Vice President Performance Recognition Program



 Exhibit 10.9 
  
 VICE PRESIDENT 
 PERFORMANCE 
 RECOGNITION PROGRAM 
  
 Personal and Confidential 
  
 

 
  
 

 
  









 VP PERFORMANCE RECOGNITION PROGRAM 
  

	I.	Purpose 

  
 The Vice President Incentive Program (VPIP) recognizes and rewards AMD’s and SPANSION LLC’s Vice Presidents (Participants) for furthering
AMD’s and SPANSION 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. 
  

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 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. 
  

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 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	  	 
	 Case 2 (Target Perf.)
	  	$	225,000	  	400	  	500	  	1.00	  	10.0	%	 	10.00	%	 	$	22,500	  	0.00	  	 
	 Case 3
	  	$	225,000	  	400	  	385	  	0.50	  	10.0	%	 	5.00	%	 	$	11,250	  	0.00	  	 Pool eliminated
 from First Half
 since combined
 threshold not met

	 Case 4
	  	$	225,000	  	400	  	320	  	0.13	  	10.0	%	 	1.30	%	 	$	2,925	  	0.00	  	 

  

	 	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: 
  
 

 
  

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 VP PERFORMANCE RECOGNITION PROGRAM 
  

 

 
  
 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	%	 	75	%	 	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

  

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	 	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. Except as otherwise set forth in the Employment Agreement for the Chief Executive Officer of the Company (CEO) as amended effective on October 27, 2004 (CEO Employment Agreement), 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. 
  

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	 	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: 
  

														
	 	  	 	  	 	 	 	Performance Level

	 
	 	  	 	  	Weighting

	 	 	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. 

  

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 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. 
  

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 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. 
  
 This Section V shall not apply to payments to the CEO pursuant to his Employment Agreement. 
  

	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. 
  

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	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 LTP. The CEO shall also be a
Participant in the LTP. 

  

	 	B.	To be eligible to receive any accrued award under the Plan, a participant must be actively employed by AMD or SPANSION 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 



  

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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 SPANSION LLC and 1) has reached 60 years of age, 2) has 15 years of AMD and/or SPANSION 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. 

  

	 	K.	Sections VI B – VI J shall not be applicable to the CEO. 

  

	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 

  

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salary will be calculated based on the salary in effect at the time of the change in status. 
  
 Participant is defined as a proven contributor in an eligible position subject to the participation guidelines
established by senior management. Except for the CEO, 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 SPANSION 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. 
  

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