Executive Officers in fiscal 2014 vest in three equal tranches over three years, subject to the Named Executive Officer’s continued employment with us through each vesting date (unless a Named Executive Officer’s employment agreement or other agreement with us provides otherwise). The service vesting requirements are designed to act as a retention device.

Aggregate Target Value of Equity Award Grants.  The Compensation Committee set the aggregate target value for the fiscal 2014 annual equity awards granted to each Named Executive Officer consistent with the target range of the competitive market data compiled by Compensia. When making its long-term equity award decisions for fiscal 2014, the Compensation Committee reviewed data showing the potential realizable value of each Named Executive Officer’s existing equity holdings. Additionally, in approving the fiscal 2014 equity awards for our Named Executive Officers, the Compensation Committee considered executive retention objectives and continuity within senior management and the following high level corporate goals: achieve 2014 annual operating plan (revenue, gross margin, operating expense and operating income), execute industry leading roadmap and meet customer commitments. The achievement of these high level goals drives the overall Company strategy and subsequently, the attainment of the performance metrics in the annual long- term incentive plan.

The aggregate target value of the fiscal 2014 annual equity awards granted to each Named Executive Officer in August 2014 was converted into a mix of PRSUs, RSUs, and stock options. The number of PRSU shares were determined by dividing one-half of the aggregate target value by $4.10 (as applicable, the “2014 Annual Grant Conversion Price”). We opted to utilize an adjusted 30-day average conversion price of the company’s common stock through the grant date. This action provided us the flexibility in converting shares in order to manage both equity compensation expense and dilution. The number of shares of our common stock subject to the RSUs was determined by dividing one-quarter of the aggregate target value by the 2014 Annual Grant Conversion Price, and the number of shares of our common stock subject to the stock options determined by dividing one-quarter of the aggregate target value by the 2014 Annual Conversion Price and multiplying that by 38.86%, our then-current binomial discount factor. For awards associated with Dr. Su’s promotion and appointment as our CEO, the $2.87 grant conversion price was used. This was established using the volume-weighted average price (VWAP) of the Company’s common stock for the 30 day period ending on October 30, 2014. The target numbers of PRSUs and RSUs were calculated as the quotient obtained by dividing the applicable award values by the said grant conversion price. The number of stock options shares was determined by dividing the stock option award value by the grant conversion price and the then-current binomial factor of 38.86%.

We follow Financial Accounting Standard Board (“FASB”) Accounting Standards Codification Topic 718 (“ASC Topic 718”) for our share-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our Named Executive Officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their share-based compensation awards in their income statements over the period that a recipient is required to render service in exchange for the option or other award.

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See the “2014 Summary Compensation Table” and the “Grants of Plan-Based Awards in 2014” table below for more information on the equity awards that we granted to our Named Executive Officers in fiscal 2014.

Dr. Su’s Employment Agreement

In October 2014, we entered into an “at-will” employment agreement with Dr. Su in connection with her appointment as our President and Chief Executive Officer. The terms and conditions of Dr. Su’s employment agreement, which were approved by the members of our Board, excluding the Chief Executive Officer, were the result of arms-length negotiations between Dr. Su and the Compensation Committee. The key compensation terms of Dr. Su’s employment agreement are as follows:

On November 24, 2014, we received notice of a stockholder derivative action filed in Delaware on the grounds that we had granted equity awards to Dr. Su during calendar year 2014 in excess of the per calendar year individual share limit under our 2004 Plan. Rather than litigate this technical issue, we believed that resolving this technicality quickly was a better solution for us and our stockholders. In light of this determination, on December 26, 2014, the Board, including the members of the Compensation Committee, voided and rescinded the PRSU awards granted to Dr. Su on October 31, 2014 and August 12, 2014, and a portion of the RSU award granted to her on October 31, 2014 (collectively, the “Excess Awards”).

At the time the Board determined to void and rescind the Excess Awards, the Board also determined that the total compensation package provided for in Dr. Su’s employment agreement, including the equity compensation, was appropriate, reasonable and aligned with our stockholders’ interests. Having reaffirmed that the compensation we agreed to provide Dr. Su was appropriate and reasonable, the Board determined that we should return Dr. Su’s equity compensation to the level it should have been at the earliest practicable opportunity subject to applicable law and the terms of the 2004 Plan. As a result, on February 11, 2015, the Board approved a PRSU award covering a target number of 1,475,000 shares and a RSU award covering 50,000 shares to Dr. Su. We expect the Board to grant an additional PRSU award to Dr. Su covering a target number of 230,364 shares to return her equity compensation to the level it should have been before her Excess Awards were voided and rescinded (any such award, together with the February 2015 awards, the “Replacement Awards”). The Replacement Awards have (or will have, in the case of the Replacement Award yet to be granted) the same grant date and grant date fair values as the corresponding Excess Awards for purposes of ASC Topic 718.

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Mr. Read’s Transition, Separation Agreement and Release

We entered into a Transition, Separation Agreement and Release with Mr. Read on October 8, 2014, in connection with his stepping down as our President and Chief Executive Officer. Mr. Read remained with us as a non-executive employee until his actual separation date of December 31, 2014. Pursuant to the separation agreement, Mr. Read continued to receive his base salary at his then current rate of $1 million per year through December 31, 2014, and received a one-time severance payment in the amount of $5 million (in accordance with the terms of the employment agreement he executed in August 2011) and payment for COBRA medical insurance premiums for up to 12 months following his separation date. The $5 million one-time severance payment is calculated as the sum of two times his annual base salary plus two times his target annual bonus under the EIP plan. In addition, pursuant to the separation agreement, Mr. Read will receive a lump sum cash payment in the amount of the annual cash performance bonus that he would have earned with respect to fiscal 2014 under the terms of the EIP had he been employed by us on the date EIP bonuses were paid. The Compensation Committee calculated that amount to be $495,000, which will be paid to Mr. Read in March 2015. Further discussion of how this amount was determined is provided above under “—Compensation Philosophy, Practices and Program Design Inputs—Annual Cash Performance Bonuses.”

The separation agreement also accelerated vesting of (a) the 1,673,766 stock options granted on June 15, 2012 and July 22, 2013 and 764,939 of the 1,019,921 stock options granted on August 12, 2014 and (b) the 678,207 RSUs granted on June 15, 2012 and July 22, 2013 and 264,227 of the 396,341 RSUs granted on August 12, 2014, in accordance with the terms of the employment agreement he executed in August 2011. In addition, Mr. Read was deemed to have satisfied any continued service requirements related to the vesting of the PRSUs granted on June 15, 2012, July 22, 2013 and August 12, 2014, representing, at target, an aggregate of 2,149,096 shares of our common stock, in accordance with the terms of the employment agreement he executed in August 2011. Each of these PRSUs will be earned or forfeited by Mr. Read depending on our actual performance for the applicable performance period, consistent with the terms of the applicable award agreement.

Pursuant to the separation agreement, Mr. Read is subject to a confidentiality covenant, a non-disparagement covenant, a two-year non-compete covenant, a two-year non-solicitation covenant and a cooperation covenant. In consideration of the separation benefits payable under his separation agreement, Mr. Read agreed to release us from all claims and liabilities under federal and state laws arising prior to his separation date.

Mr. Norrod’s Offer Letter

In connection with his appointment as our Senior Vice President and General Manager, Enterprise, Embedded and Semi-Custom Business Group, we entered into an offer letter with Mr. Norrod, the terms of which were approved by the Compensation Committee. Mr. Norrod’s offer letter provides the following:

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In February 2015, the Compensation Committee set the performance goals applicable to Mr. Norrod’s PRSU award. Mr. Norrod may earn between 0% and 150% of the target number of PRSUs covered by the award depending on the fiscal 2015 fiscal performance of our Enterprise, Embedded and Semi-Custom Business Group, as measured against the performance targets established by the Compensation Committee. One-half of the earned PRSUs will vest upon certification of performance following the close of our 2015 fiscal year and the remaining 50% will vest on January 31, 2017, subject to Mr. Norrod’s employment with us through each settlement date. We believe that the performance goals, while achievable, require superior performance.

Special Retention Award

While the Compensation Committee’s focus is on pay for performance, during transformational periods, such as our current multi-year strategy to reshape the company, the Compensation Committee may believe it necessary and in the best interests of the company to grant a special equity and/or cash retention award to encourage retention of key talent in leadership and critical R&D positions.

In October 2014, the Compensation Committee granted a special retention award to Mr. Byrne consisting of a performance-based cash retention award of $1 million and a PRSU award with a target value of $1 million. This award was designed to retain Mr. Byrne for at least two years and encourage him to remain fully committed and engaged in the execution of our multi-year strategy to reshape the company.

The performance-based cash retention award is payable in two tranches. One-half of the award is payable on the first regular payroll date after September 30, 2015, and the remainder will be paid on the first regular payroll date after September 30, 2016, in each case provided Mr. Byrne remains employed through each vesting date. The award will accelerate and be paid on the first regular payroll date after such acceleration if Mr. Byrne is involuntarily terminated by the Company other than for cause and if certain other conditions are met.

The PRSU award will only be earned to the extent certain pre-determined performance conditions are met. One-half of the earned PRSUs will be settled on September 30, 2015, and the remainder will be settled on September 30, 2016, in each case provided Mr. Byrne remains in employment through each vesting date. The PRSUs will accelerate and vest immediately if Mr. Byrne is involuntarily terminated by the Company other than for cause and if certain other conditions are met. We are not disclosing specific performance conditions applicable to this award because we believe such disclosure would cause us competitive harm, and we consider this information to be confidential business information.

We expect both the retention cash award and PRSU award will be forfeited by Mr. Byrne on March 31, 2015, when his employment with us will end.

Deferred Compensation

In fiscal 2014, our Named Executive Officers were eligible to participate in our Deferred Income Account Plan (the “DIA”). Participation in the DIA is intended to assist our Named Executive Officers in their retirement planning as well as to restore Company contributions that are lost due to IRS limits applicable to contributions in our Section 401(k) plan. The Compensation Committee believes the opportunity to defer compensation is a competitive benefit that enhances our ability to attract and retain talented executives while building plan participants’ long-term commitment to the Company. For further information about the DIA, see “2014 Nonqualified Deferred Compensation” below.

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Health, Welfare and Other Personal Benefits (Perquisites)

In fiscal 2014, a broad population of our U.S. employees, including our Named Executive Officers, were eligible to receive the following health, welfare and other personal benefits:

In addition to the above, our Named Executive Officers were eligible to receive an annual physical examination and executive life insurance.

We also provide for air and other travel for our Named Executive Officers for business purposes only, which may include air travel on aircraft chartered by us. From time to time, we may request that a Named Executive Officer’s spouse, significant other, or dependent (an “invitee”) accompany the Named Executive Officer on such business-related travel. Occasionally, invitees may ride along on Company-chartered aircraft for personal reasons when the aircraft is already traveling to a specific destination for a business reason, the travel does not result in any significant incremental cost to us, and the Named Executive Officer pays us an amount equal to the economy fare of the most directly comparable commercial aircraft flight plus any incremental cost incurred by us. No tax protection is provided to a Named Executive Officer related to his or her invitee’s use of Company-chartered aircraft or Company-provided travel, whether or not the invitee’s travel is at our request for business purposes.

The health, welfare and other personal benefits described above are intended to be part of a competitive overall compensation program and help attract and retain executive talent.

For further information regarding the health, welfare and other personal benefits received by our Named Executive Officers during fiscal 2014, see the “2014 Summary Compensation Table” below.

Change in Control Agreements and Other Change in Control Arrangements

Any payments and benefits for Dr. Su in the event of her termination of employment in connection with a change in control of us are set forth in her employment agreement, the terms of which were the result of arms-length negotiations between Dr. Su and the Compensation Committee. Except for Mr. Read, each of the other Named Executive Officers is party to a change in control agreement with us. These arrangements are designed to encourage the Named Executive Officers’ continued services in the event of a potential change in control of us and to allow for a smooth leadership transition upon such a change in control. In addition, these arrangements are intended to provide incentives to our Named Executive Officers to effectively execute the directives of the Board, even in the event that such actions may result in the elimination of a Named Executive Officer’s position.

Under the terms and conditions of these arrangements and agreements, a Named Executive Officer is eligible to receive certain specified compensatory payments and benefits only if (i) a “change in control” of us occurs and (ii) the Named Executive Officer’s employment is terminated or the Named Executive Officer is constructively discharged within two years of the change in control. The Compensation Committee believes this structure strikes a balance between our incentive arrangements and our executive hiring and retention objectives without providing “windfall” payments and benefits to any Named Executive Officers who continue employment with an acquiring entity following a change in control of us.

For a detailed description of the payments and benefits under these arrangements and agreements payable to our Named Executive Officers, see “Severance and Change in Control Arrangements” below.

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Severance and Separation Arrangements

Any severance payable to Dr. Su is governed solely by her employment agreement, the terms of which were the result of arms-length negotiations between Dr. Su and the Compensation Committee. Under her employment agreement, Dr. Su is eligible to receive certain specified payments and benefits in the event that her employment is involuntarily terminated. The Compensation Committee believes that the severance payable to Dr. Su pursuant to her employment agreement is reasonable and competitive and provides a level of transition assistance in the event of her involuntary termination with the goal of keeping her focused on our business rather than her personal circumstances.

With the exception of Dr. Su and Mr. Read, all of our other Named Executive Officers participate in our Executive Severance Plan for Senior Vice Presidents (the “SVP Severance Plan”). The SVP Severance Plan is designed to provide uniform treatment in the event of an involuntary termination of employment of our U.S. senior executives (except Dr. Su and Mr. Read) and to provide a level of transition assistance in such instances with the goal of keeping these senior executives focused on our business rather than their personal circumstances. A Named Executive Officer is not eligible to receive severance payments and benefits under the SVP Severance Plan if he or she receives severance payments and benefits in connection with a change in control pursuant to his or her change in control agreement. Although the majority of each of these Named Executive Officer’s fiscal 2014 target total direct compensation opportunity is performance-based and contingent upon achievement of our financial goals or our stock price performance, the Compensation Committee believes that the SVP Severance Plan provides the covered executives important protections and promotes our objectives of attracting and retaining executive talent.

Mr. Read was entitled to receive separation payments and benefits under his Transition, Separation Agreement and Release, which we entered into with him in October 2014 in connection with his stepping down as our President and Chief Executive Officer.

For a detailed description of the severance and separation payments and benefits payable to our Named Executive Officers, see “Severance and Change in Control Arrangements” below, and “—Mr. Read’s Transition, Separation Agreement and Release” above.

Other Compensation Policies

Compensation Recovery

Our Worldwide Standards of Business Conduct provide that we may pursue all remedies available under applicable law to recover any incentive-based or other compensation (including equity awards) paid or granted to our employees or agents if we are required to prepare an accounting restatement as a result of our material noncompliance with any financial reporting laws.

In addition, each stock option, RSU and PRSU awarded since May 2010 to an employee at or above the level of senior vice president (which includes our Named Executive Officers) has included a compensation recovery (“claw-back”) provision. The claw-back provides the Compensation Committee with the right to recover all or a portion of the compensation attributable to the award if the employee’s direct involvement with fraud, misconduct, or his or her gross negligence contributes to or results in us being required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws. The claw-back does not apply to any award awarded more than 18 months prior to the date of the first public issuance or SEC filing of the financial document embodying the reporting requirement. The Compensation Committee may exercise this claw-back right by cancelation, forfeiture, repayment, or disgorgement of profits realized by the employee from the sale of our securities.

We continue to monitor the rulemaking activities of the SEC and Nasdaq with respect to the development, implementation and disclosure of compensation recovery provisions/policies. We expect to revise our compensation recovery provisions/policies in the future if and as required by applicable law.

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Stock Ownership Requirements

Our stock ownership requirements are designed to increase our Named Executive Officers’ stakes in us and to align their interests more closely with those of our stockholders.

The guidelines provide that on or before the Ownership Achievement Date (defined below), the President and/or Chief Executive Officer should attain an investment position in our common stock equal to three-times his or her base salary, and our other Named Executive Officers should attain an investment position equal to one-and-one-half times their base salary.

Shares of our common stock counted toward the minimum stock ownership requirements include any shares held directly or indirectly by an executive officer and shares underlying vested but unexercised stock options, with 50% of the in-the-money value or shares (as applicable) of such stock options being used for this calculation.

The “Ownership Achievement Date” is the later of October 2016 or five years from first appointment as an executive officer. In the case of an existing executive officer being appointed as our Chief Executive Officer, the “Ownership Achievement Date” is based on five years from the date of such appointment.

As of December 27, 2014, each of our Named Executive Officers was on target to comply with his or her applicable stock ownership requirement by the Ownership Achievement Date.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to our Chief Executive Officer and each of our three other most highly compensated executive officers (other than our Chief Financial Officer) in any taxable year. Generally, remuneration in excess of $1 million may only be deducted if it is “performance-based compensation” within the meaning of the Code.

The Compensation Committee believes that, in establishing the cash and equity incentive compensation plans and arrangements for our executive officers, the potential deductibility of the compensation payable under those plans and arrangements should be only one of the relevant factors taken into consideration. For that reason, the Compensation Committee may deem it appropriate to provide one or more executive officers with the opportunity to earn incentive compensation, whether through cash incentive awards or equity incentive awards, which may not be deductible by reason of Section 162(m) or other provisions of the Code.

The Compensation Committee believes it is important to maintain cash and equity incentive compensation at the requisite level to attract and retain the individuals essential to our financial success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation.

2015 Compensation Actions

For the reasons discussed below, so far in fiscal 2015 the Compensation Committee has made the following additional changes to our executive compensation program:

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE

John E. Caldwell, Chair

Nora M. Denzel

Nicholas M. Donofrio

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COMPENSATION POLICIES AND PRACTICES

The Compensation Committee reviewed our compensation policies and practices for employees generally and concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.

In reaching this conclusion, the Compensation Committee, with the assistance of management, assessed our executive and broad-based compensation and benefits programs to determine if any of them created undesired or excessive risks of a material nature. The assessment included (i) a review of our compensation policies and practices for employees generally, (ii) identification of the risks that could result from such policies and practices, (iii) identification of the risk mitigators and controls, and (iv) analysis of the potential risks against the risk mitigators and controls and our business strategy and objectives. Although the Compensation Committee reviewed all of our compensation programs, the Compensation Committee focused on the programs that have variability of payout and in which employees could directly affect the payout of incentives. These programs included the EIP, Annual Incentive Plan, Sales Incentive Plan and 2004 Plan.

In performing the assessment and reaching its conclusion, the Compensation Committee noted the following factors that the Compensation Committee believes may reduce the likelihood of undesired or excessive risk-taking:

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EXECUTIVE COMPENSATION

The following table shows, for fiscal 2014, fiscal 2013 and fiscal 2012, the compensation for the individuals serving as our Chief Executive Officer and Chief Financial Officer and our three most highly compensated executive officers (other than our Chief Executive Officer and Chief Financial Officer) who were serving as executive officers at the end of fiscal 2014.

For information on the role of each compensation component within the total compensation packages of the Named Executive Officers, see “Compensation Discussion and Analysis—2014 Executive Compensation Program.”

2014 SUMMARY COMPENSATION TABLE

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