AMD

Business Context and Reporting Period

Company: Advanced Micro Devices, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 12, 2005
Event: Entry into Material Agreement regarding executive compensation plans.

On October 12, 2005, the Compensation Committee of the Board of Directors approved the "Advanced Micro Devices, Inc. 2005 Long Term Incentive Plan" (LTIP) and the "Advanced Micro Devices, Inc. 2005 Annual Incentive Plan" (Annual Plan). These plans are effective as of January 1, 2005, and replace existing bonus plans applicable to officers.

Key Financial Metrics

This filing does not report revenue, profit, cash flow, margins, debt, or liquidity figures. The document focuses exclusively on the structure and approval of executive compensation agreements.

Material Changes Versus Prior Period

The primary material change is the replacement of the Company's existing bonus plans for officers with the new 2005 LTIP and Annual Plan. The new plans introduce specific performance metrics and award structures not previously detailed in this filing.

Guidance, Outlook, and Plan Details

2005 Long Term Incentive Plan (LTIP)

• Structure: Multi-year incentive compensation based on three-year performance cycles.
• Performance Measures: Relative revenue growth compared to a selected group of semiconductor companies and average operating income margin.
• Award Types: Restricted stock units (RSUs) or cash.
• Caps: Cash awards and RSU fair market value are capped at 200% of the target award amount.
• Specific Grants Approved: Maximum RSUs for two award cycles (2005-2006 and 2005-2007) were approved for specific officers, contingent on performance.

  Officer	2005-2006 Target RSUs	2005-2006 Max RSUs	2005-2007 Target RSUs	2005-2007 Max RSUs
  William Edwards	4,500	9,000	10,500	21,000
  Thomas McCoy	6,000	12,000	14,000	28,000
  Derrick Meyer	9,000	18,000	21,000	42,000
  Henri Richard	9,000	18,000	21,000	42,000
  Robert Rivet	9,000	18,000	21,000	42,000
  Harry Wolin	4,500	9,000	10,500	21,000

  Note: Dr. Hector Ruiz's participation is pending Board approval of an employment agreement amendment.

2005 Annual Incentive Plan

• Structure: Annual incentives based on two semi-annual periods.
• Performance Measures: Revenue, operating profit, and individual performance objectives.
• Payout: Cash awards based on a percentage of base pay.
• Caps: Awards are capped at three times the target Incentive Award amount.

Important Facts for Investor Verification

• Performance Metrics: Verify the specific "selected group of semiconductor companies" used for relative revenue growth comparisons in the LTIP.
• Financial Impact: Review the full text of Exhibits 10.1 and 10.2 to understand the total potential dilution from RSUs and the cash liability exposure from the Annual Plan.
• CEO Compensation: Confirm the status of Dr. Hector Ruiz's employment agreement amendment to determine his specific compensation terms under the new plans.
• Retention Risk: Note that awards are contingent on continued employment, with specific exceptions for termination without cause, death, retirement, or disability.