2018 Guide to Effective Proxies

2.17.7 Alternative pay calculations | 411 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES ADVANCED MICRO DEVICES, INC. AK STEEL HOLDING CORPORATION Chart Nos. 1 and 2 below demonstrate that 75% of the CEO’s total potential compensation for 2017 (and slightly less than that for all NEOs, including the CEO) was directly linked to our performance. Composition of Total Potential Compensationfor 2017 Chart No. 1 Chart No. 2 TotalNon-Performance-based TotalPerformance-based CEO TotalPotentialCompensation for 2017 Non-Performance-based vs.Performance-based 25% 75% TotalNon-Performance-based TotalPerformance-based AllNEOs TotalPotentialCompensation for 2017 Non-Performance-based vs.Performance-based 27% 73% Chart Nos. 3 and 4 below demonstrate the amount of performance-based compensation actually received by the CEO and for all the NEOs (including the CEO) compared to total performance- basedcompensationfor whichthey were eligiblein2017. Performance-basedCompensationActually Receivedfor 2017 vs. Total Potential Compensationfor 2017 Chart No. 3 Chart No. 4 CEO Performance-basedCompensation for 2017 Received vs.TotalPotential NotEarned Received 54% 46% 55% 45% AllNEOs Performance-basedCompensation for 2017 Receivedvs.TotalPotential NotEarned Received 48 2018Proxy Statement CEOTotalPotentialCompensationfor2017Non-Performance-basedvs.Performance-basedTotalNon-Performance-basedTotalPerformance-basedAllNEOsTotalPotentialCompensationfor2017Non-Performance-basedvs.Performance-basedTotalNon-Performance-basedTotalPerformance-basedCEOPerformance-basedCompensationfor2017Receivedvs.TotalPotentialReceivedNotEarnedAllNEOsPerformance-basedCompensationfor2017Receivedvs.TotalPotentialReceivedNotEarned 2018NOTICEOFMEETINGANDPROXYSTATEMENT CompensationDiscussionandAnalysis (continued) • Market Competitive Compensation . Each Named Executive Officer’s fiscal 2017 target total direct compensationwassetatalevelcommensuratewithcompetitivelevelsofcompensationforexecutivesin similar positions at a group of peer companies (set forth below), which our Compensation Committee believesreflectsthecurrentcompetitivemarketforexecutivetalent.Inmakingthesedeterminations,our Compensation Committee also considered the scope of responsibility of each Named Executive Officer, internal pay comparisons, and the in-the-money value ( i.e. , retention value) of each Named Executive Officer’s unvested long-term equity award holdings, as well as its assessment of each Named Executive Officer’sperformanceandexpectedfutureimpactonourorganization. • Increased Stock Ownership Guidelines. In 2017, the stock ownership guidelines for our President and Chief Executive Officer was increased from three times to five times his or her base salary, and from one-and-one-half times to two times base salary of our other Named Executive Officers. The ownership guidelines were strengthened to be more consistent with typical market practices of our company peer group and to demonstrate to shareholders that our Named Executive Officers have a meaningful “long position”intheCompany. Fiscal2017RealizedPay ThetotalpayofourNamedExecutiveOfficers,asreportedinthe2017SummaryCompensationTable,reflects the accounting (grant date fair value) value of their annual long-term equity awards and not the economic value actually realized by our Named Executive Officers from these awards. Since a significant portion of the reported compensation of our Named Executive Officers represents potential future compensation, we believe it is useful to supplement the information provided in the 2017 Summary Compensation Table with a discussion of the pay our NamedExecutiveOfficersactuallyrealizedduringthefiscalyear. As in previous years, the key drivers of the realized pay of our Named Executive Officers for fiscal 2017were (i) the increase in our stock price and (ii) our actual performance against the pre-established financial targets and operatinggoalsundertheEIP. The table below compares our market capitalization to the “realized pay” of our Chief Executive Officer and the average “realized pay” of our other Named Executive Officers for each of our last three fiscal years. As this table demonstrates,thecompensationcollectively“realized”byourNamedExecutiveOfficersduringfiscalyears2015,2016, and2017represented0.77%ofthe$7.87billioninvaluecreatedforourstockholdersduringthatperiod. $2,343 $16,588 $24,790 $1,139 $6,417 $9,145 2,274,182 10,510,694 9,938,309 $- $2,000,000 $1,000,000 $4,000,000 $3,000,000 $6,000,000 $5,000,000 $8,000,000 $7,000,000 $10,000,000 $9,000,000 $11,000,000 0.00 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00 Fiscal 2015 Fiscal 2016 Fiscal 2017 AMDMarketCapitaliza�on(in thoussands ) RealizedPay (in thousands) RealizedPayvs.AMDMarketCapitaliza�on (FY2015 -2017) (1)(2) ChiefExecu�veOfficer OtherNEOs (Average) AMDMarket Capitaliza�on (1) EachNamedExecutiveOfficer’s“realizedpay”is,fortheapplicablefiscalyear,thesumofherorhisearnedbasesalary,actualEIPbonus,any discretionaryorretentionbonusamountspaid,othercompensationreceived,andincomeactuallyrealizedduetoequitytransactionsinvolving sharesawardedunderourequityplan.Additionalinformationisprovidedbelowinthe“2017SummaryCompensationTable”onpage53and the “Option Exercises and Stock Vested in 2017” table on page 60. Realized pay is not a substitute for total compensation. For more informationontotalcompensationascalculatedunderSECrules,seethenotesaccompanyingthe2017SummaryCompensationTable,below. (2) Thefiscal2015averageoftheOtherNamedExecutiveOfficersexcludesMr.Anderson,whobeganemploymentinMay2015. ADVANCEDMICRODEVICES,INC. | 2018ProxyStatement 33 2.17.7 Alternative pay calculations Companies have long been concerned that the Summary Compensation Table’s pay disclosures, which include theoretical estimates of the value of equity awards, may significantly distort true pay outcomes and related pay-for-performance calculations. While still a minority, more companies each year are supplementing the required compensation disclosures with alternative pay calculations, typically involving some version of “realizable” and/or “realized” pay. In 2015, the SEC proposed new S-K Item 402(v) to implement the Dodd-Frank provisions on “compensation actually paid.” The timing of any final rule is unclear.