<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Advanced Micro Devices, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Advanced Micro Devices, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
<PAGE> 2
ADVANCED MICRO DEVICES, INC. [LOGO]
ONE AMD PLACE
P.O. BOX 3453
SUNNYVALE, CALIFORNIA 94088-3453
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, APRIL 27, 1994
------------------------
The Annual Meeting of Stockholders of Advanced Micro Devices, Inc., will be
held at the St. Regis Hotel, 2 East 55th Street, New York, New York 10022, on
April 27, 1994 at 10:00 AM for the following purposes:
1. To elect eight directors.
2. To approve the 1992 Stock Incentive Plan, as amended, and an increase
by 4,600,000 in the number of shares authorized to be issued under the
Plan, all as set forth in greater detail in the 1994 proxy statement.
3. To ratify the appointment of Ernst & Young as independent auditors for
the Corporation for the current year.
4. To consider and act on a stockholder proposal concerning the Nominating
Committee of the Board of Directors, as set forth in the proxy
statement, if such proposal is brought before the meeting.
5. To consider and act on a stockholder proposal concerning the
composition of the Board of Directors, as set forth in the proxy
statement, if such proposal is brought before the meeting.
6. To consider and act on a stockholder proposal requesting the Board of
Directors redeem the preferred stock purchase rights issued in 1990
under the Corporation's Stockholder Rights Plan unless such Plan is
approved by the stockholders, as set forth in the proxy statement, if
such proposal is brought before the meeting.
7. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on February 28, 1994,
are entitled to vote at this meeting and any adjournment or postponement
thereof. A list of such stockholders is kept at the offices of the Corporation's
transfer agent, The First National Bank of Boston, BancBoston Trust Company of
New York, One Exchange Plaza, 55 Broadway, 3rd Floor, New York, New York. The
meeting will be open to stockholders of record, proxyholders, and others by
invitation only. Beneficial owners of shares held by a broker or nominee must
present proof of such ownership to attend the meeting.
By Order of the Board of Directors,
MARVIN D. BURKETT
Secretary
Sunnyvale, California
March 25, 1994
PLEASE USE THE ENCLOSED STAMPED ENVELOPE TO RETURN YOUR PROXY. RETURNING
YOUR PROXY WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE ANNUAL MEETING.
YOUR PROMPT RESPONSE WILL HELP YOUR COMPANY ASSURE A QUORUM AND AVOID ADDITIONAL
EXPENSE FOR PROXY SOLICITATION.
<PAGE> 3
ADVANCED MICRO DEVICES, INC.
ONE AMD PLACE
P.O. BOX 3453
SUNNYVALE, CALIFORNIA 94088-3453
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1994
The enclosed proxy is solicited on behalf of the Board of Directors of
Advanced Micro Devices, Inc. (the "Corporation" or "AMD"), a Delaware
corporation, for use at the Annual Meeting of Stockholders to be held at 10:00
AM at the St. Regis Hotel, 2 East 55th Street, New York, New York 10022, on
April 27, 1994, and at any adjournment or postponement thereof. Only holders of
the Corporation's Common Stock of record on February 28, 1994, will be entitled
to vote. Holders of Common Stock are entitled to one vote for each share held.
There is no cumulative voting. At the close of business on the record date,
there were approximately 92,627,503 shares of the Corporation's Common Stock
outstanding.
The presence in person or by proxy of a majority of the shares entitled to
vote is necessary to constitute a quorum at the Annual Meeting of Stockholders.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum. "Broker non-votes" are shares held by brokers
or nominees which are present in person or represented by proxy, but which are
not voted on a particular matter. (Broker non-votes occur when a broker votes on
some matters, but does not vote on other matters, because under applicable rules
of the New York Stock Exchange, the broker cannot vote on the matter in the
absence of instructions from the beneficial owner.) In the absence of
instructions from beneficial owners, brokers do not have discretionary authority
to vote on the three stockholder proposals included in this proxy statement and
which are properly presented for action at the Annual Meeting. The effect of
abstentions and broker non-votes on the calculation of the required vote on
specific proposals to be brought before the Annual Meeting of Stockholders is
discussed under each proposal, where applicable.
Any person giving a proxy in the form accompanying this Proxy Statement has
the power to revoke it prior to its exercise. A proxy may be revoked by filing
an instrument revoking it or a duly executed proxy bearing a later date with the
Office of the Secretary of the Corporation prior to the meeting, or by attending
the meeting and electing to vote in person.
The shares represented by a duly executed and unrevoked proxy in the form
accompanying this Proxy Statement will be voted in accordance with the
specifications contained therein, and in the absence of specifications will be
voted FOR the nominees for director named herein, FOR the 1992 Stock Incentive
Plan as amended, FOR the ratification of auditors, AGAINST any of the
stockholder proposals set forth in the Notice of Annual Meeting of Stockholders
which are properly presented by the proponent or the proponent's qualified
representative for action at the meeting, and according to the discretion of the
proxy holders on any other matters that properly come before the meeting.
This Proxy Statement and the accompanying proxy were first sent to
stockholders on approximately March 25, 1994. The cost of this solicitation is
being borne by the Corporation. The Corporation may reimburse brokerage firms
and other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited personally or by telephone, facsimile or telegram, by certain of the
Corporation's directors, officers and regular employees, without additional
compensation. The Corporation has retained Georgeson & Company, Inc.,
professional proxy solicitors, to assist in the soliciting of proxies. Employees
of the soliciting firm may solicit proxies
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personally, by telephone, facsimile and telegram, and by any other means of
communication. The Corporation expects to pay the solicitor a fee of $7,000 plus
normal out-of-pocket expenses for its assistance in preparing soliciting
material and soliciting proxies, for an anticipated total cost of approximately
$25,000.
PRINCIPAL STOCKHOLDERS
The following table shows the name, address, number of shares held, and
percentage of shares held as of February 18, 1994 by each person or entity known
to the Corporation to be the beneficial owner of more than five percent (5%) of
the Corporation's Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF OWNERSHIP PERCENT OF CLASS
- ------------------------------------ ------------------------------------- ----------------
<S> <C> <C>
The Capital Group 11,607,020 sole dispositive power 12.53%
333 South Hope St. (of which 4,207,100 are held by the
Los Angeles, CA 90071 Capital Group with sole voting power)
FMR Corp. (Fidelity Investments) 5,842,218 sole dispositive power 6.31%
82 Devonshire Street (of which 94,598 shares are held by
Boston, MA 02109 FMR Corp. with sole voting power)
*Vanguard/Windsor Fund, Inc. 7,826,000 shared dispositive power 8.45%
P.O. Box 2600 (of which 7,826,000 are held by
Valley Forge, PA 19482 Vanguard/Windsor with shared voting
power)
*Wellington Management Company 9,936,950 shared dispositive power 10.73%
75 State Street (of which 1,019,500 shares are held
Boston, MA 02109 by Wellington with shared voting
power)
</TABLE>
- ---------------
* Shares held by Vanguard/Windsor are included among shares held by Wellington
Management.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
As set by the Board of Directors pursuant to the Bylaws of the Corporation,
the authorized number of directors to be elected is eight, increased from six,
the number of directors elected last year. Directors will hold office from the
time of their election until the next Annual Meeting of Stockholders and until
successors are elected and qualified. The eight nominees receiving the highest
number of affirmative votes of the shares present in person or represented by
proxy and entitled to vote for them, shall be elected as directors. Only votes
cast for a nominee will be counted in determining whether that nominee has been
elected as director. Stockholders may withhold authority to vote for the entire
slate as nominated or, by writing the name of an individual nominee in the space
provided on the proxy card, withhold the authority to vote for any individual
nominee. Abstentions, broker non-votes, and instructions on the accompanying
proxy card to withhold authority to vote for one or more of the nominees will
result in such nominees receiving fewer votes, but will not otherwise affect the
outcome of the vote.
The following eight persons have been selected by the Nominating Committee
of the Board of Directors and have been accepted by the Board as nominees for
election to the Board: W. J. Sanders III, Dr. Friedrich Baur, Charles M.
Blalack, Dr. R. Gene Brown, Anthony B. Holbrook, Richard Previte, Joe L. Roby,
and Dr. Leonard Silverman. All of the nominees except for Drs. Baur and
Silverman are incumbent directors. If any of the nominees should decline or be
unable to act as a Director, the shares may be voted for such substitute
nominees as the persons appointed in the proxy may in their discretion
determine. Shares represented by the enclosed proxy will be voted "FOR" the
election of these nominees, unless authority to vote for one or more nominees is
withheld.
The experience and background of each of the nominees are set forth below.
W. J. SANDERS III -- Mr. Sanders is Chairman of the Board and Chief
Executive Officer of Advanced Micro Devices, Inc. Mr. Sanders co-founded the
Corporation in 1969. He is also an Advisory Director of Donaldson, Lufkin &
Jenrette, Inc.
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<PAGE> 5
DR. FRIEDRICH BAUR -- 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 on the Board of Directors
of Advanced Micro Devices from 1978 until 1982. From 1982 to 1990, Dr. Baur was
Chairman of the Board of Zahnradfabrik Friedrichshafen AG, a publicly traded
German company.
CHARLES M. BLALACK -- Mr. Blalack is Chairman of the Board and Chief
Executive Officer of Blalack and Company, an investment banking firm and a
member of the NASD. From 1970 until 1991, Mr. Blalack was Chief Executive
Officer of Blalack-Loop, Inc., also an investment banking firm and member of the
NASD. Prior to that, he was founder, chairman and chief executive officer of BW
& Associates, an investment banking firm and member of the NYSE. Mr. Blalack had
been a member of the Board of Directors of Monolithic Memories, Inc. ("MMI")
until it was acquired by the Corporation in 1987. Mr. Blalack is currently a
member of the Board of Directors of GrandCare, Inc.
DR. R. GENE BROWN -- Dr. Brown is a private investor and management
consultant. From 1961 to 1968, Dr. Brown was a full-time professor in the
graduate schools of business at Harvard, then Stanford University. From 1968 to
1974, Dr. Brown was Vice President of Corporate Development for Syntex
Corporation, and from 1974 to 1976, President of Berkeley BioEngineering. He
serves on the Board of Directors of other companies, including the economic
consulting firm of Putnam, Hayes & Bartlett, where he is an outside director and
member of the executive committee.
ANTHONY B. HOLBROOK -- Mr. Holbrook is Vice Chairman of the Board of
Directors and Chief Technical Officer of Advanced Micro Devices, Inc. Prior to
his election as Vice Chairman in 1990, Mr. Holbrook was President from 1986 to
1990 and Chief Operating Officer from 1986 to 1989. Mr. Holbrook was Executive
Vice President and Chief Operating Officer from 1982 to 1986.
RICHARD PREVITE -- Mr. Previte is currently President and Chief Operating
Officer of Advanced Micro Devices, Inc. Prior to his election as President in
1990, Mr. Previte served as Executive Vice President and Chief Operating Officer
from 1989 to 1990, had been Chief Financial Officer and Treasurer of the
Corporation from shortly after its founding in 1969 until 1989, and had been
Chief Administrative Officer and Secretary of the Corporation from 1986 to 1989.
JOE L. ROBY -- Mr. Roby is currently Chairman of the Investment Banking
Group of Donaldson, Lufkin & Jenrette, Inc. Mr. Roby is also a member of the
Board of Directors of Donaldson, Lufkin & Jenrette, Inc. and Sybron Corporation.
Donaldson, Lufkin & Jenrette, Inc. is a securities brokerage and investment
banking firm, and is a wholly-owned subsidiary of the Equitable Life Assurance
Society of the United States ("The Equitable"). The Equitable is a financial
institution providing insurance and other financial services.
DR. LEONARD SILVERMAN -- Dr. Silverman is Dean of the School of Engineering
of the University of Southern California (USC), 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 (IEEE). Dr.
Silverman also served on the Board of Directors of Tandon Corporation from 1988
to 1993.
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<PAGE> 6
STOCK OWNERSHIP TABLE
The table below indicates the number of shares of the Corporation's Common
Stock beneficially owned as of February 18, 1994 by current directors, the
nominees recommended by the Nominating Committee and nominated by the Board of
Directors for election as directors, by each of the executive officers listed in
the Summary Compensation Table, and by all 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 furnished by the respective individuals.
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
DIRECTOR OWNED AS OF PERCENT
NAME AGE SINCE FEBRUARY 18, 1994 OF CLASS
------------------------------------- --- -------- ----------------- --------
<S> <C> <C> <C> <C>
W. J. Sanders III.................... 57 1969 957,708(1) 1%
Dr. Friedrich Baur................... 67 -- (2) --(2) N/A
Charles M. Blalack................... 67 1989 8,400(3) *
Dr. R. Gene Brown.................... 61 1969 53,647(4) *
Anthony B. Holbrook.................. 54 1987 448,609(5) *
Richard Previte...................... 59 1990 198,093(6) *
Joe L. Roby.......................... 54 1991 21,200(7) *
Dr. Leonard Silverman................ 54 -- -- N/A
Stephen J. Zelencik(8)............... 59 N/A 122,102(9) *
Eugene D. Conner(10)................. 50 N/A 219,199(11) *
All directors and executive officers
as a group......................... -- -- 2,427,370(12) 3%
</TABLE>
- ---------------
* Less than one percent (1%)
(1) Includes 600,496 shares subject to options that are exercisable on February
18, 1994, or become exercisable within sixty (60) days thereafter. Excludes
any shares which may be owned by Mr. Sanders' wife, as to which Mr. Sanders
disclaims beneficial ownership.
(2) Dr. Baur was previously a member of the Board of Directors, from 1978 until
1984.
(3) Includes 8,400 shares subject to options that are exercisable on February
18, 1994, or become exercisable within sixty (60) days thereafter.
(4) Includes 8,400 shares subject to options that are exercisable on February
18, 1994, or become exercisable within sixty (60) days thereafter, and
23,847 shares issuable on conversion of Depositary Convertible Exchangeable
Preferred Shares. Dr. Brown holds 12,000 shares of the Corporation's
Depositary Convertible Exchangeable Preferred Shares, amounting to less
than one percent (1%) of the total number of such shares outstanding.
(5) Includes 372,862 shares subject to options that are exercisable on February
18, 1994, or become exercisable within sixty (60) days thereafter.
(6) Includes 134,300 shares subject to options that are exercisable on February
18, 1994, or become exercisable within sixty (60) days thereafter.
(7) Includes 8,400 shares subject to options that are exercisable on February
18, 1994 or become exercisable within sixty (60) days thereafter.
(8) Mr. Zelencik is Senior Vice President and Chief Marketing Executive of
Advanced Micro Devices, Inc.
(9) Includes 84,625 shares subject to options that are exercisable on February
18, 1994 or become exercisable within sixty (60) days thereafter.
(10) Mr. Conner is Senior Vice President, Operations, of Advanced Micro Devices,
Inc.
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<PAGE> 7
(11) Includes 209,264 shares subject to options that are exercisable on February
18, 1994 or become exercisable within sixty (60) days thereafter.
(12) Includes 1,818,928 shares subject to options that are exercisable on
February 18, 1994, or become exercisable within sixty (60) days thereafter,
and 23,847 shares issuable on conversion of Depositary Convertible
Exchangeable Preferred Shares. All directors and executive officers as a
group hold 12,000 Depositary Convertible Exchangeable Preferred Shares,
amounting to less than one percent (1%) of the total number of such shares
outstanding.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled or special meetings
during the fiscal year ended December 26, 1993 (the "Fiscal Year"). Each current
member of the Board of Directors nominated for election attended at least 75% of
the aggregate of the total number of meetings of the Board of Directors and of
the committees on which he served during the Fiscal Year. The Corporation has
standing Audit, Nominating and Compensation Committees of the Board of
Directors.
Audit Committee
The Audit Committee, which during the Fiscal Year consisted of Dr. R. Gene
Brown as Chairman, Mr. Joe L. Roby and Mr. Charles M. Blalack, all non-employee
directors, held three meetings during the Fiscal Year. Members are appointed
annually by the full Board. The functions of the Audit Committee include review
of internal controls of the Corporation, legal and accounting compliance
generally, and the sufficiency of the Corporation's financial reporting. In
connection with these reviews it meets alone with appropriate Corporation
financial and legal personnel and with the independent auditors, who have free
access to the Committee at any time. The Corporation's Internal Control
Department, whose director reports directly to the Chairman of the Audit
Committee, serves a staff function for the Committee. The Committee recommends
to the Board for its approval and for ratification by the stockholders the
engagement of the independent auditors to serve the following year in examining
the accounts of the Corporation. The Committee also annually reviews the
independence of the independent auditors as a factor in these recommendations.
Nominating Committee
The Nominating Committee is currently comprised of Mr. W. J. Sanders III,
as Chairman, Mr. Joe L. Roby, Mr. Charles M. Blalack, and Dr. R. Gene Brown.
This Committee met once during 1993 to consider nominees for the 1993 Annual
Meeting. Stockholders who wish to submit names of prospective nominees for
consideration by the Nominating Committee should do so in writing to the Office
of the Secretary of the Corporation in accordance with the Bylaws of the
Corporation.
Compensation Committees
The Compensation Committee is currently comprised of Mr. Charles M. Blalack
as Chairman, Dr. R. Gene Brown and Mr. Joe L. Roby. Members are appointed
annually by the full Board. This Committee reviews and from time to time
recommends to the full Board adjustments in the compensation of any officer of
the Corporation who is also a member of the Board, and performs periodic reviews
with management of existing and proposed compensation plans, programs and
arrangements both for officers of the Corporation and for certain non-officer
employees. During 1993, the Compensation Committee met four times and was
comprised of Mr. Charles M. Blalack as Chairman, Dr. R. Gene Brown, and Mr. Joe
L. Roby during most of the year. Mr. W. J. Sanders III was a member of the
Compensation Committee until February 17, 1993, when he resigned from the
Committee and was replaced by Mr. Roby. Mr. Sanders participated in one
committee meeting prior to his resignation. Mr. Sanders, acting on his own as
Chief Executive Officer, has the authority to set salaries and declare bonuses
for other executive officers and to allocate bonuses under the Executive Bonus
Plan.
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<PAGE> 8
The Board has also established an Officer Stock Committee, which from time
to time meets to consider and to act upon recommendations of management to grant
stock options, grant stock appreciation rights, and award restricted stock to
key employees, including officers and members of the Board who are employees of
the Corporation. The Officer Stock Committee, comprised of Mr. Blalack as
Chairman, Mr. Roby and Dr. Brown, met twice during the Fiscal Year. Members are
appointed annually by the full Board. Effective February 18, 1994 the Officer
Stock Committee was dissolved, and its duties were assumed by the Compensation
Committee. The Board has delegated to Mr. Sanders, acting as the Employee Stock
Committee of the Board, authority to grant stock options and stock appreciation
rights and award restricted stock in amounts up to 25,000 shares per employee
per year and otherwise administer the plans with respect to employees who are
not also members of the Board or officers. The Employee Stock Committee took
action 20 times during the Fiscal Year.
Directors' Fees and Expenses
Directors who are not employees of the Corporation individually receive an
annual fee of $20,000, a fee of $1,000 for attendance at each regular or special
nontelephonic meeting of the Board, and a fee of $500 for attendance at each
nontelephonic meeting of each committee (other than the Nominating Committee) on
which they serve. In addition, the Chairman of the Audit Committee receives an
annual fee of $20,000 for services in that capacity, and the Chairman of the
Compensation Committee receives an annual fee of $4,000 for services in that
capacity. No additional amounts are paid for special assignments. The
Corporation also reimburses reasonable out-of-pocket expenses incurred by
Directors performing services for the Corporation, including travel expenses of
their spouses.
Pursuant to a nondiscretionary formula set forth in the 1992 Stock
Incentive Plan, non-employee Directors also receive stock options covering
12,000 shares on their initial election to the Board (the "First Option"), and
automatically receive supplemental options covering 3,000 shares on each
subsequent re-election (the "Annual Option"). The First Option vests in
increments of 4,800, 3,600, 2,400 and 1,200 on July 15 of the first, second,
third and fourth calendar years following election. Each Annual Option vests in
increments of 1,000 shares each on July 15 of the second, third and fourth
calendar years following re-election. Each such option is granted with an
exercise price at fair market value on the date of grant. These options expire
on the earlier of ten years from the grant date or twelve months following
termination of the director's tenure 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 not less than $5,000. Deferred amounts
plus interest are payable in a lump sum cash payment 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. 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 1993, Dr.
Brown deferred fees in the amount of $20,000 pursuant to this program. Dr. Brown
received the use of an automobile provided by the Corporation, a value taxable
to him at $20,142 in lieu of his annual fee for acting as Chairman of the Audit
Committee.
Notwithstanding anything to the contrary set forth in any of the
Corporation's 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 12 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.
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REPORT OF THE COMPENSATION COMMITTEE AND OF THE OFFICER STOCK COMMITTEE
The Compensation Committee sets the compensation of the Chief Executive
Officer and reviews the design, administration and effectiveness of compensation
programs for other key executives, and grants stock options and stock
appreciation rights and awards restricted stock to officers. During 1993, stock
options for executive officers were granted by the Officer Stock Committee,
which was dissolved effective February 18, 1994.
Compensation Philosophy and Policies
The Compensation Committee and the Officer Stock Committee believe that
long-term corporate success, defined as sustained profitable growth, is best
achieved in an environment in which employees have the opportunity to innovate,
and are rewarded appropriately for that innovation. Our compensation philosophy
is to provide total compensation opportunities that are competitive with the pay
practices of other industry-leading companies, and to provide a strong and
direct link between corporate performance and compensation. This is accomplished
through a combination of cash incentives and equity incentives which are granted
to a broad range of the Corporation's employees. We believe that this closely
aligns employee interests with those of our stockholders. This alignment is
evident in our executive compensation program, which is designed to:
- Strengthen the relationship between pay and stockholder value by focusing
on variable compensation, such as annual performance incentives, and
executive ownership of shares, using stock options and other programs.
- Enhance the Corporation's ability to attract, encourage and retain
exceptionally knowledgeable and experienced executives.
- Balance short-term and long-term business financial goals.
As an example of this highly performance-based philosophy, in 1990 the
Corporation made no profits, and Mr. Sanders and other executives earned no
bonus with respect to 1990 results. Conversely, in 1993 the Corporation achieved
record operating profits and Mr. Sanders and all but two other executives earned
maximum bonuses payable.
Base Salary
The Compensation Committee reviews Mr. Sanders' base salary annually,
considering factors such as individual performance (leadership, employee morale,
industry activities, and maintaining a competitive advantage), corporate
performance factors (sales growth, profitability, return on equity) and external
competitive pay practices. In analyzing competitive pay practices, the
Compensation Committee has reviewed compensation ranges for a select group of
high technology companies with annual revenues generally in excess of $1
billion. Most of these companies are included in the S&P High Technology
Composite Index. The Corporation endeavors to attract and retain above-average
employees, and therefore sets base salary at or above the median for the
surveyed companies, with an opportunity for total cash compensation to reach the
top quartile when performance targets are exceeded. In recognition of Mr.
Sanders' service and contribution to the continued success of the Corporation
and to ensure his continued service as Chairman and Chief Executive Officer, the
Corporation entered into an employment agreement with him effective July 1,
1991, which continues through December 31, 1996. Mr. Sanders' agreement provides
for his base salary to be reviewed annually by the Board of Directors or its
delegate (currently the Compensation Committee), and increased if performance
and competitive practices warrant. The Compensation Committee increased Mr.
Sanders' annual base salary in May, 1993 by 5.5% from $900,000 to $950,000,
reflecting the fact that in 1992 the Corporation achieved record operating
income on record annual revenues. Mr. Sanders later voluntarily reduced his base
salary to $929,000, a 3.2% increase over his prior base salary, in order to
enhance the Corporation's ability to deduct the portion of his compensation
which exceeds $1 million.
In consultation with members of the Compensation Committee, the Chairman
and Chief Executive Officer reviews annually every other executive officer's
base salary, including those officers who are also
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<PAGE> 10
directors. When reviewing base salaries, Mr. Sanders considers individual and
corporate performance, levels of responsibility, and external pay practices.
Annual Incentives
Annual incentive opportunities allow the Corporation to communicate key
corporate goals to all employees and reward employees for achieving those goals
each fiscal year. As one example of these incentives, the Corporation allocates
ten percent of operating profits to a profit sharing program in which all
employees participate. A portion of this allocation is paid in cash and a
portion is contributed to a tax qualified deferred retirement plan.
Mr. Sanders' employment agreement provides for an annual incentive bonus.
This incentive compensation is payable in an amount equal to 0.6% of the annual
adjusted operating profits of the Corporation, not to exceed 200% of Mr.
Sanders' annual base salary. Any amount exceeding the maximum annual award is
added to the award determined for any of the next three fiscal years. A
discretionary bonus may also be awarded by the Board or its delegate (currently
the Compensation Committee) for unique performance achievements. Pursuant to
bonus agreements entered into in 1992, Mr. Previte and Mr. Holbrook are also
eligible for and received annual incentive bonuses similar to Mr. Sanders'
bonus, but based on 0.3% and 0.15% of adjusted operating profits, respectively.
For 1993, AMD reported record sales of $1,648,280,000, an increase of 9%
over the prior year's $1,514,489,000. The Corporation's operating income was a
record $305,053,000, an increase of 13% over the prior year's $269,945,000.
Based on this outstanding financial performance, Mr. Sanders' 1993 annual
incentive payment was $1,895,879 ($1,900,000 discounted by $4,121 for early
payment in December 1993), which amount was further reduced by $41,042, to
reflect Mr. Sanders' voluntary reduction in his base pay to $929,000 per annum.
This yielded a final 1993 incentive payment of $1,854,837 ($1,857,874 discounted
by $3,037 for early payment in December, 1993), with an additional $226,580
carried over for payment in future years.
Senior executives other than Mr. Sanders, Mr. Previte and Mr. Holbrook were
eligible for and earned awards under the Executive Bonus Plan for 1993. A
portion of the bonus was based on company profitability for the last fiscal year
and responsibility level within the Corporation, and a portion was based on
return on equity and sales growth over a multi-year period. This calculation
takes into account the cyclical nature of the semiconductor industry and
encourages the balancing of short-term decisions with the long-term success of
the Corporation. Mr. Sanders determined the allocation of bonus opportunities to
other executive officers, considering such factors as individual and corporate
performance, levels of responsibility, and external pay practices. Amounts paid
were formula-based, variable on a sliding scale over a wide range of
performance. In future years, both the short-term and long-term components will
be based in part on performance against pre-established levels of performance,
and a threshold level of corporate financial performance must be exceeded before
any awards are earned. During 1993, all executive officers other than Mr.
Previte and Mr. Holbrook earned maximum bonus amounts. Mr. Previte and Mr.
Holbrook will reimburse the Corporation $1,700 and $840, respectively, for the
early payments in December, 1993 of their bonuses, in order to enhance the
Corporation's ability to deduct present and future bonus payments to them.
Long-Term Incentives
During 1993, the Officer Stock Committee held the authority to administer
and grant options to purchase shares pursuant to the 1992 Stock Incentive Plan
and other various stock option plans, and to award shares to selected employees
pursuant to the Corporation's Restricted Stock Award Plan. Shares and options
granted under the plans generally become freely transferable or exercisable
after continued employment for a period of six months to five years, or when the
employee or the Corporation achieves certain performance criteria. (Effective
February 18, 1994, the Officer Stock Committee was dissolved and its duties were
assumed by the Compensation Committee, the members of which are the same as
comprised the Officer Stock Committee.)
Grants under these plans provide an immediate and direct link to
shareholder interests. The Corporation and its stockholders benefit from the
increased morale and productivity that the Corporation believes are
8
<PAGE> 11
associated with these grants, as well as the ability to retain key employees
through the vesting provisions contained in the plans. The number of shares
granted is based on the Corporation's business plans, the employee's corporate
level of responsibility, individual performance, historical award data, and
competitive practices of other companies, most of which are included in the S&P
High Technology Composite Index. Whether an executive has exercised previously
granted options, or the number of shares or options the executive holds, is
generally not considered when granting options or restricted stock. While over a
multi-year period AMD strives to award options in amounts equal to or above
competitive practice, in 1993 awards to executives were below competitive
practices due to a shortage of available shares. The Compensation Committee
unanimously recommends that the number of shares under the 1992 Stock Incentive
Plan be increased by 4.6 million. Stockholders are being asked to approve such
increase at the 1994 annual meeting.
Stock options and restricted shares were granted to Mr. Sanders in 1991 in
connection with signing a new employment agreement. No additional restricted
shares or stock options were granted to him in 1992 or 1993.
Other Incentives
The semiconductor industry is characterized by high volatility and there is
often frequent turnover of employees, including executives. In view of this and
of the fact that the Corporation does not have a pension plan, several deferred
compensation programs are offered. An executive may defer up to one-half of his
or her salary and bonuses. Deferred amounts plus earnings are payable in a lump
sum or installments, commencing after a specified number of years or on
retirement. Under certain circumstances, distribution may be made in cash or in
the form of a whole life insurance policy. On occasion, the Corporation will
make an interest-free home loan to an officer, usually as part of a recruitment
package or in connection with the officer's relocation from outside the area.
Tax Policy
Recently enacted Internal Revenue Code ("IRC") Section 162(m) 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 payments are contingent on stockholder approval of the
compensation arrangement. The Corporation has endeavored to structure its
compensation plans to achieve maximum deductibility under Section 162(m) with
minimal sacrifices in flexibility and corporate objectives. To that end, the
Corporation's 1992 Stock Incentive Plan has been amended to ensure continued
deductibility under Section 162(m) and stockholder approval is sought for the
Plan as amended. With respect to non-equity compensation arrangements, the
Compensation Committee has reviewed the terms of those arrangements most likely
to be subject to Section 162(m).
The Compensation Committee believes that with stockholder approval of the
1992 Stock Incentive Plan, as amended, the Corporation will have a reasonable
basis for claiming full deductibility of amounts paid under existing executive
compensation arrangements. The Committee will consider the continued
deductibility of such payments on future compensation arrangements with Messrs.
Sanders, Previte and Holbrook but deductibility will not be the sole factor used
by the Committee 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 the Corporation may enter into
compensation arrangements in the future under which payments are not deductible
under Section 162(m). For example, compensation attributable to future awards of
restricted stock or below-market options may not be deductible in all
circumstances.
Conclusion
The Compensation Committee and the Officer Stock Committee believe that
long-term stockholder value is enhanced by corporate and individual performance
achievements. Through the plans described above, a significant portion of the
Corporation's executive compensation is based on corporate and individual
performance, as well as industry-competitive pay practices. The Committees
believe equity compensation, in the form of stock options and restricted stock,
is vital to the long-term success of the Corporation. The
9
<PAGE> 12
Corporation remains committed to this policy, recognizing the competitive market
for talented executives and that the cyclical nature of its business may result
in highly variable compensation for a particular time period.
<TABLE>
<S> <C>
Compensation Committee Members:* Officer Stock Committee Members:
Mr. Charles M. Blalack Mr. Charles M. Blalack
Dr. R. Gene Brown Dr. R. Gene Brown
Mr. Joe L. Roby Mr. Joe L. Roby
</TABLE>
- ---------------
* In February 1993, Mr. Sanders resigned from the Compensation Committee and Mr.
Roby was appointed.
EXECUTIVE COMPENSATION
The following table shows for the three fiscal years ended December 26,
1993, the compensation paid by the Corporation and its subsidiaries to the
Corporation's Chief Executive Officer and to the four other most highly paid
executive officers whose aggregate salary and bonus compensation exceeded
$100,000.
SUMMARY COMPENSATION TABLE (1991-1993)
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(A) (B) (C) (D) (E) (F) (G) (I)
<CAPTION>
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) SARS COMPENSATION(3)
- --------------------------- ---- -------- ---------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. J. Sanders III 1993 $929,000 $2,081,418(4) $ 201,200(5) $ 0 0 $40,926
Chairman and Chief 1992 $874,999 $1,874,976(6) $ 214,541(7) $ 0 0 $21,272
Executive Officer 1991 $720,749 $1,007,044 $ 155,723(8) $3,900,000 (9) 600,000(10) $12,504
Richard Previte 1993 $543,125 $1,039,009 $ 34,879 $ 0 25,000 $33,796
President and Chief 1992 $510,625 $ 944,514 $ 44,529 $ 0 0 $21,272
Operating Officer 1991 $447,874 $ 503,522 $ 37,963 $ 286,344 (11) 234,900(10) $12,504
Anthony B. Holbrook 1993 $440,937 $ 519,515 $ 32,872 $ 0 12,500 $32,432
Vice Chairman and 1992 $425,000 $ 472,257 $ 44,632 $ 0 0 $21,272
Chief Technical Officer 1991 $419,438 $ 275,188 $ 41,597 $ 0 84,900(10) $12,504
Stephen J. Zelencik 1993 $334,593 $ 304,763 $ 27,958 $ 0 12,500 $31,882
Sr. Vice President and 1992 $316,875 $ 290,250 $ 31,841 $ 0 0 $21,272
Chief Marketing Executive 1991 $294,095 $ 211,008 $ 29,903 $ 0 103,875(10) $12,504
Eugene D. Conner 1993 $313,501 $ 254,400 $ 28,028 $ 0 12,500 $28,824
Sr. Vice President 1992 $285,052 $ 240,000 $ 28,801 $ 0 94,300 $21,272
Operations 1991 $251,260 $ 181,300 $ 10,654 $ 0 25,000(10) $ 9,366
</TABLE>
- ---------------
(1) For the named persons other than Mr. Sanders, includes cash profit sharing
in the following amounts for Messrs. Previte, Holbrook, Zelencik and Conner
respectively: for 1993, $34,879, $28,319, $21,489 and $20,129; for 1992,
$37,328, $32,053, $25,190 and $23,213; for 1991, $10,421, $9,465, $7,074
and $6,142.
(2) The number of restricted shares and their aggregate value at December 26,
1993 were as follows: For Mr. Sanders, 180,000 shares valued at $3,127,500;
for the four other persons listed on the table, none. No dividends are paid
on any shares of restricted stock.
(3) Includes, for the most recent fiscal year and for each of the individuals
listed, contributions to the Corporation's tax-qualified deferred profit
sharing plan in the amount of $17,573, matching contributions to the
Corporation's 401(k) Plan in the amount of $3,433, and for Messrs. Sanders,
Previte, Holbrook, Zelencik, and Conner nonqualified deferred compensation
in the amounts of $17,520, $10,390, $9,890, $8,476 and $6,890,
respectively, and life insurance in the amounts of $2,400, $2,400, $1,536,
$2,400 and $928, respectively.
(4) A maximum amount of $1,854,837 was paid out with respect to fiscal year
1993, with a balance of $226,580 carried over for payment with respect to
fiscal year 1994, 1995 or 1996.
(5) Includes $94,937 of in-kind compensation in the form of the use of
company-provided vehicles and drivers, and cash payments for profit sharing
and tax gross-ups, in the amounts of $60,200 and $38,663, respectively.
(6) A maximum amount of $1,800,000 was paid out for fiscal year 1992, and the
balance of $74,976 was carried over for payment with respect to fiscal year
1993, 1994 or 1995.
(7) Includes $94,932 of in-kind compensation, in the form of the use of
company-provided vehicles and drivers, and cash payments for profit sharing
and tax gross-ups, in the amounts of $60,012 and $48,497, respectively.
(8) Includes $85,962 of in-kind compensation, in the form of the use of
company-provided vehicles and drivers, and cash payments for profit sharing
and tax gross-ups, in the amounts of $16,637 and $45,524, respectively.
(9) Includes the value of 180,000 shares which became vested in increments of
60,000 shares each in January 1992, 1993 and 1994.
(10) Includes tandem limited stock appreciation rights on a like number of
shares.
(11) Includes the value of 19,250 shares which became vested in 1992.
10
<PAGE> 13
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(A) (B) (C) (D) (E) (F) (G)
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
NUMBER OF EMPLOYEES EXERCISE
OPTIONS/SARS IN FISCAL PRICE EXPIRATION
NAME GRANTED(1)(2) YEAR PER SHARE DATE 0% 5% 10%
- --------------------- ------------- ------------- --------- ---------- --- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. J. Sanders III.... 0 0.00% -- -- -- -- --
Richard Previte...... 25,000 1.20% $ 28.50 5/18/03 $ 0 $ 448,087 $ 1,135,542
Anthony B.
Holbrook........... 12,500 .60% $ 28.50 5/18/03 $ 0 $ 224,044 $ 567,771
Stephen J.
Zelencik........... 12,500 .60% $ 28.50 5/18/03 $ 0 $ 224,044 $ 567,771
Eugene D. Conner..... 12,500 .60% $ 28.50 5/18/03 $ 0 $ 224,044 $ 567,771
All Stockholders as a
group.............. -- $ 28.50 -- $ 0 $1.6 Billion $4.2 Billion
Gain to named
executive officers
as a percentage of
gain to all
stockholders....... 0.07% 0.07%
</TABLE>
- ---------------
(1) Each option grant typically is subject to the following material terms:
Grants are divisible and may be exercised in groups of one or more shares.
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. Options become fully vested on a change in control. The
Compensation Committee of the Board of Directors has the discretion and
authority to grant Limited Stock Appreciation Rights in tandem with options.
No SARs or LSARs were granted during the period covered by the table.
(2) All grants vest in single increments on July 25, 1995.
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT 12/26/93 OPTIONS/SARS AT 12/26/93
ACQUIRED ON VALUE ------------------------------- -------------------------------
NAME EXERCISE REALIZED (EXERCISABLE) (UNEXERCISABLE) (EXERCISABLE) (UNEXERCISABLE)
- --------------------- ----------- ---------- ------------- --------------- ------------- ---------------
W. J. Sanders III.... 400,000 $8,276,420 600,496 600,000 $ 7,659,512 $ 3,503,000
Richard Previte...... 170,540 $2,846,164 134,300 147,500 $ 356,900 $ 602,497
Anthony B.
Holbrook........... 150,000 $2,421,550 372,862 85,000 $ 4,552,219 $ 477,497
Stephen J.
Zelencik........... 132,975 $2,278,431 84,625 77,875 $ 552,888 $ 370,230
Eugene D. Conner..... 0 0 209,264 75,000 $ 2,040,798 $ 306,304
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The Corporation maintains no long-term incentive plans for executive
officers other than stock options and restricted stock.
PENSION TABLE
The Corporation maintains no pension plan for executive officers.
11
<PAGE> 14
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ADVANCED MICRO DEVICES, S&P 500 COMPOSITE INDEX AND
S&P HIGH TECHNOLOGY COMPOSITE INDEX
The following graph shows a five-year comparison of cumulative total return
on Common Stock for the Corporation, the Standard & Poor's 500 Composite Index,
and the Standard & Poor's High Technology Composite Index.
(CHART)
The chart above assumes $100 invested on December 31, 1988 in Advanced Micro
Devices Common Stock, S&P 500 Composite Index and S&P High Technology Composite
Index, and the reinvestment of dividends. The graph was plotted using the
following data:
<TABLE>
<CAPTION>
YEAR ENDING
-------------------------------------------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
AMD........................................... $100 $ 91 $ 57 $203 $210 $206
S&P 500....................................... $100 $132 $128 $166 $179 $197
S&P High Technology........................... $100 $ 99 $101 $115 $120 $147
</TABLE>
MATERIAL COMPENSATION AGREEMENTS
Chairman's Employment Agreement. The Corporation has an employment
agreement with Mr. Sanders, the term of which commenced July 1, 1991, and
continues until December 31, 1996, unless terminated prior to that time by a
majority vote of the full Board of Directors. Mr. Sanders may extend the term of
the employment agreement for an additional one-year period upon written notice
to the Corporation given no later than October 15, 1996. Mr. Sanders' annual
base compensation is currently $929,000. This amount may be increased (but not
reduced) by the Board of Directors or its delegate. Additional incentive
compensation is payable in the form of an annual bonus equal to 0.6% of the
adjusted operating profits of the Corporation. However, such annual bonus may
not be greater than 200% of his annual base salary. The amount of the annual
bonus which exceeds the maximum bonus payable in a particular year (the "Excess
Bonus"), if any, shall be added to the bonus determined for any of the next
three fiscal years, provided that the addition of the Excess Bonus does not
cause the bonus otherwise payable to exceed the maximum bonus payable in that
year. "Adjusted operating profits" are deemed for these purposes to constitute
the Corporation's operating income as reported on the Corporation's financial
statements, increased by any expenses accrued for profit sharing plan
contributions, bonuses under the Corporation's Executive Bonus Plan, the bonuses
to the Corporation's Chief Operating Officer and Chief Technical Officer, and
the bonus payable
12
<PAGE> 15
to Mr. Sanders. Mr. Sanders may also receive an additional amount (if any) as
shall be fixed by the Board, based on the Board's assessment of his performance
during the period for which the bonus is payable. In accordance with Mr.
Sanders' contract, his base salary was increased effective March 29, 1993, from
$900,000 to $950,000 per annum. This 5 1/2% increase was identical to the
percentage salary increases of the other executive officers of the Corporation.
The Compensation Committee intended this raise to be consistent with prior
increases and in conformity with competitive pay practices. Subsequent to Mr.
Sanders' base salary increase, the Internal Revenue Service published proposed
regulations in December 1993, relating to the deductibility of executive
compensation in excess of $1 million. In order to enhance the Corporation's
ability to deduct his compensation in excess of $1 million, Mr. Sanders
voluntarily agreed to reduce his base salary to $929,000, a level consistent
with the proposed IRS regulations, and to correspondingly reduce his bonus. Mr.
Sanders' voluntary salary and bonus reductions will in no way waive any other
rights he may have under his employment agreement.
Under the employment agreement, the Corporation is obligated to guarantee
the repayment of any loan obtained by Mr. Sanders for the purpose of exercising
options or warrants to purchase stock of the Corporation, and to pay the
interest on any such loan. The Corporation's obligation to guarantee such loans
and pay interest thereon continues for a period of 13 months following the date
of the event that causes Mr. Sanders to incur tax liability by virtue of having
exercised options or warrants to purchase stock of the Corporation. The amount
of any such guarantee and the amount on which interest will be paid is limited
to the exercise price of the options and warrants plus taxes paid by Mr. Sanders
from exercise through such 13-month period by reason of the exercise. The
Corporation may also limit such guarantee obligations in order to comply with
state and federal law or to comply with financial covenants imposed by the
Corporation's lenders. Mr. Sanders is also entitled to receive certain benefits
upon his disability (as that term is defined in the employment agreement) and
upon his death while employed by the Corporation. Mr. Sanders is also entitled
to receive such other benefits of employment with the Corporation as are
generally available to members of the Corporation's management.
If the Corporation terminates Mr. Sanders' employment (for reasons other
than theft, misappropriation or conversion of corporate funds) or re-assigns him
to lesser duties, reduces or limits his compensation or benefits, removes him
from his responsibilities other than for good cause, requires him to relocate or
transfer his principal place of residence, or if Mr. Sanders is not elected or
retained as Chairman and Chief Executive Officer and a Director of the
Corporation, the Corporation is nevertheless obligated to pay Mr. Sanders his
annual base salary (at the annual rate in effect as of the date of the event
triggering the payment) for the unexpired balance of the term of the agreement,
but no less than one full year's base salary at such rate. In such
circumstances, the Corporation would also be obligated to pay Mr. Sanders the
incentive compensation to which he would have been entitled for the fiscal year
during which such termination or other event takes place and for the following
fiscal year, plus the amount of any Excess Bonus then remaining unpaid. In
addition, under such circumstances, any options which Mr. Sanders holds on stock
of the Corporation will become fully vested for exercise and the restrictions on
any shares of restricted stock of the Corporation which Mr. Sanders may then
hold will lapse. Mr. Sanders will also be entitled to receive all benefits due
him under the Corporation's tax-qualified employee benefit plans and any
supplementary plans as well as the unvested company contributions. He will also
have the right to be paid his legal fees for contesting any portion of the
employment agreement including termination or in connection with any tax audit
seeking to assess an excise tax on the payments under the agreement. Mr. Sanders
will also be entitled to receive, for five years following termination or such
other event, health and welfare benefits comparable to those he was receiving,
reimbursements for all income taxes due on the receipt of such benefits, the use
of a Corporation automobile, up to $25,000 each year for expenses incurred for
estate, tax and financial planning, and an office and secretarial services
equivalent to those provided Mr. Sanders while he was Chairman and Chief
Executive Officer. For at least six years following termination or such other
event, Mr. Sanders will be indemnified by the Corporation to the same extent as
prior thereto and be provided with director's and officer's fiduciary and
professional liability insurance equivalent to the insurance carried by the
Corporation while he was Chairman and Chief Executive Officer.
If Mr. Sanders' employment is terminated by the Corporation for good cause,
as defined in the employment agreement, or cause as defined in the California
Labor Code (other than as a result of certain
13
<PAGE> 16
actions by the Corporation), the Corporation has the right to retain Mr. Sanders
as a consultant for 12 months thereafter, but in no event beyond the unexpired
balance of the term of his employment agreement, at a rate of compensation equal
to that then in effect pursuant to the employment agreement. While so retained,
Mr. Sanders is prohibited from being associated with any competitive business.
If the Corporation does not exercise this right, Mr. Sanders' right to
compensation ceases upon his resignation or termination as described above. If
Mr. Sanders' employment is terminated by reason of disability or death, he or
his estate is entitled to his full base salary under the agreement for the
unexpired balance of its term, plus the incentive compensation for the fiscal
year in which such termination occurred and for the following fiscal year, plus
the amount of any Excess Bonus then remaining unpaid. In addition, the
restrictions on any restricted stock of the Corporation which Mr. Sanders holds
will lapse and any options Mr. Sanders holds to purchase the Corporation's stock
which would have become vested within two years from the date of termination
will become fully vested. In the event of Mr. Sanders' death, the Corporation
must pay to his designated representative, his personal representative or his
estate as a death benefit, compensation for a period of 12 months after his
death at the same monthly rate of compensation which prevailed during the month
of his death plus the proceeds from a life insurance policy, subject to a split
dollar arrangement between Mr. Sanders and the Corporation, with a face amount
of $1,000,000. Mr. Sanders is also entitled to receive an amount from the
Corporation necessary to reimburse Mr. Sanders for any federal excise tax
imposed on Mr. Sanders by reason of his receipt of payments under his employment
agreement or otherwise so that he will be placed in the same after-tax position
as he would have been in had no such tax been imposed.
Bonus Agreements. In 1992, the Corporation entered into separate bonus
agreements with Mr. Previte and Mr. Holbrook. Under the terms of the agreements,
Mr. Previte receives 0.3% of adjusted operating profits of the Corporation and
Mr. Holbrook receives 0.15% of adjusted operating profits up to an annual
maximum and carryover amount similar to that under Mr. Sanders' employment
agreement. "Adjusted operating profits" are defined in the same manner as under
Mr. Sanders' employment agreement.
Deferred Compensation Agreements. The Corporation has purchased an
insurance policy for Messrs. Sanders, Previte, Holbrook and Zelencik, and has
agreed to continue to pay premiums on each policy for each year in which the
executive officer defers compensation under the Executive Savings Plan (the
"Plan"). The executive officer will become fully entitled to the policy only if
he or she continues employment with the Company until the vesting date set forth
in the agreement, becomes disabled, is terminated without cause or terminates
employment following a change in control under certain conditions, or if the
Company fails to pay the required premiums on the policy. If an executive
officer becomes vested in this policy, his or her benefits under the Plan will
be reduced by an amount equal to the cash surrender value of the policy. If the
executive officer terminates employment before becoming vested in the policy,
the Corporation will be entitled to receive an amount equal to the cash
surrender of the policy. If the executive officer dies while employed by the
Company and before becoming vested in the policy, the executive officers'
beneficiary will be entitled to receive a portion of the policy's death benefit
equal to three times the executive's base salary, subject to a limit of $2
million or the maximum insurable amount, and the benefit payable to the
executive officer's beneficiary under the Plan will be offset by that amount.
The value of the premium attributable to this term insurance provided under each
policy has been included in the column encaptioned "All Other Compensation." The
cash surrender value of each policy has been designed to be less than the
balance of the deferred compensation and interest credited to each executive's
account under the Plan. Thus, the existence of the life insurance policy will
not result in the executive receiving benefits with a greater value than his or
her benefits payable under the Plan plus the term life insurance.
CHANGE IN CONTROL ARRANGEMENTS
Management Continuity Agreements. The Corporation has entered into
management continuity agreements with each of its executive officers named in
the Summary Compensation Table, designed to ensure their continued services in
the event of a Change in Control. Except for Mr. Sanders' management continuity
agreement, all the agreements provide that benefits are payable only if the
executive officer's employment is terminated by the Corporation (including a
constructive discharge) within two years following a Change in Control. For
purposes of the agreements, a Change in Control includes any change of a nature
which would be
14
<PAGE> 17
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934. A Change in Control
is conclusively presumed to have occurred on (1) acquisition by any person
(other than the Corporation or any employee benefit plan of the Corporation) of
beneficial ownership of more than 20% of the combined voting power of the
Corporation's then outstanding securities; (2) a change of the majority of the
Board of Directors during any two consecutive years, unless certain conditions
of Board approval are met; or (3) certain members of the Board determine within
one year after an event that such event constitutes a Change in Control.
All of the management continuity agreements provide that in the event of a
Change in Control, the Corporation will reimburse each executive officer who has
signed a management continuity agreement for any federal excise tax payable as a
result of benefits received from the Corporation. Other than Mr. Sanders'
agreement, the agreements provide that, if within two years after the Change in
Control the executive officer's employment is terminated by the Corporation or
the executive officer is constructively discharged, the executive officer will
receive: (1) 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; (2) payment of his accrued bonus; (3) twelve months' continuation of
other incidental benefits; and (4) full and immediate vesting of all unvested
stock options, stock appreciation rights and restricted stock awards.
Mr. Sanders' management continuity agreement provides that not more than
ten business days after a Change in Control, he is entitled to receive an amount
equal to three times his annual base compensation plus the average of his two
highest bonuses in the last five years, whether or not his employment by the
Corporation is terminated. In addition, all stock options and stock appreciation
rights that Mr. Sanders holds will become fully vested on the occurrence of a
Change in Control and the restrictions on any shares of restricted stock of the
Corporation which he may hold will lapse as of such date. The deductibility
limitation of $1 million for certain executive compensation under sec.162(m)
must be reduced by payments which are considered "excess parachute payments"
under sec.280G of the Internal Revenue Code. Some of the payments made under the
management continuity agreements may be considered "excess parachute payments"
and, if so characterized, could increase the portion of the compensation paid to
the affected executive which the Corporation could not deduct.
Stock Option Vesting. All options granted to officers of the Corporation
shall become fully vested for exercise upon the occurrence of any change in the
beneficial ownership of any quantity of shares of Common Stock of the
Corporation (where the purpose for the acquisition of such beneficial ownership
is other than passive investment), that would effect a "change in control" of
the Corporation of a nature that 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, other than a change that has been approved in advance by
the Corporation's Board of Directors. A change in control shall be conclusively
deemed to have occurred if any person (other than the Corporation, any employee
benefit plan, trustee or custodian therefor) is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing more than
fifty percent (50%) of the combined voting power of the Corporation's then
outstanding securities. In addition, all options granted under the 1982 Stock
Option Plan and the 1992 Stock Incentive Plan and all restricted stock awarded
under the 1987 Restricted Stock Award Plan, become fully vested on termination
of employment within one year following a change in control as defined in that
plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Corporation's
directors, executive officers, and any persons holding more than ten percent of
the Corporation's Common Stock are required to report, to the Securities
Exchange Commission and to the New York Stock Exchange, their initial ownership
of the Corporation's stock and any subsequent changes in that ownership.
Specific due dates for these reports have been established, and the Corporation
is required to disclose in this proxy statement any failure to file these
reports on a timely basis. To the Corporation's knowledge, all of these
requirements were satisfied in 1993.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Mr. Charles M.
Blalack, Dr. R. Gene Brown, and Mr. Joe L. Roby. Mr. Sanders served as a member
of the Compensation Committee during the first eight weeks of 1993, but resigned
from the Committee in February 1993. Mr. Sanders is the sole member of the
Employee Stock Committee, which grants stock options and awards restricted stock
to employees who are not also officers. Mr. Sanders has the authority to act
alone in making determinations concerning the compensation of executives other
than himself, but often makes such determinations in consultation with the
Compensation Committee.
Mr. Roby is Chairman of the Investment Banking Group of Donaldson, Lufkin &
Jenrette, Inc., a firm which has provided investment banking services to the
Corporation in the past, and which may do so again during 1994.
TRANSACTIONS WITH MANAGEMENT
During 1992 the Corporation loaned $120,000 to Larry Carter, Vice President
and Controller (principal accounting officer) in connection with his accepting
employment with the Corporation and prior to his election as an officer. Under
the terms of the loan, which is unsecured, Mr. Carter pays no interest, repaid
$40,000 in 1993 and is required to repay the remaining principal in two annual
installments of $40,000 each.
Other than Mr. Roby, Mr. Blalack, and Dr. Brown each of the current members
of the Board of Directors and each named executive officer other than Mr.
Zelencik is currently a defendant in securities-related litigation in which the
Corporation is also a defendant. One or more of the individual defendants could
have interests different from, and perhaps in conflict with, the interests of
the Corporation. Each such individual defendant is entitled to advancement of
reasonable expenses and indemnification to the fullest extent permitted under
the Corporation's by-laws and Delaware General Corporation Law.
All current directors and many of the executive officers are also named as
defendants in a purported derivative lawsuit which names the Corporation as a
nominal defendant. The Corporation has filed a motion to dismiss the complaint
for failure to make a prior request to the Board of Directors to institute the
lawsuit directly. In the event the Corporation's motion is denied, it is
expected the Board of Directors will authorize the advancement of reasonable
expenses and indemnification to the fullest extent permitted by the
Corporation's by-laws and the Delaware General Corporation Law.
Mr. Roby is Chairman of the Investment Banking Group of Donaldson, Lufkin &
Jenrette, Inc., a firm which has provided investment banking services to the
Corporation in the past, and which may do so again during 1994.
PROPOSAL NO. 2 -- 1992 STOCK INCENTIVE PLAN
The Corporation has had a longstanding practice of linking key employees'
compensation to corporate performance. This increases employee motivation to
improve stockholder value -- the employee's reward is directly related to AMD's
success. Therefore, equity incentives have continually been a significant
component of compensation for a broad range of the Corporation's employees. This
practice has enabled the Corporation to attract and retain the talent which it
continues to require.
Stockholder approval is sought for a revised 1992 Stock Incentive Plan,
which has been amended to increase by 4,600,000 the number of shares authorized
to be issued under the Plan, to conform to recent tax law changes, and to make
certain other changes. The Board of Directors adopted the 1992 Stock Incentive
Plan on August 28, 1991, and amended it on August 18, 1993 and again on February
18, 1994. Below is a description of the principal terms of the 1992 Stock
Incentive Plan as amended and restated (the "Plan"). Your Board of Directors
unanimously recommends you vote "FOR" the Plan as amended, as described below.
The Plan originally authorized for issuance up to 4,750,000 shares of
Common Stock under the Plan. As of February 28, 1994, options to purchase
10,836,185 shares were outstanding. With stockholder approval of the increase by
4,600,000 in the number of shares available for issuance, a total of 9,350,000
shares would be
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authorized for issuance, of which a total of 5,552,278 shares would remain
available for grant as of February 28, 1994. A copy of the Plan as amended and
restated through the date of this proxy statement is set forth in full as
Appendix A to this Proxy Statement, and the following description of the Plan is
qualified in its entirety by reference to that Appendix.
The following table shows stock options granted in 1993 under the Plan to
specified individuals. Other than non-discretionary grants to non-executive
directors, which are fixed under the Plan, future grants vary in the discretion
of the Officer Stock Committee.
PLAN BENEFITS IN 1993
1992 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES WEIGHTED AVERAGE
NAME AND POSITION UNDERLYING OPTIONS EXERCISE PRICE
- ------------------------------------------------------------ ------------------ ----------------
<S> <C> <C>
W. J. Sanders III........................................... -- --
Chairman and Chief Executive Officer
Richard Previte............................................. 25,000 $28.50
President and Chief Operating Officer
Anthony B. Holbrook......................................... 12,500 $28.50
Vice Chairman and Chief Technical Officer
Stephen J. Zelencik......................................... 12,500 $28.50
Senior Vice President and Chief Marketing Executive
Eugene D. Conner............................................ 12,500 $28.50
Senior Vice President
All Executive Officers as a Group........................... 105,750 $28.50
All Directors Who are Not Executive Officers as a Group..... 9,000 $28.50
All Employees Other Than Executive Officers and Directors... 1,973,576 $28.68
</TABLE>
Stock options have been granted to employees under three other stock option
plans that are no longer in effect for the purpose of granting new options, but
remain in effect as to any outstanding options. These include the MMI 1975 Stock
Option Plan, the MMI 1981 Incentive Stock Option Plan, and the AMD 1982 Stock
Option Plan. Grants under the MMI 1975 Plan and the MMI 1981 Plan were
discontinued subsequent to the merger between Monolithic Memories, Inc. and a
subsidiary of the Corporation. The 1982 Stock Option Plan expired by its terms
on January 26, 1992. Consequently, although options granted under these plans
may remain in effect pursuant to their terms, as those options lapse or expire
unexercised they will not be available for regrant. The Corporation is unable to
predict the precise number of options that will lapse or expire.
As of January 31, 1994, options covering 6,293,549 shares remained
outstanding under the MMI 1975 Plan, the MMI 1981 Plan, and the AMD 1982 Plan,
and a total of 11,275,975 shares had been issued with respect to options granted
under these three Plans. (This number includes stock dividends on shares
previously issued on exercise of stock options.)
The Corporation also maintains the 1986 Stock Option Plan (the "1986
Plan"), which provides for options granted with exercise prices of not less than
fifty percent (50%) of the fair market value of the shares covered by the
options. As of January 31, 1994, options covering 736,048 shares remained
available for grant, options covering 232,377 shares remained outstanding, and a
total of 31,575 shares had been issued with respect to options granted under
this Plan. The Corporation also maintains a restricted stock award plan, which
provides for the grant of shares of the Corporation's Common Stock, which become
fully vested on the lapse of specified restrictions. As of January 31, 1994,
715,036 shares remained available for grant, 155,000 shares subject to
restriction remained outstanding, and 1,129,964 shares had been issued free of
restrictions.
Finally, the Corporation maintains two stock appreciation rights plans, the
AMD 1980 Stock Appreciation Rights Plan and the 1986 Stock Appreciation Rights
Plan. Under these plans, stock appreciation rights have been granted to be
exercisable in lieu of options granted under the AMD stock option plans. The
1980 Stock Appreciation Rights Plan has expired by its terms, although rights
granted under that plan remain in
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<PAGE> 20
effect pursuant to their terms. To date, only limited stock appreciation rights
(LSARs) have been granted under the plans. As of January 31, 1994, LSARs
outstanding could be exercised in lieu of 4,980,743 options.
Purpose
The purpose of the 1992 Stock Incentive Plan is (i) to enable the
Corporation and its subsidiaries to recruit and retain capable employees for the
successful conduct of its business, and (ii) to provide an additional incentive
to non-employee directors, officers and other eligible key employees upon whom
rest major responsibilities for the successful operation and management of the
Corporation and its subsidiaries. The Plan is intended to enable the Corporation
to attract qualified personnel in a highly competitive labor market.
Number of Shares Subject to the Plan
As amended, the Plan provides for the issuance of up to Nine Million Three
Hundred Fifty Thousand (9,350,000) shares of Common Stock pursuant to the
exercise of options or stock appreciation rights ("SARs") granted under the
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 Plan. The Plan has been amended to permit shares of Common
Stock used in payment of the exercise price or applicable withholding taxes, or
both, to be made available for grant to participants who are not subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and to clarify that if an SAR is exercised for cash, the shares underlying
the SAR or the cancelled related option will be added back to the number of
shares available under the Plan. In order to comply with the requirements for
deductibility under IRC sec. 162(m), the Plan has been amended to limit the
maximum number of shares which may be granted to any individual under the Plan
over a period of ten consecutive years to two million (2,000,000). (Subsequent
to grant, the number of shares subject to options and SARs may be adjusted for
changes in capitalization, which could result in the number of shares for which
options or SARs are exercised to be higher or lower than the maximum number of
shares set forth in the Plan.) The market value of the Corporation's Common
Stock on the New York Stock Exchange as of March 16, 1994 was $29 1/2 per share.
Administration and Duration of the Plan
Authority to administer the Plan and to grant options rests with the Board.
The Board has delegated its authority to grant options to any employee
(including officers who are members of the Board) to the Compensation Committee,
consisting of Messrs. Blalack, Brown, and Roby. The Board has also delegated
authority to Mr. Sanders, acting as the Employee Stock Committee of the Board,
to grant options or SARs covering up to 25,000 shares per year to any employee
who is not also an officer or member of the Board of Directors.
The Board and its delegates have the authority to effect, at any time and
from time to time, but only with respect to employees who are not executive
officers, the cancellation of any or all options or SARs outstanding under the
Plan and to grant in substitution therefor new options or SARs under the Plan
covering the same or different number of shares of Common Stock but having an
option price per share or award price not less than 100% of fair market value on
the new grant date. However, it is anticipated that in all instances the fair
market value option price or award price in effect under the new grant will be
less than the option price or award price which is in effect under the
terminated option or SAR. As part of the Plan's restatement, the Plan was
amended to provide that the authority to cancel and reissue options (i.e., the
authority to "reprice") extends only to options or SARs held by employees who
are not also executive officers.
The Plan will terminate on August 27, 2001, but the Board of Directors
retains the right to suspend, terminate or amend the Plan at any time. On
termination of the Plan, outstanding options remain in effect until they expire
by their terms. The requirements of the Securities and Exchange Commission, the
New York Stock Exchange, and the Internal Revenue Service require stockholder
approval for certain amendments to take effect. The Plan has been amended to
clarify that in determining the number of shares entitled to vote on and approve
a proposed amendment, shares with respect to which the holders have abstained
from voting will be counted, and broker non-votes will not.
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Eligibility for Participation
Options may be granted under the Plan by the Compensation Committee or the
Employee Stock Committee to key full or part-time employees of the Corporation
and its subsidiaries. Directors who are not also employees ("Outside Directors")
automatically receive options covering a specified number of shares on their
election or re-election to the Board. Management estimates that as many as 2,800
of its present employees have received or are currently eligible to receive
options under stock option plans of the Corporation. However, depending upon
numerous factors, options may be granted to a significantly larger or smaller
number of persons.
Terms and Transferability of Options
Options granted to employees may be either incentive stock options ("ISOs")
which satisfy the requirements of IRC sec. 422 or nonstatutory options ("NSOs")
which are not intended to satisfy such requirements. In recent years, the
Corporation has granted only NSOs to employees. Under the IRC, options may be
granted as ISOs only if the aggregate fair market value (determined as of the
time the option is granted) of the stock with respect to which ISOs become
exercisable for the first time by the plan participant during any calendar year
under all plans of the employer cannot exceed $100,000. It is the Corporation's
current practice to grant only NSOs, although the Corporation may change that
practice at any time.
Only NSOs are granted to Outside Directors. On his initial election to the
Board, each new Outside Director will automatically receive a First Option for
12,000 shares, vesting in increments of 4,800, 3,600, 2,400, and 1,200 on July
15 of the first, second, third and fourth calendar year following election. For
Outside Directors currently serving, the First Option was granted on August 28,
1991, vesting in the same increments on July 15, 1992, 1993, 1994 and 1995. On
re-election, an Outside Director automatically receives an Annual Option for
3,000 shares, vesting in three increments of 1,000 shares each on July 15 of the
second, third, and fourth calendar year following re-election. For example,
options granted to Dr. Brown, Mr. Blalack and Mr. Roby in 1993 are scheduled to
vest in 1995, 1996, and 1997. Options which are not vested on termination of an
Outside Director's period of service are cancelled.
All options granted under the Plan may be exercisable only at a price which
is not less than the fair market value of the stock on the date of grant.
Payment of the exercise price may be made in cash, by certified check or in
property (including other securities of the Corporation) and may be subject to a
deferred payment arrangement that is approved by the Board or its delegate or
under a "cashless exercise" arrangement which meets the requirements of Federal
Reserve Board Regulation T. Taxes required to be withheld at the time of
exercise may be paid in cash, by certified check, by the withholding of shares
deliverable pursuant to the exercise, or by the delivery of previously acquired
shares. In addition, the Board may authorize loans and loan guarantees, as the
case may be, for the exercise price and taxes due by reason of exercise of
options granted under the Plan. The term of an ISO may not exceed ten (10)
years. The term of an option granted to an Outside Director is ten years plus
one day.
If an optionee's employment terminates because of his misconduct, his
option terminates immediately. If his employment terminates for any reason other
than misconduct, the option remains exercisable for a fixed period of three
months (12 months 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. However, an ISO will not receive favorable
tax treatment (see "Federal Tax Consequences") if exercised beyond such
three-month or twelve-month period. Options granted to officers generally remain
exercisable for twelve months following the officer's termination of employment.
Options granted to Outside Directors expire twelve months following termination
of their tenure on the Board. In no case may an option be exercised after the
expiration of the option term. An option may be exercised by the optionee or his
guardian or legal representative.
The Board and its delegate have the authority to "reprice options" (i.e.,
to grant new options in exchange for the cancellation of outstanding options),
but only with respect to employees who are not executive officers.
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To qualify as an ISO, the plan under which the ISO is granted or the option
agreement must provide that the ISO is nontransferable other than by will or the
laws of descent and distribution. In order for any option granted to a
participant who is subject to Section 16 of the Exchange Act to be exempt from
being treated as a purchase of the underlying shares for purposes of the
short-swing profit liability provisions of Section 16, the plan under which the
option is granted or the option agreement must provide that the option is
nontransferable other than by will or the laws of descent and distribution,
pursuant to a qualified domestic relations order, or under any other
circumstances permitted by regulations promulgated by the SEC pursuant to
Section 16 of the Exchange Act. The Plan has been amended to remove such
restrictions on transferability. Instead, the option agreements entered into
pursuant to the Plan will contain such restrictions on transferability, if any,
as the Board or its delegate may determine.
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 immediately
exercisable or exercisable only under such conditions as the Board or its
delegate may establish, such as if the optionee remains employed until a
specified date, if specified performance goals have been met, or in the event of
a change of control. In the event a Participant's employment is terminated by
the Corporation for any reason other than misconduct within one year after a
Change of Control, all Options held by such Participant become fully vested.
"Change of Control" is defined by the Plan to encompass a change of control of a
nature required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A, the ownership by any person of more than 20% of the combined
voting power of the Corporation's outstanding Securities, a change in the
majority of the Board of Directors over a two-year period not approved by at
least two-thirds of the directors in office, and any event determined by a
majority of the Board within one year after the event to constitute a Change of
Control. In the event of a change of control as described under "Change in
Control Arrangements -- Stock Option Vesting" above, options granted to an
executive officer under the Plan and in certain instances associated LSARs, will
become fully vested and immediately exercisable.
Stock Appreciation Rights
In addition to market-price stock options, the Plan also authorizes the
grant of stock appreciation rights ("SARs"), which may be granted as General
SARs (GSARs) or Limited SARs (LSARs). GSARs may be made exercisable in lieu of
an option, or without regard to option holdings. LSARs are made exercisable only
in lieu of an option, and only on certain conditions related to a Change of
Control of the Corporation.
Although the Corporation has the authority to grant GSARs and LSARs under
the existing 1986 Stock Appreciation Rights Plan, to date the Corporation has
granted only a limited number of LSARs to executive officers and vice
presidents. This practice could change at any time. The flexibility to grant
GSARs or LSARs in various forms could become an important part of the
Corporation's compensation practices in the event of a change in accounting or
tax treatment for stock options.
An SAR may be granted with respect to an option at the time an option is
granted, or while the option is already outstanding. SARs granted by the
Corporation in tandem with a stock option are intended to permit the grantee to
realize the appreciated value of the stock over the option exercise price
without an option exercise. On the exercise of an SAR, the Corporation pays in
cash, stock or both, an amount equal to the appreciation in value of the stock
covered by the SAR.
Directors and executive officers of the Corporation subject to Section 16
of the Exchange Act generally are unable to exercise GSARs and LSARs without
risk of forfeiture of their profits, unless they have held the GSAR or LSAR for
6 months or more and the exercise occurs within a 10-day window period following
the release of quarterly financial results. LSARs may be exercised only during a
60-day period following the date of a Change of Control, as defined by the Plan.
The Plan also permits the award of Automatic LSARs which become automatically
exercisable for cash on fixed events outside the control of the Optionee.
Outside Directors are not eligible to receive SARs. The Plan has been amended to
remove restrictions on transferability. Instead, the SAR agreements entered into
pursuant to the Plan will contain such restrictions on transferability, if any,
as the Board or its delegate may determine.
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Federal Tax Consequences
Non-Statutory 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. 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.
An optionee who is an officer or director of the Corporation generally will
recognize income for federal income tax purposes at the time of exercise of an
NSO. However, if the officer or director purchased shares on the open market, or
otherwise effected a non-exempt "purchase" within the meaning of Section 16 of
the Exchange Act within six months before the option exercise, the Corporation
will have a right to recapture the profits on any sale of shares within six
months after such prior purchase. Under such circumstances, the officer or
director may not recognize income incident to an option exercise until the lapse
of the Corporation's right to recapture profits. At that time, the officer or
Director recognizes ordinary income in the amount of the excess, if any of (i)
the fair market value of the Common Stock on the date the right to recapture
lapses, over (ii) the exercise price. By filing a timely election with the
Internal Revenue Service under Section 83(b) of the Code, an officer or Director
may elect to be taxed at the time of exercise. A person who makes such an
election must then include in gross income for the taxable year in which the
exercise occurs the amount of the excess, if any, of (i) the fair market value
of the Common Stock on the date of exercise, over (ii) the exercise 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.
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 generally will
recognize 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 long-term if the shares have been held for more than one (1) year
following exercise of the option.
Stock Appreciation Rights. No income will be realized by the employee as a
result of the grant of an SAR. Upon the exercise of an SAR the employee will
realize ordinary income (which will constitute personal service income) to the
extent of any cash received plus the fair market value of any stock received.
Upon a subsequent sale of shares acquired pursuant to the exercise of an
SAR, the holder will normally realize capital gain or loss to the extent of the
difference between the sale price and the fair market value of the shares on the
date of acquisition. Such capital gain or loss will be long-term for Federal
income tax purposes if the shares have been held for more than one year at the
time of sale.
Deduction to the Corporation. The Corporation 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 or SAR. The deduction generally will
be allowed for the taxable year of the Corporation in which occurs the last day
of the calendar year in which the optionee recognizes ordinary income in
connection with such purchase.
If the optionee makes a disqualifying disposition of the shares purchased
on exercise of an ISO, then the Corporation will be entitled to an income tax
deduction for the taxable year in which such disposition occurs,
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<PAGE> 24
equal to the amount which is taxable to the employee as ordinary income. In no
other instance will the Corporation be allowed a deduction with respect to the
optionee's disposition of the shares purchased upon exercise of an ISO.
Under IRC sec. 162(m), the Corporation is not entitled to a deduction for
certain executive compensation in excess of $1 million. This limitation applies
to compensation payable to the executive officers named in the summary
compensation table of the proxy statement who are also employees at the end of
the fiscal year. Amounts includible in compensation pursuant to the exercise of
a stock option or SAR are subject to the deduction limit, unless the option
exercise price or SAR award price is at least equal to the fair market value of
the underlying stock on the date of grant, the option or SAR is granted by a
committee of at least two outside directors, and the Plan under which the option
or SAR was granted has been approved by stockholders. As a result of the
proposed changes to the Plan, options granted under the Plan to executive
officers are expected to qualify for full deductibility. However, it is possible
that amendments to options not currently foreseen and subsequent to their grant
may cause the compensation attributable to the exercise of options granted to
named executive officers to be nondeductible to the Corporation.
Accounting Treatment
Under present accounting rules, neither the grant nor the exercise of
options nor the grant of LSARs will result in any charge to the Corporation's
earnings, so long as the exercise price of the option or LSAR is not less than
fair market value of the Corporation's Common Stock on the date the option or
LSAR was granted or the date the option price was amended, whichever is lower.
However, the number of options outstanding is a factor in determining earnings
per share.
With respect to the grant of a GSAR, the Company's earnings would be
charged with compensation expense equal to any excess of the market value of the
Corporation's Common Stock over the award price, accrued over any required
period of service by the employee prior to vesting. Thereafter, increases (or
decreases) in the market price of the Corporation's Common Stock result in
further charges (or credits) to reported earnings accrued over any remaining
vesting period. Should one or more optionees exercise LSARs in connection with a
Change of Control of the Corporation, then the payment made by the Corporation
pursuant to such exercise will result in a charge to the Corporation's earnings
at that time.
All of the existing accounting rules for stock compensation plans are
currently being reviewed by the Financial Accounting Standards Board and may be
the subject of significant changes in the future.
Required Vote
An affirmative vote of the holders of a majority of the shares of the
Corporation's Common Stock present in person or represented by proxy and
entitled to vote on the Plan is required for approval of the amended and
restated 1992 Stock Incentive Plan. Shares with respect to which the holders
have abstained from voting on the Plan will be counted for purposes of
determining the number of shares present and entitled to vote on the Plan.
Broker non-votes will not be counted in determining the number of shares present
and entitled to vote on the Plan. Brokers who have not received instructions
from beneficial owners on this proposal may, under applicable rules of the New
York Stock Exchange, vote shares of such owners to approve the Plan. The Board
of Directors unanimously recommends a vote "FOR" approval of the Plan. Unless
marked to the contrary, proxies received will be voted "FOR" approval.
PROPOSAL NO. 3 -- RATIFICATION OF INDEPENDENT AUDITORS
Unless marked to the contrary, proxies received will be voted "FOR" the
ratification of the appointment of Ernst & Young as the independent auditors for
the Corporation for the current year. Ernst & Young or its predecessor, Arthur
Young and Company, have been the Corporation's independent auditors since its
incorporation in 1969.
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Audit services of Ernst & Young during the Fiscal Year included the
examination of the consolidated financial statements of the Corporation and
services related to filings with the Securities and Exchange Commission and
other regulatory bodies.
The Audit Committee of the Corporation meets with Ernst & Young on an
annual or more frequent basis. At such time, the Audit Committee reviews both
audit and non-audit services performed by Ernst & Young for the preceding year,
as well as the fees charged for such services. Among other things, the effect
that the performance of non-audit services may have upon the independence of the
auditors is examined.
A representative of Ernst & Young is expected to be present at the Annual
Meeting of Stockholders and will have an opportunity to make a statement if he
or she so desires. Moreover, he or she will be available to respond to
appropriate questions from the stockholders.
PROPOSAL NO. 4 -- STOCKHOLDER PROPOSAL CONCERNING THE NOMINATING COMMITTEE
The New York City Employees' Retirement System ("Proponent"), 1 Centre
Street, New York, New York 10007-2341, has notified the Corporation that it is
the beneficial owner of 267,050 shares of the Corporation's Common Stock as of
October 30, 1993, and that it intends to offer the following proposal for
consideration and approval at the annual meeting of stockholders.
Proposal and Proponent's Statement of Support
WHEREAS, the board of directors is meant to be an independent body elected
by shareholders and charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies, and
WHEREAS, this company has provided that the board may designate from among
its members one or more committees, each of which, to the extent allowed, shall
have certain designated authority, and
WHEREAS, we believe that directors independent of management are best
qualified to act in the interest of shareholders and can take steps necessary to
seek, nominate and present new directors to shareholders, and
WHEREAS, we believe the selection of new directors is an area in which
inside directors may have a conflict of interest with shareholders, and
WHEREAS, we believe that an increased role for the independent directors
would help our company improve its long-term financial condition, stock
performance and ability to compete,
NOW THEREFORE BE IT RESOLVED, that the shareholders request the company
establish a Nominating Committee to recommend candidates to stand for election
to the board of directors. The Committee shall be composed solely of independent
directors. For these purposes, an independent director is one who: (1) has not
been employed by the company, or an affiliate, in an executive capacity within
the last five years; (2) is not, and has not been, a member of a company that is
one of this company's paid advisors or consultants; (3) is not employed by a
significant customer or supplier; (4) does not and did not have a personal
services contract with the company; (5) is not employed by a tax-exempt
organization that receives significant contributions from the company; (6) is
not a relative of the management of the company; (7) has not had any business
relationship that would be required to be disclosed under Regulation S-K. The
Committee's responsibilities shall include establishing procedures for the
nominating process and developing for board approval the criteria for
nomination.
As long-term shareholders we are concerned about our company's prospects
for profitable growth. This proposal is intended to strengthen the process by
which nominees are selected. We believe that this will strengthen the board of
directors in its role of advising, overseeing and evaluating management.
We urge you to vote FOR this proposal.
The Corporation's Statement in Opposition
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
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This proposal is nearly identical to a proposal submitted last year by the
same proponent, and which was defeated by a margin of almost four to one at the
Corporation's 1993 annual meeting -- of the shares voted, 77% were AGAINST, 20%
were in favor, and 3% abstained. Since then, the Nominating Committee has
nominated two new outside directors, Dr. Friedrich Baur and Dr. Leonard
Silverman, to serve on the Corporation's Board.
The Directors believe that the Board's Nominating Committee comprise a
majority of directors who are independent of management within the customary
definition of that term as used by publicly traded companies. The Committee
consists of a majority of directors who are neither officers nor employees of
the Corporation or any of its subsidiaries, nor affiliates of the Corporation.
Only one member of the Nominating Committee -- founder and Chairman of the Board
of Directors, W. J. Sanders III -- is also an employee of the Corporation.
The Board of Directors believes that the current Nominating Committee best
serves the interests of the Corporation and its stockholders. If this
stockholder proposal is adopted, and if the Board restructures the Nominating
Committee, it would become necessary to reduce the Committee to one or two
directors, or to add several new directors to the Board, disrupting the
governing structure and leadership of the Corporation. In addition, the Board's
Nominating Committee would lose the valuable advice of the Corporation's founder
and chairman, W. J. Sanders III. Mr. Sanders has guided the Corporation for over
twenty (20) years, creating the 5th largest U.S. semiconductor company. He is
widely recognized as an industry leader, and his experience and contacts are
invaluable in identifying candidates for director and assessing each candidate's
potential contribution to the Board.
The Directors believe that to restructure the Nominating Committee in the
manner requested in the stockholder proposal would improperly interfere with the
Board's ability to review and share information on prospective nominees. In the
Corporation's view, the definition of independence contained in the proposal is
unreasonably restrictive and unduly disqualifies capable persons from being able
to serve on the Committee. Among other things, it would exclude persons with
past business relationships with the Corporation which have ended, and persons
with present business relationships with the Corporation which are immaterial.
The Board believes that the persons best suited to evaluate potential new
directors are persons close to the industry who understand its dynamics. The
proposal could also interfere directly with the Corporation's ability to
effectively manage its business. For example, joint venture and cooperative
technology relationships are an important part of doing business in the
semiconductor industry. In some cases, such strategic partners seek a seat on
each other's Board of Directors. Under the proposal, the director representing
such a strategic partner would be unable to serve on the Nominating Committee.
The Board believes that the important issue is not whether "independent"
directors should participate in the decision-making process, but rather how the
mixture of management and "independent" directors should be determined. The
Board believes the flexible approach currently followed allows the Corporation
to maximize the respective contributions of the Corporation's management and
non-employee directors.
For the past four years, the Board of Directors has consisted of six
members. At the Annual Meeting of Stockholders, the Board is being increased to
eight members, and the Board has accepted the Nominating Committee's
recommendation that Dr. Friedrich Baur and Dr. Leonard Silverman each serve as a
director on the expanded Board. Dr. Baur and Dr. Silverman are each neither an
officer nor an employee of the Company, and each is independent of management.
The selection by the Nominating Committee of two additional directors who are
independent of management supports the Board's belief that Mr. Sanders' presence
on the Nominating Committee does not in any way inhibit the selection of
qualified, independent nominees.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
To be adopted, this stockholder proposal must be approved by the
affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote on the matter. Shares with respect to which the
holders have abstained from voting on the proposal will be counted for purposes
of determining the number of shares entitled to vote on the proposal. "Broker
non-votes" will not be counted in determining the
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number of shares entitled to vote on the proposal. Unless marked to the
contrary, proxies received will be voted "AGAINST" the proposal.
PROPOSAL NO. 5 -- STOCKHOLDER PROPOSAL CONCERNING THE BOARD OF DIRECTORS
The New York City Teachers' Retirement System ("Proponent"), 1 Centre
Street, New York, New York 10007-2341, has notified the Corporation that it is
the beneficial owner of 104,600 shares of the Corporation's Common Stock as of
September 17, 1993 and that it intends to offer the following proposal for
consideration and approval at the annual meeting of stockholders.
Proposal and Proponent's Statement of Support
WHEREAS, the New York City Teachers' Retirement System ("TRS") is concerned
about the long-term economic performance of the companies in which it owns
stock, and
WHEREAS, the board of directors of a company is accountable to shareholders
for the performance of management and the company, and TRS believes that a
majority of directors should be independent of management, and
WHEREAS, the board of directors is meant to be an independent body elected
by shareholders and is charged by law and by shareholders with the duty,
authority and responsibility to formulate and direct corporate policies, and
WHEREAS, the board of directors should monitor the activities of management
in the implementation of those policies for the best interest of shareholders,
and
WHEREAS, the Company's interests can best be served by having directors who
are independent of management and who represent a breadth of experience,
NOW THEREFORE BE IT RESOLVED THAT: the shareholders request that the board
of directors amend the By-Laws to provide that the board of directors consist of
a majority of independent directors. For those purposes, an independent director
is one who: (1) has not been employed by the company, or an affiliate, in an
executive capacity within the last five years; (2) is not, and has not been, a
member of a company that is one [of] this company's paid advisors or
consultants; (3) is not employed by a significant customer or supplier; (4) does
not and did not have a personal services contract with the company; (5) is not
employed by a tax-exempt organization that receives significant contributions
from the company; (6) is not a relative of the management of the company; (7)
has not had any business relationship that would be required to be disclosed
under Regulation S-K. We request that this by-law amendment be applied only to
nominees for director at meetings subsequent to the 1994 annual meeting and that
it not apply to incumbent directors.
The Corporation's Statement in Opposition
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
The Board of Directors is responsible for overall direction of the business
and affairs of the Corporation. The Nominating Committee regularly assesses the
composition of the Board, and seeks to achieve a balance of knowledge,
experience and capability on the Board. The Committee and the Board believe the
composition of the current slate of nominees to the Board, which includes a
majority of non-employee Directors, is consistent with this objective of
balance.
The number of employees it may be desirable to have serve as Directors will
vary from time to time depending on the make-up of the Board as a whole and the
further development of the Corporation's business. Implementation of this
proposal would deprive the Board of needed flexibility in creating a balance of
knowledge, experience and capability on the Board.
The Board believes that certain responsibilities of the Board, including
the evaluation of senior managers, should be carried out by non-employee
Directors. For this reason, key committees of the Board, including the
Compensation and Audit Committees, are made up entirely of non-employee
Directors. At the same time, the
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Board and its Nominating Committee also believe that the presence of senior
executives on the Board can assist the Board in fulfilling its responsibilities
to stockholders. The senior executives on the Corporation's Board bring with
them a wealth of knowledge about and insight into the Corporation's diverse
business and affairs, and each has important responsibilities within the
organization. Their individual contributions assist the Board in its collective
decisions, and their participation better enables the Board to judge their
performance as managers.
Outside Directors have always had a substantial role on the Board. From the
Corporation's founding in 1969 until 1987, only one member of the Board was also
an executive officer of the Corporation. Since 1987, the Board has always
included at least three non-employee Directors. The Corporation welcomes the
participation of well-qualified Directors who have no relationship with
management, and as stated above, upon the election of Directors at this Annual
Meeting, a majority of the members of the Board will be non-employee Directors.
This proposal, however, seeks to impose what the Board believes to be arbitrary
and overbroad "independence" qualifications. It would create practical problems
in its implementation, would inhibit flexibility, and would inappropriately
elevate above all other criteria one single aspect of a potential Director's
qualifications.
The Board finds certain elements of the proposal's definition of
"independent" to be arbitrary and vague. For example, it would disqualify
individuals who were previously members in a firm that is a current advisor to
the Corporation, even though that would not necessarily undermine a person's
independence. The proposal also would disqualify individuals employed by a
"significant customer or supplier," or by a charity that receives "significant
contributions" from the Corporation, but the proposal provides no guidance as to
what it means by "significant". As a result, the Board believes the proposal
would exclude otherwise worthy candidates and would make the Nominating
Committee's objective of selecting qualified Directors more difficult. The Board
feels it would be imprudent to apply such criteria rigidly, without evaluating
the substance of the relationship in question and the overall qualifications of
a potential nominee.
This particular proposal also trivializes the long and complicated process
of identifying qualified people willing to assume the obligations of a Director.
The way this proposal is structured could create practical problems in the event
of a Director's death, retirement or resignation. If such an event created an
imbalance in the Board composition as mandated by the proposal, any Board
actions could be subject to challenge during the interim until either another
Director resigns, or a replacement Director has been found. Such a situation
could paralyze the Board during such an interim. The Directors believe that the
Board and the Corporation should not be put in this position, but the proposal
does not explain how such a predicament could be remedied.
Overall, the Board feels this proposal attaches a disproportionate
importance to a very rigid definition of "independence" as set forth in the
proposal. For this reason and the others stated above, the Board believes this
proposal is unnecessary and unwise, is not an appropriate or practical basis for
regulating the composition of the Board, and is not in the best interests of the
Corporation or its stockholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
To be adopted, this stockholder proposal must be approved by the
affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote on the matter. Shares with respect to which the
holders have abstained from voting on the proposal will be counted for purposes
of determining the number of shares entitled to vote on the proposal. "Broker
non-votes" will not be counted in determining the number of shares entitled to
vote on the proposal. Unless marked to the contrary, proxies received will be
voted "AGAINST" the proposal.
PROPOSAL NO. 6 -- STOCKHOLDER PROPOSAL CONCERNING REDEMPTION OF STOCKHOLDERS'
PREFERRED STOCK PURCHASE RIGHTS
The Amalgamated Bank of New York Longview Collective Investment Fund, 11-15
Union Square, New York, New York 10003, has notified the Corporation that it is
the beneficial owner of 2,000 shares of the
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Corporation's Common Stock as of November 30, 1993, and that it intends to offer
the following proposal for consideration and approval at the annual meeting of
stockholders.
Proposal and Proponent's Statement of Support
WHEREAS, on February 7, 1990, the Board of Directors of Advanced Micro
Devices, Inc. (the "Company") declared a dividend distribution of Preferred
Stock Purchase Rights ("rights" or "right") absent shareholder approval.
WHEREAS, we strongly believe that such rights are a type of anti-takeover
device, commonly known as a poison pill, which injures shareholders by reducing
management accountability and adversely affecting shareholder value.
WHEREAS, the shareholders of the Company believe the terms of the rights
are designed to discourage or thwart an unwanted takeover of the Company. While
management and the Board of Directors should have appropriate tools to ensure
that all shareholders benefit from any proposal to buy the Company, the
shareholders do not believe that the future possibility of a takeover justifies
the unilateral implementation of such a poison pill.
WHEREAS, the effects of poison pill rights plans on the trading value of
companies' stock have been the subject of extensive research. A 1986 study
(covering 37 companies introducing poison pills between June 1983 and December
1985) by the Office of the Chief Economist of the U.S. Securities and Exchange
Commission on the economics of poison pill rights plans states that "The
stock-returns evidence suggests that the effect of poison pills to deter
prospective hostile takeover bids outweighs the beneficial effects that come
from increased bargaining leverage of the target management." Another, more
recent study by Professor Michael Ryngaert published in 1988 (covering 380
companies adopting poison pills in the period 1982-1986) singled out rights
plans such as the one authorized by our Company for their negative effect on
shareholder value.
WHEREAS, the shareholders believe that it is the shareholders who should
have the right to vote on the necessity of such a powerful tool which could be
used to entrench existing management. Rights plans like the Company's have
become increasingly unpopular in recent years.
WHEREAS, in light of what can at best be described as the debatable
economic benefit of the Preferred Stock Purchase Rights and the undeniably
undemocratic way in which they were assigned to shareholders, we believe these
rights should either be redeemed or voted on.
NOW THEREFORE BE IT RESOLVED: That the shareholders of Advanced Micro
Devices, Inc. hereby request the Board of Directors to redeem the Preferred
Stock Purchase Rights issued in February of 1990 unless said issuance is
approved by the affirmative vote of a majority of the outstanding shares at a
meeting of the shareholders held as soon as practical.
WE URGE SHAREHOLDERS TO VOTE FOR THIS RESOLUTION.
The Corporation's Statement in Opposition
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
This proposal is intended to encourage the Corporation's Board of Directors
to redeem the Stock Purchase Rights that all stockholders possess under the
Corporation's Stockholder Rights Plan (the "Stockholder Rights Plan"). The Board
believes redemption of the Rights would remove a valuable protection for
stockholders and eliminate an important tool designed to protect your interests.
Redemption at this time could potentially deprive you of substantial economic
benefits in the future.
What Stockholder Rights Plans Do. Stockholder rights plans were developed
in the 1980s to counter a wide range of coercive tactics which had become common
in hostile takeovers. A key function of a rights plan is to encourage bidders to
negotiate with the board of the target company, to produce better offers for all
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stockholders. Rights plans give boards time to evaluate offers, investigate
alternatives, and take steps necessary to maximize value for all stockholders.
A consensus has gradually emerged among major U.S. corporations that rights
plans help inhibit abusive conduct and assist directors in fulfilling their
fiduciary duty to all stockholders. Approximately 70% of the 200 largest
companies on the Fortune 500 list have adopted rights plans. Many of these
companies apparently found adoption of a rights plan to be a prudent step to
take to protect stockholder interests even though they were not the subject of
takeover bids.
The Importance of the Stockholder Rights Plan to AMD Stockholders. Your
Board of Directors believes that the Stockholder Rights Plan is of critical
importance to stockholders in the Corporation's current circumstances. The
Corporation is currently involved with Intel Corporation in extensive and
complicated litigation which could have a material impact on the Corporation's
future revenues, earnings and financial condition. Intermediate developments in
this litigation process have caused, and in the future could cause, dramatic
fluctuations in the Corporation's stock price. For example, following an adverse
jury verdict in June 1992, the Corporation's stock price declined from a high of
18 in May, 1992 to 7 5/8 in July, 1992. When a new trial was ordered in April,
1993, during a one-week period the Corporation's stock price rose from 24 1/8 to
31. The Board of Directors believes that with the uncertainties surrounding the
litigation with Intel and the impact of that litigation on the market value of
the Corporation's stock, the Corporation could be faced with a takeover attempt
at a time when its stock price might be artificially depressed as a result of
litigation developments and when that price does not fully reflect the
Corporation's long-term value. In such circumstances, the Rights Plan will
enhance the Board's ability to protect the rights of all stockholders. With its
knowledge of the Corporation's litigation strategy and long-term business plans,
the Board believes it is in the best position to negotiate on behalf of all
stockholders.
Effect on Takeover Attempts. The Rights Plan is not intended to prevent a
takeover, on terms that are fair and equitable to all stockholders. Many
corporations which adopted rights plans were later acquired by others. The
Stockholder Rights Plan allows the Board an opportunity to assess the adequacy
and fairness of any offer and protect stockholders against potential abuses
during the takeover process, including certain practices which do not treat all
stockholders fairly and equally, such as partial and two-tier tender offers,
coercive offers and creeping stock accumulation programs.
Enhancing Stockholder Value. The Rights Plan will allow the Board adequate
time and flexibility to negotiate on behalf of the stockholders and will enhance
the Board's ability to negotiate the highest possible bid from a potential
acquiror and to develop alternatives which may better maximize stockholder
values, preserve the long-term value of the Corporation for the stockholders and
ensure that all stockholders are treated fairly and equally.
The proponent refers to two studies regarding the effects of a rights plan
on the trading value of adopting companies' stock. However, March and October
1988 studies by Georgeson & Company, Inc. (nationally recognized as a leading
investor relations and proxy solicitation firm) found that companies adopting
rights plans do not lessen the value of their stock and, more importantly, that
companies with rights plans received higher takeover premiums than those
companies without rights plans. The March 1988 Georgeson study concluded that
companies with rights plans received takeover premiums averaging 69 percent
higher than those received by companies not protected by such plans. The
Corporation believes that these studies confirm the Board's 1990 judgment that a
rights plan can be beneficial to all stockholders.
Fiduciary Duties of the Board. Under Delaware law, the Board is responsible
for the Corporation's business and affairs, including the evaluation of any
unsolicited offer. The Board believes that the adoption of the Stockholder
Rights Plan was a valid exercise of that responsibility and that its
recommendation to vote against the proposal is also consistent with its
fiduciary duties. Stockholder rights plans have been repeatedly upheld by the
courts, including the Delaware Supreme Court. The Securities and Exchange
Commission stated in a 1988 release that one of the reasons corporations adopted
stockholder rights plans is to "encourage the development of an auction for the
Company resulting in shareholders receiving a higher price for their stock."
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Redemption of Stockholder Rights. The Board may, pursuant to the terms of
the Rights Plan, redeem the rights to permit an acquisition that it deems
adequately reflects the value of the Corporation and to be in the best interests
of all stockholders. The Board believes that the proper time to consider
redemption of the stockholder rights is when a specific offer is made to acquire
the Corporation. To redeem the rights now would be to strip stockholders of an
important protection against unfair takeover attempts when the Corporation's
Common Stock is subject to volatile changes, and, ultimately, reduce the
long-term value for all stockholders.
The Board does not believe that the Rights Plan will deter an acquisition
offer that reflects the underlying value of the Corporation and that is fair to
all stockholders. The Board believes that the redemption of the Rights Plan at
the present time would deprive the Board of a key negotiating tool that is
invaluable in preserving the long-term value of the Corporation and protecting
all stockholders from coercive and unfair takeover attempts.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
To be adopted, this stockholder proposal must be approved by the
affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote on the matter. Shares with respect to which the
holders have abstained from voting on the proposal will be counted for purposes
of determining the number of shares entitled to vote on the proposal. "Broker
non-votes" will not be counted in determining the number of shares entitled to
vote on the proposal. Unless marked to the contrary, proxies received will be
voted "AGAINST" this proposal.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The 1993 Annual Report of the Corporation, which includes its audited
financial statements for the fiscal year ended December 26, 1993, has
accompanied or preceded this Proxy Statement.
STOCKHOLDER PROPOSALS
Subject to Securities and Exchange Commission regulations, proposals of
stockholders intended to be presented at the 1995 Annual Meeting must be
received by the Secretary of the Corporation not later than November 25, 1994 to
be included in the 1995 Proxy Statement.
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ADVANCED MICRO DEVICES, INC.
1992 STOCK INCENTIVE PLAN
AS AMENDED
1. PURPOSE
The purpose of this Plan is to encourage key personnel, whose long-term
employment is considered essential to the Company's continued progress, to
remain in the employ of the Company or its subsidiaries. By means of the Plan,
the Company also seeks to attract new key employees 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 employees in the future.
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) Award Price: The term "Award Price" shall mean a price designated by
the Board or its delegate and which is not less than the Fair Market Value per
Share on the date the Stock Appreciation Right is granted. In the case of a
General Right which is exercisable only in lieu of exercising a Related Option,
unless otherwise specified in the Right Agreement, the Award Price shall be the
exercise price of such Related Option.
(c) Board or its delegate: The term "Board or its delegate" shall mean the
Company's Board of Directors or its delegate as set forth in Sections 3(d) and
3(e) hereinbelow.
(d) Change of Control: The term "Change of Control" shall mean a change of
control of a nature that 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 (the "Exchange Act"), or in response to any other form
or report to the Securities and Exchange Commission or any stock exchange on
which the Company's shares are listed which requires the reporting of a change
of control. In addition, a Change of Control shall be deemed to have occurred if
(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, directly or indirectly, of
securities of the Company representing more than 20% of the combined voting
power of the Company's then outstanding securities; or (ii) in any two-year
period, individuals who were members of the Board of Directors (the "Board") at
the beginning of such period plus each new director whose election or nomination
for election was approved by at least two-thirds of the directors in office
immediately prior to such election or nomination, cease for any reason to
constitute at least a majority of the Board; or (iii) a majority of the members
of the Board in office prior to the happening of any event and who are still in
office after such event, determines in its sole discretion within one year after
such event, that as a result of such event there has been a Change of Control.
The Board or its delegate may, at its discretion, define a Change of Control
differently for purposes of any individual option agreement.
Notwithstanding the foregoing definition, "Change of Control" shall exclude
the acquisition of securities representing more than 20% of the combined voting
power of the Company by the Company, 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. As used
herein, the term "beneficial owner" shall have the same meaning as under Section
13(d) of the Exchange Act and related case law.
(e) 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.
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(f) Company: The term "Company" shall mean Advanced Micro Devices, Inc., a
Delaware corporation.
(g) Constructive Termination: The term "Constructive Termination" shall
mean a resignation by a Participant who has been elected by the Company's Board
of Directors 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.
(h) Disinterested Director: The term "Disinterested Director" shall mean a
member of the Board of Directors of the Company 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.
(i) Event Price per Share: The term "Event Price per Share" as used in
Section 12 with respect to the exercise of a Limited Right shall mean the
highest price per Share paid in connection with the event constituting a Change
of Control. Any securities or property which are part or all of the
consideration paid for Shares in connection with the event constituting a Change
of Control shall be valued in determining the Event Price per Share at the
highest of (A) the valuation placed on such securities or property by the
corporation, person or other entity which paid such price or (B) the valuation
placed on such securities or property by the Board of Directors.
(j) 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 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.
(k) ISO: The term "ISO" shall mean a stock option described in Section
422(b) of the Code.
(l) NSO: The term "NSO" shall mean a nonstatutory stock option not
described in Sections 422(b) or 423(a) of the Code.
(m) Option: The term "Option" shall mean (except as herein otherwise
provided) a stock option granted under this Plan.
(n) 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.
(o) Participant: The term "Participant" shall mean any person who holds an
Option or a Stock Appreciation Right granted under this Plan.
(p) Plan: The term "Plan" shall mean this Advanced Micro Devices, Inc. 1992
Stock Incentive Plan, as amended from time to time.
(q) 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 14 of this Plan.
(r) Related Option: The term "Related Option" shall mean an Option with
respect to which a Right has been granted which is exercisable only to the
extent that such Option has not previously been exercised.
(s) Rights: The term "General Right" shall mean a Stock Appreciation Right
granted pursuant to the provisions of Section 11 of this Plan. The term "Limited
Right" shall mean a Stock Appreciation Right granted pursuant to the provisions
of Section 12 of this Plan. The term "Right" shall mean any General Right or
Limited Right.
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(t) Stock Appreciation Right: The term "Stock Appreciation Right" shall
mean a right granted under this Plan to receive, without payment to the Company,
cash and/or Shares equivalent in value to the Spread as defined in Sections 11
and 12 of this Plan.
(u) Window Period: The term "Window Period" shall mean the period beginning
on the third business day following the date of release for publication of the
quarterly and annual summary statements of sales and earnings of the Company and
ending on the twelfth business day following such date.
3. ADMINISTRATION
(a) The Board of Directors (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 of Directors 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 and Rights pursuant to the Plan.
(2) To determine from time to time which of the eligible persons shall
be granted Options or Rights under the Plan, the number of Shares for which
each Option or Right shall be granted, the term of each granted Option or
Right and the time or times during the term of each Option or Right within
which all or portions of each Option or Right may be exercised (which at
the discretion of the Board or its delegate may be accelerated).
(3) With respect to persons who are not also executive officers, to
grant Options and/or Rights in exchange for cancellation of Options and/or
Rights granted earlier at different exercise prices; provided, however,
nothing contained herein shall empower the Board or its delegate to grant
an ISO under conditions or pursuant to terms that are inconsistent with the
requirements of Section 422 of the Code.
(4) To prescribe the terms and provisions of each Option and/or Right
granted (which need not be identical) and the form of written instrument
that shall constitute the Option and/or Right agreement.
(5) To take appropriate action to amend any Option and/or Right
hereunder, including to amend the vesting schedule of any outstanding
Option or Right, 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.
(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 and Rights 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 or Right 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 of Directors 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 or
Rights to an employee who is not subject to Section 16 of the Exchange Act,
to a committee of one or more members of the Board of Directors, whether or
not such members of the Board of Directors are Disinterested Directors;
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(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 or Right, to a committee of one or more
members of the Board of Directors, whether or not such members of the Board
of Directors are Disinterested Directors, or to one or more officers of the
Company.
(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 subject to Section 16 of the
Exchange Act, 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 or Right, to a committee of two or more
Disinterested Directors. 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.
(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 14 (relating to adjustments upon
changes in stock), the Shares which may be issued pursuant to the exercise of
Options or Rights granted under the Plan shall not exceed in the aggregate nine
million three hundred fifty thousand (9,350,000) 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 or Rights granted under the Plan shall for any reason be cancelled,
terminate or expire without having been exercised in full, the Shares subject to
such Options or Rights shall be available again for the purposes of the Plan,
except for Shares subject to a Related Option which is cancelled due to the
exercise for Shares of a Right related to such Option, and except for Shares
subject to a Right which is cancelled due to the exercise for Shares of an
Option related to such Right. Shares which are delivered or withheld from the
Shares otherwise due on exercise of an Option or Right may be reused and sold
pursuant to Options or Rights granted to a Participant who is not subject to
Section 16 of the Exchange Act. If a Right is exercised for cash, the Shares
underlying the Right or cancelled Related Option, if any, shall become available
again for the grant of Options or Rights to any Participant.
5. ELIGIBILITY
Options and/or Rights may be granted only to full or part-time employees of
the Company and/or of any Affiliate. Outside Directors shall not be eligible for
the benefits of the Plan, except as provided in Section 8 hereof. Any employee
or Outside Director may hold more than one Option and Right at any time.
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 or its delegate, 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 Affiliates) exceeds $100,000,
such options shall be treated as NSOs.
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(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 Affiliates 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.
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 or its delegate from time to time shall deem appropriate, subject to
the following limitations:
(a) The term of any Option (other than an ISO) 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 Option 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.
(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, 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 employment 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 or its delegate 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 or its delegate (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.
(2) MISCONDUCT: If a Participant is determined by the Board or its
delegate to have committed an 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, 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
employment, whether or not after termination of employment 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 or its delegate shall
give the Participant an opportunity to present to the Board or its delegate
evidence on his behalf. For the purpose of this paragraph, termination of
employment shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his employment is terminated.
(3) TERMINATION FOR OTHER REASONS: If a Participant's employment 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
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three months following such termination, or within such longer period as
the Board or its delegate may fix, exercise the Option to the extent such
Option was exercisable by the Participant on the date of termination of his
employment, or to the extent otherwise specified by the Board or its
delegate (which may so specify after the date of the termination of his
employment 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) DIVORCE: If an Option or any portion thereof is transferred
pursuant to a qualified domestic relations order to a former spouse who is
neither an Outside Director nor an employee of the Company or any of its
Affiliates, the former spouse shall have the right for the period of twelve
months following the date of transfer, or such other period as the Board or
its delegate may fix, to exercise the Option to the extent the Participant
was entitled to exercise such option on the date of transfer. Unless
otherwise specified in the option agreement or by court order, the date of
transfer shall be the date the qualified domestic relations order is
executed.
(e) 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.
(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 maximum number of shares which are subject to Options granted to
any individual, plus the maximum number of Rights which are not associated with
a Related Option and which are 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.
8. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS
(a) On the date of adoption of this Plan by the Board, each Outside
Director shall be granted an option to purchase 12,000 Shares under the Plan
(the "First Option"). 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 3,000 Shares under the Plan (the "Annual Option"); provided, however,
that an Outside Director who has not previously been elected as a member of the
Board of Directors of the Company shall then be granted a First Option; i.e., an
option to purchase 12,000 Shares under the Plan. Further, subject to the right
of any Outside Director who has not previously been elected as a member of the
Board of Directors of the Company to receive a First Option, if there are
insufficient Shares available under the Plan for each Outside Director 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
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) Nonstatutory Options. All Options granted to Outside Directors pursuant
to the Plan shall be NSOs.
(c) Exercise Price. The exercise price under each Option granted to an
Outside Director shall be one hundred percent of the Fair Market Value per Share
subject thereto on the date the Option is granted and shall be payable in full
at the time the Option is exercised (i) in cash or by certified check, (ii) by
delivery of Shares to the Company which shall have been owned for at least six
months and have a Fair Market Value per Share on the date of surrender equal to
the exercise price, or (iii) by delivery to the Company of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company from sale or loan proceeds the amount required to pay the
exercise price and any applicable tax withholding.
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(d) Duration and Vesting of Options. 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: 4,800 shares in the first calendar year following the
date of grant; 3,600 shares in the second such calendar year; 2,400 shares in
the third such calendar year; and 1,200 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 equal installments of
1,000 shares each 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 15 hereof is obtained.
(e) Termination of Tenure on the Board. The rights to exercise an Option
granted to an Outside Director shall be limited as follows:
(1) DEATH, DISABILITY OR TERMINATION: 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.
(2) DIVORCE: If an Option or any portion thereof is transferred
pursuant to a qualified domestic relations order to a former spouse who is
neither an Outside Director nor an employee of the Company or any of its
Affiliates, the former spouse shall have the right for the period of twelve
months following the date of transfer, or such other period as the Board or
its delegate may fix, to exercise the Option to the extent the Participant
was entitled to exercise such option on the date of transfer. Unless
otherwise specified in the option agreement or by court order, the date of
transfer shall be the date the qualified domestic relations order is
executed.
(f) 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 exercise price of Shares sold pursuant to an Option shall be paid
either in full in cash or by certified check at the time the Option is exercised
or in accordance with any deferred payment arrangement that the Board or its
delegate in its discretion may approve.
(b) In addition, if and to the extent authorized by the Board or its
delegate, Participants may make all or any portion of any payment due to the
Company upon exercise of an Option (i) by delivery of any property (including
securities of the Company) other than cash, so long as such property constitutes
valid consideration for the stock under applicable law and has a fair market
value on date of delivery equal to the exercise price, or (ii) by delivery to
the Company of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company from sale or loan
proceeds the amount required to pay the exercise price and any applicable tax
withholding. If securities of the Company are delivered in payment of the
exercise price pursuant to this paragraph, such securities shall have been owned
for at least six months (or such other period as the Board or its delegate may
require) and have a fair market value on the date of surrender equal to the
exercise price. Any securities delivered by a Participant who is subject to
Section 16 of the Exchange Act must be the same class of stock as the stock to
be received upon exercise of the Option.
(c) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual Participants, including officers, on such
terms as may be approved by the Board of Directors for the
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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.
(d) In addition, a Participant may elect to have the Company withhold from
the number of Shares otherwise issuable upon exercise of an Option, a sufficient
number of Shares with an aggregate Fair Market Value per Share on the date of
exercise equal to the exercise price. Any such election shall be subject to the
approval of the Board or its delegate and must be made in compliance with rules
and procedures established by the Board or its delegate.
10. TAX WITHHOLDING
(a) Where, in the opinion of counsel to the Company, the Company has or
will have an obligation to withhold taxes relating to the exercise of any Option
or Right, the Board or its delegate may in its discretion require that such tax
obligation be satisfied in a manner satisfactory to the Company. In satisfying
such obligation with respect to a General or Limited Right exercised for cash,
the Company may withhold such taxes from any cash award. With respect to the
exercise of an Option or a General Right, in whole or in part, for Shares, the
Company may require the payment of such taxes before Shares deliverable pursuant
to such exercise are transferred to the holder of the Option or General Right.
(b) With respect to the exercise of an Option or a General Right, in whole
or in part, for Shares, a Participant may elect (a "Withholding Election") to
pay his withholding tax obligation by the withholding of Shares from the total
number of Shares deliverable pursuant to the exercise of such Option or General
Right 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 or its delegate. Previously owned shares delivered in
payment for such taxes must have been owned for at least six months prior to the
exercise date, or may be subject to such other conditions as the Board or its
delegate may require. The value of Shares withheld or delivered shall be the
Fair Market Value per Share on the date the exercise becomes taxable. All
Withholding Elections are subject to the approval of the Board or its delegate
and must be made in compliance with rules and procedures established by the
Board or its delegate.
11. STOCK APPRECIATION RIGHTS -- GENERAL RIGHTS
(a) The Board or its delegate shall have authority in its discretion to
grant a General Right to any eligible employee. A General Right may be granted
to a Participant irrespective of whether such Participant holds, is being
granted, or has been previously granted an Option, a Limited Right or a General
Right under the Plan. A General Right may be made exercisable without regard to
the exercisability of any Option or may be made exercisable only to the extent
of, and in lieu of, a Related Option. A General Right may be granted with
respect to some or all of the Shares issuable pursuant to the Related Option.
(b) With respect to the exercise of any General Right for Shares by any
Participant, and with respect to the exercise of a General Right for Shares or
cash by a Participant who is not subject to Section 16 of the Exchange Act, the
term "Spread" as used in paragraph (c) of this Section 11 shall mean an amount
equal to the product computed by multiplying (i) the excess of (A) the Fair
Market Value per Share on the date such General Right is exercised over (B) the
Award Price by (ii) the number of Shares with respect to which such General
Right is being exercised. With respect to the exercise of any General Right for
cash by a Participant who is subject to Section 16 of the Exchange Act pursuant
to an election made in accordance with paragraphs (c) and (d) of this Section
11, the term "Spread" as used in paragraph (c) of this Section 11 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
highest Fair Market Value per Share during a Window Period over (B) the Award
Price by (ii) the number of Shares with respect to which such General Right is
being exercised. With respect to the exercise of a General Right for cash
pursuant to an election made in accordance with paragraph (f) of this Section 11
by a Participant who is subject to Section 16 of the Exchange Act, the term
"Spread" as used in paragraph (c) of this Section 11 shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the Fair Market
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Value per Share on the date the election becomes effective over (B) the Award
Price by (iii) the number of Shares with respect to which the General Right is
being exercised.
(c) On the exercise of a General Right as provided in paragraph (g) of this
Section 11, the holder thereof (subject to compliance with paragraph (d) or
paragraph (f) of this Section 11, if applicable) shall be entitled at his
election to receive either:
(i) a number of Shares equal to the quotient computed by dividing the
Spread by the Fair Market Value per Share on the date of exercise of the
General Right; provided, however, that in lieu of fractional Shares the
Company shall pay cash equal to the same fraction of the Fair Market Value
per Share on the date of exercise of the General Right; or
(ii) an amount in cash equal to the Spread; or
(iii) a combination of cash in the amount specified in such holder's
notice of exercise, and a number of Shares calculated as provided in clause
(i) of this paragraph (c), after reducing the Spread by such cash amount,
plus cash in lieu of any fractional Share as provided above.
(d) This paragraph (d) shall only apply to Participants who are subject to
Section 16 of the Exchange Act. Unless an election to receive cash upon the
exercise of a General Right is made pursuant to paragraph (f) of this Section
11, the Board or its delegate shall have sole discretion to consent to or
disapprove, in whole or in part, the election pursuant to either clause (ii) or
(iii) of paragraph (c) of this Section 11 of a holder of a General Right to
receive cash upon the exercise of a General Right ("Cash Election"). Such
consent or disapproval may be given at any time after the Cash Election to which
it relates. If the Board or its delegate shall disapprove a Cash Election, in
lieu of paying the cash (or any portion thereof) specified in such Cash
Election, the Board or its delegate shall determine the cash, if any, to be paid
pursuant to such Cash Election and shall issue a number of Shares calculated as
provided in clause (i) of paragraph (c) of this Section 11, after reducing the
Spread by such cash to be paid plus cash in lieu of any fractional Share. A Cash
Election may be made only (x) with respect to a General Right which has been
held at least six months from the date of grant of such General Right, and (y)
during a Window Period. A Cash Election made in advance of a Window Period shall
be deemed to have been made and to take effect on the first day of the first
Window Period occurring after such election.
(e) Notwithstanding the provision of paragraph (c) of this Section 11, if
within one year after a Change of Control has occurred, the employment of any
Participant is terminated by the Company for any reason other than for
Misconduct (or, if applicable, by Constructive Termination) then such
Participant's General Right shall become fully vested on the date of termination
and may be exercised; provided, however, that with respect to a General Right
held by a Participant who is subject to Section 16 of the Exchange Act, the
event constituting a Change of Control shall have been subject to stockholder
approval by non-insider stockholders of the Company, as determined under Rule
16(b)(3) of the Exchange Act, and if such General Right has not been outstanding
for at least six months on the date of termination, then such grant shall not be
exercisable until such six-month period elapses. Upon an exercise for cash, a
holder of a General Right shall be entitled to receive an amount in cash equal
to the Spread which, for purposes of this paragraph (e) of this Section 11,
shall mean an amount equal to the product computed by multiplying (i) the excess
of (A) the Fair Market Value per Share on the date such General Right is
exercised over (B) the Award Price, by (ii) the number of Shares with respect to
which such General Right is being exercised.
(f) An election by a Participant who is subject to Section 16 of the
Exchange Act to receive cash upon the exercise of a General Right may be made
without compliance with paragraph (d) of this Section 11, if such election is
irrevocable and the receipt of cash pursuant to such election occurs no earlier
than six months after such election is made. An election made pursuant to this
paragraph (f) may be changed only by a subsequent irrevocable election to take
effect no earlier than six months after the date such subsequent election is
made.
(g) To exercise a General Right, the holder shall (i) give notice thereof
to the Company in form satisfactory to the Board or its delegate addressed to
the Secretary of the Company specifying (A) the number of Shares with respect to
which such holder is exercising the General Right and (B) the amount such holder
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elects to receive in cash, if any, and the amount he elects to receive in Shares
with respect to the exercise of the General Right; provided, however, that
notice of the exercise of a General Right pursuant to paragraph (e) of this
Section 11 shall only specify the number of Shares with respect to which the
General Right is being exercised for cash; and (ii) if requested by the Company,
deliver the Right Agreement relating to the General Right being exercised and
the Option Agreement for any Related Option to the Secretary of the Company, who
shall endorse thereon a notation of such exercise and return the Right Agreement
and Option Agreement to the Participant. The date of exercise of a General Right
which is validly exercised shall be the date on which the Company shall have
received the notice referred to in the first sentence of this paragraph (g).
12. STOCK APPRECIATION RIGHTS -- LIMITED RIGHTS
(a) The Board or its delegate shall have authority in its discretion to
grant a Limited Right to the holder of a Related Option. A Limited Right may be
granted with respect to all or some of the Shares covered by such Related
Option. A Limited Right may be granted either at the time of grant of the
Related Option or at any time thereafter during its term. A Limited Right may be
granted to a Participant irrespective of whether such Participant is being
granted or has been granted a General Right with respect to the same Related
Option. Unless specified in the Right Agreement as an Automatic Right, a Limited
Right may be exercised only during a period of sixty days beginning on the date
of a Change of Control; provided, however, that with respect to a Limited Right
held by a Participant who is subject to Section 16 of the Exchange Act the event
constituting a Change of Control shall have been subject to stockholder approval
by non-insider stockholders of the Company, as determined under Rule 16(b)(3) of
the Exchange Act, and if such Limited Right has not been outstanding for at
least six months on the date of the Change of Control, then the sixty-day period
shall not begin until the expiration of six months from the date of grant of
such Limited Right. Notwithstanding the provisions of the immediately preceding
sentence, each Limited Right shall be exercisable only if and to the extent that
the Related Option is exercisable. A Limited Right granted as an Automatic
Right, shall be exercised automatically and only for cash, on satisfaction of
conditions specified in the Right Agreement; provided, that an Automatic Right
held by a Participant who is subject to Section 16 of the Exchange Act shall not
be automatically exercised unless such Automatic Right has been outstanding for
at least six months from the date of grant of such Right.
(b) The term "Spread" as used in this Section 12 with respect to the
exercise of any Limited Right shall mean an amount equal to the product computed
by multiplying (i) the excess of (A) either (x) the highest Fair Market Value
per Share during the sixty-day period ending on the date of the Change of
Control, or (y) the Event Price per Share, whichever is greater, over (B) the
exercise price per Share at which the Related Option is exercisable, by (ii) the
number of Shares with respect to which such Limited Right is being exercised.
(c) Upon the exercise of a Limited Right as provided in paragraph (e) of
this Section 12, the holder thereof shall receive an amount in cash equal to the
Spread.
(d) Notwithstanding any other provision of this Plan, no General Right
which has a Related Option may be exercised for cash at any time when any
Limited Right which was granted with respect to the same Related Option may be
exercised.
(e) To exercise a Limited Right, the holder shall (i) give notice thereof
to the Company in form satisfactory to the Board or its delegate specifying the
number of Shares with respect to which such holder is exercising the Limited
Right, and (ii) if requested by the Company, deliver the Right Agreement
relating to the Limited Right being exercised and the Option Agreement for the
Related Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return the Right Agreement and the Option
Agreement to the employee. The date of exercise of a Limited Right which is
validly exercised shall be deemed to be the date on which the Company shall have
received the notice referred to in the first sentence of this paragraph (e).
A-10
<PAGE> 42
13. STOCK APPRECIATION RIGHTS -- GENERAL PROVISIONS
(a) Either a General Right or a Limited Right, or both a General Right and
a Limited Right, may be granted with respect to the same Related Option. Upon
the exercise of a Right, any Related Option and any other Right granted with
respect to the same Related Option shall be considered cancelled to the extent
of the Shares with respect to which the Right is exercised. Upon the exercise,
cancellation or termination of any Related Option, the Right or Rights that
relate thereto will cease to be exercisable to the extent of the number of
Shares with respect to which the Related Option is exercised, cancelled or
terminated.
(b) The Company intends that Sections 11, 12 and 13 shall comply with the
requirements of Rule 16b-3 (the "Rule") under the Exchange Act during the term
of this Plan. Should any provision of these Sections 11, 12 and 13 fail to
comply with or be unnecessary to comply with the requirements of the Rule, the
Board may amend this Plan to add to or modify the provisions of this Plan
accordingly without seeking stockholder approval.
(c) Unless otherwise specified in the Right agreement, no General or
Limited Right shall be transferable except by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined in
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; provided, however, that the terms of a General
or Limited Right granted with respect to an ISO shall comply with the
requirements of the Code as necessary to maintain the status of the Related
Option as an ISO including, without limitation, transferability and
exercisability restrictions.
(d) A person exercising a General Right shall not be treated as having
become the registered owner of any Shares issued on such exercise until such
Shares are issued.
(e) Each General or Limited Right shall be on such terms and conditions not
inconsistent with this Plan or the Related Option, if any, as the Board or its
delegate may determine and shall be evidenced by a Right Agreement setting forth
such terms and conditions executed by the Company and the holder of the General
or Limited Right. A General and/or Limited Right granted with respect to a
Related Option shall be exercisable only if and to the extent the Related Option
is exercisable.
14. ADJUSTMENTS OF AND CHANGES IN THE STOCK
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 or its delegate shall make
appropriate adjustments to the number of Shares of Common Stock of the Company
theretofore appropriated or thereafter subject or which may become subject to an
Option or Right under the Plan. Outstanding Options and Rights 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 or Rights pursuant to this Section 14. In case of any such
adjustment, the Shares subject to the Option or Right 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 or Right 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.
15. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective when adopted by the Board, but no Option or
Right granted under this Plan shall be exercisable until the Plan is approved in
the manner prescribed in Section 16(a) of this Plan. Any amendment to the Plan
shall become effective when adopted by the Board, unless specified otherwise,
but no Option or Right granted under any increase in the number of shares
authorized to be issued under this Plan shall be exercisable until the increase
is approved in the manner prescribed in Section 16(a) of this Plan. The
amendments to Section 4 which pertain to shares available again for issuance to
participants not subject to Section 16 of the Exchange Act shall be effective
from December 27, 1993.
A-11
<PAGE> 43
16. AMENDMENT OF THE PLAN
(a) The Board of Directors at any time, and from time to time, may amend
the Plan, subject to the limitation, however, that, except as provided in
Section 14 (relating to adjustments upon changes in stock), 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 of Directors. Approval of the
stockholders may be obtained, at a meeting of stockholders duly called and held,
by the affirmative vote of a majority of the holders of the Company's voting
stock who are present or represented by proxy and entitled to vote on the Plan,
or by the written consent of the holders of a majority of the outstanding voting
stock of the Company. Shares which are present at the meeting but not voted on
the Plan are not counted in determining whether a majority has been obtained
(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 Securities and
Exchange Act of 1934 and the regulations promulgated thereunder relating to
employee incentive stock options and/or to bring the Plan or Options granted
under it into compliance therewith.
(c) Rights and obligations under any Option or Right 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 or Right, which
consent may be obtained in any manner that the Board or its delegate deems
appropriate.
(d) The Board of Directors 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.
17. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors at any time may suspend or terminate the Plan. The
Plan, unless sooner terminated, shall terminate at the end of ten years from the
date the Plan is adopted by the Board or approved by the stockholders of the
Company, whichever is earlier. No Option or Right may be granted under the Plan
while the Plan is suspended or after it is terminated. Rights and obligations
under any Option or Right granted while the Plan is in effect, including the
maximum duration and vesting provisions, shall not be altered or impaired by
suspension or termination of the Plan, except with the consent of the person who
holds the Option or Right, which consent may be obtained in any manner that the
Board or its delegate deems appropriate.
18. REGISTRATION, LISTING, QUALIFICATION, APPROVAL OF STOCK AND OPTIONS
All Options and Rights granted under the Plan are subject to the
requirement that if at any time the Board shall determine in its discretion that
the registration, listing or qualification of the shares of stock subject
thereto on any securities exchange or under any applicable law, or the consent
or approval by any governmental regulatory body or the stockholders of the
Company, is necessary or desirable as a condition of or in connection with the
issuance of shares upon exercise of the Option or Right, the Option or Right may
not be exercised in whole or in part unless such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any condition not acceptable to the Board of Directors.
19. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any Option or Right agreement 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.
20. MISCELLANEOUS
The use of any masculine pronoun or similar term is intended to be without
legal significance as to gender.
A-12
<PAGE> 44
AMD-90186
<PAGE> 45
ADVANCED MICRO DEVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 27, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints W. J. SANDERS III and MARVIN D. BURKETT 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 is 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 Wednesday, April 27,
1994, 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 HEREOF, FOR THE 1992 STOCK INCENTIVE
PLAN, AS AMENDED, FOR RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS,
AND AGAINST THE STOCKHOLDER PROPOSALS (PROPOSALS 4-6 ON YOUR PROXY). THE
UNDERSIGNED MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO ITS EXERCISE OR MAY
ATTEND THE MEETING AND VOTE IN PERSON.
<PAGE> 46
Please mark
/X/ votes as in
this example
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE LISTED
NOMINEES FOR DIRECTORS, FOR PROPOSALS 2-3, AND AGAINST PROPOSALS 4-6.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3
Nominees for Directors:
W.J. Sanders III, Friedrich Baur, Charles M. Blalack,
R. Gene Brown, Anthony B. Holbrook, Richard Previte,
Joe L. Roby, Leonard Silverman
<TABLE>
<S> <C> <C>
1. ELECTION OF FOR WITHHELD
DIRECTORS: / / / /
- --------------------------------------------------------------
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space
provided above.)
FOR AGAINST ABSTAIN
2. 1992 Stock Incentive Plan, / / / / / /
as amended
3. Ratification of the / / / / / /
appointment of independent
auditors
The Board of Directors recommends a vote AGAINST Proposals 4, 5 and 6
FOR AGAINST ABSTAIN
4. Stockholder proposal / / / / / /
relating to the Nominating
Committee.
5. Stockholder proposal / / / / / /
relating to the Board of
Directors.
6. Stockholder proposal / / / / / /
to redeem stockholders'
preferred stock purchase
rights.
MARK HERE FOR
ADDRESS CHANGE / /
AND NOTE AT LEFT
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. Executors, administrators and
trustees so indicate when signing.
Signature __________________________ Date _______________
Signature __________________________ Date _______________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
</TABLE>
