Stock-Based Incentive Compensation Plans |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Incentive Compensation Plans |
Stock-Based Incentive Compensation Plans
Stock Options
The weighted average assumptions applied in the lattice-binomial model that the Company uses to estimate the fair value of employee stock options are as follows:
During the quarter and nine months ended September 30, 2017 and quarter and nine months ended September 24, 2016, the Company granted 0.9 million and 2.2 million shares of employee stock options, respectively, with weighted average grant date fair value per share of $5.46 and $3.10, respectively.
Restricted Stock Units
In the third quarter of 2017, the Company granted 8.3 million shares of restricted stock units, including 0.8 million performance-based restricted stock units (PRSUs) with market conditions discussed below, with weighted average grant date fair value per share of $13.24. In the third quarter of 2016, the Company granted 19.5 million shares of restricted stock units including, 2.0 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $5.10.
During the nine months ended September 30, 2017, the Company granted 10.4 million shares of restricted stock units including, 0.8 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $13.03. During the nine months ended September 24, 2016, the Company granted 26 million shares of restricted stock units including, 2.0 million PRSUs with market conditions discussed below, with weighted average grant date fair value per share of $4.55.
Performance-based Restricted Stock Units with Market Conditions
During the third quarter of 2017, the Company granted restricted stock units with both a market condition and a service condition (market-based restricted stock units) to the Company's senior executives. The vesting is based on relative Total Shareholder Return (TSR) performance. The number of shares that may be earned is calculated based on the TSR of AMD's common stock as compared to the TSR of the companies included in the PHLX Semiconductor Sector Index (SOX), with the potential payout level of shares within a range from 0% to 250% of the target number of shares granted. These payout levels can be adjusted by two criteria - one based on AMD's TSR and one based on AMD's stock price during the last year of performance period; and an overall payout cap based on total value. Any shares earned shall vest upon the compensation committee's certification of the attainment of the performance level, subject to the recipient's continuous employment or service through each such vesting date.
The Company estimated the fair value of the market-based restricted stock units using a Monte Carlo simulation model on the date of grant. As of September 30, 2017 there were 0.8 million market-based restricted stock units with potential payout level at 100% with a grant date fair value per share of $17.18.
During the third quarter of 2016, the Company granted market-based restricted stock units to the Company’s senior executives. The number of shares that may be earned is based on three-year compounded annual growth rate milestones related to the Company’s closing stock price that may be attained within the three-year performance period, with the potential payout levels of shares at 50%, 100%, 150%, 200% and 250% of the target number of shares granted. Any shares earned pursuant to the attainment of a performance level shall vest 50% upon the compensation committee's certification of the attainment of the performance level (provided, however, that no shares may be earned or vest prior to the first anniversary of the grant date) and the remaining 50% shall vest at the end of the performance period, subject to the recipient’s continuous employment or service through each such vesting date.
The Company estimated the fair value of the market-based restricted stock units using a Monte Carlo simulation model on the date of grant. As of September 24, 2016, there were 2.0 million market-based restricted stock units with the potential payout level at 100% with a grant date fair value per share of $4.50. As of September 30, 2017, all the 2016 market-based restricted stock units achieved the 250% payout level.
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