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Exhibit
10.1
January 31, 2002 (as amended
through December 7, 2007)
Dr. Hector de J. Ruiz
[Address]
Dear Hector:
On behalf of the Board of Directors of
Advanced Micro Devices, Inc. (including any successor thereto,
“AMD”), I am pleased to offer you continued employment
in the position of Chief Executive Officer of AMD on the terms set
forth below.
1. Position .
(a) You will continue to be
employed by AMD as its Chief Executive Officer. You will have
overall responsibility for the management of AMD and will report
directly to its Board of Directors (“Board”). During
the Employment Period (as defined below), you will also be
nominated to and, if elected by the stockholders of AMD, shall
serve on the Board and such committees that you may be appointed to
by the Board and, provided that you are elected to serve on the
Board, you shall serve as Chairman of the Board.
(b) You will be expected to
devote your full business time and attention to the affairs of AMD,
and you will not render services to any other business without the
prior approval of the Board or, directly or indirectly, engage or
participate in any business that is competitive in any manner with
the business of AMD, except for (i) your current board
membership with Eastman Kodak and (ii) managing your personal
investments, so long as such activities do not significantly
interfere with the performance of your responsibilities as an
employee of AMD in accordance with this Agreement. You will be
expected to comply with and be bound by AMD’s operating
policies, procedures and practices that are from time to time in
effect during the term of your employment.
2. Term . The original effective
date of this Employment Agreement was January 31, 2002 (the
“Effective Date”), and it was amended on
January 1, 2005, October 27, 2005 and December 16,
2006. This Agreement was originally scheduled to expire on
April 25, 2007 (the “Employment Period”), unless
sooner terminated pursuant to Section 8 or extended pursuant
to this Section 2; provided that your participation in the
LTIP (as defined below) award cycles ending in 2004, 2005 and 2006
commenced on October 1, 2004, as set forth in
Section 4(c) of this Agreement. Commencing on the fourth
(4th) anniversary of the Effective Date and on each
anniversary thereafter, the Employment Period shall be
automatically extended for one (1)-year terms unless either AMD or
you shall give the other party not less than ninety
(90) days’ prior written notice of the intention to
terminate this Agreement (a “Notice of
Non-Renewal”).
3. Annual Base Salary . During
the Employment Period, you shall receive an annual base salary (the
“Annual Base Salary”) of at least $950,000, payable in
accordance with AMD’s normal payroll practices. Your Annual
Base Salary will be reviewed on an annual basis by the Compensation
Committee of the Board (the “Compensation Committee”)
and may be increased
from time to time, in the discretion of
the Compensation Committee. As of the date of this amended
Agreement, your Annual Base Salary is $1,124,000. Any increase in
Annual Base Salary shall not serve to limit or reduce any other
obligation to you under this Agreement. Annual Base Salary shall
not be reduced at any time (including after any such increase),
other than as part of an across-the-board salary reduction
applicable to other senior officers of AMD. The term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base
Salary as adjusted from time to time.
4. Bonus .
(a) You will be eligible to
receive an annual bonus (“Annual Bonus”) under
AMD’s 2006 Executive Incentive Plan or any successor plan.
The target incentive opportunity for your Annual Bonus shall be one
hundred fifty percent (150%) of your Annual Base Salary, with
a maximum bonus opportunity under such Annual Bonus not to exceed
four hundred fifty percent (450%) of your Annual Base Salary,
in each case to be paid only upon your achievement of performance
criteria established annually by the Compensation Committee. The
Annual Bonus shall be paid during your taxable year following the
taxable year to which such Annual Bonus relates, or as soon as
practicable after release by AMD of its operational results and
review of goal accomplishments by the Compensation Committee for
the fiscal year unless you and AMD shall have previously agreed to
a deferred payment pursuant to the terms of a plan or agreement
that satisfies the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
The amount payable under this Section 4 shall not be subject
to the further discretion of the Compensation Committee and shall
not be reduced except as specifically provided in Section 4(d)
or as otherwise agreed to by you.
(b) In addition to the bonus
payable in each fiscal year under Section 4(a), you shall be
eligible to receive an additional bonus (the “Additional
Bonus”) in an amount determined by the Compensation Committee
in its discretion. In determining the amount of such additional
bonus, the Compensation Committee shall consider, among other
things, your contribution to the accomplishment of AMD’s
long-range business goals, the success of various corporate
strategies in which you participated in reaching those goals, and
your unique services in connection with the maintenance or increase
in stockholder value of AMD.
(c) You shall be eligible to
participate in the 2005 AMD Long Term Incentive Plan (the
“LTIP”) or in a replacement plan adopted by the Board
during each fiscal year throughout the term of your employment. The
target incentive opportunity for your participation under the LTIP
shall be an amount equal to two hundred percent (200%) of your
Annual Base Salary, with a maximum incentive opportunity under such
LTIP not to exceed four hundred percent (400%) of your Annual
Base Salary. You shall continue to be eligible for monthly
transition participation in AMD’s long term incentive plans
in effect for the three-year award cycles ending 2004, 2005 and
2006, and twenty-five percent (25%) (or such lower percentage
of any cash award as may be determined by the Compensation
Committee) of any award paid to you for such cycles shall be paid
in restricted stock issued under the AMD 2004 Equity Incentive
Plan. The restrictions on any such awards of restricted stock shall
lapse over a two (2) year period, with the restrictions on 25%
of the shares subject thereto lapsing on each six (6) month
anniversary of the grant date.
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(d) The aggregate amount
payable to you under Section 4(a) and Section 4(c) in
each fiscal year shall not be greater than $10,000,000 or such
higher amount as may be permitted under the 2006 Executive
Incentive Plan or deductible by AMD for Federal income tax purposes
for such fiscal year pursuant to Section 162(m) of the Code;
provided, however, that until such time as such 2006 Executive
Incentive Plan is amended to increase its $10,000,000 limit to an
amount that the Compensation Committee determines in its sole
discretion will permit amounts paid to you under Sections 4(a) and
(c) to be deductible for Federal income tax purposes, any
non-deductible amounts that would otherwise be payable under
Sections 4(a) and 4(c) that would exceed the maximum bonus payable
in any such fiscal year, if any, (the “Excess Bonus”)
shall be carried over (on a “first-in, first-out”
basis) and shall be added to the aggregate Annual Bonus and LTIP
payments (if any) payable for any of the next three (3) fiscal
years, whether or not any one or more of such fiscal years ends
before or after the end of the Employment Period; provided that the
Excess Bonus is paid during your first taxable year in which AMD
reasonably anticipates that the deduction of the payment of the
Excess Bonus will not be subject to limitation pursuant to
Section 162(m) of the Code in accordance with the provisions
of Treasury Regulation Section 1.409A-2(b)(7)(i), and provided
further that the Excess Bonus, or portion thereof, may not cause
the Annual Bonus and/or the LTIP payments payable in any fiscal
year to exceed $10,000,000 or such higher amount as may be
permitted under the 2006 Executive Incentive Plan in such fiscal
year.
5. Equity Compensation Awards
.
(a) You shall be eligible for
the grant of equity compensation awards from time to time under the
equity compensation plans and arrangements maintained by AMD. Any
equity compensation grants made to you pursuant to such plans and
arrangements shall be subject to the provisions of this
Section 5 and Section 10 hereof, as
applicable.
(b) On the Effective Date,
you were granted a time-based option to purchase 400,000 shares of
AMD’s Common Stock in accordance with the following terms:
the option has an exercise price equal to one hundred percent
(100%) of the fair market value of AMD’s Common Stock as
of the date of grant; of these option shares, 100,000 shares became
fully exercisable on October 15, 2002; 100,000 shares became
fully exercisable on October 15, 2003; 100,000 shares became
fully exercisable on October 15, 2004; 50,000 shares became
fully exercisable on October 15, 2005; and 50,000 shares
became fully exercisable on October 15, 2006.
(c) On the Effective Date,
you were granted a time-based option to purchase 200,000 shares of
AMD’s Common Stock in accordance with the following terms:
the option has an exercise price equal to one hundred percent
(100%) of the fair market value of AMD’s Common Stock as
of the date of grant; of these option shares, 50,000 shares became
fully exercisable on October 15, 2003; 50,000 shares became
fully exercisable on October 15, 2004; 50,000 shares became
fully exercisable on October 15, 2005; and 50,000 shares
became fully exercisable on June 19, 2006.
(d) On the Effective Date,
you were granted an option to purchase 600,000 shares of
AMD’s Common Stock (“Performance Accelerated
Options”). The Performance Accelerated Options have an
exercise price equal to one hundred percent (100%) of the fair
market value of AMD’s Common Stock as of the date of grant.
For any Measurement Period (as defined below),
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the vesting with respect to 25,000
Performance Accelerated Options will be accelerated to the earliest
possible Measurement Date (the “Release Date”) for that
Measurement Period if (i) for any Target Period during that
Measurement Period the Average Stock Price meets or exceeds the
Stock Price Target for that Target Period and (ii) you are
employed on that Release Date. The number of Performance
Accelerated Options for which the vesting will be accelerated as of
any Release Date will be increased by the number of Performance
Accelerated Options on which the vesting has not been accelerated
but which would have been accelerated on any preceding Measurement
Date had the Stock Price Target been satisfied for a prior Target
Period within the current calendar year or the immediately
preceding calendar years. Notwithstanding the foregoing, 300,000 of
the Performance Accelerated Options shall become fully exercisable
on October 31, 2007, reduced by any Performance Accelerated
Options the vesting of which has previously been accelerated
pursuant to this Section 5(d), and 300,000 of the Performance
Accelerated Options shall become fully exercisable on
October 31, 2008.
(e) For purposes of this
Section 5:
(i) “Average Stock
Price” means the sum of the closing prices of AMD’s
Common Stock on the New York Stock Exchange as reported in The
Wall Street Journal during the applicable Target Period,
divided by the number of days in which AMD’s Common Stock
traded during such period.
(ii) “Measurement
Date” means the fifteenth (15th) calendar day after the
end of any Target Period.
(iii) “Target
Period” means the calendar month set forth in Column
(2) of Exhibit A .
(iv) “Stock Price
Target” means a target stock price as set forth in Column
(3) of Exhibit A .
(v) “Measurement
Period” means any consecutive three (3) month period
commencing on or after May 1, 2002, as set forth in Column
(1) of Exhibit A .
(f) All options granted to
you pursuant to Sections 5(b), 5(c) and 5(d) shall be in addition
to, and not in lieu of, any grant of equity compensation awards
pursuant to Section 5(a) during the Employment Period. You
shall receive annual equity compensation grants no less than the
annual equity compensation grants made to other executive officers
of AMD commencing in 2003 and continuing throughout the Employment
Period.
(g) Each equity compensation
award granted pursuant to Sections 5(a), 5(b), 5(c), 5(d) and 5(f)
shall be transferable upon your election, to the extent consistent
with applicable restrictions under AMD’s registration of the
underlying shares with the SEC.
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(h) All of your equity
compensation awards (including any options that are outstanding on
the Effective Date) shall be subject to, and governed by, the terms
and provisions in the applicable AMD stock incentive plan, except
to the extent of modifications that are expressly provided for in
this Agreement. Notwithstanding anything in the applicable AMD
stock incentive plan to the contrary, all of your options that are
granted pursuant to Section 5 of this Agreement, and all other
options held by you either (x) after the Effective Date or
(y) prior to the Effective Date with an exercise price on the
Effective Date equal to or greater than the fair market value of
AMD’s Common Stock on the Effective Date shall be
exercisable, to the extent vested, at least for the following
periods after the Date of Termination (as defined
below):
(i) in the case of a
Termination for Death or Disability (as defined below), Retirement
(as defined below) or Termination without Cause (as defined below)
or Involuntary Termination (as defined below) on or following a
Change in Control (as defined below), five
(5) years;
(ii) in the case of an
Involuntary Termination or a Termination without Cause prior to a
Change in Control, two (2) years.
(i) If there is any change in
the Common Stock of AMD 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 or reorganization, however structured, then
the number of shares subject to your equity compensation awards,
the exercise price of your options and the Stock Price Targets for
the Performance Accelerated Options shall be equitably and
appropriately adjusted by the Compensation Committee to effectuate
the intent of this Section 5. Notice of any adjustment shall
be given by AMD to you.
(j) Notwithstanding any other
provision of this Section 5 to the contrary, upon an
Involuntary Termination, a Termination without Cause, a Termination
for Death or Disability or Retirement, all or a portion of any
unvested equity compensation awards previously granted to you shall
become vested as provided in Section 10 below.
(k) AMD shall register the
shares issuable under the equity compensation awards on a Form S-8
registration statement and shall keep such registration statement
in effect for the entire period the equity compensation awards
remain outstanding.
6. Vacation . You will be
eligible for four (4) weeks of paid vacation
annually.
7. Other Employee Benefits
.
(a) During the period of any
service hereunder, you shall also be entitled to receive all other
benefits and perquisites which are, and which may be in the future,
generally available to members of AMD’s senior management,
including without limitation, the group health, disability, and
life insurance benefits and participation in any AMD profit
sharing, retirement or pension plan, and any other benefits
generally available to executive officers of AMD; provided,
however, that you shall not be eligible to participate in any cash
bonus plan or other cash incentive arrangement available to
officers of AMD other than as specifically set forth in this
Agreement. You shall be permitted use of a leased airplane
consistent with AMD policy for business purposes.
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(b) AMD shall reimburse you
up to $25,000 each year for out-of-pocket expenses incurred by you
for estate planning, financial planning, tax planning and tax
return preparation.
(c) If and to the extent that
you are required to pay state income taxes to the State of
California in connection with income attributable to payments or
benefits under this Agreement or income recognized in connection
with any option or other equity compensation award granted by AMD,
between January 1st and March 31st of each year following
the year in which you incur such tax liability, AMD shall pay to
you an amount necessary to reimburse you for such state income
taxes. In addition, AMD shall pay you an amount necessary to
reimburse you for any federal and state income taxes payable with
respect to such reimbursement pursuant to this Section 7(c),
such that you will be in the same after-tax position as if no such
state taxes had been imposed. In no event will the total payments
under this Section 7(c) for any taxable year exceed $400,000
($800,000 in the event payments are made or benefits are provided
pursuant to Sections 10(a) or 10(e)). The benefit provided pursuant
to this Section 7(c) is herein referred to as the
“California Tax Payment.” You will be entitled to the
California Tax Payment with respect to income recognized at any
time by you in connection with your employment with AMD. In the
event that after the close of a taxable year which covers the
Employment Period (or a subsequent year in which you recognized
income in connection with your employment with AMD), you are
required to pay California state income taxes with respect to such
taxable year as a result of an audit, claim, investigation or other
inquiry by the California Franchise Tax Board (or other California
tax authority), AMD shall pay the California Tax Payment for such
year by March 31 st of
the year following the year in which you incurred such liability as
a result of the audit, claim, investigation or other
inquiry.
8. Employment and Termination .
Your employment with AMD will be at-will and may be terminated by
you or by AMD at any time for any reason as follows:
(a) You may terminate your
employment at any time for Good Reason (as defined below) and AMD
may terminate your employment by providing a timely Notice of
Non-Renewal (an “Involuntary Termination”);
(b) You may terminate your
employment at any time in your discretion without Good Reason
(“Voluntary Termination”);
(c) AMD may terminate your
employment for “Cause” (as defined below)
(“Termination for Cause”);
(d) AMD may terminate your
employment without Cause (“Termination without
Cause”);
(e) Your employment will
terminate upon your Disability (as defined below) and will
automatically terminate upon your death (“Termination for
Death or Disability”); or
(f) You may terminate your
employment at any time after your sixty-fifth (65th) birthday
or, with the consent of the Board, at any time after your
sixty-first (61 st ) birthday, and AMD may terminate your employment by
providing a Notice of Non-Renewal which would result in the
Employment Period ending after your sixty-fifth
(65th) birthday (“Retirement”).
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(g) Notice of
Termination . Any termination by AMD or by you shall be
communicated by Notice of Termination to the other party given in
accordance with Section 13(f). For purposes of this Agreement,
a “Notice of Termination” means (x) a Notice of
Non-Renewal or (y) a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty (30) days after
the giving of such notice). The failure by you or AMD to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of yours or of AMD, respectively, hereunder or preclude
you or AMD, respectively, from asserting such fact or circumstance
in enforcing your or AMD’s rights hereunder.
(h) Date of
Termination . “Date of Termination” means
(i) if your employment is terminated by AMD other than for
Disability, the date of receipt of the Notice of Termination or any
later date specified therein within thirty (30) days of such
notice (provided that if you receive a Notice of Non-Renewal, the
Date of Termination shall be the date on which the Employment
Period ends unless subparagraph (ii) below is applicable),
(ii) if your employment is terminated by you, thirty
(30) days after receipt of the Notice of Termination (provided
that AMD may accelerate the Date of Termination to an earlier date
by providing you with notice of such action, or, alternatively, AMD
may place you on paid leave during such period) and (iii) if
your employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of your death or the
Disability Effective Date (as defined below), as the case may
be.
9. Definitions . As used in this
Agreement, the following terms have the following
meanings:
(a) “Good Reason”
shall mean in the absence of your written consent:
(i) the assignment to you of
any duties inconsistent with your title, position, authority,
duties or responsibilities as contemplated by Section 1, or
any other action which results in a diminution in such title,
position, authority, duties or responsibilities, other than an
isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by AMD promptly after receipt of notice
given by you; provided that if AMD appoints any person as President
other than yourself on or after AMD’s Annual Meeting in 2002,
and you remain Chief Executive Officer of AMD, such appointment
shall not constitute Good Reason;
(ii) any failure by AMD to
comply with any of the provisions of Sections 3, 4 or 5, or any
other material breach by AMD of any of its obligations hereunder,
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by AMD promptly after
receipt of notice thereof given by you;
(iii) any failure by AMD to
nominate you for election to the Board or, if so nominated, the
failure to be elected to the Board;
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(iv) a request by the Board
that you no longer serve as Chairman of the Board pursuant to
Section 1(a), except where such request is made to comply with
law or regulations issued by the Securities Exchange Commission or
the New York Stock Exchange or any similar regulatory or
self-regulatory agency or organization;
(v) any termination by AMD of
your employment otherwise than as expressly permitted pursuant to
Section 8 of this Agreement;
(vi) the delivery of a Notice
of Non-Renewal by AMD which would result in the Employment Period
ending prior to your sixty-fifth (65th) birthday;
(vii) any requirement that
you be relocated, without your consent, anywhere more than fifty
(50) miles from Austin, Texas;
(viii) the occurrence of a
Change in Control (as defined below); or
(ix) any failure by AMD to
comply with and satisfy Section 13(e).
If you do not deliver to AMD
a Notice of Termination within sixty (60) days (one hundred
eighty (180) days on or following a Change in Control) after
you have knowledge that an event constituting Good Reason has
occurred, the event will no longer constitute Good
Reason.
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