Exhibit 10.14

 

VP PERFORMANCE RECOGNITION PROGRAM

 

I. Purpose

 

The Vice President Incentive Program (VPIP) recognizes and rewards AMD’s and
FASL LLC’s Vice Presidents (Participants) for furthering AMD’s and FASL LLC’s
ongoing success against both short- and long-term objectives.

 

II. Plan Overview

 

  • The Short-Term Plan (STP) provides an award for meeting or exceeding planned
performance for the current fiscal year (Plan Year).

 

  • The Long-Term Plan (LTP) provides an annual award for sustained corporate
performance over a three-fiscal-year period relative to external measures.

 

Within these plans, the performance objectives are as follows:

 

Plan

--------------------------------------------------------------------------------

  

Component

--------------------------------------------------------------------------------

  

Metric(s)

--------------------------------------------------------------------------------

STP    Corporate Performance Award (CPA)   

•      Corporate Operating Profit vs. Plan

     Group Performance Award (GPA)   

•      Group Operating Profit vs. Plan

     Individual Performance Award (IPA)   

•      Performance against Balanced Scorecard

LTP    Relative Profitability   

•      AMD Return on Equity (ROE) vs. S&P 500 Return on Equity (ROE) over 3
years

     Relative Sales Growth   

•      AMD Sales Growth vs. WSTS Sales Growth over 3 years

 

The following sections discuss the plan provisions in further detail. All awards
are subject to the Plan funding, maximum and carryover provisions detailed in
Section V. A separate communication outlining the assigned target percentages
for each component of the Plans, and division assignments and financial goals
for the STP, will be provided to Participants each year.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

III. Short Term Plan (STP)

 

The STP uses three different components to measure and reward the Participant’s
annual contributions: Corporate, Group and Individual.

 

The payout opportunity and the weight of each component vary depending upon the
Participant’s role and the tier to which he/she is assigned by management.

 

The Corporate and Group Performance components of the Plan are split into two
six-month performance periods. Planned corporate and operating group objectives
for the first half of the year are generally based on the Board Approved
Corporate Budget. Objectives for the second half are established using the
mid-year update of the Corporate Budget.

 

  A. Corporate Performance Award (CPA)

 

The CPA is earned by meeting or exceeding specific levels of Operating Profit
(OP) against the Plan for the performance period.

 

For each half-year performance period a multiplier is derived based on Actual OP
vs. Planned OP. The multiplier is then applied against the CPA target bonus to
determine the accrued award.

 

  • The threshold level, below which the multiplier is zero, is 80% of Planned
OP by default. This threshold will be confirmed or revised for any Plan Year at
the discretion of the CEO.

 

  • The multiplier is 1.0 when Actual OP equals Planned OP.

 

  • For performance between 80% and 100% of Planned OP, the multiplier is
prorated on a straight-line basis.

 

For performance above Planned OP in each half-year performance period, a pool of
funds is created using a percentage of the OP above Planned OP. This percentage
is determined each year by the Office of the CEO.

 

  • This pool is used to pay individual discretionary awards beyond target
performance.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

  • Any pool award generated for the first-half performance period is held in
reserve pending the final OP for the year. If, for the year, Actual OP is below
the combined threshold for the two separate performance periods, any pool
generated for the first half of the year is forfeited.

 

There is no maximum accrued award on this component of the Plan. The maximum
paid in any year is subject to the Plan funding, maximum and carryover
provisions explained in section V.

 

The following table illustrates four payment calculation examples for a
participant with a CPA target of 10% of pay, a base salary of $225,000, and a
pool of 10% of excess OP:

 

     First Half ($M)

--------------------------------------------------------------------------------

     Planned
OP

--------------------------------------------------------------------------------

   OP Threshold
(80%)

--------------------------------------------------------------------------------

   Actual
OP

--------------------------------------------------------------------------------

   Perf.
%

--------------------------------------------------------------------------------

   Target Mult.
(Max=1.00)

--------------------------------------------------------------------------------

  

$ Pool

for Distribution

--------------------------------------------------------------------------------

Case 1

   200    160    240    120    1.00    4.00

Case 2 (Target Perf.)

   200    160    200    100    1.00    0.00

Case 3

   200    160    220    110    1.00    2.00

Case 4

   200    160    170    85    0.25    0.00

 

     Second Half ($M)

--------------------------------------------------------------------------------

     Planned
OP

--------------------------------------------------------------------------------

   OP Threshold
(80%)

--------------------------------------------------------------------------------

   Actual
OP

--------------------------------------------------------------------------------

   Perf.
%

--------------------------------------------------------------------------------

   Target Mult.
(Max=1.00)

--------------------------------------------------------------------------------

  

$ Pool

for Distribution

--------------------------------------------------------------------------------

Case 1

   300    240    315    105    1.00    1.50

Case 2 (Target Perf.)

   300    240    300    100    1.00    0.00

Case 3

   300    240    165    55    0.00    0.00

Case 4

   300    240    150    50    0.00    0.00

 

     Annual ($M)

--------------------------------------------------------------------------------

          Base
Salary

--------------------------------------------------------------------------------

   Combined
OP Threshold

--------------------------------------------------------------------------------

   Actual
OP

--------------------------------------------------------------------------------

   CPA
Mult.

--------------------------------------------------------------------------------

   CPA
Target

--------------------------------------------------------------------------------

    Award
%

--------------------------------------------------------------------------------

   

Award

$

--------------------------------------------------------------------------------

   Total $ Pool for
Distribution

--------------------------------------------------------------------------------

    

Case 1

   $ 225,000    400    555    1.00    10.0 %   10.00 %   $ 22,500    5.50     
Pool eliminated

Case 2 (Target Perf.)

   $ 225,000    400    500    1.00    10.0 %   10.00 %   $ 22,500    0.00     
from First Half 

Case 3

   $ 225,000    400    385    0.50    10.0 %   5.00 %   $ 11,250    0.00    ¬
since combined

Case 4

   $ 225,000    400    320    0.13    10.0 %   1.30 %   $ 2,925    0.00     
  threshold not
met

 

  B. Group Performance Award (GPA)

 

The GPA depends on Actual Group Operating Profit (OP) versus Planned Group OP.
Similar to the CPA, for each half-year performance period a multiplier is
derived based on Actual Group OP vs. Planned Group OP as illustrated in the
following graph:

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

LOGO [g41633g19n31.jpg]

 

The multiplier is then applied against the GPA target award to determine the
accrued award.

 

  • The threshold is 80% of planned Group OP, by default.

 

  • The multiplier is 1.0 when Actual GOP equals Planned GOP.

 

  • The maximum multiplier in each half-year period is 2.0, generally when 125%
performance is achieved.

 

  • The threshold and maximum are confirmed or revised in any Plan Year at the
discretion of the CEO.

 

  • The annual GPA is derived by taking the average of the two half year
multipliers.

 

The following table illustrates four sample payout calculations for a
participant with a 25% GPA target:

 

     First Half

--------------------------------------------------------------------------------

   Second Half

--------------------------------------------------------------------------------

     Planned
Group
Profit

--------------------------------------------------------------------------------

   Threshold
(80%)

--------------------------------------------------------------------------------

   Actual

--------------------------------------------------------------------------------

   Perf.
%

--------------------------------------------------------------------------------

    Mult.

--------------------------------------------------------------------------------

   Planned
Group
Profit

--------------------------------------------------------------------------------

   Threshold
(80%)

--------------------------------------------------------------------------------

   Actual

--------------------------------------------------------------------------------

   Perf
%

--------------------------------------------------------------------------------

    Mult.

--------------------------------------------------------------------------------

Case 1

   100    80    85    85 %   0.25    125    100    120    96 %   0.80

Case 2 (Target Perf.)

   100    80    100    100 %   1.00    125    100    125    100 %   1.00

Case 3

   100    80    75    75 %   0.00    125    100    145    116 %   1.64

Case 4

   100    80    150    130 %   2.00    125    100    150    125 %   2.00

 

     Annual

--------------------------------------------------------------------------------

     Base
Salary

--------------------------------------------------------------------------------

     GPA
Mult.

--------------------------------------------------------------------------------

   GPA
Target

--------------------------------------------------------------------------------

    GPA
%

--------------------------------------------------------------------------------

    GPA
Award

--------------------------------------------------------------------------------

Case 1

   $ 225,000      0.53    25.0 %   13.1 %   $ 29,531

Case 2 (Target Perf.)

   $ 225,000      1.00    25.0 %   25.0 %   $ 56,250

Case 3

   $ 225,000      0.82    25.0 %   20.5 %   $ 46,125

Case 4

   $ 225,000      2.00    25.0 %   50.0 %   $ 112,500

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

  C. Individual Performance Award (IPA)

 

The IPA is based on performance against the established Balanced Scorecard for
the year. The IPA target is generally 10% of base salary. However, executive
management may adjust the average target percent in any given Plan Year based on
the performance of the Company, competitive practices and/or the role of a
particular executive.

 

  D. STP Award Calculation

 

The total STP award is calculated as follows:

 

STP Award = CPA + GPA + IPA

 

The following table illustrates this payment calculation, combining the previous
examples:

 

     Base
Salary

--------------------------------------------------------------------------------

   CPA

--------------------------------------------------------------------------------

   GPA

--------------------------------------------------------------------------------

   IPA

--------------------------------------------------------------------------------

   Total Bonus Award

--------------------------------------------------------------------------------

        %

--------------------------------------------------------------------------------

    $

--------------------------------------------------------------------------------

   %

--------------------------------------------------------------------------------

    $

--------------------------------------------------------------------------------

   %

--------------------------------------------------------------------------------

    $

--------------------------------------------------------------------------------

   %

--------------------------------------------------------------------------------

    $

--------------------------------------------------------------------------------

   Additional
CPA Pool
Award

--------------------------------------------------------------------------------

Case 1

   $ 225,000    10.00 %   $ 22,500    13.13 %   $ 29,531    5.00 %   $ 11,250   
28.13 %   $ 63,281    Yes

Case 2 (Target Perf.)

   $ 225,000    10.00 %   $ 22,500    25.00 %   $ 56,250    10.00 %   $ 22,500
   45.00 %   $ 101,250     

Case 3

   $ 225,000    5.00 %   $ 11,250    20.50 %   $ 46,125    12.00 %   $ 27,000   
37.50 %   $ 84,375     

Case 4

   $ 225,000    1.30 %   $ 2,925    50.00 %   $ 112,500    16.00 %   $ 36,000   
67.30 %   $ 151,425     

 

IV. Long-Term Plan (LTP)

 

The LTP rewards sustained corporate performance for both Return on Equity (ROE)
and sales growth relative to competitive measures over a rolling three-year
period. The LTP has an annual target award of 30% of base salary and a maximum
opportunity of 60% for all Participants, subject to proration provisions in
Section VII F. The model below illustrates the LTP cycles.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

LOGO [g41633g53k04.jpg]

 

  A. LTP Plan Components

 

  • ROE Component: compares AMD’s three-year ROE against the three-year ROE for
the S&P 500. This component is weighted at 50%.

 

  • Sales Component: compares the difference between AMD’s three-year sales
growth and the three-year semiconductor industry sales growth, as published by
Worldwide Semiconductor Trade Statistics (WSTS) 2. This component is weighted at
50%.

 

Target multipliers are derived as follows:

 

          Weighting

--------------------------------------------------------------------------------

  Performance Level

--------------------------------------------------------------------------------

            Threshold

--------------------------------------------------------------------------------

 

Target

(1.0 Multiplier)

--------------------------------------------------------------------------------

  

Maximum

(2.0 Multiplier)

--------------------------------------------------------------------------------

Roe Component

   AMD ROE minus S&P 500 ROE (3-year)    50%     -6%   0      6%

Sales Component

   AMD Sales Growth % minus WSTS Sales Growth % (3-year)    50%   -30%   0   
20%

--------------------------------------------------------------------------------

2 Semiconductor industry data may be modified to be more representative of AMD’s
product offerings. For instance, the DRAM market segment may be excluded from
the Total Semiconductor Sales data.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

For example, if AMD’s 3-year ROE is 10% and the S&P ROE is 10%, the difference
is 0. Therefore, a multiplier of 1.0 is generated for the ROE component. If
AMD’s 3-year Sales Growth is 30% and the WSTS Sales Growth is 10%, the
difference is 20%. Therefore, a multiplier of 2.0 is generated for the Sales
component.

 

The Combined LTP Target Multiplier is calculated as follows:

 

(ROE Component Multiplier x 50%) + (Sales Component Multiplier x 50%) = Combined
LTP Multiplier

 

So, in the example above, the Combined LTP Multiplier is 1.5:

 

(1.0 x 50%) + (2.0 x 50%) = 1.5

 

For either factor, the threshold performance level must be met in order for an
LTP award to be generated. The maximum multiplier when both factors are added is
two (2.0).

 

  B. LTP Award Calculation

 

The LTP award is calculated as follows:

 

Combined LTP Multiplier x LTP Target (30%) x Base Salary = LTP

 

V. Plan Funding, Maximum Awards and Carryovers

 

  • The Corporate Component of the STP is funded by a maximum of three percent
of AMD’s adjusted Operating Profit, as defined in section VIII, for any given
Plan Year. In the aggregate, if the Corporate awards exceed the 3 percent limit,
each Participant’s award will be scaled back to conform.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

  • The Corporate Component will not be paid for any Plan Year in which
Corporate OP is less than or equal to $0.

 

  • The 3% of OP funding limitation applies to all STP Components for Officer
participants

 

  • For Vice Presidents below the Officer Level, the Group and the Individual
Components are not affected by the 3% funding limitation.

 

  • Assuming the 3% funding limitations above are met, accrued STP awards can be
paid in amounts up to 3 times the target award.

 

  • Any accrued STP award in excess of the 3 times target maximum will be
carried forward and paid out over the following two years. One half of any
carryover award will be paid following the first year of the carryover period.
The remaining half will be paid following the second year of the carryover
period. Carryover payments will be made coincident with the regular Plan payment
schedule.

 

  • Payment of LTP awards is subject to the 3% funding limitation. Awards
generated but not paid due to the limitations will be carried over for possible
payout in future Plan years. That amount will be carried over for up to three
following Plan Years. Carryover award amounts will be paid at the earliest
possible payout date (on a first in, first out basis) during the three-year
carryover period, subject to the three percent maximum payout cap and other
eligibility provisions. Any amount carried over but not payable during the
three-year carryover period reverts to zero.

 

VI. Timing of Payouts

 

Awards for the STP are generally paid out by the end of the first quarter
following the close of a Plan Year. For the LTP, awards are paid as soon as
possible after actual external performance data become available. Typically this
will be in the 4th quarter following the plan year.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

VII. Eligibility for Participation and Receipt of Awards

 

  A. Unless otherwise determined by the CEO, all non-Sales Vice Presidents,
Officers, Sr. Vice Presidents, and Group Vice Presidents are Participants in the
Plan.

 

  B. To be eligible to receive any accrued award under the Plan, a participant
must be actively employed by AMD or FASL LLC on the actual date of payment of
the award.

 

  C. Payment to a Participant of any calculated award for which the Participant
is otherwise eligible is contingent upon that Participant’s sustained
satisfactory performance during the Plan period for which the award was
calculated, as determined by the Participant’s immediate superior.

 

  D. To be eligible to receive an accrued STP award of any amount, a participant
must have been actively employed in the Plan for some portion of the Plan Year.
A participant who is actively employed for less than an entire Plan Year (i.e.,
became a participant mid-year or was on an unpaid leave), and who is otherwise
eligible, will receive a prorated STP award, according to the number of months
of active employment in the 12-month STP Plan Year. For purposes of this
provision, a full month’s credit will be given where the Participant was
actively employed in the Plan for at least 15 days of a partial month.

 

  E. In the event of an employee status change resulting in an approved change
of Plan tier (for which different target award levels exist or a group
assignment changes), the participation period for each tier is determined using
the proration method described above. The monthly salary immediately prior to
the status change is used to compute all portions of the award for the first
tier. The monthly salary at the end of the Plan Year is used to compute the
award for the new tier. Calculations take into account the appropriate targets
and maximums for each Plan tier.

 

  F. To be eligible to receive an LTP award of any amount, a participant must
have been actively employed in the Plan for at least 12 months. A participant
who is actively employed for less than an entire three-year LTP award period
(i.e., became a Participant at some time during the period, or was on an unpaid
leave), and who is otherwise eligible to receive an LTP award, will receive an
LTP award that is prorated according to the number of months of active
employment out of the 36-month LTP award period. For purposes of this provision,
a full

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

month’s credit will be given where the Participant was actively employed for at
least 15 days of a partial month.

 

  G. A participant who voluntarily terminates employment with AMD or FASL LLC
and 1) has reached 60 years of age, 2) has 15 years of AMD and/or FASL LLC
service, and 3) has been actively employed for at least 6 months in the Plan
Year is eligible for a payment of an accrued award that is not prorated for less
than a full-year’s service. Participants actively employed for less than 6
months are eligible for a prorated accrued award. The payment will be based on
year-end financial performance and will be made at the same time as other Plan
payments. The proration provisions, as discussed in D and F above, will apply.
The above conditions apply to any LTP carryover. Any STP carryover is forfeited
upon termination of any kind.

 

  H. If a participant dies during the Plan Year, any accrued award for the
current Plan Year will be paid in full so long as the Participant was on active
status for at least 6 months of that year. If active for less than 6 months, any
award generated at the end of the year will be prorated as above. Payments of
any accrued award, including any earned LTP carryover amounts, will be made to
the designated recipient of the participant’s final paycheck. Any STP carryover
awards are forfeited.

 

  I. No allowance will be made for factors beyond the control of the Plan
Participants that either adversely or favorably affect the Plan’s performance.
There is no vested entitlement to any accrued award as described above. Award
payments are made at the sole discretion of the CEO.

 

  J. AMD reserves the right to retroactively or prospectively modify or
terminate the Plan, in whole or in part, and AMD reserves the right to deny the
participation of, or payout of an award to, a Participant, at its sole
discretion, with or without notice or cause.

 

VIII. Definition of Terms

 

Base Salary is defined as the Participant’s annualized base pay rate at the end
of the Plan Year or, in the case of Plan tier changes, the Participant’s
annualized base pay rate at the end of the participation period for each
separate tier. For a participant who exits the Plan, but retains eligibility, or
changes Plan tiers during the year, the annualized salary will be calculated
based on the salary in effect at the time of the change in status.

--------------------------------------------------------------------------------

VP PERFORMANCE RECOGNITION PROGRAM

 

Participant is defined as a proven contributor in an eligible position subject
to the participation guidelines established by senior management. The individual
must be nominated by his or her Vice President and approved by senior management
each Plan Year.

 

Operating Profit, for Plan purposes, is adjusted for pre-tax income/loss from
FASL LLC, also referred to as Operating Profit on the Non-GAAP profit and loss
statement. Operating Profit is also adjusted to add back any award payments from
Corporate award plans.

 

Corporate Budget is defined as the Corporate Financial Budget established in the
4th quarter of the previous year, generally during the month of November (unless
defined otherwise by executive management for the Plan Year in question.)

 

Mid-Year Update is defined as the update of the Corporate Financial Budget
established in the 2nd quarter of the current year, generally in May (unless
defined otherwise by executive management for the Plan Year in question.)

 

Plan Year is defined as the period between January 1 and December 31 of any
given year.

 

The specifics of the Plan are highly confidential and are to be discussed only
with the appropriate Vice President, Division Human Resources, or Compensation.