Apple 2000 Annual Report Download - page 74

REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Until April 2000, the members of the Compensation Committee were Messrs. Edgar S. Woolard and Gareth C.C. Chang. Mr. Woolard retired
from the Board of Directors in April 2000 and the Company ceased to have an active Compensation Committee. As a result, the Company's
executive compensation program is presently administered by the Board. The Board reviews and approves the base salaries, bonuses, stock
options and other compensation of the executive officers and management-level employees of the Company and administers the Company's
stock option plans. Mr. Jobs who is both a member of the Board and the Company's Chief Executive Officer, does not participate in
deliberations of the Board concerning executive compensation.
The Company's executive compensation program focuses on Company performance, individual performance and increases 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 competitive levels so that the Company can continue 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 is reviewed annually.
BONUSES
For fiscal year 2000, the Board established a FY00 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 achieved the metrics specified in the Bonus Plan, payments were made thereunder. Executive officers and
members of the Board were not eligible to participate in the Bonus Plan and received no other bonuses for fiscal year 2000.
EQUITY-BASED COMPENSATION
In fiscal year 2000, the Board 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 Board based on industry surveys, each officer's individual performance
and achievements, market factors and the recommendations of management. In fiscal year 2000, executive officers were eligible to receive
grants of stock options under the 1998 Executive Officer Stock Plan ("1998 PLAN"). In addition, executive officers were eligible to participate
in the Company's Employee Stock Purchase Plan.
During fiscal year 2000, options were granted under the 1998 Plan to Messrs. Jobs, Johnson, and Tamaddon and Ms. Heinen. 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 increments over a four-year period after grant, subject to the participant's continued employment with the Company. However, the
options granted to Mr. Jobs will vest in full in July 2001. 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 terminates before the end of such ten-
year period.
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