Apple 1999 Annual Report Download - page 78

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Compensation Committee of the Board of Directors (the
"COMMITTEE"). The role of the Committee, which is comprised of two outside non-employee directors, is to review and approve the base
salaries, bonuses, stock options and other compensation of the executive officers and management-level employees of the Company. The
Committee also administers the Company's stock option plans and makes grants to executive officers under the 1998 Executive Officer Stock
Plan (the "1998 Plan").
The Company's executive compensation program utilizes Company performance, individual performance and an increase in stockholder value
over time as determinants of executive pay levels. These principles are intended to motivate executive officers to improve the financial position
of the Company, to hold executives accountable for the performance of the organizations for which they are responsible, to attract key
executives into the service of the Company and to create value for the Company's shareholders. The compensation for executive officers is
based on two elements: Cash compensation and equity-based compensation.
CASH COMPENSATION
The Company reviews executive compensation surveys in both the computer industry and general industry to ensure that the total cash
compensation provided to executive officers and senior management remains at a competitive level to enable the Company to attract and retain
management personnel with the talents and skills required to meet the challenges of a highly competitive industry. The compensation of
executive officers, other than Mr. Jobs, interim Chief Executive Officer, is reviewed annually by the Committee.
BONUSES
For fiscal year 1999, the Compensation Committee approved the FY99 Vice Presidents and Directors Incentive Bonus Plan (the "BONUS
PLAN"), under which cash bonuses for employees at the level of director and above were determined based on specified revenue, unit
shipments and profit targets for the Company. Because the Company did not achieve the metrics specified in the Bonus Plan, no payments
were made thereunder. Executive officers and members of the Board of Directors are not eligible to participate in the Bonus Plan.
EQUITY-BASED COMPENSATION
In fiscal year 1999, the Compensation Committee emphasized equity-
based compensation, principally in the form of options, as the cornerstone
of the Company's executive compensation program. Equity awards are typically set by the Compensation Committee based on industry
surveys, each officer's individual performance and achievements, market factors and the recommendations of management. In fiscal year 1999,
executive officers were eligible to receive grants of stock options under the 1998 Plan. In addition, executive officers were eligible to
participate in the Company's Employee Stock Purchase Plan.
During fiscal year 1999, all of the executive officers of the Company received new option grants under the 1998 Plan. The Options granted
under the 1998 Plan were at an exercise price equal to the fair market value of the Common Stock on the date of grant and generally vest in
unequal increments over a five-year period after grant, subject to the participant's continued employment with the Company. All options
granted under the 1998 Plan expire ten years from the date of grant, unless a shorter term is provided in the option agreement or the
participant's employment with the Company ends before the end of such ten-year period.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Jobs, the Company's interim Chief Executive Officer, received $1 for the services he performed for the Company in fiscal year 1999.
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