ITEM 1-ELECTION OF DIRECTORS
Effective February 4, 2005, in accordance with our bylaws, our Board of
Directors increased the authorized number of directors from nine to ten. As
described below, two of our directors are retiring and the Board intends to
reduce the authorized number of directors to eight following their retirement.
Consequently, eight directors will be elected at the Annual Meeting. All
directors are elected annually and serve a one-year term until the next Annual
Meeting.
The Nominating and Corporate Governance Committee of the Board of Directors
selected, and the Board of Directors accepted, the following eight persons as
nominees for election to the Board: Dr. Hector de J. Ruiz, Dr. W. Michael
Barnes, Mr. Bruce L. Claflin, Ms. H. Paulett Eberhart, Mr. David J. Edmondson,
Mr. Robert B. Palmer, Dr. Leonard M. Silverman and Mr. Morton L. Topfer. All of
the nominees are currently directors of AMD. Mr. W. J. Sanders III resigned from
the Board in April 2004. Mr. Charles M. Blalack and Dr. R. Gene Brown, currently
members of the Board, will not be standing for re-election. Dr. Brown has served
the Company as a director since the Company was founded in 1969. Mr. Blalack has
served the Company as a director since 1989. Our Board appointed Mr. Edmondson
in October 2004 and Mr. Topfer in February 2005. Mr. Edmondson was referred to
our Nominating and Corporate Governance Committee by an executive search firm
retained by the Committee to assist in identifying qualified director
candidates. Mr. Topfer was referred to the Committee by our Chairman, Dr. Ruiz.
The Board of Directors expects all nominees named below to be available for
election. If a nominee declines or is unable to act as a director, your proxy
may vote for any substitute nominee proposed by the Board. Your proxy will vote
FOR the election of these nominees, unless you instruct otherwise. All of our
current Board member nominees are expected to be present at the 2005 Annual
Meeting. All of our 2004 Board member nominees were present at the 2004 Annual
Meeting, except Dr. Silverman, who was ill.
The experience and background of each of the nominees follows.
Dr. Hector de J. Ruiz-Dr. Ruiz, 59, has been a director since 2000. Dr. Ruiz is
currently our Chairman of the Board, President and Chief Executive Officer. Dr.
Ruiz joined AMD as President and Chief Operating Officer in January 2000 and
became our Chief Executive Officer on April 25, 2002. Before joining AMD,
Dr. Ruiz served as President of the Motorola, Inc. Semiconductor Products Sector
since 1997. From 1991 to 1995, Dr. Ruiz was Senior Vice President and General
Manager of Motorola's paging and messaging businesses and in 1996 became
Executive Vice President and General Manager of those businesses. Dr. Ruiz
joined Motorola in 1977 and, from 1977 to 1991, he held various executive
positions in Motorola's Semiconductor Products Sector. Before joining Motorola,
Dr. Ruiz worked at Texas Instruments, Inc. from 1972 to 1977. Dr. Ruiz is a
member of the Board of Directors of Eastman Kodak Company.
Dr. W. Michael Barnes-Dr. Barnes, 62, has been a director since 2003. Dr. Barnes
served as Senior Vice President and Chief Financial Officer of Rockwell
International Corporation (Rockwell), a diversified NYSE company, from 1991
until his retirement in 2001. Dr. Barnes joined Collins Radio Company (Collins)
in 1968 as a member of the corporate operations research staff. Collins was
acquired by Rockwell in 1973, and Dr. Barnes held various management positions
at Rockwell until 1991. He was named a distinguished alumnus by the Texas A&M
University College of Engineering in 1992, is a member of the Texas A&M
University chancellor's Century Council and is on the university's Engineering
Advisory Board. Dr. Barnes is a member of the Board of Directors of MetroPCS,
Inc.
Bruce L. Claflin-Mr. Claflin, 53, has been a director since 2003. Mr. Claflin is
President, Chief Executive Officer, and a member of the Board of Directors of
3Com Corporation (3Com), a provider of voice and data networking products and
services, and has been since January 2001. He joined 3Com as President and Chief
Operating Officer in August of 1998. Prior to 3Com, Mr. Claflin served as Senior
Vice President and General Manager, sales and marketing for Digital Equipment
Corporation (Digital). Mr. Claflin also worked for 22 years at IBM, where he
held various sales, marketing and management positions, including general
manager of the IBM PC Company's worldwide R&D, product and brand management, as
well as president of IBM PC Company Americas.
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H. Paulett Eberhart-Ms. Eberhart, 51, has been a director since April 2004. Ms.
Eberhart was the President-Americas of Electronic Data Systems Corporation
(EDS), an information technology and business process outsourcing company, from
2003 until she retired in 2004. Ms. Eberhart was an employee of EDS since 1978.
Prior to serving as President-Americas, Ms. Eberhart was the Senior Vice
President - EDS and President-Solutions Consulting. From 2001 to 2002, Ms.
Eberhart served as the Senior Vice President, Information Solutions, U.S. and
from 1999 to 2001 as the Senior Vice President, Information Solutions, Southwest
Region. In 1998, she was the Senior Vice President, Finance. During this time,
she was a member of the Board of Directors of AT Kearney, a subsidiary of EDS.
Between 1978 and 1998, Ms. Eberhart served in various management positions in
the area of Finance at EDS. Ms. Eberhart served as the chair of the Political
Action Committee for EDS and is a member of the Financial Executives Institute
and American Institute of Certified Public Accountants. Ms. Eberhart is a member
of the Board of Directors of Anadarko Petroleum Corporation and Solectron
Corporation.
David J. Edmondson-Mr. Edmondson, 45, was appointed a director on October 27,
2004. Mr. Edmondson is the President and Chief Executive Officer-Elect and a
member of the Board of Directors of RadioShack Corporation. He joined RadioShack
in 1994 as Vice President of Marketing. Before becoming President in 2000, he
served as Senior Vice President of RadioShack and Executive Vice President/Chief
Operating Officer of the RadioShack Retail Division. Prior to joining
RadioShack, Mr. Edmondson served for 12 years in a variety of sales and
marketing roles for ADVO, Inc. a large database and direct marketing company.
Robert B. Palmer-Mr. Palmer, 64, has been a director since 1999. Mr. Palmer was
the Chairman and Chief Executive Officer of Digital Equipment Corporation
(Digital) from 1995 until his retirement in 1998. Mr. Palmer was appointed Chief
Executive Officer and President of Digital in October 1992. From 1985 to 1992,
Mr. Palmer served in various executive positions at Digital. Before Digital, Mr.
Palmer was Executive Vice President of Semiconductor Operations at United
Technologies Corporation (UTC), joining UTC in 1980 when it acquired Mostek
Corporation, where he was a member of the founding team in 1969. Mr. Palmer is
on the Board of Trustees of the Cooper Institute for Aerobic Research, a
non-profit preventative medicine research and education organization.
Dr. Leonard M. Silverman-Dr. Silverman, 65, has been a director since 1994. Dr.
Silverman was Dean of the School of Engineering of the University of Southern
California from 1984 until June 2001. He currently holds the Fred O'Green Chair
in Engineering at the same institution. He was elected to the National Academy
of Engineering in 1988 and is a Fellow of the Institute of Electrical and
Electronic Engineers. Dr. Silverman is a member of the Board of Directors of
Statmon Technologies.
Morton L. Topfer-Mr. Topfer, 68, was appointed a director on February 4, 2005.
Mr. Topfer is the Managing Director of Castletop Capital L.P., an investment
firm that focuses on private equity and real estate investments. Before joining
Castletop Capital in 2002, Mr. Topfer was Vice Chairman of Dell Computer
Corporation, counselor to Dell's Chief Executive Officer and a member of Dell's
office of the Chief Executive Officer. Before joining Dell in 1994, Mr. Topfer
held various positions with Motorola, Inc., last serving as Corporate Executive
Vice President and President of the Land Mobile Products Sector. Before joining
Motorola in 1971, Mr. Topfer spent 11 years with RCA Laboratories in various
research and development and management positions. Mr. Topfer serves on the
Board of Directors of Measurement Specialties, Inc. and Staktek Holdings, Inc.
Consideration of Stockholder Nominees for Director
The policy of the Nominating and Corporate Governance Committee is to consider
properly submitted stockholder nominations for candidates to serve on our Board.
Pursuant to our bylaws, stockholders who wish to nominate persons for election
to the Board of Directors at the 2006 Annual Meeting must be a stockholder of
record when they give us notice, must be entitled to vote at the meeting and
must comply with the notice provisions in our bylaws. A stockholder's notice
must be delivered to our Corporate Secretary not less than 60 nor more than 90
days before the anniversary date of the immediately preceding Annual Meeting.
For our 2006
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Annual Meeting, the notice must be delivered between January 30, 2006 and
February 27, 2006. However, if our 2006 Annual Meeting is not within 30 days of
April 28, 2006, the notice must be delivered no later than the close of business
on the 10th day following the earlier of the day on which the first public
announcement of the date of the Annual Meeting was made or the day the notice of
the Meeting is mailed. The stockholder's notice must include the following
information for the person proposed to be nominated:
his or her name, age, nationality, business and residence addresses;
his or her principal occupation and employment;
the class and number of shares of stock owned beneficially or of record by
him or her; and
any other information required to be disclosed in a proxy statement.
The stockholder's notice must also include the following information for the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made:
their names and addresses;
the class and number of shares of stock owned beneficially and of record by
them;
a description of any arrangements or understandings between them and each
proposed nominee and any other persons (including their names) pursuant to
which the nominations are to be made;
a representation that they intend to appear in person or by proxy at the
Annual Meeting to nominate the person named in the notice;
a representation as to whether they are part of a group that intends to
deliver a proxy statement or solicit proxies in support of the nomination;
and
any other information that would be required to be included in a proxy
statement.
The Chair of the Annual Meeting will determine if the procedures in the bylaws
have been followed, and if not, declare that the nomination be disregarded. If
the nomination was made in accordance with the procedures in our bylaws, the
Nominating and Corporate Governance Committee of the Board of Directors will
apply the same criteria in evaluating the nominee as it would any other board
nominee candidate and will recommend to the Board whether or not the stockholder
nominee should be nominated by the Board and included in our proxy statement.
These criteria are described below in the description of the Nominating and
Corporate Governance Committee on page 9. The nominee and nominating stockholder
must be willing to provide any information reasonably requested by the
Nominating and Corporate Governance Committee in connection with its evaluation.
Communications with the Board or Non-Management Directors
Stockholders who wish to communicate with our Board of Directors or with
non-management directors may send their communications in writing to our
Corporate Secretary, Advanced Micro Devices, Inc., One AMD Place, P.O. Box 3453,
M.S. 68, Sunnyvale, California 94088 or send an email to
Corporate.Secretary@amd.com. Our Corporate Secretary will forward these
communications to our lead independent director. Communications will not be
forwarded to the lead independent director unless the stockholder submitting the
communication identifies himself or herself by name and sets out the class and
number of shares of stock owned by himself or herself beneficially or of record.
Your Board of Directors unanimously recommends that you vote "FOR" the proposed
slate of directors for the current year. Unless you indicate otherwise, your
proxy will vote "FOR" the proposed nominees.
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CORPORATE GOVERNANCE
The Board of Directors has adopted Principles of Corporate Governance
(Principles) to address significant corporate governance issues. The Principles
provide a framework for our corporate governance matters and include topics such
as Board and Board committee composition and evaluation. The Nominating and
Corporate Governance Committee is responsible for reviewing the Principles and
reporting and recommending any changes to the Principles to the Board of
Directors.
The Principles provide that a majority of the members of the Board must meet the
criteria for independence as required by applicable law and the New York Stock
Exchange listing standards. No director qualifies as independent unless the
Board of Directors determines that the director has no direct or indirect
material relationship with the Company. Our Board of Directors has determined
all of our director nominees, other than Dr. Ruiz, are independent in accordance
with applicable law and the New York Stock Exchange rules. In 2003 and 2002, the
Company received payment from 3Com Corporation for product purchases. In 2004,
the Company did not receive any payment from 3Com. The Board has concluded that
the business relationship of Mr. Claflin, as Chief Executive Officer of 3Com,
with the Company is below the thresholds in the NYSE independence rules and is
immaterial and does not interfere with Mr. Claflin's exercise of independent
judgment in his service on the Audit Committee.
The Board of Directors has adopted a code of ethics that applies to all
directors and employees entitled, "Worldwide Standards of Business Conduct,"
which we designed to help directors and employees resolve ethical issues
encountered in the business environment. The Worldwide Standards of Business
Conduct covers topics such as conflicts of interest, compliance with laws,
confidentiality of company information, encouraging the reporting of any illegal
or unethical behavior, fair dealing and use of company assets.
The Board of Directors has also adopted a Code of Ethics for the Chief Executive
Officer, the Chief Financial Officer, the Corporate Controller and all other
senior finance executives. The Code of Ethics covers topics such as financial
reporting, conflicts of interest and compliance with laws, rules, regulations
and our policies.
Each of the Committees described below has adopted a charter, which has been
approved by the Board of Directors. You can access our bylaws, the latest
Committee Charters, the Principles of Corporate Governance, the Worldwide
Standards of Business Conduct and the Code of Ethics at the Investor Relations
Web page of our Web site at www.amd.com or by writing to us at Corporate
Secretary, AMD, One AMD Place, P.O. Box 3453, M.S. 68, Sunnyvale, California
94088, or emailing us at Corporate.Secretary@amd.com. We will provide you with
this information free of charge. Please note that information contained on our
Web site is not incorporated by reference in, or considered to be a part of,
this document.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held eleven regularly scheduled and special meetings
during the 2004 fiscal year. All directors attended at least 75 percent of the
meetings of the Board of Directors in 2004. The Board has Audit, Compensation,
Finance and Nominating and Corporate Governance Committees. The members of the
Committees and their Chairs are selected by the Nominating and Corporate
Governance Committee and then appointed by the Board annually. The Finance
Committee was formed in July 2004. In 2004, the Board of Directors reappointed
Mr. Robert Palmer as the lead independent director of the Board of Directors. In
that capacity, Mr. Palmer chairs executive sessions of the independent
directors, which are held at least twice a year, and the meetings of the
Nominating and Corporate Governance Committee. Executive sessions of the
independent directors were held six times in 2004.
Audit Committee. In 2004, the Audit Committee consisted of Dr. R. Gene Brown,
as Chair, Dr. W. Michael Barnes, Mr. Charles M. Blalack, Mr. Bruce L. Claflin
and Ms. H. Paulett Eberhart, each of whom was
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determined by the Board of Directors to be financially literate and
"independent." All members of the Audit Committee are qualified to be designated
as "audit committee financial experts." However, the Board of Directors
determined that only Dr. Brown and Ms. Eberhart would be designated to be "audit
committee financial experts." Following the retirement of Dr. Brown from the
Board, Ms. Eberhart will serve as Chair of the Audit Committee. The Audit
Committee held seventeen meetings during 2004. The Audit Committee assists the
Board with its oversight responsibilities regarding the integrity of our
financial statements, our compliance with legal and regulatory requirements, the
independent registered public accounting firm's qualifications and independence
and the performance of our internal audit function and the independent
registered public accounting firm. The Audit Committee is also directly
responsible for the appointment, compensation, retention and oversight of the
work of the independent registered public accounting firm, who reports directly
to the Committee. The Audit Committee meets alone with our financial and legal
personnel, and with our independent registered public accounting firm, who have
free access to the Audit Committee at any time. The director of our Internal
Audit Department reports to the Chair of the Audit Committee and to our Chief
Financial Officer and serves a staff function for the Audit Committee. All
members of the Audit Committee attended at least 75 percent of the meetings of
the Committee in 2004.
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee consists of Mr. Robert B. Palmer, as Chair, Dr. W. Michael
Barnes, Mr. Charles M. Blalack, Dr. R. Gene Brown, Mr. Bruce L. Claflin, Ms. H.
Paulett Eberhart, Mr. David J. Edmondson, Dr. Leonard Silverman and Mr. Morton
L. Topfer, each determined by the Board of Directors to be "independent."
Messers Edmondson and Topfer became members of the Nominating and Corporate
Governance Committee on February 4, 2005. The Nominating and Corporate
Governance Committee met six times in 2004 to consider nominees and appointees
to the Board and other corporate governance matters. The Committee met once
during 2005 to consider nominees for the 2005 Annual Meeting and other corporate
governance matters. The Nominating and Corporate Governance Committee assists
the Board in discharging its responsibilities regarding the identification of
qualified candidates to become Board members, the selection of nominees for
election as directors at the next annual meeting of stockholders (or special
meeting of stockholders at which directors are to be elected), the selection of
candidates to fill any vacancies on the Board, the development and
recommendation to the Board of a set of corporate governance guidelines and
principles applicable to us and oversight of the evaluation of the board and
management. In evaluating candidates to determine if they are qualified to
become Board members, the Committee looks for the following attributes, among
others the Committee deems appropriate: personal and professional character,
integrity, ethics and values; general business experience and leadership
profile, including experience in corporate management, such as serving as an
officer or former officer of a publicly held company; strategic planning
abilities and experience; aptitude in accounting and finance; expertise in
domestic and international markets; experience in our industry and with relevant
social policy concerns; understanding of relevant technologies; academic
expertise in an area of our operations; communications and interpersonal skills;
and practical and mature business judgment. The Committee also evaluates board
members' and nominees' service on the board of other public companies. Although
the Committee uses these and other criteria to evaluate potential nominees,
there are no stated minimum criteria for nominees. In 2004, the Committee
retained an executive search firm to assist in identifying qualified candidates,
at our expense. Mr. Edmondson was referred to the Committee by the executive
search firm. The Committee also evaluated candidates identified by their and
other Board members' personal contacts. Mr. Topfer was referred to the Committee
by our Chairman, Dr. Ruiz. For a detailed description of the process for
nomination of director candidates by stockholders, please see page 8 above. The
Committee uses the same standards to evaluate all director candidates, whether
or not the candidates were proposed by stockholders. All members of the
Nominating and Corporate Governance Committee attended at least 75 percent of
the meetings of the Committee in 2004.
Compensation Committee. The Compensation Committee consists of Dr. Leonard
Silverman, as Chair, Dr. R. Gene Brown, Mr. Charles M. Blalack, Mr. Bruce L.
Claflin and Mr. Robert B. Palmer, each determined by the Board to be
"independent." During 2004, the Compensation Committee met nine times. The
Compensation Committee assists the Board in discharging its responsibilities
relating to the compensation of our executives and members of the Board. In
consultation with management and the Board, the Committee designs, recommends to
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the Board for approval and evaluates employment, severance and change of control
agreements with executive officers and our compensation plans, policies and
programs. The Committee ensures that compensation programs are designed to
encourage high performance, promote accountability and assure that employee
interests are aligned with the interests of our stockholders. All members of the
Compensation Committee attended at least 75 percent of the meetings of the
Committee in 2004.
Finance Committee. The Finance Committee consists of Dr. W. Michael Barnes, as
Chair, Dr. R. Gene Brown and Ms. H. Paulett Eberhart. The Board of Directors
approved the formation of the Finance Committee in July 2004. During 2004, the
Finance Committee met two times. The Finance Committee assists the Board by
reviewing and making recommendations to the Board about our financial affairs
and policies and the nature and structure of major financial commitments. Dr.
Barnes and Ms. Eberhart attended both of the meetings of the Committee. Dr.
Brown attended one of the meetings. The Finance Committee Charter is attached as
Appendix A.
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