Annual report pursuant to Section 13 and 15(d)

Common Stock and Stock-Based Incentive Compensation Plans

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Common Stock and Stock-Based Incentive Compensation Plans
 12 Months Ended
Dec. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Common Stock and Stock-Based Incentive Compensation Plans Common Stock and Stock-Based Compensation
Common Stock
Shares of common stock outstanding were as follows:
Year Ended
December 30,
2023		 December 31,
2022		 December 25,
2021
(In millions)
Balance, beginning of period 1,612  1,207  1,211 
Common stock issued in the acquisition of Xilinx —  429  — 
Common stock issued under employee equity plans 17  17  12 
Repurchases of common stock (10) (36) (17)
Common stock repurchases for tax withholding on equity awards (4) (5) (2)
Issuance of common stock upon warrant exercise 1  —  — 
Issuance of common stock to settle convertible debt —  —  3 
Balance, end of period 1,616  1,612  1,207 
Stock Repurchase Program
The Company has an approved stock repurchase program authorizing repurchases of up to $12 billion of the Company’s common stock (Repurchase Program). During the year ended December 30, 2023, the Company repurchased 9.7 million shares of its common stock under the Repurchase Program for $985 million. As of December 30, 2023, $5.6 billion remained available for future stock repurchases under this program. This Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
Stock-Based Compensation
The Company’s employee equity programs are intended to attract, retain and motivate highly qualified employees. On May 18, 2023, the Company’s stockholders approved the AMD 2023 Equity Incentive Plan (the 2023 Plan), which supersedes the AMD 2004 Equity Incentive Plan and the Xilinx, Inc. 2007 Equity Incentive Plan (the Prior Plans). Outstanding awards granted under the Prior Plans will continue to be governed by the terms of the Prior Plans but no awards may be made under the Prior Plans on or after May 18, 2023. Under the 2023 Plan, 87,645,874 shares of the Company’s common stock are reserved and available for delivery pursuant to awards granted under the 2023 Plan. Generally, stock options granted under the 2023 Plan vest and become exercisable over a four-year period from the date of grant and expire within seven years after the grant date. Unvested shares from the 2023 Plan that are reacquired by the Company from forfeited outstanding equity awards become available for grant and may be reissued as new awards. Under the 2023 Plan, the Company can grant (i) stock options, and (ii) RSUs, including time-based RSUs and PRSUs.
Stock Options. Under the 2023 Plan, nonstatutory and incentive stock options may be granted. The exercise price of the shares subject to each nonstatutory stock option and incentive stock option cannot be less than 100% of the fair market value of the Company’s common stock on the date of the grant. The exercise price of each option granted under the 2023 Plan must be paid in full at the time of the exercise.
Time-based RSUs. Time-based RSUs are awards that can be granted to any employee, director or consultant and that obligate the Company to issue a specific number of shares of the Company’s common stock in the future if the vesting terms and conditions are satisfied.
PRSUs. PRSUs can be granted to certain of the Company’s senior executives. The performance metrics can be financial performance, non-financial performance and/or market conditions. Each PRSU award reflects a target number of shares (Target Shares) that may be issued to an award recipient before adjusting based on the Company’s financial performance, non-financial performance and/or market conditions. The actual number of shares that a grant recipient receives at the end of the period may range from 0% to 250% of the Target Shares granted, depending upon the degree of achievement of the performance target designated by each individual award.
ESPP. Under the 2017 Plan, eligible employees who participate in an offering period may have up to 15% of their eligible earnings withheld, up to certain limitations, to purchase shares of common stock at 85% of the lower of the fair market value on the first or the last business day of the six-month offering period. The offering periods commence in May and November each year.
As of December 30, 2023, the Company had 74 million shares of common stock that were available for future grants and 37 million shares reserved for issuance upon the exercise of outstanding stock options or the vesting of unvested RSUs, including PRSUs, under the 2023 Plan and the Prior Plans.
Valuation and Expense
Stock-based compensation expense was allocated in the consolidated statements of operations as follows:
Year Ended
December 30, 2023 December 31, 2022 December 25, 2021
  (In millions)
Cost of sales $ 30  $ 29  $ 5 
Research and development 1,002  697  246 
Marketing, general, and administrative 352  355  128 
Total stock-based compensation expense before income taxes 1,384  1,081  379 
Income tax benefit (249) (179) (58)
Total stock-based compensation expense, net of income taxes $ 1,135  $ 902  $ 321 
Stock Options. The weighted-average estimated fair value of employee stock options granted during 2023, 2022 and 2021 was $53.72, $44.35 and $46.07 per share, respectively, using the following assumptions:
December 30, 2023 December 31, 2022 December 25, 2021
Expected volatility
52.36% - 52.42%
 51.28  % 51.77  %
Risk-free interest rate
3.93% - 4.11%
 3.00  % 0.69  %
Expected dividends —  % —  % —  %
Expected life (in years)
4.96 - 5.04
 4.75 4.55
The Company uses a combination of the historical volatility of its common stock and the implied volatility for publicly traded options on the Company’s common stock as the expected volatility assumption. The risk-free interest rate is based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the option grant at the date closest to the option grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding.
The following table summarizes stock option activity and related information:
Outstanding Number
of Shares		 Weighted-
Average
Exercise
Price		 Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life
(in years)
  (In millions, except share price)
Balance as of December 31, 2022 4  $ 42.35 
Granted 1  $ 108.19 
Canceled —  $ 98.54 
Exercised (2) $ 18.22 
Balance as of December 30, 2023 3  $ 68.33  $ 205  3.87
Exercisable December 30, 2023 2  $ 49.54  $ 164  2.73
The total intrinsic value of stock options exercised for 2023, 2022 and 2021 was $173 million, $139 million and $277 million, respectively. As of December 30, 2023, the Company had $38 million of total unrecognized compensation expense related to stock options, which will be recognized over the weighted-average period of 2.87 years.
Time-based RSUs. The weighted-average grant date fair values of time-based RSUs granted during 2023, 2022 and 2021 were $106.28, $92.92 and $78.59 per share, respectively.
The following table summarizes time-based RSU activity and related information:
Number
of Shares		 Weighted- Average Grant Date Fair Value
 
(In millions)
Unvested shares as of December 31, 2022 28  $ 95.49 
Granted 16  $ 106.28 
Forfeited (2) $ 99.48 
Vested (10) $ 99.83 
Unvested shares as of December 30, 2023 32  $ 100.65 
The total fair value of time-based RSUs vested during 2023, 2022 and 2021 was $1.1 billion, $889 million and $678 million, respectively. As of December 30, 2023, the Company had $2.3 billion of total unrecognized compensation expense related to time-based RSUs, which will be recognized over the weighted-average period of 2.59 years.
PRSUs. The weighted-average grant date fair values of PRSUs granted during 2023, 2022 and 2021 were $134.87, $121.12 and $153.89, respectively, using the following assumptions:
December 30, 2023 December 31, 2022 December 25, 2021
Expected volatility
51.12% - 56.22%
50.65% - 53.51%
 57.75  %
Risk-free interest rate
4.30% - 4.36%
1.14% - 3.17%
 0.43  %
Expected dividends —  % —  % —  %
Expected term (in years)
2.17 - 3.00
2.07 - 3.07
 3.00
The Company uses the historical volatility of its common stock and risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the PRSUs grant at the date closest to the grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of PRSUs represents the requisite service periods of these PRSUs.
The following table summarizes PRSU activity and related information:
  Number
of Shares		 Weighted-Average
Grant Date Fair Value
(In millions)
Unvested shares as of December 31, 2022 2  $ 110.31 
Granted 1  $ 134.87 
Forfeited —  $ 134.53 
Vested (1) $ 129.78 
Unvested shares as of December 30, 2023 2  $ 117.65 
The total fair value of PRSUs vested during 2023, 2022 and 2021 was $100 million, $254 million and $98 million, respectively. As of December 30, 2023, the Company had $162 million of total unrecognized compensation expense related to PRSUs, which will be recognized over the weighted-average period of 1.64 years.
ESPP. The weighted-average grant date fair value for the ESPP during 2023, 2022 and 2021 was $31.11, $24.71 and $27.27 per share, respectively, using the following assumptions:
December 30, 2023 December 31, 2022 December 25, 2021
Expected volatility
45.74% - 49.40%
58.15% - 63.76%
36.90% - 39.39%
Risk-free interest rate
5.13% - 5.46%
1.43% - 4.52%
0.04% - 0.07%
Expected dividends —  % —  % —  %
Expected term (in years) 0.50 0.50 0.50
The Company uses the historical volatility of its common stock and the risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the ESPP grant at the date closest to the ESPP grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of the ESPP represents the six-month offering period.
During 2023, 4 million shares of common stock were purchased under the ESPP at a purchase price of $67.13 resulting in aggregate cash proceeds of $240 million. As of December 30, 2023, the Company had $36 million of total unrecognized compensation expense related to the ESPP, which will be recognized over the weighted-average period of 0.36 years.
Xilinx Replacement Awards

In connection with the acquisition of Xilinx, the Company issued equity awards as replacement for assumed equity awards to Xilinx employees. The replacement awards include restricted stock units of approximately 12 million shares with a weighted average fair value of $103.35 per share and have terms that are substantially the same as the assumed Xilinx awards. The fair value of replacement awards related to services rendered up to the Xilinx Acquisition Date was recognized as a component of the total purchase consideration while the remaining fair value of replacement awards attributable to post-combination services is being recognized as stock-based compensation expense over the remaining post-acquisition vesting period.