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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ADVANCED MICRO DEVICES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
ADVANCED MICRO DEVICES, INC.
ONE AMD PLACE [AMD LOGO APPEARS HERE]
P.O. BOX 3453
SUNNYVALE, CALIFORNIA 94088-3453
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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We will hold the Annual Meeting of Stockholders of Advanced Micro Devices,
Inc. at the St. Regis Hotel, 2 East 55th Street, New York, New York 10022, on
Thursday, April 27, 2000. The meeting will start at 10:00 a.m. local time. At
the meeting, we will:
. Elect eight directors,
. Ratify the appointment of Ernst & Young LLP as our independent auditors
for the current fiscal year,
. Approve an increase in the number of shares authorized to be issued
under the Advanced Micro Devices, Inc. 1996 Stock Incentive Plan by
7,250,000 shares,
. Approve the Advanced Micro Devices, Inc. 2000 Employee Stock Purchase
Plan,
. If properly presented, consider a stockholder proposal to amend our
bylaws, which is opposed by the Board of Directors, and
. Transact any other business that properly comes before the meeting.
By Order of the Board of Directors,
THOMAS M. McCOY
Secretary
Sunnyvale, California
March 21, 2000
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. RETURNING YOUR PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF
YOU LATER DECIDE NOT TO ATTEND THE MEETING.
TABLE OF CONTENTS
Page
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QUESTIONS AND ANSWERS..................................................... 1
ELECTION OF DIRECTORS..................................................... 4
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS......................... 5
DIRECTORS' COMPENSATION AND BENEFITS...................................... 6
PRINCIPAL STOCKHOLDERS.................................................... 7
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS.................... 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 9
EXECUTIVE COMPENSATION.................................................... 9
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS...................... 14
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION............. 14
PERFORMANCE GRAPH......................................................... 18
RATIFICATION OF INDEPENDENT AUDITORS...................................... 19
APPROVAL OF THE INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER
THE ADVANCED MICRO DEVICES, INC. 1996 STOCK INCENTIVE PLAN............... 19
APPROVAL OF THE ADVANCED MICRO DEVICES, INC. 2000 EMPLOYEE STOCK PURCHASE
PLAN..................................................................... 22
STOCKHOLDER PROPOSAL TO AMEND BYLAWS...................................... 25
ANNUAL REPORT AND FINANCIAL STATEMENTS.................................... 27
i
ADVANCED MICRO DEVICES, INC.
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PROXY STATEMENT
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2000 Annual Meeting of Stockholders
QUESTIONS AND ANSWERS
1.Q:WHO IS SOLICITING MY VOTE?
A: This proxy solicitation is being made by the Board of Directors of
Advanced Micro Devices, Inc. We have retained Georgeson Shareholder
Communications, Inc. and MacKenzie Partners, Inc., professional proxy
solicitors, to assist us with this proxy solicitation.
2.Q:WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
A: This proxy statement was first mailed to stockholders on or about March
21, 2000.
3.Q:WHAT MAY I VOTE ON?
A: You may vote on:
. The election of directors to serve on our Board of Directors,
. The approval of the appointment of our independent auditors for the
current fiscal year,
. The approval of an increase in the number of shares authorized to be
issued under the Advanced Micro Devices, Inc. 1996 Stock Incentive
Plan (the 1996 Plan) by 7,250,000 shares,
. The approval of the Advanced Micro Devices, Inc. 2000 Employee Stock
Purchase Plan (the ESPP), and
. If properly presented at the meeting, a stockholder proposal to amend
our bylaws (the stockholder bylaw proposal).
4.Q:HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends that you vote:
. FOR each of the director nominees,
. FOR the appointment of Ernst & Young LLP as independent auditors for
the current fiscal year,
. FOR the increase in the number of shares authorized to be issued
under the 1996 Plan,
. FOR the ESPP, and
. AGAINST the stockholder bylaw proposal.
5.Q:WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on February 28, 2000 (the
Record Date) are entitled to vote at the Annual Meeting. On the Record
Date, approximately 152,006,873 shares of our common stock were
outstanding. Every stockholder is entitled to one vote for each share of
common stock held. A list of these stockholders is kept at the offices
of our transfer agent, EquiServe LLP, 100 William Street-Galleria, New
York, New York.
6.Q:HOW DO I VOTE BY MAIL?
A: If you complete and properly sign each proxy card you receive and return
it in the prepaid envelope to us, it will be voted by one of the
individuals indicated on the card (your "proxy") as you direct. If you
return your signed proxy card but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR the election of the director
nominees, FOR the ratification of the appointment of our auditors, FOR
the increase in the number of shares authorized to be issued under the
1996 Plan, FOR the ESPP and AGAINST the stockholder bylaw proposal.
7.Q:CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
A: If you live in the United States or Canada, you may submit your proxy by
following the Vote by Telephone instructions on the proxy card. If you
have Internet access, you may submit your proxy from any location in the
world by following the Vote by Internet instructions on the proxy card.
8.Q:CAN I VOTE AT THE MEETING?
A. Yes. If you wish to vote your shares in person at the Annual Meeting and
they are held by your broker (held in "street name"), you must bring a
letter from the broker to the meeting showing that you were the direct
or indirect ("beneficial") owner of the shares on February 28, 2000.
9.Q: CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD OR AFTER I HAVE VOTED
BY TELEPHONE OR ELECTRONICALLY?
A. Yes. You may revoke your proxy at any time before it is exercised by:
. Sending in another proxy with a later date (by mail, telephone or
over the Internet),
. Notifying our Corporate Secretary in writing before the Annual
Meeting that you wish to revoke your proxy, or
. Voting in person at the Annual Meeting.
10.Q:HOW DO I VOTE MY SHARES IF THEY ARE HELD IN STREET NAME?
A: If your shares are held by your broker, in "street name," you will
receive a form from your broker seeking instruction as to how your
shares should be voted. If you do not instruct your broker how to vote,
your broker will vote your shares at its discretion. However, your
broker is not permitted to exercise voting discretion on the stockholder
bylaw proposal; therefore, if you do not instruct your broker how to
vote, your shares will not be voted on the stockholder bylaw proposal.
These shares are said to be represented by "broker non-votes."
11.Q:WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. They may be present
at the Annual Meeting or represented by proxy. There must be a quorum
for the Annual Meeting to be held. If you submit a properly executed
proxy card, even if you abstain from voting, you will be considered part
of the quorum. Broker non-votes are counted in determining if there is a
quorum.
12.Q:HOW ARE MATTERS PASSED OR DEFEATED?
A: The eight director nominees receiving the highest number of affirmative
votes will be elected. A properly executed proxy marked "WITHHOLD
AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is
a quorum. All the other matters must receive affirmative votes from more
than 50% of the shares that are voted to be adopted. An abstention has
the same effect as a vote AGAINST a proposal. Because your broker does
not have discretion to vote on your behalf on the stockholder bylaw
proposal, broker non-votes will not be counted in determining the number
of shares voting on that proposal.
13.Q:WHO WILL COUNT THE VOTES?
A: Representatives of our transfer agent, EquiServe, will count the votes.
14.Q:IS MY VOTE CONFIDENTIAL?
A: Proxy cards, ballots and voting tabulations that identify individual
stockholders are mailed or returned directly to EquiServe, and handled
in a manner that protects your voting privacy. Your vote will not be
disclosed except: (1) as needed to permit EquiServe to tabulate and
certify the vote, and (2) as required
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by law. However, comments written on the proxy card may be forwarded to
management. In that case, your identity may not be kept confidential.
15.Q:WHO CAN ATTEND THE ANNUAL MEETING?
A: Only stockholders as of the close of business on February 28, 2000,
holders of proxies for those stockholders and other persons invited by
us can attend.
16.Q: HOW WILL VOTING ON ANY BUSINESS NOT DESCRIBED ON THE NOTICE OF ANNUAL
MEETING BE CONDUCTED?
A: We do not know of any business to be considered at the Annual Meeting
other than the proposals described in this proxy statement. If any other
business is presented at the Annual Meeting, your signed proxy card
gives authority to W. J. Sanders III, our Chief Executive Officer, or
Thomas M. McCoy, our Senior Vice President, General Counsel, Secretary
and Year 2000 Compliance Officer, to vote on such matters at their
discretion.
17.Q: WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING DUE?
A: All stockholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to Thomas M. McCoy,
Secretary, Advanced Micro Devices, Inc., One AMD Place, Sunnyvale,
California 94088 before November 22, 2000.
3
ITEM 1--ELECTION OF DIRECTORS
Eight directors will be elected at the Annual Meeting. All directors are
elected annually and serve a one-year term until the next Annual Meeting.
The Nominating Committee of the Board of Directors selected, and the Board
of Directors accepted, the following eight persons as nominees for election to
the Board: Mr. W. J. Sanders III, Dr. Friedrich Baur, Mr. Charles M. Blalack,
Dr. R. Gene Brown, Mr. Robert B. Palmer, Mr. Joe L. Roby, Dr. Hector de J.
Ruiz and Dr. Leonard M. Silverman. All of the nominees are currently directors
of AMD.
The Board of Directors expects all nominees named below to be available for
election. If a nominee declines or is unable to act as a director, your proxy
may vote for any substitute nominee proposed by the Board. Your proxy will
vote FOR the election of these nominees, unless you instruct otherwise.
The experience and background of each of the nominees follows.
W. J. Sanders III--Mr. Sanders, 63, has been a director since 1969. Mr.
Sanders is Chairman of the Board and Chief Executive Officer of AMD. Mr.
Sanders co-founded AMD in 1969. He is also a director of Donaldson, Lufkin &
Jenrette, Inc., the parent company of Donaldson, Lufkin & Jenrette Securities
Corporation.
Dr. Friedrich Baur--Dr. Baur, 72, has been a director since 1994. Dr. Baur
has been President and Managing Partner of MST Beteiligungs und
Unternehmensberatungs GmbH, a German consulting firm, since 1990. Beginning in
1953, Dr. Baur held a variety of positions of increasing responsibility with
Siemens AG, retiring in 1982 as Executive Vice President and a Managing
Director. He also represented Siemens AG on the Board of Directors of AMD from
1978 until 1982. From 1982 to 1990, Dr. Baur was Chairman of the Board of
Zahnradfabrik Friedrichshafen AG.
Charles M. Blalack--Mr. Blalack, 73, has been a director since 1989. Mr.
Blalack is Chairman of the Board and Chief Executive Officer of Blalack and
Company, a registered investment advisor, and has been since 1969. From 1970
until 1991, Mr. Blalack was Chief Executive Officer of Blalack-Loop, Inc., an
investment banking firm and member of the National Association of Securities
Dealers. Prior to 1970, he was founder, Chairman and Chief Executive Officer
of BW & Associates, an investment banking firm and member of the New York
Stock Exchange. Mr. Blalack was a member of the Board of Directors of
Monolithic Memories, Inc. until it was acquired by AMD in 1987.
Dr. R. Gene Brown--Dr. Brown, 67, has been a director since 1969. Dr. Brown
is a private investor and financial and management consultant. Currently, he
is a director of Hagler Bailly, Inc. and has been since 1998. Dr. Brown was a
non-employee Managing Director of Putnam, Hayes & Bartlett, Inc., an economic
and management consulting firm, from 1975 to 1998, when it was acquired by
Hagler Bailly, Inc. From 1961 to 1968, Dr. Brown was a full-time professor in
the graduate schools of business at Harvard University and then Stanford
University. From 1968 to 1974, Dr. Brown was Vice President of Corporate
Development for Syntex Corporation, and from 1974 to 1976, Dr. Brown was
President of Berkeley BioEngineering.
Robert B. Palmer--Mr. Palmer, 59, has been a director since 1999. Mr. Palmer
was the Chairman and Chief Executive Officer of Digital Equipment Corporation
(Digital), and negotiated the 1998 merger of Digital with Compaq Corporation.
Mr. Palmer was named Chairman of the Board of Digital in May 1995, and was
appointed Chief Executive Officer and President of Digital in October 1992.
From 1990 to 1992, Mr. Palmer served as Vice President, Manufacturing and
Logistics and Vice President, Manufacturing and Logistics and Component
Engineering. After joining Digital in 1985, from 1986 to 1990, Mr. Palmer held
the positions of Vice President, Semiconductor Operations and Vice President,
Semiconductor and Interconnect Technology. Before Digital, Mr. Palmer was
Executive Vice President of Semiconductor Operations at United Technologies
Corporation (UTC), joining UTC in 1980 when it acquired Mostek Corporation,
where he was a member of the founding team in 1969. Mr. Palmer is on the Board
of Directors of the Cooper Institute for Aerobic Research, a non-profit
preventative medicine research and education organization.
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Dr. Hector de J. Ruiz--Dr. Ruiz, 54, has been a director since February
2000. Dr. Ruiz joined AMD as President and Chief Operating Officer in January
2000. Before joining AMD, Dr. Ruiz had served as President of Motorola, Inc.'s
Semiconductor Products Sector since May 1997. From 1991 to 1994, Dr. Ruiz was
Senior Vice President and General Manager of Motorola's paging and messaging
businesses, and in 1996 became Executive Vice President and General Manager of
those businesses. Dr. Ruiz joined Motorola in 1977, and from 1977 to 1991, he
held the positions of Operations Manager, Vice President of MOS Wafer
Processing, Vice President of the Memory Products Division, Corporate Vice
President and General Manager of Integrated Circuit Wafer Manufacturing,
Corporate Vice President and Assistant General Manager, Microprocessor
Products Group, Corporate Vice President and Director of Technology and Senior
Vice President. Before joining Motorola, Dr. Ruiz worked at Texas Instruments,
Inc. from 1972 to 1977. Dr. Ruiz is a member of the Board of Directors of
Darden Restaurants, Inc.
Joe L. Roby--Mr. Roby, 60, has been a director since 1991. Mr. Roby is the
President, Chief Executive Officer and a director of Donaldson, Lufkin &
Jenrette, Inc. (DLJ), a diversified financial services company and the parent
company of Donaldson, Lufkin & Jenrette Securities Corporation. Mr. Roby has
been a member of the Board of Directors of DLJ since 1989. He was appointed
President of DLJ in February 1996 and Chief Executive Officer in February
1998. Mr. Roby served as the Chief Operating Officer of DLJ from November 1995
until February 1998. Previously, Mr. Roby was the Chairman of the Banking
Group of Donaldson, Lufkin & Jenrette Securities Corporation, a position he
had held since 1989. Mr. Roby is a member of the Board of Directors of Sybron
International Corporation.
Dr. Leonard M. Silverman--Dr. Silverman, 60, has been a director since 1994.
Dr. Silverman is Dean of the School of Engineering of the University of
Southern California, and has held that position since 1984. He was elected to
the National Academy of Engineering in 1988 and is a Fellow of the Institute
of Electrical and Electronic Engineers. Dr. Silverman served on the Board of
Directors of Tandon Corporation from 1988 to 1993. Dr. Silverman is also a
member of the Board of Directors of Diodes, Inc. and Netter Digital
Entertainment, Inc.
Your Board of Directors unanimously recommends that you vote "FOR" the
proposed slate of directors for the current year. Unless you indicate
otherwise, your proxy will vote "FOR" the proposed nominees.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held eight regularly scheduled and special meetings
during the 1999 fiscal year. All Directors attended at least 75% of the
meetings of the Board of Directors and of the committees on which they served
during 1999. The Board has three permanent committees: the Audit Committee,
the Nominating Committee and the Compensation Committee. The members of the
committees are appointed by the Board annually.
Audit Committee. The Audit Committee consists of Dr. R. Gene Brown, as
Chair, Mr. Robert B. Palmer and Mr. Charles M. Blalack, each a non-employee
director. The Audit Committee held five meetings during 1999. The Audit
Committee reviews our accounting policies, internal controls, financial
reporting practices, contingent risks and risk management strategies and
plans, including litigation issues, and the services and fees of independent
auditors. In connection with these reviews, the Audit Committee meets alone
with our financial and legal personnel, and with our independent auditors, who
have free access to the Audit Committee at any time. The director of our
Internal Control Department reports directly to the Chair of the Audit
Committee and serves a staff function for the Audit Committee. The Audit
Committee recommends the selection of the independent auditors to serve the
following year in examining our accounts. The Audit Committee also annually
reviews the independence of the independent auditors as a factor in these
recommendations.
Nominating Committee. The Nominating Committee consists of Mr. W. J. Sanders
III, as Chair, Mr. Charles M. Blalack, Dr. R. Gene Brown, Mr. Robert B. Palmer
and Mr. Joe L. Roby. The Nominating Committee
5
met once during 1999 to consider nominees for the 1999 Annual Meeting. If you
wish to submit names of prospective nominees for consideration by the
Nominating Committee you should do so in writing to our Corporate Secretary
(nomination procedures are discussed in greater detail in our bylaws which
will be provided to you upon written request).
Compensation Committee. The Compensation Committee consists of Mr. Charles
M. Blalack, as Chair, Dr. R. Gene Brown and Dr. Leonard M. Silverman, each a
non-employee director. The Compensation Committee recommends to the Board
proposed equity incentive plans, determines equity compensation for the Chief
Executive Officer and other executive officers, provides oversight of the
salaries of executive officers as determined by the Chief Executive Officer,
adopts executive bonus plans and grants equity awards to certain other
employees. The Chief Executive Officer and Senior Vice President, Human
Resources make recommendations to the Compensation Committee on the equity
compensation of executive officers other than themselves. During 1999, the
Compensation Committee met 11 times.
DIRECTORS' COMPENSATION AND BENEFITS
In 1999, we paid each director who was not an employee of AMD an annual fee
of $25,000, a fee of $1,500 for attendance at each regular or special meeting
of the Board, and a fee of $1,000 for attendance at each meeting of each
committee (other than the Nominating Committee) on which they served. In
addition, we paid the Chair of the Audit Committee an annual fee of $20,000
for service in that capacity, and we paid the Chair of the Compensation
Committee an annual fee of $4,000 for service in that capacity. We also
reimburse reasonable out-of-pocket expenses incurred by directors in
connection with attending meetings and performing other Board-related services
for AMD, and, on occasion, travel expenses of their spouses.
Under a non-discretionary formula approved by the stockholders, we grant
options to purchase 15,000 shares of common stock to non-employee directors on
their initial election to the Board. These options vest on July 15 of the
first, second, third and fourth calendar years following election in the
following amounts, respectively: 6,000, 4,500, 3,000 and 1,500. If the
director remains on the Board, we automatically grant supplemental options to
purchase 5,000 shares of common stock on each re-election. Approximately one-
third of these options vest on July 15 of each of the second, third and fourth
calendar years following re-election. The exercise price of each option is the
fair market value on the date of grant. The options expire on the earlier of
ten years plus one day from the grant date or twelve months following
termination of a director's service on the Board.
Any non-employee director may elect to defer receipt of all or a portion of
his annual fees and meeting fees, but may not defer less than $5,000. We
credit deferred amounts plus interest to an account for record-keeping
purposes, and we pay cash payments in a lump sum or in installments over a
period of years, as elected by the director. Except in the case of the
director's death or disability, payments commence upon the latest of the
director's tenth anniversary of his first deferral, age 55, or upon retirement
from the Board, but in no event later than age 70. The aggregate amount of
retirement payments equals the director's deferred fees plus the accumulation
of interest based on the annual dividend interest rate for the individual
insurance policy on the director's life. In the event of the director's death,
his beneficiary will receive the value of his account plus, in certain cases,
a supplemental death benefit of up to ten times the average annual amount of
his deferred fees. During 1999, Dr. Brown deferred fees in the amount of
$20,000 pursuant to this program. In addition, in lieu of his annual fee, Dr.
Brown used an automobile provided by us, valued at $22,548, which is taxable
to him. We also provided Dr. Brown with family medical and dental insurance
benefits, which are valued at $57,553 and are also taxable to him.
6
PRINCIPAL STOCKHOLDERS
The following table shows each person or entity we know to be the beneficial
owner of more than five percent of our common stock as of February 28, 2000.
Name and Address of Percent
Beneficial Owner Amount and Nature of Beneficial Ownership of Class
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The Capital Research and
Management Company(1).. 11,810,130 7.9%
333 South Hope Street (sole dispositive power as to all shares)
Los Angeles, CA 90071
UBS AG(2)............... 11,140,744 10.7%
Bahnhofstrasse 45 (sole voting power and shared dispositive power as to all shares)
8021, Zurich,
Switzerland
Friess Associates,
Inc.(3)................ 7,969,000 5.4%
350 E. Broadway (sole voting and dispositive power as to all shares)
Jackson, WY 83001
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(1) This information is based on Amendment No. 3 to the Schedule 13G filed with
the Securities and Exchange Commission (SEC) on February 14, 2000, by
Capital Research and Management Co. (Capital), a registered Investment
Advisor. Capital is deemed to be the beneficial owner of 11,810,130 shares
as a result of acting as an investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of 1940.
Shares reported by Capital include 2,060,130 shares resulting from the
assumed conversion of $76,225,000 principal amount of the Company's 6.00%
Convertible Subordinate Notes due 2005.
(2) This information is based on Amendment No. 1 to the Schedule 13G filed with
the SEC on February 17, 2000, by UBS AG and Brinson Partners, Inc. (BPI).
UBS AG is classified as a Bank and BPI is a registered Investment Advisor.
BPI is an indirect wholly-owned subsidiary of UBS AG. UBS AG reported
indirect beneficial holdings of our stock by reason of its ownership of BPI
and UBS (USA) Inc., a parent holding company of BPI. BPI reported sole
voting power and shared dispositive power as to 9,013,550 shares. BPI is
located at 209 South LaSalle, Chicago, IL 60604. The percentage of
outstanding shares beneficially owned by UBS AG includes 8.7% beneficially
owned by BPI.
(3) This information is based on the Schedule 13G filed with the SEC on January
12, 2000, by Friess Associates, Inc. Friess Associates, Inc. is an
Investment Advisor.
7
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the number of shares of our common stock beneficially
owned as of February 28, 2000, by our directors, the nominees for election as
directors, by each of our executive officers listed in the Summary
Compensation Table, below, and by all of our directors and executive officers
as a group. Except as otherwise indicated, each person has sole investment and
voting powers with respect to the shares shown as beneficially owned.
Ownership information is based upon information provided by the individuals.
Amount and Nature of Percent
Name Beneficial Ownership(1) of Class
- ---- ----------------------- --------
W. J. Sanders III............................ 1,930,281(2) 1.27%
Dr. Friedrich Baur........................... 7,534(3) *
Charles M. Blalack........................... 24,667(4) *
Dr. R. Gene Brown............................ 46,891(5) *
Robert B. Palmer............................. 0 *
Richard Previte.............................. 704,837(6) *
Joe L. Roby.................................. 40,467(7) *
Dr. Hector de J. Ruiz........................ 1,000(8) *
Dr. Leonard M. Silverman..................... 16,667(9) *
Robert R. Herb(10)........................... 126,000(11) *
Dr. William T. Siegle(12).................... 51,182(13) *
Thomas M. McCoy(14).......................... 113,490(15) *
All directors and executive officers as a
group (17 persons).......................... 4,016,031(16) 2.64%
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* Less than one percent.
(1) Some of the individuals may share voting power with regard to the
listed shares with their spouses.
(2) Includes 1,800,000 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(3) Includes 5,867 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(4) Includes 22,667 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(5) Includes 19,667 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(6) Includes 637,500 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(7) Includes 27,667 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(8) Does not include 1,000,000 shares subject to options, with 250,000
shares exercisable in January 2001, 2002, 2003 and 2004.
(9) Includes 16,667 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(10) Mr. Herb, 38, is Senior Vice President and Chief Sales and Marketing
Officer of AMD.
(11) Includes 126,000 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(12) Dr. Siegle, 61, is Senior Vice President, Technology and Manufacturing
Operations, Chief Scientist of AMD.
(13) Includes 35,750 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(14) Mr. McCoy, 49, is Senior Vice President, General Counsel, Secretary and
Year 2000 Compliance Officer of AMD.
(15) Includes 105,000 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
(16) Includes 3,673,635 shares subject to options that are exercisable on
February 28, 2000 or become exercisable within 60 days thereafter.
8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors, our Section 16 officers and any persons holding more than ten
percent of our common stock to report to the Securities and Exchange
Commission and the New York Stock Exchange their initial ownership of our
stock and any changes in that ownership. No person holds more than ten percent
of our common stock. We believe that during fiscal year 1999, our directors
and Section 16 officers filed all Section 16(a) reports on a timely basis. In
making this statement, we have relied upon the written representations of our
directors and Section 16 officers.
EXECUTIVE COMPENSATION
The following table shows compensation information for our Chief Executive
Officer and the four other most highly paid executive officers of the Company.
SUMMARY COMPENSATION TABLE (1997-1999)
Annual Compensation Long-Term Compensation Awards
--------------------------------------------- ---------------------------------------
Securities
Other Annual Restricted Underlying All Other
Name and Principal Position Year Salary Bonus(1) Compensation Stock Awards Options Compensation(2)
- --------------------------- ---- ---------- ---------- ------------ ------------ ---------- ---------------
W. J. Sanders III........ 1999 $1,000,000 $2,000,000 $257,719(4) $ 0 0 $541,777
Chairman and Chief 1998 $1,000,000 $ 12,167(3) $274,427(4) $ 0 0 $516,503
Executive Officer 1997 $1,000,000 $ 617,817(3) $256,928(4) $ 0 0 $472,812
Richard Previte.......... 1999 $ 785,155 $ 500,000 $ 0 $ 0 0 $ 41,336
Vice Chairman 1998 $ 769,401 $ 9,078(5) $ 0 $ 0 160,000 $ 40,114
1997 $ 757,477 $ 8,068(5) $ 0 $ 0 100,000 $ 30,843
Robert R. Herb........... 1999 $ 393,750 $ 512,813 $ 0 $ 0 150,000 $ 15,253
Senior Vice President
and 1998 $ 361,298 $ 379,483 $ 55,701(6) $ 0 250,900 $ 8,974
Chief Sales and 1997 $ 226,250 $ 2,177 $141,893(6) $ 0 102,000 $ 6,974
Marketing Officer
William T. Siegle........ 1999 $ 385,000 $ 349,300 $ 0 $ 0 108,000 $ 22,576
Senior Vice President, 1998 $ 366,442 $ 148,745 $ 0 $ 0 100,000 $ 18,743
Technology and 1997 $ 291,077 $ 7,573 $ 0 $ 0 20,000 $ 14,319
Manufacturing
Operations, Chief
Scientist
Thomas M. McCoy.......... 1999 $ 418,000(7) $ 226,000 $ 0 $ 0 112,500 $ 12,247
Senior Vice President, 1998 $ 348,800 $ 4,095 $ 0 $ 0 50,000 $ 12,363
General Counsel,
Secretary 1997 $ 333,539 $ 166,626 $ 0 $ 0 45,000 $ 12,124
and Year 2000 Compliance
Officer
- --------
(1) Includes cash profit sharing in the following amounts for Messrs.
Sanders, Previte, Herb, Siegle and McCoy: for 1998, $12,167, $9,078,
$4,483, $4,370 and $4,095; for 1997, $10,371, $8,068, $2,177, $2,971,
and $3,410.
(2) Includes for 1999, 1998 and 1997 for Mr. Sanders, pursuant to his
agreement, $400,000 in deferred retirement compensation for each year
and $93,697, $64,943 and $23,000 as a deferred cost of living salary
adjustment. Includes for 1999 for Messrs. Sanders, Previte, Herb, Siegle
and McCoy, our matching contributions to our 401(k) Plan in the amounts
of $2,400, $2,400, $2,800, $2,400 and $2,400, our matching contributions
to the Executive Savings Plan (the ESP) in the amounts of $15,518,
$11,444, $4,383, $4,219 and $0, imputed income from term life insurance
in the amounts of $3,881, $4,251, $611, $1,691 and $886 and premiums
paid for individual insurance policies in the amount of $26,282,
$23,241, $7,459, $14,266 and $8,962. Includes for 1998 for Messrs.
Sanders, Previte, Herb, Siegle and McCoy, our matching contributions to
our 401(k) Plan in the amounts of $2,400, $2,400, $2,400, $2,400 and
$2,400, our matching contributions to the ESP in the amounts of $13,574,
$8,928, $2,616, $3,113 and $0, imputed income from
9
term life insurance in the amounts of $9,304, $5,546, $733, $2,413 and
$1,001 and premiums paid for individual insurance policies in the amount of
$26,282, $23,241, $3,225, $10,817 and $8,962. Includes for 1997 for Messrs.
Sanders, Previte, Herb, Siegle and McCoy, the Company's matching
contributions to the Company's 401(K) Plan in the amounts of $2,250,
$2,250, $2,250, $2,250 and $2,250, respectively; the Company's matching
contributions to the ESP in the amounts of $12,600, $0, $1,013, $1,961 and
$0, respectively; imputed income from the term life insurance provided by
the Company in the amounts of $8,680, $5,352, $486, $1,774 and $912,
respectively; and premiums paid by the Company for individual insurance
policies in the amount of $26,282, $23,241, $3,225 $8,334 and $8,962,
respectively.
(3) No bonus was earned for 1998 or 1997. This column includes cash profit
sharing for 1998 and 1997. (See note 1.) In 1997, pursuant to the terms of
Mr. Sanders' employment agreement, $607,446 was paid from the bonus
carried forward from 1995. No additional carryover amount currently
exists.
(4) Includes for 1999, 1998 and 1997, $115,298, $113,782, and $104,178, of in-
kind compensation in the form of company provided vehicles; and $79,754,
$96,061 and $78,176, reflecting the cost of providing physical security
services.
(5) No bonus was earned for 1998 or 1997. This column includes cash profit
sharing for 1998 and 1997. (See note 1.)
(6) Includes for 1998, $36,943 of relocation assistance and $17,458 of in-kind
compensation in the form of a company provided vehicle. Includes for 1997,
$128,789 of relocation assistance.
(7) Includes $20,000 for loan forgiveness and a $38,000 retention payment.
1999 OPTION GRANTS
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise For Option Term(2)
Options Employees in Price Per Expiration ------------------------------
Name Granted(1) Fiscal Year Share Date 0% 5% 10%
---- ---------- ------------ --------- ---------- -------- ---------- ----------
W. J. Sanders III....... 0 0% $ N/A $ N/A $ 0 $ 0 $ 0
Richard Previte......... 0 0% $ N/A $ N/A $ 0 $ 0 $ 0
Robert R. Herb.......... 100,000 2.05% $16.38 4/28/09 $ 0 $1,030,129 $2,610,550
50,000 1.03% $18.50 8/12/09 $ 0 $ 581,728 $1,474,212
William T. Siegle....... 50,000 1.03% $16.38 4/28/09 $ 0 $ 515,065 $1,305,275
20,000 0.41% $ 0.01 4/28/09 $327,400 $ 533,426 $ 849,510
38,000 0.78% $18.50 8/12/09 $ 0 $ 442,113 $1,120,401
Thomas M. McCoy......... 50,000 1.03% $16.38 4/28/09 $ 0.00 $ 515,065 $1,305,275
25,000 0.51% $16.38 4/28/09 $ 0.00 $ 257,532 $ 652,638
37,500 0.77% $18.50 8/12/09 $ 0.00 $ 436,296 $1,105,659
- --------
(1) For all optionees: Each option has a ten-year term. Each option is subject
to earlier termination upon the optionee's termination of employment,
death or disability. The exercise price may be paid in cash or in shares.
Withholding taxes due on exercise may be paid in cash, with previously
owned shares, or by having shares withheld. 50,000 shares of Mr. Herb's
options vest in July 2000, 2002 and 2003. Dr. Siegle's shares vest as
follows: 62,000 shares in July 2000; 10,000 shares in July 2001; 16,000
shares in July 2002; and 20,000 shares with an exercise price of $.01 vest
in January 2004 and vesting is accelerated if certain performance criteria
are met. Mr. McCoy's shares vest as follows: 25,000 shares in July 2000
and 2001; 12,500 in July 2000 and 2001; and 37,500 shares in July 2000.
Upon an optionee's termination of employment, options may be exercised
only to the extent exercisable on the date of such termination of
employment. Upon an optionee's death or disability, certain options that
vest during the year of death or disability may become exercisable.
Options may also become fully exercisable upon a change in control of AMD
as that term is defined under AMD's stock incentive plans or in accordance
with an optionee's management continuity agreement. See the discussion
under "Employment Agreements" and "Change in Control Arrangements."
(2) The 0%, 5% and 10% assumed rates of annual compound stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent our estimate or projection of future
prices of our common stock.
10
AGGREGATED OPTION EXERCISES IN 1999
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Number Underlying Unexercised In-The-Money
of Shares Options at 12/26/99 Options at 12/26/99(1)
Acquired on Value ----------------------------- -----------------------------
Name Exercise Realized(1) (Exercisable) (Unexercisable) (Exercisable) (Unexercisable)
---- ----------- ----------- ------------- --------------- ------------- ---------------
W. J. Sanders III....... 0 $ 0 2,300,000 900,000 $30,373,000 $12,492,000
Richard Previte......... 11,317 $250,332 645,550 171,317 $ 3,653,413 $ 2,129,093
Robert R. Herb.......... 10,000 $318,700 120,924 399,882 $ 1,180,081 $ 3,674,046
William T. Siegle....... 0 $ 0 55,625 214,625 $ 635,519 $ 2,348,009
Thomas M. McCoy......... 5,658 $125,155 135,000 168,158 $ 296,400 $ 1,504,557
- --------
(1) Value for these purposes is based solely on the difference between
market value of underlying shares on the applicable date (i.e., date of
exercise or fiscal year-end) and the exercise price of options.
Employment Agreements
Chairman's Employment Agreement. In 1996, we entered into an employment
agreement with Mr. Sanders that expires December 31, 2003. The agreement
provides for annual base compensation to Mr. Sanders of $1 million through
2001, $500,000 in 2002 and $350,000 in 2003, with certain deferred adjustments
for cost of living increases. The agreement also provides for an annual
incentive bonus equal to 0.6% of our adjusted operating profit (as defined in
the agreement) in excess of 20% of adjusted operating profits for the
preceding year for each year through 2001. The annual bonus payment is capped
at $5 million, with any excess carried over to years where the cap is not
satisfied. Mr. Sanders is also eligible to receive a discretionary bonus, in
an amount determined by the Compensation Committee. Under the agreement, we
granted Mr. Sanders an option in 1996 to purchase 2,500,000 shares of our
common stock with an exercise price equal to the fair market value of our
common stock on the date of the grant with time-based and performance-based
vesting criteria. 1,600,000 of these options were vested as of February 28,
2000.
If we terminate or constructively terminate Mr. Sanders' employment before
the agreement expires, Mr. Sanders will receive his salary through the later
of December 31, 2002 or one year following termination, his bonus for the year
of termination and for the year following his termination, vesting of all
time-based options and vesting of time-based performance-accelerated options
for the year of termination and for the year following termination (provided
the performance milestones are satisfied within those periods). Mr. Sanders
will receive a portion of these benefits if his employment terminates by
reason of death or disability.
If Mr. Sanders' employment terminates following a Change in Control (as
defined on p. 13, below), he will receive:
. The greater of the salary payable for the remaining term of the
agreement or three times his base salary,
. Bonus payments equal to the average of the two highest annual bonuses
paid during the past five years plus any difference between the amount
paid and any bonus amount that would otherwise have been payable to Mr.
Sanders for the year in which the termination occurred and the following
year,
. Vesting of all time-based options,
. Vesting of time-based performance-accelerated options if the performance
milestones are satisfied on the basis of the acquisition price or if the
options would have vested in the year of such Change in Control, and
. An additional payment to reimburse him for federal excise taxes (and
taxes on those taxes).
Under the agreement, we accrue $400,000 per year (with 9% interest) in
deferred retirement compensation, payable to Mr. Sanders if he is Chief
Executive Officer on September 12, 2001. This $2 million (plus interest) will
be paid to Mr. Sanders in a manner that ensures that it is deductible under
Section 162(m) of the Internal Revenue Code of 1986 (the Code). Following the
termination or constructive termination of Mr. Sanders' employment by us other
than for cause, retirement deferrals will accelerate.
11
President and Chief Operating Officer's Employment Agreement. In January
2000, we entered into an employment agreement with Dr. Ruiz that provides for
an initial annual base compensation of $750,000 and an annual incentive bonus
equal to 0.3% of our adjusted operating profit in excess of 20% of adjusted
operating profits for the preceding year. The annual bonus is capped at $5
million. For 2000, Dr. Ruiz' bonus will be no less than $500,000, or if
greater, 0.3% of adjusted operating profit for 2000. Under the agreement, we
granted Dr. Ruiz an option to purchase 1,000,000 shares of our common stock
with an exercise price equal to the fair market value on the date of grant.
Beginning in 2001, Dr. Ruiz will be eligible for base compensation increases
and entitled to annual grants of options to purchase 250,000 shares of common
stock.
In addition, under the agreement, we will pay Dr. Ruiz a retirement benefit
to replace the retirement benefit that he forfeited at the time he joined AMD.
The retirement benefit will be paid following the later of his termination of
employment or his attainment of age 57. In the case of his voluntary
termination or his termination for cause before age 55, no benefits will be
payable. We will pay all federal and state income or employment taxes on this
retirement benefit amount. Should Dr. Ruiz forfeit any of his vested stock
option gains from his former employer, we will reimburse him for any forfeited
gains (not to exceed the aggregate spread on shares subject to the stock
option as of the date he joined AMD). In the event that Dr. Ruiz voluntarily
leaves or he is terminated for cause within two years of joining AMD, he will
be required to repay the full amount of this reimbursement.
In the event we terminate Dr. Ruiz without cause, we will pay Dr. Ruiz a
lump sum severance payment equal to one year of his current annual base salary
and accelerate the vesting of the initial option grant by one year. In the
event that Dr. Ruiz resigns before 2002 because the Board of Directors has
determined that he will not become Chief Executive Officer of AMD following
our 2002 Annual Meeting, he will receive a lump sum severance payment equal to
two years of his current annual base salary and we will accelerate the vesting
of his initial option by two years. In the event of a Change in Control (as
defined on p. 13, below), if we terminate Dr. Ruiz' employment without cause
or he resigns due to any diminution or adverse change in the circumstances of
his employment, he will receive a lump sum severance payment equal to three
years of his current annual base salary, the average of his two highest
bonuses in the past five years and full acceleration of all stock options held
by him at the time of termination. We will pay Dr. Ruiz an additional payment
to reimburse him for federal excise taxes (and taxes on those taxes).
Vice Chairman's Employment Agreement. In 1999, we entered into an employment
agreement with Mr. Previte that provides for annual base compensation of
$770,340, increased in 1999 and 2000 by a Consumer Price Index percentage,
through April 30, 2000, and a bonus payment for 1999 equal to 0.3% of our
adjusted operating profits. Under the agreement, on January 31, 2000, Mr.
Previte began a paid leave of absence of one year. If we terminate Mr.
Previte's employment before January 31, 2001, other than for cause, Mr.
Previte will receive his base compensation, benefits and continued vesting of
options through January 31, 2001. During his leave of absence, Mr. Previte
will be available to provide limited services to us at the request of the
Chief Executive Officer. If we terminate Mr. Previte's employment for cause,
or if Mr. Previte competes with the Company, all rights to compensation,
benefits and continued vesting of stock options terminate. Mr. Previte will
serve as Vice Chairman until the 2000 Annual Meeting. He will not stand for
re-election as a director at the 2000 Annual Meeting.
12
Change in Control Arrangements
Management Continuity Agreements. We have entered into management continuity
agreements with each of our executive officers, except Mr. Sanders and Dr.
Ruiz, designed to ensure their continued services in the event of a change in
control. Mr. Sanders' employment agreement supersedes his management
continuity agreement and Dr. Ruiz' employment agreement addresses a change of
control. Mr. Sanders' and Dr. Ruiz' employment agreements are discussed in
this proxy statement in the section entitled, "Employment Agreements,"
beginning on p.11, above.
For purposes of the management continuity agreements, a change in control
includes any change of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended. A change in control is
conclusively presumed to have occurred on:
. Acquisition by any person, other than AMD, or any employee benefit plan
of ours, of beneficial ownership of more than 20% (35% in the case of
Mr. Sanders' and Dr. Ruiz' employment agreements and in Mr. Herb's
management continuity agreement) of the combined voting power of our
then outstanding securities.
. A change of the majority of the Board of Directors during any two
consecutive years, unless certain conditions of Board approval are met.
. A determination by certain members of the Board within one year after an
event that such event constitutes a change in control.
The management continuity agreements provide that, in the event of a change
in control, we will reimburse the executive officer for any federal excise
taxes (and taxes on those taxes) payable as a result of benefits received from
us. The agreements provide that, if within two years after a change in control
the executive officer's employment is terminated by us or the executive
officer is constructively discharged, the executive officer will receive:
. A severance benefit equal to three times the sum of his rate of base
compensation plus the average of his two highest bonuses in the last
five years,
. Payment of his accrued bonus,
. Twelve months' continuation of other incidental benefits, and
. Full and immediate vesting of all unvested stock options, SARs and
restricted stock awards.
Mr. Herb's management continuity agreement provides that he will receive
these benefits upon termination of his employment by him or the Company
following a change in control.
Vesting of Stock Options. All stock options granted and restricted stock
awarded under our stock incentive plans become fully vested on termination of
employment (other than for misconduct) or constructive termination within one
year following a change of control, as defined in the plans.
13
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Roby, director, is the President, Chief Executive Officer and a director
of Donaldson, Lufkin & Jenrette, Inc. (DLJ). In 1999, Donaldson, Lufkin &
Jenrette Securities Corporation, a wholly-owned subsidiary of DLJ, provided
investment banking services to us and will provide services to us in 2000. W.
J. Sanders III, Chairman of the Board of AMD, is a director of DLJ.
In March 1997, Mr. McCoy borrowed $450,000 from us pursuant to a promissory
note secured by a pledge of stock and a deed of trust on real property. Mr.
McCoy borrowed an additional $50,000 in April 1997 and $20,000 in May 1998. In
January 1999, the $20,000 loan was forgiven by AMD and the remaining loans
were restructured to extend the term to March 2002, change the interest rate
to 4.57%, and require payment in four annual installments. The largest amount
owed under the loans during 1999 was $525,521, and the aggregate amount
outstanding under the loans as of February 28, 2000 was $504,798.
In connection with Mr. Francis P. Barton's initial employment by AMD as
Chief Financial Officer in 1998, we loaned him $200,000 pursuant to a
promissory note bearing interest at 5.43%, payable in four annual installments
beginning September 1, 1999, secured by a deed of trust on real property. The
largest amount owed under the loan during 1999 was $211,870, and the aggregate
amount outstanding under the loan as of February 28, 2000 was $154,254.
In January 2000, we loaned $2.5 million to Dr. Ruiz pursuant to a promissory
note bearing interest at 7.75% payable in full on July 26, 2000. The aggregate
amount outstanding under the loan as of February 28, 2000 was $2,521,764.
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following report and
the Performance Graph on page 18 shall not be incorporated by reference into
any such filings, nor shall they be deemed to be soliciting material or deemed
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1999, the Compensation Committee of AMD's Board of Directors
consisted of Mr. Blalack, as Chair, Dr. Brown and Dr. Silverman. The members
of the Compensation Committee are independent non-employee, non-affiliated
directors.
The Committee has overall responsibility for AMD's executive compensation
policies and practices. The Committee's functions include:
. Determining the compensation of the Chief Executive Officer of AMD,
. Reviewing and approving all other executive officers' compensation,
including salary and payments under the annual executive bonus plans, in
each case based in part upon the recommendation of the Chief Executive
Officer and the Senior Vice President, Human Resources of AMD, and
. Granting awards to executive officers and, depending on the size of the
award, to other employees under AMD's equity incentive plans.
Certain officers of AMD, outside counsel and consultants typically attend
meetings of the Committee. No officer of AMD is present during discussions or
deliberations regarding that officer's own compensation. The Committee
administers AMD's 1998 Stock Incentive Plan, 1996 Executive Incentive Plan,
1996 Stock Incentive Plan, 1995 Stock Plan of NexGen, Inc., and 1992 Stock
Incentive Plan.
14
Compensation Philosophy and Policies. The Committee believes that long-term
corporate success, defined as sustained profitable growth, is best achieved in
an environment in which employees have the opportunity to be innovative and
are rewarded appropriately for that innovation. In order to provide a direct
link between corporate performance and compensation which will attract and
retain top-caliber employees, the Committee's compensation philosophy is to
provide total compensation opportunities that are highly competitive with the
pay practices of other industry-leading companies. Our compensation policies
are designed to address a number of objectives, and to both reward financial
performance and motivate executive officers to achieve significant returns for
our stockholders. Our policies rely on two principles. First, a large portion
of executive officers' cash compensation should be at risk and vary depending
upon meeting stated financial objectives. Second, a significant portion of
executive officers' total compensation should be in the form of stock and
other equity incentives.
When establishing salaries, bonus levels, and stock or equity awards for
executive officers, the Committee considers the individual's role, leadership
responsibilities and performance during the past year, and the amount of
compensation paid to executive officers in similar positions at companies that
compete with us for executives. The Committee has retained an outside
compensation consultant to make periodic reviews of competitive data obtained
from other independent consultants. The Committee's determinations take into
account our outside compensation consultant's reviews and the compensation
practices of those high technology companies that compete with us for
executive talent and have annual revenues generally in excess of $1 billion.
Most of these companies are included in the Technology-500 Index used in the
performance graph appearing in this proxy statement.
Because we want to attract and retain top-caliber employees, we typically
set base salary targets at or above the median for this group of companies.
Companies outside the semiconductor industry are selected for inclusion in
this review based upon the extent to which they satisfy a list of selection
criteria, which includes size, growth rates, similar financial performance,
leadership status in their industry, reputation for innovation and the extent
to which they compete with us for executives, not all of which may be
satisfied in any particular case. The Committee has instructed its
compensation consultant to include in its review companies other than those
included in the Technology-500 Index because we compete with them for
executives, depending upon the specific skills required for the position.
The Committee uses comparative data to set compensation targets that will
provide executive officers with compensation that exceeds the average amounts
paid to similar executives in years in which we achieve superior results, and
with compensation below the average of amounts paid to similar executives in
years in which we fail to achieve superior results. However, the Committee
also makes discretionary and subjective determinations of appropriate
compensation amounts to reflect, for example, our philosophy of compensating
executives for the success they achieve in managing specific enterprises. The
Committee places considerable weight upon the recommendations of the Chief
Executive Officer in the case of other executive officers. While decisions
concerning specific 1999 salaries, bonus levels, and stock or equity awards
for individual executive officers were made within this broad framework, and
in light of each executive officer's level of responsibility, performance, and
competitive pay position, the awards were ultimately based upon the
Committee's judgment regarding the individual executive officer's performance,
taking account of whether each particular payment or award would provide an
appropriate reward and incentive for his contribution to the continuation of
our long-term profit performance.
Base Salary. In consultation with members of the Committee, the Chief
Executive Officer reviews annually every other executive officer's base
salary, including those officers who are also directors. When reviewing base
salaries, he considers individual and corporate performance, levels of
responsibility and competitive pay practices. These factors vary from
individual to individual and the Chief Executive Officer does not assign
relative weight or priority to any one factor. In 1999, salary increases for
executive officers were deferred until the quarter following the Company's
return to profitability. Therefore, salary increases for 1999 were not
effective until January 2000.
15
Under Mr. Sanders' employment agreement, the Committee approved a 2.7%
increase to Mr. Sanders' base salary for 1999 as a cost of living adjustment.
This 2.7% adjustment will be deferred. We paid Mr. Sanders a base salary of
$1,000,000 for 1999. The agreement is discussed in more detail in this proxy
statement in the section entitled, "Employment Agreements," on p. 11.
Annual Cash Bonus Incentives. Annual cash bonus incentives allow us to
communicate key corporate goals to all employees and reward employees for
achieving those goals each fiscal year. As one example of these incentives, we
allocate up to 10% of operating profits to a profit sharing program in which
all domestic and U.S. expatriate employees participate. Generally, we pay a
portion of this allocation in cash and contribute a portion to a tax-qualified
deferred profit sharing plan. No profit sharing was paid out under this plan
for 1999. A one-time modified cash profit sharing plan was put in place for
employees at the level of manager and below for the fourth quarter of 1999.
All senior executives with titles of vice president and above, other than
Mr. Sanders, Mr. Previte and Dr. Ruiz, were eligible in 1999 for bonus awards
under the Executive Bonus Plan. The Executive Bonus Plan has a short-term
component and a long-term component. The amount payable under the short-term
component of the Executive Bonus Plan ranges from 0% to 100% of base salary
depending on the executive's level of responsibility. Under the short-term
component, 80% of the targeted bonus is based on AMD's achievement of
predetermined operating income goals beyond a threshold level of operating
income. The remaining 20% of the targeted bonus under the short-term component
is based on the executive's achievement of various group and division goals
developed by the executive's manager. Bonuses under the long-term component of
the Executive Bonus Plan are based on AMD's three-year average return on
equity relative to that of the S&P 500 Index, and on AMD's three-year sales
growth relative to that of the semiconductor industry, as published by
Worldwide Semiconductor Trade Statistics (WSTS). In order for an award to be
paid under the long-term component, we must achieve a threshold level of
performance relative to the S&P 500 and WSTS indexes, which is established by
management, approved by the Committee and reviewed by the Board. The maximum
amount payable under the long-term component is 60% of base salary. Although
none of the eligible and participating executive officers earned an award
under the Executive Bonus Plan in 1999, discretionary bonuses were paid based
on modified Company goals for the second half of the year.
The Committee believes that the Company is in serious competition with high
technology companies to attract and retain top caliber employees both within
and without the semiconductor industry. In fact, during 1999 when members of
senior management resigned, additional responsibilities were added to those
members who remained. The Committee also recognizes that AMD has been under
intense pressure to return to profitability and did so in the fourth quarter
of 1999. In light of these circumstances, the Committee determined it was
appropriate to be flexible in administering cash-based incentive compensation
programs for 1999. Accordingly, the Committee approved additional awards for
exemplary performance and for achieving certain strategic objectives.
Mr. Sanders was awarded $2,000,000 for his leadership and strategic
direction after assuming the role of Chief Operating Officer in July,
successfully leading the Company to fourth quarter profitability and
successfully leading the project to finance and build Fab 30 in Dresden,
Germany. Mr. Previte was awarded $500,000 for the successful completion of the
sale of the Company's programmable logic subsidiary, Vantis Corporation, in
June 1999. Mr. Herb was awarded an additional $375,000 for the successful
achievement of the revenue objectives for AMD-K6(R) and AMD Athlon(TM)
microprocessors for the third and fourth quarters. Dr. Siegle was awarded an
additional $233,800 for accomplishment of strategic manufacturing objectives
and for the successful incorporation of certain additional technology into the
Company's alliance with Motorola in 1999. Mr. McCoy was awarded an additional
$100,000 for his leadership as Year 2000 Compliance Officer, successfully
leading the Company's Year 2000 remediation and transition program. The
Committee believes that the development of these special incentive programs
was a significant contributor to AMD's return to profitability in the fourth
quarter of 1999.
Equity Incentive Awards. A fundamental tenet of AMD's compensation policy is
that significant equity participation creates a vital long-term partnership
between executive officers and other stockholders. As of
16
February 28, 2000, executive officers of AMD owned an aggregate of 298,705
shares of common stock (including restricted shares) and had the right to
acquire an additional 3,581,100 shares of common stock upon the exercise of
employee stock options which are exercisable by April 28, 2000. These
interests, exclusive of other outstanding options, represented in the
aggregate 2.55% of AMD's outstanding capital stock on February 28, 2000. We
intend to continue our strategy of encouraging our executive officers to
become stockholders.
The number of shares of common stock subject to option grants or restricted
stock awards is based on AMD's business plans, the executive's level of
corporate responsibility, individual performance, historical award data, and
competitive practices of high technology companies that compete with us for
executives, with annual revenues generally in excess of $1 billion and
satisfying the other criteria set forth above. In making these grants, the
Committee exercises its discretion and does not assign any relative weight to
one or more of these factors. Further, the Committee generally does not
consider whether an executive has exercised previously granted options. During
1999, executive officers received options to purchase 667,000 shares of common
stock. Mr. Sanders did not receive any equity awards in 1999.
Tax Policy. Section 162(m) of the Code limits deductions for certain
executive compensation in excess of $1 million. Certain types of compensation
are deductible only if performance criteria are specified in detail and are
contingent on stockholder approval of the compensation arrangement. AMD has
endeavored to structure its compensation plans to achieve maximum
deductibility under Section 162(m) with minimal sacrifices in flexibility and
corporate objectives. However, as noted above, because the cash-based
incentive compensation arrangements normally implemented before the end of the
first quarter were revised mid-year, a portion of the payments under such
arrangements will not be deductible under Section 162(m).
While the Committee will consider deductibility under Section 162(m) with
respect to future compensation arrangements with executive officers,
deductibility will not be the sole factor used in ascertaining appropriate
levels or modes of compensation. Since corporate objectives may not always be
consistent with the requirements for full deductibility, it is conceivable
that AMD may enter into compensation arrangements in the future under which
payments are not deductible under Section 162(m).
Conclusion. The Committee believes that long-term stockholder value is
enhanced by corporate and individual performance achievements. Through the
plans and policies described above, a significant portion of AMD's executive
compensation is based on corporate and individual performance, as well as
competitive pay practices. The Committee believes equity compensation, in the
form of stock options and restricted stock, is vital to the long-term success
of AMD. The Committee remains committed to this policy, recognizing the
competitive market for talented executives and that the cyclical nature of
AMD's business may result in highly variable compensation for a particular
time period. Moreover, the Committee believes that AMD's flexibility in
implementing its compensation philosophy in 1999 has played a substantial part
in enabling AMD to retain its key executives and return to profitability in
the fourth quarter of 1999. The Committee believes that long-term stockholder
value was enhanced by the corporate and individual performance achievements of
AMD's executives.
COMPENSATION COMMITTEE
Charles M. Blalack
R. Gene Brown
Leonard M. Silverman
17
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ADVANCED MICRO DEVICES, S&P 500 INDEX AND
TECHNOLOGY-500 INDEX
The following graph shows a five-year comparison of cumulative total return
on our common stock, the S&P 500 Index and the Technology-500 Index from
December 31, 1994 through December 31, 1999. The past performance of our common
stock is no indication of future performance.
[Performance Graph Appears Here]
This graph was plotted using the following data:
Year ending December 31,
--------------------------------------------
1994 1995 1996 1997 1998 1999
---- ------- ------- ------- ------- -------
AMD................................ $100 $ 66.35 $103.55 $ 71.38 $116.62 $116.37
S&P 500 Index...................... $100 $137.58 $169.17 $225.60 $290.08 $351.12
Technology-500 Index............... $100 $144.04 $204.35 $257.68 $445.72 $780.60
18
ITEM 2--RATIFICATION OF INDEPENDENT AUDITORS
Unless you indicate otherwise, your proxy will vote FOR the ratification of
the appointment of Ernst & Young LLP as the independent auditors for the
current year. Ernst & Young LLP has been our independent auditors since our
incorporation in 1969.
Audit services of Ernst & Young LLP during the 1999 fiscal year included the
examination of our consolidated financial statements and services related to
filings with the Securities and Exchange Commission and other regulatory
bodies.
Our Audit Committee meets with Ernst & Young LLP several times a year. At
such times, the Audit Committee reviews both audit and non-audit services
performed by Ernst & Young LLP for the preceding year, as well as the fees
charged for such services. Among other things, the Committee examines the
effect that the performance of non-audit services may have upon the
independence of the auditors.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement if he or she
so desires. He or she will also be available to respond to appropriate
questions from stockholders.
Your Board of Directors unanimously recommends that you vote "FOR" the
ratification of the appointment of Ernst & Young LLP as the independent
auditors for the current year. Unless you indicate otherwise, your proxy will
vote "FOR" ratification.
ITEM 3--APPROVAL OF THE INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER THE ADVANCED MICRO DEVICES, INC. 1996 STOCK INCENTIVE PLAN.
The Company's stockholders are also being asked to approve an amendment to
the Advanced Micro Devices, Inc. 1996 Stock Incentive Plan (the 1996 Plan) to
increase the number of shares authorized for issuance under the 1996 Plan. The
purpose of this amendment is to provide the Company with an additional
7,250,000 shares of common stock that can be awarded to employees, consultants
and advisors of the Company. Management believes that this amendment is in the
best interests of the Company because of the need to provide equity incentives
to attract and retain quality employees and consultants and remain competitive
in the industry.
The purpose of the 1996 Plan is to enable the Company and its affiliates to
recruit and retain capable employees and consultants for the successful
conduct of its business and to provide an additional incentive to officers and
other eligible key employees, consultants and advisors and Outside Directors
upon whom rest major responsibilities for the successful operation and
management of the Company and its affiliates. The 1996 Plan is intended to
enable the Company to attract qualified personnel in a highly competitive
labor market. The Company intends future increases in the value of securities
granted under the 1996 Plan to form part of the compensation for services to
be rendered by such persons in the future.
As of February 28, 2000, approximately 2,268,084 shares were available for
future grants and 18,493,336 shares were subject to outstanding options from
all of our stock incentive plans. The weighted average exercise price and
weighted average remaining term of the outstanding options were $18.41 and
$7.37, respectively.
The stockholders approved the 1996 Plan on April 24, 1996 with an effective
date of February 7, 1996. The Board of Directors approved previous amendments
to the 1996 Plan in October 1996 and in April 1998, and the stockholders
approved these previous amendments on April 24, 1997 and April 30, 1998. The
Board of Directors approved the proposed amendment to the 1996 Plan, to be
voted on at the Annual Meeting, in February 2000. Below is a summary of the
principal provisions of the 1996 Plan and its operation.
19
Summary Description of the 1996 Plan
Number of Shares Subject to the 1996 Plan. The 1996 Plan reserves for
issuance up to 10,200,000 shares of AMD common stock pursuant to the exercise
of options granted under such plan. If the stockholders approve the amendment,
an additional 7,250,000 shares may be issued pursuant to the exercise of
options granted under the 1996 Plan. The number of shares is subject to
adjustment for any future stock dividends, splits, mergers, combinations, or
other changes in capitalization as described in the 1996 Plan. The market
value of the Company's common stock on the New York Stock Exchange as of
February 28, 2000 was $37.75 per share.
Administration and Duration of the 1996 Plan. Authority to administer the
1996 Plan and to grant awards rests with the Board of Directors. The Board has
delegated its authority to grant awards to any employee (including officers
who are members of the Board) to the Compensation Committee. The Board has
also delegated authority to senior management to grant awards covering up to
25,000 shares per year to any employee who is not also an officer or member of
the Board.
The 1996 Plan will terminate on February 7, 2006, but the Board retains the
right to suspend, terminate or amend the 1996 Plan at any time. On termination
of the 1996 Plan, outstanding awards remain in effect until they expire by
their terms, are forfeited or otherwise terminate.
Eligibility for Participation. Options may be granted under the 1996 Plan to
key full- or part-time employees, officers, consultants and advisors of the
Company and its affiliates. The maximum number of shares that may be granted
to an individual under the 1996 Plan is 2,000,000. As of February 28, 2000,
approximately 3,835 persons were eligible to receive options under the 1996
Plan, 986,575 shares had been issued upon the exercise of options under the
1996 Plan, and 8,929,373 shares were subject to outstanding options under the
1996 Plan. As of February 28, 2000, 284,052 shares were available for future
option grants.
Over the term of the 1996 Plan through February 28, 2000, the following
executive officers have been granted the following options to purchase shares
under the 1996 Plan: Mr. Sanders, 2,000,000 shares; Dr. Ruiz, 750,000 shares;
Mr. Previte, 300,000 shares; Mr. Herb, 112,000 shares; Dr. Siegle, 170,000
shares; and Mr. McCoy, 200,000 shares. During this period, the Company's
executive officers as a group have been granted options to purchase an
aggregate of 4,448,500 shares, and all employees as a group (excluding
executive officers) have been granted options to purchase an aggregate of
8,797,776 shares under the 1996 Plan. During this period, the Company's
current directors as a group (excluding executive officers) have been granted
options to purchase 105,000 shares under the 1996 Plan.
Terms of Options. Options granted to employees may be either incentive stock
options (ISOs) which satisfy the requirements of Code Section 422 or
nonstatutory options (NSOs) which are not intended to satisfy such
requirements. Options granted to Outside Directors, consultants and advisors
may only be NSOs.
The exercise price of options granted under the 1996 Plan may not be less
than the fair market value of the Company's common stock on the date of grant.
Payment of the exercise price may be made in cash, by certified check,
promissory note, other shares of the Company's common stock, or through a same
day sale program. In addition, the Board may authorize loans and loan
guarantees for the exercise price. The term of an ISO may not exceed ten
years. The term of an NSO may not exceed ten years plus one day. The Company
did not grant any ISOs in 1999.
Options granted to employees generally are made cumulatively exercisable in
annual installments, although the actual dates of exercise may be modified by
the Board or its delegate so long as the option holder's interest is not
thereby diminished without the option holder's consent. Options may be made
exercisable only under such conditions as the Board or its delegate may
establish, such as if the optionee remains employed until a specified date, or
if specified performance goals have been met. If an optionee's employment
terminates because of misconduct, such option terminates immediately. If an
optionee's employment terminates for any reason other than misconduct, the
option remains exercisable for a fixed period of three months (twelve months
in the case of
20
vice presidents or where employment has terminated because of death or
disability) or a longer period to be fixed by the Board or its delegate up to
the remainder of the option's term. In no case may an option be exercised
after the expiration of the option's term. An option may be exercised by the
optionee or his guardian or legal representative.
Outside Director Option Program. An Outside Director who has not previously
been elected or appointed as a member of the Board will be granted a First
Option for 15,000 shares on his or her election or appointment. First Options
vest in increments of 6,000, 4,500, 3,000 and 1,500 on July 15 of the first,
second, third and fourth calendar year following grant. On the first business
day coincident with or following each annual meeting of the Company's
stockholders at which an Outside Director is re-elected, he or she will
automatically receive an Annual Option for 5,000 shares, vesting in three
increments of 1,667, 1,667 and 1,666 shares on July 15 of the second, third
and fourth calendar year following re-election. Options held by Outside
Directors may be exercised for up to twelve months following termination of
their service on the Board to the extent the options are vested on the date of
termination. Options which are not vested on the date of termination are
canceled. Options held by Outside Directors will become fully vested for
exercise upon a Change of Control. See the section entitled "Acceleration in
Connection with a Change of Control" below.
Acceleration in Connection with a Change of Control. If a participant's
employment is terminated for any reason other than for cause (or, with respect
to certain participants who are executive officers of the Company as defined
in the 1996 Plan, there is a constructive termination of their employment)
within one year after a Change of Control, all options held by such
participant become fully vested. A constructive termination occurs if the
participant resigns because of a diminution or adverse change in his or her
conditions of employment. Options held by Outside Directors become fully
vested upon a Change of Control without regard to termination of their service
as a director. In general, a "Change of Control" will be deemed to have
occurred upon the acquisition of more than 20% of either the then outstanding
shares of AMD common stock or the combined voting power of the Company's then
outstanding securities, a change in two-thirds of the Board of Directors over
a two-year period, certain mergers or corporate transactions in which the
Company is not the surviving entity, or a liquidation of the Company or a sale
of substantially all of the Company's assets. The 1996 Plan Change of Control
provisions are not applicable to options granted to Mr. Sanders or Dr. Ruiz.
Plan Benefits Table. The following table shows in the aggregate the Annual
Options that will be granted to Outside Directors under the 1996 Plan in 2000.
Since all current Outside Directors are incumbent directors, no Outside
Director who is elected at the 2000 Annual Meeting of Stockholders will
receive a First Option. Because future awards to executive officers and
employees of the Company are discretionary and cannot be determined at this
time, the table does not reflect any such awards.
Name and Position Exercise Price (per share) Number of Shares
----------------- ---------------------------------- ----------------
All current directors who
are not executive officers
as a group (6 persons).... Fair market value on date of grant 30,000
Federal Tax Consequences--Nonstatutory Options. No taxable income is
recognized by an optionee upon the grant of an NSO. The optionee generally
will recognize ordinary income in the year in which the option is exercised
equal to the excess of the fair market value of the purchased shares at the
date of exercise over the exercise price, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income which the
optionee may elect to satisfy by having the Company withhold shares from the
shares otherwise due or by delivering a sufficient number of previously owned
shares of the Company's common stock to the Company. On ultimate sale of the
shares, the optionee will generally recognize as capital gain or loss the
difference between the fair market value on the date of exercise and the
ultimate sales price.
Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the grant of an ISO and, except in determining alternative minimum
tax, no taxable income is recognized at the time the ISO is exercised. The
optionee will, however, recognize taxable income or loss in the year in which
the purchased shares are sold or otherwise made the subject of disposition.
21
For federal tax purposes, dispositions of ISOs are divided into two
categories: qualifying and disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other taxable disposition
of such shares is made more than two years after the grant date of the option
and more than one year after the exercise date. If the optionee fails to
satisfy either of these two holding periods prior to the sale or other
disposition of the purchased shares, then a disqualifying disposition will
result.
Upon a qualifying disposition of the shares, the optionee will recognize
mid-term capital gain or long-term capital gain in an amount equal to the
excess of (i) the amount realized upon the sale or other disposition over (ii)
the option price paid for the shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the fair market value of the shares at
the date of exercise (or, if lower, the fair market value of the shares on the
date of disposition) over (ii) the option price paid therefor will be taxable
as ordinary income. Any additional gain recognized upon the disposition will
be a capital gain, and such gain will be mid-term if the shares have been held
for more than one year following exercise of the option and long-term if the
shares have been held for more than eighteen months following exercise of the
option.
Alternative Minimum Tax. The difference between the fair market value of
shares subject to an ISO on the date of exercise and the exercise price of
such shares is an adjustment to income for purposes of the alternative minimum
tax (the AMT). The AMT (imposed to the extent it exceeds the taxpayer's
regular tax) is 26% on the portion of an individual taxpayer's alternative
minimum taxable income that would otherwise be ordinary income (28% in the
case of alternative minimum taxable income in excess of $175,000). A maximum
20% AMT rate applies to the portion of alternative minimum taxable income that
would otherwise be treated as net capital gain. Alternative minimum taxable
income is determined by adjusting regular taxable income for certain items,
increasing that income by certain tax preference items (including the
difference between the fair market value of the shares subject to the ISO on
the date of exercise and the exercise price) and reducing this amount by the
applicable exemption amount ($45,000 in case of a joint return, subject to
reduction under certain circumstances). If a disqualifying disposition of the
shares subject to an ISO occurs in the same calendar year as exercise of the
ISO, there is no AMT adjustment with respect to those shares. Also, upon a
sale of such shares that is a qualifying disposition, alternative minimum
taxable income is reduced in the year of sale by the excess of the fair market
value of the shares subject to the ISO at exercise over the amount paid for
such shares.
Deduction to the Company. The Company will be entitled to an income tax
deduction equal to the amount of ordinary income recognized by the optionee in
connection with the exercise of an NSO. The deduction generally will be
allowed for the taxable year of the Company in which occurs the last day of
the calendar year in which the optionee recognizes ordinary income in
connection with such exercise.
If the optionee makes a disqualifying disposition of the shares purchased on
exercise of an ISO, then the Company will be entitled to an income tax
deduction for the taxable year in which such disposition occurs, equal to the
amount which is taxable to the employee as ordinary income. In no other
instance will the Company be allowed a deduction with respect to the
optionee's disposition of the shares purchased upon exercise of an ISO.
ITEM 4--APPROVAL OF THE ADVANCED MICRO DEVICES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
In February 2000, our Board of Directors adopted the 2000 Employee Stock
Purchase Plan (ESPP) effective February 1, 2001, authorizing 250,000 shares of
our common stock to be issued to employees under the ESPP, subject to
stockholder approval. The ESPP is intended to replace our existing employee
stock purchase plan which had approximately 1,384,196 shares of our common
stock remaining available for issuance as of February 28, 2000. The essential
features of the ESPP, as proposed, are outlined below.
22
Summary Description of the ESPP
Purpose. The purpose of the ESPP, which is intended to qualify under Section
423 of the Code, is to provide our employees (including officers) and
participating subsidiaries with an opportunity to purchase our common stock
through payroll deductions. The Board of Directors believes that equity
participation in the ESPP provides employees at all levels with a greater
incentive to contribute to our success.
Administration. The ESPP will be administered by a committee appointed by
the Board. Offerings under the ESPP will have a duration of three months and
commence on the first business day on or after February 1, May 1, August 1 and
November 1 of each year, unless otherwise specified by the Board of Directors.
Eligibility and Participation. Any employee who is customarily employed for
at least 20 hours per week and more than five months per calendar year by us
or our participating subsidiaries will be eligible to participate in the ESPP.
Employees will become participants in the ESPP by delivering to us a
subscription agreement within a specified period of time prior to the
commencement of each offering period.
No employee who owns 5% or more of the total combined voting power or value
of all classes of shares of our stock or our subsidiaries' stock, including
shares which may be purchased under the ESPP or pursuant to any other options,
will be permitted to purchase shares under the ESPP. In addition, no employee
will be entitled to purchase more than $25,000 worth of shares under the ESPP
in any calendar year based on the fair market value of the shares at the time
the option is granted.
We estimate approximately 6,500 of our current employees will be eligible to
participate in the ESPP. We are not presently able to determine the amount of
benefits which may be received by employees under the ESPP.
Payroll Deductions. The purchase price of the shares will be accumulated by
payroll deductions over each offering period. The deductions may not be
greater than 10% of a participant's compensation, nor less than a minimum
established by the Board or its delegate. Compensation, for purposes of the
ESPP, includes salary, shift differential, lead pay and overtime, but excludes
bonuses, special awards, 50% of commissions, income attributable to option
exercises, reimbursements and allowances. A participant may increase or
decrease his or her rate of payroll deductions once during each offering
period.
All payroll deductions of a participant will be credited to his or her
account under the ESPP and are deposited with our general funds. Such funds
may be used for any corporate purpose. No charges for administrative or other
costs may be made by us against the payroll deductions.
Purchase Price. The price at which shares will be sold under the ESPP is the
lower of 85% of the fair market value of our common stock at the beginning of
the offering period or 85% of the fair market value of our common stock as of
the end of such period.
Number of Shares. The ESPP authorizes 250,000 shares of our common stock for
issuance under the ESPP, subject to stockholder approval.
At the beginning of an offering period, each participant will be granted an
option to purchase up to that number of shares equal to 30% of the
participant's eligible compensation for the preceding offering period divided
by 85% of the fair market value of a share of our common stock at the
beginning of the offering period. Unless the employee's participation is
discontinued, his or her option for the purchase of shares will be exercised
automatically at the end of the offering period at the applicable price. To
the extent an employee's payroll deductions exceed the amount required to
purchase the shares subject to an option, such excess amount is refunded to
the employee at the end of the offering period. To the extent that an
employee's payroll deductions are insufficient to exercise the full number of
shares subject to an option, the remaining portion of the option expires
unexercised. The market value of our common stock on the New York Stock
Exchange as of February 28, 2000 was $37.75 per share.
23
Withdrawal from the ESPP. A participant may terminate his or her interest in
a given offering by withdrawing all of the accumulated payroll deductions
credited to such participant's account at any time prior to the end of the
offering period. The withdrawal of accumulated payroll deductions
automatically terminates the employee's interest in that offering. As soon as
practicable after such withdrawal, the payroll deductions credited to a
participant's account are returned to the participant without interest. A
participant's withdrawal from an offering does not have any effect upon such
participant's eligibility to participate in subsequent offerings under the
ESPP.
Termination of Employment. Termination of a participant's employment for any
reason, including retirement or death or the failure to remain in the
continuous employ of AMD for at least 20 hours per week (except for certain
leaves of absence), cancels his or her participation in the ESPP immediately.
In such event, the payroll deductions credited to the participant's account
will be returned to the participant, or in the case of death, to the person or
persons entitled thereto, without interest.
Changes in Capitalization. In the event of any stock dividend, stock split,
spin-off, recapitalization, merger, consolidation, exchange of shares or other
change in capitalization, the number of shares then subject to an option and
the number of authorized shares remaining available to be sold shall be
increased or decreased appropriately, with such other adjustment as may be
deemed necessary or equitable by the Board, including adjustments to the price
per share.
Transferability. No rights or accumulated payroll deductions of an employee
under the ESPP may be pledged, assigned or transferred for any reason, and any
such attempt may be treated by us as an election to withdraw from the ESPP.
Amendment and Termination of the Plan. The Board of Directors may at any
time amend or terminate the ESPP, except that such termination cannot affect
options previously granted nor may any amendment make any change in an
existing option which adversely affects the rights of any participant without
the participant's consent. No amendment may be made to the ESPP without prior
or subsequent stockholder approval, if stockholder approval would be required
to meet the requirements of Section 423 of the Code or to satisfy the
requirements of a stock exchange on which our shares are listed.
Federal Income Tax Consequences. The ESPP, and the right of participants to
make purchases thereunder, is intended to qualify as an "employee stock
purchase plan" under the provisions of Section 423 of the Code. Under these
provisions, no income will be taxable to a participant at the time of grant of
the option or purchase of shares. We will be entitled to a deduction for
amounts taxed as ordinary income to a participant only to the extent that
ordinary income must be reported upon disposition of shares by the participant
before the expiration of the holding period described below. A participant may
become liable for tax upon disposition of the shares acquired, as summarized
below.
1. If the shares are sold or disposed of, including by way of gift, at least
two years after the date of the beginning of the offering period the
participant will recognize ordinary income in an amount equal to the lesser of
(a) the excess of the value of the shares at the time of such disposition over
the purchase price of the shares or (b) 15% of the value of the shares at the
beginning of the offering period. Any further gain upon such disposition will
be treated as long-term capital gain. If the sale price is less than the
purchase price, there is no ordinary income and the participant has a capital
loss for the difference.
2. If the shares are sold or disposed of, including by way of gift or
exchange, before the expiration of the two-year period described above, the
excess of the value of the shares on the date of purchase over the purchase
price will be treated as ordinary income to the participant. This amount will
constitute ordinary income in the year of sale or other disposition even if no
gain is realized on the sale or other disposition. A capital loss will be
recognized if the sale price is lower than the value of the shares on the date
of purchase but any such loss will not affect the ordinary income recognized
upon the disposition.
24
Your Board of Directors unanimously recommends that you vote "FOR" approval
of the amendment to the ESPP. Unless you indicate otherwise, your proxy will
vote "FOR" approval.
ITEM 5--STOCKHOLDER PROPOSAL TO AMEND BYLAWS
The Company has been notified that a stockholder of the Company intends to
present the proposal set forth below for consideration at the 2000 Annual
Meeting. Any person may submit an oral or written request to the Secretary of
the Company for the name, address and stock ownership of the stockholder
proponent. This information will be furnished orally or in writing, as
requested. The Company is not responsible for the content of the stockholder
proposal, which is printed as it was submitted.
The Board of Directors opposes the following stockholder proposal for the
reasons stated after the proposal.
"RESOLVED, that the stockholders of Advanced Micro Devices, Inc. (the
"Company") amend the Company's Bylaws to require that the Board's Chairperson
be an independent Director. For purposes of this proposal, the stockholders
further recommend that the term "Independent Director" means a director who:
(i) has not been employed by the Company in an executive capacity within the
last five years; (ii) is not, and is not affiliated with a company that is, an
advisor or consultant to the Company; (iii) is not affiliated with a
significant customer or supplier of the Company; (iv) has no personal services
contract(s) with the Company or its senior management; (v) is not affiliated
with a not-for-profit entity that receives significant contributions from the
Company; (vi) within the last five years, has not had any business
relationship with the Company (other than service as a director) for which the
Company has been required to make disclosure under Regulation S-K of the
Securities and Exchange Commission; (vii) is not employed by a public company
at which an executive officer of the Company serves as a director; (viii) has
not had a relationship described in (i) through (vii) above with any affiliate
of the Company; and (ix) is not a member of the immediate family of any person
described in (i) through (viii) above.
"SUPPORTING STATEMENT
"How important is the Board of Directors? We believe that the Board--and
most particularly its Chairperson--is of paramount importance. This is why we
are sponsoring this proposal which urges the Board to amend the Company's
bylaws so that the Board's leader will be a person who is independent of the
Company and its officers. Through this proposal, we seek to promote strong,
objective leadership on the Board.
"A Board of Directors must formulate corporate policies and monitor
management's implementations of those policies. The Chairperson is responsible
for leading the Board in these tasks, and ensuring that directors are given
the information necessary to perform their duties. In our view, when the
Board's Chairperson is also an officer, employee or otherwise closely related
to the Company's management, it is difficult to objectively perform this
monitoring and evaluation function. We believe that an independent Chairperson
would best ensure that the interests of stockholders are served, rather than
the interests of management.
"The benefits of independent directors are generally well accepted. The New
York Stock Exchange, for example, requires that at least two members of the
board of a listed company, and all members of the Company's audit committee,
must meet the Exchange's standards of independence. The Investment Company Act
of 1940 (the law that governs the activities of investment companies) also
includes an independent director provision, generally requiring investment
company boards to be comprised of at least 40 percent "disinterested"
directors.
"Help us send a message to this Board and its Chairperson. Please VOTE FOR
THIS PROPOSAL."
25
Your Board of Directors recommends a vote AGAINST the above proposal for the
following reasons:
The same proposal was made by the same stockholder only two years ago. At
that time, the Company's stockholders rejected the proposal, and the Board
believes that the reasons for doing so are equally relevant today.
The Board believes that the best interests of the Company and its
stockholders would not be served by adopting a bylaw provision that would
require the separation of the positions of Chairman of the Board and Chief
Executive Officer. The Board's view is that it should be free to make this
choice in a manner that seems best for the Company at any particular point in
time. The proposed bylaw would instead require a particular structure and
deprive the Board of its flexibility to organize its functions and conduct its
business in the manner it deems most efficient.
The Board's responsibility "to organize its functions and conduct its
business in the manner it deems most efficient" is recognized by TIAA-CREF, a
major institutional investor widely recognized for its corporate governance
leadership, in its "Policy Statement on Corporate Governance." TIAA-CREF
states in this policy that, "in the absence of special circumstances,
ordinarily we would not support shareholder resolutions concerning separation
of the CEO and Chairman . . .unless the board supports such measures."
The Board believes that the Company is currently best served by having one
person serve as both Chairman and CEO, acting as a bridge between the Board
and the whole operating organization and providing critical leadership for the
strategic initiatives and challenges of the future.
The Company competes in a volatile industry where long-term success depends
on strategic vision and strong, experienced leadership. Implementation of the
proposal would deprive the Company and its stockholders of the leadership of
one of the most experienced industry executives, W. J. Sanders III, who has
led the Company successfully from a Silicon Valley start-up business to a
multibillion dollar, worldwide enterprise. Implementation of the proposal
would cause the Company to breach its 1996 employment agreement with Mr.
Sanders, which provides that he will serve as both chairman and CEO through
the five-year term of the agreement.
The Board believes its independence is not compromised by having a single
person serve as Chairman and CEO. The functions of the Board are carried out
at the full Board and Board committee levels. Each director is a full and
equal participant in the major strategic and policy decisions of the Company.
The insight, advice, and counsel that each non-employee director makes
available to the Company would not change if they were the Chairman.
The Board also believes the responsibilities of the Compensation Committee
of the Board, which is composed of all non-employee directors, makes a non-
executive Chairman unnecessary. The Compensation Committee reviews and
approves the compensation for all elected officers. The Chairman and CEO is
not a member of this committee. This supports objectivity of the Board when it
reviews performance and compensation matters. The Audit Committee also
consists solely of non-employee directors and provides a direct channel of
communication between the Board and the Company's independent auditors.
Finally, the Company fully complies with the New York Stock Exchange
requirements and standards of independence, and the Board believes that no
meaningful additional measure of independence would be provided by a non-
executive Chairman.
For the reasons set forth above, the Board believes that the interests of
the Company and its stockholders are best served at this time by the
experience and consistent direction and strategic vision afforded by a single
full-time individual serving as Chairman and CEO.
Accordingly, your Board of Directors unanimously recommends that
Stockholders vote "AGAINST" this stockholder proposal.
26
ANNUAL REPORT AND FINANCIAL STATEMENTS
Our 1999 Annual Report, which includes our audited financial statements for
the fiscal year ended December 26, 1999, has accompanied or preceded this
proxy statement. We will provide, without charge, upon your written request, a
copy of our most recent Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission. Requests should be directed to our
Corporate Secretary at Advanced Micro Devices, Inc., One AMD Place, P.O. Box
3453, Sunnyvale, California 94088-3453.
AMD, the AMD logo and combinations thereof, Advanced Micro Devices, AMD-K6
and AMD Athlon are either registered trademarks or trademarks of Advanced
Micro Devices, Inc.
27
1770-PS-00 AMD-22933A
ADVANCED MICRO DEVICES, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to encourage key personnel, Outside Directors
and advisors whose long-term service is considered essential to the Company's
continued progress, to remain in the service of the Company or its Affiliates.
By means of the Plan, the Company also seeks to attract new key employees,
Outside Directors and advisors whose future services are necessary for the
continued improvement of operations. The Company intends future increases in the
value of securities granted under this Plan to form part of the compensation for
services to be rendered by such persons in the future. It is intended that this
purpose will be effected through the granting of Options.
2. DEFINITIONS
The terms defined in this Section 2 shall have the respective meanings set
forth herein, unless the context otherwise requires.
(a) "Affiliate" The term "Affiliate" shall mean any corporation,
partnership, joint venture or other entity in which the Company holds an equity,
profits or voting interest of thirty percent (30%) or more.
(b) "Board" The term "Board" shall mean the Company's Board of Directors or
its delegate as set forth in Sections 3(d) and 3(e) below.
(c) "Change of Control" Unless otherwise defined in a Participant's
employment agreement, the term "Change of Control" shall be deemed to mean any
of the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company or any of its
Affiliates) representing more than 20% of either the then outstanding shares of
the Common Stock of the Company or the combined voting power of the Company's
then outstanding voting securities; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board and
any new director (other than a director designated by a person who has entered
into an agreement or arrangement with the Company to effect a transaction
described in clause (i) or (ii) of this sentence) whose appointment, election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) there is consummated a merger or
consolidation of the Company or subsidiary thereof with or into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding securities which represent immediately after such merger or
consolidation more than 50% of the combined voting power of the voting
securities of either the
Company or the other entity which survives such merger or consolidation or the
parent of the entity which survives such merger or consolidation; or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or there is consummated the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition by
the Company of all or substantially all of the Company's assets to an entity, at
least 80% of the combined voting power of the voting securities of which are
owned by persons in substantially the same proportions as their ownership of the
Company immediately prior to such sale. Notwithstanding the foregoing (i) unless
otherwise provided in a Participant's employment agreement, no "Change of
Control" shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately following which the
record holders of the Common Stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately prior to such transaction or series of
transactions and (ii) unless otherwise provided in a Participant's employment
agreement, "Change of Control" shall exclude the acquisition of securities
representing more than 20% of either the then outstanding shares of the Common
Stock of the Company or the combined voting power of the Company's then
outstanding voting securities by the Company or any of its wholly owned
subsidiaries, or any trustee or other fiduciary holding securities of the
Company under an employee benefit plan now or hereafter established by the
Company.
(d) "Code" The term "Code" shall mean the Internal Revenue Code of 1986, as
amended to date and as it may be amended from time to time.
(e) "Company" The term "Company" shall mean Advanced Micro Devices, Inc., a
Delaware corporation.
(f) "Constructive Termination" The term "Constructive Termination" shall
mean a resignation by a Participant who has been elected by the Board as a
corporate officer of the Company due to diminution or adverse change in the
circumstances of such Participant's employment with the Company, as determined
in good faith by the Participant; including, without limitation, reporting
relationships, job description, duties, responsibilities, compensation,
perquisites, office or location of employment. Constructive Termination shall be
communicated by written notice to the Company, and such termination shall be
deemed to occur on the date such notice is delivered to the Company.
(g) "Disinterested Director" The term "Disinterested Director" shall mean a
member of the Board who has not, during the one year prior to service as an
administrator of the Plan, or during such service, been granted or awarded
equity securities of the Company pursuant to this Plan (except for automatic
grants of options to Outside Directors pursuant to Section 8 hereof) or any
other plan of the Company or any of its Affiliates.
(h) "Fair Market Value per Share" The term "Fair Market Value per Share"
shall mean as of any day (i) the closing price for Shares on the New York Stock
Exchange as reported on the composite tape on the day as of which such
determination is being made or, if there was no sale of Shares reported on the
composite tape on such day, on the most recently preceding day on which there
was such a sale, or (ii) if the Shares are not listed or admitted to trading on
the
2
New York Stock Exchange on the day as of which the determination is made, the
amount determined by the Board or its delegate to be the fair market value of a
Share on such day.
(i) "Insider" The term "Insider" means an officer or director of the
Company or any other person whose transactions in the Company's Common Stock are
subject to Section 16 of the Exchange Act.
(j) "ISO" The term "ISO" shall mean a stock option described in Section
422(b) of the Code.
(k) "NSO" The term "NSO" shall mean a nonstatutory stock option not
described in Section 422(b) of the Code.
(l) "Option" The term "Option" shall mean (except as herein otherwise
provided) a stock option granted under this Plan.
(m) "Outside Director" The term "Outside Director" shall mean a member of
the Board of Directors of the Company who is not also an employee of the Company
or an Affiliate.
(n) "Participant" The term "Participant" shall mean any person who holds an
Option or Restricted Stock Award granted under this Plan.
(o) "Plan" The term "Plan" shall mean this Advanced Micro Devices, Inc.
1996 Stock Incentive Plan, as amended from time to time.
(p) "Shares" The term "Shares" shall mean shares of Common Stock of the
Company and any shares of stock or other securities received as a result of the
adjustments provided for in Section 11 of this Plan.
3. ADMINISTRATION
(a) The Board, whose authority shall be plenary, shall administer the Plan
and may delegate part or all of its administrative powers with respect to part
or all of the Plan pursuant to Section 3(d); provided, however, that the Board
shall delegate administration of the Plan to the extent required by Section
3(e).
(b) Except for automatic grants of Options to Outside Directors pursuant to
Section 8 hereof, the Board or its delegate shall have the power, subject to and
within the limits of the express provisions of the Plan:
(1) To grant Options pursuant to the Plan.
(2) To determine from time to time which of the eligible persons shall
be granted Options under the Plan, the number of Shares for which each
Option shall be granted, the term of each granted Option and the time or
times during the term of each Option within which all or portions of each
Option may be exercised (which at the discretion of the Board of its
delegate may be accelerated.)
3
(3) To prescribe the terms and provisions of each Option granted (which
need not be identical) and the form of written instrument that shall
constitute the Option agreement.
(4) To take appropriate action to amend any Option hereunder, including
to amend the vesting schedule of any outstanding Option, or to cause any
Option granted hereunder to cease to be an ISO, provided that no such
action adverse to a Participant's interest may be taken by the Board or its
delegate without the written consent of the affected Participant.
(5) To determine whether and under what circumstances an Option may be
settled in cash or Shares.
(c) The Board or its delegate shall also have the power, subject to and
within the limits of the express provisions of this Plan:
(1) To construe and interpret the Plan and Options granted under the
Plan, and to establish, amend and revoke rules and regulations for
administration of the Plan. The Board or its delegate, in the exercise of
this power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission or
inconsistency in the Plan or in any Option agreement in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective.
(2) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company.
(d) The Board may, by resolution, delegate administration of the Plan
(including, without limitation, the Board's powers under Sections 3(b) and (c)
above), under either or both of the following:
(1) with respect to the participation of or granting of Options to an
employee , consultant or advisor who is not an Insider, to a committee of
one or more members of the Board, whether or not such members of the Board
are Disinterested Directors;
(2) with respect to matters other than the selection for participation
in the Plan, substantive decisions concerning the timing, pricing, amount
or other material term of an Option, to a committee of one or more members
of the Board, whether or not such members of the Board are Disinterested
Directors, or to one or more Insiders.
(e) Unless each member of the Board is a Disinterested Director, the Board
shall, by resolution, delegate administration of the Plan with respect to the
participation in the Plan of employees who are Insiders, including its powers to
select such employees for participation in the Plan, to make substantive
decisions concerning the timing, pricing, amount or any other material term of
an Option, to a committee of two or more Disinterested Directors who are also
"outside directors" within the meaning of Section 162(m) of the Code. Any
committee to which administration of the Plan is so delegated pursuant to this
Section 3(e) may also administer the Plan with respect to an employee described
in Section 3(d)(1) above.
4
(f) Except as required by Section 3(e) above, the Board shall have complete
discretion to determine the composition, structure, form, term and operations of
any committee established to administer the Plan. If administration is delegated
to a committee, unless the Board otherwise provides, the committee shall have,
with respect to the administration of the Plan, all of the powers and discretion
theretofore possessed by the Board and delegable to such committee, subject to
any constraints which may be adopted by the Board from time to time and which
are not inconsistent with the provisions of the Plan. The Board at any time may
revest in the Board any of its administrative powers under the Plan, except
under circumstances where a committee is required to administer the Plan under
Section 3(e) above.
(g) The determinations of the Board or its delegate shall be conclusive and
binding on all persons having any interest in this Plan or in any awards granted
hereunder.
4. SHARES SUBJECT TO PLAN
Subject to the provisions of Section 11 (relating to adjustments upon
changes in capitalization), the Shares which may be available for issuance under
the Plan shall not exceed in the aggregate 17,450,000 Shares of the Company's
authorized Common Stock and may be unissued Shares or reacquired Shares or
Shares bought on the market for the purposes of issuance under the Plan. If any
Options granted under the Plan shall for any reason be forfeited or canceled,
terminate or expire, the Shares subject to such Options shall be available again
for the purposes of the Plan. Shares which are delivered or withheld from the
Shares otherwise due on exercise of an Option shall become available for future
awards under the Plan. Shares that have actually been issued under the Plan,
upon exercise of an Option shall not in any event be returned to the Plan and
shall not become available for future awards under the Plan.
5. ELIGIBILITY
Options may be granted only to full or part-time employees, officers,
directors, consultants and advisors of the Company and/or of any Affiliate;
provided such consultants and advisors render bona fide services not in
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connection with the offer and sale of securities in a capital-raising
transaction. Outside Directors shall not be eligible for the benefits of the
Plan, except as provided in Section 8 hereof. Any Participant may hold more
than one Option at any time; provided that the maximum number of shares which
--------
are subject to Options granted to any individual shall not exceed in the
aggregate two million (2,000,000) Shares over the full ten-year life of the
Plan.
6. STOCK OPTIONS -- GENERAL PROVISIONS
(a) Except for automatic grants of Options to Outside Directors under
Section 8 hereof, each Option granted pursuant to the Plan may, at the
discretion of the Board, be granted either as an ISO or as an NSO. No Option may
be granted alternatively as an ISO and as an NSO.
(b) To the extent that the aggregate exercise price for ISOs which are
exercisable for the first time by a Participant during any calendar year (under
this Plan or any other plans of the Company or its subsidiaries or parent (as
such terms are defined in Section 424 of the Code)) exceeds $100,000, such
Options shall be treated as NSOs.
5
(c) No ISO may be granted to a person who, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of the Company or
any of its subsidiaries or parent (as such terms are defined in Section 424 of
the Code) unless the exercise price is at least 110% of the Fair Market Value
per Share of the stock subject to the Option and the term of the Option does not
exceed five (5) years from the date such ISO is granted.
(d) Notwithstanding any other provision in this Plan, no term of this Plan
relating to ISOs will be interpreted, amended or altered, nor will any
discretion or authority granted under this Plan be exercised, so as to
disqualify this Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify an ISO under Section 422 of the Code.
7. TERMS OF OPTION AGREEMENT
Except as otherwise required by the terms of Section 8 hereof, each Option
agreement shall be in such form and shall contain such terms and conditions as
the Board from time to time shall deem appropriate, subject to the following
limitations:
(a) The term of any NSO shall not be greater than ten (10) years and one
day from the date it was granted. The term of any ISO shall not be greater than
ten (10) years from the date it was granted.
(b) The exercise price of each ISO shall be not less than the Fair Market
Value per Share of the stock subject to the Option on the date the Option is
granted. NSOs may be granted at an exercise price that is not less than Fair
Market Value per Share of the Shares at the time an NSO is granted.
(c) Unless otherwise specified in the Option agreement, no Option shall be
transferable otherwise than by will, pursuant to the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, or as otherwise permitted by regulations and interpretations under
Section 16 of the Exchange Act.
(d) Except as otherwise provided in paragraph (e) of this Section 7 or in a
Participant's employment agreement, the rights of a Participant (other than an
Outside Director) to exercise an Option shall be limited as follows:
(1) DEATH OR DISABILITY: If a Participant's service is terminated by
death or disability, then the Participant or the Participant's estate, or
such other person as may hold the Option, as the case may be, shall have
the right for a period of twelve (12) months following the date of death or
disability, or for such other period as the Board may fix, to exercise the
Option to the extent the Participant was entitled to exercise such Option
on the date of his death or disability, or to such extent as may otherwise
be specified by the Board (which may so specify after the date of his death
or disability but before expiration of the Option), provided the actual
date of exercise is in no event after the expiration of the term of the
Option. A Participant's estate shall mean his legal representative or any
person who acquires the right to exercise an Option by reason of the
Participant's death or disability.
6
(2) MISCONDUCT: If a Participant is determined by the Board to have
committed on act of theft, embezzlement, fraud, dishonesty, a breach of
fiduciary duty to the Company (or Affiliate), or deliberate disregard of
the rules of the Company (or Affiliate), or if a Participant makes any
unauthorized disclosure of any of the trade secrets or confidential
information of the Company (or Affiliate), engages in any conduct which
constitutes unfair competition with the Company (or Affiliate), induces any
customer of the Company (or Affiliate) to break any contract with the
Company (or Affiliate), or induces any principal for whom the Company (or
Affiliate) acts as agent to terminate such agency relationship, then,
unless otherwise provided in a Participant's employment agreement, neither
the Participant, the Participant's estate nor such other person who may
then hold the Option shall be entitled to exercise any Option with respect
to any Shares whatsoever, after termination of service, whether or not
after termination of service the Participant may receive payment from the
Company (or Affiliate) for vacation pay, for services rendered prior to
termination, for services rendered for the day on which termination occurs,
for salary in lieu of notice, or for any other benefits. In making such
determination, the Board shall give the Participant an opportunity to
present to the Board evidence on his behalf. For the purpose of this
paragraph, unless otherwise provided in a Participant's employment
agreement, termination of service shall be deemed to occur on the date when
the Company dispatches notice or advice to the Participant that his service
is terminated.
(3) TERMINATION FOR OTHER REASONS: If a Participant's service is
terminated for any reason other than those mentioned above under "DEATH OR
DISABILITY" or "MISCONDUCT," the Participant, the Participant's estate, or
such other person who may then hold the Option may, within three months
following such termination, or within such longer period as the Board may
fix, exercise the Option to the extent such Option was exercisable by the
Participant on the date of termination of his employment or service, or to
the extent otherwise specified by the Board (which may so specify after the
date of the termination but before expiration of the Option) provided the
date of exercise is in no event after the expiration of the term of the
Option.
(4) EVENTS NOT DEEMED TERMINATIONS: Unless otherwise provided in a
Participant's employment agreement, the service relationship shall not be
considered interrupted in the case of (i) a Participant who intends to
continue to provide services as a director, employee, consultant or advisor
to the Company or an Affiliate; (ii) sick leave; (iii) military leave; (iv)
any other leave of absence approved by the Board, provided such leave is
--------
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing; or (v) in
the case of transfer between locations of the Company or between the
Company or its Affiliates. In the case of any employee on an approved
leave of absence, the Board may make such provisions respecting suspension
of vesting of the Option while on leave from the employ of the Company or
an Affiliate as it may deem appropriate, except that in no event shall an
Option be exercised after the expiration of the term set forth in the
Option.
7
(e) Unless otherwise provided in a Participant's employment agreement, if
any Participant's employment is terminated by the Company for any reason other
than for Misconduct or, if applicable, by Constructive Termination, within one
year after a Change of Control has occurred, then all Options held by such
Participant shall become fully vested for exercise upon the date of termination,
irrespective of the vesting provisions of the Participant's Option agreement.
For purposes of this subsection (e), the term "Change of Control" shall have the
meaning assigned by this Plan, unless a different meaning is defined in an
individual Participant's Option agreement or employment agreement.
(f) Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Board or its delegate shall
deem appropriate.
(g) The Board may modify, extend or renew outstanding Options and authorize
the grant of new Options in substitution therefor; provided that any such
--------
action may not, without the written consent of a Participant, impair any such
Participant's rights under any Option previously granted.
8. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS
(a) Each Outside Director shall be granted an Option to purchase 15,000
Shares under the Plan (the "First Option") on the date such Outside Director is
first elected or appointed as a member of the Board; provided that an Outside
--------
Director who has previously been elected as a member of the Board on the
Effective Date set forth in Section 14 below shall not be granted a First Option
under the Plan. Thereafter, on the first business day coincident with or
following each annual meeting of the Company's stockholders, each Outside
Director reported as being elected shall be granted an additional Option to
purchase 5,000 Shares under the Plan (the "Annual Option"). Further, subject to
the right of any Outside Director who has not previously been elected as a
member of the Board to receive a First Option, if there are insufficient Shares
available under the Plan for each Outside Director who is eligible to receive an
Annual Option (as adjusted) in any year, the number of Shares subject to each
Annual Option in such year shall equal the total number of available Shares then
remaining under the Plan divided by the number of Outside Directors who are
eligible to receive an Annual Option on such date, as rounded down to avoid
fractional Shares. All Options granted to Outside Directors shall be subject to
the following terms and conditions of this Section 8.
(b) All Options granted to Outside Directors pursuant to the Plan shall
be NSOs.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, may consist entirely of (i) cash,
(ii) certified or cashier's check, (iii) other Shares which (x) either have been
owned by the Participant for more than six months on the date of surrender or
were not acquired, directly or indirectly, from the Company, and (y) have a Fair
Market Value per Share on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised, (iv) delivery of
a properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, or (v) any combination of the foregoing
methods of payment.
8
(d) Each Option granted to an Outside Director shall be for a term of ten
years plus one day. Each First Option shall vest and become exercisable on July
15 of subsequent calendar years, according to the following schedule: 6,000
shares in the first calendar year following the date of grant; 4,500 shares in
the second such calendar year; 3,000 shares in the third such calendar year; and
1,500 shares in the fourth such calendar year. Each Annual Option shall vest
and become exercisable on July 15 of subsequent calendar years according to the
following schedule: in increments of 1,667, 1667, and 1,666 in the second,
third and fourth calendar years following the date of grant. Any Shares
acquired by an Outside Director upon exercise of an Option shall not be freely
transferable until six months after the date stockholder approval referred to in
Section 14 hereof is obtained.
(e) If an Outside Director's tenure on the Board is terminated for any
reason, then the Outside Director or the Outside Director's estate, as the case
may be, shall have the right for a period of twelve months following the date
such tenure is terminated to exercise the Option to the extent the Outside
Director was entitled to exercise such Option on the date the Outside Director's
tenure terminated; provided the actual date of exercise is in no event after the
expiration of the term of the Option. An Outside Director's "estate" shall mean
the Outside Director's legal representative or any person who acquires the right
to exercise an Option by reason of the Outside Director's death or disability.
(f) Upon a Change of Control, all Options held by an Outside Director shall
become fully vested and exercisable upon such Change of Control, irrespective of
any other provisions of the Outside Director's Option agreement.
(g) The automatic grants to Outside Directors pursuant to this Section 8
shall not be subject to the discretion of any person. The other provisions of
this Plan shall apply to the Options granted automatically pursuant to this
Section 8, except to the extent such other provisions are inconsistent with this
Section 8.
9. PAYMENTS AND LOANS UPON EXERCISE OF OPTIONS
With respect to Options other than Options granted to Outside Directors
pursuant to Section 8, the following provisions shall apply:
(a) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the Board
or its delegate (and, in the case of an ISO, shall be determined at the time of
grant) and may consist entirely of (i) cash, (ii) certified or cashier's check,
(iii) promissory note, (iv) other Shares which (x) either have been owned by the
Participant for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a Fair Market
Value per Share on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised, (v) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, or (vi) any combination of the foregoing
methods of payment. Any promissory note shall be a full recourse promissory
note having such terms as may be approved by the Board and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483, 1274 or 7872
of the Code; provided that Participants
--------
9
who are not employees or directors of the Company will not be entitled to
purchase Shares with a promissory note unless the note is adequately secured by
collateral other than the Shares; provided further, that the portion of the
-------- -------
exercise price equal to the par value, if any, of the Shares must be paid in
cash;
(b) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual Participants, including Insiders, on such
terms as may be approved by the Board for the purpose of financing the exercise
of Options granted under the Plan and the payment of any taxes that may be due
by reason of such exercise.
10. TAX WITHHOLDING
(a) Where, in the opinion of counsel to the Company, the Company has or
will have an obligation to withhold federal, state or local taxes relating to
the exercise of any Option, the Board may in its discretion require that such
tax obligation be satisfied in a manner satisfactory to the Company. With
respect to the exercise of an Option, the Company may require the payment of
such taxes before Shares deliverable pursuant to such exercise are transferred
to the holder of the Option.
(b) With respect to the exercise of an Option, a Participant may elect (a
"Withholding Election") to pay his minimum statutory withholding tax obligation
by the withholding of Shares from the total number of Shares deliverable
pursuant to the exercise of such Option, or by delivering to the Company a
sufficient number of previously acquired Shares, and may elect to have
additional taxes paid by the delivery of previously acquired Shares, in each
case in accordance with rules and procedures established by the Board.
Previously owned Shares delivered in payment for such additional taxes must have
been owned for at least six months prior to the delivery or must not have been
acquired directly or indirectly from the Company and may be subject to such
other conditions as the Board may require. The value of Shares withheld or
delivered shall be the Fair Market Value per Share on the date the Option
becomes taxable. All Withholding Elections are subject to the approval of the
Board must be made in compliance with rules and procedures established by the
Board.
11. ADJUSTMENTS OF AND CHANGES IN CAPITALIZATION
If there is any change in the Common Stock of the Company by reason of any
stock dividend, stock split, spin-off, split up, merger, consolidation,
recapitalization, reclassification, combination or exchange of Shares, or any
other similar corporate event, then the Board shall make appropriate adjustments
to the number of Shares theretofore appropriated or thereafter subject or which
may become subject to an Option under the Plan. Outstanding Options shall also
be automatically converted as to price and other terms if necessary to reflect
the foregoing events. No right to purchase fractional Shares shall result from
any adjustment in Options pursuant to this Section 11. In case of any such
adjustment, the Shares subject to the Option shall be rounded down to the
nearest whole Share. Notice of any adjustment shall be given by the Company to
each holder of any Option which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
10
12. PRIVILEGES OF STOCK OWNERSHIP
No Participant will have any rights of a stockholder with respect to any
Shares until the Shares are issued to the Participant. After Shares are issued
to the Participant, the Participant will be a stockholder and have all the
rights of a stockholder with respect to such Shares, including the right to vote
and receive all dividends or other distributions made or paid with respect to
such Shares.
13. EXCHANGE AND BUYOUT OF AWARDS; RULE 16b-3
The Board or its delegate may, at any time or from time to time, authorize
the Company, with the consent of the respective Participants, to issue new
Options in exchange for the surrender and cancellation of any or all outstanding
Options, except as otherwise provided in Section 7(i) with respect to Insiders.
The Board or its delegate may at any time buy from a Participant an Option
previously granted with payment in cash, Shares or other consideration, based on
such terms and conditions as the Board or its delegate and the Participant may
agree. Grants of Options to Insiders are intended to comply with the applicable
provisions of Rule 16b-3 and such Options shall contain such additional
conditions or restrictions, if any, as may be required by Rule 16b-3 to be in
the written agreement relating to such Options in order to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
14. EFFECTIVE DATE OF THE PLAN
This Plan will become effective when adopted by the Board (the "Effective
Date"). This Plan must be approved by the stockholders of the Company,
consistent with applicable laws, within twelve (12) months before or after the
Effective Date. Upon the Effective Date, the Board or its delegate may grant
Options pursuant to this Plan; provided that no Option may be exercised prior to
the initial stockholder approval of this Plan. In the event that stockholder
approval is not obtained within the time period provided herein, all Options
granted hereunder will be canceled. So long as Insiders are Participants, the
Company will comply with the requirements of Rule 16b-3 with respect to
stockholder approval.
15. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan;
provided that, except as provided in Section 11 (relating to adjustments upon
- --------
changes in capitalization), no amendment for which stockholder approval is
required shall be effective unless such approval is obtained within the required
time period. Whether stockholder approval is required shall be determined by
the Board.
(b) It is expressly contemplated that the Board may, without seeking
approval of the Company's stockholders, amend the Plan in any respect necessary
to provide the Company's employees with the maximum benefits provided or to be
provided under Section 422 of the Code or Section 16 of the Exchange Act and the
regulations promulgated thereunder and/or to bring the Plan or Options granted
under it into compliance therewith.
11
(c) Rights and obligations under any Option granted before any amendment of
the Plan shall not be altered or impaired by amendment of the Plan, except with
the consent of the person who holds the Option, which consent may be obtained in
any manner that the Board or its delegate deems appropriate.
(d) To the extent required by Rule 16b-3, the Board may not amend the
provisions of Section 8 hereof more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules thereunder.
16. REGISTRATION, LISTING, QUALIFICATION, APPROVAL OF STOCK AND OPTIONS
An award under this Plan will not be effective unless such award is in
compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange
or automated quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the award and also on the
date of exercise or other issuance. Notwithstanding any other provision in this
Plan, the Company will have no obligation to issue or deliver certificates for
Shares under this Plan prior to: (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and/or (b)
completion of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the Securities and Exchange Commission or
to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
17. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any Option shall be deemed to confer on any
employee any right to continue in the employ of the Company or any Affiliate or
to limit the rights of the Company or its Affiliates, which are hereby expressly
reserved, to discharge an employee at any time, with or without cause, or to
adjust the compensation of any employee.
18. MISCELLANEOUS
The use of any masculine pronoun or similar term is intended to be without
legal significance as to gender.
12
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the Advanced Micro Devices,
Inc. 2000 Employee Stock Purchase Plan (the "Plan"). The terms "Corporation" and
"AMD" refer to Advanced Micro Devices, Inc. and, where appropriate, any
Participating Subsidiary of Advanced Micro Devices, Inc.
1. Purpose. The purpose of the Plan is to foster continued cordial
-------
employee relations by providing employees of the Corporation and Participating
Subsidiaries with an opportunity to purchase Common Stock of the Corporation
through payroll deductions. It is the intention of the Corporation that the
Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code and the regulations
promulgated thereunder.
2. Definitions.
-----------
(a) "Board" means the Board of Directors of the Corporation.
(b) "Business Day" means a day on which AMD Common Stock is publicly
traded.
(c) "Committee" means the committee designated by the Board to
administer this Plan.
(d) "Compensation" means salaries, overtime, shift differential and
lead pay. Bonuses, special awards, sales commissions, cash profit sharing,
income attributable to the exercise of a compensatory stock option or warrant
and reimbursements and allowances are excluded.
(e) "Employee" means any person, including an officer, customarily
employed for at least twenty (20) hours per week and more than five (5) months
in a calendar year by the Corporation or its Participating Subsidiaries.
Individuals who provide services to the Company or any of its Participating
Subsidiaries as independent contractors, who are reclassified as common law
employees for any reason other than for federal income and employment tax
purposes, are not eligible Employees.
(f) "Participating Subsidiary" means any subsidiary (determined by
reference to Section 425 of the Code) designated by the Board to be a
participating subsidiary.
(g) "Offering Period" shall have meaning assigned by paragraph 4.
(h) "Option Grant Date" means the first Business Day of each Offering
Period of the Plan.
(i) "Purchase Date" means the last Business Day of each Offering
Period of the Plan.
3. Eligibility. Any Employee who shall be employed by the Corporation or
-----------
its Participating Subsidiaries on the first day of an Offering Period, shall be
eligible to participate in such Offering Period under the Plan, subject to the
requirements of paragraph 5 and the limitations imposed by Section 423(b) of the
Code.
4. Offering period. Absent action by the Board, each Offering Period
---------------
shall extend for three calendar months commencing on the first Business Day on
or after February 1, May 1, August 1 and November 1 of each year and ending on
the last Business Day of the third month.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deduction on the form
provided by the Corporation and filing it with the designated Corporation office
not later than the 15th day of the month prior to a new Offering Period;
provided that participants who go on a leave of absence are subject to the
special rules set forth in paragraph 10(c) hereof; and provided further that an
Employee who commences employment in the month prior to a new Offering Period
may complete a subscription agreement on the date he commences employment. An
Employee who becomes eligible to participate in the Plan after an Option Grant
Date may not participate until the next Offering Period.
(b) Payroll deductions for a participant shall commence with the first
payroll following the Option Grant Date and shall end with the Purchase Date of
the offering, unless sooner terminated by the participant as provided in
paragraph 10, or by the Corporation.
6. Payroll Deductions.
------------------
(a) At the time a participant files his subscription agreement, he
shall elect to have payroll deductions made on each payday during the Offering
Period at a rate not exceeding ten percent (10%) of the Compensation which he
would otherwise receive on such payday, provided that the aggregate of such
payroll deductions during the Offering Period shall not exceed ten percent (10%)
of the aggregate compensation which he would otherwise have received during said
Offering Period. The Committee shall determine whether the amount to be
deducted from each paycheck is to be designated as a specific dollar amount, or
as a percentage of the eligible Compensation being paid on such pay day, or as
either, and may also establish a minimum percentage or amount for such payroll
deductions.
(b) All payroll deductions authorized by a participant shall be
credited to his account under the Plan. A participant may not make any
additional payments into such account.
(c) A participant may discontinue his participation in the Plan as
provided in paragraph 10, and may decrease or increase the rate of his payroll
deductions a maximum of once during the Offering Period by completing and filing
with the Corporation a new authorization for payroll deduction. The change in
rate shall become effective no later than fifteen (15) days after the
Corporation's receipt of the new authorization.
7. Grant of Option
---------------
(a) On each Option Grant Date, each participant in the Plan shall be
granted an option to purchase (at the per share option price) the number of
shares of the Corporation's Common Stock determined by dividing: (i) thirty
percent (30%) of the participant's Pay by (ii) eighty-five percent (85%) of the
fair market value of a share of the Corporation's Common Stock on such Option
Grant Date; but in no event shall such number be greater than the amount
permitted under Section 7(b) of this Plan. Fair market value of a share of the
Corporation's Common Stock shall be determined as provided in Section 7(c)
herein. In calculating under this section the number of shares subject to
option for the next Offering Period, and for purposes of calculating the
foregoing limit, Pay for a current Offering Period shall mean: (1) Five Hundred
Seventy (570) times the sum of (a) the participant's hourly wage rate in effect
on the first day of the current Offering Period plus (b) the Participant's
average hourly overtime for the preceding Offering Period; plus (2) the amount
of Compensation deferred from a prior Offering Period and which will be paid to
the participant during the current Offering Period.
(b) Exceptions. Any provisions of the Plan to the contrary
----------
notwithstanding, any option granted to an Employee shall be limited so that:
(i) immediately after the grant, such employee would not own
stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Corporation or of
any subsidiary of the Corporation (including stock which the employee
may purchase under outstanding options and stock, the ownership of
which is attributed to the employee under Section 424 (d) of the
Code), and
(ii) the Employee's rights to purchase shares under all employee
stock purchase plans of the Corporation and its subsidiaries shall not
accrue (i.e., become exercisable) at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such shares
(determined at the time such option is granted) for each calendar year
in which such option is outstanding at any time.
(c) The option price per share of such shares shall be the lower of:
(i) 85% of the fair market value of a share of the Corporation's Common Stock at
the
Option Grant Date; or (ii) 85% of the fair market value of a share of the
Corporation's Common Stock at the Purchase Date. The fair market value of the
Corporation's Common Stock on said dates shall be the closing price on the New
York Stock Exchange for such date, or if no sale is made on such date, the
corresponding closing price on the first preceding date on which the
Corporation's Common Stock was sold.
(d) Any excess contributions remaining in the Employee's account after
the purchase of the shares on the Purchase Date will be returned to the
employee, or may be credited against future payroll deductions.
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in paragraph 10, his option for the purchase of shares will be
exercised automatically for the number of whole shares which the accumulated
payroll deductions in his account could purchase at the applicable option price
on the Purchase Date. During his lifetime, a participant's option to purchase
shares hereunder is exercisable only by him.
9. Delivery. As promptly as practicable after the Purchase Date of each
--------
offering, the Corporation shall arrange the delivery to each participant or the
participant's account at the Corporation's approved brokerage firm, as
appropriate, of a certificate representing the number of whole shares purchased
on exercise of his option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A participant may withdraw all, but not less than all, the payroll
deductions credited to his account under the Plan at any time prior to the
Purchase Date by giving written notice to the Corporation on a form provided for
such purpose. All of the participant's payroll deductions credited to his
account will be paid to him promptly after receipt of his notice of withdrawal,
his option for the current period will be automatically cancelled, and no
further payroll deductions for the purchase of shares will be made during the
Offering Period.
(b) Upon termination of the participant's employment for any reason,
including retirement, permanent disability or death, the payroll deductions
credited to his account will be returned to him or, in the case of his death, to
the person or persons entitled thereto under paragraph 14, and his option will
be automatically cancelled.
(c) In the event an Employee fails to remain in the continuous employ
of the Corporation or its subsidiaries for customarily at least twenty (20)
hours per week during an Offering Period, he will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to his account will
be returned to him and his option cancelled; provided that a participant who
goes on an unpaid leave of absence shall be permitted to remain in the Plan with
respect to an Offering Period which commenced prior to the beginning of such
leave of absence. If such participant is not guaranteed reemployment by
contract or statute and the leave of absence extends beyond 90 days, such
participant shall be deemed to have terminated employment on the 91st day of
such leave of absence. Payroll deductions for a participant who has been on an
unpaid leave of
absence will resume at the same rate as in effect prior to such leave upon
return to work unless changed by such participant or unless the participant has
been on an unpaid leave of absence either throughout an entire Offering Period
or for more than ninety (90) days, in which cases the participant shall not be
permitted to re-enter the Plan until a subscription agreement is filed with
respect to a subsequent Offering Period which commences after such participant
has returned to work from the unpaid leave of absence.
(d) A participant's withdrawal from an offering will not have any
effect upon his eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Corporation.
11. No Interest. No interest shall accrue on the payroll deductions of a
-----------
participant in the Plan.
12. Stock.
-----
(a) The maximum number of shares of the Corporation's Common Stock
which may be sold pursuant to options exercised under the Plan shall be 250,000
shares, subject to adjustment upon changes in capitalization of the Corporation
as provided in paragraph 18. The shares to be sold to participants in the Plan
may be, at the election of the Corporation, either treasury shares or shares
authorized but unissued. In addition, the officers of the Corporation are
authorized to acquire shares of the Corporation's Common Stock in the open
market for resale under this Plan. If the total number of shares which would
otherwise be subject to options granted pursuant to paragraph 7(a) hereof at the
Option Grant Date exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Corporation shall make a pro rata allocation of the shares
remaining available for option grant in as uniform and equitable a manner as is
practicable. In such event, the Corporation may reduce the rate of payroll
deductions as appropriate.
(b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in street name in the participant's
account at the Corporation's approved brokerage firm.
13. Administration.
--------------
(a) The Plan shall be administered by the Board or a committee
appointed by the Board (the "Committee"). The Board may from time to time
remove members from or add members to the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. Acts taken or approved
by a majority of the Committee at which a quorum is present, or acts approved in
writing by all members of the
Committee, shall be the valid acts of the Committee. The Plan shall be
administered in a manner that assures all participants the same rights and
privileges.
(b) The administration, interpretation or application of the Plan by
the Board or its Committee shall be final, conclusive and binding upon all
participants. Members of the Board or its Committee who are eligible Employees
are permitted to participate in the Plan.
(c) No member of the Board or its Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under it. In addition to such other rights of indemnification as
they may have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding the Committee member seeking indemnification shall in
writing offer the Corporation the opportunity, as its own expense, to handle and
defend the same.
(d) All costs and expenses incurred in administering the Plan shall be
paid by the Corporation. The Board or the Committee, if any is appointed, may
request advice or assistance or employ such other persons as are necessary for
proper administration of the Plan.
14. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the Purchase
Date but prior to delivery to him of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to the Purchase Date.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant in
the absence of a valid designation of a beneficiary who is living at the time of
such participant's death, the Corporation shall deliver such shares and/or cash
in accordance with the participant's designation of beneficiaries under the
Advanced Micro Devices Deferred Profit Sharing Plan; or, in the absence of such
designation, to the executor or administrator of the estate of the participant;
or if no such executor or administrator has been appointed (to the
knowledge of the Corporation), the Corporation, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant; or if no spouse, dependent or relative is known to
the Corporation, then to such other person as the Corporation may designate.
15. Transferability. Neither payroll deduction credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in paragraph 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition, shall be void
and without effect, except that the Corporation may treat such act as an
election to withdraw funds in accordance with paragraph 10.
16. Use of Funds. All payroll deductions received or held by the
------------
Corporation under the Plan may be used by the Corporation for any corporate
purpose, and the Corporation shall not be obligated to segregate such payroll
deductions.
17. Statements. Statements of account will be given to participating
----------
employees promptly following each Purchase Date, which statements will set forth
the amounts of payroll deductions, the per share purchase price, the number of
shares purchased and any excess contributions.
18. Changes in Capitalization. In the event of any stock dividend, stock
-------------------------
split, spin-off, recapitalization, merger, consolidation, exchange of shares or
the like, the number of shares then subject to option and the number of
authorized shares remaining available to be sold shall be increased or decreased
appropriately, with such other adjustment as may be deemed necessary or
equitable by the Board.
19. Amendment. The Board of Directors may at any time amend the Plan. No
---------
such amendment may make any change in any option previously granted which
adversely affects the rights of any participant without such participant's
consent. No amendment for which shareholder approval is required shall be
effective unless such approval is obtained within the required time period.
Whether stockholder approval is required shall be determined by the Committee
and consistent with the rules of the Securities Exchange Commission, the Code or
the stock exchange(s) on which the Corporation's shares are listed, as such
rules are in effect at the time the plan amendment becomes effective.
20. Termination. The Board of Directors of Advanced Micro Devices, Inc.
-----------
may at any time terminate the Plan. No such termination will affect options
previously granted. Unless sooner terminated by the Board, this Plan shall
terminate February 1, 2011.
21. Notices. All notices or other communications by a participant to the
-------
Corporation in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Corporation at the location, or by
the person, designated by the Corporation for the receipt thereof.
22. Government and Other Regulations. The Plan, and the grant and
--------------------------------
exercise of the rights to purchase shares hereunder, and the Corporation's
obligation to sell and deliver shares upon the exercise of rights to purchase
shares, shall be subject to all applicable federal, state and foreign laws,
rules and regulations, and to such approvals by any regulatory or government
agency as may, in the opinion of counsel for the Corporation, be required. Any
amendments requiring stockholder approval shall take effect only subject to such
approval.
23. Applicable Law. The interpretation, performance and enforcement of
--------------
this Plan shall be governed by the laws of the State of California.
[AMD LOGO]
One AMD Place
Sunnyvale, CA 94088
(408) 732-2400
You are cordially invited to attend the Annual Meeting of Stockholders of
Advanced Micro Devices, Inc. to be held at 10:00 a.m. on Thursday, April
27, 2000, at the St. Regis Hotel at 2 East 55th Street, New York, New York.
Detailed information regarding the business to be transacted at the meeting
is contained in the accompanying Notice of Annual Meeting and Proxy
Statement.
Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, we ask that you either vote by telephone
------
or by the Internet or sign and return your proxy card as soon as possible
-- --
in the envelope provided.
AMD59B
DETACH HERE
PROXY
ADVANCED MICRO DEVICES, INC.
Annual Meeting of Stockholders - April 27, 2000
This Proxy is solicited on behalf of the Board of Directors
The undersigned appoints W.J. SANDERS III and THOMAS M. MCCOY and each of
them as proxies for the undersigned, with full power of substitution to
represent and to vote all the stock of the undersigned on the following matters
as described in the Proxy Statement accompanying the Notice of Meeting, receipt
of which hereby acknowledged, and according to their discretion on all other
matters that may be properly presented for action at the Annual Meeting of
Stockholders of Advanced Micro Devices, Inc. to be held on Thursday, April 27,
2000, and at any adjournment(s) or postponement(s) thereof. If properly
executed, this proxy shall be voted in accordance with the instructions given.
To the extent no directions are given on a proposal, the proxyholders will vote
FOR the nominees listed on the reverse side, FOR the ratification of the
appointment of independent auditors, FOR the amendment to the 1996 Stock
Incentive Plan, FOR the approval of the 2000 Employee Stock Purchase Plan, and
AGAINST the stockholder proposal to amend the bylaws, and in the discretion of
the proxyholders on other matters which may properly be presented at the
meeting. The undersigned may revoke this proxy at any time prior to its exercise
or may attend the meeting and vote in person.
- -------------- --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- -------------- --------------
[LETTERHEAD OF AMD]
[Vote by Telephone] [Vote by Internet]
It's fast, convenient, and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed
1-877-PRX-VOTE (1-877-779-8683). and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement Prospective and Proxy Card. Statement/Prospectus and
Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877 PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/amd
For stockholders residing outside the
United States call collect on a touch 3. Enter your 14-digit Voter
tone phone 1-201-536-8073. Control Number located on
your Proxy Card above your
3. Enter your 14-digit Voter Control Number name.
located on your Proxy Card above your
name. 4. Follow the instructions
provided.
4. Follow the recorded instructions.
Your vote is Important! Your vote is Important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/
amd anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
AMD59A DETACH HERE
[X] Please mark
vote as in
this example.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE LISTED NOMINEES
FOR DIRECTORS, FOR RATIFICATION OF ERNST & YOUNG LLP AS THE CORPORATION'S
INDEPENDENT AUDITORS, AND FOR APPROVAL OF THE AMENDMENT TO THE 1991 STOCK
PURCHASE PLAN.
The Board of Directors recommends a vote FOR Items 1,2,3 and 4,
Nominees for Directors:
(01) W.J. Sanders III, (02) Friedrich Baur, (03) Charles M. Blalack
(04) R. Gene Brown, (05) Robert B. Palmer, (06) Joe L. Roby,
(07) Hector de J. Ruiz, (08) Leonard Silverman
1. Election of directors. [___] FOR [___] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[____]
--------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Ratification of appointment of [___] [_____] [_____]
Independent auditors.
3. Amendment to the 1996 Stock [___] [_____] [_____]
Incentive Plan.
4. Approval of the 2000 Employee Stock [___] [_____] [_____]
Purchase Plan.
5. Stockholder proposal to amend the [___] [_____] [_____]
bylaws.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_____]
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PRE-PAID ENVELOPE.
Please sign exactly as the name or names appear in this proxy. If the stock is
issued in the name of two or more persons, all of them should sign the proxy. A
proxy executed by a corporation should be signed in its name by an authorized
officer. Executor, administrators and trustees so indicate when signing.
Signature: Date: Signature: Date:
------------ ------------- ------------- ------------