AMD VICE PRESIDENT INCENTIVE PLAN
Published on March 20, 2001
Exhibit 10.15
VICE PRESIDENT
INCENTIVE PROGRAM
Summary
Personal and Confidential
AMD [LOGO]
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AMD VICE PRESIDENT INCENTIVE PROGRAM
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I. Purpose
The Vice President Incentive Program (VPIP) provides an incentive for AMD's
Vice Presidents (Participants) to maximize both short-term financial
performance against plan, as well as long-term revenue growth and Return on
Equity (ROE). This summary presents an overview of the program. Further
details about how the program is administered, including specific formulas
for each component, can be obtained from Corporate Compensation.
II. Plan Overview
The VPIP consists of two plans (Plans):
. The Short-Term Plan (STP) provides a bonus for achieving planned
performance for the current fiscal year (Plan Year).
. The Long-Term Plan (LTP) annually provides a bonus for sustained
corporate performance over a three-fiscal-year period relative to
external measures.
Within these Plans, Participants are rewarded for meeting or exceeding
performance objectives as follows:
Table I
A separate communication outlining the assigned target percentages for
each component of the Plans, and division assignments and financial
goals for the STP, will be provided to Participants each year.
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III. Plan Funding
. The VPIP is funded by a maximum of three percent of AMD's adjusted
Operating Income (OI)/1/, for any given Plan Year. In the aggregate, if
calculated bonuses exceed the 3 percent limit, each Participant's bonus
will be scaled back to conform.
. Bonuses will not be paid for any Plan Year in which OI is less than or
equal to $0.
. LTP bonuses generated but not paid due to the above funding limitations
will be carried over for possible payout in future Plan years. (See
provisions under section V.)
IV. Short Term Plan (STP)
The STP uses three different components to measure and reward the
Participant's annual contributions: Corporate, Division and Individual.
The payout opportunity and weight of each component vary depending upon the
Participant's role and the tier to which he/she is assigned by management.
The weighting for Participants with Product Line or Manufacturing
responsibility emphasizes Division Performance.
A. Corporate Performance Bonus (CPB)
The CPB is generated when specific levels of adjusted OI/1/ and EVA
Improvement are achieved relative to the business plan. The OI portion
has a weighting of 70%, while the EVA Improvement portion has a weighting
of 30%. Target multipliers are derived as follows:
Table II
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/1/ Adjusted Operating Income (OI), referred to as "OI" throughout the plan
document, is OI as reported in the GAAP profit and loss statement, adjusted for
pre-tax income/loss from FASL.
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For example, if Actual OI equals planned OI for the year, the resulting
OI multiplier would be 1.0. If Actual EVA Improvement equals 125% of
planned EVA Improvement, the EVA Improvement multiplier would be 2.0.
The combined CPB Target Multiplier is calculated as follows:
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(OI Multiplier x 70%) + (EVA Multiplier x 30%) = Combined CPB Multiplier
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So, in our example, the Combined CPB Multiplier would be 1.3:
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(1.0 x 70%) + (2.0 x 30%) = 1.3
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Formulas generate target multipliers for actual performance falling
outside of or between the parameters in Table II. While either
multiplier can exceed two (2.0) individually, the maximum combined CPB
multiplier, and thus the maximum CPB award, is two (2.0) times the CPB
target amount.
The actual CPB is calculated as follows:
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Combined CPB Multiplier x CPB Target % x Base Salary = CPB
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B. Division Performance Bonus (DPB)
The DPB, unless otherwise specified, depends on division Sales and
Operating Profit (OP) performance against plan for the division(s)
supported by the participant. Target multipliers are derived as follows:
Table III
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/2/ Operating Profit performance is related to Planned Sales to allow for a DPB
payout if reasonable profits are maintained relative to the original sales plan,
even though actual sales may have fluctuated.
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For example, if Actual Sales are equal to Planned Sales, the resulting
Sales Success Multiplier is 1.0. If the difference between Actual OP
and Planned OP as a percent of Planned Sales is 6%, the Profit Success
multiplier is 2.0.
The Combined DPB Target Multiplier is calculated as follows:
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Sales Success Multiplier x Profit Success Multiplier =
Combined DPB Multiplier
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So, in our example, the Combined DPB Target Multiplier is 2.0:
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(1.0 x 2.0) = 2.0
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We use Pretax OP from the Economic Profit and Loss statement to
calculate actual and planned profit success. Planned Division Sales and
Planned Division OP are the numbers approved by the Board of Directors
as part of the business plan for the Plan Year.
Formulas generate target multipliers for actual performance falling
outside of or between the parameters in Table III. The threshold
performance level for both factors must be met in order for a bonus to
be generated. While either multiplier can exceed two (2.0) individually,
the maximum combined DPB multiplier, and thus the maximum DPB award, is
two (2.0) times the DPB target amount.
Table IV displays combined DPB Multipliers resulting from various Sales
Success and Profit Success Factors. Formulas are used to calculate
values falling between those shown.
Table IV
Sample DPB Multipliers
* Less than.
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The actual DPB is calculated as follows:
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Combined DPB Multiplier x DPB Target % x Base Salary = DPB
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For Participants in a corporate role, a weighted average DPB multiplier is
calculated using planned sales at the group level. Similarly, Participants
assigned to multiple divisions or groups have a weighted average DPB
multiplier.
C. Individual Performance Bonus (IPB)
Officers and Group Vice Presidents establish individual performance
expectations for each Participant reporting to them. These expectations
might include specific division goals such as product releases, financial
targets and organizational development. The Officer/Group VP then assesses
performance against these expectations and an IPB is recommended. The IPB
target and maximum are 10 percent and 20 percent of base salary,
respectively, for all Participants. However executive management may adjust
the average target percent in any given Plan Year based on the performance
of the Company.
Typical guidelines are outlined in Table V:
Table V
IPB Guidelines
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IPB
Performance Percentage
Assessment Range
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Exceptional 16 - 20%
Successful 8 - 16%
Most Goals Met 4 - 8%
Improvement Required 0%
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D. STP Bonus Calculation
The total STP bonus is calculated as follows:
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STP Bonus = CPB + DPB + IPB
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V. Long-Term Plan (LTP)
The LTP rewards sustained corporate performance for both ROE and sales
growth relative to competitive measures over a rolling three-year period.
The LTP has an annual target bonus of 30% of base salary and a maximum
opportunity of 60% for all Participants, subject to proration provisions in
Section VII. The model below illustrates the LTP cycles.
Long-Term Performance Plan Model
[GRAPH APPEARS HERE]
A. LTP Plan Components
Specifically, the LTP is comprised as follows:
. ROE Component: compares AMD's three-year ROE against the three-year
ROE for the S&P 500.
. Sales Component: compares the difference between AMD's three-year
sales growth and the three-year semiconductor industry sales growth,
as published by Worldwide Semiconductor Trade Statistics (WSTS)/3/.
Target multipliers are derived as follows in Table VI:
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/3/ Semiconductor industry data may be modified to be more representative of
AMD's product offerings. For instance, the DRAM market segment may be excluded
from the Total Semiconductor Sales data.
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Table VI
For example, if AMD's 3-year ROE is 10% and the S&P ROE is 10%, a
multiplier of 1.0 is generated for the ROE component. If AMD's 3-year
Sales Growth is 30% and the WSTS Sales Growth is 10%, a multiplier of
2.0 is generated for the Sales component.
Then, the Combined LTP Target Multiplier is calculated:
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ROE Component Multiplier x Sales Component Multiplier
= Combined LTP Multiplier
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So, in our example, the Combined LTP Multiplier is 2.0:
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(1.0 x 2.0) = 2.0
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The threshold performance level for both factors must be met in order
for an LTP bonus to be possible. Formulas generate multipliers for
actual performance falling between the parameters on Table VI. The
maximum multiplier when both factors are combined is two (2.0).
Table VII displays combined LTP Multipliers resulting from various ROE
and Sales Growth performance levels. Formulas are used to calculate
values falling between those shown.
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Table VII
Sample LTP Multipliers
B. LTP Bonus Calculation
The LTP bonus is calculated as follows:
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Combined LTP Multiplier x LTP Target (30%) x Base Salary = LTP
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C. LTP Carry-Over Provision
In the event an LTP bonus is calculated but all or a portion is
not paid due to the OI funding limitations (see Section III),
that amount will be carried over for up to three following Plan
Years. Carry-over bonus amounts will be paid at the earliest
possible payout date (on a first in, first out basis) during the
three-year carryover period, subject to the three percent maximum
payout cap and other eligibility provisions. Any amount carried
over but not payable during the three-year carry-over period
reverts to zero.
The Vice President must be an active Plan participant in the year
a carry-over amount is applied in order to be eligible to receive
it.
VI. Timing of Payouts
Bonuses are paid out by the end of the first quarter following the close of
a Plan Year.
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VII. Eligibility For Participation And Receipt Of Bonuses
A. Unless otherwise determined by the CEO, all non-Sales Vice Presidents
are Participants in the VPIP. This includes Sr. Vice Presidents and
Group Vice Presidents.
B. To be eligible to receive any bonus under the VPIP, a Participant must
be employed by AMD at the time of payout of the bonus.
C. To be eligible to receive an STP bonus of any amount, a Participant
must have been actively employed in the VPIP for at least some portion
of the Plan Year. A Participant who is actively employed for less than
an entire Plan Year (i.e., became a participant mid-year or was on an
unpaid leave), and who is otherwise eligible to receive an STP bonus
for that Plan Year, will receive an STP bonus, prorated according to
the number of months of active employment in the 12-month STP Plan
Year. For purposes of this provision, a full month's credit will be
given where the Participant was actively employed in the VPIP for at
least 15 days of a partial month.
D. To be eligible to receive an LTP bonus of any amount, a Participant
must have been actively employed in the VPIP for at least 12 months. A
Participant who is actively employed for less than an entire three-
year LTP bonus period (i.e., became a Participant at some time during
the period, or was on an unpaid leave), and who is otherwise eligible
to receive an LTP bonus, will receive an LTP bonus, prorated according
to the number of months of active employment out of the 36-month LTP
bonus period. For purposes of this provision, a full month's credit
will be given where the Participant was actively employed for at least
15 days of a partial month.
E. If a Participant dies during the Plan period, any VPIP bonus will be
paid in full so long as the Participant was on active status for at
least 6 months of the Plan Year. If active for less than 6 months, any
award generated at the end of the year will be prorated as above.
Bonus payments will be made to the designated recipient of the
Participant's final paycheck.
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F. Payment to a Participant of any calculated bonus for which the
Participant is otherwise eligible is contingent upon that
Participant's sustained satisfactory performance during the Plan
period for which the bonus was calculated, as determined by the
Participant's immediate superior.
G. No Participant has any earned or vested entitlement to any bonus(es)
under the VPIP. Any and all bonus payments are made at the sole
discretion of the Chief Executive Officer.
H. AMD reserves the right to retroactively or prospectively modify or
terminate the VPIP, in whole or in part, and AMD reserves the right to
deny the participation of, or payout of a bonus to, a Participant, at
its sole discretion, with or without notice or cause.
VIII. Other Important Plan Provisions
A. Base Salary is defined as the Participant's annualized base pay rate
at the end of the Plan Year. For the LTP bonus, the annualized base
pay rate at the end of Plan Year three will be the basis for bonus
determination.
B. Operating Income, for Plan purposes, is adjusted for pre-tax
income/loss from FASL. This is otherwise referred to as Operating
Profit on the Non-GAAP profit and loss statement.
C. Because Year 3 LTP bonus calculations may be based on the closest WSTS
and/or S&P 500 estimate at the time of payout, adjustments (positive
or negative) may be made as soon as possible following availability of
actual data.
D. No allowance will be made for factors beyond the control of
Participants that either adversely or favorably affect the Company's
performance.
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